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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, 29 October 13
NEWCASTLE PORT SHIPPED 12.29 PER CENT MORE COAL W-W
COALspot.com: Power plant and semi-soft coking coal shipments from Australia's Newcastle port up 12.29 per cent week on week to 3.61 million mt for ...
Monday, 28 October 13
API 8 CFR SOUTH CHINA COAL FOR Q3'14 DELIVERY LOST ON D-D,W-W & M-M
COALspot.com : API 8 CFR South China Coal swaps for average Q4 2013 delivery fell 0.22 percept M-M on Friday 25 October 2013. The CFR South China Co ...
Monday, 28 October 13
COAL SWAP FOR Q3' 2014 DELIVERY LOST ON D-D, W-W AND M-M
COALspot.com – Sub-Bit Indonesia coal swap (FOB ) for average Q4 2013 delivery gained 0.46 percept month on month on Friday 25 October 2 ...
Saturday, 26 October 13
PANAMAX CHARTER RATES FROM INDONESIA TO INDIA STAY FIRM - SOLYM
COALspot.com: The freight market showed tendency of softness with Cape and Panamax futures and physical soft.
The BDI was down by 12 pct week end ...
Saturday, 26 October 13
DRY BULK MARKET KEEPS ON RETREATING, BUT NEW BUILDING ORDERS KEEP ON PILING - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
The dry bulk market kept on retreating this week, with the industry's benchmark, the Baltic Dry Index (BDI) falling to 1,708 points, down 78 on the ...
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- Essar Steel Hazira Ltd - India
- Kartika Selabumi Mining - Indonesia
- Mercuria Energy - Indonesia
- Independent Power Producers Association of India
- Vijayanagar Sugar Pvt Ltd - India
- The University of Queensland
- Energy Development Corp, Philippines
- Sakthi Sugars Limited - India
- Bhatia International Limited - India
- The Treasury - Australian Government
- Madhucon Powers Ltd - India
- Kumho Petrochemical, South Korea
- Parliament of New Zealand
- TNB Fuel Sdn Bhd - Malaysia
- Ind-Barath Power Infra Limited - India
- Malabar Cements Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Savvy Resources Ltd - HongKong
- Meenaskhi Energy Private Limited - India
- Rashtriya Ispat Nigam Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Australian Coal Association
- PNOC Exploration Corporation - Philippines
- Wood Mackenzie - Singapore
- Vizag Seaport Private Limited - India
- Planning Commission, India
- Global Green Power PLC Corporation, Philippines
- GAC Shipping (India) Pvt Ltd
- Economic Council, Georgia
- Semirara Mining and Power Corporation, Philippines
- Borneo Indobara - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Price Waterhouse Coopers - Russia
- Kaltim Prima Coal - Indonesia
- Bhushan Steel Limited - India
- Eastern Coal Council - USA
- Pendopo Energi Batubara - Indonesia
- European Bulk Services B.V. - Netherlands
- Sojitz Corporation - Japan
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Kideco Jaya Agung - Indonesia
- Baramulti Group, Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Vedanta Resources Plc - India
- Goldman Sachs - Singapore
- Heidelberg Cement - Germany
- Bukit Baiduri Energy - Indonesia
- SMG Consultants - Indonesia
- ICICI Bank Limited - India
- Dalmia Cement Bharat India
- Chettinad Cement Corporation Ltd - India
- Videocon Industries ltd - India
- IHS Mccloskey Coal Group - USA
- LBH Netherlands Bv - Netherlands
- Kohat Cement Company Ltd. - Pakistan
- Siam City Cement - Thailand
- Formosa Plastics Group - Taiwan
- AsiaOL BioFuels Corp., Philippines
- Coastal Gujarat Power Limited - India
- Straits Asia Resources Limited - Singapore
- Ministry of Finance - Indonesia
- Standard Chartered Bank - UAE
- Romanian Commodities Exchange
- Samtan Co., Ltd - South Korea
- Billiton Holdings Pty Ltd - Australia
- Asmin Koalindo Tuhup - Indonesia
- Posco Energy - South Korea
- Leighton Contractors Pty Ltd - Australia
- Parry Sugars Refinery, India
- Tamil Nadu electricity Board
- Ambuja Cements Ltd - India
- Ministry of Mines - Canada
- Kepco SPC Power Corporation, Philippines
- Chamber of Mines of South Africa
- Directorate General of MIneral and Coal - Indonesia
- GMR Energy Limited - India
- Energy Link Ltd, New Zealand
- Deloitte Consulting - India
- Bayan Resources Tbk. - Indonesia
- Mjunction Services Limited - India
- Merrill Lynch Commodities Europe
- Grasim Industreis Ltd - India
- Commonwealth Bank - Australia
- Sree Jayajothi Cements Limited - India
- PTC India Limited - India
- PowerSource Philippines DevCo
- Semirara Mining Corp, Philippines
- Maheswari Brothers Coal Limited - India
- Jindal Steel & Power Ltd - India
- Orica Australia Pty. Ltd.
- Banpu Public Company Limited - Thailand
- Alfred C Toepfer International GmbH - Germany
- Minerals Council of Australia
- Neyveli Lignite Corporation Ltd, - India
- Indo Tambangraya Megah - Indonesia
- Mintek Dendrill Indonesia
- Indogreen Group - Indonesia
- Global Coal Blending Company Limited - Australia
- TeaM Sual Corporation - Philippines
- Makarim & Taira - Indonesia
- Tata Chemicals Ltd - India
- Oldendorff Carriers - Singapore
- Central Electricity Authority - India
- Coal and Oil Company - UAE
- CIMB Investment Bank - Malaysia
- Riau Bara Harum - Indonesia
- White Energy Company Limited
- Renaissance Capital - South Africa
- Metalloyd Limited - United Kingdom
- Port Waratah Coal Services - Australia
- Marubeni Corporation - India
- Bulk Trading Sa - Switzerland
- Anglo American - United Kingdom
- Gujarat Sidhee Cement - India
- Bukit Asam (Persero) Tbk - Indonesia
- Bukit Makmur.PT - Indonesia
- Therma Luzon, Inc, Philippines
- Binh Thuan Hamico - Vietnam
- Lanco Infratech Ltd - India
- New Zealand Coal & Carbon
- San Jose City I Power Corp, Philippines
- Edison Trading Spa - Italy
- Latin American Coal - Colombia
- VISA Power Limited - India
- Mercator Lines Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Meralco Power Generation, Philippines
- Jaiprakash Power Ventures ltd
- Africa Commodities Group - South Africa
- Uttam Galva Steels Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- India Bulls Power Limited - India
- Electricity Authority, New Zealand
- Medco Energi Mining Internasional
- Eastern Energy - Thailand
- Bangladesh Power Developement Board
- Thiess Contractors Indonesia
- South Luzon Thermal Energy Corporation
- Cigading International Bulk Terminal - Indonesia
- IEA Clean Coal Centre - UK
- McConnell Dowell - Australia
- Kobexindo Tractors - Indoneisa
- Xindia Steels Limited - India
- Simpson Spence & Young - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Orica Mining Services - Indonesia
- Sical Logistics Limited - India
- Iligan Light & Power Inc, Philippines
- Indian Energy Exchange, India
- Australian Commodity Traders Exchange
- Bahari Cakrawala Sebuku - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Aditya Birla Group - India
- Sindya Power Generating Company Private Ltd
- MS Steel International - UAE
- GVK Power & Infra Limited - India
- Interocean Group of Companies - India
- SMC Global Power, Philippines
- International Coal Ventures Pvt Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Ministry of Transport, Egypt
- Sarangani Energy Corporation, Philippines
- Aboitiz Power Corporation - Philippines
- Georgia Ports Authority, United States
- Singapore Mercantile Exchange
- Coalindo Energy - Indonesia
- Wilmar Investment Holdings
- Bharathi Cement Corporation - India
- Central Java Power - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Timah Investasi Mineral - Indoneisa
- The State Trading Corporation of India Ltd
- Indian Oil Corporation Limited
- Toyota Tsusho Corporation, Japan
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Sinarmas Energy and Mining - Indonesia
- ASAPP Information Group - India
- Krishnapatnam Port Company Ltd. - India
- Globalindo Alam Lestari - Indonesia
- Antam Resourcindo - Indonesia
- Directorate Of Revenue Intelligence - India
- Holcim Trading Pte Ltd - Singapore
- Agrawal Coal Company - India
- Intertek Mineral Services - Indonesia
- Petron Corporation, Philippines
- London Commodity Brokers - England
- PetroVietnam Power Coal Import and Supply Company
- Star Paper Mills Limited - India
- SN Aboitiz Power Inc, Philippines
- Manunggal Multi Energi - Indonesia
- Bhoruka Overseas - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Trasteel International SA, Italy
- Altura Mining Limited, Indonesia
- Siam City Cement PLC, Thailand
- Indonesian Coal Mining Association
- Indika Energy - Indonesia
- Carbofer General Trading SA - India
- Barasentosa Lestari - Indonesia
- Salva Resources Pvt Ltd - India
- Power Finance Corporation Ltd., India
- Attock Cement Pakistan Limited
- Global Business Power Corporation, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Rio Tinto Coal - Australia
- OPG Power Generation Pvt Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Cement Manufacturers Association - India
- Larsen & Toubro Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Karaikal Port Pvt Ltd - India
- CNBM International Corporation - China
- Electricity Generating Authority of Thailand
- Thai Mozambique Logistica
- Ceylon Electricity Board - Sri Lanka
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