The concept of economies of scale in mining is unclear. Each coal mine is a unique resource which may need or call for different scales of output. Thus mines with thick seams and plentiful coal may call for larger operations than those mines with smaller seams. Deeper seams call for more capital per unit output, ceteris paribus, than shallower. On the other hand, if the seams are close enough to the surface, strip mining, which is more capital intensive, is called for. Even here the natural resource base may be the basic determinant of the optimum size.

Because the mine is the natural unit in coal mining, little attention has been paid to the concept of economies of scale. One study [Moyer, p. 105-106] examined the relationship of output per man-day by size of mine. On the basis of statistics for Illinois mines in 1959, Moyer found that underground mines smaller than 50,000 tons per year had a significantly lower output per man-day than larger mines. For strip mines, he found that the larger the mines the greater the productivity per mine. This data, however, does not prove that there are significant economies of scale in coal mining. Larger mines may have higher labor productivity because they use more capital, yet their costs may not be significantly lower than smaller operations. Larger mines tend to be more heavily unionized with the result that wages are higher, thus leading firms to increase the proportion of capital to labor. Moyer did find that larger mines, both strip and underground, tended to have better resource bases, that is, thicker seams, and larger stripping ratios, than did the smaller operations.

Recent statistics indiciate that productivity continues to be positively