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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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Sunday, 29 September 13
SUB-BIT INDONESIA COAL SWAP FELL ON MONTH AND WEEK
COALspot.com – Sub-Bit Indonesia coal swap (FOB ) for average Q4 2013 delivery fell 3.93 percept month on month on Friday 27 September 2 ...
Friday, 27 September 13
TAIWAN'S FORMOSA TO IMPORT 140K MT OF BITUMINOUS COAL FOR Q4
COALspot.com : Taiwan's Formosa Plastics Group is inviting bids for 140,000 mt of bituminous coal for delivery in the Q4 for its China plant.
Ac ...
Friday, 27 September 13
CAPESIZES REGAINING PART OF THEIR FORMER GLORY - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
The latest dry bulk market rally has been nothing short of spectacular, with freight rates more than doubling over the past few weeks. This growth h ...
Friday, 27 September 13
US PRODUCED 19.30 MMST OF COAL IN SEVEN DAYS
COALspot.com – United States the world’s second largest coal producer produced approximately 19.30 million short tons (mmst) of coal in ...
Thursday, 26 September 13
PANAMAX MARKET CONTINUE WITH STRONG RATES IN BOTH BASINS - FEARNRESEARCH
Handy
Feast rates are still firm, some fresh stems entered the market. Vessels trading around $15k passing Singapore for coal to India, and a bit l ...
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- Pendopo Energi Batubara - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Price Waterhouse Coopers - Russia
- Straits Asia Resources Limited - Singapore
- Coal and Oil Company - UAE
- Renaissance Capital - South Africa
- Agrawal Coal Company - India
- Vizag Seaport Private Limited - India
- Coalindo Energy - Indonesia
- Oldendorff Carriers - Singapore
- Asmin Koalindo Tuhup - Indonesia
- Ind-Barath Power Infra Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Timah Investasi Mineral - Indoneisa
- Bhushan Steel Limited - India
- Commonwealth Bank - Australia
- Kartika Selabumi Mining - Indonesia
- Edison Trading Spa - Italy
- Krishnapatnam Port Company Ltd. - India
- Romanian Commodities Exchange
- Singapore Mercantile Exchange
- Altura Mining Limited, Indonesia
- Energy Development Corp, Philippines
- Minerals Council of Australia
- Baramulti Group, Indonesia
- Sojitz Corporation - Japan
- Anglo American - United Kingdom
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Bukit Makmur.PT - Indonesia
- Rio Tinto Coal - Australia
- Maharashtra Electricity Regulatory Commission - India
- Karbindo Abesyapradhi - Indoneisa
- Essar Steel Hazira Ltd - India
- Thiess Contractors Indonesia
- Barasentosa Lestari - Indonesia
- Kumho Petrochemical, South Korea
- Port Waratah Coal Services - Australia
- IHS Mccloskey Coal Group - USA
- Meenaskhi Energy Private Limited - India
- Madhucon Powers Ltd - India
- Global Coal Blending Company Limited - Australia
- Sical Logistics Limited - India
- Aboitiz Power Corporation - Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Holcim Trading Pte Ltd - Singapore
- Tamil Nadu electricity Board
- Jorong Barutama Greston.PT - Indonesia
- Attock Cement Pakistan Limited
- Larsen & Toubro Limited - India
- OPG Power Generation Pvt Ltd - India
- Uttam Galva Steels Limited - India
- Global Business Power Corporation, Philippines
- McConnell Dowell - Australia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Indian Energy Exchange, India
- The State Trading Corporation of India Ltd
- Directorate General of MIneral and Coal - Indonesia
- Bayan Resources Tbk. - Indonesia
- Tata Chemicals Ltd - India
- SMG Consultants - Indonesia
- Jindal Steel & Power Ltd - India
- Chamber of Mines of South Africa
- Sarangani Energy Corporation, Philippines
- Planning Commission, India
- Metalloyd Limited - United Kingdom
- Wilmar Investment Holdings
- Ambuja Cements Ltd - India
- London Commodity Brokers - England
- Gujarat Electricity Regulatory Commission - India
- Mjunction Services Limited - India
- CNBM International Corporation - China
- Alfred C Toepfer International GmbH - Germany
- European Bulk Services B.V. - Netherlands
- Electricity Authority, New Zealand
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Sree Jayajothi Cements Limited - India
- Wood Mackenzie - Singapore
- Billiton Holdings Pty Ltd - Australia
- Siam City Cement - Thailand
- Savvy Resources Ltd - HongKong
- Sinarmas Energy and Mining - Indonesia
- Lanco Infratech Ltd - India
- Eastern Coal Council - USA
- Grasim Industreis Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Chettinad Cement Corporation Ltd - India
- Petron Corporation, Philippines
- Orica Mining Services - Indonesia
- White Energy Company Limited
- Bukit Baiduri Energy - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Star Paper Mills Limited - India
- Kapuas Tunggal Persada - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Intertek Mineral Services - Indonesia
- Borneo Indobara - Indonesia
- Ministry of Finance - Indonesia
- Samtan Co., Ltd - South Korea
- Bharathi Cement Corporation - India
- Sakthi Sugars Limited - India
- Goldman Sachs - Singapore
- Marubeni Corporation - India
- Malabar Cements Ltd - India
- GAC Shipping (India) Pvt Ltd
- PTC India Limited - India
- Carbofer General Trading SA - India
- Mercator Lines Limited - India
- ICICI Bank Limited - India
- Independent Power Producers Association of India
- Kalimantan Lumbung Energi - Indonesia
- Banpu Public Company Limited - Thailand
- Ministry of Transport, Egypt
- Coastal Gujarat Power Limited - India
- Georgia Ports Authority, United States
- Indonesian Coal Mining Association
- PowerSource Philippines DevCo
- Gujarat Mineral Development Corp Ltd - India
- The University of Queensland
- Central Java Power - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Bukit Asam (Persero) Tbk - Indonesia
- ASAPP Information Group - India
- Bulk Trading Sa - Switzerland
- VISA Power Limited - India
- Aditya Birla Group - India
- IEA Clean Coal Centre - UK
- Bangladesh Power Developement Board
- Mintek Dendrill Indonesia
- Gujarat Sidhee Cement - India
- GVK Power & Infra Limited - India
- Indo Tambangraya Megah - Indonesia
- Cement Manufacturers Association - India
- SN Aboitiz Power Inc, Philippines
- SMC Global Power, Philippines
- Electricity Generating Authority of Thailand
- Sindya Power Generating Company Private Ltd
- New Zealand Coal & Carbon
- PNOC Exploration Corporation - Philippines
- Thai Mozambique Logistica
- Riau Bara Harum - Indonesia
- South Luzon Thermal Energy Corporation
- Dalmia Cement Bharat India
- Iligan Light & Power Inc, Philippines
- Indika Energy - Indonesia
- Eastern Energy - Thailand
- Trasteel International SA, Italy
- Meralco Power Generation, Philippines
- Indian Oil Corporation Limited
- PetroVietnam Power Coal Import and Supply Company
- Ministry of Mines - Canada
- Vedanta Resources Plc - India
- Salva Resources Pvt Ltd - India
- TeaM Sual Corporation - Philippines
- Jaiprakash Power Ventures ltd
- Latin American Coal - Colombia
- Economic Council, Georgia
- Energy Link Ltd, New Zealand
- Posco Energy - South Korea
- Vijayanagar Sugar Pvt Ltd - India
- India Bulls Power Limited - India
- Globalindo Alam Lestari - Indonesia
- Standard Chartered Bank - UAE
- Manunggal Multi Energi - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Simpson Spence & Young - Indonesia
- Siam City Cement PLC, Thailand
- Petrochimia International Co. Ltd.- Taiwan
- Formosa Plastics Group - Taiwan
- TNB Fuel Sdn Bhd - Malaysia
- CIMB Investment Bank - Malaysia
- Kaltim Prima Coal - Indonesia
- Parry Sugars Refinery, India
- Binh Thuan Hamico - Vietnam
- Xindia Steels Limited - India
- Central Electricity Authority - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- LBH Netherlands Bv - Netherlands
- Bahari Cakrawala Sebuku - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Power Finance Corporation Ltd., India
- Heidelberg Cement - Germany
- Interocean Group of Companies - India
- The Treasury - Australian Government
- Deloitte Consulting - India
- Antam Resourcindo - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Makarim & Taira - Indonesia
- Bhatia International Limited - India
- Indogreen Group - Indonesia
- Directorate Of Revenue Intelligence - India
- Australian Commodity Traders Exchange
- Mercuria Energy - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Medco Energi Mining Internasional
- International Coal Ventures Pvt Ltd - India
- San Jose City I Power Corp, Philippines
- Karaikal Port Pvt Ltd - India
- Parliament of New Zealand
- Orica Australia Pty. Ltd.
- Merrill Lynch Commodities Europe
- Kideco Jaya Agung - Indonesia
- Toyota Tsusho Corporation, Japan
- MS Steel International - UAE
- Kobexindo Tractors - Indoneisa
- Bhoruka Overseas - Indonesia
- Videocon Industries ltd - India
- Africa Commodities Group - South Africa
- Therma Luzon, Inc, Philippines
- Semirara Mining and Power Corporation, Philippines
- Global Green Power PLC Corporation, Philippines
- Semirara Mining Corp, Philippines
- Maheswari Brothers Coal Limited - India
- Australian Coal Association
- Kepco SPC Power Corporation, Philippines
- Miang Besar Coal Terminal - Indonesia
- GMR Energy Limited - India
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