Finely ground coal is degraded aerobically by both fungi and bacteria. Fungal breakdown involves cell wall-bound, extracellular enzymes, whereas bacteria utilize only products leached from the coal, or they excrete free extracellular proteins, which adsorb to the coal particles and may have some catalytic activity. This is illustrated by the release of brown coloured compounds from the coal into the culture supernatant. The coal particles become more hydrophobic and show a decrease in the aromatic fraction of the infra-red spectrum. Simultaneously the extractability of the coal is changed in comparison with non-biologically treated coal. These results show that coal is not microbiologically inert.