Guide to coal mining, coal production, coal industry and coal prices


Coal is a fossil fuel formed from the remains of flora (peat) that existed millions of years ago and then were buried over the years by ever increasing soil and rock strata, resulting in thousands of pounds of pressure that converted the remains to the form of mineral. While there are several types of coal, overal it is primarily a mixture of carbon and hydrogen atoms, with very small amounts of sulphur (bound with carbon or iron) and other elements.

There are 4 basic categories of coal:
  • Anthracite (hard coal): is formed from bituminous coal under great pressure. This form of coal has the highest energy content of all coals and is utilized for space heating and electricity generation (average: 25 million Btu per ton)
  • Bituminous (soft coal) is formed from subbituminous coal under great pressure. This form of coal is primarily used for electric power generation in the United States (average: 24 million Btu per ton).
  • Subbituminous is formed from lignite under great pressure. This form of coal is used primarily for generating electricity and for space heating (average: 18 million Btu per ton).
  • Lignite formed from buried peat (high moisture and ash content) and due to its low heating value it is primarily used for electricity generation (average: 14 million Btu per ton).
  • Thermal coal is used for heat generation, which is used primaily in steam-driven turbine electricity generation.

    Metallurgical coal (coke) is used in steelmaking.

    Lignite is sometimes referred to as brown coal while the other types are referred to as black coal.

    Coal Deposits / Reserves

    Many nations have coal deposits. The United States has the largest coal reserves of any nation. However, China is actually the world's largest annual producer of coal. Other large reserve nations include Russia, China, Australia, India, Ukraine, Kazakhstan, and South Africa.

    Coal deposits are very plentiful in the United States and more plentiful than domestic sources of oil or natural gas.
  • The domestic supply amounts to just over 25% of the world's known reserves of coal.
  • Approximately 90% of the coal deposits located within the United States are of the bituminous (eastern and mid-continent deposits) and subbituminous (western United States deposits) categories. Anthracite deposits are concentrated in northwestern Pennsylvania. The state with largest deposits of coal is Montana, with approximately 25% of proven U.S. reserves.
  • The U.S. produces over one billion tons of coal annually and the largest coal producing state is Wyoming, followed by the states of West Virginia, Kentucky, Pennsylvania, Texas and Montana.
  • There are also several large geographical areas ("basins") of coal concentration:
  • Central Appalachia Basin - includes eastern Kentucky, Virginia and southern West Virginia. Coal from this region generally has a low sulfur content of 0.7% to 1.5% and a high heat value of between 12,000 and 14,000 Btus per pound. Production in this region has declined to approximately 17% of total U.S. annual production compared to 70% in the 1970s.
  • Northern Appalachia Basin - includes Maryland, Ohio, Pennsylvania and northern West Virginia. Coal from this region generally has a typical sulfur content range from 1.0% to 4.5% and a high heat value of between 12,000 and 14,000 Btus per pound.
  • Powder River Basin - located in northeastern Wyoming and southeastern Montana. Coal from this region generally has a very low sulfur content of between 0.15% to 0.55% and a low heat value of between 7,500 and 10,000 Btus per pound.
  • Illinois Basin - includes Illinois, Indiana and western Kentucky. Coal from this region generally has a very high sulfur content of 2.0% to 4.0% and a low heat value of between 10,000 to 12,500 Btus per pound.
  • Unita Basin - located in Utah.

  • Coal Mining

    Coal production is from surface stripping and underground mining operations. Strip mining is also sometimes referred to as mountain top mining.

    Anatomy of a strip / mountain top mine:
  • First, trees are clear cut from the mountain and also for access roads.
  • Explosive charges are set and detonated to loosen the topsoil and rock strata underneath.
  • Large dragline shovels are used to strip away the top soil. The top soil is hauled away in huge trucks and dumped into neighboring valleys.
  • Once the coal seam is exposed the dragline shovel is used to dig up the coal and it is then hauled away.
  • The mining company is required to reclaim mined and valley fill environments.
  • Coal mining operations requires a substantial investment in equipment:
  • Drilling and blasting equipment
  • Loading and hauling equipment
  • Conveying feeding equipment, conveyer belt pre-cleaning, conveyer belt monitoring / rip detection
  • Crushers and pulverizers
  • Dust suppression
  • Measurement monitoring equipment
  • Electrical equipment and supplies
  • Maintenance and repair
  • Lubricants and fluids
  • Motors and power transmission
  • Pumps and air compressors
  • Roof control, rock fall control, cavity filling, waterstopping, ventilation control
  • Pipes, valves and fittings
  • Hoist and drag chain
  • Processing equipment and washers
  • Plant automation systems and software

  • Coal Commodity Pricing
    Coal price is effected by:
  • Seasonal demand (more electricity is generated during the summer months)
  • International demand
  • The price of substitutes such as natural gas (when the price of natural gas increases, utility operators switch over to coal)
  • Transporation costs (U.S. railroad transport rates have been rising since 2005 but effects have been gradual on average shipping costs because new rail shipping contracts phase in over 6-8 years)
  • Litigation over mine operations
  • There are several reference prices for coal (which reflect the major coal producing regions):
  • Powder River Basin (Southern)
  • Northern Appalachia
  • Central Appalachia
  • Illinois Basin
  • Unita Basin
  • Average weekly coal commodity spot prices: