Industry Analysis & Industry Trends
Coal's position in global electricity markets stems from its relative accessibility, affordability and distribution around the globe. Global thermal and metallurgical coal prices recovered rapidly as demand for electricity generation stabilized following the recession, especially in the developing world. However, environmental concerns surrounding coal-generated power have increased in the past five years, and are expected to continue doing so in the next five years. In the five years to 2021, demand for coal is anticipated to be moderate. Developing nations will continue expanding infrastructures to supply populations with reliable and affordable electricity. Consequently, industry revenue is expected to grow over the next five years.
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The Global Coal Mining industry is highly capital intensive, with most of its assets held in the form of land holdings, stocks and equipment. Establishing a new mine or expanding an existing one requires large amounts of capital for mine site development and specialized equipment, including items such as draglines (used to remove overburden at open-cut operations), longwalls (shearers and accompanying hydraulic supports and coal extraction conveyors) and coal washing plants. Evidently, levels of capital expenditure by the industry are typically very high. For every $1.00 spent on labor, IBISWorld estimates that companies will spend $1.05 on capital.
Ongoing investment requirements largely depend on coal prices... read more