Economic environment of coal mining operations in Appalachia, United States

Abstract

Appalachia is a mountainous coal region, in the United States, where the small mining operation dominates. The large number of small coal operations makes the coal industry in that area very competitive, the industry concentration ratio being low. The vast majority of the small coal operations are contractors and nonunionized. There are various circumstances under which a large company will elect to supplement their coal production from their, usually larger, coal mines. The size of the coal mine is generally dictated by the size and location of the coal reserves. The optimum rate of coal extraction, and hence the life of the mine, is a factor of the size of the coal reserves and the contribution margin (coal price less variable cost). Large companies tend to have better safety records than smaller companies due to greater numbers of professional engineers and better management. Small mines have the advantage of closer supervision.