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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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Thursday, 22 August 13
PANAMAX : PERIOD MARKET IS STILL BEING LED BY STRONGER SENTIMENT IN THE FFA'S - FEARNRESEARCH
Handy
This week started slowly as expected. Indo biz now rate APS around 7k +60k to china and around 8k+80k to India. However, there are some ships ...
Wednesday, 21 August 13
DRY BULK SHIPPING - POSITIVE WINDOW FOR CAPESIZE OWNERS - PETER SAND
By: Peter Sand, Chief Shipping Analyst, BIMCO
Demand:
“Expect the unexpected from the dry bulk market” was what we wrote last time ar ...
Wednesday, 21 August 13
RATES FOR CAPES MOVED DECISIVELY NORTH THIS WEEK - INTERMODAL
COALspot.com - Right when the BDI seemed ready for another dive below the 1000 points level, the Dry Bulk market made significant comeback this week ...
Tuesday, 20 August 13
AUSTRALIA NEWCASTLE COAL EXPORTS FALL 19.15 PERCENT ON WEEK
COALspot.com: Power plant and semi-soft coking coal shipments from Australia's Newcastle port fell 19.15 per cent week on week to 2.39 million mt f ...
Tuesday, 20 August 13
CAPESIZE RATES MORE SENSITIVE TO DEMAND - COMMODORE RESEARCH & CONSULTANCY
COALspot.com : Approximately 71.50 million tons of iron ore is now stockpiled at Chinese ports, 900,000 tons (-1%) less than a week ago, Commodore R ...
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- Australian Coal Association
- Barasentosa Lestari - Indonesia
- Sojitz Corporation - Japan
- Madhucon Powers Ltd - India
- Merrill Lynch Commodities Europe
- Maharashtra Electricity Regulatory Commission - India
- GVK Power & Infra Limited - India
- Neyveli Lignite Corporation Ltd, - India
- SMC Global Power, Philippines
- Sindya Power Generating Company Private Ltd
- Mjunction Services Limited - India
- TeaM Sual Corporation - Philippines
- Interocean Group of Companies - India
- Indonesian Coal Mining Association
- Iligan Light & Power Inc, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Central Java Power - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Singapore Mercantile Exchange
- Essar Steel Hazira Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Global Business Power Corporation, Philippines
- Aboitiz Power Corporation - Philippines
- Baramulti Group, Indonesia
- Aditya Birla Group - India
- San Jose City I Power Corp, Philippines
- Antam Resourcindo - Indonesia
- Timah Investasi Mineral - Indoneisa
- Larsen & Toubro Limited - India
- Vedanta Resources Plc - India
- Bukit Asam (Persero) Tbk - Indonesia
- Energy Link Ltd, New Zealand
- MS Steel International - UAE
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Minerals Council of Australia
- Deloitte Consulting - India
- Kaltim Prima Coal - Indonesia
- PTC India Limited - India
- Altura Mining Limited, Indonesia
- Electricity Generating Authority of Thailand
- IHS Mccloskey Coal Group - USA
- Siam City Cement - Thailand
- Alfred C Toepfer International GmbH - Germany
- Salva Resources Pvt Ltd - India
- Meenaskhi Energy Private Limited - India
- Standard Chartered Bank - UAE
- AsiaOL BioFuels Corp., Philippines
- Makarim & Taira - Indonesia
- Eastern Energy - Thailand
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Medco Energi Mining Internasional
- India Bulls Power Limited - India
- Bharathi Cement Corporation - India
- Ministry of Mines - Canada
- Lanco Infratech Ltd - India
- Romanian Commodities Exchange
- Wilmar Investment Holdings
- Miang Besar Coal Terminal - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Mercuria Energy - Indonesia
- Global Coal Blending Company Limited - Australia
- Pipit Mutiara Jaya. PT, Indonesia
- GMR Energy Limited - India
- Meralco Power Generation, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Kumho Petrochemical, South Korea
- Electricity Authority, New Zealand
- Tamil Nadu electricity Board
- Uttam Galva Steels Limited - India
- Billiton Holdings Pty Ltd - Australia
- Borneo Indobara - Indonesia
- Formosa Plastics Group - Taiwan
- GAC Shipping (India) Pvt Ltd
- Power Finance Corporation Ltd., India
- OPG Power Generation Pvt Ltd - India
- Marubeni Corporation - India
- Bhushan Steel Limited - India
- Ind-Barath Power Infra Limited - India
- Coalindo Energy - Indonesia
- Independent Power Producers Association of India
- Bhoruka Overseas - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Intertek Mineral Services - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Orica Mining Services - Indonesia
- Pendopo Energi Batubara - Indonesia
- Africa Commodities Group - South Africa
- Latin American Coal - Colombia
- Attock Cement Pakistan Limited
- Xindia Steels Limited - India
- Port Waratah Coal Services - Australia
- Parry Sugars Refinery, India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Carbofer General Trading SA - India
- Coal and Oil Company - UAE
- Gujarat Electricity Regulatory Commission - India
- Malabar Cements Ltd - India
- Trasteel International SA, Italy
- Offshore Bulk Terminal Pte Ltd, Singapore
- Eastern Coal Council - USA
- Sree Jayajothi Cements Limited - India
- Price Waterhouse Coopers - Russia
- Georgia Ports Authority, United States
- Mintek Dendrill Indonesia
- Posco Energy - South Korea
- Chamber of Mines of South Africa
- CNBM International Corporation - China
- Indian Oil Corporation Limited
- Riau Bara Harum - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Cigading International Bulk Terminal - Indonesia
- Parliament of New Zealand
- Binh Thuan Hamico - Vietnam
- Anglo American - United Kingdom
- Renaissance Capital - South Africa
- Goldman Sachs - Singapore
- McConnell Dowell - Australia
- Energy Development Corp, Philippines
- South Luzon Thermal Energy Corporation
- Savvy Resources Ltd - HongKong
- Semirara Mining and Power Corporation, Philippines
- Sarangani Energy Corporation, Philippines
- Tata Chemicals Ltd - India
- Holcim Trading Pte Ltd - Singapore
- Samtan Co., Ltd - South Korea
- Jindal Steel & Power Ltd - India
- New Zealand Coal & Carbon
- Thai Mozambique Logistica
- SN Aboitiz Power Inc, Philippines
- Semirara Mining Corp, Philippines
- Indika Energy - Indonesia
- IEA Clean Coal Centre - UK
- Thiess Contractors Indonesia
- Bangladesh Power Developement Board
- The University of Queensland
- Siam City Cement PLC, Thailand
- Kideco Jaya Agung - Indonesia
- Agrawal Coal Company - India
- Oldendorff Carriers - Singapore
- Directorate Of Revenue Intelligence - India
- Therma Luzon, Inc, Philippines
- Chettinad Cement Corporation Ltd - India
- PowerSource Philippines DevCo
- CIMB Investment Bank - Malaysia
- Petron Corporation, Philippines
- Edison Trading Spa - Italy
- Krishnapatnam Port Company Ltd. - India
- Kepco SPC Power Corporation, Philippines
- Economic Council, Georgia
- Sinarmas Energy and Mining - Indonesia
- Videocon Industries ltd - India
- Global Green Power PLC Corporation, Philippines
- European Bulk Services B.V. - Netherlands
- Ceylon Electricity Board - Sri Lanka
- Kobexindo Tractors - Indoneisa
- Coastal Gujarat Power Limited - India
- Kapuas Tunggal Persada - Indonesia
- Central Electricity Authority - India
- Ministry of Finance - Indonesia
- Bukit Makmur.PT - Indonesia
- Bayan Resources Tbk. - Indonesia
- Heidelberg Cement - Germany
- Vijayanagar Sugar Pvt Ltd - India
- Dalmia Cement Bharat India
- Globalindo Alam Lestari - Indonesia
- Commonwealth Bank - Australia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Sakthi Sugars Limited - India
- White Energy Company Limited
- The Treasury - Australian Government
- Banpu Public Company Limited - Thailand
- ICICI Bank Limited - India
- Mercator Lines Limited - India
- ASAPP Information Group - India
- Rashtriya Ispat Nigam Limited - India
- Jorong Barutama Greston.PT - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Bulk Trading Sa - Switzerland
- International Coal Ventures Pvt Ltd - India
- Bhatia International Limited - India
- Metalloyd Limited - United Kingdom
- Kartika Selabumi Mining - Indonesia
- Bukit Baiduri Energy - Indonesia
- LBH Netherlands Bv - Netherlands
- Orica Australia Pty. Ltd.
- PNOC Exploration Corporation - Philippines
- Maheswari Brothers Coal Limited - India
- Gujarat Sidhee Cement - India
- Kohat Cement Company Ltd. - Pakistan
- Cement Manufacturers Association - India
- London Commodity Brokers - England
- Indian Energy Exchange, India
- Petrochimia International Co. Ltd.- Taiwan
- Leighton Contractors Pty Ltd - Australia
- Sical Logistics Limited - India
- Star Paper Mills Limited - India
- Australian Commodity Traders Exchange
- Vizag Seaport Private Limited - India
- Karaikal Port Pvt Ltd - India
- Grasim Industreis Ltd - India
- Ministry of Transport, Egypt
- Straits Asia Resources Limited - Singapore
- Gujarat Mineral Development Corp Ltd - India
- Planning Commission, India
- Simpson Spence & Young - Indonesia
- Rio Tinto Coal - Australia
- Manunggal Multi Energi - Indonesia
- Wood Mackenzie - Singapore
- The State Trading Corporation of India Ltd
- SMG Consultants - Indonesia
- Ambuja Cements Ltd - India
- Indogreen Group - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Jaiprakash Power Ventures ltd
- VISA Power Limited - India
- Toyota Tsusho Corporation, Japan
- Indo Tambangraya Megah - Indonesia
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