Spain's coal reserves are found primarily in Asturias, with smaller deposits located near southwestern Seville, Cordoba, and Badajoz, and in northeastern Catalonia and Aragon (Spanish, Aragon). Most of the country's lignite is located in Galicia. Domestic coal is generally of poor quality, and, because of the structure of Spanish deposits, it is more expensive than imported coal. In 1967 HUNOSA, a state holding company under the control of INI, was founded to direct most of Spain's coal mining, and it gradually took over the larger coal companies.

Higher oil prices have spurred domestic coal production. Annual production in the early 1970s amounted to about 10 million tons of coal and 3 million tons of lignite. By the mid-1980s, the industry produced 15 million tons of coal and 23 million tons of lignite annually. This higher rate of production was insufficient to meet domestic needs because coal had come to supply about 25 percent of Spain's needed energy, compared with about 16 percent in the early 1970s. About 5 million tons of foreign coal were imported per annum.

Over the years, there had been little change in patterns of coal consumption. Hard coal, used mainly for the generation of electricity, accounted for 65 percent of total demand. The steel and cement industries were the two next-largest consumers.

In line with the energy rationalization policies set by PEN, the government sought to increase the efficiency of the coalmining sector by closing down high-cost mines and by providing financial aid for the industry's modernization. To encourage the cement and other industries to convert from oil to coal, the government allowed them to import duty-free coal. The government also made efforts to substitute the use of oil for coal in urban areas.

Data as of December 1988