Coal Mining Industry Profile

Companies in this industry develop coal mine sites, extract coal from surface and underground mines, prepare coal for use, and provide support activities for coal mining. Major companies include Arch Coal, Cloud Peak Energy, and Peabody Energy (all based in the US), as well as Anglo American (UK), BHP Billiton (dually headquartered in the UK and Australia), Coal India Limited (CIL), and Yanzhou Coal Mining and ShenHua Group (China).

Internationally, coal mining companies produce about 9 billion short tons of coal annually. Increases in coal consumption are expected to be driven primarily by demand in countries such as China and India, according to the US Energy Information Administration. The largest coal-producing nations are China, India, Australia, and the US.

The US coal mining industry includes about 1,100 mining and support establishments (single-location companies and units of multi-location companies) with combined annual revenue of about $27 billion. About 780 million short tons of coal are produced annually in the US, according to the Energy Information Administration.

COMPETITIVE LANDSCAPE

Demand comes mainly from generators of electricity. Profitability depends on efficient operations, as coal is a commodity sold on the basis of price. Big companies have significant economies of scale in production and distribution. Small companies can compete if they hold long-term contracts or if they supply local customers. The US industry is concentrated: the top four companies account for about 50% of sales.

Because the US ...