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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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Tuesday, 13 August 13
AUSTRALIA NEWCASTLE COAL EXPORTS JUMP 30.61 PERCENT ON WEEK
COALspot.com: Power plant and semi-soft coking coal shipments from Australia's Newcastle port up 30.61 per cent week on week to 2.95 million mt for ...
Monday, 12 August 13
GBCE SUCCESSFUL IN UPGRADING LOW RANK INDONESIAN COAL ON INDUSTRIAL SCALE
COALspot.com : GB Clean Energy Ltd. (GBCE) has annoused that, the company has successfully upgraded 2,426 tonnes of low rank 4,018 kcal NAR Ind ...
Monday, 12 August 13
INDIA - SAFE SHIPMENT OF IRON ORE FINES FROM INDIAN PORTS - WEST OF ENGLAND P&I CLUB
As Members may be aware, in 2009 two ships, the ‘Asian Forest’ and the ‘Black Rose’, capsized and sank following the liquefa ...
Sunday, 11 August 13
INDONESIAN COAL SWAPS : FLAT ON DAY
COALspot.com – Sub-Bit Indonesia coal swaps (FOB ) for average Q4 2013 delivery flat on day due to holidays in Indonesia, Malaysia & ...
Sunday, 11 August 13
SUPRAMAX FREIGHT RATES FROM INDONESIA TO INDIA CONTINUED TO BE SOFT - VISTAAR
COALspot.com : The freight market was soft this week with all indices down , the reason could be long weekend holidays in Indonesia, Singapore and M ...
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- Rio Tinto Coal - Australia
- Bhoruka Overseas - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Energy Development Corp, Philippines
- CNBM International Corporation - China
- Banpu Public Company Limited - Thailand
- The University of Queensland
- Indogreen Group - Indonesia
- Parry Sugars Refinery, India
- Coastal Gujarat Power Limited - India
- Intertek Mineral Services - Indonesia
- Coal and Oil Company - UAE
- Maheswari Brothers Coal Limited - India
- Ministry of Finance - Indonesia
- Samtan Co., Ltd - South Korea
- Bukit Asam (Persero) Tbk - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Posco Energy - South Korea
- Leighton Contractors Pty Ltd - Australia
- Meenaskhi Energy Private Limited - India
- Bhatia International Limited - India
- GVK Power & Infra Limited - India
- Indian Energy Exchange, India
- SN Aboitiz Power Inc, Philippines
- Electricity Authority, New Zealand
- Straits Asia Resources Limited - Singapore
- Essar Steel Hazira Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- Gujarat Electricity Regulatory Commission - India
- PowerSource Philippines DevCo
- Power Finance Corporation Ltd., India
- GN Power Mariveles Coal Plant, Philippines
- Attock Cement Pakistan Limited
- Chamber of Mines of South Africa
- Global Green Power PLC Corporation, Philippines
- The Treasury - Australian Government
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Holcim Trading Pte Ltd - Singapore
- McConnell Dowell - Australia
- Goldman Sachs - Singapore
- Meralco Power Generation, Philippines
- Mjunction Services Limited - India
- TeaM Sual Corporation - Philippines
- PTC India Limited - India
- Krishnapatnam Port Company Ltd. - India
- VISA Power Limited - India
- Pendopo Energi Batubara - Indonesia
- Larsen & Toubro Limited - India
- Marubeni Corporation - India
- Kapuas Tunggal Persada - Indonesia
- Sical Logistics Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Pipit Mutiara Jaya. PT, Indonesia
- Siam City Cement PLC, Thailand
- Bukit Makmur.PT - Indonesia
- Uttam Galva Steels Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Independent Power Producers Association of India
- Aditya Birla Group - India
- Indo Tambangraya Megah - Indonesia
- Dalmia Cement Bharat India
- Medco Energi Mining Internasional
- Price Waterhouse Coopers - Russia
- South Luzon Thermal Energy Corporation
- Binh Thuan Hamico - Vietnam
- Edison Trading Spa - Italy
- Ministry of Mines - Canada
- Oldendorff Carriers - Singapore
- Ceylon Electricity Board - Sri Lanka
- Kohat Cement Company Ltd. - Pakistan
- ASAPP Information Group - India
- Grasim Industreis Ltd - India
- Semirara Mining Corp, Philippines
- Jaiprakash Power Ventures ltd
- Bulk Trading Sa - Switzerland
- India Bulls Power Limited - India
- Central Electricity Authority - India
- Star Paper Mills Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Global Business Power Corporation, Philippines
- Ambuja Cements Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Port Waratah Coal Services - Australia
- Deloitte Consulting - India
- IEA Clean Coal Centre - UK
- Orica Australia Pty. Ltd.
- SMC Global Power, Philippines
- Madhucon Powers Ltd - India
- Commonwealth Bank - Australia
- Semirara Mining and Power Corporation, Philippines
- Kartika Selabumi Mining - Indonesia
- Thai Mozambique Logistica
- Sojitz Corporation - Japan
- Renaissance Capital - South Africa
- OPG Power Generation Pvt Ltd - India
- Parliament of New Zealand
- PetroVietnam Power Coal Import and Supply Company
- Karaikal Port Pvt Ltd - India
- Simpson Spence & Young - Indonesia
- New Zealand Coal & Carbon
- Vedanta Resources Plc - India
- Directorate General of MIneral and Coal - Indonesia
- Romanian Commodities Exchange
- Africa Commodities Group - South Africa
- Kumho Petrochemical, South Korea
- Chettinad Cement Corporation Ltd - India
- Kepco SPC Power Corporation, Philippines
- Sindya Power Generating Company Private Ltd
- Bharathi Cement Corporation - India
- San Jose City I Power Corp, Philippines
- Petron Corporation, Philippines
- Borneo Indobara - Indonesia
- Makarim & Taira - Indonesia
- LBH Netherlands Bv - Netherlands
- Energy Link Ltd, New Zealand
- Kaltim Prima Coal - Indonesia
- GMR Energy Limited - India
- CIMB Investment Bank - Malaysia
- Miang Besar Coal Terminal - Indonesia
- Cement Manufacturers Association - India
- Wood Mackenzie - Singapore
- Savvy Resources Ltd - HongKong
- Jindal Steel & Power Ltd - India
- Economic Council, Georgia
- Maharashtra Electricity Regulatory Commission - India
- Tata Chemicals Ltd - India
- Malabar Cements Ltd - India
- Ind-Barath Power Infra Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Bhushan Steel Limited - India
- Bangladesh Power Developement Board
- Sinarmas Energy and Mining - Indonesia
- Directorate Of Revenue Intelligence - India
- Interocean Group of Companies - India
- Sree Jayajothi Cements Limited - India
- Eastern Coal Council - USA
- Global Coal Blending Company Limited - Australia
- Gujarat Sidhee Cement - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Planning Commission, India
- European Bulk Services B.V. - Netherlands
- Riau Bara Harum - Indonesia
- Therma Luzon, Inc, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Salva Resources Pvt Ltd - India
- Baramulti Group, Indonesia
- Metalloyd Limited - United Kingdom
- Bukit Baiduri Energy - Indonesia
- Iligan Light & Power Inc, Philippines
- Indika Energy - Indonesia
- Kideco Jaya Agung - Indonesia
- Carbofer General Trading SA - India
- Sarangani Energy Corporation, Philippines
- GAC Shipping (India) Pvt Ltd
- Mercator Lines Limited - India
- Latin American Coal - Colombia
- Videocon Industries ltd - India
- Globalindo Alam Lestari - Indonesia
- Toyota Tsusho Corporation, Japan
- Aboitiz Power Corporation - Philippines
- Sakthi Sugars Limited - India
- Orica Mining Services - Indonesia
- Minerals Council of Australia
- Xindia Steels Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Ministry of Transport, Egypt
- SMG Consultants - Indonesia
- Merrill Lynch Commodities Europe
- Agrawal Coal Company - India
- Electricity Generating Authority of Thailand
- Mercuria Energy - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Tamil Nadu electricity Board
- Singapore Mercantile Exchange
- Bayan Resources Tbk. - Indonesia
- Formosa Plastics Group - Taiwan
- MS Steel International - UAE
- Cigading International Bulk Terminal - Indonesia
- Indian Oil Corporation Limited
- Georgia Ports Authority, United States
- Australian Commodity Traders Exchange
- Trasteel International SA, Italy
- Eastern Energy - Thailand
- London Commodity Brokers - England
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Mintek Dendrill Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Lanco Infratech Ltd - India
- Altura Mining Limited, Indonesia
- Wilmar Investment Holdings
- Heidelberg Cement - Germany
- IHS Mccloskey Coal Group - USA
- International Coal Ventures Pvt Ltd - India
- Vizag Seaport Private Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- AsiaOL BioFuels Corp., Philippines
- Billiton Holdings Pty Ltd - Australia
- Siam City Cement - Thailand
- Antam Resourcindo - Indonesia
- Australian Coal Association
- Coalindo Energy - Indonesia
- The State Trading Corporation of India Ltd
- Timah Investasi Mineral - Indoneisa
- Indonesian Coal Mining Association
- Rashtriya Ispat Nigam Limited - India
- Thiess Contractors Indonesia
- ICICI Bank Limited - India
- Kobexindo Tractors - Indoneisa
- PNOC Exploration Corporation - Philippines
- White Energy Company Limited
- Anglo American - United Kingdom
- Standard Chartered Bank - UAE
- Central Java Power - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Barasentosa Lestari - Indonesia
- Manunggal Multi Energi - Indonesia
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