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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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Friday, 22 March 24
INDONESIA APPROVES 922.14 MLN T COAL PRODUCTION QUOTA FOR 2024, ABOVE TARGET - REUTERS
Indonesia has approved coal production quotas totalling 922.14 million metric tons for 2024, Bambang Suswantono, a senior official at the mining mi ...
Friday, 22 March 24
CHINA COAL INDUSTRY GROUP EXPECTS OUTPUT GROWTH TO SLOW IN 2024 - REUTERS
China’s coal output is expected to increase 36 million metric tons, or 0.8%, to about 4.7 billion tonnes in 2024, a Chinese coal industry gro ...
Monday, 18 March 24
THREE KEY TAKEAWAYS FROM OUR EUROPE GAS MARKETS SHORT-TERM OUTLOOK Q1 2024 - WOOD MACKENZIE
European gas prices are currently back to pre-crisis levels, but with a complex series of factors affecting future supply and demand, are they set ...
Wednesday, 06 March 24
INDONESIA AIMS TO FINISH MINING OUTPUT QUOTAS APPROVAL BY END-MARCH, OFFICIAL SAYS - REUTERS
Indonesia’s has approved the mining production quotarequests from more than 120mineral companies and aims to complete the approval process th ...
Monday, 04 March 24
IS YOUR GUARANTEE A GUARANTEE? NOTE TO SHIPOWNERS - GARD
KNOWLEDGE TO ELEVATE
The law of guarantees is not always obvious or easy to understand without proper guidance. This article clarifies the dif ...
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Showing 26 to 30 news of total 6871 |
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- CIMB Investment Bank - Malaysia
- Formosa Plastics Group - Taiwan
- Kohat Cement Company Ltd. - Pakistan
- Samtan Co., Ltd - South Korea
- Vijayanagar Sugar Pvt Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Kobexindo Tractors - Indoneisa
- Renaissance Capital - South Africa
- Ministry of Transport, Egypt
- Heidelberg Cement - Germany
- Chettinad Cement Corporation Ltd - India
- Port Waratah Coal Services - Australia
- Manunggal Multi Energi - Indonesia
- Maheswari Brothers Coal Limited - India
- Karaikal Port Pvt Ltd - India
- New Zealand Coal & Carbon
- Singapore Mercantile Exchange
- Marubeni Corporation - India
- Malabar Cements Ltd - India
- Globalindo Alam Lestari - Indonesia
- Directorate Of Revenue Intelligence - India
- Meralco Power Generation, Philippines
- Georgia Ports Authority, United States
- Bayan Resources Tbk. - Indonesia
- Bhushan Steel Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Baramulti Group, Indonesia
- Bhoruka Overseas - Indonesia
- Lanco Infratech Ltd - India
- Coalindo Energy - Indonesia
- Videocon Industries ltd - India
- VISA Power Limited - India
- PowerSource Philippines DevCo
- Ambuja Cements Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Bukit Makmur.PT - Indonesia
- Deloitte Consulting - India
- Karbindo Abesyapradhi - Indoneisa
- IHS Mccloskey Coal Group - USA
- Semirara Mining and Power Corporation, Philippines
- Binh Thuan Hamico - Vietnam
- Merrill Lynch Commodities Europe
- Bhatia International Limited - India
- Carbofer General Trading SA - India
- Edison Trading Spa - Italy
- TNB Fuel Sdn Bhd - Malaysia
- LBH Netherlands Bv - Netherlands
- Kepco SPC Power Corporation, Philippines
- GMR Energy Limited - India
- Altura Mining Limited, Indonesia
- International Coal Ventures Pvt Ltd - India
- Simpson Spence & Young - Indonesia
- Pendopo Energi Batubara - Indonesia
- Bharathi Cement Corporation - India
- Indogreen Group - Indonesia
- Barasentosa Lestari - Indonesia
- Parliament of New Zealand
- Petrochimia International Co. Ltd.- Taiwan
- Ministry of Mines - Canada
- Siam City Cement PLC, Thailand
- Dalmia Cement Bharat India
- ICICI Bank Limited - India
- Electricity Generating Authority of Thailand
- Timah Investasi Mineral - Indoneisa
- McConnell Dowell - Australia
- Vizag Seaport Private Limited - India
- MS Steel International - UAE
- Sinarmas Energy and Mining - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Mintek Dendrill Indonesia
- Bangladesh Power Developement Board
- Planning Commission, India
- TeaM Sual Corporation - Philippines
- Africa Commodities Group - South Africa
- Trasteel International SA, Italy
- Chamber of Mines of South Africa
- Kapuas Tunggal Persada - Indonesia
- Jindal Steel & Power Ltd - India
- Semirara Mining Corp, Philippines
- Krishnapatnam Port Company Ltd. - India
- Siam City Cement - Thailand
- Posco Energy - South Korea
- Sree Jayajothi Cements Limited - India
- Indonesian Coal Mining Association
- Mercuria Energy - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Sojitz Corporation - Japan
- Straits Asia Resources Limited - Singapore
- Banpu Public Company Limited - Thailand
- Asia Pacific Energy Resources Ventures Inc, Philippines
- The Treasury - Australian Government
- Petron Corporation, Philippines
- Intertek Mineral Services - Indonesia
- Makarim & Taira - Indonesia
- Agrawal Coal Company - India
- Aditya Birla Group - India
- Interocean Group of Companies - India
- Savvy Resources Ltd - HongKong
- Madhucon Powers Ltd - India
- Orica Australia Pty. Ltd.
- PNOC Exploration Corporation - Philippines
- Sical Logistics Limited - India
- Wilmar Investment Holdings
- SMC Global Power, Philippines
- Kideco Jaya Agung - Indonesia
- San Jose City I Power Corp, Philippines
- Antam Resourcindo - Indonesia
- Central Electricity Authority - India
- Leighton Contractors Pty Ltd - Australia
- IEA Clean Coal Centre - UK
- Larsen & Toubro Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Iligan Light & Power Inc, Philippines
- Mjunction Services Limited - India
- Kumho Petrochemical, South Korea
- Bulk Trading Sa - Switzerland
- Offshore Bulk Terminal Pte Ltd, Singapore
- Kalimantan Lumbung Energi - Indonesia
- Grasim Industreis Ltd - India
- Coal and Oil Company - UAE
- Eastern Coal Council - USA
- Sakthi Sugars Limited - India
- GAC Shipping (India) Pvt Ltd
- Toyota Tsusho Corporation, Japan
- The State Trading Corporation of India Ltd
- Indian Energy Exchange, India
- India Bulls Power Limited - India
- Energy Link Ltd, New Zealand
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Jorong Barutama Greston.PT - Indonesia
- Kaltim Prima Coal - Indonesia
- Indo Tambangraya Megah - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Aboitiz Power Corporation - Philippines
- Essar Steel Hazira Ltd - India
- Anglo American - United Kingdom
- Goldman Sachs - Singapore
- Borneo Indobara - Indonesia
- Salva Resources Pvt Ltd - India
- OPG Power Generation Pvt Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Standard Chartered Bank - UAE
- Maharashtra Electricity Regulatory Commission - India
- Minerals Council of Australia
- Independent Power Producers Association of India
- Australian Coal Association
- Sindya Power Generating Company Private Ltd
- Latin American Coal - Colombia
- Attock Cement Pakistan Limited
- Miang Besar Coal Terminal - Indonesia
- Power Finance Corporation Ltd., India
- AsiaOL BioFuels Corp., Philippines
- Orica Mining Services - Indonesia
- Coastal Gujarat Power Limited - India
- Global Business Power Corporation, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Kartika Selabumi Mining - Indonesia
- GVK Power & Infra Limited - India
- Uttam Galva Steels Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- The University of Queensland
- Global Green Power PLC Corporation, Philippines
- Tamil Nadu electricity Board
- PTC India Limited - India
- White Energy Company Limited
- Gujarat Sidhee Cement - India
- Electricity Authority, New Zealand
- Riau Bara Harum - Indonesia
- Price Waterhouse Coopers - Russia
- PetroVietnam Power Coal Import and Supply Company
- Thai Mozambique Logistica
- Rio Tinto Coal - Australia
- Australian Commodity Traders Exchange
- Metalloyd Limited - United Kingdom
- Medco Energi Mining Internasional
- CNBM International Corporation - China
- Thiess Contractors Indonesia
- Energy Development Corp, Philippines
- Ind-Barath Power Infra Limited - India
- Wood Mackenzie - Singapore
- Alfred C Toepfer International GmbH - Germany
- Tata Chemicals Ltd - India
- SMG Consultants - Indonesia
- Jaiprakash Power Ventures ltd
- Bukit Baiduri Energy - Indonesia
- Vedanta Resources Plc - India
- ASAPP Information Group - India
- Parry Sugars Refinery, India
- SN Aboitiz Power Inc, Philippines
- Cement Manufacturers Association - India
- Star Paper Mills Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Meenaskhi Energy Private Limited - India
- Central Java Power - Indonesia
- Romanian Commodities Exchange
- Global Coal Blending Company Limited - Australia
- Gujarat Mineral Development Corp Ltd - India
- Oldendorff Carriers - Singapore
- London Commodity Brokers - England
- South Luzon Thermal Energy Corporation
- Bukit Asam (Persero) Tbk - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Sarangani Energy Corporation, Philippines
- Economic Council, Georgia
- Billiton Holdings Pty Ltd - Australia
- Indika Energy - Indonesia
- Indian Oil Corporation Limited
- Holcim Trading Pte Ltd - Singapore
- Ministry of Finance - Indonesia
- European Bulk Services B.V. - Netherlands
- Bahari Cakrawala Sebuku - Indonesia
- Mercator Lines Limited - India
- Commonwealth Bank - Australia
- Eastern Energy - Thailand
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Therma Luzon, Inc, Philippines
- Xindia Steels Limited - India
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