A Proposed Approach in Estimating the Profit of Coal Mines Under Fluctuating Prices

  • N. S. BatuginaEmail author
  • V. L. Gavrilov
  • E. A. Khoiutanov
Conference paper
Part of the Smart Innovation, Systems and Technologies book series (SIST, volume 138)


The price is one of the most important external factors affecting the effectiveness of coal mining companies. The prices for many commodities, including exported coal, form in the financial speculative market which often have nothing to do with the real sector of the economy. In this difficult, frequently unpredictable terms coal companies have to conform both under periodic and chaotic fluctuations of annual and subannual prices. Periodic price instability of coal process and variability of the most important indicators of geological, mining, technological, organizational, ecology and economy conditions of exploitation of the deposits cause inevitable fluctuations in profits. Profit in the proposed model of the relative change in profit in coal mines equals the algebraic sum of relative changes in seven factors (coal reserves in block, extraction ratio, losses, dilution, price per unit, total costs per unit, integrated factor taking into account mining emergencies caused by all the most important reasons, respectively). The impact of relative change price on the relative change in profit is always more significant than a similar relative change in any of the above factors. The article analyses the pace and scale of change of world market prices for coking coal. A 27% price of coking coal drop will result in a decrease in a coal company’s profit by 55% if the cost/price ratio is 0,5 and by nearly 135% if it is 0,8. This paper identifies key reserves of increase of profit of coal mine for price change of coal by improving coal quality, more extensive processing.


Profit Effectiveness Coal prices Coking coal Relative change Fluctuations 


  1. 1.
    Mimuroto, Y.: An analysis of steaming coal price trends - factors behind price fluctuations and outlook. Accessed 10 May 2018
  2. 2.
    Aatola, P., Ollikainen, M., Toppinen, A.: Price determination in the EU ETS market: theory and econometric analysis with market fundamentals. Energy Econ. 36, 380–395 (2013). Scholar
  3. 3.
    Zhao, X., Han, M., Ding, L., Kang, W.: Usefulness of economic and energy data at different frequencies for carbon price forecasting in the EU ETS. Appl. Energy 216, 132–141 (2018). Scholar
  4. 4.
    Yang, Y., Zeng, M., Xue, S., Wang, J., Li, Y.: Unifying the “dual-track” pricing mechanism for coal in China: policy description, influences, and suggestions for government and generation enterprises. Resour. Conserv. Recycl. 129, 402–415 (2018). Scholar
  5. 5.
    Cui, H., Wei, P.: Analysis of thermal coal pricing and the coal price distortion in China from the perspective of market forces. Energy Policy 106, 148–154 (2017). Scholar
  6. 6.
    Rudyka, V.: Steel, metallurgical coal and coke: markets and innovations: a review of presentations at Eurocoke summit 2017. Coke Chem. 60(8), 297–310 (2017)CrossRefGoogle Scholar
  7. 7.
    Wilmot, N.: Discontinuities in the coal market. Appl. Econ. Lett. 23(11), 790–794 (2015). Scholar
  8. 8.
    Batugina, N., Tkach, S.: The development of system of organizational and economic actions aimed to efficiency increase of mineral resources base exploration. Min. Inf. Anal. Bull. 12, 32–39 (2009)Google Scholar
  9. 9.
    Tkach, S., Batugina, N., Gavrilov, V.: Construction of the model of the profit and its changes in the development of coal deposits. In: Geomechanical and Geotechnological Problems of Effective Exploration of Solid Mineral Deposits, Yakutsk, pp. 105–108 (2014)Google Scholar
  10. 10.
    Fisher, S., Dornbush, R., Shmalenzi, R.: Economics, 2nd edn. “Delo Ltd”, Moscow (1995)Google Scholar
  11. 11.
    Prechter, R.: The Socionomic Theory of Finance. Socionomics Institute Press, Georgia (2016)Google Scholar
  12. 12.
    Projected Costs of Generating Electricity, 2015 Edition. Accessed 15 Sept 2017
  13. 13.
    Liu, B., Geman, H.: World coal markets: still weakly integrated and moving east. J. Commod. Markets 5, 63–76 (2017). Scholar
  14. 14.
    Tan, H., Wang, X., Miao, Y., Liu, H., Pourkashanian, M., et al.: Decision making on most economical coal for coal-fired power plants under fluctuating coal prices. Int. J. Coal Prep. Utilization 31(5), 273–288 (2011)CrossRefGoogle Scholar
  15. 15.
    Westman, E.: A characterization and determination of the coal reserves and resources of southwest virginia: dissertation of doctor of philosophy in mining and minerals engineering, Accessed 15 May 2017
  16. 16.
    Coal Manual. 2016/17 edn. The Tex Report Limited, Tokyo (2016–2017)Google Scholar
  17. 17.
    Lozovskaya, Ya., Grabskaya, E., Bogdan, I.: Evaluation of efficiency of strategic cost management control concept in industry. Min. Inf. Anal. Bull. 11, 158–167 (2017). Scholar
  18. 18.
    Budeba, M., Joubert, J., Webber-Youngman, R.: A proposed approach for modelling competitiveness of new surface coal mines. J. South Afr. Inst. Min. Metall. 115(11), 1057–1064 (2015). Scholar
  19. 19.
    Noort, D., Adams, C.: Effective mining project management systems. In: Proceedings of the International Mine Management Conference, pp. 87–96 (2006)Google Scholar
  20. 20.
    Novoselov, S., Melnik, V., Agafonov, V.: Export-oriented development strategy of the coal companies of Russia – the main factor ensuring their financial stability. Ugol’ Russian Coal J. 11, 54–56 (2017). Scholar
  21. 21.
    Petenko, I., Maidukov, G.: Breakeven point as coal mines investment attractiveness threshold indicator. Ugol’ Russian Coal J. 6, 52–57 (2017). Scholar
  22. 22.
    Trushina, G.: Mining enterprise performance strategy economic evaluation. Ugol’ Russian Coal J. 3, 52–55 (2017). Scholar
  23. 23.
    Freidina, E., Botvinnik, A., Dvornikova, A.: Methodology and development tool for robust control in open pit mines. Part I: decision-making system and mineral quality control. J. Min. Sci. 50(2), 298–309 (2014). Scholar
  24. 24.
    Gavrilov, V.: Reserves of improvement of quality management of coal of Yakutia in supply chains. In: Proceedings of the International Scientific and Practical Conference «50 Years of the Russian Scientific School of Complex Exploration of the Earth’s Subsoil», Moscow, pp. 246–251 (2017)Google Scholar
  25. 25.
    Batugin, S., Gavrilov, V., Khoyutanov, E.: Geotechnical approaches to coal ash content control in mining of complex structure deposits. In: IOP Conference Series: Earth and Environmental Science, vol. 53, pp. 1–5. Novosibirsk (2017). Scholar
  26. 26.
    Batugin, S., Tkach, S., Gavrilov, V.: Geotechnological reserves for effectivization of coal mining in South Yakutia. Gornyi Zhurnal Min. J. 12, 40–43 (2014)Google Scholar

Copyright information

© Springer Nature Switzerland AG 2020

Authors and Affiliations

  • N. S. Batugina
    • 1
    Email author
  • V. L. Gavrilov
    • 1
  • E. A. Khoiutanov
    • 1
  1. 1.Chersky Institute of Mining of the North, Siberian Branch, Russian Academy of SciencesYakutskRussia

Personalised recommendations