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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, 01 December 23
COAL MINERS GROUP EXPECTS INDONESIA’S 2023 COAL OUTPUT TO SURPASS TARGET - REUTERS
The Indonesian Coal Mining Association (ICMA) expects the country’s 2023 coal output to surpass the official target of 695 million metric ton ...
Friday, 24 November 23
COAL IMPORTS TO INDIA IN OCTOBER 2023 REACHED HIGHEST LEVELS IN NEARLY A YEAR AND A HALF - VESSELSVALUE, VESON NAUTICAL
In October, coal imports to India reached 13.8 mt in October 2023, according to Oceanbolt, a Veson Nautical solution, the highest level since May 2 ...
Friday, 24 November 23
COAL SHIPMENTS TO ADVANCED ECONOMIES DOWN 17% SO FAR IN 2023 - BIMCO
In the first ten months of 2023, coal shipments to advanced economies fell by 17% y/y, as demand for electricity declined and the share of electric ...
Friday, 24 November 23
INTELLIGENT COAL MINES CONTRIBUTE TO IMPROVING SAFETY STANDARDS - CHINA DAILY
Mechanization, automation and intelligent upgrades have contributed to improved safety in coal mines, though the level of development of intelligen ...
Friday, 24 November 23
WHY AUSTRALIA'S COAL MINES ARE GETTING BIGGER - IEEFA
Australia’s largest coal mines are getting larger. Mines in New South Wales (NSW) are ramping up production following the state’s recov ...
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- Carbofer General Trading SA - India
- Therma Luzon, Inc, Philippines
- Parliament of New Zealand
- Altura Mining Limited, Indonesia
- Indo Tambangraya Megah - Indonesia
- Meralco Power Generation, Philippines
- Semirara Mining and Power Corporation, Philippines
- Cement Manufacturers Association - India
- Simpson Spence & Young - Indonesia
- Meenaskhi Energy Private Limited - India
- Parry Sugars Refinery, India
- Merrill Lynch Commodities Europe
- Agrawal Coal Company - India
- Indian Energy Exchange, India
- Bahari Cakrawala Sebuku - Indonesia
- Price Waterhouse Coopers - Russia
- Pendopo Energi Batubara - Indonesia
- Makarim & Taira - Indonesia
- Thiess Contractors Indonesia
- Grasim Industreis Ltd - India
- The State Trading Corporation of India Ltd
- Karaikal Port Pvt Ltd - India
- Directorate Of Revenue Intelligence - India
- Interocean Group of Companies - India
- PetroVietnam Power Coal Import and Supply Company
- Gujarat Electricity Regulatory Commission - India
- CNBM International Corporation - China
- TeaM Sual Corporation - Philippines
- ICICI Bank Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Maheswari Brothers Coal Limited - India
- Timah Investasi Mineral - Indoneisa
- Indian Oil Corporation Limited
- Lanco Infratech Ltd - India
- GMR Energy Limited - India
- Central Electricity Authority - India
- India Bulls Power Limited - India
- Globalindo Alam Lestari - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Salva Resources Pvt Ltd - India
- Independent Power Producers Association of India
- Formosa Plastics Group - Taiwan
- Miang Besar Coal Terminal - Indonesia
- ASAPP Information Group - India
- Goldman Sachs - Singapore
- The Treasury - Australian Government
- Attock Cement Pakistan Limited
- Baramulti Group, Indonesia
- Wilmar Investment Holdings
- Maharashtra Electricity Regulatory Commission - India
- Orica Australia Pty. Ltd.
- Vizag Seaport Private Limited - India
- Petron Corporation, Philippines
- Singapore Mercantile Exchange
- Mintek Dendrill Indonesia
- Holcim Trading Pte Ltd - Singapore
- Asmin Koalindo Tuhup - Indonesia
- Posco Energy - South Korea
- Barasentosa Lestari - Indonesia
- Chettinad Cement Corporation Ltd - India
- Global Coal Blending Company Limited - Australia
- PTC India Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Banpu Public Company Limited - Thailand
- Planning Commission, India
- Ministry of Transport, Egypt
- Samtan Co., Ltd - South Korea
- Sical Logistics Limited - India
- Orica Mining Services - Indonesia
- Siam City Cement PLC, Thailand
- Minerals Council of Australia
- SMG Consultants - Indonesia
- New Zealand Coal & Carbon
- Toyota Tsusho Corporation, Japan
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Bank of Tokyo Mitsubishi UFJ Ltd
- Australian Commodity Traders Exchange
- Edison Trading Spa - Italy
- Uttam Galva Steels Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Heidelberg Cement - Germany
- Alfred C Toepfer International GmbH - Germany
- Deloitte Consulting - India
- Semirara Mining Corp, Philippines
- Anglo American - United Kingdom
- Binh Thuan Hamico - Vietnam
- Ministry of Mines - Canada
- VISA Power Limited - India
- Commonwealth Bank - Australia
- Neyveli Lignite Corporation Ltd, - India
- McConnell Dowell - Australia
- Straits Asia Resources Limited - Singapore
- Bhatia International Limited - India
- Riau Bara Harum - Indonesia
- Renaissance Capital - South Africa
- Intertek Mineral Services - Indonesia
- CIMB Investment Bank - Malaysia
- Aboitiz Power Corporation - Philippines
- Central Java Power - Indonesia
- Coalindo Energy - Indonesia
- London Commodity Brokers - England
- Directorate General of MIneral and Coal - Indonesia
- Thai Mozambique Logistica
- European Bulk Services B.V. - Netherlands
- Sarangani Energy Corporation, Philippines
- Wood Mackenzie - Singapore
- Tata Chemicals Ltd - India
- Bharathi Cement Corporation - India
- Sinarmas Energy and Mining - Indonesia
- Australian Coal Association
- Rashtriya Ispat Nigam Limited - India
- Energy Link Ltd, New Zealand
- Krishnapatnam Port Company Ltd. - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Sojitz Corporation - Japan
- Vedanta Resources Plc - India
- Africa Commodities Group - South Africa
- IHS Mccloskey Coal Group - USA
- Metalloyd Limited - United Kingdom
- Oldendorff Carriers - Singapore
- Ind-Barath Power Infra Limited - India
- South Luzon Thermal Energy Corporation
- TNB Fuel Sdn Bhd - Malaysia
- PowerSource Philippines DevCo
- Kobexindo Tractors - Indoneisa
- Bayan Resources Tbk. - Indonesia
- Kartika Selabumi Mining - Indonesia
- OPG Power Generation Pvt Ltd - India
- Kumho Petrochemical, South Korea
- Videocon Industries ltd - India
- Kapuas Tunggal Persada - Indonesia
- Coastal Gujarat Power Limited - India
- Coal and Oil Company - UAE
- Chamber of Mines of South Africa
- MS Steel International - UAE
- Sakthi Sugars Limited - India
- Ministry of Finance - Indonesia
- Sree Jayajothi Cements Limited - India
- Dalmia Cement Bharat India
- San Jose City I Power Corp, Philippines
- Bhoruka Overseas - Indonesia
- Kaltim Prima Coal - Indonesia
- Bukit Makmur.PT - Indonesia
- Bangladesh Power Developement Board
- Borneo Indobara - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Marubeni Corporation - India
- Kideco Jaya Agung - Indonesia
- Mercuria Energy - Indonesia
- Ambuja Cements Ltd - India
- Port Waratah Coal Services - Australia
- Global Green Power PLC Corporation, Philippines
- Standard Chartered Bank - UAE
- Power Finance Corporation Ltd., India
- Gujarat Sidhee Cement - India
- Georgia Ports Authority, United States
- Essar Steel Hazira Ltd - India
- Indonesian Coal Mining Association
- Electricity Authority, New Zealand
- Iligan Light & Power Inc, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Bukit Baiduri Energy - Indonesia
- Indogreen Group - Indonesia
- Global Business Power Corporation, Philippines
- GVK Power & Infra Limited - India
- Medco Energi Mining Internasional
- Kepco SPC Power Corporation, Philippines
- Sindya Power Generating Company Private Ltd
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- The University of Queensland
- Karbindo Abesyapradhi - Indoneisa
- Mercator Lines Limited - India
- International Coal Ventures Pvt Ltd - India
- Indika Energy - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Savvy Resources Ltd - HongKong
- Trasteel International SA, Italy
- Jindal Steel & Power Ltd - India
- PNOC Exploration Corporation - Philippines
- Siam City Cement - Thailand
- SMC Global Power, Philippines
- Leighton Contractors Pty Ltd - Australia
- Eastern Energy - Thailand
- Jaiprakash Power Ventures ltd
- Bulk Trading Sa - Switzerland
- Tamil Nadu electricity Board
- Madhucon Powers Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Latin American Coal - Colombia
- Rio Tinto Coal - Australia
- Electricity Generating Authority of Thailand
- Xindia Steels Limited - India
- Billiton Holdings Pty Ltd - Australia
- Larsen & Toubro Limited - India
- Aditya Birla Group - India
- LBH Netherlands Bv - Netherlands
- Star Paper Mills Limited - India
- SN Aboitiz Power Inc, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- White Energy Company Limited
- Antam Resourcindo - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Bhushan Steel Limited - India
- Mjunction Services Limited - India
- GAC Shipping (India) Pvt Ltd
- IEA Clean Coal Centre - UK
- Eastern Coal Council - USA
- GN Power Mariveles Coal Plant, Philippines
- Economic Council, Georgia
- Manunggal Multi Energi - Indonesia
- Malabar Cements Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Energy Development Corp, Philippines
- AsiaOL BioFuels Corp., Philippines
- Romanian Commodities Exchange
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