costs for strip and underground mines, but they fail to be supported by hard data. Estimates of capital costs for strip mines run from $4-10 a ton of annual capacity; for underground mines the estimates usually run from $10-20 a ton of annual capacity.

Several factors account for the wide ranging estimates. First is the size of the operation. Scale factors may either increase or decrease the capital costs per ton of output. Consider a strip mining example. The major item of capital expenditure is the large unit(s) of stripping equipment used to remove overburden and lay bare the coal seam. The trend until recently has been toward the use of draglines and shovels with increasingly large bucket capacities. From a maximum capacity several decades ago of 25 cubic yards, machines increased up to as much as 220 cubic yard capacity. As mines grew larger, the scale of most of the other major components in the mining process also increased—especially in strip mining. Loading shovels, haulage trucks, preparation plants, and drills, among other things, became available in larger sizes. In underground mining, larger size occurred more from the concurrent use of more mining modules than from an increase in the size of the mining equipment (except for preparation plants which, as in strip mining, also increased in size over time).

The use of larger equipment, however, does not necessarily spell lower capital costs per ton of output. An unpublished study by a strip mine operator reveals that capital costs per cubic yard of bucket capacity for stripping equipment decline up to around 60 yards, remain fairly flat for machines with buckets of 60-100 yards capacity, but increase for machines with bucket sizes above 100 yards.

Other factors contribute to varying capital costs. Mining conditions may differ substantially from one mine to another. Among factors affecting capital costs are: thickness of seam, depth of overburden, number of seams being mined, extent to which the coal is processed (washed, crushed, sized), mode of entry for underground mines (shaft, slope or drift), and roof conditions over the coal. Also, capital costs vary considerably depending on whether or not coal acquisition costs are included in the figures. Finally how one calculates the costs may influence the estimates. Whether one adds an allowance for funds used during construction, and includes start-up costs and working capital will affect the total. One must also decide whether to measure capital costs for initial mining operations or whether to include later capital costs required to maintain a given level of output.

The National Petroleum Council's energy study throws some light on capital costs in coal mining. Table C-2 summarizes their findings. Capital costs include initial mine investment, land acquisition and exploration costs, and working capital. They are based on historical values for the ten years prior to the estimate.

These figures require a word of caution. The estimates for 1970 represent the average original capital investment for mines in operation at that