including the United States, South Africa, Poland, and parts of the former Soviet Union, coal exports are a fraction of a substantial domestic market. Other countries mine primarily for export. The leading country in this class is Australia, with Colombia and Venezuela also increasing coal exports rapidly (IEA, 1993a). China is a special case: it is the world's largest coal producer, but almost all of its coal is consumed domestically (Doyle, 1987). However, with investment in transportation networks and some automation, China could quickly become a major force in international coal markets. Japan is the world's largest coal importer, while the fastest import growth is occurring in the rapidly developing Pacific Rim countries, especially Taiwan and South Korea (DOE, 1993a).

In the United States, as elsewhere, coal production has a significant impact on the domestic economy. A recent study from the Pennsylvania State University notes that the direct contribution of coal production to the economy has a value of $21 billion annually, while indirect contributions reach $132 billion (Energy Daily, 1994).

Over the past 10 years, many changes have occurred in the U.S. coal industry. Although more coal is still produced in states east of the Mississippi River, coal production in the west has increased dramatically; in 1988 Wyoming surpassed Kentucky as the largest producing state. This shift in coal production initially was a result of changes in environmental regulation that favor low-sulfur Western coal. Subsequent factors have been the competitive cost of Western coal and a lower cost for its rail transport to markets traditionally served by Eastern coal. These trends are expected to continue, with environmental constraints on coal combustion becoming more stringent.

Transportation costs are more generally a critical determinant of the competitiveness of coal from different sources. On the Gulf and Atlantic coasts of the United States, South American coals are very competitive with U.S. coals on a delivered price basis. For example, Colombian coal currently is $3 to $6/per metric ton cheaper than U.S. coals (Coal Week International, 1994). About 10 percent of the coal used in the United States during the first decade of the next century will likely be imported (EIA, 1994a).

Another change in the industry has been the continued decrease in the price paid for coal at the mine. For mines producing 10,000 tons per year or more, the average price at the mine decreased in 1992 for the tenth straight year, to $21.03 per ton (NCA, 1993a).1 This trend of decreasing coal prices is expected to persist for the near-term, keeping coal a relatively low-cost energy source for the United States.

Coal exports contribute significantly to the U.S. balance of payments. Of the total 1992 U.S. coal production of 998 million tons, 103 million tons were exported, primarily to Europe (57 percent), Asia (20 percent), and North America


Unless otherwise noted, all "tons" referred to in the text are short tons (i.e., 2,000 lb or 0.91 metric tons).

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