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Tuesday, 16 July 13
TAKE - OR - PAY CONTRACTS CONTINUE TO INCENTIVISE AUSTRALIAN COAL PRODUCERS DESPITE POTENTIAL NEGATIVE CASH MARGINS - WOOD MACKENZIE
 Australia's coal production has continued to grow, despite lower coal prices in 2013. Global investors and suppliers are therefore questioning whether more production will be shut down. Wood Mackenzie estimates that in 2013, only 4 million tonnes (mt) of coal production in Australia is at risk of closure even though 32mt of coal will be produced at negative margins, including sustaining capital. The decision to continue production instead of shutting it down can mainly be attributed to transport and port contracts in Australia, otherwise known as 'take-or-pay' contracts.
Take-or-pay contracts are fixed cost contracts that result in most producers paying for capacity regardless of tonnes shipped. Stronger growth in exports relative to new capacity build will reduce the average cost per tonne that miners pay for not fully utilising contracted capacity.
Mr. Viktor Tanevski, Coal Cost Analyst at Wood Mackenzie, says, "There have only been two mine closures so far in 2013 compared to seven in 2012. Despite the low coal price environment and current margin squeeze, take-or-pay contracts are incentivising coal producers to increase rather than reduce production, even if additional production is generating negative cash margins. This is because the fixed cost of infrastructure capacity makes the cost of shutting down even more expensive than the cost of maintaining production."
"We estimate that only 4mt, or just over 1% of Australia's coal exports in 2013, is at risk of closure based on Hard Coking Coal (HCC) price of US$171/t and thermal coal price of US$92/t. This is not a significant volume of output; however the amount at risk increases significantly under a lower price scenario.
Wood Mackenzie analyses that if average prices fall to US$122/t for HCC and US$77/t for thermal coal in 2013, then 45mt or 13% of Australia's coal exports in 2013 will be at risk of closure. At that price, a total of 204mt of production will be suffering negative margins.
In summary, Mr. Tanevski says, "Our expectation is that there will not be a significant dent in Australia's production this year. However, if prices do fall below expectations, the risk of closure for mines producing at negative margins will increase, reducing output."
Editor's notes:
Wood Mackenzie is the most comprehensive source of knowledge about the world's energy and metals industries. We analyse and advise on every stage along the value chain - from discovery to delivery, and beyond - to provide clients with the commercial insight that makes them stronger. For more information visit Wood Mackenzie.
Views expressed herein are personal views of the author and not that of COALspot.com and subject to COALspot.com's disclaimer clause. We welcome article submissions from experts in the areas of coal, mining, shipping, etc. To submit your articles please click here.
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Wednesday, 04 December 13
SGX'S MONTHLY VOLUMES REACHED A RECORD HIGH OF 705,000 MT IN NOVEMBER 2013
COALspot.com: SGX has announced that, it monthly volumes have reached a record high of 705 lots (705,000 mt) in November 2013 with month-end open in ...
Tuesday, 03 December 13
PORT OF NEWCASTLE IN QUEENSLAND SHIPPED 1.22 MMT MORE COAL W-W
COALspot.com: In the week ended December 2, power plant and semi-soft coking coal shipments from the port of Newcastle in Queensland, totalled 3.49 ...
Tuesday, 03 December 13
U.S PRODUCED 900.80 MMST YEAR-TO-DATE
COALspot.com – United States the world’s second largest coal producer, produced approximately 19.7 million short tons (mmst) of coal in ...
Monday, 02 December 13
SUB-BIT INDONESIA COAL SWAP DIFFERENCE BETWEEN Q1 AND Q3 DELIVERIES ARE VERY MARGINAL
COALspot.com – Sub-Bit Indonesia coal swap (FOB ) for average Q1’ 14 delivery gained $ 1.67 pmt month on month on Friday 29 Novemb ...
Sunday, 01 December 13
API 8 CFR SOUTH CHINA COAL SWAP FOR Q2 AND Q3 DELIVERY SHOWS A DECLINE
COALspot.com : API 8 CFR South China Coal swaps for average Q1’ 14 delivery gained 0.63 percept d-d on Friday 29 November 2013. The CFR South ...
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- Coastal Gujarat Power Limited - India
- International Coal Ventures Pvt Ltd - India
- Chamber of Mines of South Africa
- Global Business Power Corporation, Philippines
- PTC India Limited - India
- Salva Resources Pvt Ltd - India
- Latin American Coal - Colombia
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- Price Waterhouse Coopers - Russia
- TeaM Sual Corporation - Philippines
- European Bulk Services B.V. - Netherlands
- Renaissance Capital - South Africa
- Port Waratah Coal Services - Australia
- Independent Power Producers Association of India
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- Tata Chemicals Ltd - India
- Antam Resourcindo - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Ind-Barath Power Infra Limited - India
- Sojitz Corporation - Japan
- Intertek Mineral Services - Indonesia
- PNOC Exploration Corporation - Philippines
- Toyota Tsusho Corporation, Japan
- Edison Trading Spa - Italy
- Karaikal Port Pvt Ltd - India
- Indian Energy Exchange, India
- Parry Sugars Refinery, India
- Eastern Coal Council - USA
- Georgia Ports Authority, United States
- Wood Mackenzie - Singapore
- Marubeni Corporation - India
- White Energy Company Limited
- Bukit Makmur.PT - Indonesia
- Dalmia Cement Bharat India
- Petron Corporation, Philippines
- Coalindo Energy - Indonesia
- Posco Energy - South Korea
- Energy Development Corp, Philippines
- Simpson Spence & Young - Indonesia
- Siam City Cement PLC, Thailand
- Petrochimia International Co. Ltd.- Taiwan
- Cement Manufacturers Association - India
- Wilmar Investment Holdings
- Ceylon Electricity Board - Sri Lanka
- MS Steel International - UAE
- Riau Bara Harum - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Tamil Nadu electricity Board
- The University of Queensland
- Planning Commission, India
- Ambuja Cements Ltd - India
- CNBM International Corporation - China
- OPG Power Generation Pvt Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- ASAPP Information Group - India
- VISA Power Limited - India
- Banpu Public Company Limited - Thailand
- Kohat Cement Company Ltd. - Pakistan
- Singapore Mercantile Exchange
- Kalimantan Lumbung Energi - Indonesia
- Directorate Of Revenue Intelligence - India
- Krishnapatnam Port Company Ltd. - India
- SMC Global Power, Philippines
- Alfred C Toepfer International GmbH - Germany
- Jindal Steel & Power Ltd - India
- Aditya Birla Group - India
- Cigading International Bulk Terminal - Indonesia
- Larsen & Toubro Limited - India
- Anglo American - United Kingdom
- Maharashtra Electricity Regulatory Commission - India
- Sical Logistics Limited - India
- IEA Clean Coal Centre - UK
- IHS Mccloskey Coal Group - USA
- Merrill Lynch Commodities Europe
- Gujarat Sidhee Cement - India
- Africa Commodities Group - South Africa
- Manunggal Multi Energi - Indonesia
- Global Coal Blending Company Limited - Australia
- Maheswari Brothers Coal Limited - India
- Sinarmas Energy and Mining - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- GAC Shipping (India) Pvt Ltd
- Central Java Power - Indonesia
- Thai Mozambique Logistica
- Karbindo Abesyapradhi - Indoneisa
- AsiaOL BioFuels Corp., Philippines
- Mjunction Services Limited - India
- Indika Energy - Indonesia
- India Bulls Power Limited - India
- Mercator Lines Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- The Treasury - Australian Government
- Videocon Industries ltd - India
- Rashtriya Ispat Nigam Limited - India
- Orica Australia Pty. Ltd.
- Meenaskhi Energy Private Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Leighton Contractors Pty Ltd - Australia
- Siam City Cement - Thailand
- Trasteel International SA, Italy
- Commonwealth Bank - Australia
- CIMB Investment Bank - Malaysia
- Binh Thuan Hamico - Vietnam
- Bhushan Steel Limited - India
- Eastern Energy - Thailand
- Kaltim Prima Coal - Indonesia
- Samtan Co., Ltd - South Korea
- Altura Mining Limited, Indonesia
- Grasim Industreis Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Baramulti Group, Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Metalloyd Limited - United Kingdom
- Kumho Petrochemical, South Korea
- Lanco Infratech Ltd - India
- Orica Mining Services - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- San Jose City I Power Corp, Philippines
- Pendopo Energi Batubara - Indonesia
- Coal and Oil Company - UAE
- Kartika Selabumi Mining - Indonesia
- Straits Asia Resources Limited - Singapore
- Indogreen Group - Indonesia
- Borneo Indobara - Indonesia
- Standard Chartered Bank - UAE
- SN Aboitiz Power Inc, Philippines
- Mintek Dendrill Indonesia
- Economic Council, Georgia
- Romanian Commodities Exchange
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Australian Commodity Traders Exchange
- Semirara Mining and Power Corporation, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Indo Tambangraya Megah - Indonesia
- Electricity Authority, New Zealand
- Minerals Council of Australia
- Formosa Plastics Group - Taiwan
- Asmin Koalindo Tuhup - Indonesia
- Bhoruka Overseas - Indonesia
- Global Green Power PLC Corporation, Philippines
- Bangladesh Power Developement Board
- Mercuria Energy - Indonesia
- Heidelberg Cement - Germany
- Kapuas Tunggal Persada - Indonesia
- Australian Coal Association
- PowerSource Philippines DevCo
- Energy Link Ltd, New Zealand
- Meralco Power Generation, Philippines
- London Commodity Brokers - England
- Bharathi Cement Corporation - India
- Sree Jayajothi Cements Limited - India
- Ministry of Transport, Egypt
- Holcim Trading Pte Ltd - Singapore
- Aboitiz Power Corporation - Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Indonesian Coal Mining Association
- GVK Power & Infra Limited - India
- Carbofer General Trading SA - India
- Ministry of Finance - Indonesia
- Indian Oil Corporation Limited
- Medco Energi Mining Internasional
- Uttam Galva Steels Limited - India
- Gujarat Mineral Development Corp Ltd - India
- McConnell Dowell - Australia
- New Zealand Coal & Carbon
- The State Trading Corporation of India Ltd
- Interocean Group of Companies - India
- Kobexindo Tractors - Indoneisa
- Makarim & Taira - Indonesia
- Rio Tinto Coal - Australia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Parliament of New Zealand
- Timah Investasi Mineral - Indoneisa
- Deloitte Consulting - India
- Essar Steel Hazira Ltd - India
- Sindya Power Generating Company Private Ltd
- Savvy Resources Ltd - HongKong
- Sakthi Sugars Limited - India
- Thiess Contractors Indonesia
- Kideco Jaya Agung - Indonesia
- Agrawal Coal Company - India
- Vijayanagar Sugar Pvt Ltd - India
- South Luzon Thermal Energy Corporation
- Sarangani Energy Corporation, Philippines
- ICICI Bank Limited - India
- LBH Netherlands Bv - Netherlands
- Offshore Bulk Terminal Pte Ltd, Singapore
- PetroVietnam Power Coal Import and Supply Company
- Power Finance Corporation Ltd., India
- Star Paper Mills Limited - India
- Therma Luzon, Inc, Philippines
- Electricity Generating Authority of Thailand
- GMR Energy Limited - India
- Madhucon Powers Ltd - India
- Iligan Light & Power Inc, Philippines
- SMG Consultants - Indonesia
- Ministry of Mines - Canada
- Jaiprakash Power Ventures ltd
- Central Electricity Authority - India
- Oldendorff Carriers - Singapore
- Attock Cement Pakistan Limited
- Barasentosa Lestari - Indonesia
- Globalindo Alam Lestari - Indonesia
- Goldman Sachs - Singapore
- Bayan Resources Tbk. - Indonesia
- Vedanta Resources Plc - India
- Semirara Mining Corp, Philippines
- Malabar Cements Ltd - India
- Bulk Trading Sa - Switzerland
- Billiton Holdings Pty Ltd - Australia
- Bhatia International Limited - India
- Chettinad Cement Corporation Ltd - India
- Xindia Steels Limited - India
- Vizag Seaport Private Limited - India
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