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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, 30 July 13
KOMIPO INVITES BIDS FOR 520,000 MT OF 5,700 KCAL/KG COAL ON NAR BASIS FOR H1, 2014
COALspot.com : Korea Midland Power Co., Ltd. has invited bids for 520,000 Metric Tons (MT) of coal with calorific value 5,700 kcal/kg on NAR basis f ...
Tuesday, 30 July 13
AUSTRALIA'S NEWCASTLE SHIPPED 12.58 PERCENT LESS COAL W-O-W
COALspot.com: Newcastle port in Australia has loaded 2,945,848 tons of coal for the week ended 0700 hours 29 July 2013, Newcastle Port Corp. s ...
Monday, 29 July 13
INDONESIA'S ENERGY NEEDS COULD SPELL GOOD NEWS FOR TANKER OWNERS - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
Despite abundant energy resources, Indonesia has still failed meet its own demand, which led to a rising import of crude. According to the latest we ...
Sunday, 28 July 13
SUB-BIT INDONESIA COAL SWAP UP SLIGHTLY FOR SEPTEMBER CARGOES
COALspot.com – Sub-Bit Indonesia coal swaps (FOB ) for average September 2013 delivery slightly up on day and week but fell on month on ...
Saturday, 27 July 13
CEPL INDIA TO BAG 0.3 MILLION TONS OF COAL SUPPLY ORDER FROM TNPL
COALspot.com - An India based coal trader Coastal Energy Private Limited has offered the lowest price of US$ 73.00 per metric ton for calorific valu ...
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- PowerSource Philippines DevCo
- Standard Chartered Bank - UAE
- Independent Power Producers Association of India
- Lanco Infratech Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Indogreen Group - Indonesia
- Central Electricity Authority - India
- TeaM Sual Corporation - Philippines
- Ambuja Cements Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- Grasim Industreis Ltd - India
- SMG Consultants - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Power Finance Corporation Ltd., India
- Siam City Cement - Thailand
- Singapore Mercantile Exchange
- Gujarat Sidhee Cement - India
- Vijayanagar Sugar Pvt Ltd - India
- Price Waterhouse Coopers - Russia
- Tamil Nadu electricity Board
- Commonwealth Bank - Australia
- Jindal Steel & Power Ltd - India
- IHS Mccloskey Coal Group - USA
- Maharashtra Electricity Regulatory Commission - India
- Sical Logistics Limited - India
- Electricity Authority, New Zealand
- Samtan Co., Ltd - South Korea
- Kideco Jaya Agung - Indonesia
- Meenaskhi Energy Private Limited - India
- Billiton Holdings Pty Ltd - Australia
- Dalmia Cement Bharat India
- Sinarmas Energy and Mining - Indonesia
- Romanian Commodities Exchange
- Bulk Trading Sa - Switzerland
- Aboitiz Power Corporation - Philippines
- Timah Investasi Mineral - Indoneisa
- Economic Council, Georgia
- Bahari Cakrawala Sebuku - Indonesia
- Kobexindo Tractors - Indoneisa
- Baramulti Group, Indonesia
- Central Java Power - Indonesia
- Marubeni Corporation - India
- Latin American Coal - Colombia
- OPG Power Generation Pvt Ltd - India
- Directorate Of Revenue Intelligence - India
- Vizag Seaport Private Limited - India
- Vedanta Resources Plc - India
- India Bulls Power Limited - India
- Oldendorff Carriers - Singapore
- Medco Energi Mining Internasional
- Coalindo Energy - Indonesia
- Bayan Resources Tbk. - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Indo Tambangraya Megah - Indonesia
- Energy Development Corp, Philippines
- Simpson Spence & Young - Indonesia
- Sree Jayajothi Cements Limited - India
- McConnell Dowell - Australia
- Heidelberg Cement - Germany
- Videocon Industries ltd - India
- Trasteel International SA, Italy
- GAC Shipping (India) Pvt Ltd
- Jaiprakash Power Ventures ltd
- Indonesian Coal Mining Association
- Energy Link Ltd, New Zealand
- Borneo Indobara - Indonesia
- LBH Netherlands Bv - Netherlands
- Binh Thuan Hamico - Vietnam
- Wood Mackenzie - Singapore
- Orica Australia Pty. Ltd.
- PetroVietnam Power Coal Import and Supply Company
- Essar Steel Hazira Ltd - India
- Indian Energy Exchange, India
- Global Business Power Corporation, Philippines
- Altura Mining Limited, Indonesia
- Merrill Lynch Commodities Europe
- Minerals Council of Australia
- Bhushan Steel Limited - India
- Global Green Power PLC Corporation, Philippines
- Sarangani Energy Corporation, Philippines
- Goldman Sachs - Singapore
- Karaikal Port Pvt Ltd - India
- AsiaOL BioFuels Corp., Philippines
- CIMB Investment Bank - Malaysia
- Petrochimia International Co. Ltd.- Taiwan
- Barasentosa Lestari - Indonesia
- Deloitte Consulting - India
- Australian Commodity Traders Exchange
- Eastern Coal Council - USA
- Africa Commodities Group - South Africa
- Sojitz Corporation - Japan
- Edison Trading Spa - Italy
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Maheswari Brothers Coal Limited - India
- Bhoruka Overseas - Indonesia
- Port Waratah Coal Services - Australia
- Cigading International Bulk Terminal - Indonesia
- Agrawal Coal Company - India
- Interocean Group of Companies - India
- Kohat Cement Company Ltd. - Pakistan
- New Zealand Coal & Carbon
- Kaltim Prima Coal - Indonesia
- Indika Energy - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Bukit Makmur.PT - Indonesia
- Formosa Plastics Group - Taiwan
- Siam City Cement PLC, Thailand
- GN Power Mariveles Coal Plant, Philippines
- Carbofer General Trading SA - India
- Tata Chemicals Ltd - India
- International Coal Ventures Pvt Ltd - India
- CNBM International Corporation - China
- Orica Mining Services - Indonesia
- Kepco SPC Power Corporation, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- IEA Clean Coal Centre - UK
- Kalimantan Lumbung Energi - Indonesia
- Mintek Dendrill Indonesia
- GMR Energy Limited - India
- Aditya Birla Group - India
- Chamber of Mines of South Africa
- Pendopo Energi Batubara - Indonesia
- Metalloyd Limited - United Kingdom
- Planning Commission, India
- The University of Queensland
- Banpu Public Company Limited - Thailand
- Leighton Contractors Pty Ltd - Australia
- Mercuria Energy - Indonesia
- Uttam Galva Steels Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Thiess Contractors Indonesia
- Bhatia International Limited - India
- Indian Oil Corporation Limited
- Jorong Barutama Greston.PT - Indonesia
- Kumho Petrochemical, South Korea
- Savvy Resources Ltd - HongKong
- Attock Cement Pakistan Limited
- Chettinad Cement Corporation Ltd - India
- Madhucon Powers Ltd - India
- ASAPP Information Group - India
- Makarim & Taira - Indonesia
- Iligan Light & Power Inc, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Meralco Power Generation, Philippines
- Wilmar Investment Holdings
- Krishnapatnam Port Company Ltd. - India
- Ministry of Finance - Indonesia
- Larsen & Toubro Limited - India
- GVK Power & Infra Limited - India
- Ceylon Electricity Board - Sri Lanka
- Ind-Barath Power Infra Limited - India
- Electricity Generating Authority of Thailand
- Thai Mozambique Logistica
- Therma Luzon, Inc, Philippines
- Semirara Mining Corp, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- San Jose City I Power Corp, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Rashtriya Ispat Nigam Limited - India
- PNOC Exploration Corporation - Philippines
- Neyveli Lignite Corporation Ltd, - India
- Globalindo Alam Lestari - Indonesia
- Anglo American - United Kingdom
- Bukit Baiduri Energy - Indonesia
- Eastern Energy - Thailand
- Australian Coal Association
- Parry Sugars Refinery, India
- Kapuas Tunggal Persada - Indonesia
- Star Paper Mills Limited - India
- The Treasury - Australian Government
- White Energy Company Limited
- Kartika Selabumi Mining - Indonesia
- Straits Asia Resources Limited - Singapore
- Sindya Power Generating Company Private Ltd
- ICICI Bank Limited - India
- Ministry of Transport, Egypt
- Sakthi Sugars Limited - India
- VISA Power Limited - India
- SMC Global Power, Philippines
- Mercator Lines Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Toyota Tsusho Corporation, Japan
- Offshore Bulk Terminal Pte Ltd, Singapore
- Intertek Mineral Services - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Bharathi Cement Corporation - India
- Antam Resourcindo - Indonesia
- South Luzon Thermal Energy Corporation
- MS Steel International - UAE
- Georgia Ports Authority, United States
- European Bulk Services B.V. - Netherlands
- SN Aboitiz Power Inc, Philippines
- Holcim Trading Pte Ltd - Singapore
- Cement Manufacturers Association - India
- Asmin Koalindo Tuhup - Indonesia
- Posco Energy - South Korea
- London Commodity Brokers - England
- Bangladesh Power Developement Board
- Ministry of Mines - Canada
- Renaissance Capital - South Africa
- The State Trading Corporation of India Ltd
- PTC India Limited - India
- Malabar Cements Ltd - India
- Parliament of New Zealand
- Riau Bara Harum - Indonesia
- Xindia Steels Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Petron Corporation, Philippines
- Mjunction Services Limited - India
- Rio Tinto Coal - Australia
- Manunggal Multi Energi - Indonesia
- Salva Resources Pvt Ltd - India
- Global Coal Blending Company Limited - Australia
- Alfred C Toepfer International GmbH - Germany
- Coastal Gujarat Power Limited - India
- Coal and Oil Company - UAE
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