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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, 27 November 13
SHIP OWNERS ONCE AGAIN TURN TO DRY BULK CARRIERS - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
Ship owners once again turned to more dry bulk carrier ordering over the course of the past week, as more and more appear convinced of the industry ...
Tuesday, 26 November 13
EWP INVITES COAL BIDS FOR 2014 - 2018 DELIVERIES
COALspot.com: Korea East-West Power Co. Ltd (EWP) invited bids to supply 130,000MT of min 5,600kcal/kg (Sub)-bituminous Coal on NCV basis for March ...
Tuesday, 26 November 13
NEWCASTLE COAL EXPORTS SLIP 22.62% W-W
COALspot.com: In the week ended November 25, power plant and semi-soft coking coal shipments from the port of Newcastle in Queensland, totalled 2.26 ...
Monday, 25 November 13
THE SUB-BIT INDONESIA COAL SWAP MOVEMENT IN YEAR 2014 IS STILL FAR FROM PROMISING
COALspot.com – Sub-Bit Indonesia coal swap (FOB ) for average Q1’ 14 delivery gained $ 2.54 pmt month on month on Friday 22 Novemb ...
Sunday, 24 November 13
CFR SOUTH CHINA COAL SWAPS FOR Q4' 14 DELIVERY PRICE SHOWS A NEGATIVE TREND WEEK ON WEEK AND FLAT ON D-D
COALspot.com : API 8 CFR South China Coal swaps for average Q1’ 14 delivery gained 0.13 percept d-d on Friday 22 November 2013. The CFR South ...
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- Indian Oil Corporation Limited
- Georgia Ports Authority, United States
- Oldendorff Carriers - Singapore
- MS Steel International - UAE
- European Bulk Services B.V. - Netherlands
- Bayan Resources Tbk. - Indonesia
- London Commodity Brokers - England
- Medco Energi Mining Internasional
- Kalimantan Lumbung Energi - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Goldman Sachs - Singapore
- Maharashtra Electricity Regulatory Commission - India
- Mintek Dendrill Indonesia
- Central Electricity Authority - India
- Bhoruka Overseas - Indonesia
- Bulk Trading Sa - Switzerland
- Altura Mining Limited, Indonesia
- Indonesian Coal Mining Association
- Agrawal Coal Company - India
- Asmin Koalindo Tuhup - Indonesia
- Energy Development Corp, Philippines
- Makarim & Taira - Indonesia
- Riau Bara Harum - Indonesia
- Therma Luzon, Inc, Philippines
- Marubeni Corporation - India
- Cigading International Bulk Terminal - Indonesia
- Vedanta Resources Plc - India
- Meenaskhi Energy Private Limited - India
- Bhatia International Limited - India
- Ministry of Finance - Indonesia
- Wilmar Investment Holdings
- CIMB Investment Bank - Malaysia
- Timah Investasi Mineral - Indoneisa
- Barasentosa Lestari - Indonesia
- McConnell Dowell - Australia
- GN Power Mariveles Coal Plant, Philippines
- South Luzon Thermal Energy Corporation
- Pendopo Energi Batubara - Indonesia
- Posco Energy - South Korea
- Tata Chemicals Ltd - India
- Petron Corporation, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Krishnapatnam Port Company Ltd. - India
- Miang Besar Coal Terminal - Indonesia
- Malabar Cements Ltd - India
- Indian Energy Exchange, India
- AsiaOL BioFuels Corp., Philippines
- Lanco Infratech Ltd - India
- Bharathi Cement Corporation - India
- VISA Power Limited - India
- Baramulti Group, Indonesia
- Siam City Cement - Thailand
- Sarangani Energy Corporation, Philippines
- Thai Mozambique Logistica
- Manunggal Multi Energi - Indonesia
- Australian Commodity Traders Exchange
- Jaiprakash Power Ventures ltd
- TeaM Sual Corporation - Philippines
- Banpu Public Company Limited - Thailand
- Salva Resources Pvt Ltd - India
- OPG Power Generation Pvt Ltd - India
- Anglo American - United Kingdom
- Parry Sugars Refinery, India
- Heidelberg Cement - Germany
- Attock Cement Pakistan Limited
- Power Finance Corporation Ltd., India
- Ambuja Cements Ltd - India
- Global Coal Blending Company Limited - Australia
- Bukit Baiduri Energy - Indonesia
- Iligan Light & Power Inc, Philippines
- Kepco SPC Power Corporation, Philippines
- GVK Power & Infra Limited - India
- Siam City Cement PLC, Thailand
- Bangladesh Power Developement Board
- Ceylon Electricity Board - Sri Lanka
- Savvy Resources Ltd - HongKong
- Economic Council, Georgia
- Minerals Council of Australia
- Tamil Nadu electricity Board
- Price Waterhouse Coopers - Russia
- Sindya Power Generating Company Private Ltd
- GMR Energy Limited - India
- Sree Jayajothi Cements Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Gujarat Sidhee Cement - India
- Independent Power Producers Association of India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Bukit Makmur.PT - Indonesia
- Deloitte Consulting - India
- SN Aboitiz Power Inc, Philippines
- Toyota Tsusho Corporation, Japan
- Bahari Cakrawala Sebuku - Indonesia
- Meralco Power Generation, Philippines
- Vizag Seaport Private Limited - India
- Standard Chartered Bank - UAE
- Gujarat Electricity Regulatory Commission - India
- IEA Clean Coal Centre - UK
- India Bulls Power Limited - India
- Mercuria Energy - Indonesia
- Singapore Mercantile Exchange
- Kideco Jaya Agung - Indonesia
- Indika Energy - Indonesia
- Carbofer General Trading SA - India
- LBH Netherlands Bv - Netherlands
- Orica Australia Pty. Ltd.
- International Coal Ventures Pvt Ltd - India
- White Energy Company Limited
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Trasteel International SA, Italy
- Bank of Tokyo Mitsubishi UFJ Ltd
- GAC Shipping (India) Pvt Ltd
- Planning Commission, India
- Bukit Asam (Persero) Tbk - Indonesia
- New Zealand Coal & Carbon
- Chamber of Mines of South Africa
- Sojitz Corporation - Japan
- The State Trading Corporation of India Ltd
- ASAPP Information Group - India
- Mercator Lines Limited - India
- Coalindo Energy - Indonesia
- Aboitiz Power Corporation - Philippines
- Globalindo Alam Lestari - Indonesia
- Mjunction Services Limited - India
- Orica Mining Services - Indonesia
- Essar Steel Hazira Ltd - India
- Intertek Mineral Services - Indonesia
- Indo Tambangraya Megah - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Kartika Selabumi Mining - Indonesia
- Coal and Oil Company - UAE
- Directorate Of Revenue Intelligence - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- PowerSource Philippines DevCo
- Vijayanagar Sugar Pvt Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Cement Manufacturers Association - India
- Samtan Co., Ltd - South Korea
- Holcim Trading Pte Ltd - Singapore
- Rashtriya Ispat Nigam Limited - India
- Ind-Barath Power Infra Limited - India
- Renaissance Capital - South Africa
- Alfred C Toepfer International GmbH - Germany
- Kohat Cement Company Ltd. - Pakistan
- Petrochimia International Co. Ltd.- Taiwan
- Star Paper Mills Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Edison Trading Spa - Italy
- Grasim Industreis Ltd - India
- Kobexindo Tractors - Indoneisa
- Ministry of Transport, Egypt
- Formosa Plastics Group - Taiwan
- Simpson Spence & Young - Indonesia
- PTC India Limited - India
- San Jose City I Power Corp, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Rio Tinto Coal - Australia
- ICICI Bank Limited - India
- Latin American Coal - Colombia
- Port Waratah Coal Services - Australia
- Australian Coal Association
- SMG Consultants - Indonesia
- Commonwealth Bank - Australia
- Merrill Lynch Commodities Europe
- PNOC Exploration Corporation - Philippines
- Energy Link Ltd, New Zealand
- Indogreen Group - Indonesia
- Wood Mackenzie - Singapore
- Xindia Steels Limited - India
- Africa Commodities Group - South Africa
- Central Java Power - Indonesia
- Global Business Power Corporation, Philippines
- Billiton Holdings Pty Ltd - Australia
- Thiess Contractors Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Eastern Coal Council - USA
- Antam Resourcindo - Indonesia
- Maheswari Brothers Coal Limited - India
- Karaikal Port Pvt Ltd - India
- SMC Global Power, Philippines
- Parliament of New Zealand
- Eastern Energy - Thailand
- Metalloyd Limited - United Kingdom
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Global Green Power PLC Corporation, Philippines
- CNBM International Corporation - China
- The University of Queensland
- The Treasury - Australian Government
- Kaltim Prima Coal - Indonesia
- Kumho Petrochemical, South Korea
- Jindal Steel & Power Ltd - India
- Chettinad Cement Corporation Ltd - India
- Kapuas Tunggal Persada - Indonesia
- Larsen & Toubro Limited - India
- Aditya Birla Group - India
- Sakthi Sugars Limited - India
- Interocean Group of Companies - India
- IHS Mccloskey Coal Group - USA
- Dalmia Cement Bharat India
- Semirara Mining Corp, Philippines
- Straits Asia Resources Limited - Singapore
- Sical Logistics Limited - India
- Leighton Contractors Pty Ltd - Australia
- Electricity Generating Authority of Thailand
- Electricity Authority, New Zealand
- Ministry of Mines - Canada
- Jorong Barutama Greston.PT - Indonesia
- Uttam Galva Steels Limited - India
- Videocon Industries ltd - India
- Sinarmas Energy and Mining - Indonesia
- Binh Thuan Hamico - Vietnam
- Romanian Commodities Exchange
- Borneo Indobara - Indonesia
- Madhucon Powers Ltd - India
- Bhushan Steel Limited - India
- Coastal Gujarat Power Limited - India
- PetroVietnam Power Coal Import and Supply Company
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