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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$77/t for thermal coal in 2013, then 45mt or 13% of Australia's coal exports in 2013 will be at risk of closure. At that price, a total of 204mt of production will be suffering negative margins.
In summary, Mr. Tanevski says, "Our expectation is that there will not be a significant dent in Australia's production this year. However, if prices do fall below expectations, the risk of closure for mines producing at negative margins will increase, reducing output."
Editor's notes:
Wood Mackenzie is the most comprehensive source of knowledge about the world's energy and metals industries. We analyse and advise on every stage along the value chain - from discovery to delivery, and beyond - to provide clients with the commercial insight that makes them stronger. For more information visit Wood Mackenzie.
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Tuesday, 27 August 13
AUSTRALIA NEWCASTLE COAL EXPORTS JUMPED 15.59 PERCENT ON WEEK
COALspot.com: Power plant and semi-soft coking coal shipments from Australia's Newcastle port up 15.59 per cent week on week to 2.76 million mt for ...
Monday, 26 August 13
CARRIAGE OF COAL CARGOES FROM KALIMANTAN, INDONESIA - WEST OF ENGLAND P&I CLUB
The Club has recently been advised by consulting scientists and engineers Dr J H Burgoyne and Partners (International) Limited that the number of in ...
Sunday, 25 August 13
API 8 CFR SOUTH CHINA COAL: HEADING TO NORTH
COALspot.com – Sub-Bit Indonesia coal swaps (FOB ) for average Q4 2013 delivery US$ 2.39 up month on month. The swap was moved positive ...
Sunday, 25 August 13
THE FREIGHT MARKET S7 & S8 SECTOR IS EXPECTED TO BE STEADY/FIRM NEXT WEEK - VISTAAR
COALspot.com - The freight market continued to be firm with all indices moved positive except for Panamax which was slightly down (2 pct down).
T ...
Friday, 23 August 13
US PRODUCED MORE COAL WEEK ON WEEK - EIA
COALspot.com – United states the world’s second largest coal producer produced totaled approximately 20.80 million short tons (mmst) of ...
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- Parry Sugars Refinery, India
- Orica Mining Services - Indonesia
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- Aditya Birla Group - India
- Kalimantan Lumbung Energi - Indonesia
- SMG Consultants - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Global Coal Blending Company Limited - Australia
- Vedanta Resources Plc - India
- Directorate Of Revenue Intelligence - India
- Iligan Light & Power Inc, Philippines
- White Energy Company Limited
- Standard Chartered Bank - UAE
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- Metalloyd Limited - United Kingdom
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- AsiaOL BioFuels Corp., Philippines
- Australian Coal Association
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- Thai Mozambique Logistica
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- Independent Power Producers Association of India
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- Wood Mackenzie - Singapore
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- Asia Pacific Energy Resources Ventures Inc, Philippines
- PowerSource Philippines DevCo
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- Coalindo Energy - Indonesia
- Marubeni Corporation - India
- Interocean Group of Companies - India
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- Dalmia Cement Bharat India
- Grasim Industreis Ltd - India
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- SN Aboitiz Power Inc, Philippines
- Orica Australia Pty. Ltd.
- TeaM Sual Corporation - Philippines
- Vijayanagar Sugar Pvt Ltd - India
- IHS Mccloskey Coal Group - USA
- Meenaskhi Energy Private Limited - India
- Sojitz Corporation - Japan
- Bhushan Steel Limited - India
- Kumho Petrochemical, South Korea
- Madhucon Powers Ltd - India
- Borneo Indobara - Indonesia
- Electricity Authority, New Zealand
- Samtan Co., Ltd - South Korea
- Xindia Steels Limited - India
- PTC India Limited - India
- Gujarat Mineral Development Corp Ltd - India
- London Commodity Brokers - England
- Manunggal Multi Energi - Indonesia
- Indogreen Group - Indonesia
- Merrill Lynch Commodities Europe
- Bharathi Cement Corporation - India
- San Jose City I Power Corp, Philippines
- Chamber of Mines of South Africa
- Mintek Dendrill Indonesia
- The State Trading Corporation of India Ltd
- Commonwealth Bank - Australia
- Ceylon Electricity Board - Sri Lanka
- Sree Jayajothi Cements Limited - India
- GN Power Mariveles Coal Plant, Philippines
- European Bulk Services B.V. - Netherlands
- Ministry of Finance - Indonesia
- GMR Energy Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Billiton Holdings Pty Ltd - Australia
- India Bulls Power Limited - India
- The University of Queensland
- Posco Energy - South Korea
- Africa Commodities Group - South Africa
- Port Waratah Coal Services - Australia
- Energy Development Corp, Philippines
- Sical Logistics Limited - India
- SMC Global Power, Philippines
- Essar Steel Hazira Ltd - India
- Rashtriya Ispat Nigam Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Ind-Barath Power Infra Limited - India
- Economic Council, Georgia
- Meralco Power Generation, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Kobexindo Tractors - Indoneisa
- Attock Cement Pakistan Limited
- Global Green Power PLC Corporation, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Bank of Tokyo Mitsubishi UFJ Ltd
- MS Steel International - UAE
- Siam City Cement - Thailand
- Australian Commodity Traders Exchange
- Pipit Mutiara Jaya. PT, Indonesia
- Tamil Nadu electricity Board
- Makarim & Taira - Indonesia
- Sarangani Energy Corporation, Philippines
- Price Waterhouse Coopers - Russia
- McConnell Dowell - Australia
- Holcim Trading Pte Ltd - Singapore
- CNBM International Corporation - China
- Intertek Mineral Services - Indonesia
- Mjunction Services Limited - India
- Kartika Selabumi Mining - Indonesia
- Eastern Energy - Thailand
- Lanco Infratech Ltd - India
- Jaiprakash Power Ventures ltd
- Renaissance Capital - South Africa
- Neyveli Lignite Corporation Ltd, - India
- Banpu Public Company Limited - Thailand
- Bukit Asam (Persero) Tbk - Indonesia
- Wilmar Investment Holdings
- Maheswari Brothers Coal Limited - India
- Singapore Mercantile Exchange
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Bangladesh Power Developement Board
- Kohat Cement Company Ltd. - Pakistan
- Rio Tinto Coal - Australia
- Trasteel International SA, Italy
- Karaikal Port Pvt Ltd - India
- Coal and Oil Company - UAE
- Bhatia International Limited - India
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- Global Business Power Corporation, Philippines
- OPG Power Generation Pvt Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Star Paper Mills Limited - India
- Aboitiz Power Corporation - Philippines
- Binh Thuan Hamico - Vietnam
- Kapuas Tunggal Persada - Indonesia
- Chettinad Cement Corporation Ltd - India
- Minerals Council of Australia
- Ministry of Mines - Canada
- TNB Fuel Sdn Bhd - Malaysia
- Semirara Mining and Power Corporation, Philippines
- Eastern Coal Council - USA
- Ministry of Transport, Egypt
- Indika Energy - Indonesia
- Globalindo Alam Lestari - Indonesia
- Simpson Spence & Young - Indonesia
- The Treasury - Australian Government
- ASAPP Information Group - India
- Therma Luzon, Inc, Philippines
- Jindal Steel & Power Ltd - India
- Timah Investasi Mineral - Indoneisa
- Bukit Baiduri Energy - Indonesia
- New Zealand Coal & Carbon
- Edison Trading Spa - Italy
- Barasentosa Lestari - Indonesia
- Cement Manufacturers Association - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Semirara Mining Corp, Philippines
- Gujarat Sidhee Cement - India
- Vizag Seaport Private Limited - India
- Central Java Power - Indonesia
- IEA Clean Coal Centre - UK
- LBH Netherlands Bv - Netherlands
- Uttam Galva Steels Limited - India
- Toyota Tsusho Corporation, Japan
- Malabar Cements Ltd - India
- Anglo American - United Kingdom
- Gujarat Electricity Regulatory Commission - India
- Straits Asia Resources Limited - Singapore
- Sakthi Sugars Limited - India
- Mercuria Energy - Indonesia
- Heidelberg Cement - Germany
- Petron Corporation, Philippines
- GVK Power & Infra Limited - India
- Parliament of New Zealand
- Savvy Resources Ltd - HongKong
- Krishnapatnam Port Company Ltd. - India
- Indian Energy Exchange, India
- Medco Energi Mining Internasional
- Agrawal Coal Company - India
- Deloitte Consulting - India
- Maharashtra Electricity Regulatory Commission - India
- Mercator Lines Limited - India
- Bulk Trading Sa - Switzerland
- Salva Resources Pvt Ltd - India
- Larsen & Toubro Limited - India
- Kideco Jaya Agung - Indonesia
- International Coal Ventures Pvt Ltd - India
- Energy Link Ltd, New Zealand
- ICICI Bank Limited - India
- CIMB Investment Bank - Malaysia
- Oldendorff Carriers - Singapore
- Ambuja Cements Ltd - India
- Georgia Ports Authority, United States
- Goldman Sachs - Singapore
- Thiess Contractors Indonesia
- Indonesian Coal Mining Association
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- Planning Commission, India
- Cigading International Bulk Terminal - Indonesia
- Power Finance Corporation Ltd., India
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- Indian Oil Corporation Limited
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- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Romanian Commodities Exchange
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- Baramulti Group, Indonesia
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- Alfred C Toepfer International GmbH - Germany
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