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Wednesday, 18 September 13
IRON ORE AND ZINC ARE BEST PERFORMING MINING SECTORS IN CURRENT LOW PRICE, HIGH COST ENVIRONMENT - WOOD MACKENZIE
 With the fall in commodity prices, cash margins in the mining industry have come under pressure. Accordingly, producers and investors are placing intense focus on both operating and capital costs. Wood Mackenzie's report titled 'Who hurts most' analyses cash costs and margins across the bulk commodities as well as base and precious metals. The report reveals that the iron ore and zinc sectors will perform best on average; while copper, export metallurgical coal and gold will be most challenged. Based on this, companies may have to make important decisions to protect their overall margins.
Wood Mackenzie finds that amongst the bulk commodities, iron ore stands above the rest. Despite pulling back from 2012 levels with a 19% cash margin decline, iron ore still has a very strong average industry margin of US$49/tonne (52% of average price) in 2014, enabling continued large cash generation in this high volume business. This supports the on-going focus by the major producers like Rio Tinto, BHP Billiton and Vale, on pushing ahead with expansions at their low cost iron ore operations. It is also in stark contrast to coal and bauxite, both of which have average margins of less than 25% in 2013 - the outlook is particularly bleak for export thermal coal with an average margin of only 19% in 2014.
Mr Steve Hulton, Principal Mining Analyst for Wood Mackenzie, says, "The sectors that fare the worst, with biggest average falls in margins from 2012 to 2014 are copper, export metallurgical coal and gold. Nickel has the lowest average industry margin of only 13% of price in 2013. This rises slightly in 2014, but it is still the worst of all commodities studied. As such, the nickel industry is under severe pressure. In 2012, one-third of industry production generated negative margins after taking into account total cash and sustaining capex costs."
The zinc mining sector has a very high average margin as a percentage of the metal price due to the large contribution of by-product credits like copper, lead, silver and gold, which offset operating costs. While remaining relatively high, the average zinc margin is expected to decrease to 83% in 2014, even with a rising zinc price, due to the lower value of by-product revenue in this polymetallic sector.
For the copper and gold industries, lower prices will continue to put pressure on overall operational cash-flow. In Wood Mackenzie's analysis, average industry margins in 2014 fall to 39% for copper and 44% for gold, down from 49% and 50% respectively from 2012. In export met coal, margins in 2014 are only 25% of average price, down from 30% in 2012.
Mr Hulton explains the importance of this analysis to producers, "Operating costs in the mining industry have risen rapidly over recent years, but now that prices have dropped there is a renewed focus from mining companies on reducing costs and trying to protect margins."
"To compare overall operating margins, we examine total cash cost plus sustaining capital. For producers to accurately assess cash margins at the mine level, just examining the basic C1™ operating cost can be misleading. Total cash cost plus sustaining capital is a better full cash cost measure. This comprises the C1™ operating cash cost plus indirect cash costs such as royalties & levies, and the cash spend on capital required to sustain production." The industry standard C1™ cost is the direct cash cost of mining, processing and offsite realisation costs, including any by-product credits. It is primarily used to compare the relative underlying cost efficiency of production between mines.
Mr Hulton concludes, "Individual mining companies will be variously affected depending on their exposure to the different commodities, and where their particular mines sit on the respective industry cost/margin curves. As price takers, there are limited tunes the producers can play and one of them will be to slow down on capital spend, and prioritise the commodities that have the best returns."
*Note: The base and precious metals commodities covered in the analysis are copper, nickel, zinc and gold. The bulk commodities covered in the analysis are metallurgical export coal, thermal export coal, bauxite and iron ore.
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Friday, 06 September 24
REBOUND IN OIL DEMAND COULD LIFT MARKET IN LATTER HALF OF 2024 - BIMCO
Supply/demand
Based on a strong second half demand, the supply/balance is forecast to strengthen in 2024 but weaken slightly in 2025 as n ...
Friday, 06 September 24
GLOBAL SEABORNE LNG TRADE HAS CONTINUED TO INCREASE LAST YEAR - BANCHERO COSTA
Global seaborne LNG trade has continued to increase last year, helped also by the events in Ukraine which forced Europe to diversify away from Russ ...
Wednesday, 28 August 24
SEABORNE COAL IMPORTS INTO INDIA INCREASED BY +9.9% Y-O-Y TO 146.6 MLN T - BANCHERO COSTA
Global coal trade has really picked up pace over the past year, and is now fully back to pre-Covid levels said Banchero Costa Research in its lates ...
Tuesday, 06 August 24
EXERCISE CAUTION WITH AMMONIA SWITCH - BALTIC EXCHANGE
A new study from the Massachusetts Institute of Technology (MIT) has thrown a spanner into the plan to transition ships from diesel fuel to ammonia ...
Friday, 02 August 24
ENERGY MARKET DEVELOPMENTS: COAL AND NATURAL GAS PRICES REACH RECORD HIGHS - WORLD BANK
The recent surge in natural gas and coal prices has been so swift that the main benchmarks were roughly three times higher in 2022Q2 compared to a ...
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- Manunggal Multi Energi - Indonesia
- Marubeni Corporation - India
- Medco Energi Mining Internasional
- Bharathi Cement Corporation - India
- Edison Trading Spa - Italy
- Bayan Resources Tbk. - Indonesia
- Carbofer General Trading SA - India
- Orica Mining Services - Indonesia
- Toyota Tsusho Corporation, Japan
- Global Business Power Corporation, Philippines
- Ind-Barath Power Infra Limited - India
- Kideco Jaya Agung - Indonesia
- Dalmia Cement Bharat India
- Ceylon Electricity Board - Sri Lanka
- Madhucon Powers Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Siam City Cement - Thailand
- GVK Power & Infra Limited - India
- Straits Asia Resources Limited - Singapore
- AsiaOL BioFuels Corp., Philippines
- Power Finance Corporation Ltd., India
- Electricity Authority, New Zealand
- Bulk Trading Sa - Switzerland
- Vijayanagar Sugar Pvt Ltd - India
- Intertek Mineral Services - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- PNOC Exploration Corporation - Philippines
- Tata Chemicals Ltd - India
- Economic Council, Georgia
- Kalimantan Lumbung Energi - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Grasim Industreis Ltd - India
- CIMB Investment Bank - Malaysia
- Vizag Seaport Private Limited - India
- Malabar Cements Ltd - India
- Sakthi Sugars Limited - India
- Barasentosa Lestari - Indonesia
- Iligan Light & Power Inc, Philippines
- Kohat Cement Company Ltd. - Pakistan
- European Bulk Services B.V. - Netherlands
- Price Waterhouse Coopers - Russia
- Goldman Sachs - Singapore
- Cement Manufacturers Association - India
- Bhoruka Overseas - Indonesia
- Heidelberg Cement - Germany
- Sindya Power Generating Company Private Ltd
- Simpson Spence & Young - Indonesia
- Maheswari Brothers Coal Limited - India
- Samtan Co., Ltd - South Korea
- Mercuria Energy - Indonesia
- Latin American Coal - Colombia
- Indian Energy Exchange, India
- Bhatia International Limited - India
- Electricity Generating Authority of Thailand
- Mercator Lines Limited - India
- SMG Consultants - Indonesia
- Bhushan Steel Limited - India
- TeaM Sual Corporation - Philippines
- Cigading International Bulk Terminal - Indonesia
- Metalloyd Limited - United Kingdom
- Binh Thuan Hamico - Vietnam
- Gujarat Sidhee Cement - India
- Sical Logistics Limited - India
- Ministry of Mines - Canada
- Thai Mozambique Logistica
- The University of Queensland
- Kapuas Tunggal Persada - Indonesia
- SMC Global Power, Philippines
- ASAPP Information Group - India
- White Energy Company Limited
- Directorate Of Revenue Intelligence - India
- CNBM International Corporation - China
- Kaltim Prima Coal - Indonesia
- Africa Commodities Group - South Africa
- Parliament of New Zealand
- Therma Luzon, Inc, Philippines
- Anglo American - United Kingdom
- Agrawal Coal Company - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- PowerSource Philippines DevCo
- Indonesian Coal Mining Association
- India Bulls Power Limited - India
- Indika Energy - Indonesia
- VISA Power Limited - India
- Kumho Petrochemical, South Korea
- SN Aboitiz Power Inc, Philippines
- Sarangani Energy Corporation, Philippines
- Vedanta Resources Plc - India
- Mintek Dendrill Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Petron Corporation, Philippines
- Asmin Koalindo Tuhup - Indonesia
- LBH Netherlands Bv - Netherlands
- Kepco SPC Power Corporation, Philippines
- Bukit Makmur.PT - Indonesia
- Thiess Contractors Indonesia
- PTC India Limited - India
- Holcim Trading Pte Ltd - Singapore
- Merrill Lynch Commodities Europe
- Mjunction Services Limited - India
- The State Trading Corporation of India Ltd
- Miang Besar Coal Terminal - Indonesia
- Aditya Birla Group - India
- Renaissance Capital - South Africa
- International Coal Ventures Pvt Ltd - India
- Savvy Resources Ltd - HongKong
- London Commodity Brokers - England
- Globalindo Alam Lestari - Indonesia
- Deloitte Consulting - India
- Bukit Baiduri Energy - Indonesia
- Planning Commission, India
- Altura Mining Limited, Indonesia
- Indian Oil Corporation Limited
- Global Coal Blending Company Limited - Australia
- Standard Chartered Bank - UAE
- Larsen & Toubro Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Commonwealth Bank - Australia
- Port Waratah Coal Services - Australia
- Jaiprakash Power Ventures ltd
- GAC Shipping (India) Pvt Ltd
- Star Paper Mills Limited - India
- Indo Tambangraya Megah - Indonesia
- San Jose City I Power Corp, Philippines
- Leighton Contractors Pty Ltd - Australia
- Energy Link Ltd, New Zealand
- Karaikal Port Pvt Ltd - India
- McConnell Dowell - Australia
- Antam Resourcindo - Indonesia
- Attock Cement Pakistan Limited
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Trasteel International SA, Italy
- GMR Energy Limited - India
- Posco Energy - South Korea
- Banpu Public Company Limited - Thailand
- Kobexindo Tractors - Indoneisa
- Georgia Ports Authority, United States
- Alfred C Toepfer International GmbH - Germany
- Kartika Selabumi Mining - Indonesia
- Eastern Coal Council - USA
- Riau Bara Harum - Indonesia
- Sojitz Corporation - Japan
- GN Power Mariveles Coal Plant, Philippines
- Uttam Galva Steels Limited - India
- Chamber of Mines of South Africa
- OPG Power Generation Pvt Ltd - India
- Coalindo Energy - Indonesia
- Ministry of Transport, Egypt
- Essar Steel Hazira Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- PetroVietnam Power Coal Import and Supply Company
- Rashtriya Ispat Nigam Limited - India
- IEA Clean Coal Centre - UK
- Lanco Infratech Ltd - India
- Ministry of Finance - Indonesia
- Wood Mackenzie - Singapore
- Coastal Gujarat Power Limited - India
- Salva Resources Pvt Ltd - India
- The Treasury - Australian Government
- Tamil Nadu electricity Board
- Chettinad Cement Corporation Ltd - India
- Indogreen Group - Indonesia
- Meralco Power Generation, Philippines
- Formosa Plastics Group - Taiwan
- Australian Commodity Traders Exchange
- Timah Investasi Mineral - Indoneisa
- Sree Jayajothi Cements Limited - India
- Singapore Mercantile Exchange
- Ambuja Cements Ltd - India
- Borneo Indobara - Indonesia
- Jindal Steel & Power Ltd - India
- Central Electricity Authority - India
- Independent Power Producers Association of India
- Petrochimia International Co. Ltd.- Taiwan
- New Zealand Coal & Carbon
- Pendopo Energi Batubara - Indonesia
- Eastern Energy - Thailand
- Aboitiz Power Corporation - Philippines
- Coal and Oil Company - UAE
- Parry Sugars Refinery, India
- Orica Australia Pty. Ltd.
- MS Steel International - UAE
- Baramulti Group, Indonesia
- Billiton Holdings Pty Ltd - Australia
- Energy Development Corp, Philippines
- Minerals Council of Australia
- Oldendorff Carriers - Singapore
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- South Luzon Thermal Energy Corporation
- Karbindo Abesyapradhi - Indoneisa
- Siam City Cement PLC, Thailand
- Offshore Bulk Terminal Pte Ltd, Singapore
- Interocean Group of Companies - India
- Central Java Power - Indonesia
- Xindia Steels Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Rio Tinto Coal - Australia
- Global Green Power PLC Corporation, Philippines
- Videocon Industries ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Sinarmas Energy and Mining - Indonesia
- Australian Coal Association
- IHS Mccloskey Coal Group - USA
- Romanian Commodities Exchange
- ICICI Bank Limited - India
- Makarim & Taira - Indonesia
- Meenaskhi Energy Private Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Bangladesh Power Developement Board
- Semirara Mining Corp, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Wilmar Investment Holdings
- Krishnapatnam Port Company Ltd. - India
- Gujarat Electricity Regulatory Commission - India
- Semirara Mining and Power Corporation, Philippines
- Jorong Barutama Greston.PT - Indonesia
- Neyveli Lignite Corporation Ltd, - India
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