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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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Saturday, 27 July 13
INDONESIA TO INDIA SUPRAMAX FREIGHT RATES ARE EXPECTED TO REMAIN STEADY - CAPT.REDDY
COALspot.com : The freight market seemed to soften this week with BDI , Cape and Panamax indices dropped average 5 percent on week.
The BDI was d ...
Thursday, 25 July 13
CAPESIZE : PACIFIC AND ATLANTIC RATES ARE HOLDING STEADY - FEARNLEYS AS
Handy
The Far East market remains quiet even if some Indo coal trip orders were fed in the market at early this week. Prompt ships passing Singapor ...
Thursday, 25 July 13
SUMMER LULL CHIPPING AWAY RECENT GAINS IN DRY BULK FREIGHT RATES - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
In what seems to be establishing as a permanent trend, at least for the time being, the dry bulk market kept on retreating yesterday, even if this r ...
Tuesday, 23 July 13
NEWCASTLE'S COAL EXPORTS CLIMB 17.82% ON WEEK, PORT'S DATA SHOWS
COALspot.com: Newcastle port in Australia has loaded 3,369,865 tons of coal for the week ended 0700 hours 22 July 2013, Newcastle Port Corp. s ...
Monday, 22 July 13
DRY BULK MARKET DIFFICULT TO MAINTAIN POSITIVE DRIVE CLAIMS SHIPBROKER - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The dry bulk market has seen a significant recovery in recent weeks, leading most ship classes to earnings above their operating expenses, thus brin ...
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- Offshore Bulk Terminal Pte Ltd, Singapore
- Australian Commodity Traders Exchange
- Coal and Oil Company - UAE
- Kalimantan Lumbung Energi - Indonesia
- Kobexindo Tractors - Indoneisa
- Bhushan Steel Limited - India
- PowerSource Philippines DevCo
- Kaltim Prima Coal - Indonesia
- Eastern Energy - Thailand
- Price Waterhouse Coopers - Russia
- Globalindo Alam Lestari - Indonesia
- Parry Sugars Refinery, India
- Sojitz Corporation - Japan
- Indonesian Coal Mining Association
- Directorate General of MIneral and Coal - Indonesia
- Thai Mozambique Logistica
- Indian Energy Exchange, India
- Orica Australia Pty. Ltd.
- Mjunction Services Limited - India
- Leighton Contractors Pty Ltd - Australia
- Kapuas Tunggal Persada - Indonesia
- Anglo American - United Kingdom
- Parliament of New Zealand
- Vedanta Resources Plc - India
- Energy Development Corp, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Central Java Power - Indonesia
- McConnell Dowell - Australia
- Formosa Plastics Group - Taiwan
- Ind-Barath Power Infra Limited - India
- Siam City Cement PLC, Thailand
- Timah Investasi Mineral - Indoneisa
- Ambuja Cements Ltd - India
- Indika Energy - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Coastal Gujarat Power Limited - India
- Samtan Co., Ltd - South Korea
- Kohat Cement Company Ltd. - Pakistan
- Rio Tinto Coal - Australia
- Bulk Trading Sa - Switzerland
- Georgia Ports Authority, United States
- Central Electricity Authority - India
- Edison Trading Spa - Italy
- Marubeni Corporation - India
- Straits Asia Resources Limited - Singapore
- Africa Commodities Group - South Africa
- New Zealand Coal & Carbon
- GMR Energy Limited - India
- Global Business Power Corporation, Philippines
- Pendopo Energi Batubara - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- TeaM Sual Corporation - Philippines
- Tamil Nadu electricity Board
- Intertek Mineral Services - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Bayan Resources Tbk. - Indonesia
- The State Trading Corporation of India Ltd
- OPG Power Generation Pvt Ltd - India
- Cement Manufacturers Association - India
- AsiaOL BioFuels Corp., Philippines
- Merrill Lynch Commodities Europe
- Karaikal Port Pvt Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- European Bulk Services B.V. - Netherlands
- Sinarmas Energy and Mining - Indonesia
- Indogreen Group - Indonesia
- International Coal Ventures Pvt Ltd - India
- Chamber of Mines of South Africa
- Vizag Seaport Private Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Romanian Commodities Exchange
- IHS Mccloskey Coal Group - USA
- SMG Consultants - Indonesia
- Standard Chartered Bank - UAE
- Metalloyd Limited - United Kingdom
- Kideco Jaya Agung - Indonesia
- Latin American Coal - Colombia
- Semirara Mining and Power Corporation, Philippines
- Salva Resources Pvt Ltd - India
- Electricity Generating Authority of Thailand
- Jindal Steel & Power Ltd - India
- Sarangani Energy Corporation, Philippines
- CIMB Investment Bank - Malaysia
- Attock Cement Pakistan Limited
- Rashtriya Ispat Nigam Limited - India
- Singapore Mercantile Exchange
- Dalmia Cement Bharat India
- Heidelberg Cement - Germany
- Iligan Light & Power Inc, Philippines
- Australian Coal Association
- Toyota Tsusho Corporation, Japan
- Altura Mining Limited, Indonesia
- Aboitiz Power Corporation - Philippines
- Global Coal Blending Company Limited - Australia
- Star Paper Mills Limited - India
- IEA Clean Coal Centre - UK
- Jorong Barutama Greston.PT - Indonesia
- Ministry of Finance - Indonesia
- Borneo Indobara - Indonesia
- ICICI Bank Limited - India
- Wood Mackenzie - Singapore
- Economic Council, Georgia
- Planning Commission, India
- PetroVietnam Power Coal Import and Supply Company
- GAC Shipping (India) Pvt Ltd
- Simpson Spence & Young - Indonesia
- Ministry of Transport, Egypt
- Gujarat Sidhee Cement - India
- Energy Link Ltd, New Zealand
- Antam Resourcindo - Indonesia
- GVK Power & Infra Limited - India
- Uttam Galva Steels Limited - India
- Renaissance Capital - South Africa
- Port Waratah Coal Services - Australia
- Electricity Authority, New Zealand
- Baramulti Group, Indonesia
- PTC India Limited - India
- PNOC Exploration Corporation - Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Petron Corporation, Philippines
- LBH Netherlands Bv - Netherlands
- Thiess Contractors Indonesia
- Global Green Power PLC Corporation, Philippines
- Power Finance Corporation Ltd., India
- Minerals Council of Australia
- San Jose City I Power Corp, Philippines
- Asmin Koalindo Tuhup - Indonesia
- India Bulls Power Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- ASAPP Information Group - India
- Tata Chemicals Ltd - India
- Bukit Baiduri Energy - Indonesia
- London Commodity Brokers - England
- Interocean Group of Companies - India
- The Treasury - Australian Government
- Neyveli Lignite Corporation Ltd, - India
- South Luzon Thermal Energy Corporation
- Bank of Tokyo Mitsubishi UFJ Ltd
- Ceylon Electricity Board - Sri Lanka
- Kumho Petrochemical, South Korea
- Trasteel International SA, Italy
- Bukit Asam (Persero) Tbk - Indonesia
- Kartika Selabumi Mining - Indonesia
- Bhatia International Limited - India
- Goldman Sachs - Singapore
- MS Steel International - UAE
- Binh Thuan Hamico - Vietnam
- Mercuria Energy - Indonesia
- Lanco Infratech Ltd - India
- Orica Mining Services - Indonesia
- Jaiprakash Power Ventures ltd
- SN Aboitiz Power Inc, Philippines
- Sindya Power Generating Company Private Ltd
- Maheswari Brothers Coal Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Bukit Makmur.PT - Indonesia
- Mercator Lines Limited - India
- Siam City Cement - Thailand
- Aditya Birla Group - India
- Oldendorff Carriers - Singapore
- Agrawal Coal Company - India
- Sical Logistics Limited - India
- Independent Power Producers Association of India
- Meralco Power Generation, Philippines
- Madhucon Powers Ltd - India
- Riau Bara Harum - Indonesia
- Manunggal Multi Energi - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Coalindo Energy - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Banpu Public Company Limited - Thailand
- Indian Oil Corporation Limited
- Xindia Steels Limited - India
- Holcim Trading Pte Ltd - Singapore
- Kepco SPC Power Corporation, Philippines
- Posco Energy - South Korea
- Indo Tambangraya Megah - Indonesia
- Meenaskhi Energy Private Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Wilmar Investment Holdings
- Semirara Mining Corp, Philippines
- Grasim Industreis Ltd - India
- Therma Luzon, Inc, Philippines
- Bhoruka Overseas - Indonesia
- Makarim & Taira - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Commonwealth Bank - Australia
- White Energy Company Limited
- CNBM International Corporation - China
- Sree Jayajothi Cements Limited - India
- The University of Queensland
- Bharathi Cement Corporation - India
- Videocon Industries ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Ministry of Mines - Canada
- Essar Steel Hazira Ltd - India
- Carbofer General Trading SA - India
- SMC Global Power, Philippines
- Savvy Resources Ltd - HongKong
- Directorate Of Revenue Intelligence - India
- Mintek Dendrill Indonesia
- Barasentosa Lestari - Indonesia
- Malabar Cements Ltd - India
- Chettinad Cement Corporation Ltd - India
- Sakthi Sugars Limited - India
- Bangladesh Power Developement Board
- Larsen & Toubro Limited - India
- Krishnapatnam Port Company Ltd. - India
- Alfred C Toepfer International GmbH - Germany
- Bahari Cakrawala Sebuku - Indonesia
- VISA Power Limited - India
- Deloitte Consulting - India
- Medco Energi Mining Internasional
- Gujarat Mineral Development Corp Ltd - India
- Eastern Coal Council - USA
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