Least Cost Surface Coal Mining (e63d9920-6b04-46a6-bef8-db50bd5e3206)

The coal mining industry is divided into two distinct economic segments based on Coal Supply Agreements. Coal supply agreements generally fall into two categories, spot or long-term, with the selected contract term being driven by the buyer's market expectations, security of supply considerations, fuel tonnage and quality requirements, and economics. Short-term or spot coal purchases are generally market driven and are highly competitive in today's marketplace. Long-term contracts, particularly those involving captive mines and mine-mouth power plants, are commonly driven by considerations other than economics. These other considerations, such as Reserve Conservation and Resource Recovery, Security of Supply, and Maintenance of Levelized Costs may increase the cost of coal, often needlessly and without benefit to the buyer or seller. The basic economic principles which guide the market driven metals industry and generally guide the spot coal sector of the coal industry should apply equally well to the long-term coal supply contract. The artificial constraints imposed as a result of regulated rates of return should be re-examined and in most cases, abandoned. There are many methods of surface and underground coal mining being used today such as, open-pit, contour, mountaintop, and area mining for surface mineable reserves; conventional, standard continuous and super-section continuous miners, and longwalls for deep reserves; and highwall miners, thin seam miners and augers in between. This discussion is primarily directed to surface mining, however the same principles of least cost mining on a Net Present Value basis must be considered in all cases.