Coal Mining in the US Industry Market Research Report Now Available from IBISWorld

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The demand for coal is dominated by its use as a fuel for power generation; in particular, metallurgical coal is experiencing a surge in interest and companies are scrambling to meet demand for steel overseas. Emerging economies will increasingly demand metallurgical coal over the next five years to meet their insatiable demand for steel. Electricity consumption will also expand as consumers and businesses increase their energy use and, in turn, demand more energy. For these reasons, industry research firm IBISWorld has added a report on the Coal Mining industry to its growing industry report collection.

IBISWorld Market Research

IBISWorld Market Research

Consumers and businesses will increase their energy use, spurring demand for coal

The Coal Mining industry has reached for the depths over the five years to 2012, with revenue expected to grow at an average 7.1% annually to $52.2 billion. Higher prices for coal have underpinned this trend as strong demand from steel production abroad and moderate increases in electricity demand push prices up. According to IBISWorld industry analyst Brian Bueno, emerging economies are demanding metallurgical coal (i.e. coal needed for steel production) at accelerating rates as these countries grow rapidly and invest in their infrastructure. As these countries ramp up the steel production needed for these projects, significant upward pressure has been placed on metallurgical coal, positively influencing revenue over the five-year period. In 2012, the price of steaming and metallurgical coal is expected to decline slightly due to global supply growth. As a result, industry revenue is expected to shrink. The search for metallurgical coal has spurred significant merger and acquisition (M&A) activity in the industry as firms try to acquire as much metallurgical coal as they can afford. Players have purchased smaller firms that struggled during the recession and had access to metallurgical coal. As such, larger firms acquired metallurgical coal at a discount, and they are positioned to benefit from accelerating metallurgical demand. Moreover, metallurgical coal in the United States is highly sought after because of its perceived superior quality compared with coal found in most other countries; in turn, industry firms have scrambled to acquire domestic firms to grow quickly.
The four largest firms in the Coal Mining industry are Alpha Natural Resources, CONSOL Energy Inc., Peabody Energy Corporation and Arch Coal Inc. Industry concentration has increased substantially over the past five years as industry operators strive to acquire metallurgical coal to meet surging export demand, thereby resulting in frequent merger and acquisition activity, says Bueno. Although there are considerable economies of scale in coal mining, there are also substantial numbers of small and medium-size operators that generally operate on slimmer profit margins. Typically, these firms mine deposits that are smaller than those sought after by the larger firms. Coal mining firms bought up smaller firms as coal prices soared during 2007 and early 2008. At the same time, firms have been acquiring other firms that produce natural gas and other types of natural resources. Although this has not increased the market share in this industry, it is a telling trend; coal producers are diversifying their holdings to reduce the risk of the increased environmental regulation of coal and falling coal prices.
The next five years will likely be bright for the industry. Higher prices for coal are expected as firming global growth places upward pressure on metallurgical coal and thermal coal prices. Emerging economies will still demand metallurgical coal at increasing rates to meet their insatiable demand for steel. Electricity consumption will expand as well, while consumers and businesses increase their energy use and in turn, demand more energy. Additionally, an upsurge in demand from cheap low-sulfur type coals is expected to compete with attractive natural gas prices among downstream electricity generation firms over the next five years as the impetus for generation firms to switch to natural gas becomes more attractive. As a result of these trends, revenue is anticipated to increase in the five years to 2017. For more information, visit IBISWorld’s Coal Mining in the US industry report page.

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IBISWorld industry Report Key Topics

This industry mines various types of coal. Most coal mines consist of bituminous coal or anthracite (types of black coal), but firms may also mine lignite (brown coal). Mining occurs underground and in surface pits. Industry firms may also develop coal mine sites and prepare the coal for sale by washing, screening and sizing it.

Industry Performance
Executive Summary
Key External Drivers
Current Performance
Industry Outlook
Industry Life Cycle
Products & Markets
Supply Chain
Products & Services
Major Markets
Globalization & Trade
Business Locations
Competitive Landscape
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
Major Companies
Operating Conditions
Capital Intensity
Key Statistics
Industry Data
Annual Change
Key Ratios

About IBISWorld Inc.
Recognized as the nation’s most trusted independent source of industry and market research, IBISWorld offers a comprehensive database of unique information and analysis on every US industry. With an extensive online portfolio, valued for its depth and scope, the company equips clients with the insight necessary to make better business decisions. Headquartered in Los Angeles, IBISWorld serves a range of business, professional service and government organizations through more than 10 locations worldwide. For more information, visit http://www.ibisworld.com or call 1-800-330-3772.

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Gavin Smith
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