ABSTRACT

In 2011, coal accounted for 25% of all mining and metal deals globally, worth $42 billion in value and surpassing mergers and acquisitions in the gold, copper, iron ore, and oil and gas industries according to Ernst & Young LLP (Miller and Maher 2012). Coal is one of the world’s cheapest fuels for generating electricity, and the industry is the most highly fragmented of all commodities,* leaving room for consolidation. Mergers provide larger coal-reserves bases and can lower costs for infrastructure, equipment, and other inputs like diesel fuel. Prices for high-grade metallurgical (coking) coals were at historic levels in 2010, but since 2011 prices for all coal grades has fallen by nearly a third, significantly impacting the financial health of many companies. Every significant coal company has cut jobs and circa 2015 a half dozen have declared bankruptcy.