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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, 13 August 13
AUSTRALIA NEWCASTLE COAL EXPORTS JUMP 30.61 PERCENT ON WEEK
COALspot.com: Power plant and semi-soft coking coal shipments from Australia's Newcastle port up 30.61 per cent week on week to 2.95 million mt for ...
Monday, 12 August 13
GBCE SUCCESSFUL IN UPGRADING LOW RANK INDONESIAN COAL ON INDUSTRIAL SCALE
COALspot.com : GB Clean Energy Ltd. (GBCE) has annoused that, the company has successfully upgraded 2,426 tonnes of low rank 4,018 kcal NAR Ind ...
Monday, 12 August 13
INDIA - SAFE SHIPMENT OF IRON ORE FINES FROM INDIAN PORTS - WEST OF ENGLAND P&I CLUB
As Members may be aware, in 2009 two ships, the ‘Asian Forest’ and the ‘Black Rose’, capsized and sank following the liquefa ...
Sunday, 11 August 13
INDONESIAN COAL SWAPS : FLAT ON DAY
COALspot.com – Sub-Bit Indonesia coal swaps (FOB ) for average Q4 2013 delivery flat on day due to holidays in Indonesia, Malaysia & ...
Sunday, 11 August 13
SUPRAMAX FREIGHT RATES FROM INDONESIA TO INDIA CONTINUED TO BE SOFT - VISTAAR
COALspot.com : The freight market was soft this week with all indices down , the reason could be long weekend holidays in Indonesia, Singapore and M ...
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- Krishnapatnam Port Company Ltd. - India
- Africa Commodities Group - South Africa
- Karbindo Abesyapradhi - Indoneisa
- Bulk Trading Sa - Switzerland
- Intertek Mineral Services - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Mercuria Energy - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- PNOC Exploration Corporation - Philippines
- Pendopo Energi Batubara - Indonesia
- CIMB Investment Bank - Malaysia
- Bhoruka Overseas - Indonesia
- Altura Mining Limited, Indonesia
- PTC India Limited - India
- Vizag Seaport Private Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Electricity Generating Authority of Thailand
- ICICI Bank Limited - India
- White Energy Company Limited
- Coastal Gujarat Power Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Kartika Selabumi Mining - Indonesia
- Attock Cement Pakistan Limited
- Eastern Energy - Thailand
- Agrawal Coal Company - India
- Salva Resources Pvt Ltd - India
- Gujarat Sidhee Cement - India
- IHS Mccloskey Coal Group - USA
- Indo Tambangraya Megah - Indonesia
- India Bulls Power Limited - India
- Bhatia International Limited - India
- Alfred C Toepfer International GmbH - Germany
- Videocon Industries ltd - India
- Coalindo Energy - Indonesia
- Rio Tinto Coal - Australia
- Singapore Mercantile Exchange
- Bayan Resources Tbk. - Indonesia
- Sical Logistics Limited - India
- Vedanta Resources Plc - India
- Kepco SPC Power Corporation, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Straits Asia Resources Limited - Singapore
- Kalimantan Lumbung Energi - Indonesia
- Planning Commission, India
- Meralco Power Generation, Philippines
- London Commodity Brokers - England
- Sojitz Corporation - Japan
- Sakthi Sugars Limited - India
- Timah Investasi Mineral - Indoneisa
- Australian Coal Association
- Binh Thuan Hamico - Vietnam
- Ministry of Mines - Canada
- Goldman Sachs - Singapore
- Kumho Petrochemical, South Korea
- Ministry of Transport, Egypt
- Neyveli Lignite Corporation Ltd, - India
- Banpu Public Company Limited - Thailand
- Siam City Cement PLC, Thailand
- Energy Development Corp, Philippines
- San Jose City I Power Corp, Philippines
- Australian Commodity Traders Exchange
- Semirara Mining and Power Corporation, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- Malabar Cements Ltd - India
- European Bulk Services B.V. - Netherlands
- Latin American Coal - Colombia
- VISA Power Limited - India
- Trasteel International SA, Italy
- Thiess Contractors Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Georgia Ports Authority, United States
- Bukit Baiduri Energy - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Mintek Dendrill Indonesia
- Commonwealth Bank - Australia
- Global Green Power PLC Corporation, Philippines
- McConnell Dowell - Australia
- Thai Mozambique Logistica
- Kideco Jaya Agung - Indonesia
- Kaltim Prima Coal - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Global Coal Blending Company Limited - Australia
- Larsen & Toubro Limited - India
- MS Steel International - UAE
- Siam City Cement - Thailand
- Global Business Power Corporation, Philippines
- Orica Australia Pty. Ltd.
- Cigading International Bulk Terminal - Indonesia
- GVK Power & Infra Limited - India
- Therma Luzon, Inc, Philippines
- Tata Chemicals Ltd - India
- Baramulti Group, Indonesia
- Renaissance Capital - South Africa
- International Coal Ventures Pvt Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Petrochimia International Co. Ltd.- Taiwan
- Tamil Nadu electricity Board
- Cement Manufacturers Association - India
- The State Trading Corporation of India Ltd
- Edison Trading Spa - Italy
- South Luzon Thermal Energy Corporation
- Samtan Co., Ltd - South Korea
- New Zealand Coal & Carbon
- Ind-Barath Power Infra Limited - India
- Jaiprakash Power Ventures ltd
- Sarangani Energy Corporation, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Marubeni Corporation - India
- Heidelberg Cement - Germany
- Medco Energi Mining Internasional
- SMG Consultants - Indonesia
- Coal and Oil Company - UAE
- Mjunction Services Limited - India
- Gujarat Electricity Regulatory Commission - India
- Port Waratah Coal Services - Australia
- Wilmar Investment Holdings
- Economic Council, Georgia
- Makarim & Taira - Indonesia
- Manunggal Multi Energi - Indonesia
- Savvy Resources Ltd - HongKong
- Aditya Birla Group - India
- OPG Power Generation Pvt Ltd - India
- Bangladesh Power Developement Board
- Orica Mining Services - Indonesia
- Bukit Makmur.PT - Indonesia
- Deloitte Consulting - India
- Karaikal Port Pvt Ltd - India
- LBH Netherlands Bv - Netherlands
- Jindal Steel & Power Ltd - India
- Antam Resourcindo - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Bharathi Cement Corporation - India
- Parry Sugars Refinery, India
- Sree Jayajothi Cements Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Iligan Light & Power Inc, Philippines
- Kobexindo Tractors - Indoneisa
- Aboitiz Power Corporation - Philippines
- Wood Mackenzie - Singapore
- Uttam Galva Steels Limited - India
- The University of Queensland
- The Treasury - Australian Government
- Metalloyd Limited - United Kingdom
- Dalmia Cement Bharat India
- Posco Energy - South Korea
- Offshore Bulk Terminal Pte Ltd, Singapore
- CNBM International Corporation - China
- TeaM Sual Corporation - Philippines
- Sinarmas Energy and Mining - Indonesia
- Borneo Indobara - Indonesia
- Chettinad Cement Corporation Ltd - India
- Independent Power Producers Association of India
- Eastern Coal Council - USA
- GAC Shipping (India) Pvt Ltd
- Mercator Lines Limited - India
- Interocean Group of Companies - India
- Standard Chartered Bank - UAE
- Anglo American - United Kingdom
- Bhushan Steel Limited - India
- Indian Oil Corporation Limited
- Price Waterhouse Coopers - Russia
- Miang Besar Coal Terminal - Indonesia
- Xindia Steels Limited - India
- Ambuja Cements Ltd - India
- Energy Link Ltd, New Zealand
- Indian Energy Exchange, India
- Indika Energy - Indonesia
- Madhucon Powers Ltd - India
- SMC Global Power, Philippines
- Ministry of Finance - Indonesia
- PowerSource Philippines DevCo
- IEA Clean Coal Centre - UK
- Sindya Power Generating Company Private Ltd
- Leighton Contractors Pty Ltd - Australia
- Ceylon Electricity Board - Sri Lanka
- Barasentosa Lestari - Indonesia
- Indogreen Group - Indonesia
- Globalindo Alam Lestari - Indonesia
- Grasim Industreis Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Simpson Spence & Young - Indonesia
- Lanco Infratech Ltd - India
- Oldendorff Carriers - Singapore
- Formosa Plastics Group - Taiwan
- Kohat Cement Company Ltd. - Pakistan
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Central Java Power - Indonesia
- Electricity Authority, New Zealand
- Parliament of New Zealand
- Maheswari Brothers Coal Limited - India
- Power Finance Corporation Ltd., India
- ASAPP Information Group - India
- Indonesian Coal Mining Association
- SN Aboitiz Power Inc, Philippines
- Meenaskhi Energy Private Limited - India
- Star Paper Mills Limited - India
- Directorate Of Revenue Intelligence - India
- Essar Steel Hazira Ltd - India
- Holcim Trading Pte Ltd - Singapore
- Carbofer General Trading SA - India
- Chamber of Mines of South Africa
- Riau Bara Harum - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Romanian Commodities Exchange
- GMR Energy Limited - India
- Toyota Tsusho Corporation, Japan
- Directorate General of MIneral and Coal - Indonesia
- Central Electricity Authority - India
- Bukit Asam (Persero) Tbk - Indonesia
- Petron Corporation, Philippines
- Merrill Lynch Commodities Europe
- Minerals Council of Australia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Semirara Mining Corp, Philippines
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