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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, 12 July 13
U.S. PRODUCED 18.40 MMST COAL WEEK ENDED 6 JULY 2013
COALspot.com – United states the world’s second largest coal producer produced totaled approximately 18.40 million short tons (mmst) of ...
Thursday, 11 July 13
PANAMAX: PACIFIC ROUND PAY AROUND $6,500/D; ATLANTIC ROUND VOYAGE PAY AROUND US$ 10,000/D - FEARNLEYS AS
Handy
The Feast market is quiet, July date cargoes remain unfixed as there is a gap between what owners aiming and charterers willing to pay. There ...
Wednesday, 10 July 13
DRY BULK MARKET IS STILL STRUGGLING TO SURVIVE - INTERMODAL
COALspot.com : With the first half of the year now behind us and, as expected, most shipping segments in the dry bulk market are struggling to survi ...
Tuesday, 09 July 13
COAL PRICE REMAINS SLUGGISH - TRIMEGAH
COALspot.com - Newcastle coal price has reached US$ 76.30/ton (-15.9% YTD), bringing YTD’13 average to stand at US$ 87.90/ton, 6.80% lower tha ...
Tuesday, 09 July 13
NEWCASTLE COAL EXPORTS JUMP 27.53% ON WEEK TO 2.97 MILLION MT
COALspot.com - Newcastle Coal exports up 27.53% to 2.97 million tons W-o-W.
Newcastle port in Australia has loaded 2,974,715 tons of coal for the ...
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- Medco Energi Mining Internasional
- European Bulk Services B.V. - Netherlands
- Billiton Holdings Pty Ltd - Australia
- Carbofer General Trading SA - India
- Wilmar Investment Holdings
- Attock Cement Pakistan Limited
- Renaissance Capital - South Africa
- Bukit Makmur.PT - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Malabar Cements Ltd - India
- Semirara Mining Corp, Philippines
- Indonesian Coal Mining Association
- Makarim & Taira - Indonesia
- Australian Commodity Traders Exchange
- Bhushan Steel Limited - India
- Bukit Baiduri Energy - Indonesia
- Chamber of Mines of South Africa
- Krishnapatnam Port Company Ltd. - India
- Deloitte Consulting - India
- Holcim Trading Pte Ltd - Singapore
- Anglo American - United Kingdom
- Economic Council, Georgia
- ASAPP Information Group - India
- Posco Energy - South Korea
- TeaM Sual Corporation - Philippines
- Kohat Cement Company Ltd. - Pakistan
- Bhoruka Overseas - Indonesia
- Barasentosa Lestari - Indonesia
- Siam City Cement - Thailand
- Eastern Coal Council - USA
- Siam City Cement PLC, Thailand
- Coal and Oil Company - UAE
- Bayan Resources Tbk. - Indonesia
- Petron Corporation, Philippines
- Rashtriya Ispat Nigam Limited - India
- Metalloyd Limited - United Kingdom
- Pendopo Energi Batubara - Indonesia
- Edison Trading Spa - Italy
- SMC Global Power, Philippines
- Banpu Public Company Limited - Thailand
- Africa Commodities Group - South Africa
- Larsen & Toubro Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Coalindo Energy - Indonesia
- McConnell Dowell - Australia
- Marubeni Corporation - India
- Toyota Tsusho Corporation, Japan
- Essar Steel Hazira Ltd - India
- New Zealand Coal & Carbon
- Indika Energy - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Global Green Power PLC Corporation, Philippines
- Ministry of Mines - Canada
- Bukit Asam (Persero) Tbk - Indonesia
- Therma Luzon, Inc, Philippines
- Meralco Power Generation, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Global Business Power Corporation, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Manunggal Multi Energi - Indonesia
- PowerSource Philippines DevCo
- San Jose City I Power Corp, Philippines
- Sinarmas Energy and Mining - Indonesia
- Price Waterhouse Coopers - Russia
- Standard Chartered Bank - UAE
- Sakthi Sugars Limited - India
- Port Waratah Coal Services - Australia
- Thai Mozambique Logistica
- Electricity Authority, New Zealand
- Mercator Lines Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Karbindo Abesyapradhi - Indoneisa
- Kobexindo Tractors - Indoneisa
- Riau Bara Harum - Indonesia
- Sarangani Energy Corporation, Philippines
- Kepco SPC Power Corporation, Philippines
- Global Coal Blending Company Limited - Australia
- Uttam Galva Steels Limited - India
- Star Paper Mills Limited - India
- Jindal Steel & Power Ltd - India
- Salva Resources Pvt Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Ind-Barath Power Infra Limited - India
- Vedanta Resources Plc - India
- Leighton Contractors Pty Ltd - Australia
- Chettinad Cement Corporation Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Planning Commission, India
- Singapore Mercantile Exchange
- LBH Netherlands Bv - Netherlands
- Central Java Power - Indonesia
- The Treasury - Australian Government
- Vizag Seaport Private Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Meenaskhi Energy Private Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Ministry of Transport, Egypt
- Agrawal Coal Company - India
- Kideco Jaya Agung - Indonesia
- PNOC Exploration Corporation - Philippines
- SN Aboitiz Power Inc, Philippines
- SMG Consultants - Indonesia
- Minerals Council of Australia
- Jorong Barutama Greston.PT - Indonesia
- Intertek Mineral Services - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Parry Sugars Refinery, India
- Jaiprakash Power Ventures ltd
- Borneo Indobara - Indonesia
- Ministry of Finance - Indonesia
- Aboitiz Power Corporation - Philippines
- Kalimantan Lumbung Energi - Indonesia
- GVK Power & Infra Limited - India
- Baramulti Group, Indonesia
- Bharathi Cement Corporation - India
- Dalmia Cement Bharat India
- Indian Oil Corporation Limited
- Bhatia International Limited - India
- GMR Energy Limited - India
- Binh Thuan Hamico - Vietnam
- Indian Energy Exchange, India
- Kaltim Prima Coal - Indonesia
- Altura Mining Limited, Indonesia
- Ambuja Cements Ltd - India
- The University of Queensland
- Independent Power Producers Association of India
- PTC India Limited - India
- GAC Shipping (India) Pvt Ltd
- Samtan Co., Ltd - South Korea
- Miang Besar Coal Terminal - Indonesia
- AsiaOL BioFuels Corp., Philippines
- South Luzon Thermal Energy Corporation
- Timah Investasi Mineral - Indoneisa
- Xindia Steels Limited - India
- Commonwealth Bank - Australia
- Karaikal Port Pvt Ltd - India
- Bangladesh Power Developement Board
- Orica Mining Services - Indonesia
- Tamil Nadu electricity Board
- OPG Power Generation Pvt Ltd - India
- Energy Link Ltd, New Zealand
- Sindya Power Generating Company Private Ltd
- Parliament of New Zealand
- Gujarat Mineral Development Corp Ltd - India
- The State Trading Corporation of India Ltd
- Bulk Trading Sa - Switzerland
- Trasteel International SA, Italy
- Formosa Plastics Group - Taiwan
- Rio Tinto Coal - Australia
- Petrochimia International Co. Ltd.- Taiwan
- Sical Logistics Limited - India
- Sree Jayajothi Cements Limited - India
- Mintek Dendrill Indonesia
- Romanian Commodities Exchange
- MS Steel International - UAE
- Madhucon Powers Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Wood Mackenzie - Singapore
- Eastern Energy - Thailand
- ICICI Bank Limited - India
- Oldendorff Carriers - Singapore
- Interocean Group of Companies - India
- Savvy Resources Ltd - HongKong
- Mjunction Services Limited - India
- Sojitz Corporation - Japan
- London Commodity Brokers - England
- Central Electricity Authority - India
- Mercuria Energy - Indonesia
- Merrill Lynch Commodities Europe
- Maheswari Brothers Coal Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Heidelberg Cement - Germany
- IEA Clean Coal Centre - UK
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Videocon Industries ltd - India
- Goldman Sachs - Singapore
- Australian Coal Association
- Grasim Industreis Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Gujarat Sidhee Cement - India
- Iligan Light & Power Inc, Philippines
- CNBM International Corporation - China
- Cement Manufacturers Association - India
- Antam Resourcindo - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Gujarat Electricity Regulatory Commission - India
- Directorate Of Revenue Intelligence - India
- Aditya Birla Group - India
- Straits Asia Resources Limited - Singapore
- Power Finance Corporation Ltd., India
- Kartika Selabumi Mining - Indonesia
- Tata Chemicals Ltd - India
- Georgia Ports Authority, United States
- Neyveli Lignite Corporation Ltd, - India
- Simpson Spence & Young - Indonesia
- International Coal Ventures Pvt Ltd - India
- Indogreen Group - Indonesia
- Lanco Infratech Ltd - India
- Globalindo Alam Lestari - Indonesia
- Thiess Contractors Indonesia
- Latin American Coal - Colombia
- Coastal Gujarat Power Limited - India
- Indo Tambangraya Megah - Indonesia
- White Energy Company Limited
- Energy Development Corp, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Alfred C Toepfer International GmbH - Germany
- Semirara Mining and Power Corporation, Philippines
- Orica Australia Pty. Ltd.
- CIMB Investment Bank - Malaysia
- Bank of Tokyo Mitsubishi UFJ Ltd
- IHS Mccloskey Coal Group - USA
- VISA Power Limited - India
- India Bulls Power Limited - India
- Kumho Petrochemical, South Korea
- Electricity Generating Authority of Thailand
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