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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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Wednesday, 19 June 13
NEWCASTLE SHIPPED 16.05 PERCENT LESS COAL W/E 17 JUNE 2013
COALspot.com - Newcastle port in Australia has loaded 2,606,071 tons of coal for the week ended 0700 hours 17 June 2013, Newcastle Port Corp. ...
Sunday, 16 June 13
WEAK DEMAND KEEPS COAL PRICES LOW
COALspot.com - Sub-Bit Indonesia coal swaps (FOB ) for average July 2013 delivery have lost 2.94 percent week on week but gained 0.06 percent ...
Saturday, 15 June 13
S7 AND S8 ROUTES ARE EXPECTED TO BE STEADY NEXT WEEK - VISTAAR
COALspot.com - This week freight movement was fairly firm with news of China is rebuilding iron ore stockpiles, and ease import rules. Cape and Pana ...
Saturday, 15 June 13
SHIPPING CONFIDENCE REACHES HIGHEST LEVEL FOR TWO AND A HALF YEARS - MOORE STEPHENS
Overall confidence levels in the shipping industry rose to their highest level for two and a half years in the three months ended May 2013, accordin ...
Friday, 14 June 13
U.S. COAL PRODUCTION TOTALED APPROXIMATELY 18.20 MILLION SHORT TONS W/E 8 JUNE 2013
COALspot.com – United states the world’s second largest coal producer produced totaled approximately 18.20 million short tons (mmst) of ...
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- PTC India Limited - India
- Coal and Oil Company - UAE
- SN Aboitiz Power Inc, Philippines
- Petron Corporation, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Thiess Contractors Indonesia
- Trasteel International SA, Italy
- Rashtriya Ispat Nigam Limited - India
- Cement Manufacturers Association - India
- Karbindo Abesyapradhi - Indoneisa
- Eastern Energy - Thailand
- Coalindo Energy - Indonesia
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- Wood Mackenzie - Singapore
- Wilmar Investment Holdings
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- Samtan Co., Ltd - South Korea
- Kepco SPC Power Corporation, Philippines
- Barasentosa Lestari - Indonesia
- GAC Shipping (India) Pvt Ltd
- Uttam Galva Steels Limited - India
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- Semirara Mining and Power Corporation, Philippines
- Neyveli Lignite Corporation Ltd, - India
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- Tamil Nadu electricity Board
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- Mjunction Services Limited - India
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- Sree Jayajothi Cements Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Orica Australia Pty. Ltd.
- Mercuria Energy - Indonesia
- Central Electricity Authority - India
- The Treasury - Australian Government
- Sical Logistics Limited - India
- Ministry of Transport, Egypt
- Romanian Commodities Exchange
- Price Waterhouse Coopers - Russia
- Orica Mining Services - Indonesia
- London Commodity Brokers - England
- Miang Besar Coal Terminal - Indonesia
- Bhoruka Overseas - Indonesia
- Kartika Selabumi Mining - Indonesia
- LBH Netherlands Bv - Netherlands
- Mintek Dendrill Indonesia
- Indika Energy - Indonesia
- Intertek Mineral Services - Indonesia
- Attock Cement Pakistan Limited
- India Bulls Power Limited - India
- Thai Mozambique Logistica
- GVK Power & Infra Limited - India
- Jindal Steel & Power Ltd - India
- Kideco Jaya Agung - Indonesia
- Indo Tambangraya Megah - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Bukit Baiduri Energy - Indonesia
- Ambuja Cements Ltd - India
- Indogreen Group - Indonesia
- Deloitte Consulting - India
- Global Coal Blending Company Limited - Australia
- Grasim Industreis Ltd - India
- Therma Luzon, Inc, Philippines
- White Energy Company Limited
- ICICI Bank Limited - India
- GMR Energy Limited - India
- Maheswari Brothers Coal Limited - India
- Pendopo Energi Batubara - Indonesia
- Xindia Steels Limited - India
- Bukit Makmur.PT - Indonesia
- Global Green Power PLC Corporation, Philippines
- Holcim Trading Pte Ltd - Singapore
- Karaikal Port Pvt Ltd - India
- Larsen & Toubro Limited - India
- Kaltim Prima Coal - Indonesia
- Malabar Cements Ltd - India
- Chamber of Mines of South Africa
- Indonesian Coal Mining Association
- Australian Coal Association
- South Luzon Thermal Energy Corporation
- Agrawal Coal Company - India
- Aboitiz Power Corporation - Philippines
- Altura Mining Limited, Indonesia
- Central Java Power - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Siam City Cement PLC, Thailand
- Parry Sugars Refinery, India
- Billiton Holdings Pty Ltd - Australia
- IEA Clean Coal Centre - UK
- Sarangani Energy Corporation, Philippines
- Planning Commission, India
- European Bulk Services B.V. - Netherlands
- Power Finance Corporation Ltd., India
- Asmin Koalindo Tuhup - Indonesia
- Meenaskhi Energy Private Limited - India
- SMG Consultants - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Jorong Barutama Greston.PT - Indonesia
- Standard Chartered Bank - UAE
- Bharathi Cement Corporation - India
- SMC Global Power, Philippines
- Medco Energi Mining Internasional
- Sindya Power Generating Company Private Ltd
- TNB Fuel Sdn Bhd - Malaysia
- Marubeni Corporation - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- International Coal Ventures Pvt Ltd - India
- Heidelberg Cement - Germany
- Kohat Cement Company Ltd. - Pakistan
- Metalloyd Limited - United Kingdom
- New Zealand Coal & Carbon
- Borneo Indobara - Indonesia
- Ind-Barath Power Infra Limited - India
- Sakthi Sugars Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Carbofer General Trading SA - India
- Meralco Power Generation, Philippines
- Interocean Group of Companies - India
- TeaM Sual Corporation - Philippines
- Latin American Coal - Colombia
- Africa Commodities Group - South Africa
- Goldman Sachs - Singapore
- CNBM International Corporation - China
- Ministry of Mines - Canada
- Dalmia Cement Bharat India
- The University of Queensland
- Sojitz Corporation - Japan
- Port Waratah Coal Services - Australia
- Simpson Spence & Young - Indonesia
- PNOC Exploration Corporation - Philippines
- Vedanta Resources Plc - India
- Toyota Tsusho Corporation, Japan
- OPG Power Generation Pvt Ltd - India
- Independent Power Producers Association of India
- Rio Tinto Coal - Australia
- Kalimantan Lumbung Energi - Indonesia
- Energy Development Corp, Philippines
- Krishnapatnam Port Company Ltd. - India
- Global Business Power Corporation, Philippines
- VISA Power Limited - India
- Indian Oil Corporation Limited
- Star Paper Mills Limited - India
- Riau Bara Harum - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Makarim & Taira - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Savvy Resources Ltd - HongKong
- Australian Commodity Traders Exchange
- Videocon Industries ltd - India
- Coastal Gujarat Power Limited - India
- Directorate Of Revenue Intelligence - India
- Maharashtra Electricity Regulatory Commission - India
- Siam City Cement - Thailand
- Bhatia International Limited - India
- Commonwealth Bank - Australia
- The State Trading Corporation of India Ltd
- Gujarat Mineral Development Corp Ltd - India
- Parliament of New Zealand
- Bhushan Steel Limited - India
- Singapore Mercantile Exchange
- Minerals Council of Australia
- Bayan Resources Tbk. - Indonesia
- CIMB Investment Bank - Malaysia
- Straits Asia Resources Limited - Singapore
- Salva Resources Pvt Ltd - India
- IHS Mccloskey Coal Group - USA
- Essar Steel Hazira Ltd - India
- Edison Trading Spa - Italy
- Bahari Cakrawala Sebuku - Indonesia
- Iligan Light & Power Inc, Philippines
- Ministry of Finance - Indonesia
- Eastern Coal Council - USA
- Indian Energy Exchange, India
- Alfred C Toepfer International GmbH - Germany
- Sinarmas Energy and Mining - Indonesia
- Kobexindo Tractors - Indoneisa
- Ceylon Electricity Board - Sri Lanka
- Gujarat Sidhee Cement - India
- Kumho Petrochemical, South Korea
- PowerSource Philippines DevCo
- Lanco Infratech Ltd - India
- Economic Council, Georgia
- Georgia Ports Authority, United States
- Manunggal Multi Energi - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Antam Resourcindo - Indonesia
- Bulk Trading Sa - Switzerland
- Jaiprakash Power Ventures ltd
- Kapuas Tunggal Persada - Indonesia
- Electricity Authority, New Zealand
- Renaissance Capital - South Africa
- ASAPP Information Group - India
- Banpu Public Company Limited - Thailand
- Formosa Plastics Group - Taiwan
- McConnell Dowell - Australia
- Timah Investasi Mineral - Indoneisa
- Chettinad Cement Corporation Ltd - India
- Posco Energy - South Korea
- Merrill Lynch Commodities Europe
- Mercator Lines Limited - India
- Binh Thuan Hamico - Vietnam
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Energy Link Ltd, New Zealand
- Oldendorff Carriers - Singapore
- GN Power Mariveles Coal Plant, Philippines
- Tata Chemicals Ltd - India
- Anglo American - United Kingdom
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- MS Steel International - UAE
- Baramulti Group, Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Madhucon Powers Ltd - India
- Globalindo Alam Lestari - Indonesia
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