Coal Mining Business Plan Sample

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.

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.

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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.

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
Consultants		$0
Insurance		$22 750
Rent		$150 500
Research and Development		$45 750
Expensed Equipment		$540 750
Signs		$98 250
TOTAL START-UP EXPENSES		$1 050 300
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 FUNDING
Start-up Expenses to Fund		$1 050 300
Start-up Assets to Fund		$2 959 255
TOTAL FUNDING REQUIRED		$4 009 555
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
TOTAL LIABILITIES		$2 181 490
Capital		$0
Planned Investment		$0
Investor 1		$4 009 555
Investor 2		$0
Other		$0
Additional Investment Requirement		$0
TOTAL PLANNED INVESTMENT		$1 490 000
Loss at Start-up (Start-up Expenses)		$2 009 385
TOTAL CAPITAL		$3 499 385
TOTAL CAPITAL AND LIABILITIES		$5 680 875
Total Funding		$4 009 555

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Products

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.

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.

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 Customers	Growth	Year 1	Year 2	Year 3	Year 4	Year 5	CAGR
Power Production Companies	43%	2,300	8,560	12,450	38,390	14,350	9%
Steel & Cement Manufacturers	37%	7,450	2,300	2,395	21,879	21,630	8%
Chemical Companies & Medical Facilities	12%	6,200	4,350	2,350	10,835	17,400	8%
Others	8%	210	3,000	1,400	21,300	18,750	13%
Total	100%	14,300	13,240	27,500	58,600	78,500	11%

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

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

6.4 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.

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

Sales Forecast
Unit Sales	Year 1	Year 2	Year 3
Bituminous, Sub Bituminous & Anthracite Coal	1,200	1,348	1,596
Metallurgical Coal & Cannel Coal	890	999	1,184
Coke & Coal Tar	980	1,101	1,303
Other Residues	610	685	811
TOTAL UNIT SALES	3,680	4,133	4,894
Unit Prices	Year 1	Year 2	Year 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
Sales
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
TOTAL SALES
Direct Unit Costs	Year 1	Year 2	Year 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 1	Year 2	Year 3
General Managers	$60,000	$67,200	$90,000
Accountants	$34,000	$38,080	$51,000
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
Technicians	$45,000	$50,400	$67,500
Web Developer	$30,500	$34,160	$45,750
Cleaners	$60,000	$67,200	$90,000
Front Desk Officer	$28,000	$31,360	$42,000
Drivers	$55,000	$61,600	$82,500
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 1	Year 2	Year 3
Plan Month	1	2	3
Current Interest Rate	10.00%	10.40%	11.00%
Long-term Interest Rate	11.00%	11.00%	11.00%
Tax Rate	25.57%	26.03%	26.98%
Other	0	0	0

8.2 Brake-even Analysis

 

Brake-Even Analysis
Monthly Units Break-even	5240
Monthly Revenue Break-even	$165,740
Assumptions:
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 1	Year 2	Year 3
Sales	$3,036,980	$4,130,150	$5,695,635
Direct Cost of Sales	$1,824,760	$2,430,763	$3,113,374
Other	$0	$0	$0
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%
Expenses
Payroll	$527,500	$590,800	$776,750
Sales and Marketing and Other Expenses	$59,000	$61,950	$65,048
Depreciation	$34,000	$35,700	$37,485
Leased Equipment	$0	$0	$0
Utilities	$40,000	$42,000	$44,100
Insurance	$35,000	$36,750	$38,588
Rent	$24,500	$25,725	$27,011
Payroll Taxes	$105,500	$118,160	$155,350
Other	$45,000	$47,250	$49,613
Total Operating Expenses	$870,500	$958,335	$1,193,944
Profit Before Interest and Taxes	$341,720	$375,892	$420,316
EBITDA	$375,720	$411,592	$457,801
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

8.3.2 Profit Yearly

8.3.3 Gross Margin Monthly

8.3.4 Gross Margin Yearly

8.4 Projected Cash Flow

Pro Forma Cash Flow
Cash Received	Year 1	Year 2	Year 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
Expenditures	Year 1	Year 2	Year 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
Dividends	$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
Assets	Year 1	Year 2	Year 3
Current Assets
Cash	$175,000	$196,000	$215,250
Accounts Receivable	$10,100	$11,312	$12,423
Inventory	$2,540	$2,845	$3,124
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 Capital	Year 1	Year 2	Year 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
Earnings	$95,600	$119,555	$124,060
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 1	Year 2	Year 3	INDUSTRY PROFILE
Sales Growth	4.24%	20.10%	45.09%	4.00%
Percent of Total Assets
Accounts Receivable	5.32%	4.19%	3.36%	9.35%
Inventory	1.46%	1.75%	1.79%	9.81%
Other Current Assets	1.77%	2.04%	2.31%	26.54%
Total Current Assets	135.92%	149.60%	150.40%	54.60%
Long-term Assets	-8.40%	-9.60%	-10.60%	-11.04%
TOTAL ASSETS	98.00%	99.40%	101.00%	105.00%
Current Liabilities	3.60%	3.76%	3.80%	5.10%
Long-term Liabilities	0.00%	0.00%	0.00%	26.10%
Total Liabilities	4.25%	4.61%	4.71%	6.20%
NET WORTH	99.50%	101.50%	102.50%	103.00%
Percent of Sales
Sales	94.20%	96.80%	101.00%	103.50%
Gross Margin	93.19%	94.00%	96.00%	0.00%
Selling, General & Administrative Expenses	74.33%	75.60%	76.10%	80.20%
Advertising Expenses	2.45%	1.01%	0.86%	0.10%
Profit Before Interest and Taxes	26.33%	27.09%	30.05%	2.09%
Main Ratios
Current	24.56	26.98	30.01	1.48
Quick	24.6	27.7	31.95	0.23
Total Debt to Total Assets	2.45%	1.99%	0.37%	64.70%
Pre-tax Return on Net Worth	66.09%	70.04%	74.60%	4.10%
Pre-tax Return on Assets	63.98%	69.75%	72.59%	10.00%
Additional Ratios	Year 1	Year 2	Year 3
Net Profit Margin	19.18%	22.10%	23.12%	N.A.
Return on Equity	46.04%	50.98%	54,89%	N.A.
Activity Ratios
Accounts Receivable Turnover	4.56	4.56	4.56	N.A.
Collection Days	91	96	101	N.A.
Inventory Turnover	19.59	23.56	28	N.A.
Accounts Payable Turnover	13.85	14.67	16.01	N.A.
Payment Days	27	27	27	N.A.
Total Asset Turnover	1.95	1.59	1.32	N.A.
Debt Ratios
Debt to Net Worth	0	-0.01	-0.02	N.A.
Current Liab. to Liab.	1	1	1	N.A.
Liquidity Ratios
Net Working Capital	$130,982	$140,850	$160,900	N.A.
Interest Coverage	0	0	0	N.A.
Additional Ratios
Assets to Sales	0.47	0.48	0.52	N.A.
Current Debt/Total Assets	5%	4%	1%	N.A.
Acid Test	24.1	27	28.98	N.A.
Sales/Net Worth	1.48	1.29	0.86	N.A.
Dividend Payout	0	0	0	N.A.

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