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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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Saturday, 25 March 23
COAL INDIA HAS STRONG CASE TO INCREASE PRICES, TALKS ON: CMD AGRAWAL - BUSINESS STANDARD
Coal India (CIL) Chairman and Managing Director Pramod Agrawal said on Monday there is a “strong case” for increasing coal prices, and ...
Saturday, 25 March 23
ASIAN CRUDE PALM OIL WATCH 1Q23 - FITCH RATINGS
Malaysian benchmark crude palm oil (CPO) spot prices have averaged around USD915 per tonne (t) so far in 1Q23, sharply lower than the average of ar ...
Saturday, 25 March 23
INDONESIA’S COAL EXPORT INCREASED BY 21.0% YOY TO 388.4 MLN T IN 2022 - BANCHERO COSTA
After a slow start in the first quarter, global coal trade has really picked up pace last year, and is now fully back to pre-Covid levels. In the f ...
Saturday, 25 March 23
GLOBAL LNG-ASIA SPOT PRICES SLIP AS WEAK NORTHERN DEMAND REMAINS - REUTERS
Asian spot prices of liquefied natural gas (LNG) declined this week, falling to a 21-month low, as weak demand in the northeast Asia region continu ...
Wednesday, 22 March 23
OIL PRICE FALL SPECULATIVE, TO HIT $140 BY YEAR-END -ANDURAND: REUTERS
The recent fall in oil prices due to banking jitters is speculative and oil will hit $140 a barrel by the end of the year, hedge fund manager Pierr ...
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- Aditya Birla Group - India
- Sindya Power Generating Company Private Ltd
- Cigading International Bulk Terminal - Indonesia
- Global Business Power Corporation, Philippines
- Energy Link Ltd, New Zealand
- Jaiprakash Power Ventures ltd
- The State Trading Corporation of India Ltd
- Indika Energy - Indonesia
- Mercuria Energy - Indonesia
- International Coal Ventures Pvt Ltd - India
- Miang Besar Coal Terminal - Indonesia
- South Luzon Thermal Energy Corporation
- Jorong Barutama Greston.PT - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Meralco Power Generation, Philippines
- Renaissance Capital - South Africa
- Thiess Contractors Indonesia
- Wilmar Investment Holdings
- Port Waratah Coal Services - Australia
- Directorate General of MIneral and Coal - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Borneo Indobara - Indonesia
- Standard Chartered Bank - UAE
- IEA Clean Coal Centre - UK
- Larsen & Toubro Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Indogreen Group - Indonesia
- Makarim & Taira - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Deloitte Consulting - India
- Aboitiz Power Corporation - Philippines
- Bayan Resources Tbk. - Indonesia
- Electricity Authority, New Zealand
- Indian Oil Corporation Limited
- Videocon Industries ltd - India
- Madhucon Powers Ltd - India
- Power Finance Corporation Ltd., India
- Kartika Selabumi Mining - Indonesia
- Orica Mining Services - Indonesia
- Planning Commission, India
- GN Power Mariveles Coal Plant, Philippines
- ICICI Bank Limited - India
- Tamil Nadu electricity Board
- The University of Queensland
- Ministry of Mines - Canada
- Lanco Infratech Ltd - India
- Indian Energy Exchange, India
- GVK Power & Infra Limited - India
- Commonwealth Bank - Australia
- Australian Coal Association
- ASAPP Information Group - India
- TNB Fuel Sdn Bhd - Malaysia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Sarangani Energy Corporation, Philippines
- Vizag Seaport Private Limited - India
- Kaltim Prima Coal - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- The Treasury - Australian Government
- Bukit Baiduri Energy - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Minerals Council of Australia
- India Bulls Power Limited - India
- Thai Mozambique Logistica
- OPG Power Generation Pvt Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Kalimantan Lumbung Energi - Indonesia
- Timah Investasi Mineral - Indoneisa
- CNBM International Corporation - China
- Kapuas Tunggal Persada - Indonesia
- Africa Commodities Group - South Africa
- Independent Power Producers Association of India
- Altura Mining Limited, Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Baramulti Group, Indonesia
- Eastern Energy - Thailand
- Siam City Cement PLC, Thailand
- Samtan Co., Ltd - South Korea
- Indo Tambangraya Megah - Indonesia
- Central Java Power - Indonesia
- Pendopo Energi Batubara - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Siam City Cement - Thailand
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Malabar Cements Ltd - India
- Manunggal Multi Energi - Indonesia
- Star Paper Mills Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Sojitz Corporation - Japan
- TeaM Sual Corporation - Philippines
- Coastal Gujarat Power Limited - India
- Sakthi Sugars Limited - India
- Maheswari Brothers Coal Limited - India
- Coal and Oil Company - UAE
- Posco Energy - South Korea
- Anglo American - United Kingdom
- Binh Thuan Hamico - Vietnam
- Kobexindo Tractors - Indoneisa
- Bangladesh Power Developement Board
- Merrill Lynch Commodities Europe
- Kideco Jaya Agung - Indonesia
- Electricity Generating Authority of Thailand
- Bank of Tokyo Mitsubishi UFJ Ltd
- Bhoruka Overseas - Indonesia
- Rashtriya Ispat Nigam Limited - India
- MS Steel International - UAE
- Ind-Barath Power Infra Limited - India
- Bukit Makmur.PT - Indonesia
- SN Aboitiz Power Inc, Philippines
- Ministry of Finance - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Bharathi Cement Corporation - India
- Directorate Of Revenue Intelligence - India
- Chettinad Cement Corporation Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- PowerSource Philippines DevCo
- Australian Commodity Traders Exchange
- Meenaskhi Energy Private Limited - India
- Tata Chemicals Ltd - India
- European Bulk Services B.V. - Netherlands
- Singapore Mercantile Exchange
- Savvy Resources Ltd - HongKong
- Therma Luzon, Inc, Philippines
- Indonesian Coal Mining Association
- Agrawal Coal Company - India
- GMR Energy Limited - India
- Mjunction Services Limited - India
- Salva Resources Pvt Ltd - India
- Straits Asia Resources Limited - Singapore
- Coalindo Energy - Indonesia
- Vedanta Resources Plc - India
- Bhatia International Limited - India
- Ministry of Transport, Egypt
- Holcim Trading Pte Ltd - Singapore
- Bhushan Steel Limited - India
- San Jose City I Power Corp, Philippines
- Chamber of Mines of South Africa
- Trasteel International SA, Italy
- Mercator Lines Limited - India
- Cement Manufacturers Association - India
- Parliament of New Zealand
- Eastern Coal Council - USA
- CIMB Investment Bank - Malaysia
- Price Waterhouse Coopers - Russia
- Dalmia Cement Bharat India
- Central Electricity Authority - India
- Attock Cement Pakistan Limited
- Global Green Power PLC Corporation, Philippines
- Intertek Mineral Services - Indonesia
- Xindia Steels Limited - India
- Ceylon Electricity Board - Sri Lanka
- Medco Energi Mining Internasional
- Bahari Cakrawala Sebuku - Indonesia
- Rio Tinto Coal - Australia
- Globalindo Alam Lestari - Indonesia
- Bulk Trading Sa - Switzerland
- Kohat Cement Company Ltd. - Pakistan
- Alfred C Toepfer International GmbH - Germany
- AsiaOL BioFuels Corp., Philippines
- Interocean Group of Companies - India
- Kumho Petrochemical, South Korea
- IHS Mccloskey Coal Group - USA
- McConnell Dowell - Australia
- Mintek Dendrill Indonesia
- Georgia Ports Authority, United States
- Gujarat Sidhee Cement - India
- Carbofer General Trading SA - India
- Jindal Steel & Power Ltd - India
- Sree Jayajothi Cements Limited - India
- Edison Trading Spa - Italy
- Simpson Spence & Young - Indonesia
- Formosa Plastics Group - Taiwan
- Banpu Public Company Limited - Thailand
- Oldendorff Carriers - Singapore
- Marubeni Corporation - India
- New Zealand Coal & Carbon
- Ambuja Cements Ltd - India
- Riau Bara Harum - Indonesia
- Goldman Sachs - Singapore
- Wood Mackenzie - Singapore
- Essar Steel Hazira Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Petron Corporation, Philippines
- Karaikal Port Pvt Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Global Coal Blending Company Limited - Australia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Latin American Coal - Colombia
- White Energy Company Limited
- Economic Council, Georgia
- Kepco SPC Power Corporation, Philippines
- Energy Development Corp, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Heidelberg Cement - Germany
- Iligan Light & Power Inc, Philippines
- Krishnapatnam Port Company Ltd. - India
- Metalloyd Limited - United Kingdom
- Semirara Mining Corp, Philippines
- Antam Resourcindo - Indonesia
- PTC India Limited - India
- Grasim Industreis Ltd - India
- Toyota Tsusho Corporation, Japan
- Barasentosa Lestari - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- VISA Power Limited - India
- LBH Netherlands Bv - Netherlands
- SMG Consultants - Indonesia
- London Commodity Brokers - England
- Uttam Galva Steels Limited - India
- Parry Sugars Refinery, India
- PNOC Exploration Corporation - Philippines
- Orica Australia Pty. Ltd.
- Sical Logistics Limited - India
- Romanian Commodities Exchange
- GAC Shipping (India) Pvt Ltd
- SMC Global Power, Philippines
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