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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.
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Tuesday, 22 October 13
NEWCASTLE PORT SERVED 38 OCEAN GOING VESSELS IN A WEEK
COALspot.com: Power plant and semi-soft coking coal shipments from Australia's Newcastle port up 0.64 per cent week on week to 3.21 million mt for ...
Tuesday, 22 October 13
KOWEPO INVITED BIDS FOR MULTI GRADE COAL
COALspot.com - Korea Western Power Co., Ltd. (KOWEPO), a Korean electricity generator intends to procure 240,000 tons of multi grade coal for its Ta ...
Monday, 21 October 13
SOUTH CHINA COAL SWAP FOR 2014 DELIVERIES SHOW A POSITIVE TREND
COALspot.com : API 8 CFR South China Coal swaps for average Q4 2013 delivery fell 0.02 percept M-M on Friday 18 October 2013. The CFR South China Co ...
Sunday, 20 October 13
Q3'14 SUB-BIT INDO COAL SWAP CLOSED AT $ 61.80 PMT W/E 18 OCT' 13
COALspot.com – Sub-Bit Indonesia coal swap (FOB ) for average Q4 2013 delivery fell 0.93 percept month on month on Friday 18 October 201 ...
Saturday, 19 October 13
NICKEL ORE SHIPMENTS KEEP SUPRAMAX CHARTER RATES STEADY - CAPT. REDDY
COALspot.com : The futures freight market continued to go down which was reflected in the physical markets as well.
The BDI continued to be soft ...
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- Globalindo Alam Lestari - Indonesia
- SN Aboitiz Power Inc, Philippines
- Renaissance Capital - South Africa
- European Bulk Services B.V. - Netherlands
- ASAPP Information Group - India
- Carbofer General Trading SA - India
- Sinarmas Energy and Mining - Indonesia
- Energy Link Ltd, New Zealand
- Kumho Petrochemical, South Korea
- Xindia Steels Limited - India
- Binh Thuan Hamico - Vietnam
- Africa Commodities Group - South Africa
- IEA Clean Coal Centre - UK
- Ceylon Electricity Board - Sri Lanka
- Standard Chartered Bank - UAE
- Videocon Industries ltd - India
- Mercuria Energy - Indonesia
- The State Trading Corporation of India Ltd
- CIMB Investment Bank - Malaysia
- Chamber of Mines of South Africa
- Indo Tambangraya Megah - Indonesia
- Agrawal Coal Company - India
- Australian Coal Association
- Madhucon Powers Ltd - India
- Kaltim Prima Coal - Indonesia
- VISA Power Limited - India
- Borneo Indobara - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Bhoruka Overseas - Indonesia
- Indian Energy Exchange, India
- Straits Asia Resources Limited - Singapore
- Directorate Of Revenue Intelligence - India
- Billiton Holdings Pty Ltd - Australia
- Savvy Resources Ltd - HongKong
- Kideco Jaya Agung - Indonesia
- Sakthi Sugars Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Ministry of Finance - Indonesia
- Kepco SPC Power Corporation, Philippines
- Pendopo Energi Batubara - Indonesia
- Eastern Coal Council - USA
- Malabar Cements Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- LBH Netherlands Bv - Netherlands
- TNB Fuel Sdn Bhd - Malaysia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Posco Energy - South Korea
- Kapuas Tunggal Persada - Indonesia
- Samtan Co., Ltd - South Korea
- Meenaskhi Energy Private Limited - India
- Barasentosa Lestari - Indonesia
- New Zealand Coal & Carbon
- Indonesian Coal Mining Association
- PNOC Exploration Corporation - Philippines
- Siam City Cement - Thailand
- Orica Mining Services - Indonesia
- Coastal Gujarat Power Limited - India
- Timah Investasi Mineral - Indoneisa
- SMC Global Power, Philippines
- Mercator Lines Limited - India
- TeaM Sual Corporation - Philippines
- Star Paper Mills Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Miang Besar Coal Terminal - Indonesia
- Romanian Commodities Exchange
- Dalmia Cement Bharat India
- Trasteel International SA, Italy
- Tamil Nadu electricity Board
- Semirara Mining and Power Corporation, Philippines
- Oldendorff Carriers - Singapore
- Altura Mining Limited, Indonesia
- Baramulti Group, Indonesia
- CNBM International Corporation - China
- OPG Power Generation Pvt Ltd - India
- Salva Resources Pvt Ltd - India
- Ambuja Cements Ltd - India
- Iligan Light & Power Inc, Philippines
- Attock Cement Pakistan Limited
- Petrochimia International Co. Ltd.- Taiwan
- Goldman Sachs - Singapore
- PowerSource Philippines DevCo
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- London Commodity Brokers - England
- McConnell Dowell - Australia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Maheswari Brothers Coal Limited - India
- Sojitz Corporation - Japan
- Asmin Koalindo Tuhup - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Minerals Council of Australia
- Vizag Seaport Private Limited - India
- Ind-Barath Power Infra Limited - India
- India Bulls Power Limited - India
- Therma Luzon, Inc, Philippines
- Manunggal Multi Energi - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Sarangani Energy Corporation, Philippines
- Edison Trading Spa - Italy
- Electricity Authority, New Zealand
- Aditya Birla Group - India
- Essar Steel Hazira Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Vedanta Resources Plc - India
- Bangladesh Power Developement Board
- Grasim Industreis Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Independent Power Producers Association of India
- Bharathi Cement Corporation - India
- AsiaOL BioFuels Corp., Philippines
- Electricity Generating Authority of Thailand
- Kobexindo Tractors - Indoneisa
- South Luzon Thermal Energy Corporation
- Semirara Mining Corp, Philippines
- Global Green Power PLC Corporation, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Bhushan Steel Limited - India
- Aboitiz Power Corporation - Philippines
- Commonwealth Bank - Australia
- White Energy Company Limited
- Banpu Public Company Limited - Thailand
- GMR Energy Limited - India
- Interocean Group of Companies - India
- Gujarat Sidhee Cement - India
- International Coal Ventures Pvt Ltd - India
- Australian Commodity Traders Exchange
- Alfred C Toepfer International GmbH - Germany
- Bulk Trading Sa - Switzerland
- Global Business Power Corporation, Philippines
- Mintek Dendrill Indonesia
- Jaiprakash Power Ventures ltd
- Bayan Resources Tbk. - Indonesia
- Indika Energy - Indonesia
- Deloitte Consulting - India
- Krishnapatnam Port Company Ltd. - India
- Holcim Trading Pte Ltd - Singapore
- Coalindo Energy - Indonesia
- The University of Queensland
- Indogreen Group - Indonesia
- Latin American Coal - Colombia
- Power Finance Corporation Ltd., India
- Planning Commission, India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Orica Australia Pty. Ltd.
- Heidelberg Cement - Germany
- Price Waterhouse Coopers - Russia
- Thiess Contractors Indonesia
- Metalloyd Limited - United Kingdom
- Merrill Lynch Commodities Europe
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Sical Logistics Limited - India
- Bhatia International Limited - India
- Uttam Galva Steels Limited - India
- ICICI Bank Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Cement Manufacturers Association - India
- Georgia Ports Authority, United States
- GAC Shipping (India) Pvt Ltd
- Bukit Makmur.PT - Indonesia
- Siam City Cement PLC, Thailand
- Wood Mackenzie - Singapore
- Chettinad Cement Corporation Ltd - India
- Medco Energi Mining Internasional
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- Bukit Asam (Persero) Tbk - Indonesia
- Lanco Infratech Ltd - India
- Marubeni Corporation - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Maharashtra Electricity Regulatory Commission - India
- Riau Bara Harum - Indonesia
- Eastern Energy - Thailand
- Economic Council, Georgia
- Simpson Spence & Young - Indonesia
- Singapore Mercantile Exchange
- Vijayanagar Sugar Pvt Ltd - India
- Toyota Tsusho Corporation, Japan
- Meralco Power Generation, Philippines
- Formosa Plastics Group - Taiwan
- Karaikal Port Pvt Ltd - India
- Anglo American - United Kingdom
- Rashtriya Ispat Nigam Limited - India
- Global Coal Blending Company Limited - Australia
- PTC India Limited - India
- Sindya Power Generating Company Private Ltd
- Bahari Cakrawala Sebuku - Indonesia
- Central Electricity Authority - India
- Energy Development Corp, Philippines
- Indian Oil Corporation Limited
- Bank of Tokyo Mitsubishi UFJ Ltd
- Jindal Steel & Power Ltd - India
- Mjunction Services Limited - India
- Makarim & Taira - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Petron Corporation, Philippines
- Parliament of New Zealand
- IHS Mccloskey Coal Group - USA
- Wilmar Investment Holdings
- Coal and Oil Company - UAE
- PetroVietnam Power Coal Import and Supply Company
- Thai Mozambique Logistica
- Port Waratah Coal Services - Australia
- Jorong Barutama Greston.PT - Indonesia
- Sree Jayajothi Cements Limited - India
- Larsen & Toubro Limited - India
- Ministry of Transport, Egypt
- San Jose City I Power Corp, Philippines
- GVK Power & Infra Limited - India
- Antam Resourcindo - Indonesia
- Tata Chemicals Ltd - India
- Ministry of Mines - Canada
- Central Java Power - Indonesia
- Rio Tinto Coal - Australia
- Intertek Mineral Services - Indonesia
- MS Steel International - UAE
- SMG Consultants - Indonesia
- Bukit Baiduri Energy - Indonesia
- The Treasury - Australian Government
- Parry Sugars Refinery, India
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