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Tuesday, 16 July 13
TAKE - OR - PAY CONTRACTS CONTINUE TO INCENTIVISE AUSTRALIAN COAL PRODUCERS DESPITE POTENTIAL NEGATIVE CASH MARGINS - WOOD MACKENZIE
 Australia's coal production has continued to grow, despite lower coal prices in 2013. Global investors and suppliers are therefore questioning whether more production will be shut down. Wood Mackenzie estimates that in 2013, only 4 million tonnes (mt) of coal production in Australia is at risk of closure even though 32mt of coal will be produced at negative margins, including sustaining capital. The decision to continue production instead of shutting it down can mainly be attributed to transport and port contracts in Australia, otherwise known as 'take-or-pay' contracts.
Take-or-pay contracts are fixed cost contracts that result in most producers paying for capacity regardless of tonnes shipped. Stronger growth in exports relative to new capacity build will reduce the average cost per tonne that miners pay for not fully utilising contracted capacity.
Mr. Viktor Tanevski, Coal Cost Analyst at Wood Mackenzie, says, "There have only been two mine closures so far in 2013 compared to seven in 2012. Despite the low coal price environment and current margin squeeze, take-or-pay contracts are incentivising coal producers to increase rather than reduce production, even if additional production is generating negative cash margins. This is because the fixed cost of infrastructure capacity makes the cost of shutting down even more expensive than the cost of maintaining production."
"We estimate that only 4mt, or just over 1% of Australia's coal exports in 2013, is at risk of closure based on Hard Coking Coal (HCC) price of US$171/t and thermal coal price of US$92/t. This is not a significant volume of output; however the amount at risk increases significantly under a lower price scenario.
Wood Mackenzie analyses that if average prices fall to US$122/t for HCC and US$77/t for thermal coal in 2013, then 45mt or 13% of Australia's coal exports in 2013 will be at risk of closure. At that price, a total of 204mt of production will be suffering negative margins.
In summary, Mr. Tanevski says, "Our expectation is that there will not be a significant dent in Australia's production this year. However, if prices do fall below expectations, the risk of closure for mines producing at negative margins will increase, reducing output."
Editor's notes:
Wood Mackenzie is the most comprehensive source of knowledge about the world's energy and metals industries. We analyse and advise on every stage along the value chain - from discovery to delivery, and beyond - to provide clients with the commercial insight that makes them stronger. For more information visit Wood Mackenzie.
Views expressed herein are personal views of the author and not that of COALspot.com and subject to COALspot.com's disclaimer clause. We welcome article submissions from experts in the areas of coal, mining, shipping, etc. To submit your articles please click here.
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Friday, 01 November 13
DRY BULK MARKET IN FIRST POSITIVE SIGN IN DAYS - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
Owners of dry bulk carriers are well aware of the rollercoaster ride that has been the market for their vessels over the past few years. This trend ...
Thursday, 31 October 13
HANDY: ACTIVE; PANAMAX: QUIET; CAPESIZE: NO LIGHT
Handy
The handy market had an active week however not directly translated into the rates we´ve seen in the Pacific. We see more coal and baux ...
Wednesday, 30 October 13
INDONESIAN STATE OWNED COAL MINER HAS EXPORTED 7.02 MILLION TONS OF COAL IN 9 MONTHS
COALspot.com : PT. Bukit Asam, Indonesian state owned coal miner has sold 13.24 million tons of coal for the period January - September 2013. Accord ...
Wednesday, 30 October 13
DRY BULK MARKET HAS LOST FURTHER GROUND THIS PAST WEEK - INTERMODAL
Chartering (Wet: Firm+ / Dry: Stable-)
The Dry Bulk market has lost further ground this past week, as de-creased activity in both basins for both C ...
Wednesday, 30 October 13
CAPESIZE: DOWNWARD; SUPRAS AND HANDIES: STABLE - INTERMODAL
The Dry Bulk market has resumed its downward movement, noting another dip for a third week in a row. The larger size segments were responsible for p ...
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- Krishnapatnam Port Company Ltd. - India
- Kartika Selabumi Mining - Indonesia
- Coastal Gujarat Power Limited - India
- Thai Mozambique Logistica
- Bangladesh Power Developement Board
- Meenaskhi Energy Private Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Ministry of Mines - Canada
- Indian Oil Corporation Limited
- Wood Mackenzie - Singapore
- Iligan Light & Power Inc, Philippines
- Carbofer General Trading SA - India
- Agrawal Coal Company - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Binh Thuan Hamico - Vietnam
- Indian Energy Exchange, India
- Savvy Resources Ltd - HongKong
- Semirara Mining Corp, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Kobexindo Tractors - Indoneisa
- Economic Council, Georgia
- MS Steel International - UAE
- GVK Power & Infra Limited - India
- LBH Netherlands Bv - Netherlands
- Global Green Power PLC Corporation, Philippines
- Indo Tambangraya Megah - Indonesia
- Altura Mining Limited, Indonesia
- Formosa Plastics Group - Taiwan
- Wilmar Investment Holdings
- Videocon Industries ltd - India
- Singapore Mercantile Exchange
- The University of Queensland
- Bhatia International Limited - India
- Standard Chartered Bank - UAE
- Gujarat Sidhee Cement - India
- Rashtriya Ispat Nigam Limited - India
- South Luzon Thermal Energy Corporation
- TeaM Sual Corporation - Philippines
- Interocean Group of Companies - India
- ASAPP Information Group - India
- Gujarat Mineral Development Corp Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Central Java Power - Indonesia
- Manunggal Multi Energi - Indonesia
- Bhushan Steel Limited - India
- Merrill Lynch Commodities Europe
- Bank of Tokyo Mitsubishi UFJ Ltd
- Port Waratah Coal Services - Australia
- Mintek Dendrill Indonesia
- Baramulti Group, Indonesia
- Price Waterhouse Coopers - Russia
- Sree Jayajothi Cements Limited - India
- GAC Shipping (India) Pvt Ltd
- Timah Investasi Mineral - Indoneisa
- Bayan Resources Tbk. - Indonesia
- Makarim & Taira - Indonesia
- Kumho Petrochemical, South Korea
- Vedanta Resources Plc - India
- Grasim Industreis Ltd - India
- Barasentosa Lestari - Indonesia
- Intertek Mineral Services - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Bukit Makmur.PT - Indonesia
- Xindia Steels Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Dalmia Cement Bharat India
- Toyota Tsusho Corporation, Japan
- Electricity Generating Authority of Thailand
- PNOC Exploration Corporation - Philippines
- Coalindo Energy - Indonesia
- Metalloyd Limited - United Kingdom
- Central Electricity Authority - India
- Sarangani Energy Corporation, Philippines
- Mercator Lines Limited - India
- Commonwealth Bank - Australia
- Indika Energy - Indonesia
- Ind-Barath Power Infra Limited - India
- Petron Corporation, Philippines
- Directorate Of Revenue Intelligence - India
- Bhoruka Overseas - Indonesia
- Global Business Power Corporation, Philippines
- Pendopo Energi Batubara - Indonesia
- Trasteel International SA, Italy
- Romanian Commodities Exchange
- Cigading International Bulk Terminal - Indonesia
- Australian Commodity Traders Exchange
- Karaikal Port Pvt Ltd - India
- Straits Asia Resources Limited - Singapore
- Power Finance Corporation Ltd., India
- Jindal Steel & Power Ltd - India
- Uttam Galva Steels Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Planning Commission, India
- Indonesian Coal Mining Association
- Marubeni Corporation - India
- Parliament of New Zealand
- Sakthi Sugars Limited - India
- Eastern Energy - Thailand
- European Bulk Services B.V. - Netherlands
- San Jose City I Power Corp, Philippines
- McConnell Dowell - Australia
- Kohat Cement Company Ltd. - Pakistan
- SMG Consultants - Indonesia
- SMC Global Power, Philippines
- CIMB Investment Bank - Malaysia
- Latin American Coal - Colombia
- Georgia Ports Authority, United States
- CNBM International Corporation - China
- Billiton Holdings Pty Ltd - Australia
- OPG Power Generation Pvt Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- GN Power Mariveles Coal Plant, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Kepco SPC Power Corporation, Philippines
- Bharathi Cement Corporation - India
- The State Trading Corporation of India Ltd
- New Zealand Coal & Carbon
- Offshore Bulk Terminal Pte Ltd, Singapore
- London Commodity Brokers - England
- PowerSource Philippines DevCo
- Antam Resourcindo - Indonesia
- Aditya Birla Group - India
- Pipit Mutiara Jaya. PT, Indonesia
- Holcim Trading Pte Ltd - Singapore
- ICICI Bank Limited - India
- IEA Clean Coal Centre - UK
- Sinarmas Energy and Mining - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- PTC India Limited - India
- International Coal Ventures Pvt Ltd - India
- Posco Energy - South Korea
- IHS Mccloskey Coal Group - USA
- Jorong Barutama Greston.PT - Indonesia
- Essar Steel Hazira Ltd - India
- Anglo American - United Kingdom
- Therma Luzon, Inc, Philippines
- Aboitiz Power Corporation - Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Australian Coal Association
- Indogreen Group - Indonesia
- Siam City Cement - Thailand
- Salva Resources Pvt Ltd - India
- Global Coal Blending Company Limited - Australia
- Renaissance Capital - South Africa
- Karbindo Abesyapradhi - Indoneisa
- Mercuria Energy - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Globalindo Alam Lestari - Indonesia
- Jaiprakash Power Ventures ltd
- Mjunction Services Limited - India
- Medco Energi Mining Internasional
- The Treasury - Australian Government
- Heidelberg Cement - Germany
- Neyveli Lignite Corporation Ltd, - India
- Ministry of Finance - Indonesia
- Deloitte Consulting - India
- Sojitz Corporation - Japan
- Bulk Trading Sa - Switzerland
- Attock Cement Pakistan Limited
- Banpu Public Company Limited - Thailand
- Alfred C Toepfer International GmbH - Germany
- Siam City Cement PLC, Thailand
- Africa Commodities Group - South Africa
- Goldman Sachs - Singapore
- Energy Link Ltd, New Zealand
- SN Aboitiz Power Inc, Philippines
- Kideco Jaya Agung - Indonesia
- Electricity Authority, New Zealand
- Eastern Coal Council - USA
- GMR Energy Limited - India
- Borneo Indobara - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Ministry of Transport, Egypt
- Bahari Cakrawala Sebuku - Indonesia
- Madhucon Powers Ltd - India
- Cement Manufacturers Association - India
- Independent Power Producers Association of India
- Kapuas Tunggal Persada - Indonesia
- Star Paper Mills Limited - India
- Semirara Mining and Power Corporation, Philippines
- Samtan Co., Ltd - South Korea
- Sindya Power Generating Company Private Ltd
- Chettinad Cement Corporation Ltd - India
- Tata Chemicals Ltd - India
- Maheswari Brothers Coal Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Orica Mining Services - Indonesia
- White Energy Company Limited
- Bukit Baiduri Energy - Indonesia
- Lanco Infratech Ltd - India
- Kaltim Prima Coal - Indonesia
- Oldendorff Carriers - Singapore
- PetroVietnam Power Coal Import and Supply Company
- Orica Australia Pty. Ltd.
- Simpson Spence & Young - Indonesia
- Malabar Cements Ltd - India
- VISA Power Limited - India
- Energy Development Corp, Philippines
- Coal and Oil Company - UAE
- Parry Sugars Refinery, India
- Minerals Council of Australia
- Chamber of Mines of South Africa
- Tamil Nadu electricity Board
- Larsen & Toubro Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Meralco Power Generation, Philippines
- Sical Logistics Limited - India
- Thiess Contractors Indonesia
- India Bulls Power Limited - India
- Edison Trading Spa - Italy
- Rio Tinto Coal - Australia
- Vizag Seaport Private Limited - India
- Riau Bara Harum - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Ambuja Cements Ltd - India
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