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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, 26 February 23
MAWANI AND JEDDAH CHAMBER SIGN AN AGREEMENT TO BUILD INTEGRATED LOGISTICS PARK
Press Release: The Saudi Ports Authority (Mawani) and Jeddah Chamber of Commerce and Industry have today inked an agreement to set up an integrated ...
Saturday, 25 February 23
INDONESIA IS STILL BY FAR THE TOP SUPPLIER OF COAL TO CHINA - 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, said ban ...
Wednesday, 22 February 23
MARKET INSIGHT - INTERMODAL
The short-term outlook of the global soybean market is currently pivoted by a combination of weather patterns that are affecting the harvest progre ...
Saturday, 18 February 23
OIL UNLIKELY TO BREAK ABOVE $100/BBL THIS YEAR, J.P.MORGAN SAYS –- REUTERS
Brent oil prices are unlikely to breach the $100 a barrel level this year, barring any significant geopolitical drivers, with OPEC+ potentially add ...
Saturday, 18 February 23
CHINA'S COAL PRICES FALL TO 1 YR-LOW, CLOUDING DEMAND AND IMPORT OUTLOOK - REUTERS
China’s thermal coal prices hit their lowest levels in a year this week on rising inventories as domestic mine production is recovering faste ...
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- Electricity Authority, New Zealand
- Mjunction Services Limited - India
- Sinarmas Energy and Mining - Indonesia
- Borneo Indobara - Indonesia
- Tamil Nadu electricity Board
- Leighton Contractors Pty Ltd - Australia
- Kepco SPC Power Corporation, Philippines
- Bangladesh Power Developement Board
- Singapore Mercantile Exchange
- Chamber of Mines of South Africa
- Toyota Tsusho Corporation, Japan
- Aboitiz Power Corporation - Philippines
- Parry Sugars Refinery, India
- Vizag Seaport Private Limited - India
- Carbofer General Trading SA - India
- SMC Global Power, Philippines
- AsiaOL BioFuels Corp., Philippines
- Vijayanagar Sugar Pvt Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Savvy Resources Ltd - HongKong
- Siam City Cement PLC, Thailand
- Samtan Co., Ltd - South Korea
- Heidelberg Cement - Germany
- Indonesian Coal Mining Association
- Anglo American - United Kingdom
- Billiton Holdings Pty Ltd - Australia
- Therma Luzon, Inc, Philippines
- Indian Energy Exchange, India
- Baramulti Group, Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Karbindo Abesyapradhi - Indoneisa
- Jorong Barutama Greston.PT - Indonesia
- The University of Queensland
- Global Coal Blending Company Limited - Australia
- Antam Resourcindo - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Maharashtra Electricity Regulatory Commission - India
- Bulk Trading Sa - Switzerland
- Semirara Mining Corp, Philippines
- Petron Corporation, Philippines
- Formosa Plastics Group - Taiwan
- Kumho Petrochemical, South Korea
- SN Aboitiz Power Inc, Philippines
- Merrill Lynch Commodities Europe
- TNB Fuel Sdn Bhd - Malaysia
- Chettinad Cement Corporation Ltd - India
- Siam City Cement - Thailand
- Meenaskhi Energy Private Limited - India
- Tata Chemicals Ltd - India
- OPG Power Generation Pvt Ltd - India
- CNBM International Corporation - China
- IEA Clean Coal Centre - UK
- White Energy Company Limited
- Indika Energy - Indonesia
- Central Java Power - Indonesia
- Essar Steel Hazira Ltd - India
- Madhucon Powers Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Kideco Jaya Agung - Indonesia
- Wilmar Investment Holdings
- Kalimantan Lumbung Energi - Indonesia
- Orica Australia Pty. Ltd.
- Malabar Cements Ltd - India
- Electricity Generating Authority of Thailand
- Eastern Coal Council - USA
- Simpson Spence & Young - Indonesia
- Meralco Power Generation, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Kaltim Prima Coal - Indonesia
- Vedanta Resources Plc - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Sical Logistics Limited - India
- Posco Energy - South Korea
- Directorate Of Revenue Intelligence - India
- Salva Resources Pvt Ltd - India
- Ambuja Cements Ltd - India
- India Bulls Power Limited - India
- Alfred C Toepfer International GmbH - Germany
- Maheswari Brothers Coal Limited - India
- Timah Investasi Mineral - Indoneisa
- Parliament of New Zealand
- Indogreen Group - Indonesia
- Sindya Power Generating Company Private Ltd
- Romanian Commodities Exchange
- Asmin Koalindo Tuhup - Indonesia
- IHS Mccloskey Coal Group - USA
- PowerSource Philippines DevCo
- Kobexindo Tractors - Indoneisa
- The State Trading Corporation of India Ltd
- Kohat Cement Company Ltd. - Pakistan
- Commonwealth Bank - Australia
- Mintek Dendrill Indonesia
- Power Finance Corporation Ltd., India
- The Treasury - Australian Government
- Makarim & Taira - Indonesia
- Global Green Power PLC Corporation, Philippines
- Star Paper Mills Limited - India
- Australian Commodity Traders Exchange
- Ministry of Transport, Egypt
- Pipit Mutiara Jaya. PT, Indonesia
- GVK Power & Infra Limited - India
- Agrawal Coal Company - India
- Manunggal Multi Energi - Indonesia
- Marubeni Corporation - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Bayan Resources Tbk. - Indonesia
- GMR Energy Limited - India
- Ind-Barath Power Infra Limited - India
- VISA Power Limited - India
- Price Waterhouse Coopers - Russia
- SMG Consultants - Indonesia
- Cement Manufacturers Association - India
- International Coal Ventures Pvt Ltd - India
- Altura Mining Limited, Indonesia
- Karaikal Port Pvt Ltd - India
- South Luzon Thermal Energy Corporation
- Central Electricity Authority - India
- Bhoruka Overseas - Indonesia
- Oldendorff Carriers - Singapore
- Sakthi Sugars Limited - India
- Latin American Coal - Colombia
- Miang Besar Coal Terminal - Indonesia
- Bukit Baiduri Energy - Indonesia
- Mercator Lines Limited - India
- Standard Chartered Bank - UAE
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Ministry of Finance - Indonesia
- Intertek Mineral Services - Indonesia
- Larsen & Toubro Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Indo Tambangraya Megah - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Barasentosa Lestari - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Bharathi Cement Corporation - India
- San Jose City I Power Corp, Philippines
- Bukit Makmur.PT - Indonesia
- Sree Jayajothi Cements Limited - India
- Riau Bara Harum - Indonesia
- Pendopo Energi Batubara - Indonesia
- CIMB Investment Bank - Malaysia
- Port Waratah Coal Services - Australia
- Gujarat Sidhee Cement - India
- Dalmia Cement Bharat India
- Global Business Power Corporation, Philippines
- Bhatia International Limited - India
- Metalloyd Limited - United Kingdom
- Jindal Steel & Power Ltd - India
- Georgia Ports Authority, United States
- Trasteel International SA, Italy
- ASAPP Information Group - India
- Economic Council, Georgia
- Straits Asia Resources Limited - Singapore
- Minerals Council of Australia
- Edison Trading Spa - Italy
- Thai Mozambique Logistica
- Planning Commission, India
- Eastern Energy - Thailand
- Energy Development Corp, Philippines
- MS Steel International - UAE
- Deloitte Consulting - India
- New Zealand Coal & Carbon
- Medco Energi Mining Internasional
- McConnell Dowell - Australia
- Orica Mining Services - Indonesia
- Australian Coal Association
- Globalindo Alam Lestari - Indonesia
- LBH Netherlands Bv - Netherlands
- Attock Cement Pakistan Limited
- Africa Commodities Group - South Africa
- Indian Oil Corporation Limited
- Lanco Infratech Ltd - India
- Renaissance Capital - South Africa
- Aditya Birla Group - India
- Mercuria Energy - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- TeaM Sual Corporation - Philippines
- Sarangani Energy Corporation, Philippines
- Jaiprakash Power Ventures ltd
- Xindia Steels Limited - India
- PTC India Limited - India
- Rashtriya Ispat Nigam Limited - India
- Coal and Oil Company - UAE
- Krishnapatnam Port Company Ltd. - India
- Grasim Industreis Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Ministry of Mines - Canada
- Iligan Light & Power Inc, Philippines
- Bhushan Steel Limited - India
- Ceylon Electricity Board - Sri Lanka
- London Commodity Brokers - England
- Energy Link Ltd, New Zealand
- Sojitz Corporation - Japan
- Coastal Gujarat Power Limited - India
- European Bulk Services B.V. - Netherlands
- GN Power Mariveles Coal Plant, Philippines
- ICICI Bank Limited - India
- Goldman Sachs - Singapore
- Independent Power Producers Association of India
- Neyveli Lignite Corporation Ltd, - India
- Banpu Public Company Limited - Thailand
- Coalindo Energy - Indonesia
- Wood Mackenzie - Singapore
- Petrochimia International Co. Ltd.- Taiwan
- Videocon Industries ltd - India
- Kapuas Tunggal Persada - Indonesia
- Binh Thuan Hamico - Vietnam
- PNOC Exploration Corporation - Philippines
- Gujarat Electricity Regulatory Commission - India
- GAC Shipping (India) Pvt Ltd
- Semirara Mining and Power Corporation, Philippines
- Thiess Contractors Indonesia
- Uttam Galva Steels Limited - India
- Rio Tinto Coal - Australia
- Interocean Group of Companies - India
- Kartika Selabumi Mining - Indonesia
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