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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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Tuesday, 13 February 24
WHAT IS THE OUTLOOK FOR THE NATURAL GAS SPOT PRICE IN 2024 AND 2025? EIA
We expect the U.S. benchmark Henry Hub natural gas spot price to average higher in 2024 and 2025 than in 2023, but to remain lower than $3.00 per m ...
Monday, 12 February 24
US THERMAL COAL EXPORTS HIT 5-YEAR HIGHS AND TOP $5 BLN IN 2023 - REUTERS
United States exporters of thermal coal earned more than $5 billion in 2023 as they shipped out more than 32.5 million metric tons of the high-poll ...
Tuesday, 06 February 24
NEW E-FUELS PROJECT TO MAKE INTERNATIONAL SHIPPING CLIMATE-NEUTRAL - RINA
Transport and trade on the ocean blue must be made much greener. This is the goal of the new €17 million European GAMMA project, where compani ...
Tuesday, 06 February 24
INDIA SEES ANNUAL COAL OUTPUT UP 10.9% IN 2024/25 - REUTERS
India expects domestic coal output to increase by 10.9% to 1.13 billion metric tons in the fiscal year ending March 2025, a senior government offic ...
Tuesday, 06 February 24
INDIA'S COAL PRODUCTION INCREASES BY 10.3% TO 99.73 MILLION TONNE IN JANUARY - PTI
The country’s coal output rose 10.3 per cent to 99.73 Million Tonne (MT) in January, over the same month in the previous fiscal.
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- Planning Commission, India
- Bulk Trading Sa - Switzerland
- White Energy Company Limited
- Ministry of Finance - Indonesia
- Riau Bara Harum - Indonesia
- Ministry of Mines - Canada
- Jorong Barutama Greston.PT - Indonesia
- Carbofer General Trading SA - India
- Bukit Makmur.PT - Indonesia
- Directorate Of Revenue Intelligence - India
- Edison Trading Spa - Italy
- Videocon Industries ltd - India
- Indian Oil Corporation Limited
- Eastern Energy - Thailand
- Renaissance Capital - South Africa
- Vijayanagar Sugar Pvt Ltd - India
- Therma Luzon, Inc, Philippines
- TeaM Sual Corporation - Philippines
- Ministry of Transport, Egypt
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Chamber of Mines of South Africa
- Global Green Power PLC Corporation, Philippines
- Aboitiz Power Corporation - Philippines
- Goldman Sachs - Singapore
- Kumho Petrochemical, South Korea
- Orica Australia Pty. Ltd.
- Tata Chemicals Ltd - India
- Metalloyd Limited - United Kingdom
- Siam City Cement PLC, Thailand
- Gujarat Mineral Development Corp Ltd - India
- Tamil Nadu electricity Board
- Merrill Lynch Commodities Europe
- India Bulls Power Limited - India
- AsiaOL BioFuels Corp., Philippines
- Ambuja Cements Ltd - India
- The State Trading Corporation of India Ltd
- Africa Commodities Group - South Africa
- Coal and Oil Company - UAE
- PTC India Limited - India
- Vizag Seaport Private Limited - India
- Semirara Mining Corp, Philippines
- Parry Sugars Refinery, India
- Indo Tambangraya Megah - Indonesia
- Larsen & Toubro Limited - India
- Indogreen Group - Indonesia
- Standard Chartered Bank - UAE
- Star Paper Mills Limited - India
- Globalindo Alam Lestari - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Gujarat Electricity Regulatory Commission - India
- Mjunction Services Limited - India
- Parliament of New Zealand
- Deloitte Consulting - India
- Uttam Galva Steels Limited - India
- Coalindo Energy - Indonesia
- Global Business Power Corporation, Philippines
- ASAPP Information Group - India
- Essar Steel Hazira Ltd - India
- Chettinad Cement Corporation Ltd - India
- Trasteel International SA, Italy
- Holcim Trading Pte Ltd - Singapore
- Kaltim Prima Coal - Indonesia
- Sojitz Corporation - Japan
- Latin American Coal - Colombia
- Georgia Ports Authority, United States
- Bank of Tokyo Mitsubishi UFJ Ltd
- Interocean Group of Companies - India
- Bukit Asam (Persero) Tbk - Indonesia
- London Commodity Brokers - England
- Pipit Mutiara Jaya. PT, Indonesia
- Antam Resourcindo - Indonesia
- Posco Energy - South Korea
- Jaiprakash Power Ventures ltd
- Karbindo Abesyapradhi - Indoneisa
- IEA Clean Coal Centre - UK
- Malabar Cements Ltd - India
- Kapuas Tunggal Persada - Indonesia
- Romanian Commodities Exchange
- CNBM International Corporation - China
- Indika Energy - Indonesia
- Aditya Birla Group - India
- PNOC Exploration Corporation - Philippines
- Bhoruka Overseas - Indonesia
- SMG Consultants - Indonesia
- Manunggal Multi Energi - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Banpu Public Company Limited - Thailand
- Bukit Baiduri Energy - Indonesia
- SMC Global Power, Philippines
- Salva Resources Pvt Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Straits Asia Resources Limited - Singapore
- Independent Power Producers Association of India
- GN Power Mariveles Coal Plant, Philippines
- Dalmia Cement Bharat India
- The Treasury - Australian Government
- Billiton Holdings Pty Ltd - Australia
- Pendopo Energi Batubara - Indonesia
- Xindia Steels Limited - India
- Electricity Generating Authority of Thailand
- Eastern Coal Council - USA
- Bharathi Cement Corporation - India
- Formosa Plastics Group - Taiwan
- Thiess Contractors Indonesia
- Sarangani Energy Corporation, Philippines
- IHS Mccloskey Coal Group - USA
- Leighton Contractors Pty Ltd - Australia
- Heidelberg Cement - Germany
- Petrochimia International Co. Ltd.- Taiwan
- South Luzon Thermal Energy Corporation
- Gujarat Sidhee Cement - India
- Petron Corporation, Philippines
- VISA Power Limited - India
- Simpson Spence & Young - Indonesia
- ICICI Bank Limited - India
- Sinarmas Energy and Mining - Indonesia
- GMR Energy Limited - India
- GAC Shipping (India) Pvt Ltd
- Port Waratah Coal Services - Australia
- Singapore Mercantile Exchange
- Bayan Resources Tbk. - Indonesia
- Toyota Tsusho Corporation, Japan
- Miang Besar Coal Terminal - Indonesia
- Sindya Power Generating Company Private Ltd
- Price Waterhouse Coopers - Russia
- Kideco Jaya Agung - Indonesia
- Baramulti Group, Indonesia
- Indian Energy Exchange, India
- TNB Fuel Sdn Bhd - Malaysia
- Kohat Cement Company Ltd. - Pakistan
- Orica Mining Services - Indonesia
- OPG Power Generation Pvt Ltd - India
- Energy Link Ltd, New Zealand
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Oldendorff Carriers - Singapore
- Neyveli Lignite Corporation Ltd, - India
- Power Finance Corporation Ltd., India
- Jindal Steel & Power Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Indonesian Coal Mining Association
- Iligan Light & Power Inc, Philippines
- Lanco Infratech Ltd - India
- Alfred C Toepfer International GmbH - Germany
- GVK Power & Infra Limited - India
- Kobexindo Tractors - Indoneisa
- Offshore Bulk Terminal Pte Ltd, Singapore
- Mercuria Energy - Indonesia
- Grasim Industreis Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Intertek Mineral Services - Indonesia
- Sical Logistics Limited - India
- Madhucon Powers Ltd - India
- CIMB Investment Bank - Malaysia
- Agrawal Coal Company - India
- San Jose City I Power Corp, Philippines
- Barasentosa Lestari - Indonesia
- Mercator Lines Limited - India
- Coastal Gujarat Power Limited - India
- Marubeni Corporation - India
- Energy Development Corp, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Ceylon Electricity Board - Sri Lanka
- Borneo Indobara - Indonesia
- Central Electricity Authority - India
- New Zealand Coal & Carbon
- Savvy Resources Ltd - HongKong
- PowerSource Philippines DevCo
- Timah Investasi Mineral - Indoneisa
- PetroVietnam Power Coal Import and Supply Company
- Australian Coal Association
- Altura Mining Limited, Indonesia
- Economic Council, Georgia
- Meralco Power Generation, Philippines
- Meenaskhi Energy Private Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Binh Thuan Hamico - Vietnam
- SN Aboitiz Power Inc, Philippines
- Australian Commodity Traders Exchange
- Bangladesh Power Developement Board
- Makarim & Taira - Indonesia
- Central Java Power - Indonesia
- The University of Queensland
- Minerals Council of Australia
- Electricity Authority, New Zealand
- Karaikal Port Pvt Ltd - India
- European Bulk Services B.V. - Netherlands
- MS Steel International - UAE
- Anglo American - United Kingdom
- Wilmar Investment Holdings
- Wood Mackenzie - Singapore
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Cement Manufacturers Association - India
- Sree Jayajothi Cements Limited - India
- Ind-Barath Power Infra Limited - India
- Attock Cement Pakistan Limited
- Commonwealth Bank - Australia
- Bhushan Steel Limited - India
- Kartika Selabumi Mining - Indonesia
- McConnell Dowell - Australia
- Samtan Co., Ltd - South Korea
- Kepco SPC Power Corporation, Philippines
- Bhatia International Limited - India
- Maheswari Brothers Coal Limited - India
- Vedanta Resources Plc - India
- Global Coal Blending Company Limited - Australia
- Sakthi Sugars Limited - India
- Rio Tinto Coal - Australia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Siam City Cement - Thailand
- Thai Mozambique Logistica
- Medco Energi Mining Internasional
- International Coal Ventures Pvt Ltd - India
- LBH Netherlands Bv - Netherlands
- Mintek Dendrill Indonesia
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