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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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Sunday, 16 April 23
CHINA JUGGLES FOUR MAJOR ECONOMIC CHANGES IN 2023 - WOOD MACKENZIE
Change is afoot in China. Economic growth is slowing, while rising political tensions between China and the US, coupled with global supply chain re ...
Sunday, 16 April 23
CHINA'S MARCH COAL IMPORTS JUMP TO 3-YEAR HIGH - REUTERS
China’s coal imports surged in March to their highest in any month over the past three years as utilities increased purchases on expectations ...
Sunday, 16 April 23
OPEC KEEPS WORLD OIL DEMAND GROWTH OUTLOOK UNCHANGED
The OPEC Reference Basket (ORB) declined in March by $3.43, or 4.2%, m-o-m to average $78.45/b. The ICE Brent first-month contract fell by $4.33, o ...
Sunday, 16 April 23
CHEAPER SPOT LNG PRICES TEMPT SOME ASIAN BUYERS AMID SUPPLY GAINS - REUTERS
Cheaper spot prices for liquefied natural gas (LNG) are luring price-sensitive buyers back in Asia, with China and India recording rising imports i ...
Tuesday, 11 April 23
COAL USE CLIMBS WORLDWIDE DESPITE PROMISES TO SLASH IT - AAP
The burning of coal for electricity, cement, steel and other uses went up in 2022 despite global promises to phase down the fuel that is the bigges ...
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Showing 106 to 110 news of total 6871 |
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- Deloitte Consulting - India
- Toyota Tsusho Corporation, Japan
- Maharashtra Electricity Regulatory Commission - India
- Rashtriya Ispat Nigam Limited - India
- International Coal Ventures Pvt Ltd - India
- IHS Mccloskey Coal Group - USA
- Savvy Resources Ltd - HongKong
- Kobexindo Tractors - Indoneisa
- Edison Trading Spa - Italy
- Energy Link Ltd, New Zealand
- Kepco SPC Power Corporation, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Intertek Mineral Services - Indonesia
- White Energy Company Limited
- Barasentosa Lestari - Indonesia
- Anglo American - United Kingdom
- Bukit Makmur.PT - Indonesia
- Sakthi Sugars Limited - India
- Alfred C Toepfer International GmbH - Germany
- Sinarmas Energy and Mining - Indonesia
- Ministry of Mines - Canada
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Indian Energy Exchange, India
- Wilmar Investment Holdings
- Cigading International Bulk Terminal - Indonesia
- Iligan Light & Power Inc, Philippines
- Tata Chemicals Ltd - India
- Bulk Trading Sa - Switzerland
- Interocean Group of Companies - India
- Kalimantan Lumbung Energi - Indonesia
- Lanco Infratech Ltd - India
- Bhushan Steel Limited - India
- Xindia Steels Limited - India
- Kapuas Tunggal Persada - Indonesia
- Indika Energy - Indonesia
- Chamber of Mines of South Africa
- Indo Tambangraya Megah - Indonesia
- London Commodity Brokers - England
- Siam City Cement - Thailand
- TeaM Sual Corporation - Philippines
- New Zealand Coal & Carbon
- Sindya Power Generating Company Private Ltd
- Energy Development Corp, Philippines
- Borneo Indobara - Indonesia
- IEA Clean Coal Centre - UK
- Tamil Nadu electricity Board
- Economic Council, Georgia
- Mjunction Services Limited - India
- Bukit Baiduri Energy - Indonesia
- Straits Asia Resources Limited - Singapore
- GMR Energy Limited - India
- AsiaOL BioFuels Corp., Philippines
- Gujarat Electricity Regulatory Commission - India
- Directorate Of Revenue Intelligence - India
- Trasteel International SA, Italy
- Global Business Power Corporation, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- CNBM International Corporation - China
- Port Waratah Coal Services - Australia
- Standard Chartered Bank - UAE
- PetroVietnam Power Coal Import and Supply Company
- Essar Steel Hazira Ltd - India
- Ambuja Cements Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Parry Sugars Refinery, India
- PowerSource Philippines DevCo
- The Treasury - Australian Government
- Kideco Jaya Agung - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Bangladesh Power Developement Board
- Vizag Seaport Private Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- European Bulk Services B.V. - Netherlands
- Aditya Birla Group - India
- Meralco Power Generation, Philippines
- Parliament of New Zealand
- VISA Power Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Leighton Contractors Pty Ltd - Australia
- Merrill Lynch Commodities Europe
- Bhatia International Limited - India
- Medco Energi Mining Internasional
- Renaissance Capital - South Africa
- GAC Shipping (India) Pvt Ltd
- Bharathi Cement Corporation - India
- Goldman Sachs - Singapore
- Mercuria Energy - Indonesia
- Rio Tinto Coal - Australia
- Globalindo Alam Lestari - Indonesia
- Therma Luzon, Inc, Philippines
- Krishnapatnam Port Company Ltd. - India
- Karbindo Abesyapradhi - Indoneisa
- Bank of Tokyo Mitsubishi UFJ Ltd
- Siam City Cement PLC, Thailand
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Central Electricity Authority - India
- Latin American Coal - Colombia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Singapore Mercantile Exchange
- PNOC Exploration Corporation - Philippines
- Kartika Selabumi Mining - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Timah Investasi Mineral - Indoneisa
- Georgia Ports Authority, United States
- Thiess Contractors Indonesia
- Minerals Council of Australia
- Coastal Gujarat Power Limited - India
- Africa Commodities Group - South Africa
- ICICI Bank Limited - India
- Riau Bara Harum - Indonesia
- McConnell Dowell - Australia
- Eastern Energy - Thailand
- Eastern Coal Council - USA
- LBH Netherlands Bv - Netherlands
- Indian Oil Corporation Limited
- Electricity Generating Authority of Thailand
- Salva Resources Pvt Ltd - India
- Cement Manufacturers Association - India
- MS Steel International - UAE
- Petron Corporation, Philippines
- Miang Besar Coal Terminal - Indonesia
- Agrawal Coal Company - India
- Karaikal Port Pvt Ltd - India
- Global Coal Blending Company Limited - Australia
- Australian Commodity Traders Exchange
- Banpu Public Company Limited - Thailand
- Grasim Industreis Ltd - India
- Vedanta Resources Plc - India
- Semirara Mining and Power Corporation, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Malabar Cements Ltd - India
- Star Paper Mills Limited - India
- Ministry of Transport, Egypt
- Ind-Barath Power Infra Limited - India
- Dalmia Cement Bharat India
- Planning Commission, India
- Thai Mozambique Logistica
- Global Green Power PLC Corporation, Philippines
- Madhucon Powers Ltd - India
- Baramulti Group, Indonesia
- CIMB Investment Bank - Malaysia
- Heidelberg Cement - Germany
- Pendopo Energi Batubara - Indonesia
- Jindal Steel & Power Ltd - India
- Simpson Spence & Young - Indonesia
- Bhoruka Overseas - Indonesia
- Chettinad Cement Corporation Ltd - India
- South Luzon Thermal Energy Corporation
- Antam Resourcindo - Indonesia
- GVK Power & Infra Limited - India
- Samtan Co., Ltd - South Korea
- Oldendorff Carriers - Singapore
- Gujarat Sidhee Cement - India
- Binh Thuan Hamico - Vietnam
- Gujarat Mineral Development Corp Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Makarim & Taira - Indonesia
- Sree Jayajothi Cements Limited - India
- Uttam Galva Steels Limited - India
- Kaltim Prima Coal - Indonesia
- Romanian Commodities Exchange
- The University of Queensland
- Power Finance Corporation Ltd., India
- Jaiprakash Power Ventures ltd
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Formosa Plastics Group - Taiwan
- Australian Coal Association
- Central Java Power - Indonesia
- Meenaskhi Energy Private Limited - India
- Bayan Resources Tbk. - Indonesia
- SMG Consultants - Indonesia
- SN Aboitiz Power Inc, Philippines
- PTC India Limited - India
- Larsen & Toubro Limited - India
- Posco Energy - South Korea
- Orica Australia Pty. Ltd.
- Coal and Oil Company - UAE
- Sical Logistics Limited - India
- Videocon Industries ltd - India
- Kumho Petrochemical, South Korea
- Jorong Barutama Greston.PT - Indonesia
- Independent Power Producers Association of India
- Kohat Cement Company Ltd. - Pakistan
- Aboitiz Power Corporation - Philippines
- SMC Global Power, Philippines
- Altura Mining Limited, Indonesia
- ASAPP Information Group - India
- Mintek Dendrill Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Commonwealth Bank - Australia
- Metalloyd Limited - United Kingdom
- Ministry of Finance - Indonesia
- Marubeni Corporation - India
- Attock Cement Pakistan Limited
- Semirara Mining Corp, Philippines
- Electricity Authority, New Zealand
- Mercator Lines Limited - India
- Sarangani Energy Corporation, Philippines
- Billiton Holdings Pty Ltd - Australia
- Indogreen Group - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Price Waterhouse Coopers - Russia
- Wood Mackenzie - Singapore
- Sojitz Corporation - Japan
- Orica Mining Services - Indonesia
- Manunggal Multi Energi - Indonesia
- Maheswari Brothers Coal Limited - India
- OPG Power Generation Pvt Ltd - India
- India Bulls Power Limited - India
- Indonesian Coal Mining Association
- Ceylon Electricity Board - Sri Lanka
- Coalindo Energy - Indonesia
- The State Trading Corporation of India Ltd
- San Jose City I Power Corp, Philippines
- Carbofer General Trading SA - India
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