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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$77/t for thermal coal in 2013, then 45mt or 13% of Australia's coal exports in 2013 will be at risk of closure. At that price, a total of 204mt of production will be suffering negative margins.
In summary, Mr. Tanevski says, "Our expectation is that there will not be a significant dent in Australia's production this year. However, if prices do fall below expectations, the risk of closure for mines producing at negative margins will increase, reducing output."
Editor's notes:
Wood Mackenzie is the most comprehensive source of knowledge about the world's energy and metals industries. We analyse and advise on every stage along the value chain - from discovery to delivery, and beyond - to provide clients with the commercial insight that makes them stronger. For more information visit Wood Mackenzie.
Views expressed herein are personal views of the author and not that of COALspot.com and subject to COALspot.com's disclaimer clause. We welcome article submissions from experts in the areas of coal, mining, shipping, etc. To submit your articles please click here.
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Friday, 13 September 13
DIRECTOR GENERAL OF MINERAL AND COAL OF INDONESIA REVISED UP COAL PRICE REFERENCE TO US$ 76.89
COALspot. com - The Indonesian government has revised up its owned coal bench mark price by US$ 0.19/ MT to US$ 76.89 for September 2013 deliveries ...
Thursday, 12 September 13
PANAMAX : PACIFIC ROUNDS ARE NOW REPORTED BETWEEN USD 13K AND 15K PER DAY - FEARNRESEARCH
Handy
Nickel ore is a key support SE Asia/Feast rate at the moment; vessel in N.China were fixed around USD 11-12k, ships in mid China can expect a ...
Thursday, 12 September 13
CAPESIZE MARKET WILL BECOME EVEN TIGHTER - JEFFREY LANDSBERG
COALspot.com : While it is no secret that current capesize availability has become tight and has caused capesize rates to surge, availability is set ...
Thursday, 12 September 13
OVER THE WORST? WE MIGHT FIND OUT THIS WEEK - BIMCO
The shipping market has a spring in its step, even as summer draws to a close. There is it seems, confidence that finally, we are emerging into the ...
Thursday, 12 September 13
DRY BULK MARKET RALLY COMES AT A GOOD TIME FOR MOST SHIP OWNERS - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The latest surge of the dry bulk market has helped offset other lingering factors, which otherwise, could have plunged freight rates to new lows. Fo ...
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- Bulk Trading Sa - Switzerland
- Indian Oil Corporation Limited
- Jaiprakash Power Ventures ltd
- PTC India Limited - India
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- Global Coal Blending Company Limited - Australia
- Trasteel International SA, Italy
- Ministry of Transport, Egypt
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- Wilmar Investment Holdings
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- Romanian Commodities Exchange
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- Bhushan Steel Limited - India
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- Chettinad Cement Corporation Ltd - India
- Cigading International Bulk Terminal - Indonesia
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- Deloitte Consulting - India
- CNBM International Corporation - China
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- Iligan Light & Power Inc, Philippines
- Leighton Contractors Pty Ltd - Australia
- Energy Development Corp, Philippines
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- Vijayanagar Sugar Pvt Ltd - India
- Goldman Sachs - Singapore
- Savvy Resources Ltd - HongKong
- Thai Mozambique Logistica
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- Port Waratah Coal Services - Australia
- Mercuria Energy - Indonesia
- The State Trading Corporation of India Ltd
- Altura Mining Limited, Indonesia
- Power Finance Corporation Ltd., India
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- Jindal Steel & Power Ltd - India
- Planning Commission, India
- New Zealand Coal & Carbon
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- The Treasury - Australian Government
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- Videocon Industries ltd - India
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- Grasim Industreis Ltd - India
- Indonesian Coal Mining Association
- Indo Tambangraya Megah - Indonesia
- Sical Logistics Limited - India
- Coastal Gujarat Power Limited - India
- Renaissance Capital - South Africa
- Bukit Makmur.PT - Indonesia
- Globalindo Alam Lestari - Indonesia
- Maheswari Brothers Coal Limited - India
- Meralco Power Generation, Philippines
- Banpu Public Company Limited - Thailand
- Uttam Galva Steels Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Orica Mining Services - Indonesia
- Manunggal Multi Energi - Indonesia
- White Energy Company Limited
- Standard Chartered Bank - UAE
- Timah Investasi Mineral - Indoneisa
- Kideco Jaya Agung - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Carbofer General Trading SA - India
- GMR Energy Limited - India
- ICICI Bank Limited - India
- Eastern Coal Council - USA
- Asmin Koalindo Tuhup - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Independent Power Producers Association of India
- Rashtriya Ispat Nigam Limited - India
- Cement Manufacturers Association - India
- Sojitz Corporation - Japan
- LBH Netherlands Bv - Netherlands
- Thiess Contractors Indonesia
- Intertek Mineral Services - Indonesia
- SMC Global Power, Philippines
- Star Paper Mills Limited - India
- Samtan Co., Ltd - South Korea
- Central Java Power - Indonesia
- Siam City Cement - Thailand
- Alfred C Toepfer International GmbH - Germany
- PNOC Exploration Corporation - Philippines
- MS Steel International - UAE
- Petron Corporation, Philippines
- Semirara Mining Corp, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Sindya Power Generating Company Private Ltd
- TNB Fuel Sdn Bhd - Malaysia
- Madhucon Powers Ltd - India
- Pendopo Energi Batubara - Indonesia
- Bangladesh Power Developement Board
- Wood Mackenzie - Singapore
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- McConnell Dowell - Australia
- International Coal Ventures Pvt Ltd - India
- Holcim Trading Pte Ltd - Singapore
- Ceylon Electricity Board - Sri Lanka
- Anglo American - United Kingdom
- San Jose City I Power Corp, Philippines
- Tamil Nadu electricity Board
- Mintek Dendrill Indonesia
- Agrawal Coal Company - India
- India Bulls Power Limited - India
- AsiaOL BioFuels Corp., Philippines
- Kobexindo Tractors - Indoneisa
- Gujarat Mineral Development Corp Ltd - India
- Parry Sugars Refinery, India
- PowerSource Philippines DevCo
- Price Waterhouse Coopers - Russia
- Africa Commodities Group - South Africa
- Kaltim Prima Coal - Indonesia
- London Commodity Brokers - England
- Tata Chemicals Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Economic Council, Georgia
- Baramulti Group, Indonesia
- Interocean Group of Companies - India
- Attock Cement Pakistan Limited
- ASAPP Information Group - India
- Georgia Ports Authority, United States
- Global Green Power PLC Corporation, Philippines
- Electricity Generating Authority of Thailand
- Dalmia Cement Bharat India
- Pipit Mutiara Jaya. PT, Indonesia
- Bukit Baiduri Energy - Indonesia
- European Bulk Services B.V. - Netherlands
- Electricity Authority, New Zealand
- Miang Besar Coal Terminal - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Rio Tinto Coal - Australia
- Therma Luzon, Inc, Philippines
- Chamber of Mines of South Africa
- Bhatia International Limited - India
- Heidelberg Cement - Germany
- Lanco Infratech Ltd - India
- Aditya Birla Group - India
- Coalindo Energy - Indonesia
- Posco Energy - South Korea
- Ministry of Mines - Canada
- Makarim & Taira - Indonesia
- Bayan Resources Tbk. - Indonesia
- IEA Clean Coal Centre - UK
- IHS Mccloskey Coal Group - USA
- Malabar Cements Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Ind-Barath Power Infra Limited - India
- Central Electricity Authority - India
- Energy Link Ltd, New Zealand
- Medco Energi Mining Internasional
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Australian Commodity Traders Exchange
- Salva Resources Pvt Ltd - India
- Eastern Energy - Thailand
- Directorate Of Revenue Intelligence - India
- Toyota Tsusho Corporation, Japan
- Antam Resourcindo - Indonesia
- SN Aboitiz Power Inc, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- TeaM Sual Corporation - Philippines
- Kalimantan Lumbung Energi - Indonesia
- OPG Power Generation Pvt Ltd - India
- Ambuja Cements Ltd - India
- Bharathi Cement Corporation - India
- Parliament of New Zealand
- SMG Consultants - Indonesia
- Siam City Cement PLC, Thailand
- Bhoruka Overseas - Indonesia
- Kartika Selabumi Mining - Indonesia
- Karaikal Port Pvt Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Singapore Mercantile Exchange
- Maharashtra Electricity Regulatory Commission - India
- Gujarat Sidhee Cement - India
- Edison Trading Spa - Italy
- Karbindo Abesyapradhi - Indoneisa
- Larsen & Toubro Limited - India
- Australian Coal Association
- Global Business Power Corporation, Philippines
- Commonwealth Bank - Australia
- Mercator Lines Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Binh Thuan Hamico - Vietnam
- Simpson Spence & Young - Indonesia
- Marubeni Corporation - India
- Barasentosa Lestari - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- VISA Power Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Petrochimia International Co. Ltd.- Taiwan
- Minerals Council of Australia
- Metalloyd Limited - United Kingdom
- Vizag Seaport Private Limited - India
- Mjunction Services Limited - India
- Coal and Oil Company - UAE
- Formosa Plastics Group - Taiwan
- Straits Asia Resources Limited - Singapore
- The University of Queensland
- Xindia Steels Limited - India
- Meenaskhi Energy Private Limited - India
- Latin American Coal - Colombia
- GAC Shipping (India) Pvt Ltd
- Oldendorff Carriers - Singapore
- Vedanta Resources Plc - India
- Krishnapatnam Port Company Ltd. - India
- Sree Jayajothi Cements Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Indian Energy Exchange, India
- Orica Australia Pty. Ltd.
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Merrill Lynch Commodities Europe
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