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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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Tuesday, 19 November 13
SHIP OWNER POUR MORE MONEY INTO DRY BULK CARRIER ACQUISITIONS - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
The recent dry bulk market's rally, coupled with an expected fall in oversupply and robust cargo demand has boosted ship owners' optimism on the l ...
Monday, 18 November 13
SUB-BIT INDONESIA COAL SWAP LOST ON WEEK; MARGINALLY GAINED ON DAY
COALspot.com – Sub-Bit Indonesia coal swap (FOB ) for average Q1’ 14 delivery gained $ 1.25 pmt month on month on Friday 15 Novemb ...
Sunday, 17 November 13
Q4' 14 API 8 CFR SOUTH CHINA COAL SWAP CLOSED $ 3.43 PMT (4.34 %) HIGHER THAN Q1' 14 SWAP
COALspot.com : API 8 CFR South China Coal swaps for average Q1’ 14 delivery gained 0.05 percept d-d on Friday 15 November 2013. The CFR South ...
Saturday, 16 November 13
INDONESIA TO INDIA SUPRAMAX FREIGHT RATES FIRM DUE TO STRONG COAL ACTIVITIES
COALspot.com: The Cape and Panamax index was down this week and pulling down the BDI by about 5 pct. BDI was closed at 1507 points on Friday 1 ...
Friday, 15 November 13
DRY BULK MARKET STILL LINGERING ON, DESPITE PREDICTIONS OF NEW IMMINENT RALLY PRIOR TO THE YEAR'S END - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
The dry bulk market hasn't yet managed to stage a new comeback after its retreat from the recent multiyear highs. Yesterday, the industry's benchm ...
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- PTC India Limited - India
- International Coal Ventures Pvt Ltd - India
- Mintek Dendrill Indonesia
- Ministry of Mines - Canada
- Ind-Barath Power Infra Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Jindal Steel & Power Ltd - India
- Sical Logistics Limited - India
- GAC Shipping (India) Pvt Ltd
- Australian Commodity Traders Exchange
- Bukit Makmur.PT - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Interocean Group of Companies - India
- Indika Energy - Indonesia
- London Commodity Brokers - England
- Global Business Power Corporation, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Posco Energy - South Korea
- Ambuja Cements Ltd - India
- Vizag Seaport Private Limited - India
- Sree Jayajothi Cements Limited - India
- Samtan Co., Ltd - South Korea
- Commonwealth Bank - Australia
- Meenaskhi Energy Private Limited - India
- LBH Netherlands Bv - Netherlands
- Cement Manufacturers Association - India
- The State Trading Corporation of India Ltd
- Altura Mining Limited, Indonesia
- Sarangani Energy Corporation, Philippines
- Thai Mozambique Logistica
- Indonesian Coal Mining Association
- Kobexindo Tractors - Indoneisa
- Larsen & Toubro Limited - India
- Rio Tinto Coal - Australia
- Antam Resourcindo - Indonesia
- Medco Energi Mining Internasional
- Globalindo Alam Lestari - Indonesia
- Semirara Mining and Power Corporation, Philippines
- ICICI Bank Limited - India
- Savvy Resources Ltd - HongKong
- Attock Cement Pakistan Limited
- Maheswari Brothers Coal Limited - India
- TeaM Sual Corporation - Philippines
- Orica Mining Services - Indonesia
- Bhoruka Overseas - Indonesia
- South Luzon Thermal Energy Corporation
- VISA Power Limited - India
- Semirara Mining Corp, Philippines
- Bhatia International Limited - India
- Binh Thuan Hamico - Vietnam
- Bukit Baiduri Energy - Indonesia
- Trasteel International SA, Italy
- Romanian Commodities Exchange
- Coal and Oil Company - UAE
- Australian Coal Association
- Dalmia Cement Bharat India
- Kideco Jaya Agung - Indonesia
- New Zealand Coal & Carbon
- Singapore Mercantile Exchange
- Ceylon Electricity Board - Sri Lanka
- Tamil Nadu electricity Board
- India Bulls Power Limited - India
- Indian Oil Corporation Limited
- Indogreen Group - Indonesia
- Eastern Coal Council - USA
- Indian Energy Exchange, India
- OPG Power Generation Pvt Ltd - India
- Grasim Industreis Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- CIMB Investment Bank - Malaysia
- Gujarat Electricity Regulatory Commission - India
- Therma Luzon, Inc, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Central Java Power - Indonesia
- Merrill Lynch Commodities Europe
- Karbindo Abesyapradhi - Indoneisa
- Electricity Authority, New Zealand
- Directorate General of MIneral and Coal - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Bhushan Steel Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Sojitz Corporation - Japan
- Coalindo Energy - Indonesia
- Simpson Spence & Young - Indonesia
- Port Waratah Coal Services - Australia
- Metalloyd Limited - United Kingdom
- Banpu Public Company Limited - Thailand
- Orica Australia Pty. Ltd.
- Petron Corporation, Philippines
- Electricity Generating Authority of Thailand
- Agrawal Coal Company - India
- Ministry of Transport, Egypt
- Pipit Mutiara Jaya. PT, Indonesia
- Toyota Tsusho Corporation, Japan
- Star Paper Mills Limited - India
- Karaikal Port Pvt Ltd - India
- Kartika Selabumi Mining - Indonesia
- Indo Tambangraya Megah - Indonesia
- Bulk Trading Sa - Switzerland
- Aboitiz Power Corporation - Philippines
- Jaiprakash Power Ventures ltd
- IEA Clean Coal Centre - UK
- Petrochimia International Co. Ltd.- Taiwan
- Holcim Trading Pte Ltd - Singapore
- MS Steel International - UAE
- PetroVietnam Power Coal Import and Supply Company
- Iligan Light & Power Inc, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Bangladesh Power Developement Board
- Sakthi Sugars Limited - India
- Kumho Petrochemical, South Korea
- Aditya Birla Group - India
- Gujarat Mineral Development Corp Ltd - India
- The Treasury - Australian Government
- Kaltim Prima Coal - Indonesia
- Baramulti Group, Indonesia
- Carbofer General Trading SA - India
- Global Green Power PLC Corporation, Philippines
- Manunggal Multi Energi - Indonesia
- Riau Bara Harum - Indonesia
- Bayan Resources Tbk. - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Wilmar Investment Holdings
- Mercuria Energy - Indonesia
- Minerals Council of Australia
- ASAPP Information Group - India
- McConnell Dowell - Australia
- Sindya Power Generating Company Private Ltd
- Kapuas Tunggal Persada - Indonesia
- Energy Development Corp, Philippines
- Timah Investasi Mineral - Indoneisa
- Coastal Gujarat Power Limited - India
- Siam City Cement - Thailand
- SMC Global Power, Philippines
- Energy Link Ltd, New Zealand
- Goldman Sachs - Singapore
- Borneo Indobara - Indonesia
- Intertek Mineral Services - Indonesia
- Videocon Industries ltd - India
- Edison Trading Spa - Italy
- Parliament of New Zealand
- PNOC Exploration Corporation - Philippines
- GVK Power & Infra Limited - India
- Oldendorff Carriers - Singapore
- Krishnapatnam Port Company Ltd. - India
- SMG Consultants - Indonesia
- SN Aboitiz Power Inc, Philippines
- Planning Commission, India
- Kepco SPC Power Corporation, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Eastern Energy - Thailand
- Pendopo Energi Batubara - Indonesia
- Standard Chartered Bank - UAE
- Gujarat Sidhee Cement - India
- Independent Power Producers Association of India
- Global Coal Blending Company Limited - Australia
- Makarim & Taira - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Mjunction Services Limited - India
- Deloitte Consulting - India
- Ministry of Finance - Indonesia
- CNBM International Corporation - China
- Barasentosa Lestari - Indonesia
- White Energy Company Limited
- PowerSource Philippines DevCo
- Anglo American - United Kingdom
- Power Finance Corporation Ltd., India
- Economic Council, Georgia
- Marubeni Corporation - India
- Siam City Cement PLC, Thailand
- Tata Chemicals Ltd - India
- Formosa Plastics Group - Taiwan
- Parry Sugars Refinery, India
- Heidelberg Cement - Germany
- Cigading International Bulk Terminal - Indonesia
- Directorate Of Revenue Intelligence - India
- Billiton Holdings Pty Ltd - Australia
- Uttam Galva Steels Limited - India
- Mercator Lines Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Chamber of Mines of South Africa
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Price Waterhouse Coopers - Russia
- GMR Energy Limited - India
- The University of Queensland
- Georgia Ports Authority, United States
- Sinarmas Energy and Mining - Indonesia
- Renaissance Capital - South Africa
- Lanco Infratech Ltd - India
- Chettinad Cement Corporation Ltd - India
- Essar Steel Hazira Ltd - India
- Madhucon Powers Ltd - India
- Meralco Power Generation, Philippines
- Salva Resources Pvt Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Wood Mackenzie - Singapore
- AsiaOL BioFuels Corp., Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- European Bulk Services B.V. - Netherlands
- Latin American Coal - Colombia
- IHS Mccloskey Coal Group - USA
- Alfred C Toepfer International GmbH - Germany
- Neyveli Lignite Corporation Ltd, - India
- San Jose City I Power Corp, Philippines
- Bharathi Cement Corporation - India
- Malabar Cements Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Africa Commodities Group - South Africa
- Thiess Contractors Indonesia
- Central Electricity Authority - India
- Xindia Steels Limited - India
- Straits Asia Resources Limited - Singapore
- Rashtriya Ispat Nigam Limited - India
- Vedanta Resources Plc - India
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