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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, 09 July 13
CAPESIZE: SHOT UP; PANAMAXES: NOT SO LUCK; SUPRAS: SLIGHTLY BETTER; HANDIES: SOFT - INTERMODAL
COALspot.com : June 2013 Recap
A renewed Capesize market this month (June 2013) was the cause for much of the overall noteworthy performanc ...
Tuesday, 09 July 13
THE 11TH DEEP COAL PROCESSING FORUM 2013
Press Release : The 11th Deep Coal Processing Forum 2013 will be held in November Beijing China.
CDMC Events is pleased to announce that 11 ...
Monday, 08 July 13
ECO-FRIENDLY COAL FOR CHINA - VALUE FOR THE ENVIRONMENT AND VALUE FOR THE POWER GENERATOR - BY: LINDSAY JUNIPER
COALspot.com : January 2013 saw an episode of extreme particulate pollution in Beijing 35 times worse than the safe level recommended by the World H ...
Sunday, 07 July 13
FREIGHT MARKET IS EXPECTED TO BE SOFT TO STABLE NEXT WEEK- VISTAAR
COALspot.com - The freight market softened for the week ended 5 July 2013, and experienced a decline in all sectors, including BDI. Bulk dry Index d ...
Sunday, 07 July 13
COAL PRICES REMAIN UNDER PRESSURE
COALspot.com – Coal swaps for the year 2014 indicate that, the pressure on coal prices will continue at least until next year. Ave ...
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- GN Power Mariveles Coal Plant, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- SMG Consultants - Indonesia
- Medco Energi Mining Internasional
- Leighton Contractors Pty Ltd - Australia
- Indo Tambangraya Megah - Indonesia
- Petron Corporation, Philippines
- Mjunction Services Limited - India
- Wood Mackenzie - Singapore
- Bhoruka Overseas - Indonesia
- International Coal Ventures Pvt Ltd - India
- Coal and Oil Company - UAE
- ICICI Bank Limited - India
- Romanian Commodities Exchange
- AsiaOL BioFuels Corp., Philippines
- Salva Resources Pvt Ltd - India
- White Energy Company Limited
- Holcim Trading Pte Ltd - Singapore
- Energy Link Ltd, New Zealand
- Singapore Mercantile Exchange
- Samtan Co., Ltd - South Korea
- Kohat Cement Company Ltd. - Pakistan
- Antam Resourcindo - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Bulk Trading Sa - Switzerland
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Miang Besar Coal Terminal - Indonesia
- Ministry of Finance - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Larsen & Toubro Limited - India
- MS Steel International - UAE
- Posco Energy - South Korea
- Therma Luzon, Inc, Philippines
- PTC India Limited - India
- Bharathi Cement Corporation - India
- Tata Chemicals Ltd - India
- Vizag Seaport Private Limited - India
- Eastern Coal Council - USA
- Metalloyd Limited - United Kingdom
- GMR Energy Limited - India
- Mercator Lines Limited - India
- CIMB Investment Bank - Malaysia
- Kideco Jaya Agung - Indonesia
- Kepco SPC Power Corporation, Philippines
- Directorate Of Revenue Intelligence - India
- Makarim & Taira - Indonesia
- Bayan Resources Tbk. - Indonesia
- Baramulti Group, Indonesia
- Parliament of New Zealand
- San Jose City I Power Corp, Philippines
- Borneo Indobara - Indonesia
- Planning Commission, India
- Meralco Power Generation, Philippines
- OPG Power Generation Pvt Ltd - India
- Siam City Cement PLC, Thailand
- Ceylon Electricity Board - Sri Lanka
- Cigading International Bulk Terminal - Indonesia
- Electricity Generating Authority of Thailand
- Chamber of Mines of South Africa
- Kalimantan Lumbung Energi - Indonesia
- Billiton Holdings Pty Ltd - Australia
- European Bulk Services B.V. - Netherlands
- Thiess Contractors Indonesia
- Price Waterhouse Coopers - Russia
- Manunggal Multi Energi - Indonesia
- Star Paper Mills Limited - India
- Cement Manufacturers Association - India
- Sojitz Corporation - Japan
- Kobexindo Tractors - Indoneisa
- Barasentosa Lestari - Indonesia
- Indogreen Group - Indonesia
- The State Trading Corporation of India Ltd
- Trasteel International SA, Italy
- The University of Queensland
- Edison Trading Spa - Italy
- TNB Fuel Sdn Bhd - Malaysia
- Bangladesh Power Developement Board
- Jaiprakash Power Ventures ltd
- Minerals Council of Australia
- Attock Cement Pakistan Limited
- Sindya Power Generating Company Private Ltd
- Global Coal Blending Company Limited - Australia
- Vedanta Resources Plc - India
- IHS Mccloskey Coal Group - USA
- Wilmar Investment Holdings
- PowerSource Philippines DevCo
- Commonwealth Bank - Australia
- Renaissance Capital - South Africa
- Carbofer General Trading SA - India
- Independent Power Producers Association of India
- Bukit Makmur.PT - Indonesia
- Xindia Steels Limited - India
- Timah Investasi Mineral - Indoneisa
- Maheswari Brothers Coal Limited - India
- Globalindo Alam Lestari - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Gujarat Mineral Development Corp Ltd - India
- Bhushan Steel Limited - India
- Uttam Galva Steels Limited - India
- Binh Thuan Hamico - Vietnam
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- London Commodity Brokers - England
- SN Aboitiz Power Inc, Philippines
- Merrill Lynch Commodities Europe
- Orica Australia Pty. Ltd.
- TeaM Sual Corporation - Philippines
- Gujarat Sidhee Cement - India
- Gujarat Electricity Regulatory Commission - India
- Sical Logistics Limited - India
- Interocean Group of Companies - India
- GAC Shipping (India) Pvt Ltd
- Aboitiz Power Corporation - Philippines
- Savvy Resources Ltd - HongKong
- Banpu Public Company Limited - Thailand
- Kaltim Prima Coal - Indonesia
- Pendopo Energi Batubara - Indonesia
- New Zealand Coal & Carbon
- Energy Development Corp, Philippines
- Tamil Nadu electricity Board
- Coalindo Energy - Indonesia
- Goldman Sachs - Singapore
- Indika Energy - Indonesia
- Oldendorff Carriers - Singapore
- Iligan Light & Power Inc, Philippines
- Lanco Infratech Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Formosa Plastics Group - Taiwan
- Sree Jayajothi Cements Limited - India
- PNOC Exploration Corporation - Philippines
- Videocon Industries ltd - India
- Malabar Cements Ltd - India
- Coastal Gujarat Power Limited - India
- Toyota Tsusho Corporation, Japan
- ASAPP Information Group - India
- Economic Council, Georgia
- CNBM International Corporation - China
- Jorong Barutama Greston.PT - Indonesia
- Straits Asia Resources Limited - Singapore
- Deloitte Consulting - India
- Global Business Power Corporation, Philippines
- Grasim Industreis Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Agrawal Coal Company - India
- Central Java Power - Indonesia
- Australian Commodity Traders Exchange
- Indian Oil Corporation Limited
- Standard Chartered Bank - UAE
- Vijayanagar Sugar Pvt Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Madhucon Powers Ltd - India
- Bukit Baiduri Energy - Indonesia
- Meenaskhi Energy Private Limited - India
- Indian Energy Exchange, India
- Kumho Petrochemical, South Korea
- Neyveli Lignite Corporation Ltd, - India
- Aditya Birla Group - India
- Karaikal Port Pvt Ltd - India
- Latin American Coal - Colombia
- India Bulls Power Limited - India
- McConnell Dowell - Australia
- IEA Clean Coal Centre - UK
- The Treasury - Australian Government
- Chettinad Cement Corporation Ltd - India
- Orica Mining Services - Indonesia
- Semirara Mining Corp, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Africa Commodities Group - South Africa
- Dalmia Cement Bharat India
- Eastern Energy - Thailand
- Thai Mozambique Logistica
- Sarangani Energy Corporation, Philippines
- South Luzon Thermal Energy Corporation
- Alfred C Toepfer International GmbH - Germany
- Bukit Asam (Persero) Tbk - Indonesia
- Georgia Ports Authority, United States
- Directorate General of MIneral and Coal - Indonesia
- VISA Power Limited - India
- Central Electricity Authority - India
- Ind-Barath Power Infra Limited - India
- Mercuria Energy - Indonesia
- Power Finance Corporation Ltd., India
- Heidelberg Cement - Germany
- Essar Steel Hazira Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Port Waratah Coal Services - Australia
- SMC Global Power, Philippines
- Riau Bara Harum - Indonesia
- GVK Power & Infra Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Sakthi Sugars Limited - India
- Australian Coal Association
- Ministry of Mines - Canada
- Anglo American - United Kingdom
- Kapuas Tunggal Persada - Indonesia
- Kartika Selabumi Mining - Indonesia
- Siam City Cement - Thailand
- LBH Netherlands Bv - Netherlands
- Mintek Dendrill Indonesia
- Sinarmas Energy and Mining - Indonesia
- Bhatia International Limited - India
- Global Green Power PLC Corporation, Philippines
- Simpson Spence & Young - Indonesia
- Intertek Mineral Services - Indonesia
- Marubeni Corporation - India
- Krishnapatnam Port Company Ltd. - India
- Rashtriya Ispat Nigam Limited - India
- Electricity Authority, New Zealand
- Parry Sugars Refinery, India
- Rio Tinto Coal - Australia
- Indonesian Coal Mining Association
- Jindal Steel & Power Ltd - India
- Ambuja Cements Ltd - India
- Altura Mining Limited, Indonesia
- Ministry of Transport, Egypt
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