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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, 02 March 23
DRY BULK MARKET: THE WAY CHINA GOES, SO GOES THE MARKET - BIMCO
We expect demand growth within the 1.5-2.5% range in 2023, driven by China’s economic recovery. Improvements in consumer sentiment should hel ...
Thursday, 02 March 23
INDIA, CHINA DEMAND BOOST LOW-RANK THERMAL COAL PRICES IN ASIA - RUSSELL, REUTERS
Signs of stronger import demand from India have arrested the decline in price of the thermal coal grades most commonly sought by the world’s ...
Thursday, 02 March 23
INDIA CHEERS THE RETURN OF ‘KING COAL’ AS INDUSTRY SEES BUOYANT FUTURE - REUTERS
India’s coal industry celebrated the return of its major conference after a three-year pandemic hiatus by presenting a bullish view of demand ...
Wednesday, 01 March 23
GEO CONNECT ASIA RETURNS IN MARCH TO ACCELERATE THE REGION’S GEOSPATIAL AND LOCATION INTELLIGENCE CAPABILITIES
Press Release: The third edition of GCA will be held in conjunction with Digital Construction Asia and the inaugural Drones Asia – an event d ...
Wednesday, 01 March 23
THE DECLINE IN THE COAL PRICE SINCE THE BEGINNING OF THE YEAR HAS BEEN SIGNIFICANT - INTERMODAL
Last week, the front-month API2 future rose by 3.5%, but since the beginning of the year the future has fallen by 39% to $136.65/t, while the Newca ...
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- Kartika Selabumi Mining - Indonesia
- Xindia Steels Limited - India
- Malabar Cements Ltd - India
- Directorate Of Revenue Intelligence - India
- Dalmia Cement Bharat India
- Renaissance Capital - South Africa
- Aditya Birla Group - India
- Miang Besar Coal Terminal - Indonesia
- Global Business Power Corporation, Philippines
- Videocon Industries ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Kumho Petrochemical, South Korea
- Bharathi Cement Corporation - India
- Kapuas Tunggal Persada - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- MS Steel International - UAE
- Ministry of Mines - Canada
- Posco Energy - South Korea
- Jindal Steel & Power Ltd - India
- Tamil Nadu electricity Board
- Vedanta Resources Plc - India
- Indogreen Group - Indonesia
- Bukit Makmur.PT - Indonesia
- Kepco SPC Power Corporation, Philippines
- Trasteel International SA, Italy
- Global Coal Blending Company Limited - Australia
- Jorong Barutama Greston.PT - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Georgia Ports Authority, United States
- Economic Council, Georgia
- LBH Netherlands Bv - Netherlands
- Bank of Tokyo Mitsubishi UFJ Ltd
- SN Aboitiz Power Inc, Philippines
- Baramulti Group, Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Lanco Infratech Ltd - India
- Coal and Oil Company - UAE
- Parliament of New Zealand
- Petron Corporation, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Aboitiz Power Corporation - Philippines
- Holcim Trading Pte Ltd - Singapore
- Star Paper Mills Limited - India
- PTC India Limited - India
- Cement Manufacturers Association - India
- Kaltim Prima Coal - Indonesia
- Anglo American - United Kingdom
- South Luzon Thermal Energy Corporation
- Bangladesh Power Developement Board
- Independent Power Producers Association of India
- The University of Queensland
- Thiess Contractors Indonesia
- Vizag Seaport Private Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Sakthi Sugars Limited - India
- Meralco Power Generation, Philippines
- CIMB Investment Bank - Malaysia
- AsiaOL BioFuels Corp., Philippines
- Antam Resourcindo - Indonesia
- Singapore Mercantile Exchange
- Manunggal Multi Energi - Indonesia
- SMG Consultants - Indonesia
- PowerSource Philippines DevCo
- Maharashtra Electricity Regulatory Commission - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Banpu Public Company Limited - Thailand
- India Bulls Power Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Goldman Sachs - Singapore
- Madhucon Powers Ltd - India
- Straits Asia Resources Limited - Singapore
- Orica Australia Pty. Ltd.
- Meenaskhi Energy Private Limited - India
- GMR Energy Limited - India
- Globalindo Alam Lestari - Indonesia
- Electricity Authority, New Zealand
- IEA Clean Coal Centre - UK
- Minerals Council of Australia
- Alfred C Toepfer International GmbH - Germany
- London Commodity Brokers - England
- ASAPP Information Group - India
- Rio Tinto Coal - Australia
- Carbofer General Trading SA - India
- IHS Mccloskey Coal Group - USA
- Pendopo Energi Batubara - Indonesia
- Planning Commission, India
- Intertek Mineral Services - Indonesia
- GAC Shipping (India) Pvt Ltd
- European Bulk Services B.V. - Netherlands
- Oldendorff Carriers - Singapore
- Savvy Resources Ltd - HongKong
- Medco Energi Mining Internasional
- Maheswari Brothers Coal Limited - India
- Wilmar Investment Holdings
- Port Waratah Coal Services - Australia
- Directorate General of MIneral and Coal - Indonesia
- White Energy Company Limited
- Jaiprakash Power Ventures ltd
- Interocean Group of Companies - India
- Makarim & Taira - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Commonwealth Bank - Australia
- Thai Mozambique Logistica
- Australian Coal Association
- Riau Bara Harum - Indonesia
- Ambuja Cements Ltd - India
- Formosa Plastics Group - Taiwan
- Parry Sugars Refinery, India
- San Jose City I Power Corp, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Ind-Barath Power Infra Limited - India
- Tata Chemicals Ltd - India
- Price Waterhouse Coopers - Russia
- Essar Steel Hazira Ltd - India
- Energy Link Ltd, New Zealand
- CNBM International Corporation - China
- Electricity Generating Authority of Thailand
- Barasentosa Lestari - Indonesia
- Africa Commodities Group - South Africa
- Sical Logistics Limited - India
- Indonesian Coal Mining Association
- Power Finance Corporation Ltd., India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Bukit Asam (Persero) Tbk - Indonesia
- Sree Jayajothi Cements Limited - India
- PNOC Exploration Corporation - Philippines
- Ministry of Transport, Egypt
- Vijayanagar Sugar Pvt Ltd - India
- Karaikal Port Pvt Ltd - India
- Bulk Trading Sa - Switzerland
- Simpson Spence & Young - Indonesia
- McConnell Dowell - Australia
- Semirara Mining Corp, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Indian Energy Exchange, India
- Global Green Power PLC Corporation, Philippines
- Rashtriya Ispat Nigam Limited - India
- Sinarmas Energy and Mining - Indonesia
- Australian Commodity Traders Exchange
- Semirara Mining and Power Corporation, Philippines
- PetroVietnam Power Coal Import and Supply Company
- SMC Global Power, Philippines
- Eastern Coal Council - USA
- Indo Tambangraya Megah - Indonesia
- Therma Luzon, Inc, Philippines
- Agrawal Coal Company - India
- GVK Power & Infra Limited - India
- Grasim Industreis Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Binh Thuan Hamico - Vietnam
- Bhushan Steel Limited - India
- Bayan Resources Tbk. - Indonesia
- Edison Trading Spa - Italy
- Kalimantan Lumbung Energi - Indonesia
- Merrill Lynch Commodities Europe
- Kideco Jaya Agung - Indonesia
- Siam City Cement - Thailand
- International Coal Ventures Pvt Ltd - India
- Central Java Power - Indonesia
- Heidelberg Cement - Germany
- Ministry of Finance - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Salva Resources Pvt Ltd - India
- New Zealand Coal & Carbon
- Siam City Cement PLC, Thailand
- Sojitz Corporation - Japan
- Kobexindo Tractors - Indoneisa
- The State Trading Corporation of India Ltd
- Borneo Indobara - Indonesia
- Coastal Gujarat Power Limited - India
- Sarangani Energy Corporation, Philippines
- Mintek Dendrill Indonesia
- Bhatia International Limited - India
- Marubeni Corporation - India
- Coalindo Energy - Indonesia
- Uttam Galva Steels Limited - India
- Gujarat Electricity Regulatory Commission - India
- Kohat Cement Company Ltd. - Pakistan
- Bhoruka Overseas - Indonesia
- Mercator Lines Limited - India
- Indian Oil Corporation Limited
- Mjunction Services Limited - India
- Mercuria Energy - Indonesia
- The Treasury - Australian Government
- Bukit Baiduri Energy - Indonesia
- Central Electricity Authority - India
- TeaM Sual Corporation - Philippines
- VISA Power Limited - India
- Metalloyd Limited - United Kingdom
- Altura Mining Limited, Indonesia
- Samtan Co., Ltd - South Korea
- Sindya Power Generating Company Private Ltd
- Standard Chartered Bank - UAE
- Neyveli Lignite Corporation Ltd, - India
- Eastern Energy - Thailand
- ICICI Bank Limited - India
- Chamber of Mines of South Africa
- OPG Power Generation Pvt Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Larsen & Toubro Limited - India
- Billiton Holdings Pty Ltd - Australia
- Wood Mackenzie - Singapore
- Latin American Coal - Colombia
- Leighton Contractors Pty Ltd - Australia
- Toyota Tsusho Corporation, Japan
- Energy Development Corp, Philippines
- Gujarat Sidhee Cement - India
- Romanian Commodities Exchange
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Orica Mining Services - Indonesia
- Deloitte Consulting - India
- Timah Investasi Mineral - Indoneisa
- Indika Energy - Indonesia
- Chettinad Cement Corporation Ltd - India
- Iligan Light & Power Inc, Philippines
- Attock Cement Pakistan Limited
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