This report on the South African coal industry is the fourth in a series of studies on coal exporting countries requested by the House Appropriations committee. The committee requested that the basic differences in mining costs for U.S. and foreign mines be identified, especially those costs incurred in comp lying with health, safety, and environmental regulations. Basic costs in extracting raw coal are analyzed for two mining methods-underground conventional mining and open-pit operations. In this report there is also a limited analysis of the relative market competitiveness of selected South African and U.S. steam coal mines in electric utility markets in Japan, Western Europe, and the U.s. Gulf Coast area. The South African Government prohibits the exports of hard metallurgical coal. The U.S. utility market is included in this study to show the relative competitiveness of coal imports from South Africa prior to Congress banning coal imports in October 1986, as part of a law imposing trade sanctions. Almost all coal resources are privately owned and nearly all coal production in South Africa is by private companies. About two thirds of the coal produced is by underground methods; the remainder is by surface mining methods. Coal production is mechanized, but a much higher percentage of unskilled and semiskilled workers is employed compared to the U.S. industry. The South African coal industry is regulated by the central government. regulations cover coal resource management, exploration, health, safety and environmental standards, taxation, transportation, and exports. Domestic price controls were lifted in 1986. Export prices are determined by market competition. In 1988 South Africa produced 199 million short tons of saleable coal, of which 24 percent was exported. South Africa ranks fourth in hard coal world production and fourth in world proved recoverable coal reserves with 8 percent of the total. ,5 Coal exports are controlled by a quota and allocation system. In 1988, about 47 percent of total revenues received by the South African coal industry came from the export market. South Africa is the third largest coal exporter (value was about $1.1 billion in 1988). South Africa accounts for about 12 percent of all coal in world trade. Its most important markets are in Western Europe and the Pacific Rim countries, mainly Japan. The nine South African bituminous coal mines in this study are located in the Transvaal, the major coal producing area. Seven of the nine mines export most of their production. The U.S. mines are located in the Appalachian, Midwest, and western coal producing regions. with a few exceptions, the U.s. mines were initially developed primarily to supply domestic markets. To obtain the cooperation of the mining companies, it was agreed that the mines would not be identified, and individual mine cost data would be aggregated to ensure confidentiality of certain cost figures.