Total reserves of coal in Ukraine are 117.5 billion metric tons, including 56.7 billion tons of discovered reserves, from which 39.3 billion tons is thermal coal. Production and consumption of coal in Ukraine have been relatively flat since 1996. In 2009 the country produced 54.8 million metric tons of bituminous coal and anthracite, and 15.6 million metric tons of lignite, while consuming roughly 72.6 million metric tons, making Ukraine a net importer, despite its sizeable resources.

Last 3 years the coal production felt – from 80.3 million metric tons in 2006 to 70.4 million tons in 2009. Global economical crisis has led to a drop in Ukrainian steel production – that respectively influenced coking coal demand; energy consumption drop with most of the country’s industries – also caused with the crisis – has lowered a demand in thermal coal.

Most of Ukraine's coal is mined in the Donetsk/Donbas basin in the eastern region of the country. The country's coal industry, which counts for 170 mines and employs about 150,000 people, is managed by a hierarchy of state organizations and suffers from numerous problems including: labor strikes, hazardous working conditions, inefficiency and low productivity. Since Ukraine's independence in 1991, there have been over 4,000 deaths and 750 underground fires in the country's mines.

Currently about 45% of coal in Ukraine is being produced with private players – including their 55% share in coking coal production. At April 2009 the country’s Government announced further plans to privatize over 100 mines – but this was postponed due to political reasons.

The World Bank has provided over $300 million to aid in the coal sector's restructuring since 1997. In addition to calling for management restructuring, the program also calls for improving the average ash content of the coal from 23.1% to 22.7%. A sizeable portion of the money has gone to aid in the closure of the unprofitable mines, yet the country has been reluctant to close them in regions where there are few other job sources.

Meeting few strategic challenges the industry has entered the global crisis in 2008 with weak competitive positions. No one of coalminers – state or private – invest the geology surveys in new or existing deposits, so the total coal reserves in Ukraine are constantly shrinking.

There is no rigorous domestic coalmining market in Ukraine. All deliveries of coal are being completed only by direct contracts between coalmining companies, consumers and intermediates. Moreover the prices of coal can differ in times – even for the same seller or buyer. There is no exchange coal trade, so there are no valid coal prices.

The level of wear of the coalmining equipment is too high at the Ukrainian coalmines, so the industry requires high investments to the process of technical modernization. By the other hand, the private investors have no an access to Ukraine’s key coalmining assets because these assets are being owned with the largest metallurgical corporations. At the same time these current proprietors of coalmining assets preferred to invest their high profits to metallurgical assets recovery and modernization. The coalmining assets were not considered as the primary objects for investments.

By the years of so-called «economical reforms» the Ukrainian coalmining industry has lost its contacts with the local manufacturers of mining equipment, machines, vehicles, etc. Moreover, under the influence of the factor of «order absence» many Ukrainian mining equipment manufacturers stopped their work or have lost the experience of such equipment production.

The Ukrainian coalmining companies meet the global competition – both at domestic market (with the Russian coal suppliers) and in their export activity. Being the world’s 20th largest coal exporter Ukraine has to compete with the countries that precede it in the top-list (like Australia, China, Indonesia, or Russia).

From another hand currently the Ukrainian coalmining industry weakly depends on its export activity. Only 7.5% of coal extracted in Ukraine is being exported. Such low dependence on export makes the industry less vulnerable to the global commodity prices.

The key tendencies in the Ukrainian coal industry are privatization and consolidation of mining, enrichment, services and trade assets into large coalmining private holdings. Currently the Coal Ministry and 3 large financial-industrial groups define «the face» of Ukraine’s coalmining industry. Private players are not coalmining holdings – they are the country’s largest mining-and-metallurgical corporations with full technological cycle – from coal and ore extraction to metal product export.

Such players try to increase their profits by producing coal products with high added value – like coking coal concentrate or coke-chemical products. Moreover, most of them prefer to use their own coal for manufacturing products with high added value – for example they use coking coal in the manufacturing of expensive steel products, increasing the total added value (in comparison with «simple» sale of coal to «external» consumers).

Decreasing of costs is considered by the Ukrainian coalmining companies to be the key factor that influences the level of their competitiveness. They try to decrease all elements of cost – such as transportation fees. It’s a general tendency - the largest coalmining players have started to establish their own transportation facilities in various kinds of transport – from railroad to marine. They establish railroad operators, purchase wagons and locomotives; buy shares of coal-processing seaports or build new ports (for instance SCM plans to build own coal terminal in Sevastopol seaport, etc.). All these measures have to decrease the transportation costs as well as to avoid strong dependence of the coalmining companies with the state transport monopolist.