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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$77/t for thermal coal in 2013, then 45mt or 13% of Australia's coal exports in 2013 will be at risk of closure. At that price, a total of 204mt of production will be suffering negative margins.
In summary, Mr. Tanevski says, "Our expectation is that there will not be a significant dent in Australia's production this year. However, if prices do fall below expectations, the risk of closure for mines producing at negative margins will increase, reducing output."
Editor's notes:
Wood Mackenzie is the most comprehensive source of knowledge about the world's energy and metals industries. We analyse and advise on every stage along the value chain - from discovery to delivery, and beyond - to provide clients with the commercial insight that makes them stronger. For more information visit Wood Mackenzie.
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Friday, 04 October 13
US COAL PRODUCTION UP 2.1% WEEK ON WEEK - EIA
COALspot.com – United States the world’s second largest coal producer produced approximately 19.70 million short tons (mmst) of coal in ...
Thursday, 03 October 13
INDONESIA AUGUST COAL EXPORTS FALL 12.90 % FROM JULY TO 30.71 MIL MT
COALspot.com: Indonesia, the 15th largest economy in world, 4th largest coal producer in world and world's largest multi grade coal exporter ...
Thursday, 03 October 13
TOP FOUR U.S. COAL COMPANIES SUPPLIED MORE THAN HALF OF U.S. COAL PRODUCTION IN 2011 - EIA
In the past two years, more than half of U.S. coal production was attributable to the top four coal producers, the result of changes in regional pro ...
Thursday, 03 October 13
HANDY: PERIOD MARKET STAND IN GOOD POSITION - FEARNRESEARCH
Handy
Nickel ore and Bauxite was active last week but slowed down now due to Chinese holidays. Ships opened in North China fixed at US$ 11-13k leve ...
Wednesday, 02 October 13
DRY BULK MARKET IS STILL MAINTAINING ITS UPWARD DIRECTION
Chartering (Wet: Stable- / Dry: Firm+)
Despite the fact that rates for Capes didn't continue their crazy ride this past week, the Dry Bulk market ...
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- Krishnapatnam Port Company Ltd. - India
- Standard Chartered Bank - UAE
- Offshore Bulk Terminal Pte Ltd, Singapore
- PowerSource Philippines DevCo
- Madhucon Powers Ltd - India
- Ambuja Cements Ltd - India
- Indogreen Group - Indonesia
- Energy Development Corp, Philippines
- Leighton Contractors Pty Ltd - Australia
- GVK Power & Infra Limited - India
- Bukit Makmur.PT - Indonesia
- Ministry of Mines - Canada
- SN Aboitiz Power Inc, Philippines
- Kumho Petrochemical, South Korea
- Chettinad Cement Corporation Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Aboitiz Power Corporation - Philippines
- Gujarat Mineral Development Corp Ltd - India
- Electricity Authority, New Zealand
- Samtan Co., Ltd - South Korea
- Semirara Mining Corp, Philippines
- London Commodity Brokers - England
- Indian Energy Exchange, India
- Minerals Council of Australia
- TeaM Sual Corporation - Philippines
- Sree Jayajothi Cements Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Makarim & Taira - Indonesia
- Riau Bara Harum - Indonesia
- Thai Mozambique Logistica
- Gujarat Sidhee Cement - India
- Sical Logistics Limited - India
- Rio Tinto Coal - Australia
- Commonwealth Bank - Australia
- Planning Commission, India
- Jindal Steel & Power Ltd - India
- Georgia Ports Authority, United States
- Cigading International Bulk Terminal - Indonesia
- Oldendorff Carriers - Singapore
- Power Finance Corporation Ltd., India
- Australian Commodity Traders Exchange
- Port Waratah Coal Services - Australia
- Kalimantan Lumbung Energi - Indonesia
- International Coal Ventures Pvt Ltd - India
- Goldman Sachs - Singapore
- Bhushan Steel Limited - India
- Barasentosa Lestari - Indonesia
- Formosa Plastics Group - Taiwan
- Lanco Infratech Ltd - India
- Meralco Power Generation, Philippines
- Jaiprakash Power Ventures ltd
- Salva Resources Pvt Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Eastern Energy - Thailand
- Iligan Light & Power Inc, Philippines
- Semirara Mining and Power Corporation, Philippines
- Vizag Seaport Private Limited - India
- Star Paper Mills Limited - India
- New Zealand Coal & Carbon
- Deloitte Consulting - India
- Bukit Baiduri Energy - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Kepco SPC Power Corporation, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- India Bulls Power Limited - India
- Coastal Gujarat Power Limited - India
- Wilmar Investment Holdings
- The Treasury - Australian Government
- Indika Energy - Indonesia
- Coalindo Energy - Indonesia
- LBH Netherlands Bv - Netherlands
- Toyota Tsusho Corporation, Japan
- Medco Energi Mining Internasional
- Bangladesh Power Developement Board
- Maharashtra Electricity Regulatory Commission - India
- Australian Coal Association
- Petrochimia International Co. Ltd.- Taiwan
- Ministry of Transport, Egypt
- SMC Global Power, Philippines
- Manunggal Multi Energi - Indonesia
- VISA Power Limited - India
- Thiess Contractors Indonesia
- Directorate Of Revenue Intelligence - India
- IHS Mccloskey Coal Group - USA
- Parry Sugars Refinery, India
- Vijayanagar Sugar Pvt Ltd - India
- Meenaskhi Energy Private Limited - India
- Sarangani Energy Corporation, Philippines
- Tata Chemicals Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Orica Mining Services - Indonesia
- Gujarat Electricity Regulatory Commission - India
- CNBM International Corporation - China
- European Bulk Services B.V. - Netherlands
- Price Waterhouse Coopers - Russia
- Sakthi Sugars Limited - India
- Anglo American - United Kingdom
- Central Java Power - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Kaltim Prima Coal - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Electricity Generating Authority of Thailand
- Attock Cement Pakistan Limited
- Straits Asia Resources Limited - Singapore
- Renaissance Capital - South Africa
- Indian Oil Corporation Limited
- Ind-Barath Power Infra Limited - India
- McConnell Dowell - Australia
- Alfred C Toepfer International GmbH - Germany
- Global Coal Blending Company Limited - Australia
- SMG Consultants - Indonesia
- Trasteel International SA, Italy
- Therma Luzon, Inc, Philippines
- Pendopo Energi Batubara - Indonesia
- South Luzon Thermal Energy Corporation
- Rashtriya Ispat Nigam Limited - India
- Uttam Galva Steels Limited - India
- Energy Link Ltd, New Zealand
- Mintek Dendrill Indonesia
- Heidelberg Cement - Germany
- Binh Thuan Hamico - Vietnam
- Videocon Industries ltd - India
- Simpson Spence & Young - Indonesia
- Metalloyd Limited - United Kingdom
- Bhatia International Limited - India
- Bhoruka Overseas - Indonesia
- Petron Corporation, Philippines
- Orica Australia Pty. Ltd.
- Larsen & Toubro Limited - India
- Wood Mackenzie - Singapore
- White Energy Company Limited
- Savvy Resources Ltd - HongKong
- OPG Power Generation Pvt Ltd - India
- ICICI Bank Limited - India
- ASAPP Information Group - India
- Mercuria Energy - Indonesia
- Globalindo Alam Lestari - Indonesia
- Baramulti Group, Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- The University of Queensland
- Maheswari Brothers Coal Limited - India
- Latin American Coal - Colombia
- GMR Energy Limited - India
- Central Electricity Authority - India
- Essar Steel Hazira Ltd - India
- Indo Tambangraya Megah - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Miang Besar Coal Terminal - Indonesia
- Malabar Cements Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Siam City Cement - Thailand
- Kobexindo Tractors - Indoneisa
- Banpu Public Company Limited - Thailand
- MS Steel International - UAE
- Chamber of Mines of South Africa
- Xindia Steels Limited - India
- Interocean Group of Companies - India
- Ceylon Electricity Board - Sri Lanka
- Pipit Mutiara Jaya. PT, Indonesia
- Romanian Commodities Exchange
- CIMB Investment Bank - Malaysia
- Marubeni Corporation - India
- IEA Clean Coal Centre - UK
- Parliament of New Zealand
- Grasim Industreis Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- The State Trading Corporation of India Ltd
- Directorate General of MIneral and Coal - Indonesia
- Mercator Lines Limited - India
- Altura Mining Limited, Indonesia
- Mjunction Services Limited - India
- Edison Trading Spa - Italy
- Sindya Power Generating Company Private Ltd
- Borneo Indobara - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Asmin Koalindo Tuhup - Indonesia
- Cement Manufacturers Association - India
- Indonesian Coal Mining Association
- Singapore Mercantile Exchange
- Bharathi Cement Corporation - India
- AsiaOL BioFuels Corp., Philippines
- Siam City Cement PLC, Thailand
- San Jose City I Power Corp, Philippines
- Kideco Jaya Agung - Indonesia
- Global Business Power Corporation, Philippines
- Timah Investasi Mineral - Indoneisa
- PNOC Exploration Corporation - Philippines
- Posco Energy - South Korea
- Aditya Birla Group - India
- Vedanta Resources Plc - India
- PTC India Limited - India
- Karaikal Port Pvt Ltd - India
- Kapuas Tunggal Persada - Indonesia
- Eastern Coal Council - USA
- Intertek Mineral Services - Indonesia
- Africa Commodities Group - South Africa
- Bukit Asam (Persero) Tbk - Indonesia
- Independent Power Producers Association of India
- Carbofer General Trading SA - India
- TNB Fuel Sdn Bhd - Malaysia
- Antam Resourcindo - Indonesia
- Merrill Lynch Commodities Europe
- Economic Council, Georgia
- Sojitz Corporation - Japan
- Dalmia Cement Bharat India
- Agrawal Coal Company - India
- Ministry of Finance - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Neyveli Lignite Corporation Ltd, - India
- Sinarmas Energy and Mining - Indonesia
- Tamil Nadu electricity Board
- Bayan Resources Tbk. - Indonesia
- Kartika Selabumi Mining - Indonesia
- Global Green Power PLC Corporation, Philippines
- Coal and Oil Company - UAE
- Bulk Trading Sa - Switzerland
- GAC Shipping (India) Pvt Ltd
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