Coal Mining Business Plan for Starting Your own Company

Do you want to start a coal mining business? Since coal has found tremendous uses in industries and power sectors, you won’t be at a loss if you start the coal mining business. The business includes extracting coal from the ground using modern mining, underground mining, contour mining, strip mining or any other technique.

The business, no doubt, requires a lot of manpower, skillset, technical equipment, and knowledge but the rate of return you can get from this business truly deserves all that.

Before taking an actual startup, you’re required to write a comprehensive business plan. To help you with that, we are providing a sample coal mine business plan for a startup named, David Miners.

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Executive Summary

2.1 The Business

David Miners will be a licensed and registered coal mining company that will extract coal from various regions. The company’s outlet, workshop, and main office will be located in Chicago, Illinois. David Cameron will be the owner and CEO of the company.

2.2 Management of Coal Mining Company

Since the coal mining business requires many people of different eligibility and skillset, costly equipment and a large area to work, it’s essential to have a proper organizational structure. If you include a detailed management plan in your coal mining business plan template, you can get relief for a long time.

To effectively manage the working of his company, David will hire a manager and will overlook all the things by himself too. For efficient running of all tasks, David will hire miners, technicians, software experts, mining engineers, coal processing specialists, and general assistants.

2.3 Customers of Coal Mining Company

Before researching on how to start coal business you must explore who’ll be your customers. Our customers will mostly be the power producers, chemical and pharmaceutical companies, cement manufacturers and steel manufacturers. Later in this mining company business plan, we’ll provide details about the groups of our target customers.

2.4 Business Target

Our target is to provide supreme-quality coal to our consumers and becoming a top choice for everyone. Moreover, our monetary goal is to earn a profit margin of $10k per month by the end of the first year.

Coal Mining Business Plan - 3 Years Profit Forecast
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Company Summary

3.1 Company Owner

David Cameron is a post-graduate in mining engineering from the Camborne School of Mines, England. David has worked with Alpha Natural Resources for two years and has gained considerable experience in the field.

3.2 Why the coal mining company is being started

David had always wished to start his own company. After acquiring his degree and experience in the mining field, he decided to opt for starting a mining company. And the answer to why David goes for just coal is based upon the tremendous uses of this fossil fuel. From making liquid fuel to manufacturing electricity and daily-life things coal has found several applications.

3.3 How the coal mining company will be started

In this coal mining business plan we’re providing all details of how David Miners will be started. In case you don’t know how to make your own coal, you can take help from this sample business plan mining free of cost.
David has decided to buy the tools and equipment needed for coal mining and hire the required staff one week before the launch so that they can be trained. Since miners will have to go for extracting coal from place to place so David will hire senior assistants to monitor their tasks.

A large space in Chicago will be acquired on rent and converted into the company’s office, outlet and workshop. The company will employ techniques such as mountain top removal and strip mining for surface and underground mining of coals. After extracting, coal will be processed in the workshop to be let for sale in the company’s store.

Coal Mining Business Plan - Startup Cost

The detailed start-up requirements, start-up funding, start-up expenses, total assets, total funding required, total liabilities, total planned investment group for business, total capital and liabilities as forecasted by experts, is given below:

Start-up Expenses 
Legal$68 500
Stationery etc.$63 000
Brochures$60 800
Insurance$22 750
Rent$150 500
Research and Development$45 750
Expensed Equipment$540 750
Signs$98 250
Start-up Assets$0
Cash Required$1 100 750
Start-up Inventory$51 005
Other Current Assets$202 500
Long-term Assets$1 605 000
TOTAL ASSETS$2 959 255
Total Requirements$4 009 555
Start-up Expenses to Fund$1 050 300
Start-up Assets to Fund$2 959 255
Assets$1 203 000
Non-cash Assets from Start-up$1 039 550
Cash Requirements from Start-up$0
Additional Cash Raised$1 450 750
Cash Balance on Starting Date$1 987 575
TOTAL ASSETS$5 680 875
Liabilities and Capital$0
Liabilities$1 780 490
Current Borrowing$0
Long-term Liabilities$0
Accounts Payable (Outstanding Bills)$245 000
Other Current Liabilities (interest-free)$156 000
Planned Investment$0
Investor 1$4 009 555
Investor 2$0
Additional Investment Requirement$0
Loss at Start-up (Start-up Expenses)$2 009 385
Total Funding$4 009 555
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    If you want to start a coal mining business by owning a coal mine you will have to first decide the services and products, you’ll provide. It’s because your crew and technical equipment will be entirely dependent on that.

    Including your products in your coal mine business plan is a better way to proceed. As it can help you in taking major decisions before the time of implementation.

    David Miners will hire its own crew to extract coal from underground. The company will provide the following products to its customers.

    • Bituminous & Sub-Bituminous Coal: We’ll provide bituminous and sub-bituminous coals that are mainly used in power industries to produce electricity.
    • Metallurgical Coal: We’ll provide metallurgical coal that is primarily used in making steel.
    • Anthracite: We’ll sell anthracite, highest quality coal used for residential and commercial purposes.
    • Cannel Coal: We’ll also offer cannel coal used to produce luminous flames.
    • Coke: Another major product of ours will be the coke, left-out residue of coal that has several uses.
    • Coal Tar: We’ll also provide coal tar that is used to make perfumes, pesticides, dyes, etc.
    • Other Residues: Other residues left after processing raw coal such as silica, coal gas will also be sold by us.

    Marketing Analysis of Coal Mine

    If you are thinking about owning a coal mine and selling coal products as your business, you must first carry out a detailed marketing analysis. Marketing analysis can help you in knowing the current status of similar businesses and ongoing trends in your target market. Moreover, it can help you explore what challenges you can face while working for your target market.


    While doing market analysis, you will also come to know about the interests of your customer groups that can help you in coming up with something that is desired.

    By studying this coal mining business plan sample, you can understand which things must be observed during marketing analysis. If you are not an expert at doing marketing analysis, then it is highly recommended to get this task done by some professionals.

    5.1 Market Trends

    Over 1500 coal mining companies are running in the United States, employing about 62,500 people. Though coal mining companies have collectively generated $30 billion in 2019, still IBISWorld has reported a decline rate for this business instead of a growth rate. But, if you enter this venture with full planning and efficient preparation and of course by selecting a market where there are fewer competitors, you won’t be at loss.

    5.2 Marketing Segmentation

    Target customers identified by David Miners are given here. Anyone looking for how to start coal business can benefit from here.

    Coal Mining Business Plan - Marketing Segmentation

    The detailed marketing segmentation of our target audience is as follows:

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    5.2.1 Power Production Companies: The biggest consumer of our processed coal will be power production companies. As bituminous coal, sub-bituminous coal and anthracite are used as thermal coal to produce steam.

    5.2.2 Steel Manufacturers: 70% of the steel manufactured uses coal. As coking coal is essential for steel manufacturing thus such companies will be a target group for us.

    5.2.3 Cement Manufacturers: Another group of our target customers will comprise of cement industries as coal is mainly used as an energy source for cement production.

    5.2.4 Chemical Companies & Medical Facilities: Several companies such as those producing shampoos, dyes, paints, etc. will be needing our products. Moreover, pharma industries and medical facilities will need coal as coal products are used in processes like Charcoal Hemoperfusion

    5.2.5 Others: Individual buyers and other companies who require coal products will also be our target customers.

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    Market Analysis       
    Potential CustomersGrowthYear 1Year 2Year 3Year 4Year 5CAGR
    Power Production Companies43%2,3008,56012,45038,39014,3509%
    Steel & Cement Manufacturers37%7,4502,3002,39521,87921,6308%
    Chemical Companies & Medical Facilities12%6,2004,3502,35010,83517,4008%

    5.3 Business Target

    Clearly stating your business targets in your business plan coal mining company can help you in taking suitable measures to achieve them.

    Business targets set by David Miners are given here:

    • To generate a net profit margin of $10k per month by the end of the first year
    • To maintain the amount of minimum cash balance
    • To lower the wastage of resources by 15% every year by increasing work efficiency
    • To increase our sales by 25% every three months

    5.4 Product Pricing

    Our prices are almost the same as our competitors. However, we’ll provide a 10% discount on our products for the first three months.

    Marketing Strategy for Mining Company

    Renee M.

    Great Work!!

    Had the pleasure of working with Alex on a business plan for a new venture. The end result looks very professional. His communication is always prompt and he was very patient with my detailed requests. I would definitely work with this company in the future.

    ∙ Renee M.

    Developing marketing strategy for mining company is an extremely important step as it is the only thing that can help you get introduced with your customers. In your business plan for a major coal development company, you must clearly list the methods, you’ll adopt to reach out the groups of your target customers.

    6.1 Competitive Analysis

    Our biggest competitive advantage is that the market in which our products are demanded is really large. Though there are other already-established coal companies near us, still we hope to get customers as the need for coal is increasing with the passage of time. Moreover, David is already in contact with people who can need us for coal supply.

    Secondly, we own the best equipment, highly qualified and skilled staff, who’re efficient in all the works from blowing a mountaintop to generate coal tar from coal.

    Lastly, only we in the whole market provide online ordering and payment options. Through the services of our web-developers, we’ll enable our consumers to order us for delivering their desired products at the said time.

    6.2 Sales Strategy

    We will introduce our startup to the groups of our target customers by sending letters and brochures about us. We’ll ensure strong social media and web presence. Lastly, we’ll provide several discounts to encourage more and more customers to make a purchase.

    6.3 Sales Monthly

    Coal Mining Business Plan - Sales Monthly

    6.4 Sales Yearly

    Coal Mining Business Plan - Sales Yearly

    6.5 Sales Forecast

    Our sales pattern is expected to increase with years. By analyzing our market segmentation strategic business plan, our experts have forecasted the following sales on a yearly basis which are summarized in the column charts.

    Coal Mining Business Plan - Unit Sales

    The detailed information about sales forecast, total unit sales, total sales is given in the following table:

    Sales Forecast   
    Unit SalesYear 1Year 2Year 3
    Bituminous, Sub Bituminous & Anthracite Coal1,2001,3481,596
    Metallurgical Coal & Cannel Coal8909991,184
    Coke & Coal Tar9801,1011,303
    Other Residues610685811
    TOTAL UNIT SALES3,6804,1334,894
    Unit PricesYear 1Year 2Year 3
    Bituminous, Sub Bituminous & Anthracite Coal$1,320.00$1,598.52$1,861.20
    Metallurgical Coal & Cannel Coal$540.00$653.94$761.51
    Coke & Coal Tar$620.00$750.82$874.32
    Other Residues$598.00$724.18$843.30
    Bituminous, Sub Bituminous & Anthracite Coal$1,584,000 $2,154,166 $2,970,475
    Metallurgical Coal & Cannel Coal$480,600 $653,593 $901,397
    Coke & Coal Tar$607,600 $826,307 $1,139,594
    Other Residues$364,780 $496,084 $684,169
    Direct Unit CostsYear 1Year 2Year 3
    Bituminous, Sub Bituminous & Anthracite Coal$910.00$1,001.00$1,101.10
    Metallurgical Coal & Cannel Coal$410.00$451.00$496.10
    Coke & Coal Tar$340.00$374.00$411.40
    Other Residues$320.00$352.00$387.20
    Direct Cost of Sales   
    Bituminous, Sub Bituminous & Anthracite Coal$1,201,200.00 $1,600,118.52 $2,049,367.32
    Metallurgical Coal & Cannel Coal$221,400.00 $294,926.94 $377,784.12
    Coke & Coal Tar$210,800.00 $280,806.68 $359,696.89
    Other Residues$191,360.00 $254,910.66 $326,525.61
    Subtotal Direct Cost of Sales$1,824,760.00 $2,430,762.80 $3,113,373.94
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      Personnel plan

      7.1 Company Staff

      David will be the owner and CEO of the company. To run his coal mining business he’ll hire the following people:

      • 2 General Managers to manage overall operations
      • 2 Accountants to maintain financial records
      • 2 Mining Engineers to maintain coal extracting and processing processes
      • 10 Field Employees to carry out major tasks
      • 2 Senior Assistants to supervise various tasks
      • 1 Sales and Marketing Officer to discover new ventures
      • 1 Store Operator to operate display center
      • 2 Technicians to maintain technical equipment
      • 1 Web Developer to manage company’s sites
      • 5 Cleaners to maintain the facility
      • 2 Drivers to provide transport
      • 1 Front Desk Officer to act as a receptionist

      7.2 Average Salary of Employees

      The following table shows the forecasted data about employees and their salaries for the next three years.

       Personnel Plan   
       Year 1Year 2Year 3
      General Managers$60,000$67,200$90,000
      Mining Engineers$45,000$50,400$67,500
      Field Employees$75,000$84,000$98,000
      Senior Assistants$35,000$39,200$52,500
      Sales & Marketing Officer$30,000$33,600$45,000
      Store Operator$30,000$33,600$45,000
      Web Developer$30,500$34,160$45,750
      Front Desk Officer$28,000$31,360$42,000
      Total Salaries$527,500 $590,800 $776,750

      Financial Plan

      The only thing that can help you in setting smart, and attainable financial goals for your business is a financial plan. In your coal mining business plan, you must thoroughly analyze how can you achieve your monetary goals while balancing all the expenses of equipment, maintenance, staff salary, and workplace rent.

      To do all that careful spending, budgeting of your hard-earned cash is required which is only possible when you have decided main things in the form of a financial plan. To give you an idea of how to write an effective financial plan, we’re providing here a sample financial plan of David Miners.

      8.1 Important Assumptions

       General Assumptions   
       Year 1Year 2Year 3
      Plan Month         1        2       3
      Current Interest Rate10.00%10.40%11.00%
      Long-term Interest Rate11.00%11.00%11.00%
      Tax Rate25.57%26.03%26.98%

      8.2 Brake-even Analysis

      Coal Mining Business Plan - Brake-even Analysis
       Brake-Even Analysis 
      Monthly Units Break-even5240
      Monthly Revenue Break-even$165,740
      Average Per-Unit Revenue$285.00
      Average Per-Unit Variable Cost$0.76
      Estimated Monthly Fixed Cost$201,755

      8.3 Projected Profit and Loss

       Pro Forma Profit And Loss   
       Year 1Year 2Year 3
      Sales$3,036,980 $4,130,150 $5,695,635
      Direct Cost of Sales$1,824,760 $2,430,763 $3,113,374
      TOTAL COST OF SALES$1,824,760 $2,430,763 $3,113,374
      Gross Profit$1,212,220 $1,699,387 $2,582,261
      Gross Margin %39.92%41.15%45.34%
      Sales and Marketing and Other Expenses$59,000$61,950$65,048
      Leased Equipment$0$0$0
      Payroll Taxes$105,500$118,160$155,350
      Total Operating Expenses$870,500 $958,335 $1,193,944
      Profit Before Interest and Taxes$341,720$375,892$420,316
      Interest Expense$0$0$0
      Taxes Incurred$68,344$75,178$84,063
      Net Profit$273,376$300,714$336,252
      Net Profit/Sales$0$0$0

      8.3.1 Profit Monthly

      Coal Mining Business Plan - Profit Monthly

      8.3.2 Profit Yearly

      Coal Mining Business Plan - Profit Yearly

      8.3.3 Gross Margin Monthly

      Coal Mining Business Plan - Gross Margin Monthly

      8.3.4 Gross Margin Yearly

      Coal Mining Business Plan - Gross Margin Yearly

      8.4 Projected Cash Flow

      Coal Mining Business Plan - Projected Cash Flow
       Pro Forma Cash Flow   
      Cash ReceivedYear 1Year 2Year 3
      Cash from Operations   
      Cash Sales$37,010$44,412$48,483
      Cash from Receivables$8,950$10,740$11,725
      SUBTOTAL CASH FROM OPERATIONS$45,900 $51,080 $55,799
      Additional Cash Received   
      Sales Tax, VAT, HST/GST Received$0$0$0
      New Current Borrowing$0$0$0
      New Other Liabilities (interest-free)$0$0$0
      New Long-term Liabilities$0$0$0
      Sales of Other Current Assets$0$0$0
      Sales of Long-term Assets$0$0$0
      New Investment Received$0$0$0
      SUBTOTAL CASH RECEIVED$45,900 $51,080 $55,799
      ExpendituresYear 1Year 2Year 3
      Expenditures from Operations   
      Cash Spending$230,100$253,110$278,421
      Bill Payments$132,000$145,200$159,720
      SUBTOTAL SPENT ON OPERATIONS$310,950 $342,045 $376,250
      Additional Cash Spent   
      Sales Tax, VAT, HST/GST Paid Out$0$0$0
      Principal Repayment of Current Borrowing$0$0$0
      Other Liabilities Principal Repayment$0$0$0
      Long-term Liabilities Principal Repayment$0$0$0
      Purchase Other Current Assets$0$0$0
      Purchase Long-term Assets$0$0$0
      SUBTOTAL CASH SPENT$340,950 $381,864 $412,550
      Net Cash Flow$120,500$134,960$145,805
      Cash Balance$195,000$218,400$235,950

      8.5 Projected Balance Sheet

       Pro Forma Balance Sheet    
      AssetsYear 1Year 2Year 3
      Current Assets   
      Accounts Receivable$10,100$11,312$12,423
      Other Current Assets$1,000$1,000$1,000
      TOTAL CURRENT ASSETS$220,560 $237,468 $273,677
      Long-term Assets   
      Long-term Assets$10,000$10,000$10,000
      Accumulated Depreciation$11,050$12,980$14,300
      TOTAL LONG-TERM ASSETS$880 $510 $320
      TOTAL ASSETS$156,900 $201,990 $250,500
      Liabilities and CapitalYear 1Year 2Year 3
      Current Liabilities   
      Accounts Payable$9,322$10,000$12,460
      Current Borrowing$0$0$0
      Other Current Liabilities$0$0$0
      SUBTOTAL CURRENT LIABILITIES$9,322 $10,000 $12,460
      Long-term Liabilities$0$0$0
      TOTAL LIABILITIES$9,322 $10,000 $12,460
      Paid-in Capital$30,000$30,000$30,000
      Retained Earnings$43,190$51,060$63,290
      TOTAL CAPITAL$185,200 $234,500 $245,650
      TOTAL LIABILITIES AND CAPITAL$189,350 $264,100 $250,000
      Net Worth$176,000$230,500$289,500

       8.6 Business Ratios

       Ratio Analysis    
       Year 1Year 2Year 3INDUSTRY PROFILE
      Sales Growth4.24%20.10%45.09%4.00%
      Percent of Total Assets    
      Accounts Receivable5.32%4.19%3.36%9.35%
      Other Current Assets1.77%2.04%2.31%26.54%
      Total Current Assets135.92%149.60%150.40%54.60%
      Long-term Assets-8.40%-9.60%-10.60%-11.04%
      TOTAL ASSETS98.00%99.40%101.00%105.00%
      Current Liabilities3.60%3.76%3.80%5.10%
      Long-term Liabilities0.00%0.00%0.00%26.10%
      Total Liabilities4.25%4.61%4.71%6.20%
      NET WORTH99.50%101.50%102.50%103.00%
      Percent of Sales    
      Gross Margin93.19%94.00%96.00%0.00%
      Selling, General & Administrative Expenses74.33%75.60%76.10%80.20%
      Advertising Expenses2.45%1.01%0.86%0.10%
      Profit Before Interest and Taxes26.33%27.09%30.05%2.09%
      Main Ratios    
      Total Debt to Total Assets2.45%1.99%0.37%64.70%
      Pre-tax Return on Net Worth66.09%70.04%74.60%4.10%
      Pre-tax Return on Assets63.98%69.75%72.59%10.00%
      Additional RatiosYear 1Year 2Year 3 
      Net Profit Margin19.18%22.10%23.12%N.A.
      Return on Equity46.04%50.98%54,89%N.A.
      Activity Ratios    
      Accounts Receivable Turnover4.564.564.56N.A.
      Collection Days9196101N.A.
      Inventory Turnover19.5923.5628N.A.
      Accounts Payable Turnover13.8514.6716.01N.A.
      Payment Days272727N.A.
      Total Asset Turnover1.951.591.32N.A.
      Debt Ratios    
      Debt to Net Worth0-0.01-0.02N.A.
      Current Liab. to Liab.111N.A.
      Liquidity Ratios    
      Net Working Capital$130,982$140,850$160,900N.A.
      Interest Coverage000N.A.
      Additional Ratios    
      Assets to Sales0.470.480.52N.A.
      Current Debt/Total Assets5%4%1%N.A.
      Acid Test24.12728.98N.A.
      Sales/Net Worth1.481.290.86N.A.
      Dividend Payout000N.A.

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