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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, 11 April 23
OIL RISES ON CHINA STIMULUS EXPECTATIONS, WEAKER DOLLAR - REUTERS
Oil prices rose on Tuesday on expectations of potential economic stimulus by China, healthy demand in the rest of Asia and a drop in U.S. crude sto ...
Sunday, 09 April 23
CHINA’S BUSINESS INCOME REBOUND POINTS TO IMPROVING ECONOMY: OFFICIAL - XINHUA
Chinese businesses have posted a strong rebound in sales revenue since the beginning of this year in the latest signal of an improving economy.
...
Sunday, 09 April 23
COAL INDIA TO BOOST SUPPLIES TO INDUSTRIES AS UTILITIES’ INVENTORIES RISE - REUTERS
Coal India Ltd will increase supplies to industries, the world’s largest coal miner said on Wednesday as fuel inventories at utilities run by ...
Thursday, 06 April 23
MARKET INSIGHT - INTERMODAL
LNG Current Supply/Demand Dynamics
This year, LNG supply will likely exceed demand, so prices will need to decline to levels that will encourag ...
Sunday, 26 March 23
EUROPE’S RUSH TO LNG COULD TURN INTO 'WORLD’S MOST EXPENSIVE AND UNNECESSARY INSURANCE POLICY'- CNBC
Europe’s rapid buildout of liquefied natural gas infrastructure is on track to far exceed demand by the end of the decade, according to new r ...
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Showing 111 to 115 news of total 6871 |
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- Krishnapatnam Port Company Ltd. - India
- Sinarmas Energy and Mining - Indonesia
- Simpson Spence & Young - Indonesia
- Minerals Council of Australia
- Star Paper Mills Limited - India
- Commonwealth Bank - Australia
- Mercator Lines Limited - India
- Thiess Contractors Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Lanco Infratech Ltd - India
- Bharathi Cement Corporation - India
- Orica Mining Services - Indonesia
- Bayan Resources Tbk. - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Indian Energy Exchange, India
- Chettinad Cement Corporation Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Binh Thuan Hamico - Vietnam
- Leighton Contractors Pty Ltd - Australia
- Toyota Tsusho Corporation, Japan
- Ministry of Finance - Indonesia
- Semirara Mining Corp, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Aditya Birla Group - India
- India Bulls Power Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Sakthi Sugars Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Formosa Plastics Group - Taiwan
- Grasim Industreis Ltd - India
- The State Trading Corporation of India Ltd
- Offshore Bulk Terminal Pte Ltd, Singapore
- Cement Manufacturers Association - India
- Malabar Cements Ltd - India
- Trasteel International SA, Italy
- Baramulti Group, Indonesia
- Power Finance Corporation Ltd., India
- Billiton Holdings Pty Ltd - Australia
- Holcim Trading Pte Ltd - Singapore
- Xindia Steels Limited - India
- Kobexindo Tractors - Indoneisa
- London Commodity Brokers - England
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Siam City Cement - Thailand
- International Coal Ventures Pvt Ltd - India
- Edison Trading Spa - Italy
- Indian Oil Corporation Limited
- Parry Sugars Refinery, India
- Kohat Cement Company Ltd. - Pakistan
- Economic Council, Georgia
- Central Java Power - Indonesia
- Central Electricity Authority - India
- Rio Tinto Coal - Australia
- Ministry of Transport, Egypt
- Uttam Galva Steels Limited - India
- Indogreen Group - Indonesia
- Kartika Selabumi Mining - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Goldman Sachs - Singapore
- Bhoruka Overseas - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- TeaM Sual Corporation - Philippines
- Romanian Commodities Exchange
- SMG Consultants - Indonesia
- Meralco Power Generation, Philippines
- Karaikal Port Pvt Ltd - India
- Planning Commission, India
- Iligan Light & Power Inc, Philippines
- Bhushan Steel Limited - India
- Coalindo Energy - Indonesia
- Energy Link Ltd, New Zealand
- Agrawal Coal Company - India
- Wood Mackenzie - Singapore
- Meenaskhi Energy Private Limited - India
- Banpu Public Company Limited - Thailand
- Semirara Mining and Power Corporation, Philippines
- Ambuja Cements Ltd - India
- Eastern Energy - Thailand
- Sojitz Corporation - Japan
- CIMB Investment Bank - Malaysia
- GAC Shipping (India) Pvt Ltd
- Sindya Power Generating Company Private Ltd
- South Luzon Thermal Energy Corporation
- Renaissance Capital - South Africa
- Directorate Of Revenue Intelligence - India
- Kalimantan Lumbung Energi - Indonesia
- Jaiprakash Power Ventures ltd
- Antam Resourcindo - Indonesia
- Interocean Group of Companies - India
- Gujarat Electricity Regulatory Commission - India
- Global Coal Blending Company Limited - Australia
- Attock Cement Pakistan Limited
- Jindal Steel & Power Ltd - India
- SN Aboitiz Power Inc, Philippines
- Coastal Gujarat Power Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Petron Corporation, Philippines
- ASAPP Information Group - India
- Kideco Jaya Agung - Indonesia
- IHS Mccloskey Coal Group - USA
- New Zealand Coal & Carbon
- LBH Netherlands Bv - Netherlands
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Globalindo Alam Lestari - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Gujarat Sidhee Cement - India
- Australian Coal Association
- Ind-Barath Power Infra Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Independent Power Producers Association of India
- Cigading International Bulk Terminal - Indonesia
- VISA Power Limited - India
- Mjunction Services Limited - India
- Deloitte Consulting - India
- Vijayanagar Sugar Pvt Ltd - India
- Australian Commodity Traders Exchange
- GMR Energy Limited - India
- Tamil Nadu electricity Board
- Aboitiz Power Corporation - Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Kaltim Prima Coal - Indonesia
- Wilmar Investment Holdings
- Kumho Petrochemical, South Korea
- Latin American Coal - Colombia
- OPG Power Generation Pvt Ltd - India
- Borneo Indobara - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Siam City Cement PLC, Thailand
- Timah Investasi Mineral - Indoneisa
- Salva Resources Pvt Ltd - India
- Indo Tambangraya Megah - Indonesia
- McConnell Dowell - Australia
- Bulk Trading Sa - Switzerland
- Carbofer General Trading SA - India
- Dalmia Cement Bharat India
- Madhucon Powers Ltd - India
- Mintek Dendrill Indonesia
- Electricity Generating Authority of Thailand
- San Jose City I Power Corp, Philippines
- Sarangani Energy Corporation, Philippines
- Bangladesh Power Developement Board
- Parliament of New Zealand
- Anglo American - United Kingdom
- CNBM International Corporation - China
- IEA Clean Coal Centre - UK
- Price Waterhouse Coopers - Russia
- PowerSource Philippines DevCo
- Straits Asia Resources Limited - Singapore
- Bhatia International Limited - India
- Makarim & Taira - Indonesia
- White Energy Company Limited
- Altura Mining Limited, Indonesia
- Orica Australia Pty. Ltd.
- GVK Power & Infra Limited - India
- Larsen & Toubro Limited - India
- Medco Energi Mining Internasional
- SMC Global Power, Philippines
- Posco Energy - South Korea
- Vedanta Resources Plc - India
- Maheswari Brothers Coal Limited - India
- The University of Queensland
- Africa Commodities Group - South Africa
- Chamber of Mines of South Africa
- Manunggal Multi Energi - Indonesia
- Oldendorff Carriers - Singapore
- Global Green Power PLC Corporation, Philippines
- Vizag Seaport Private Limited - India
- Indonesian Coal Mining Association
- Merrill Lynch Commodities Europe
- PNOC Exploration Corporation - Philippines
- Indika Energy - Indonesia
- Standard Chartered Bank - UAE
- Eastern Coal Council - USA
- Kapuas Tunggal Persada - Indonesia
- Barasentosa Lestari - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Ministry of Mines - Canada
- Bukit Baiduri Energy - Indonesia
- MS Steel International - UAE
- Port Waratah Coal Services - Australia
- Thai Mozambique Logistica
- Marubeni Corporation - India
- Jorong Barutama Greston.PT - Indonesia
- Intertek Mineral Services - Indonesia
- Sree Jayajothi Cements Limited - India
- Essar Steel Hazira Ltd - India
- Energy Development Corp, Philippines
- Savvy Resources Ltd - HongKong
- Riau Bara Harum - Indonesia
- Therma Luzon, Inc, Philippines
- Georgia Ports Authority, United States
- Bukit Makmur.PT - Indonesia
- Electricity Authority, New Zealand
- Kepco SPC Power Corporation, Philippines
- The Treasury - Australian Government
- Singapore Mercantile Exchange
- Miang Besar Coal Terminal - Indonesia
- Global Business Power Corporation, Philippines
- Coal and Oil Company - UAE
- Sical Logistics Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- PTC India Limited - India
- Alfred C Toepfer International GmbH - Germany
- Videocon Industries ltd - India
- European Bulk Services B.V. - Netherlands
- Rashtriya Ispat Nigam Limited - India
- Mercuria Energy - Indonesia
- Tata Chemicals Ltd - India
- Metalloyd Limited - United Kingdom
- PetroVietnam Power Coal Import and Supply Company
- Ceylon Electricity Board - Sri Lanka
- Gujarat Mineral Development Corp Ltd - India
- Samtan Co., Ltd - South Korea
- Heidelberg Cement - Germany
- Pendopo Energi Batubara - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- ICICI Bank Limited - India
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