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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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Monday, 19 December 22
ENERGY CRISIS FUELS COAL COMEBACK IN GERMANY - REUTERS
Coal has made a comeback in Germany this year, as Europe’s largest economy turns to the dirty fuel to power it through an energy crisis.
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Thursday, 15 December 22
MARKET INSIGHT - INTERMODAL
While observing the ship repair market very close to the end of the year, we are confident that shipyards worldwide are entering a new era. The nex ...
Tuesday, 13 December 22
STRONG COAL PRICES SUPPORT ROBUST EARNINGS AT INDONESIAN COAL MINERS - FITCH RATINGS
Fitch Ratings expects cash flow generation at Indonesian coal miners to remain strong in 2023, based on its forecast for coal prices to remain high ...
Tuesday, 13 December 22
BIMCO CII CLAUSE FINALLY RELEASED: DOES IT MAKE ANY SENSE OF CCI? - WFW
WHAT IS CII?
The new International Maritime Organisation’s (“IMO’s”) Carbon Intensity Indicator (“CII”) cer ...
Tuesday, 13 December 22
COAL BASE RAMPS UP ENERGY SUPPLY FOR WINTER NEEDS - XINHUA
Inner Mongolia Autonomous Region, China’s leading coal production base, has kicked its production into high gear to meet heating needs as col ...
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- Asmin Koalindo Tuhup - Indonesia
- Dalmia Cement Bharat India
- PNOC Exploration Corporation - Philippines
- Bangladesh Power Developement Board
- Iligan Light & Power Inc, Philippines
- Bulk Trading Sa - Switzerland
- Manunggal Multi Energi - Indonesia
- GMR Energy Limited - India
- Electricity Authority, New Zealand
- Sojitz Corporation - Japan
- Ind-Barath Power Infra Limited - India
- Star Paper Mills Limited - India
- Power Finance Corporation Ltd., India
- Bukit Baiduri Energy - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- IHS Mccloskey Coal Group - USA
- OPG Power Generation Pvt Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Simpson Spence & Young - Indonesia
- Indogreen Group - Indonesia
- Intertek Mineral Services - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Wilmar Investment Holdings
- Sree Jayajothi Cements Limited - India
- Chamber of Mines of South Africa
- Ambuja Cements Ltd - India
- Toyota Tsusho Corporation, Japan
- Therma Luzon, Inc, Philippines
- Indika Energy - Indonesia
- Formosa Plastics Group - Taiwan
- Holcim Trading Pte Ltd - Singapore
- Vijayanagar Sugar Pvt Ltd - India
- Ministry of Transport, Egypt
- Binh Thuan Hamico - Vietnam
- SMC Global Power, Philippines
- Alfred C Toepfer International GmbH - Germany
- Krishnapatnam Port Company Ltd. - India
- Meenaskhi Energy Private Limited - India
- Kideco Jaya Agung - Indonesia
- New Zealand Coal & Carbon
- Marubeni Corporation - India
- Billiton Holdings Pty Ltd - Australia
- Lanco Infratech Ltd - India
- ICICI Bank Limited - India
- Baramulti Group, Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Independent Power Producers Association of India
- Sakthi Sugars Limited - India
- Edison Trading Spa - Italy
- Bhushan Steel Limited - India
- Kepco SPC Power Corporation, Philippines
- Vedanta Resources Plc - India
- Indonesian Coal Mining Association
- San Jose City I Power Corp, Philippines
- Romanian Commodities Exchange
- Siam City Cement PLC, Thailand
- Ministry of Finance - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Kapuas Tunggal Persada - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Heidelberg Cement - Germany
- Sarangani Energy Corporation, Philippines
- Oldendorff Carriers - Singapore
- Coastal Gujarat Power Limited - India
- Australian Coal Association
- Port Waratah Coal Services - Australia
- London Commodity Brokers - England
- Savvy Resources Ltd - HongKong
- Global Business Power Corporation, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Kalimantan Lumbung Energi - Indonesia
- White Energy Company Limited
- Thai Mozambique Logistica
- Petron Corporation, Philippines
- Directorate Of Revenue Intelligence - India
- Economic Council, Georgia
- PTC India Limited - India
- PowerSource Philippines DevCo
- Tata Chemicals Ltd - India
- Chettinad Cement Corporation Ltd - India
- Energy Link Ltd, New Zealand
- Global Green Power PLC Corporation, Philippines
- Semirara Mining Corp, Philippines
- PetroVietnam Power Coal Import and Supply Company
- CNBM International Corporation - China
- CIMB Investment Bank - Malaysia
- McConnell Dowell - Australia
- Gujarat Sidhee Cement - India
- Petrochimia International Co. Ltd.- Taiwan
- Mercator Lines Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Meralco Power Generation, Philippines
- Cement Manufacturers Association - India
- Gujarat Electricity Regulatory Commission - India
- Siam City Cement - Thailand
- Banpu Public Company Limited - Thailand
- Parry Sugars Refinery, India
- Renaissance Capital - South Africa
- Salva Resources Pvt Ltd - India
- SMG Consultants - Indonesia
- Essar Steel Hazira Ltd - India
- Aditya Birla Group - India
- Interocean Group of Companies - India
- Coal and Oil Company - UAE
- Rio Tinto Coal - Australia
- Bhatia International Limited - India
- Eastern Energy - Thailand
- Coalindo Energy - Indonesia
- Madhucon Powers Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Cigading International Bulk Terminal - Indonesia
- International Coal Ventures Pvt Ltd - India
- Metalloyd Limited - United Kingdom
- LBH Netherlands Bv - Netherlands
- Videocon Industries ltd - India
- Aboitiz Power Corporation - Philippines
- Rashtriya Ispat Nigam Limited - India
- Orica Mining Services - Indonesia
- Commonwealth Bank - Australia
- Bukit Makmur.PT - Indonesia
- Bayan Resources Tbk. - Indonesia
- IEA Clean Coal Centre - UK
- Riau Bara Harum - Indonesia
- Indo Tambangraya Megah - Indonesia
- Orica Australia Pty. Ltd.
- Merrill Lynch Commodities Europe
- Timah Investasi Mineral - Indoneisa
- Mintek Dendrill Indonesia
- SN Aboitiz Power Inc, Philippines
- Indian Energy Exchange, India
- Makarim & Taira - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Parliament of New Zealand
- Central Java Power - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Posco Energy - South Korea
- GAC Shipping (India) Pvt Ltd
- Uttam Galva Steels Limited - India
- Samtan Co., Ltd - South Korea
- Altura Mining Limited, Indonesia
- Pendopo Energi Batubara - Indonesia
- Central Electricity Authority - India
- Larsen & Toubro Limited - India
- Latin American Coal - Colombia
- Africa Commodities Group - South Africa
- Kartika Selabumi Mining - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Wood Mackenzie - Singapore
- Sindya Power Generating Company Private Ltd
- Singapore Mercantile Exchange
- Price Waterhouse Coopers - Russia
- Electricity Generating Authority of Thailand
- Grasim Industreis Ltd - India
- Borneo Indobara - Indonesia
- Sical Logistics Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Georgia Ports Authority, United States
- Goldman Sachs - Singapore
- TeaM Sual Corporation - Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Maheswari Brothers Coal Limited - India
- Ministry of Mines - Canada
- Eastern Coal Council - USA
- Indian Oil Corporation Limited
- Kohat Cement Company Ltd. - Pakistan
- Globalindo Alam Lestari - Indonesia
- South Luzon Thermal Energy Corporation
- Attock Cement Pakistan Limited
- Bahari Cakrawala Sebuku - Indonesia
- Straits Asia Resources Limited - Singapore
- Kumho Petrochemical, South Korea
- Mercuria Energy - Indonesia
- The State Trading Corporation of India Ltd
- Thiess Contractors Indonesia
- Leighton Contractors Pty Ltd - Australia
- Bukit Asam (Persero) Tbk - Indonesia
- Antam Resourcindo - Indonesia
- Australian Commodity Traders Exchange
- The University of Queensland
- Trasteel International SA, Italy
- Malabar Cements Ltd - India
- Medco Energi Mining Internasional
- Agrawal Coal Company - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Global Coal Blending Company Limited - Australia
- European Bulk Services B.V. - Netherlands
- Standard Chartered Bank - UAE
- Bharathi Cement Corporation - India
- Xindia Steels Limited - India
- Vizag Seaport Private Limited - India
- Karaikal Port Pvt Ltd - India
- Mjunction Services Limited - India
- Kaltim Prima Coal - Indonesia
- Deloitte Consulting - India
- Sinarmas Energy and Mining - Indonesia
- The Treasury - Australian Government
- Jaiprakash Power Ventures ltd
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Ceylon Electricity Board - Sri Lanka
- VISA Power Limited - India
- Maharashtra Electricity Regulatory Commission - India
- ASAPP Information Group - India
- Tamil Nadu electricity Board
- Carbofer General Trading SA - India
- Kobexindo Tractors - Indoneisa
- Bhoruka Overseas - Indonesia
- MS Steel International - UAE
- Energy Development Corp, Philippines
- Anglo American - United Kingdom
- India Bulls Power Limited - India
- Jindal Steel & Power Ltd - India
- Planning Commission, India
- GVK Power & Infra Limited - India
- Minerals Council of Australia
- Barasentosa Lestari - Indonesia
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