The Australian coal industry has frequently been described as a perpetual case of ＇profitless prosperity＇, Industry literature on the subject usually sources this problem to government charges on the industry and to labour costs. However, these alleged problems do not appear to have diminished the enthusiasm for new investment in the industry, This study argues that a more complete explanation must look at who is investing in the Australian coal industry, what the rationale for those investments is, how they are financed and what their specific profitability is, The particular examination made here is of the quasi-integration investment practices of Japanese trading, steel and power companies-easily the largest group of buyers in the international coal trade, The close co-operation between Japanese government and business in this strategic raw materials industry is documented, as are the methods of subsidised investment, An examination of the financial performance of these companies＇ Australian coal investments shows that the profitability of their investments is significantly below that of most other investors in Australian mining over a recent 5-year period, Takes together, there is significant support for the conclusion that a process of co-ordinated quasi-integration has taken place and that the principal aim of such investments has not been to make profits from coal-mining, These results should make other prospective investors reconsider the benefits of quasi-integration, and should also be a public policy issue for Australian governments seeking to encourage the development of ＇profitable prosperity＇ in the Australian coal industry.