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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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Monday, 08 January 24
KOSPO TO BUY 80000 MT OF INDONESIAN LOW CALORIFIC VALUE COAL FOR FEB 2024
Korea Southern Power Co., Ltd. (KOSPO), is inviting bids for the supply of Indonesian Low Calorific Value Coal from qualified suppliers for Korean ...
Monday, 08 January 24
SEABORNE TRADE REACHES 12.4BN TONNES - CLARKSONS
China will establish a back-up coal production system by 2027 to stabilise prices and secure coal supply, the state planner said on Wednesday, even ...
Monday, 08 January 24
CAPESIZES START THE NEW YEAR ON POSITIVE NOTE - BALTIC EXCHANGE
Capesize
This week the capsize market has been marked by a mix of activities and challenges. Despite a slow start following the Christmas and N ...
Friday, 05 January 24
MORGAN STANLEY SEES LOWER OIL PRICES IN 2024 ON OVERSUPPLY CONCERNS - REUTERS
Morgan Stanley sees Brent crude prices anchored near $80 per barrel in the first half in 2024 before declining towards the end of the year as it ex ...
Friday, 05 January 24
INDIA'S COAL OUTPUT RISES NEARLY 11 PC IN DEC TO 92.87 MT - PTI
India’s coal production increased by 10.75 per cent to 92.87 million tonne in December 2023 as compared to the year-ago period, an official s ...
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Showing 56 to 60 news of total 6871 |
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- Kartika Selabumi Mining - Indonesia
- The State Trading Corporation of India Ltd
- Global Coal Blending Company Limited - Australia
- Bukit Makmur.PT - Indonesia
- ICICI Bank Limited - India
- San Jose City I Power Corp, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Economic Council, Georgia
- Mjunction Services Limited - India
- London Commodity Brokers - England
- Electricity Authority, New Zealand
- Sarangani Energy Corporation, Philippines
- Metalloyd Limited - United Kingdom
- The Treasury - Australian Government
- Bank of Tokyo Mitsubishi UFJ Ltd
- Borneo Indobara - Indonesia
- Sindya Power Generating Company Private Ltd
- Samtan Co., Ltd - South Korea
- Gujarat Mineral Development Corp Ltd - India
- Salva Resources Pvt Ltd - India
- Ministry of Mines - Canada
- Ministry of Finance - Indonesia
- IHS Mccloskey Coal Group - USA
- Essar Steel Hazira Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Malabar Cements Ltd - India
- CIMB Investment Bank - Malaysia
- SMC Global Power, Philippines
- Gujarat Electricity Regulatory Commission - India
- Ambuja Cements Ltd - India
- Coal and Oil Company - UAE
- Carbofer General Trading SA - India
- Semirara Mining and Power Corporation, Philippines
- Tamil Nadu electricity Board
- Xindia Steels Limited - India
- GAC Shipping (India) Pvt Ltd
- Merrill Lynch Commodities Europe
- Heidelberg Cement - Germany
- Kalimantan Lumbung Energi - Indonesia
- Manunggal Multi Energi - Indonesia
- Karaikal Port Pvt Ltd - India
- Ministry of Transport, Egypt
- Toyota Tsusho Corporation, Japan
- Electricity Generating Authority of Thailand
- Therma Luzon, Inc, Philippines
- Makarim & Taira - Indonesia
- Indo Tambangraya Megah - Indonesia
- Kideco Jaya Agung - Indonesia
- Kaltim Prima Coal - Indonesia
- Thai Mozambique Logistica
- White Energy Company Limited
- Anglo American - United Kingdom
- Lanco Infratech Ltd - India
- Bayan Resources Tbk. - Indonesia
- Larsen & Toubro Limited - India
- Coastal Gujarat Power Limited - India
- Bangladesh Power Developement Board
- Meenaskhi Energy Private Limited - India
- Orica Mining Services - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Attock Cement Pakistan Limited
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Medco Energi Mining Internasional
- Thiess Contractors Indonesia
- Intertek Mineral Services - Indonesia
- Coalindo Energy - Indonesia
- Tata Chemicals Ltd - India
- Goldman Sachs - Singapore
- Mercuria Energy - Indonesia
- Independent Power Producers Association of India
- Maheswari Brothers Coal Limited - India
- Billiton Holdings Pty Ltd - Australia
- SN Aboitiz Power Inc, Philippines
- MS Steel International - UAE
- The University of Queensland
- Altura Mining Limited, Indonesia
- Deloitte Consulting - India
- Maharashtra Electricity Regulatory Commission - India
- Rio Tinto Coal - Australia
- Vizag Seaport Private Limited - India
- Timah Investasi Mineral - Indoneisa
- AsiaOL BioFuels Corp., Philippines
- Siam City Cement PLC, Thailand
- Global Business Power Corporation, Philippines
- VISA Power Limited - India
- Rashtriya Ispat Nigam Limited - India
- Indian Energy Exchange, India
- Gujarat Sidhee Cement - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Bulk Trading Sa - Switzerland
- Bukit Asam (Persero) Tbk - Indonesia
- Australian Coal Association
- Energy Link Ltd, New Zealand
- Krishnapatnam Port Company Ltd. - India
- Bhushan Steel Limited - India
- Semirara Mining Corp, Philippines
- Savvy Resources Ltd - HongKong
- Minerals Council of Australia
- Indian Oil Corporation Limited
- New Zealand Coal & Carbon
- Mercator Lines Limited - India
- Bhoruka Overseas - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- GN Power Mariveles Coal Plant, Philippines
- PowerSource Philippines DevCo
- Latin American Coal - Colombia
- Eastern Coal Council - USA
- Chettinad Cement Corporation Ltd - India
- Videocon Industries ltd - India
- Power Finance Corporation Ltd., India
- ASAPP Information Group - India
- LBH Netherlands Bv - Netherlands
- Planning Commission, India
- Sinarmas Energy and Mining - Indonesia
- Parliament of New Zealand
- Jaiprakash Power Ventures ltd
- Australian Commodity Traders Exchange
- Cigading International Bulk Terminal - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Georgia Ports Authority, United States
- Indonesian Coal Mining Association
- Siam City Cement - Thailand
- Africa Commodities Group - South Africa
- Jindal Steel & Power Ltd - India
- OPG Power Generation Pvt Ltd - India
- Straits Asia Resources Limited - Singapore
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Formosa Plastics Group - Taiwan
- Standard Chartered Bank - UAE
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Ceylon Electricity Board - Sri Lanka
- India Bulls Power Limited - India
- Agrawal Coal Company - India
- Petron Corporation, Philippines
- Iligan Light & Power Inc, Philippines
- Kapuas Tunggal Persada - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- PTC India Limited - India
- South Luzon Thermal Energy Corporation
- Energy Development Corp, Philippines
- TeaM Sual Corporation - Philippines
- Oldendorff Carriers - Singapore
- Parry Sugars Refinery, India
- Pendopo Energi Batubara - Indonesia
- Wood Mackenzie - Singapore
- Offshore Bulk Terminal Pte Ltd, Singapore
- Barasentosa Lestari - Indonesia
- Indogreen Group - Indonesia
- Singapore Mercantile Exchange
- CNBM International Corporation - China
- Port Waratah Coal Services - Australia
- Indika Energy - Indonesia
- Riau Bara Harum - Indonesia
- Globalindo Alam Lestari - Indonesia
- Vedanta Resources Plc - India
- Aditya Birla Group - India
- Bahari Cakrawala Sebuku - Indonesia
- IEA Clean Coal Centre - UK
- Leighton Contractors Pty Ltd - Australia
- Price Waterhouse Coopers - Russia
- GMR Energy Limited - India
- Kumho Petrochemical, South Korea
- Cement Manufacturers Association - India
- Kohat Cement Company Ltd. - Pakistan
- SMG Consultants - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Binh Thuan Hamico - Vietnam
- Sakthi Sugars Limited - India
- Antam Resourcindo - Indonesia
- Commonwealth Bank - Australia
- Kobexindo Tractors - Indoneisa
- Marubeni Corporation - India
- PetroVietnam Power Coal Import and Supply Company
- Central Java Power - Indonesia
- Bharathi Cement Corporation - India
- Central Electricity Authority - India
- Mintek Dendrill Indonesia
- Wilmar Investment Holdings
- Jorong Barutama Greston.PT - Indonesia
- Madhucon Powers Ltd - India
- Star Paper Mills Limited - India
- Orica Australia Pty. Ltd.
- PNOC Exploration Corporation - Philippines
- Sree Jayajothi Cements Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Meralco Power Generation, Philippines
- European Bulk Services B.V. - Netherlands
- Miang Besar Coal Terminal - Indonesia
- Global Green Power PLC Corporation, Philippines
- International Coal Ventures Pvt Ltd - India
- Simpson Spence & Young - Indonesia
- Romanian Commodities Exchange
- Eastern Energy - Thailand
- Sical Logistics Limited - India
- Bukit Baiduri Energy - Indonesia
- Posco Energy - South Korea
- GVK Power & Infra Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Chamber of Mines of South Africa
- Kepco SPC Power Corporation, Philippines
- Sojitz Corporation - Japan
- Banpu Public Company Limited - Thailand
- Asmin Koalindo Tuhup - Indonesia
- Dalmia Cement Bharat India
- Uttam Galva Steels Limited - India
- Bhatia International Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Aboitiz Power Corporation - Philippines
- Baramulti Group, Indonesia
- Ind-Barath Power Infra Limited - India
- Edison Trading Spa - Italy
- Directorate Of Revenue Intelligence - India
- Renaissance Capital - South Africa
- Interocean Group of Companies - India
- Grasim Industreis Ltd - India
- McConnell Dowell - Australia
- Trasteel International SA, Italy
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