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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, 26 January 23
AUSTRALIA'S CORONADO GLOBAL SEES COAL PRICES RISING ON RESUMING CHINA IMPORTS - REUTERS
Australia’s Coronado Global Resources said on Tuesday resuming metallurgical coal imports to China would likely push sea-borne coal prices hi ...
Monday, 23 January 23
CHINA'S MAJOR COAL-PRODUCING PROVINCE ACCELERATES DIGITAL TRANSFORMATION - XINHUA
At Chindata Group’s big-data industrial park in Lingqiu County of Datong City, hundreds of thousands of servers are running round-the-clock t ...
Monday, 23 January 23
CHINA'S COAL-RICH PROVINCE SEES COAL PRODUCTION INCREASE IN 2022 - XINHUA
North China’s coal-rich province of Shanxi saw its coal production hit 1.31 billion tonnes in 2022, up 8.7 percent year on year, local author ...
Wednesday, 18 January 23
MARKET INSIGHT - INTERMODAL
From Feb 5, another price cap will be introduced to Russian fuels and oil products, adding to the one for crude oil, already in place from Dec. 3. ...
Tuesday, 17 January 23
FRAUD IS THE BIGGEST THREAT TO CARGO LOSSES - TT CLUB
The almost exclusive use of online facilities to process business transactions allows a myriad of fraudulent pursuits to find opportunities within ...
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- PNOC Exploration Corporation - Philippines
- Star Paper Mills Limited - India
- Baramulti Group, Indonesia
- Banpu Public Company Limited - Thailand
- Kartika Selabumi Mining - Indonesia
- Barasentosa Lestari - Indonesia
- Antam Resourcindo - Indonesia
- Chettinad Cement Corporation Ltd - India
- Iligan Light & Power Inc, Philippines
- Sical Logistics Limited - India
- New Zealand Coal & Carbon
- Meralco Power Generation, Philippines
- Larsen & Toubro Limited - India
- Rio Tinto Coal - Australia
- Heidelberg Cement - Germany
- Edison Trading Spa - Italy
- Billiton Holdings Pty Ltd - Australia
- Bayan Resources Tbk. - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Cigading International Bulk Terminal - Indonesia
- OPG Power Generation Pvt Ltd - India
- GVK Power & Infra Limited - India
- Therma Luzon, Inc, Philippines
- Global Green Power PLC Corporation, Philippines
- Indo Tambangraya Megah - Indonesia
- Romanian Commodities Exchange
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Sakthi Sugars Limited - India
- Vedanta Resources Plc - India
- Orica Mining Services - Indonesia
- Indika Energy - Indonesia
- TeaM Sual Corporation - Philippines
- Agrawal Coal Company - India
- Global Business Power Corporation, Philippines
- ICICI Bank Limited - India
- Rashtriya Ispat Nigam Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Deloitte Consulting - India
- Singapore Mercantile Exchange
- Makarim & Taira - Indonesia
- San Jose City I Power Corp, Philippines
- Kumho Petrochemical, South Korea
- McConnell Dowell - Australia
- AsiaOL BioFuels Corp., Philippines
- Neyveli Lignite Corporation Ltd, - India
- Coal and Oil Company - UAE
- White Energy Company Limited
- Merrill Lynch Commodities Europe
- Karbindo Abesyapradhi - Indoneisa
- The University of Queensland
- Coalindo Energy - Indonesia
- Africa Commodities Group - South Africa
- Bharathi Cement Corporation - India
- ASAPP Information Group - India
- Oldendorff Carriers - Singapore
- Videocon Industries ltd - India
- Indian Energy Exchange, India
- Pendopo Energi Batubara - Indonesia
- SMG Consultants - Indonesia
- Altura Mining Limited, Indonesia
- Metalloyd Limited - United Kingdom
- Simpson Spence & Young - Indonesia
- CIMB Investment Bank - Malaysia
- Bhatia International Limited - India
- Coastal Gujarat Power Limited - India
- PowerSource Philippines DevCo
- Siam City Cement - Thailand
- Ceylon Electricity Board - Sri Lanka
- The Treasury - Australian Government
- Australian Coal Association
- India Bulls Power Limited - India
- Krishnapatnam Port Company Ltd. - India
- IEA Clean Coal Centre - UK
- SN Aboitiz Power Inc, Philippines
- Electricity Generating Authority of Thailand
- Intertek Mineral Services - Indonesia
- Formosa Plastics Group - Taiwan
- Alfred C Toepfer International GmbH - Germany
- Parliament of New Zealand
- Meenaskhi Energy Private Limited - India
- European Bulk Services B.V. - Netherlands
- LBH Netherlands Bv - Netherlands
- GN Power Mariveles Coal Plant, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Tata Chemicals Ltd - India
- Medco Energi Mining Internasional
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Borneo Indobara - Indonesia
- Sojitz Corporation - Japan
- Energy Link Ltd, New Zealand
- Kepco SPC Power Corporation, Philippines
- Sarangani Energy Corporation, Philippines
- Parry Sugars Refinery, India
- Attock Cement Pakistan Limited
- TNB Fuel Sdn Bhd - Malaysia
- Standard Chartered Bank - UAE
- Directorate Of Revenue Intelligence - India
- Global Coal Blending Company Limited - Australia
- Ministry of Transport, Egypt
- IHS Mccloskey Coal Group - USA
- Semirara Mining Corp, Philippines
- Kobexindo Tractors - Indoneisa
- Kohat Cement Company Ltd. - Pakistan
- Manunggal Multi Energi - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Kaltim Prima Coal - Indonesia
- Ministry of Mines - Canada
- Port Waratah Coal Services - Australia
- Dalmia Cement Bharat India
- Gujarat Sidhee Cement - India
- Riau Bara Harum - Indonesia
- Ind-Barath Power Infra Limited - India
- Toyota Tsusho Corporation, Japan
- Anglo American - United Kingdom
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Jaiprakash Power Ventures ltd
- Kalimantan Lumbung Energi - Indonesia
- Renaissance Capital - South Africa
- Petron Corporation, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Essar Steel Hazira Ltd - India
- Mercator Lines Limited - India
- Straits Asia Resources Limited - Singapore
- SMC Global Power, Philippines
- MS Steel International - UAE
- Indonesian Coal Mining Association
- Ministry of Finance - Indonesia
- GAC Shipping (India) Pvt Ltd
- Maheswari Brothers Coal Limited - India
- Central Electricity Authority - India
- Salva Resources Pvt Ltd - India
- Indogreen Group - Indonesia
- Economic Council, Georgia
- Independent Power Producers Association of India
- Carbofer General Trading SA - India
- Interocean Group of Companies - India
- Gujarat Electricity Regulatory Commission - India
- Globalindo Alam Lestari - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Commonwealth Bank - Australia
- Bahari Cakrawala Sebuku - Indonesia
- Orica Australia Pty. Ltd.
- Mjunction Services Limited - India
- Price Waterhouse Coopers - Russia
- Tamil Nadu electricity Board
- Latin American Coal - Colombia
- International Coal Ventures Pvt Ltd - India
- Cement Manufacturers Association - India
- Wilmar Investment Holdings
- Power Finance Corporation Ltd., India
- Bukit Baiduri Energy - Indonesia
- Vizag Seaport Private Limited - India
- Savvy Resources Ltd - HongKong
- GMR Energy Limited - India
- Central Java Power - Indonesia
- Bhoruka Overseas - Indonesia
- London Commodity Brokers - England
- Georgia Ports Authority, United States
- Binh Thuan Hamico - Vietnam
- Offshore Bulk Terminal Pte Ltd, Singapore
- Malabar Cements Ltd - India
- Minerals Council of Australia
- Uttam Galva Steels Limited - India
- Posco Energy - South Korea
- Holcim Trading Pte Ltd - Singapore
- Leighton Contractors Pty Ltd - Australia
- Indian Oil Corporation Limited
- Jindal Steel & Power Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Siam City Cement PLC, Thailand
- Mercuria Energy - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Timah Investasi Mineral - Indoneisa
- Australian Commodity Traders Exchange
- Kideco Jaya Agung - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Bhushan Steel Limited - India
- The State Trading Corporation of India Ltd
- Grasim Industreis Ltd - India
- Xindia Steels Limited - India
- Sree Jayajothi Cements Limited - India
- Eastern Coal Council - USA
- Semirara Mining and Power Corporation, Philippines
- Trasteel International SA, Italy
- Thiess Contractors Indonesia
- Marubeni Corporation - India
- South Luzon Thermal Energy Corporation
- Bukit Asam (Persero) Tbk - Indonesia
- VISA Power Limited - India
- Sinarmas Energy and Mining - Indonesia
- Sindya Power Generating Company Private Ltd
- PTC India Limited - India
- Kapuas Tunggal Persada - Indonesia
- Mintek Dendrill Indonesia
- Bukit Makmur.PT - Indonesia
- Wood Mackenzie - Singapore
- Pipit Mutiara Jaya. PT, Indonesia
- Energy Development Corp, Philippines
- CNBM International Corporation - China
- Eastern Energy - Thailand
- Madhucon Powers Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Electricity Authority, New Zealand
- Chamber of Mines of South Africa
- Samtan Co., Ltd - South Korea
- Goldman Sachs - Singapore
- Ambuja Cements Ltd - India
- Aboitiz Power Corporation - Philippines
- Bulk Trading Sa - Switzerland
- Bangladesh Power Developement Board
- Thai Mozambique Logistica
- Lanco Infratech Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Planning Commission, India
- Karaikal Port Pvt Ltd - India
- Aditya Birla Group - India
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