Takeovers have obviously played the leading role in converting a once-thriving domestic coal sector into an international business where there is barely room for a local.

It is also becoming a deeply divided business, with the mining process dominated by big companies, while small companies are restricted to the early stages of the process – exploration – with their job being to discover an orebody and sell it.

And then there is perhaps the irony (and cause) which lies at the heart of coal today – it has become an industry the current Australian government would love to close but knows it cannot survive without the taxes and jobs it generates.

More on the schizophrenic relationship Canberra has with coal later.

But first, a closer look at the structure which is evolving thanks to the overall mood created by the combination of supply, demand, tax and red tape forces at work.

On the one hand, Australia has a coal boom, with the mega miners profiting handsomely.

Companies such as BHP Billiton, Rio Tinto, Xstrata, Anglo American, Peabody and Yanzhou have never had it so good.

Nor has there ever been such big foreign-company domination of the industry.

Even BHP Billiton and Rio Tinto, despite having brass plaques outside Melbourne high-rise office blocks, are foreign in all but name.

Then there is the flotilla of small fry struggling to make headway in a sea of government red tape and tough financial conditions.

For many small coal companies it has become easier to cash out before the game becomes serious, taking a fistful of dollars from a foreign predator and returning to the simple life of exploration, leaving the job of dealing with government and bankers to the big boys of mining.

The rush of takeovers over the past year is an illustration of what is happening.

Over the course of 2011, according to analysts at the consultancy, Wood Mackenzie, global coal mergers were valued at $US35 billion, double the $17 billion of 2010.

Driving the deal rush is recognition by industry (if not by Green-led and politically correct governments) that coal is the only fuel capable of keeping the lights on, thanks to the failure of the renewable energy industry to deliver on its promises and the big hiccup in nuclear power after the Fukushima accident.

Business can smell future profits in coal even as government does its best to make life harder for the industry, in what is a classic confrontation between economic reality and popular prejudice – a situation which will change as electricity prices rocket upwards in countries that go too far down the unproven and unreliable renewables route.

Big miners can tolerate the uneven treatment of coal and other energy sources because they have what it takes to survive a period of government-induced stress – cash in the bank and long-term investment horizons.

Former Queensland treasurer and former director of Macarthur Coal, Keith De Lacy, correctly addressed the issue earlier this week after the latest big coal deal hit the headlines – the proposed merger of Gloucester Coal and Yancoal.

While not critical of the proposal – and how could he be after playing a role in selling Macarthur to Peabody – De Lacy made several interesting comments on the future of mid-sized coalminers in Australia, a species fast becoming known as “endangered”

The core of his case is mid-tier coal companies are finding it all but impossible to negotiate a way through the government approvals maze without having a large bucket of money to support a process which no longer takes months but years.

His most telling comment in the Australian Financial Review newspaper was this: “Australia has made it difficult for coalminers and they are continuing attacking what they call big coal but they are creating the circumstances where there can only be big coal”

De Lacy pointed out Macarthur’s first mine took 15 months to move from full identification of the orebody to a start on mining.

“You’ve got no chance of doing that in under five years now,” he said.

In a nutshell, that’s the big issue government will not (or cannot) understand.

It has made the development of new coal mines so difficult and expensive (time is money), only a major miner can undertake the risks associated with a tortuous feasibility and approvals process.

That’s why small coal companies are finding it easier and more profitable, to discover and sell rather than set sail down the never-ending approvals river.

The end result is coal mining will become evermore the province of big foreign investors that are totally disinterested in the Australian government’s deep-green political agenda, which is designed to make coal mining tougher, while foreign companies just want to keep the lights burning in their home countries.