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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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Monday, 16 September 13
WHAT RECOVERY MEANS FOR THE CAPESIZE MARKET - COMMODORE RESEARCH
COALspot.com: The simple fact that capesize rates have been able to increase above the $9,000/mark and become much more responsive to changes in car ...
Monday, 16 September 13
CFR SOUTH CHINA COAL SWAP: STABLE TO STEADY
COALspot.com : SGX has launched API 8 CFR South China Coal Swap on 29 April 2013 and SGX replaced the previous swap.
API 8 CFR South China Coal s ...
Monday, 16 September 13
INDONESIAN SUB-BIT COAL SWAP STRUGGLING TO FINDS THE RIGHT PATH
COALspot.com – Sub-Bit Indonesia coal swap (FOB ) for average Q4 2013 delivery down 0.75 percept month on month on Friday 13 Septe ...
Sunday, 15 September 13
CAPE FREIGHT RATES RISE ON HIGH DEMAND AND TIGHT AVAILABILITY - CAPT. REDDY
COALspot.com : The BDI, Cape and Panamax indices are continued to rise and saw a steep surge with average index in these segments up around 25 pct w ...
Friday, 13 September 13
US COAL OUTPUT SLIPS 3.34% ON-WEEK
COALspot.com – United states the world’s second largest coal producer produced totaled approximately 20.20 million short tons (mmst) of ...
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- Power Finance Corporation Ltd., India
- Essar Steel Hazira Ltd - India
- Samtan Co., Ltd - South Korea
- Ambuja Cements Ltd - India
- PTC India Limited - India
- Dalmia Cement Bharat India
- TNB Fuel Sdn Bhd - Malaysia
- Therma Luzon, Inc, Philippines
- White Energy Company Limited
- European Bulk Services B.V. - Netherlands
- Makarim & Taira - Indonesia
- Latin American Coal - Colombia
- Eastern Coal Council - USA
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- Jaiprakash Power Ventures ltd
- Bhoruka Overseas - Indonesia
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- Agrawal Coal Company - India
- Bukit Asam (Persero) Tbk - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Kobexindo Tractors - Indoneisa
- Pipit Mutiara Jaya. PT, Indonesia
- South Luzon Thermal Energy Corporation
- Sical Logistics Limited - India
- GMR Energy Limited - India
- Maheswari Brothers Coal Limited - India
- Toyota Tsusho Corporation, Japan
- Indian Oil Corporation Limited
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- Global Business Power Corporation, Philippines
- Indonesian Coal Mining Association
- Gujarat Electricity Regulatory Commission - India
- Kaltim Prima Coal - Indonesia
- Eastern Energy - Thailand
- Kepco SPC Power Corporation, Philippines
- Ministry of Finance - Indonesia
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- Parliament of New Zealand
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- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- SMG Consultants - Indonesia
- Riau Bara Harum - Indonesia
- Price Waterhouse Coopers - Russia
- Sindya Power Generating Company Private Ltd
- New Zealand Coal & Carbon
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- CIMB Investment Bank - Malaysia
- Minerals Council of Australia
- TeaM Sual Corporation - Philippines
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- Binh Thuan Hamico - Vietnam
- Ministry of Mines - Canada
- Coalindo Energy - Indonesia
- McConnell Dowell - Australia
- Global Green Power PLC Corporation, Philippines
- Bangladesh Power Developement Board
- Global Coal Blending Company Limited - Australia
- Gujarat Sidhee Cement - India
- ASAPP Information Group - India
- Electricity Generating Authority of Thailand
- Manunggal Multi Energi - Indonesia
- Rio Tinto Coal - Australia
- Kohat Cement Company Ltd. - Pakistan
- OPG Power Generation Pvt Ltd - India
- Economic Council, Georgia
- Independent Power Producers Association of India
- Maharashtra Electricity Regulatory Commission - India
- Kalimantan Lumbung Energi - Indonesia
- Mintek Dendrill Indonesia
- Siam City Cement - Thailand
- Orica Mining Services - Indonesia
- Carbofer General Trading SA - India
- Georgia Ports Authority, United States
- Directorate General of MIneral and Coal - Indonesia
- Parry Sugars Refinery, India
- Bukit Baiduri Energy - Indonesia
- Kartika Selabumi Mining - Indonesia
- SN Aboitiz Power Inc, Philippines
- Sarangani Energy Corporation, Philippines
- AsiaOL BioFuels Corp., Philippines
- Indo Tambangraya Megah - Indonesia
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- Sojitz Corporation - Japan
- Thai Mozambique Logistica
- Wood Mackenzie - Singapore
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- Straits Asia Resources Limited - Singapore
- Bhatia International Limited - India
- ICICI Bank Limited - India
- Coal and Oil Company - UAE
- Electricity Authority, New Zealand
- Romanian Commodities Exchange
- Heidelberg Cement - Germany
- Interocean Group of Companies - India
- Uttam Galva Steels Limited - India
- Aboitiz Power Corporation - Philippines
- Salva Resources Pvt Ltd - India
- Tata Chemicals Ltd - India
- The University of Queensland
- Asmin Koalindo Tuhup - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Simpson Spence & Young - Indonesia
- Larsen & Toubro Limited - India
- Ceylon Electricity Board - Sri Lanka
- Petrochimia International Co. Ltd.- Taiwan
- Billiton Holdings Pty Ltd - Australia
- Antam Resourcindo - Indonesia
- Indogreen Group - Indonesia
- Coastal Gujarat Power Limited - India
- Sakthi Sugars Limited - India
- Leighton Contractors Pty Ltd - Australia
- Mjunction Services Limited - India
- India Bulls Power Limited - India
- Edison Trading Spa - Italy
- Ministry of Transport, Egypt
- Indika Energy - Indonesia
- Trasteel International SA, Italy
- Renaissance Capital - South Africa
- San Jose City I Power Corp, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Offshore Bulk Terminal Pte Ltd, Singapore
- Standard Chartered Bank - UAE
- Bukit Makmur.PT - Indonesia
- Deloitte Consulting - India
- Posco Energy - South Korea
- Sinarmas Energy and Mining - Indonesia
- Aditya Birla Group - India
- Petron Corporation, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Meralco Power Generation, Philippines
- LBH Netherlands Bv - Netherlands
- Kumho Petrochemical, South Korea
- Merrill Lynch Commodities Europe
- Borneo Indobara - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Globalindo Alam Lestari - Indonesia
- Star Paper Mills Limited - India
- Anglo American - United Kingdom
- Planning Commission, India
- IHS Mccloskey Coal Group - USA
- Kapuas Tunggal Persada - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Thiess Contractors Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Australian Commodity Traders Exchange
- Neyveli Lignite Corporation Ltd, - India
- Energy Development Corp, Philippines
- Bulk Trading Sa - Switzerland
- Marubeni Corporation - India
- Madhucon Powers Ltd - India
- Savvy Resources Ltd - HongKong
- Mercator Lines Limited - India
- Energy Link Ltd, New Zealand
- Bharathi Cement Corporation - India
- Banpu Public Company Limited - Thailand
- PetroVietnam Power Coal Import and Supply Company
- GVK Power & Infra Limited - India
- Bayan Resources Tbk. - Indonesia
- Semirara Mining Corp, Philippines
- MS Steel International - UAE
- Directorate Of Revenue Intelligence - India
- Commonwealth Bank - Australia
- Africa Commodities Group - South Africa
- IEA Clean Coal Centre - UK
- Vizag Seaport Private Limited - India
- Barasentosa Lestari - Indonesia
- Meenaskhi Energy Private Limited - India
- Chettinad Cement Corporation Ltd - India
- Altura Mining Limited, Indonesia
- Intertek Mineral Services - Indonesia
- Tamil Nadu electricity Board
- Medco Energi Mining Internasional
- Formosa Plastics Group - Taiwan
- Baramulti Group, Indonesia
- Semirara Mining and Power Corporation, Philippines
- Timah Investasi Mineral - Indoneisa
- London Commodity Brokers - England
- Indian Energy Exchange, India
- Attock Cement Pakistan Limited
- Gujarat Mineral Development Corp Ltd - India
- Xindia Steels Limited - India
- Metalloyd Limited - United Kingdom
- Sree Jayajothi Cements Limited - India
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- Malabar Cements Ltd - India
- Vedanta Resources Plc - India
- The State Trading Corporation of India Ltd
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- Central Java Power - Indonesia
- Videocon Industries ltd - India
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- PNOC Exploration Corporation - Philippines
- CNBM International Corporation - China
- Karaikal Port Pvt Ltd - India
- PowerSource Philippines DevCo
- Australian Coal Association
- The Treasury - Australian Government
- GN Power Mariveles Coal Plant, Philippines
- Rashtriya Ispat Nigam Limited - India
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- Wilmar Investment Holdings
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- Bahari Cakrawala Sebuku - Indonesia
- Grasim Industreis Ltd - India
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- Bhushan Steel Limited - India
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- International Coal Ventures Pvt Ltd - India
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