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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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Thursday, 09 November 23
GREEK AND CHINESE COMPANIES OWN 34% OF THE GLOBAL FLEET’S CARGO CAPACITY - BIMCO
“The global fleet of cargo carrying ships consists of around 61,000 ships with a deadweight capacity of about 2,200 million tonnes. The ships ...
Monday, 23 October 23
CHINA SEPT COAL OUTPUT HITS SIX-MONTH HIGH ON RISING POWER DEMAND - REUTERS
China’s September coal output rose 0.4% from August to the highest level since March, official data showed on Wednesday, on rising power dema ...
Monday, 23 October 23
INDIA COAL INVENTORIES DROP AT FASTEST PACE IN TWO YEARS, BOOSTING IMPORTS - REUTERS
Coal inventories at Indian power plants in the first half of October fell at their fastest rate in two years, an analysis of government data showed ...
Tuesday, 19 September 23
LNG SHIPPING STOCKS: THE ASIAN GROWTH UP-INDICES
Last week, the UP World LNG Shipping Index (UPI) gained 3.81 points or 2.51%, closing at 155.85 points. This index tracks the performance of LNG sh ...
Sunday, 10 September 23
GOLDMAN SACHS PREDICTS OIL PRICE TO HIT $100 ON OPEC CUTS - YAHOO FINANCE
Oil supply cuts by Saudi Arabia and Russia could lead to Brent crude jumping as high as $107 a barrel in 2024, Goldman Sachs Commodities Research h ...
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- Meenaskhi Energy Private Limited - India
- Riau Bara Harum - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Siam City Cement PLC, Thailand
- Central Electricity Authority - India
- Antam Resourcindo - Indonesia
- SN Aboitiz Power Inc, Philippines
- Coastal Gujarat Power Limited - India
- Global Business Power Corporation, Philippines
- Heidelberg Cement - Germany
- Leighton Contractors Pty Ltd - Australia
- Bayan Resources Tbk. - Indonesia
- Karaikal Port Pvt Ltd - India
- Thiess Contractors Indonesia
- Kartika Selabumi Mining - Indonesia
- GMR Energy Limited - India
- Romanian Commodities Exchange
- Lanco Infratech Ltd - India
- Directorate Of Revenue Intelligence - India
- Parliament of New Zealand
- Dalmia Cement Bharat India
- India Bulls Power Limited - India
- Xindia Steels Limited - India
- Eastern Coal Council - USA
- Orica Australia Pty. Ltd.
- Miang Besar Coal Terminal - Indonesia
- Petron Corporation, Philippines
- Bhoruka Overseas - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Africa Commodities Group - South Africa
- Vedanta Resources Plc - India
- Coal and Oil Company - UAE
- Kideco Jaya Agung - Indonesia
- South Luzon Thermal Energy Corporation
- Bulk Trading Sa - Switzerland
- Power Finance Corporation Ltd., India
- Medco Energi Mining Internasional
- PowerSource Philippines DevCo
- Banpu Public Company Limited - Thailand
- Therma Luzon, Inc, Philippines
- SMC Global Power, Philippines
- Toyota Tsusho Corporation, Japan
- Directorate General of MIneral and Coal - Indonesia
- Tata Chemicals Ltd - India
- London Commodity Brokers - England
- Anglo American - United Kingdom
- Planning Commission, India
- IHS Mccloskey Coal Group - USA
- Indian Energy Exchange, India
- Carbofer General Trading SA - India
- Mercator Lines Limited - India
- Interocean Group of Companies - India
- Agrawal Coal Company - India
- Vizag Seaport Private Limited - India
- Attock Cement Pakistan Limited
- Formosa Plastics Group - Taiwan
- Bukit Makmur.PT - Indonesia
- Bhushan Steel Limited - India
- Thai Mozambique Logistica
- The Treasury - Australian Government
- Mjunction Services Limited - India
- Rashtriya Ispat Nigam Limited - India
- Edison Trading Spa - Italy
- Jaiprakash Power Ventures ltd
- Ministry of Transport, Egypt
- New Zealand Coal & Carbon
- International Coal Ventures Pvt Ltd - India
- Energy Development Corp, Philippines
- Chettinad Cement Corporation Ltd - India
- Star Paper Mills Limited - India
- PNOC Exploration Corporation - Philippines
- Central Java Power - Indonesia
- Uttam Galva Steels Limited - India
- Global Green Power PLC Corporation, Philippines
- Barasentosa Lestari - Indonesia
- Eastern Energy - Thailand
- GN Power Mariveles Coal Plant, Philippines
- Manunggal Multi Energi - Indonesia
- Savvy Resources Ltd - HongKong
- Aboitiz Power Corporation - Philippines
- Coalindo Energy - Indonesia
- Madhucon Powers Ltd - India
- Trasteel International SA, Italy
- Renaissance Capital - South Africa
- LBH Netherlands Bv - Netherlands
- Ministry of Mines - Canada
- Oldendorff Carriers - Singapore
- MS Steel International - UAE
- PTC India Limited - India
- Meralco Power Generation, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Australian Commodity Traders Exchange
- Bangladesh Power Developement Board
- Bank of Tokyo Mitsubishi UFJ Ltd
- Electricity Generating Authority of Thailand
- Karbindo Abesyapradhi - Indoneisa
- Bukit Asam (Persero) Tbk - Indonesia
- Sarangani Energy Corporation, Philippines
- Bhatia International Limited - India
- Tamil Nadu electricity Board
- TNB Fuel Sdn Bhd - Malaysia
- Bahari Cakrawala Sebuku - Indonesia
- Bukit Baiduri Energy - Indonesia
- Standard Chartered Bank - UAE
- Holcim Trading Pte Ltd - Singapore
- CNBM International Corporation - China
- Marubeni Corporation - India
- Indika Energy - Indonesia
- VISA Power Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Georgia Ports Authority, United States
- The State Trading Corporation of India Ltd
- White Energy Company Limited
- Goldman Sachs - Singapore
- Pendopo Energi Batubara - Indonesia
- Makarim & Taira - Indonesia
- Samtan Co., Ltd - South Korea
- Independent Power Producers Association of India
- Cement Manufacturers Association - India
- Indogreen Group - Indonesia
- Australian Coal Association
- Indonesian Coal Mining Association
- Maheswari Brothers Coal Limited - India
- Sakthi Sugars Limited - India
- Salva Resources Pvt Ltd - India
- CIMB Investment Bank - Malaysia
- Economic Council, Georgia
- European Bulk Services B.V. - Netherlands
- ICICI Bank Limited - India
- Simpson Spence & Young - Indonesia
- OPG Power Generation Pvt Ltd - India
- San Jose City I Power Corp, Philippines
- Kohat Cement Company Ltd. - Pakistan
- Maharashtra Electricity Regulatory Commission - India
- Singapore Mercantile Exchange
- Krishnapatnam Port Company Ltd. - India
- ASAPP Information Group - India
- McConnell Dowell - Australia
- Parry Sugars Refinery, India
- Binh Thuan Hamico - Vietnam
- Mercuria Energy - Indonesia
- Price Waterhouse Coopers - Russia
- Iligan Light & Power Inc, Philippines
- Bharathi Cement Corporation - India
- Semirara Mining Corp, Philippines
- Borneo Indobara - Indonesia
- Port Waratah Coal Services - Australia
- Posco Energy - South Korea
- Baramulti Group, Indonesia
- Sindya Power Generating Company Private Ltd
- Timah Investasi Mineral - Indoneisa
- Wilmar Investment Holdings
- SMG Consultants - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Sojitz Corporation - Japan
- IEA Clean Coal Centre - UK
- Gujarat Electricity Regulatory Commission - India
- Kumho Petrochemical, South Korea
- Billiton Holdings Pty Ltd - Australia
- Kepco SPC Power Corporation, Philippines
- Ambuja Cements Ltd - India
- Videocon Industries ltd - India
- Gujarat Sidhee Cement - India
- Globalindo Alam Lestari - Indonesia
- Orica Mining Services - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Metalloyd Limited - United Kingdom
- Aditya Birla Group - India
- Jorong Barutama Greston.PT - Indonesia
- GAC Shipping (India) Pvt Ltd
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Petrochimia International Co. Ltd.- Taiwan
- Neyveli Lignite Corporation Ltd, - India
- GVK Power & Infra Limited - India
- Merrill Lynch Commodities Europe
- Sical Logistics Limited - India
- TeaM Sual Corporation - Philippines
- Ceylon Electricity Board - Sri Lanka
- Commonwealth Bank - Australia
- Indian Oil Corporation Limited
- Vijayanagar Sugar Pvt Ltd - India
- Siam City Cement - Thailand
- Wood Mackenzie - Singapore
- Intertek Mineral Services - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Cigading International Bulk Terminal - Indonesia
- Minerals Council of Australia
- Jindal Steel & Power Ltd - India
- Global Coal Blending Company Limited - Australia
- Kaltim Prima Coal - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Grasim Industreis Ltd - India
- Altura Mining Limited, Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Larsen & Toubro Limited - India
- Energy Link Ltd, New Zealand
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Ministry of Finance - Indonesia
- Essar Steel Hazira Ltd - India
- The University of Queensland
- AsiaOL BioFuels Corp., Philippines
- Malabar Cements Ltd - India
- Ind-Barath Power Infra Limited - India
- Kapuas Tunggal Persada - Indonesia
- Indo Tambangraya Megah - Indonesia
- Straits Asia Resources Limited - Singapore
- Mintek Dendrill Indonesia
- Kobexindo Tractors - Indoneisa
- Latin American Coal - Colombia
- Chamber of Mines of South Africa
- Rio Tinto Coal - Australia
- Sree Jayajothi Cements Limited - India
- Deloitte Consulting - India
- Electricity Authority, New Zealand
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