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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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Monday, 07 October 13
SGX - CFR SOUTH CHINA COAL SWAPS END ALMOST FLAT
COALspot.com : SGX has launched API 8 CFR South China Coal Swap on 29 April 2013 and SGX replaced the previous swap.
API 8 CFR South China Coal s ...
Monday, 07 October 13
Q3'14 SUB-BIT FOB INDONESIA COAL SWAP CLOSED 6.53% HIGHER THAN Q4'13
COALspot.com – Sub-Bit Indonesia coal swap (FOB ) for average Q4 2013 delivery gained 0.53 % on day and fell 2.33 percept month on month ...
Sunday, 06 October 13
DRY BULK FREIGHT MARKET STAYS STEADY IN SPITE CHINESE HOLIDAYS - SOLYM CARRIERS SINGAPORE
COALspot.com: The freight market continued to remain firm in spite of Chinese holidays.
The BDI closed at 2,084 points on Friday 4 October or up ...
Saturday, 05 October 13
CAPESIZE EARNINGS SKYROCKET AS A RESULT OF INCREASED CHINA DEMAND - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
An increased iron ore demand has triggered this latest dry bulk rally, which could get yet another boost during next week, when China is expected to ...
Friday, 04 October 13
NICKEL ORE SHIPMENTS - LESSONS LEARNED FROM LOSSES
One of the most pressing problems for the bulk shipping industry is the safe carriage of nickel ore. The increasing demand for this commodity is fue ...
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- Asmin Koalindo Tuhup - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Aditya Birla Group - India
- Krishnapatnam Port Company Ltd. - India
- ICICI Bank Limited - India
- Indian Oil Corporation Limited
- Chamber of Mines of South Africa
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- Bank of Tokyo Mitsubishi UFJ Ltd
- GVK Power & Infra Limited - India
- Electricity Authority, New Zealand
- MS Steel International - UAE
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- Commonwealth Bank - Australia
- LBH Netherlands Bv - Netherlands
- Vijayanagar Sugar Pvt Ltd - India
- Heidelberg Cement - Germany
- Straits Asia Resources Limited - Singapore
- Kumho Petrochemical, South Korea
- Metalloyd Limited - United Kingdom
- Toyota Tsusho Corporation, Japan
- Agrawal Coal Company - India
- Formosa Plastics Group - Taiwan
- Samtan Co., Ltd - South Korea
- Independent Power Producers Association of India
- Global Green Power PLC Corporation, Philippines
- Carbofer General Trading SA - India
- SMC Global Power, Philippines
- Therma Luzon, Inc, Philippines
- Bangladesh Power Developement Board
- Timah Investasi Mineral - Indoneisa
- Gujarat Electricity Regulatory Commission - India
- Grasim Industreis Ltd - India
- Attock Cement Pakistan Limited
- Malabar Cements Ltd - India
- Billiton Holdings Pty Ltd - Australia
- The University of Queensland
- Bharathi Cement Corporation - India
- Planning Commission, India
- Global Coal Blending Company Limited - Australia
- Goldman Sachs - Singapore
- Thai Mozambique Logistica
- Gujarat Mineral Development Corp Ltd - India
- Price Waterhouse Coopers - Russia
- Eastern Energy - Thailand
- Altura Mining Limited, Indonesia
- The Treasury - Australian Government
- Offshore Bulk Terminal Pte Ltd, Singapore
- Trasteel International SA, Italy
- Jorong Barutama Greston.PT - Indonesia
- Kapuas Tunggal Persada - Indonesia
- White Energy Company Limited
- Videocon Industries ltd - India
- CIMB Investment Bank - Malaysia
- Central Electricity Authority - India
- OPG Power Generation Pvt Ltd - India
- Bayan Resources Tbk. - Indonesia
- Tata Chemicals Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- GMR Energy Limited - India
- Vizag Seaport Private Limited - India
- San Jose City I Power Corp, Philippines
- Marubeni Corporation - India
- Bhatia International Limited - India
- Kepco SPC Power Corporation, Philippines
- SMG Consultants - Indonesia
- IHS Mccloskey Coal Group - USA
- AsiaOL BioFuels Corp., Philippines
- Essar Steel Hazira Ltd - India
- Pendopo Energi Batubara - Indonesia
- Global Business Power Corporation, Philippines
- Intertek Mineral Services - Indonesia
- Baramulti Group, Indonesia
- Coal and Oil Company - UAE
- Port Waratah Coal Services - Australia
- Borneo Indobara - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Indo Tambangraya Megah - Indonesia
- Riau Bara Harum - Indonesia
- Dalmia Cement Bharat India
- Semirara Mining and Power Corporation, Philippines
- Ministry of Finance - Indonesia
- Coastal Gujarat Power Limited - India
- Jaiprakash Power Ventures ltd
- Minerals Council of Australia
- Bulk Trading Sa - Switzerland
- Bahari Cakrawala Sebuku - Indonesia
- Iligan Light & Power Inc, Philippines
- Indian Energy Exchange, India
- Semirara Mining Corp, Philippines
- PetroVietnam Power Coal Import and Supply Company
- VISA Power Limited - India
- Thiess Contractors Indonesia
- Wood Mackenzie - Singapore
- Georgia Ports Authority, United States
- Manunggal Multi Energi - Indonesia
- South Luzon Thermal Energy Corporation
- Indogreen Group - Indonesia
- Singapore Mercantile Exchange
- Renaissance Capital - South Africa
- Economic Council, Georgia
- Mintek Dendrill Indonesia
- Kaltim Prima Coal - Indonesia
- Romanian Commodities Exchange
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- New Zealand Coal & Carbon
- TeaM Sual Corporation - Philippines
- Lanco Infratech Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Parry Sugars Refinery, India
- Anglo American - United Kingdom
- Ind-Barath Power Infra Limited - India
- Larsen & Toubro Limited - India
- Rio Tinto Coal - Australia
- Kideco Jaya Agung - Indonesia
- Tamil Nadu electricity Board
- Petrochimia International Co. Ltd.- Taiwan
- Directorate General of MIneral and Coal - Indonesia
- PNOC Exploration Corporation - Philippines
- Sindya Power Generating Company Private Ltd
- SN Aboitiz Power Inc, Philippines
- Deloitte Consulting - India
- Sical Logistics Limited - India
- Gujarat Sidhee Cement - India
- Neyveli Lignite Corporation Ltd, - India
- Sojitz Corporation - Japan
- Chettinad Cement Corporation Ltd - India
- European Bulk Services B.V. - Netherlands
- India Bulls Power Limited - India
- International Coal Ventures Pvt Ltd - India
- Globalindo Alam Lestari - Indonesia
- Ambuja Cements Ltd - India
- Latin American Coal - Colombia
- Cigading International Bulk Terminal - Indonesia
- ASAPP Information Group - India
- McConnell Dowell - Australia
- Sakthi Sugars Limited - India
- Mercuria Energy - Indonesia
- Aboitiz Power Corporation - Philippines
- Cement Manufacturers Association - India
- Ceylon Electricity Board - Sri Lanka
- Ministry of Mines - Canada
- Vedanta Resources Plc - India
- Binh Thuan Hamico - Vietnam
- Central Java Power - Indonesia
- Africa Commodities Group - South Africa
- London Commodity Brokers - England
- Banpu Public Company Limited - Thailand
- Pipit Mutiara Jaya. PT, Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Orica Mining Services - Indonesia
- Edison Trading Spa - Italy
- Meralco Power Generation, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Wilmar Investment Holdings
- Madhucon Powers Ltd - India
- Parliament of New Zealand
- Coalindo Energy - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Indonesian Coal Mining Association
- Ministry of Transport, Egypt
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Energy Link Ltd, New Zealand
- PowerSource Philippines DevCo
- Indika Energy - Indonesia
- Maheswari Brothers Coal Limited - India
- Xindia Steels Limited - India
- Medco Energi Mining Internasional
- Petron Corporation, Philippines
- Australian Coal Association
- Merrill Lynch Commodities Europe
- Siam City Cement PLC, Thailand
- Leighton Contractors Pty Ltd - Australia
- Mercator Lines Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- CNBM International Corporation - China
- Australian Commodity Traders Exchange
- Orica Australia Pty. Ltd.
- Kartika Selabumi Mining - Indonesia
- Savvy Resources Ltd - HongKong
- Holcim Trading Pte Ltd - Singapore
- Eastern Coal Council - USA
- Alfred C Toepfer International GmbH - Germany
- GAC Shipping (India) Pvt Ltd
- Electricity Generating Authority of Thailand
- Kohat Cement Company Ltd. - Pakistan
- Posco Energy - South Korea
- Sarangani Energy Corporation, Philippines
- Kobexindo Tractors - Indoneisa
- Oldendorff Carriers - Singapore
- Interocean Group of Companies - India
- Jindal Steel & Power Ltd - India
- Sree Jayajothi Cements Limited - India
- Makarim & Taira - Indonesia
- Karaikal Port Pvt Ltd - India
- Bhushan Steel Limited - India
- Siam City Cement - Thailand
- Maharashtra Electricity Regulatory Commission - India
- Energy Development Corp, Philippines
- Antam Resourcindo - Indonesia
- Mjunction Services Limited - India
- Directorate Of Revenue Intelligence - India
- Standard Chartered Bank - UAE
- Bukit Baiduri Energy - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Salva Resources Pvt Ltd - India
- Uttam Galva Steels Limited - India
- Bukit Makmur.PT - Indonesia
- Bhoruka Overseas - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- The State Trading Corporation of India Ltd
- Star Paper Mills Limited - India
- Meenaskhi Energy Private Limited - India
- PTC India Limited - India
- IEA Clean Coal Centre - UK
- Simpson Spence & Young - Indonesia
- Kalimantan Lumbung Energi - Indonesia
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