For one, the United States is the largest coal market open to foreign investors. Most of the foreign investment in U.S. coal has been from Europe. European coal companies are motivated in part to invest in U.S. coal in order to secure sources of coal in the face of declining European production. However, this motive is apparently prospective rather than reflective of the current patterns of production and imports of coal. Japan, Canada, France, Spain, Belgium, the Netherlands, and Italy all imported more U.S. coal than the United Kingdom and Germany, but these countries had little, if any, in the way of U.S. coal investments.
Financial incentives are another possible motive for investing in U.S. coal.
Were it not for the widespread exit of the U.S. major petroleum companies from domestic coal mining, this motive might appear more plausible. It was largely due to several years of financial under performance among their coal segments that resulted in the majors' departure from U.S. coal. Possibly the key factor motivating UK and German investors is that as inefficient European mines continue to close, multinational European coal producers have had to move abroad in order to remain in the coal business. In Western Europe, coal production is concentrated, with the United Kingdom and Germany accounting for roughly four-fifths of total production and Spain and France accounting for most of the remainder. Until recently, European coal producers benefitted from protected markets and from an extraordinary array of generous subsidies, allowing European coal mines, which had become vastly inefficient by world standards, to remain in operation.