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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$77/t for thermal coal in 2013, then 45mt or 13% of Australia's coal exports in 2013 will be at risk of closure. At that price, a total of 204mt of production will be suffering negative margins.
In summary, Mr. Tanevski says, "Our expectation is that there will not be a significant dent in Australia's production this year. However, if prices do fall below expectations, the risk of closure for mines producing at negative margins will increase, reducing output."
Editor's notes:
Wood Mackenzie is the most comprehensive source of knowledge about the world's energy and metals industries. We analyse and advise on every stage along the value chain - from discovery to delivery, and beyond - to provide clients with the commercial insight that makes them stronger. For more information visit Wood Mackenzie.
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Friday, 04 October 13
US COAL PRODUCTION UP 2.1% WEEK ON WEEK - EIA
COALspot.com – United States the world’s second largest coal producer produced approximately 19.70 million short tons (mmst) of coal in ...
Thursday, 03 October 13
INDONESIA AUGUST COAL EXPORTS FALL 12.90 % FROM JULY TO 30.71 MIL MT
COALspot.com: Indonesia, the 15th largest economy in world, 4th largest coal producer in world and world's largest multi grade coal exporter ...
Thursday, 03 October 13
TOP FOUR U.S. COAL COMPANIES SUPPLIED MORE THAN HALF OF U.S. COAL PRODUCTION IN 2011 - EIA
In the past two years, more than half of U.S. coal production was attributable to the top four coal producers, the result of changes in regional pro ...
Thursday, 03 October 13
HANDY: PERIOD MARKET STAND IN GOOD POSITION - FEARNRESEARCH
Handy
Nickel ore and Bauxite was active last week but slowed down now due to Chinese holidays. Ships opened in North China fixed at US$ 11-13k leve ...
Wednesday, 02 October 13
DRY BULK MARKET IS STILL MAINTAINING ITS UPWARD DIRECTION
Chartering (Wet: Stable- / Dry: Firm+)
Despite the fact that rates for Capes didn't continue their crazy ride this past week, the Dry Bulk market ...
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- VISA Power Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Indogreen Group - Indonesia
- Siam City Cement - Thailand
- Chamber of Mines of South Africa
- Energy Link Ltd, New Zealand
- Krishnapatnam Port Company Ltd. - India
- Madhucon Powers Ltd - India
- Savvy Resources Ltd - HongKong
- Gujarat Sidhee Cement - India
- Kobexindo Tractors - Indoneisa
- SN Aboitiz Power Inc, Philippines
- ICICI Bank Limited - India
- Semirara Mining and Power Corporation, Philippines
- Commonwealth Bank - Australia
- Wilmar Investment Holdings
- Global Business Power Corporation, Philippines
- Energy Development Corp, Philippines
- Kapuas Tunggal Persada - Indonesia
- Larsen & Toubro Limited - India
- Videocon Industries ltd - India
- Siam City Cement PLC, Thailand
- Dalmia Cement Bharat India
- Australian Coal Association
- Binh Thuan Hamico - Vietnam
- Bukit Makmur.PT - Indonesia
- Rio Tinto Coal - Australia
- ASAPP Information Group - India
- Intertek Mineral Services - Indonesia
- Manunggal Multi Energi - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Eastern Coal Council - USA
- Riau Bara Harum - Indonesia
- Vedanta Resources Plc - India
- Jorong Barutama Greston.PT - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- SMG Consultants - Indonesia
- Ind-Barath Power Infra Limited - India
- Anglo American - United Kingdom
- CIMB Investment Bank - Malaysia
- Central Electricity Authority - India
- Aditya Birla Group - India
- Cement Manufacturers Association - India
- Bayan Resources Tbk. - Indonesia
- Africa Commodities Group - South Africa
- IHS Mccloskey Coal Group - USA
- Renaissance Capital - South Africa
- Medco Energi Mining Internasional
- Economic Council, Georgia
- Iligan Light & Power Inc, Philippines
- Interocean Group of Companies - India
- Bhushan Steel Limited - India
- Salva Resources Pvt Ltd - India
- MS Steel International - UAE
- Minerals Council of Australia
- Goldman Sachs - Singapore
- Jaiprakash Power Ventures ltd
- Indonesian Coal Mining Association
- Aboitiz Power Corporation - Philippines
- Cigading International Bulk Terminal - Indonesia
- India Bulls Power Limited - India
- Singapore Mercantile Exchange
- Therma Luzon, Inc, Philippines
- OPG Power Generation Pvt Ltd - India
- Latin American Coal - Colombia
- Bahari Cakrawala Sebuku - Indonesia
- Baramulti Group, Indonesia
- Sindya Power Generating Company Private Ltd
- Tata Chemicals Ltd - India
- Borneo Indobara - Indonesia
- TeaM Sual Corporation - Philippines
- Altura Mining Limited, Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Metalloyd Limited - United Kingdom
- Standard Chartered Bank - UAE
- Bharathi Cement Corporation - India
- Orica Mining Services - Indonesia
- Lanco Infratech Ltd - India
- Merrill Lynch Commodities Europe
- Makarim & Taira - Indonesia
- Meralco Power Generation, Philippines
- Miang Besar Coal Terminal - Indonesia
- The University of Queensland
- Simpson Spence & Young - Indonesia
- Deloitte Consulting - India
- The State Trading Corporation of India Ltd
- Ministry of Transport, Egypt
- Wood Mackenzie - Singapore
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Trasteel International SA, Italy
- Maharashtra Electricity Regulatory Commission - India
- IEA Clean Coal Centre - UK
- Star Paper Mills Limited - India
- LBH Netherlands Bv - Netherlands
- Agrawal Coal Company - India
- GN Power Mariveles Coal Plant, Philippines
- International Coal Ventures Pvt Ltd - India
- GVK Power & Infra Limited - India
- Xindia Steels Limited - India
- Malabar Cements Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Mjunction Services Limited - India
- Bangladesh Power Developement Board
- Maheswari Brothers Coal Limited - India
- GMR Energy Limited - India
- Bukit Baiduri Energy - Indonesia
- Kumho Petrochemical, South Korea
- Georgia Ports Authority, United States
- Essar Steel Hazira Ltd - India
- Price Waterhouse Coopers - Russia
- Timah Investasi Mineral - Indoneisa
- Ministry of Mines - Canada
- Alfred C Toepfer International GmbH - Germany
- Grasim Industreis Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- Semirara Mining Corp, Philippines
- Edison Trading Spa - Italy
- Ambuja Cements Ltd - India
- Indo Tambangraya Megah - Indonesia
- Ministry of Finance - Indonesia
- Thai Mozambique Logistica
- Billiton Holdings Pty Ltd - Australia
- Attock Cement Pakistan Limited
- Power Finance Corporation Ltd., India
- Coal and Oil Company - UAE
- PNOC Exploration Corporation - Philippines
- Rashtriya Ispat Nigam Limited - India
- Coastal Gujarat Power Limited - India
- Banpu Public Company Limited - Thailand
- London Commodity Brokers - England
- Pendopo Energi Batubara - Indonesia
- Kaltim Prima Coal - Indonesia
- Heidelberg Cement - Germany
- South Luzon Thermal Energy Corporation
- TNB Fuel Sdn Bhd - Malaysia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Sarangani Energy Corporation, Philippines
- Tamil Nadu electricity Board
- Karaikal Port Pvt Ltd - India
- Sakthi Sugars Limited - India
- Indian Oil Corporation Limited
- Electricity Authority, New Zealand
- Formosa Plastics Group - Taiwan
- Gujarat Electricity Regulatory Commission - India
- Kideco Jaya Agung - Indonesia
- Electricity Generating Authority of Thailand
- Gujarat Mineral Development Corp Ltd - India
- Sree Jayajothi Cements Limited - India
- White Energy Company Limited
- Chettinad Cement Corporation Ltd - India
- Mintek Dendrill Indonesia
- Indian Energy Exchange, India
- Ceylon Electricity Board - Sri Lanka
- San Jose City I Power Corp, Philippines
- Vizag Seaport Private Limited - India
- Jindal Steel & Power Ltd - India
- Leighton Contractors Pty Ltd - Australia
- European Bulk Services B.V. - Netherlands
- Romanian Commodities Exchange
- Coalindo Energy - Indonesia
- Kartika Selabumi Mining - Indonesia
- Petron Corporation, Philippines
- Sojitz Corporation - Japan
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Globalindo Alam Lestari - Indonesia
- Bhatia International Limited - India
- Eastern Energy - Thailand
- Mercuria Energy - Indonesia
- Parliament of New Zealand
- McConnell Dowell - Australia
- Holcim Trading Pte Ltd - Singapore
- Marubeni Corporation - India
- Oldendorff Carriers - Singapore
- Global Green Power PLC Corporation, Philippines
- Port Waratah Coal Services - Australia
- Directorate Of Revenue Intelligence - India
- Posco Energy - South Korea
- Independent Power Producers Association of India
- GAC Shipping (India) Pvt Ltd
- Antam Resourcindo - Indonesia
- Sinarmas Energy and Mining - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Bulk Trading Sa - Switzerland
- Planning Commission, India
- Meenaskhi Energy Private Limited - India
- PTC India Limited - India
- Kepco SPC Power Corporation, Philippines
- Sical Logistics Limited - India
- Mercator Lines Limited - India
- PowerSource Philippines DevCo
- Samtan Co., Ltd - South Korea
- Uttam Galva Steels Limited - India
- Global Coal Blending Company Limited - Australia
- Asmin Koalindo Tuhup - Indonesia
- New Zealand Coal & Carbon
- Kohat Cement Company Ltd. - Pakistan
- Bhoruka Overseas - Indonesia
- Thiess Contractors Indonesia
- The Treasury - Australian Government
- SMC Global Power, Philippines
- Indika Energy - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Bank of Tokyo Mitsubishi UFJ Ltd
- Parry Sugars Refinery, India
- Central Java Power - Indonesia
- Carbofer General Trading SA - India
- AsiaOL BioFuels Corp., Philippines
- Orica Australia Pty. Ltd.
- Kalimantan Lumbung Energi - Indonesia
- CNBM International Corporation - China
- Australian Commodity Traders Exchange
- Barasentosa Lestari - Indonesia
- Toyota Tsusho Corporation, Japan
- Straits Asia Resources Limited - Singapore
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