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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, 23 February 24
STRONG OUTLOOK FOR THE TANKER MARKET IN 2024 AND BEYOND - DNV
Several factors have aligned over the past two years to create a robust and profitable market for tanker owners, which is expected to drive newbuil ...
Friday, 23 February 24
AUSTRALIAN COAL FLOWS TO ASIA HOVER ABOVE LAST YEAR’S VOLUME TONNES - SIGNAL GROUP
In the final days of February, the dry bulk freight market appeared to maintain a relatively stable momentum, particularly evident in the large ves ...
Friday, 23 February 24
RUSSIAN COAL SHIPMENTS FALL 14% AS SANCTIONS BITE - BIMCO
During the first seven weeks of 2024, Russian coal shipments have fallen 14% y/y. Volumes have gradually declined since October 2023 when logistica ...
Thursday, 22 February 24
BIMCO PUBLISHES SHIP FINANCING FORMS TO ENSURE UNINTERRUPTED USE OF SHIPS
BIMCO has published two standard Quiet Enjoyment Letters (QELs), the first standard form QELs available to the industry, to offer a tool that can e ...
Monday, 19 February 24
METALS INVESTMENT: THE DARKEST HOUR IS JUST BEFORE THE DAWN - WOOD MACKENZIE
Things often seem at their worst just before they get better. In terms of meeting our net zero 2050 scenario, we’ve reached a watershed momen ...
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Showing 31 to 35 news of total 6871 |
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- Marubeni Corporation - India
- TeaM Sual Corporation - Philippines
- Kapuas Tunggal Persada - Indonesia
- Sree Jayajothi Cements Limited - India
- Renaissance Capital - South Africa
- Cement Manufacturers Association - India
- SMC Global Power, Philippines
- Parry Sugars Refinery, India
- Kaltim Prima Coal - Indonesia
- Posco Energy - South Korea
- Sojitz Corporation - Japan
- New Zealand Coal & Carbon
- Trasteel International SA, Italy
- Mercuria Energy - Indonesia
- Rashtriya Ispat Nigam Limited - India
- CIMB Investment Bank - Malaysia
- Goldman Sachs - Singapore
- Meenaskhi Energy Private Limited - India
- Maheswari Brothers Coal Limited - India
- Jaiprakash Power Ventures ltd
- Sinarmas Energy and Mining - Indonesia
- Dalmia Cement Bharat India
- Eastern Coal Council - USA
- Samtan Co., Ltd - South Korea
- Bayan Resources Tbk. - Indonesia
- PTC India Limited - India
- Antam Resourcindo - Indonesia
- Krishnapatnam Port Company Ltd. - India
- PNOC Exploration Corporation - Philippines
- Toyota Tsusho Corporation, Japan
- ICICI Bank Limited - India
- IEA Clean Coal Centre - UK
- Siam City Cement - Thailand
- Directorate General of MIneral and Coal - Indonesia
- Global Green Power PLC Corporation, Philippines
- Price Waterhouse Coopers - Russia
- Planning Commission, India
- Mjunction Services Limited - India
- San Jose City I Power Corp, Philippines
- Iligan Light & Power Inc, Philippines
- Simpson Spence & Young - Indonesia
- The University of Queensland
- Mercator Lines Limited - India
- Manunggal Multi Energi - Indonesia
- Independent Power Producers Association of India
- PowerSource Philippines DevCo
- Australian Coal Association
- Central Java Power - Indonesia
- Anglo American - United Kingdom
- Siam City Cement PLC, Thailand
- Intertek Mineral Services - Indonesia
- Indogreen Group - Indonesia
- SN Aboitiz Power Inc, Philippines
- Banpu Public Company Limited - Thailand
- Electricity Authority, New Zealand
- Bank of Tokyo Mitsubishi UFJ Ltd
- Star Paper Mills Limited - India
- Global Business Power Corporation, Philippines
- Essar Steel Hazira Ltd - India
- Tamil Nadu electricity Board
- Global Coal Blending Company Limited - Australia
- Parliament of New Zealand
- Bhushan Steel Limited - India
- Bulk Trading Sa - Switzerland
- ASAPP Information Group - India
- Medco Energi Mining Internasional
- Ambuja Cements Ltd - India
- Jindal Steel & Power Ltd - India
- Metalloyd Limited - United Kingdom
- Sical Logistics Limited - India
- Wilmar Investment Holdings
- Jorong Barutama Greston.PT - Indonesia
- Mintek Dendrill Indonesia
- Agrawal Coal Company - India
- Economic Council, Georgia
- Salva Resources Pvt Ltd - India
- International Coal Ventures Pvt Ltd - India
- Chamber of Mines of South Africa
- Romanian Commodities Exchange
- Makarim & Taira - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Indika Energy - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Sindya Power Generating Company Private Ltd
- Rio Tinto Coal - Australia
- Timah Investasi Mineral - Indoneisa
- Orica Australia Pty. Ltd.
- Kohat Cement Company Ltd. - Pakistan
- Thiess Contractors Indonesia
- Kumho Petrochemical, South Korea
- Leighton Contractors Pty Ltd - Australia
- Bhatia International Limited - India
- Billiton Holdings Pty Ltd - Australia
- Petron Corporation, Philippines
- Therma Luzon, Inc, Philippines
- Coalindo Energy - Indonesia
- Standard Chartered Bank - UAE
- Coal and Oil Company - UAE
- LBH Netherlands Bv - Netherlands
- Africa Commodities Group - South Africa
- Karbindo Abesyapradhi - Indoneisa
- Savvy Resources Ltd - HongKong
- Bhoruka Overseas - Indonesia
- Miang Besar Coal Terminal - Indonesia
- IHS Mccloskey Coal Group - USA
- Bukit Makmur.PT - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Carbofer General Trading SA - India
- Kepco SPC Power Corporation, Philippines
- Bharathi Cement Corporation - India
- Interocean Group of Companies - India
- Wood Mackenzie - Singapore
- Binh Thuan Hamico - Vietnam
- Formosa Plastics Group - Taiwan
- Kobexindo Tractors - Indoneisa
- Vijayanagar Sugar Pvt Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Barasentosa Lestari - Indonesia
- Bangladesh Power Developement Board
- Singapore Mercantile Exchange
- Aboitiz Power Corporation - Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- VISA Power Limited - India
- Oldendorff Carriers - Singapore
- The Treasury - Australian Government
- Kideco Jaya Agung - Indonesia
- Chettinad Cement Corporation Ltd - India
- McConnell Dowell - Australia
- Bukit Asam (Persero) Tbk - Indonesia
- Attock Cement Pakistan Limited
- Holcim Trading Pte Ltd - Singapore
- Bukit Baiduri Energy - Indonesia
- Meralco Power Generation, Philippines
- Indonesian Coal Mining Association
- Borneo Indobara - Indonesia
- Indian Energy Exchange, India
- GVK Power & Infra Limited - India
- Pendopo Energi Batubara - Indonesia
- OPG Power Generation Pvt Ltd - India
- South Luzon Thermal Energy Corporation
- London Commodity Brokers - England
- India Bulls Power Limited - India
- Madhucon Powers Ltd - India
- Malabar Cements Ltd - India
- Larsen & Toubro Limited - India
- CNBM International Corporation - China
- Georgia Ports Authority, United States
- Coastal Gujarat Power Limited - India
- Semirara Mining Corp, Philippines
- Latin American Coal - Colombia
- Alfred C Toepfer International GmbH - Germany
- Aditya Birla Group - India
- Directorate Of Revenue Intelligence - India
- Thai Mozambique Logistica
- Neyveli Lignite Corporation Ltd, - India
- Ministry of Transport, Egypt
- Ministry of Mines - Canada
- Vedanta Resources Plc - India
- White Energy Company Limited
- Merrill Lynch Commodities Europe
- Vizag Seaport Private Limited - India
- Heidelberg Cement - Germany
- European Bulk Services B.V. - Netherlands
- Australian Commodity Traders Exchange
- Videocon Industries ltd - India
- Xindia Steels Limited - India
- Sarangani Energy Corporation, Philippines
- Sakthi Sugars Limited - India
- Energy Development Corp, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Edison Trading Spa - Italy
- Cigading International Bulk Terminal - Indonesia
- Tata Chemicals Ltd - India
- Baramulti Group, Indonesia
- Power Finance Corporation Ltd., India
- Asmin Koalindo Tuhup - Indonesia
- Eastern Energy - Thailand
- Kartika Selabumi Mining - Indonesia
- Grasim Industreis Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- GMR Energy Limited - India
- Ind-Barath Power Infra Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Straits Asia Resources Limited - Singapore
- The State Trading Corporation of India Ltd
- PetroVietnam Power Coal Import and Supply Company
- Asia Pacific Energy Resources Ventures Inc, Philippines
- AsiaOL BioFuels Corp., Philippines
- Central Electricity Authority - India
- Globalindo Alam Lestari - Indonesia
- Riau Bara Harum - Indonesia
- Gujarat Sidhee Cement - India
- Energy Link Ltd, New Zealand
- Port Waratah Coal Services - Australia
- Karaikal Port Pvt Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Indo Tambangraya Megah - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Ministry of Finance - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- MS Steel International - UAE
- Semirara Mining and Power Corporation, Philippines
- SMG Consultants - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Electricity Generating Authority of Thailand
- Minerals Council of Australia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- GAC Shipping (India) Pvt Ltd
- Commonwealth Bank - Australia
- Lanco Infratech Ltd - India
- Altura Mining Limited, Indonesia
- Uttam Galva Steels Limited - India
- Ceylon Electricity Board - Sri Lanka
- Orica Mining Services - Indonesia
- Deloitte Consulting - India
- Indian Oil Corporation Limited
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