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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$77/t for thermal coal in 2013, then 45mt or 13% of Australia's coal exports in 2013 will be at risk of closure. At that price, a total of 204mt of production will be suffering negative margins.
In summary, Mr. Tanevski says, "Our expectation is that there will not be a significant dent in Australia's production this year. However, if prices do fall below expectations, the risk of closure for mines producing at negative margins will increase, reducing output."
Editor's notes:
Wood Mackenzie is the most comprehensive source of knowledge about the world's energy and metals industries. We analyse and advise on every stage along the value chain - from discovery to delivery, and beyond - to provide clients with the commercial insight that makes them stronger. For more information visit Wood Mackenzie.
Views expressed herein are personal views of the author and not that of COALspot.com and subject to COALspot.com's disclaimer clause. We welcome article submissions from experts in the areas of coal, mining, shipping, etc. To submit your articles please click here.
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Tuesday, 15 October 13
CHINA COAL IMPORTS TO KEEP GROWING IN THE YEARS TO COME, ALBEIT AT A SLOWER RATE - EVA TZIMA / NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
In its latest monthly report, shipbroker Intermodal highlighted the growing role of coal in the energy mix. According to Intermodal's research anal ...
Tuesday, 15 October 13
NEWCASTLE PORT SHIPPED 6.50% MORE COAL W-O-W
COALspot.com: Power plant and semi-soft coking coal shipments from Australia's Newcastle port up 6.50 per cent week on week to 3.19 million mt for ...
Monday, 14 October 13
MEMR OF INDONESIA SETS THE COAL'S SPOT PRICE AT US$ 76.61 FOR OCT'13 DELIVERY
COALspot. com - The Indonesian government has revised down government declared coal bench mark price by US$ 0.28/ MT to US$ 76.61 for October 2013 d ...
Monday, 14 October 13
CARBON POLICIES UNLIKELY TO PREVENT A COAL-FUELLED WORLD - WOOD MACKENZIE
China will propel coal growth but US, Europe and Asia will sustain global demand.
At the World Energy Congress (WEC) today Wood Mackenzie's Pres ...
Sunday, 13 October 13
Q4'13 DELIVERY SUB-BIT INDO COAL SWAP FALLS SEVEN STRAIGHT WEEK
COALspot.com – Sub-Bit Indonesia coal swap (FOB ) for average Q4 2013 delivery fell 1.72 percept month on month on Friday 11 October 201 ...
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- Oldendorff Carriers - Singapore
- Karbindo Abesyapradhi - Indoneisa
- Gujarat Electricity Regulatory Commission - India
- Bukit Makmur.PT - Indonesia
- Electricity Generating Authority of Thailand
- Eastern Coal Council - USA
- Uttam Galva Steels Limited - India
- Rashtriya Ispat Nigam Limited - India
- Therma Luzon, Inc, Philippines
- Goldman Sachs - Singapore
- Trasteel International SA, Italy
- Tata Chemicals Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Rio Tinto Coal - Australia
- Orica Mining Services - Indonesia
- Indika Energy - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Timah Investasi Mineral - Indoneisa
- SMG Consultants - Indonesia
- GMR Energy Limited - India
- Anglo American - United Kingdom
- Straits Asia Resources Limited - Singapore
- Planning Commission, India
- Cement Manufacturers Association - India
- Parliament of New Zealand
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- Chamber of Mines of South Africa
- Ministry of Mines - Canada
- Siam City Cement PLC, Thailand
- South Luzon Thermal Energy Corporation
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- Offshore Bulk Terminal Pte Ltd, Singapore
- Bank of Tokyo Mitsubishi UFJ Ltd
- Kumho Petrochemical, South Korea
- Parry Sugars Refinery, India
- Eastern Energy - Thailand
- The Treasury - Australian Government
- IHS Mccloskey Coal Group - USA
- Kartika Selabumi Mining - Indonesia
- Aboitiz Power Corporation - Philippines
- Sree Jayajothi Cements Limited - India
- Coal and Oil Company - UAE
- Billiton Holdings Pty Ltd - Australia
- Metalloyd Limited - United Kingdom
- Wilmar Investment Holdings
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- Vedanta Resources Plc - India
- Makarim & Taira - Indonesia
- Formosa Plastics Group - Taiwan
- Kohat Cement Company Ltd. - Pakistan
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- The State Trading Corporation of India Ltd
- Baramulti Group, Indonesia
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- Banpu Public Company Limited - Thailand
- Antam Resourcindo - Indonesia
- Attock Cement Pakistan Limited
- PTC India Limited - India
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- Mercator Lines Limited - India
- Ind-Barath Power Infra Limited - India
- PowerSource Philippines DevCo
- CIMB Investment Bank - Malaysia
- Kaltim Prima Coal - Indonesia
- Jaiprakash Power Ventures ltd
- Agrawal Coal Company - India
- Madhucon Powers Ltd - India
- MS Steel International - UAE
- Indian Energy Exchange, India
- Jorong Barutama Greston.PT - Indonesia
- Toyota Tsusho Corporation, Japan
- Sakthi Sugars Limited - India
- Siam City Cement - Thailand
- Bukit Baiduri Energy - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Gujarat Sidhee Cement - India
- Maharashtra Electricity Regulatory Commission - India
- Electricity Authority, New Zealand
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Kideco Jaya Agung - Indonesia
- Savvy Resources Ltd - HongKong
- Commonwealth Bank - Australia
- Semirara Mining and Power Corporation, Philippines
- Romanian Commodities Exchange
- Global Business Power Corporation, Philippines
- Wood Mackenzie - Singapore
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Carbofer General Trading SA - India
- Posco Energy - South Korea
- Ministry of Transport, Egypt
- Indogreen Group - Indonesia
- IEA Clean Coal Centre - UK
- Global Coal Blending Company Limited - Australia
- Indonesian Coal Mining Association
- Samtan Co., Ltd - South Korea
- Coastal Gujarat Power Limited - India
- European Bulk Services B.V. - Netherlands
- CNBM International Corporation - China
- Jindal Steel & Power Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Manunggal Multi Energi - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Renaissance Capital - South Africa
- Pendopo Energi Batubara - Indonesia
- Thai Mozambique Logistica
- Kepco SPC Power Corporation, Philippines
- Latin American Coal - Colombia
- Merrill Lynch Commodities Europe
- Independent Power Producers Association of India
- Xindia Steels Limited - India
- Ministry of Finance - Indonesia
- Barasentosa Lestari - Indonesia
- Mintek Dendrill Indonesia
- Global Green Power PLC Corporation, Philippines
- Iligan Light & Power Inc, Philippines
- White Energy Company Limited
- Thiess Contractors Indonesia
- Altura Mining Limited, Indonesia
- Power Finance Corporation Ltd., India
- Borneo Indobara - Indonesia
- LBH Netherlands Bv - Netherlands
- Malabar Cements Ltd - India
- New Zealand Coal & Carbon
- Bangladesh Power Developement Board
- Bukit Asam (Persero) Tbk - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Central Electricity Authority - India
- Heidelberg Cement - Germany
- Globalindo Alam Lestari - Indonesia
- Georgia Ports Authority, United States
- AsiaOL BioFuels Corp., Philippines
- ASAPP Information Group - India
- Semirara Mining Corp, Philippines
- Energy Link Ltd, New Zealand
- VISA Power Limited - India
- Bharathi Cement Corporation - India
- Edison Trading Spa - Italy
- Medco Energi Mining Internasional
- Ceylon Electricity Board - Sri Lanka
- Coalindo Energy - Indonesia
- London Commodity Brokers - England
- Vizag Seaport Private Limited - India
- Riau Bara Harum - Indonesia
- The University of Queensland
- Meralco Power Generation, Philippines
- Indo Tambangraya Megah - Indonesia
- Minerals Council of Australia
- Australian Commodity Traders Exchange
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Vijayanagar Sugar Pvt Ltd - India
- Energy Development Corp, Philippines
- Kobexindo Tractors - Indoneisa
- SN Aboitiz Power Inc, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Sical Logistics Limited - India
- Interocean Group of Companies - India
- Cigading International Bulk Terminal - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Meenaskhi Energy Private Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- ICICI Bank Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Maheswari Brothers Coal Limited - India
- Sojitz Corporation - Japan
- Petron Corporation, Philippines
- PNOC Exploration Corporation - Philippines
- San Jose City I Power Corp, Philippines
- Australian Coal Association
- Videocon Industries ltd - India
- TeaM Sual Corporation - Philippines
- Holcim Trading Pte Ltd - Singapore
- Africa Commodities Group - South Africa
- India Bulls Power Limited - India
- Chettinad Cement Corporation Ltd - India
- Bulk Trading Sa - Switzerland
- Sarangani Energy Corporation, Philippines
- Indian Oil Corporation Limited
- Bahari Cakrawala Sebuku - Indonesia
- Simpson Spence & Young - Indonesia
- Binh Thuan Hamico - Vietnam
- Sindya Power Generating Company Private Ltd
- Standard Chartered Bank - UAE
- Port Waratah Coal Services - Australia
- Intertek Mineral Services - Indonesia
- International Coal Ventures Pvt Ltd - India
- Ambuja Cements Ltd - India
- GAC Shipping (India) Pvt Ltd
- Directorate Of Revenue Intelligence - India
- Bhushan Steel Limited - India
- Salva Resources Pvt Ltd - India
- Orica Australia Pty. Ltd.
- Tamil Nadu electricity Board
- Bayan Resources Tbk. - Indonesia
- SMC Global Power, Philippines
- GN Power Mariveles Coal Plant, Philippines
- McConnell Dowell - Australia
- Star Paper Mills Limited - India
- Marubeni Corporation - India
- Kapuas Tunggal Persada - Indonesia
- Economic Council, Georgia
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- Bhoruka Overseas - Indonesia
- Singapore Mercantile Exchange
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