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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.
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Friday, 15 November 13
US COAL PRODUCTION UP 2.59% WEEK ON WEEK
COALspot.com – United States the world’s second largest coal producer, produced approximately 19.8 million short tons (mmst) of coal in ...
Friday, 15 November 13
TAIWAN'S PLASTICS GROUP FORMOSA TO IMPORT 1.37 MILLION TONS OF COAL FOR Q1' 14
COALspot.com: Taiwan's Formosa Plastics Group is inviting bids for total 1.37 million mt of coal for 1Q’ 14 for its various plants in Taiwan, ...
Thursday, 14 November 13
KOMIPO TO BUY 270K MT OF SUB-BITUMINOUS COAL FOR Q2' 14
COALspot.com : Korea Midland Power Co., Ltd. has invited bids through International Open Bidding for 140,000 Metric Tons (MT) of sub-bituminous coal ...
Thursday, 14 November 13
PANAMAX : MARKET SHOULD BE AROUND USD 11500 FOR 1 YEAR - FEARNLEYS AS
Handy
The Atlantic market has picked up this week with prompt ships able USG for November dates coming off and chrts need to pay up in order to cov ...
Wednesday, 13 November 13
Y'14 SUB-BIT INDO COAL SWAP MOVING AT SNAIL-SPEED
COALspot.com – Sub-Bit Indonesia coal swap (FOB ) for average Q1’2014 delivery gained 2.95 percept month on month on Friday ...
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- Billiton Holdings Pty Ltd - Australia
- Anglo American - United Kingdom
- Orica Mining Services - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Commonwealth Bank - Australia
- Krishnapatnam Port Company Ltd. - India
- Kalimantan Lumbung Energi - Indonesia
- Bukit Baiduri Energy - Indonesia
- Interocean Group of Companies - India
- SMG Consultants - Indonesia
- Renaissance Capital - South Africa
- Goldman Sachs - Singapore
- Mintek Dendrill Indonesia
- Parry Sugars Refinery, India
- Merrill Lynch Commodities Europe
- Uttam Galva Steels Limited - India
- Globalindo Alam Lestari - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Thai Mozambique Logistica
- Ceylon Electricity Board - Sri Lanka
- Carbofer General Trading SA - India
- Dalmia Cement Bharat India
- Thiess Contractors Indonesia
- New Zealand Coal & Carbon
- Indika Energy - Indonesia
- Ministry of Finance - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Trasteel International SA, Italy
- Pipit Mutiara Jaya. PT, Indonesia
- Global Green Power PLC Corporation, Philippines
- Toyota Tsusho Corporation, Japan
- Aditya Birla Group - India
- Wood Mackenzie - Singapore
- GAC Shipping (India) Pvt Ltd
- Intertek Mineral Services - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Videocon Industries ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Simpson Spence & Young - Indonesia
- LBH Netherlands Bv - Netherlands
- McConnell Dowell - Australia
- Africa Commodities Group - South Africa
- Global Business Power Corporation, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Kartika Selabumi Mining - Indonesia
- Samtan Co., Ltd - South Korea
- Siam City Cement - Thailand
- Bhoruka Overseas - Indonesia
- Maheswari Brothers Coal Limited - India
- Oldendorff Carriers - Singapore
- GMR Energy Limited - India
- Holcim Trading Pte Ltd - Singapore
- Parliament of New Zealand
- Tamil Nadu electricity Board
- Barasentosa Lestari - Indonesia
- Romanian Commodities Exchange
- Petrochimia International Co. Ltd.- Taiwan
- Formosa Plastics Group - Taiwan
- Indian Energy Exchange, India
- Essar Steel Hazira Ltd - India
- ICICI Bank Limited - India
- Deloitte Consulting - India
- Kumho Petrochemical, South Korea
- Bharathi Cement Corporation - India
- Sindya Power Generating Company Private Ltd
- London Commodity Brokers - England
- Independent Power Producers Association of India
- Aboitiz Power Corporation - Philippines
- Straits Asia Resources Limited - Singapore
- Bhushan Steel Limited - India
- Wilmar Investment Holdings
- Gujarat Sidhee Cement - India
- The State Trading Corporation of India Ltd
- Meenaskhi Energy Private Limited - India
- Economic Council, Georgia
- Directorate General of MIneral and Coal - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Coal and Oil Company - UAE
- Antam Resourcindo - Indonesia
- Karaikal Port Pvt Ltd - India
- Energy Development Corp, Philippines
- Indonesian Coal Mining Association
- PTC India Limited - India
- Standard Chartered Bank - UAE
- Electricity Authority, New Zealand
- Ambuja Cements Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Riau Bara Harum - Indonesia
- Pendopo Energi Batubara - Indonesia
- Mercator Lines Limited - India
- Semirara Mining and Power Corporation, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Larsen & Toubro Limited - India
- Bayan Resources Tbk. - Indonesia
- Planning Commission, India
- Chamber of Mines of South Africa
- Bank of Tokyo Mitsubishi UFJ Ltd
- Energy Link Ltd, New Zealand
- Baramulti Group, Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Attock Cement Pakistan Limited
- Cement Manufacturers Association - India
- SMC Global Power, Philippines
- Kideco Jaya Agung - Indonesia
- Ministry of Transport, Egypt
- Mercuria Energy - Indonesia
- Coalindo Energy - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Australian Commodity Traders Exchange
- Chettinad Cement Corporation Ltd - India
- Kaltim Prima Coal - Indonesia
- Bukit Makmur.PT - Indonesia
- Indian Oil Corporation Limited
- Georgia Ports Authority, United States
- The University of Queensland
- Power Finance Corporation Ltd., India
- Indo Tambangraya Megah - Indonesia
- South Luzon Thermal Energy Corporation
- Siam City Cement PLC, Thailand
- Grasim Industreis Ltd - India
- Port Waratah Coal Services - Australia
- TeaM Sual Corporation - Philippines
- Australian Coal Association
- CIMB Investment Bank - Malaysia
- Sakthi Sugars Limited - India
- OPG Power Generation Pvt Ltd - India
- Medco Energi Mining Internasional
- Makarim & Taira - Indonesia
- Directorate Of Revenue Intelligence - India
- Kobexindo Tractors - Indoneisa
- Maharashtra Electricity Regulatory Commission - India
- Coastal Gujarat Power Limited - India
- IHS Mccloskey Coal Group - USA
- Jorong Barutama Greston.PT - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Timah Investasi Mineral - Indoneisa
- Electricity Generating Authority of Thailand
- Agrawal Coal Company - India
- PNOC Exploration Corporation - Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- MS Steel International - UAE
- Manunggal Multi Energi - Indonesia
- The Treasury - Australian Government
- Bangladesh Power Developement Board
- Eastern Energy - Thailand
- Bhatia International Limited - India
- Lanco Infratech Ltd - India
- Bulk Trading Sa - Switzerland
- Kepco SPC Power Corporation, Philippines
- Banpu Public Company Limited - Thailand
- Indogreen Group - Indonesia
- India Bulls Power Limited - India
- Mjunction Services Limited - India
- Singapore Mercantile Exchange
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Jaiprakash Power Ventures ltd
- Borneo Indobara - Indonesia
- International Coal Ventures Pvt Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Vedanta Resources Plc - India
- European Bulk Services B.V. - Netherlands
- Ministry of Mines - Canada
- Sojitz Corporation - Japan
- Salva Resources Pvt Ltd - India
- Central Electricity Authority - India
- Madhucon Powers Ltd - India
- Semirara Mining Corp, Philippines
- Posco Energy - South Korea
- Eastern Coal Council - USA
- Metalloyd Limited - United Kingdom
- Iligan Light & Power Inc, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Altura Mining Limited, Indonesia
- GVK Power & Infra Limited - India
- Leighton Contractors Pty Ltd - Australia
- Sree Jayajothi Cements Limited - India
- Price Waterhouse Coopers - Russia
- AsiaOL BioFuels Corp., Philippines
- Neyveli Lignite Corporation Ltd, - India
- Global Coal Blending Company Limited - Australia
- Tata Chemicals Ltd - India
- Rashtriya Ispat Nigam Limited - India
- Meralco Power Generation, Philippines
- Minerals Council of Australia
- Vizag Seaport Private Limited - India
- Gujarat Electricity Regulatory Commission - India
- Therma Luzon, Inc, Philippines
- Heidelberg Cement - Germany
- Savvy Resources Ltd - HongKong
- Marubeni Corporation - India
- Central Java Power - Indonesia
- Rio Tinto Coal - Australia
- Xindia Steels Limited - India
- Jindal Steel & Power Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- VISA Power Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- IEA Clean Coal Centre - UK
- Ind-Barath Power Infra Limited - India
- Edison Trading Spa - Italy
- ASAPP Information Group - India
- Star Paper Mills Limited - India
- PowerSource Philippines DevCo
- Petron Corporation, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- SN Aboitiz Power Inc, Philippines
- Sinarmas Energy and Mining - Indonesia
- CNBM International Corporation - China
- White Energy Company Limited
- Binh Thuan Hamico - Vietnam
- Orica Australia Pty. Ltd.
- Latin American Coal - Colombia
- Sarangani Energy Corporation, Philippines
- San Jose City I Power Corp, Philippines
- Sical Logistics Limited - India
- Malabar Cements Ltd - India
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