Regional price targets appropriate for advanced coal extraction

Abstract

A methodology is presented for predicting coal prices in regional markets for the target time frames 1985 and 2000 that could subsequently be used to guide the development of an advanced coal extraction system. The model constructed is a supply and demand model that focuses on underground mining since the advanced technology is expected to be developed for these reserves by the target years. Coal reserve data and the cost of operating a mine are used to obtain the minimum acceptable selling price that would induce the producer to bring the mine into production. Based on this information, market supply curves can be generated. Demand by region is calculated based on an EEA methodology that emphasizes demand by electric utilities and demand by industry. The demand and supply curves are then used to obtain the price targets. The results show a growth in the size of the markets for compliance and low sulphur coal regions. A significant rise in the real price of coal is not expected even by the year 2000. The model predicts heavy reliance on mines with thick seams, larger block size and deep overburden