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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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Tuesday, 14 November 23
CHINA'S BELT AND ROAD INITIATIVE TURNS AWAY FROM COAL - WOOD MACKENZIE
Ambitious, contentious and big spending, China’s Belt and Road Initiative (BRI) is 10 years old. In that time, China has splashed more than U ...
Friday, 10 November 23
THE COMMODITIES FEED: OIL UNDER PRESSURE - ING
Energy – Brent plummets
The oil market came under significant pressure yesterday. ICE Brent settled 4.19% lower on the day and ...
Friday, 10 November 23
COAL USE AT U.S. POWER PLANTS CONTINUES DOWNWARD SPIRAL; FULL IMPACT ON MINES TO BE FELT IN 2024 - IEEFA
This year, the use of coal by the U.S.’s power producers has been so anemic that the fuel has not achieved a 20% market share in any month so ...
Friday, 10 November 23
INDIA: NATIONAL COAL INDEX RISES 3.83 POINTS IN SEPTEMBER AMID HIGHER DEMAND - LIVEMINT
The National Coal Index (NCI) rose 3.83 points to 143.91 in September amid growing demand for coal.
The union coal ministry on Tuesd ...
Thursday, 09 November 23
WE'RE PRODUCING TOO MUCH COAL, OIL AND GAS, REPORT SAYS - WSJ
World leaders pledged in 2015 to reduce emissions in a combined effort to limit climate change.
Now they are stepping up production ...
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Showing 76 to 80 news of total 6871 |
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- South Luzon Thermal Energy Corporation
- Savvy Resources Ltd - HongKong
- Vedanta Resources Plc - India
- Goldman Sachs - Singapore
- Larsen & Toubro Limited - India
- IHS Mccloskey Coal Group - USA
- Power Finance Corporation Ltd., India
- Therma Luzon, Inc, Philippines
- Africa Commodities Group - South Africa
- Altura Mining Limited, Indonesia
- Sakthi Sugars Limited - India
- Tata Chemicals Ltd - India
- PowerSource Philippines DevCo
- Orica Mining Services - Indonesia
- Jaiprakash Power Ventures ltd
- Intertek Mineral Services - Indonesia
- ICICI Bank Limited - India
- Price Waterhouse Coopers - Russia
- Coal and Oil Company - UAE
- Commonwealth Bank - Australia
- Miang Besar Coal Terminal - Indonesia
- Kideco Jaya Agung - Indonesia
- Parry Sugars Refinery, India
- Bukit Baiduri Energy - Indonesia
- Bukit Makmur.PT - Indonesia
- Sree Jayajothi Cements Limited - India
- Bhatia International Limited - India
- Indian Energy Exchange, India
- Ambuja Cements Ltd - India
- Bharathi Cement Corporation - India
- Bahari Cakrawala Sebuku - Indonesia
- Indonesian Coal Mining Association
- CNBM International Corporation - China
- AsiaOL BioFuels Corp., Philippines
- Meralco Power Generation, Philippines
- The Treasury - Australian Government
- Vizag Seaport Private Limited - India
- Wood Mackenzie - Singapore
- Maharashtra Electricity Regulatory Commission - India
- Maheswari Brothers Coal Limited - India
- Mercator Lines Limited - India
- Uttam Galva Steels Limited - India
- Economic Council, Georgia
- SN Aboitiz Power Inc, Philippines
- Bangladesh Power Developement Board
- Bhoruka Overseas - Indonesia
- Thai Mozambique Logistica
- Singapore Mercantile Exchange
- Merrill Lynch Commodities Europe
- Meenaskhi Energy Private Limited - India
- Holcim Trading Pte Ltd - Singapore
- Kepco SPC Power Corporation, Philippines
- Chettinad Cement Corporation Ltd - India
- European Bulk Services B.V. - Netherlands
- Central Java Power - Indonesia
- Eastern Energy - Thailand
- Bank of Tokyo Mitsubishi UFJ Ltd
- Independent Power Producers Association of India
- Binh Thuan Hamico - Vietnam
- Siam City Cement - Thailand
- MS Steel International - UAE
- Neyveli Lignite Corporation Ltd, - India
- Mintek Dendrill Indonesia
- Rashtriya Ispat Nigam Limited - India
- Parliament of New Zealand
- Electricity Authority, New Zealand
- LBH Netherlands Bv - Netherlands
- Sarangani Energy Corporation, Philippines
- Aboitiz Power Corporation - Philippines
- Sojitz Corporation - Japan
- TNB Fuel Sdn Bhd - Malaysia
- Jorong Barutama Greston.PT - Indonesia
- Edison Trading Spa - Italy
- Directorate Of Revenue Intelligence - India
- Xindia Steels Limited - India
- Mercuria Energy - Indonesia
- Baramulti Group, Indonesia
- Grasim Industreis Ltd - India
- SMG Consultants - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Offshore Bulk Terminal Pte Ltd, Singapore
- Oldendorff Carriers - Singapore
- Posco Energy - South Korea
- Global Business Power Corporation, Philippines
- Petron Corporation, Philippines
- Makarim & Taira - Indonesia
- Chamber of Mines of South Africa
- Krishnapatnam Port Company Ltd. - India
- Barasentosa Lestari - Indonesia
- Agrawal Coal Company - India
- Marubeni Corporation - India
- Ministry of Finance - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Georgia Ports Authority, United States
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Kohat Cement Company Ltd. - Pakistan
- Vijayanagar Sugar Pvt Ltd - India
- Sindya Power Generating Company Private Ltd
- Tamil Nadu electricity Board
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Ministry of Transport, Egypt
- Formosa Plastics Group - Taiwan
- Cement Manufacturers Association - India
- Deloitte Consulting - India
- Leighton Contractors Pty Ltd - Australia
- CIMB Investment Bank - Malaysia
- Videocon Industries ltd - India
- TeaM Sual Corporation - Philippines
- Coastal Gujarat Power Limited - India
- McConnell Dowell - Australia
- Standard Chartered Bank - UAE
- London Commodity Brokers - England
- IEA Clean Coal Centre - UK
- Siam City Cement PLC, Thailand
- Coalindo Energy - Indonesia
- Indika Energy - Indonesia
- VISA Power Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Planning Commission, India
- SMC Global Power, Philippines
- Metalloyd Limited - United Kingdom
- Karaikal Port Pvt Ltd - India
- Port Waratah Coal Services - Australia
- Riau Bara Harum - Indonesia
- PTC India Limited - India
- Toyota Tsusho Corporation, Japan
- OPG Power Generation Pvt Ltd - India
- Lanco Infratech Ltd - India
- Malabar Cements Ltd - India
- Heidelberg Cement - Germany
- Essar Steel Hazira Ltd - India
- Global Coal Blending Company Limited - Australia
- Australian Commodity Traders Exchange
- GAC Shipping (India) Pvt Ltd
- Pipit Mutiara Jaya. PT, Indonesia
- Ministry of Mines - Canada
- Straits Asia Resources Limited - Singapore
- Star Paper Mills Limited - India
- Gujarat Electricity Regulatory Commission - India
- Indo Tambangraya Megah - Indonesia
- Wilmar Investment Holdings
- Electricity Generating Authority of Thailand
- Cigading International Bulk Terminal - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Indogreen Group - Indonesia
- Billiton Holdings Pty Ltd - Australia
- GVK Power & Infra Limited - India
- Manunggal Multi Energi - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Bhushan Steel Limited - India
- Dalmia Cement Bharat India
- Latin American Coal - Colombia
- Minerals Council of Australia
- Romanian Commodities Exchange
- The State Trading Corporation of India Ltd
- Kartika Selabumi Mining - Indonesia
- International Coal Ventures Pvt Ltd - India
- Gujarat Sidhee Cement - India
- Antam Resourcindo - Indonesia
- Orica Australia Pty. Ltd.
- Madhucon Powers Ltd - India
- Iligan Light & Power Inc, Philippines
- Globalindo Alam Lestari - Indonesia
- Banpu Public Company Limited - Thailand
- Gujarat Mineral Development Corp Ltd - India
- Carbofer General Trading SA - India
- White Energy Company Limited
- Directorate General of MIneral and Coal - Indonesia
- Semirara Mining Corp, Philippines
- Indian Oil Corporation Limited
- Bulk Trading Sa - Switzerland
- Semirara Mining and Power Corporation, Philippines
- Anglo American - United Kingdom
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- India Bulls Power Limited - India
- GMR Energy Limited - India
- Simpson Spence & Young - Indonesia
- Energy Development Corp, Philippines
- Medco Energi Mining Internasional
- New Zealand Coal & Carbon
- Salva Resources Pvt Ltd - India
- Timah Investasi Mineral - Indoneisa
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Mjunction Services Limited - India
- Interocean Group of Companies - India
- Kumho Petrochemical, South Korea
- Karbindo Abesyapradhi - Indoneisa
- Bukit Asam (Persero) Tbk - Indonesia
- Samtan Co., Ltd - South Korea
- Bayan Resources Tbk. - Indonesia
- Borneo Indobara - Indonesia
- Trasteel International SA, Italy
- Aditya Birla Group - India
- Kaltim Prima Coal - Indonesia
- Kobexindo Tractors - Indoneisa
- Australian Coal Association
- PNOC Exploration Corporation - Philippines
- Sical Logistics Limited - India
- Sinarmas Energy and Mining - Indonesia
- Jindal Steel & Power Ltd - India
- Pendopo Energi Batubara - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Renaissance Capital - South Africa
- Energy Link Ltd, New Zealand
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- ASAPP Information Group - India
- Central Electricity Authority - India
- Ind-Barath Power Infra Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Eastern Coal Council - USA
- Attock Cement Pakistan Limited
- Ceylon Electricity Board - Sri Lanka
- San Jose City I Power Corp, Philippines
- The University of Queensland
- Thiess Contractors Indonesia
- Global Green Power PLC Corporation, Philippines
- Rio Tinto Coal - Australia
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