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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.
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Monday, 01 July 13
12TH CLEAN COAL FORUM INDONESIA 2013
Press Release: Produced by CDMC Events, The 12th Clean Coal Forum Indonesia 2013 will be held on Dec 5-6,2013 in Jakarta, Indonesia. It will generat ...
Monday, 01 July 13
INDIA AND CHINA STILL DOMINATING THE INDONESIAN THERMAL COAL EXPORT MARKET
COALspot.com: Indonesia, the world's largest multi types coal exporter shipped 35.83* million tons of coal in May 2013, 1.40 per cent l ...
Sunday, 30 June 13
YEAR 2014 INDO SUB-BIT COAL SWAPS EXPECTED TO STAY BELOW 2013 LEVEL
COALspot.com – Sub-Bit Indonesia coal swaps (FOB ) for average August 2013 delivery have gained 0.08 percent on a day lost on week ...
Sunday, 30 June 13
CAPESIZE RATES SEEN INCREASING ON HIGH DEMAND - VISTAAR
COALspot.com - The BDI continued to rise and saw a big gain on Friday. BDI increased 14 per cent week ended 28 June 2013, closed at 1171 points driv ...
Friday, 28 June 13
U.S. PRODUCED 1.52 PERCENT LESS COAL WEEK ON WEEK
COALspot.com – United states the world’s second largest coal producer produced totaled approximately 19.40 million short tons (mmst) of ...
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- Bhatia International Limited - India
- Aboitiz Power Corporation - Philippines
- Electricity Generating Authority of Thailand
- Siam City Cement - Thailand
- Kaltim Prima Coal - Indonesia
- Vedanta Resources Plc - India
- Energy Link Ltd, New Zealand
- Bukit Makmur.PT - Indonesia
- Kideco Jaya Agung - Indonesia
- Savvy Resources Ltd - HongKong
- Vizag Seaport Private Limited - India
- Maheswari Brothers Coal Limited - India
- GMR Energy Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Price Waterhouse Coopers - Russia
- PowerSource Philippines DevCo
- Dalmia Cement Bharat India
- Petrochimia International Co. Ltd.- Taiwan
- India Bulls Power Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Orica Mining Services - Indonesia
- White Energy Company Limited
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- Sojitz Corporation - Japan
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- Mercuria Energy - Indonesia
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- Indian Oil Corporation Limited
- Kapuas Tunggal Persada - Indonesia
- Samtan Co., Ltd - South Korea
- Offshore Bulk Terminal Pte Ltd, Singapore
- Interocean Group of Companies - India
- Bhoruka Overseas - Indonesia
- PTC India Limited - India
- Makarim & Taira - Indonesia
- Lanco Infratech Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Standard Chartered Bank - UAE
- Global Coal Blending Company Limited - Australia
- Bahari Cakrawala Sebuku - Indonesia
- New Zealand Coal & Carbon
- Ind-Barath Power Infra Limited - India
- Georgia Ports Authority, United States
- Coalindo Energy - Indonesia
- The University of Queensland
- Commonwealth Bank - Australia
- Formosa Plastics Group - Taiwan
- Merrill Lynch Commodities Europe
- Parliament of New Zealand
- Straits Asia Resources Limited - Singapore
- Banpu Public Company Limited - Thailand
- Alfred C Toepfer International GmbH - Germany
- Sical Logistics Limited - India
- Bharathi Cement Corporation - India
- Grasim Industreis Ltd - India
- Coastal Gujarat Power Limited - India
- Jaiprakash Power Ventures ltd
- Videocon Industries ltd - India
- Parry Sugars Refinery, India
- Minerals Council of Australia
- European Bulk Services B.V. - Netherlands
- Edison Trading Spa - Italy
- Goldman Sachs - Singapore
- Meralco Power Generation, Philippines
- Simpson Spence & Young - Indonesia
- Chamber of Mines of South Africa
- Gujarat Sidhee Cement - India
- Petron Corporation, Philippines
- Mjunction Services Limited - India
- Therma Luzon, Inc, Philippines
- Australian Coal Association
- Kepco SPC Power Corporation, Philippines
- IEA Clean Coal Centre - UK
- Metalloyd Limited - United Kingdom
- ASAPP Information Group - India
- PetroVietnam Power Coal Import and Supply Company
- Aditya Birla Group - India
- VISA Power Limited - India
- Thiess Contractors Indonesia
- Semirara Mining Corp, Philippines
- Jindal Steel & Power Ltd - India
- Bangladesh Power Developement Board
- SMC Global Power, Philippines
- Port Waratah Coal Services - Australia
- Semirara Mining and Power Corporation, Philippines
- Rashtriya Ispat Nigam Limited - India
- Timah Investasi Mineral - Indoneisa
- ICICI Bank Limited - India
- Globalindo Alam Lestari - Indonesia
- Romanian Commodities Exchange
- Africa Commodities Group - South Africa
- Gujarat Mineral Development Corp Ltd - India
- The Treasury - Australian Government
- Leighton Contractors Pty Ltd - Australia
- Ceylon Electricity Board - Sri Lanka
- Neyveli Lignite Corporation Ltd, - India
- Directorate Of Revenue Intelligence - India
- Larsen & Toubro Limited - India
- Indian Energy Exchange, India
- Global Business Power Corporation, Philippines
- Siam City Cement PLC, Thailand
- Mercator Lines Limited - India
- CNBM International Corporation - China
- Kartika Selabumi Mining - Indonesia
- Central Java Power - Indonesia
- McConnell Dowell - Australia
- Binh Thuan Hamico - Vietnam
- Bayan Resources Tbk. - Indonesia
- Energy Development Corp, Philippines
- Star Paper Mills Limited - India
- Mintek Dendrill Indonesia
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- Borneo Indobara - Indonesia
- Ambuja Cements Ltd - India
- Attock Cement Pakistan Limited
- Anglo American - United Kingdom
- Manunggal Multi Energi - Indonesia
- Australian Commodity Traders Exchange
- Uttam Galva Steels Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Iligan Light & Power Inc, Philippines
- Deloitte Consulting - India
- Orica Australia Pty. Ltd.
- Wilmar Investment Holdings
- Latin American Coal - Colombia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Rio Tinto Coal - Australia
- Kalimantan Lumbung Energi - Indonesia
- Ministry of Mines - Canada
- Krishnapatnam Port Company Ltd. - India
- Oldendorff Carriers - Singapore
- Xindia Steels Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Ministry of Finance - Indonesia
- Barasentosa Lestari - Indonesia
- IHS Mccloskey Coal Group - USA
- Coal and Oil Company - UAE
- SN Aboitiz Power Inc, Philippines
- Toyota Tsusho Corporation, Japan
- Electricity Authority, New Zealand
- Riau Bara Harum - Indonesia
- Altura Mining Limited, Indonesia
- Thai Mozambique Logistica
- Pipit Mutiara Jaya. PT, Indonesia
- Sakthi Sugars Limited - India
- Marubeni Corporation - India
- Malabar Cements Ltd - India
- CIMB Investment Bank - Malaysia
- Sinarmas Energy and Mining - Indonesia
- LBH Netherlands Bv - Netherlands
- GVK Power & Infra Limited - India
- Eastern Coal Council - USA
- Sarangani Energy Corporation, Philippines
- Trasteel International SA, Italy
- Gujarat Electricity Regulatory Commission - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Kumho Petrochemical, South Korea
- Asmin Koalindo Tuhup - Indonesia
- Cement Manufacturers Association - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- GAC Shipping (India) Pvt Ltd
- Kohat Cement Company Ltd. - Pakistan
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- Tamil Nadu electricity Board
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- Salva Resources Pvt Ltd - India
- Intertek Mineral Services - Indonesia
- Planning Commission, India
- Independent Power Producers Association of India
- Holcim Trading Pte Ltd - Singapore
- Miang Besar Coal Terminal - Indonesia
- MS Steel International - UAE
- The State Trading Corporation of India Ltd
- Tata Chemicals Ltd - India
- Bukit Baiduri Energy - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- AsiaOL BioFuels Corp., Philippines
- Kobexindo Tractors - Indoneisa
- Posco Energy - South Korea
- Madhucon Powers Ltd - India
- Indo Tambangraya Megah - Indonesia
- Bulk Trading Sa - Switzerland
- OPG Power Generation Pvt Ltd - India
- Economic Council, Georgia
- Central Electricity Authority - India
- Bhushan Steel Limited - India
- Indogreen Group - Indonesia
- Indika Energy - Indonesia
- Singapore Mercantile Exchange
- Heidelberg Cement - Germany
- Global Green Power PLC Corporation, Philippines
- Cigading International Bulk Terminal - Indonesia
- Power Finance Corporation Ltd., India
- TeaM Sual Corporation - Philippines
- San Jose City I Power Corp, Philippines
- London Commodity Brokers - England
- Baramulti Group, Indonesia
- Sree Jayajothi Cements Limited - India
- Renaissance Capital - South Africa
- Agrawal Coal Company - India
- Maharashtra Electricity Regulatory Commission - India
- Pendopo Energi Batubara - Indonesia
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