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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, 29 May 13
SHIP OWNERS KEEP ON SPENDING ON NEWBUILDINGS AS PRICES ARE DEEMED TOO LOW TO RESIST - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
It's been yet another week on increased newbuilding ordering activity with Hellenic ship owners appearing rathe active, on the back of attractive f ...
Tuesday, 28 May 13
NEWCASTLE PORT SHIPPED 9.76 PERCENT MORE COAL W/E 27 MAY 2013
COALspot.com - Newcastle port in Australia has loaded 2,420,366 tons of coal for week ended 0700 hours 27 May 2013, Newcastle Port Corp. said ...
Sunday, 26 May 13
AMPLE SUPPLY, LOW DEMAND KEEP COAL PRICES UNDER PRESSURE
COALspot.com - Sub-Bit Indonesia coal swaps (FOB ) for average July 2013 delivery have lost 0.07 percent and API 8 CFR South China Coal shipment los ...
Friday, 24 May 13
ENGAGEMENT WITH POTENTIAL STRATEGIC AND OFF TAKE PARTNERS ACCELERATING - REALM RESOURCES
COALspot.com - Following the recent completion of the Feasibility Study, the Realm Resources Ltd. (ASX: RRP) has focused on securing strategic ...
Friday, 24 May 13
US'S COAL PRODUCTION INCREASED WEEK ON WEEK
COALspot.com – United states the world’s second largest coal producer produced totaled approximately 18.90 million short tons (mmst) of ...
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- Siam City Cement - Thailand
- Asia Pacific Energy Resources Ventures Inc, Philippines
- South Luzon Thermal Energy Corporation
- GAC Shipping (India) Pvt Ltd
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Port Waratah Coal Services - Australia
- ASAPP Information Group - India
- Sindya Power Generating Company Private Ltd
- Australian Commodity Traders Exchange
- Directorate General of MIneral and Coal - Indonesia
- Edison Trading Spa - Italy
- Semirara Mining Corp, Philippines
- Independent Power Producers Association of India
- Tata Chemicals Ltd - India
- Kumho Petrochemical, South Korea
- Pendopo Energi Batubara - Indonesia
- Videocon Industries ltd - India
- Heidelberg Cement - Germany
- Jorong Barutama Greston.PT - Indonesia
- Sical Logistics Limited - India
- Trasteel International SA, Italy
- Kohat Cement Company Ltd. - Pakistan
- Leighton Contractors Pty Ltd - Australia
- Wilmar Investment Holdings
- Africa Commodities Group - South Africa
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Maheswari Brothers Coal Limited - India
- Malabar Cements Ltd - India
- Intertek Mineral Services - Indonesia
- Coalindo Energy - Indonesia
- Interocean Group of Companies - India
- Electricity Generating Authority of Thailand
- Madhucon Powers Ltd - India
- Bhatia International Limited - India
- VISA Power Limited - India
- The Treasury - Australian Government
- Rashtriya Ispat Nigam Limited - India
- IHS Mccloskey Coal Group - USA
- Central Electricity Authority - India
- PTC India Limited - India
- Banpu Public Company Limited - Thailand
- Merrill Lynch Commodities Europe
- SMG Consultants - Indonesia
- Indonesian Coal Mining Association
- Bukit Makmur.PT - Indonesia
- Price Waterhouse Coopers - Russia
- Siam City Cement PLC, Thailand
- Australian Coal Association
- Aditya Birla Group - India
- PowerSource Philippines DevCo
- The State Trading Corporation of India Ltd
- Bhoruka Overseas - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Iligan Light & Power Inc, Philippines
- Orica Australia Pty. Ltd.
- Lanco Infratech Ltd - India
- Sarangani Energy Corporation, Philippines
- Maharashtra Electricity Regulatory Commission - India
- PetroVietnam Power Coal Import and Supply Company
- Chettinad Cement Corporation Ltd - India
- Bukit Baiduri Energy - Indonesia
- OPG Power Generation Pvt Ltd - India
- Uttam Galva Steels Limited - India
- Marubeni Corporation - India
- Tamil Nadu electricity Board
- Central Java Power - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Neyveli Lignite Corporation Ltd, - India
- SN Aboitiz Power Inc, Philippines
- Anglo American - United Kingdom
- Sinarmas Energy and Mining - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Coastal Gujarat Power Limited - India
- Gujarat Sidhee Cement - India
- GMR Energy Limited - India
- Alfred C Toepfer International GmbH - Germany
- Therma Luzon, Inc, Philippines
- Barasentosa Lestari - Indonesia
- London Commodity Brokers - England
- Star Paper Mills Limited - India
- Jaiprakash Power Ventures ltd
- Vedanta Resources Plc - India
- Minerals Council of Australia
- Pipit Mutiara Jaya. PT, Indonesia
- CNBM International Corporation - China
- AsiaOL BioFuels Corp., Philippines
- Renaissance Capital - South Africa
- Singapore Mercantile Exchange
- Baramulti Group, Indonesia
- Bayan Resources Tbk. - Indonesia
- Planning Commission, India
- Semirara Mining and Power Corporation, Philippines
- Meralco Power Generation, Philippines
- Ceylon Electricity Board - Sri Lanka
- Petron Corporation, Philippines
- Thiess Contractors Indonesia
- Power Finance Corporation Ltd., India
- Metalloyd Limited - United Kingdom
- Gujarat Electricity Regulatory Commission - India
- Simpson Spence & Young - Indonesia
- Toyota Tsusho Corporation, Japan
- IEA Clean Coal Centre - UK
- Kalimantan Lumbung Energi - Indonesia
- European Bulk Services B.V. - Netherlands
- Larsen & Toubro Limited - India
- Energy Development Corp, Philippines
- Ministry of Transport, Egypt
- Borneo Indobara - Indonesia
- Indika Energy - Indonesia
- Romanian Commodities Exchange
- Jindal Steel & Power Ltd - India
- India Bulls Power Limited - India
- Karaikal Port Pvt Ltd - India
- Eastern Energy - Thailand
- Bulk Trading Sa - Switzerland
- Formosa Plastics Group - Taiwan
- Orica Mining Services - Indonesia
- Posco Energy - South Korea
- Sakthi Sugars Limited - India
- Riau Bara Harum - Indonesia
- Global Business Power Corporation, Philippines
- Kideco Jaya Agung - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Deloitte Consulting - India
- Indian Oil Corporation Limited
- Dalmia Cement Bharat India
- Rio Tinto Coal - Australia
- Latin American Coal - Colombia
- Timah Investasi Mineral - Indoneisa
- San Jose City I Power Corp, Philippines
- Ind-Barath Power Infra Limited - India
- Thai Mozambique Logistica
- Miang Besar Coal Terminal - Indonesia
- Wood Mackenzie - Singapore
- Vizag Seaport Private Limited - India
- Grasim Industreis Ltd - India
- Altura Mining Limited, Indonesia
- Gujarat Mineral Development Corp Ltd - India
- ICICI Bank Limited - India
- Antam Resourcindo - Indonesia
- Sojitz Corporation - Japan
- Standard Chartered Bank - UAE
- Savvy Resources Ltd - HongKong
- New Zealand Coal & Carbon
- Manunggal Multi Energi - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Makarim & Taira - Indonesia
- Binh Thuan Hamico - Vietnam
- MS Steel International - UAE
- Holcim Trading Pte Ltd - Singapore
- GVK Power & Infra Limited - India
- LBH Netherlands Bv - Netherlands
- Coal and Oil Company - UAE
- Aboitiz Power Corporation - Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Xindia Steels Limited - India
- Kobexindo Tractors - Indoneisa
- Parliament of New Zealand
- Cigading International Bulk Terminal - Indonesia
- Attock Cement Pakistan Limited
- Oldendorff Carriers - Singapore
- Krishnapatnam Port Company Ltd. - India
- Mercuria Energy - Indonesia
- McConnell Dowell - Australia
- White Energy Company Limited
- Carbofer General Trading SA - India
- Samtan Co., Ltd - South Korea
- Salva Resources Pvt Ltd - India
- The University of Queensland
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Parry Sugars Refinery, India
- Indian Energy Exchange, India
- Directorate Of Revenue Intelligence - India
- Goldman Sachs - Singapore
- International Coal Ventures Pvt Ltd - India
- Agrawal Coal Company - India
- Ambuja Cements Ltd - India
- Bharathi Cement Corporation - India
- Indogreen Group - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Global Green Power PLC Corporation, Philippines
- Essar Steel Hazira Ltd - India
- Ministry of Mines - Canada
- Sree Jayajothi Cements Limited - India
- Mintek Dendrill Indonesia
- Indo Tambangraya Megah - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Commonwealth Bank - Australia
- Kartika Selabumi Mining - Indonesia
- Kepco SPC Power Corporation, Philippines
- Cement Manufacturers Association - India
- Economic Council, Georgia
- Karbindo Abesyapradhi - Indoneisa
- Eastern Coal Council - USA
- Georgia Ports Authority, United States
- Energy Link Ltd, New Zealand
- Mercator Lines Limited - India
- Globalindo Alam Lestari - Indonesia
- Global Coal Blending Company Limited - Australia
- Petrochimia International Co. Ltd.- Taiwan
- Medco Energi Mining Internasional
- Meenaskhi Energy Private Limited - India
- Chamber of Mines of South Africa
- Ministry of Finance - Indonesia
- Bhushan Steel Limited - India
- SMC Global Power, Philippines
- CIMB Investment Bank - Malaysia
- Asmin Koalindo Tuhup - Indonesia
- PNOC Exploration Corporation - Philippines
- Electricity Authority, New Zealand
- Kaltim Prima Coal - Indonesia
- Mjunction Services Limited - India
- Billiton Holdings Pty Ltd - Australia
- TeaM Sual Corporation - Philippines
- Straits Asia Resources Limited - Singapore
- Bangladesh Power Developement Board
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