Impact of Past Issues on Mine-Size Planning in the Coal Industry: Mine-Size Transitions From 2002-2012

"In making strategic economic decisions, it is important for a mining company to gain insights on the impact of significant political, social and economic issues when planning for present and future mines. The size of any mine, measured by the average number of employees working in the mine, will likely vary according to the pressures generated by the significant issues from one year to another. The objective of this study is to develop a model that represents U.S. underground coal mine size transitions during the period 2002-2012 using data derived from the MSHA databases. Coupled with information on significant issues over the past ten years, this model is used to gain insight on the impact of the issues on mine sizes. Results indicate that the structural impact of the combined driving pressures can be discerned by examining the year-to-year stability of mine-size categories. The effects of The MINER Act, the Obama Administration environmental policies on coal, and the coal market are evident. The lessons learned from these analyses give good insights on what the industry and market responses have been on the structure of the underground coal industry over the period of study. INTRODUCTION It is apparent that key driving issues affect the structure and viability of the coal industry. The driving issues may be political, social, and/or economic in the final analysis, but are generally rooted in reaction to dramatic and publicized events or movements. Mine disasters, an increase in miners’ disease prevalence, strife in the coal fields, and negative environmental impacts on air, land or water can capture the attention of the media and the public. Some of the issues occur over a long period of time, like the current global climate change movement. The coal industry veteran can sense the changes in political and social sentiment, and attempt to react to the economic repercussions; however, the insights from the media and from unique combinations of driving pressures are difficult to fathom. Thus decisions made on inadequate information related to the driving pressures and their likely impacts could lead to missteps in corporate and market restructuring. One way to gain some more insight on the potential impacts is to examine the complicated restructuring of mine operations in reaction to the driving pressures of the recent past. This paper examines an 11-year history of the changes in the underground coal industry structure, as reflected by changes in the numbers of mines in various statuses by mine-size categories. Superimposed on the results of mine-size changes is a mapping of the key driving pressures that occurred over the same period, 2002-2012. It is assumed that using this methodology, some important insights can be gained on the immediate and delayed responses to the driving pressures during that period."