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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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Wednesday, 07 August 13
HANDIES : FINDING IT DIFFICULT TO SUSTAIN THEIR PREVIOUS LEVELS - KONSTANTINOS KONTOMICHIS
Broker's insight
by Konstantinos Kontomichis,
SnP Broker
Entering the most predictable month of the year, as expected the seasonal effects ha ...
Tuesday, 06 August 13
UNLEASHING SHALE GAS POTENTIAL AS A GLOBAL ENERGY GAME CHANGER
In its 4th year running, the Annual Shale Gas Conference will bring leaders from North American shale gas operators, key Asian regulators, multi ...
Tuesday, 06 August 13
GBCE APPOINTS BENJAMIN WILEY AS NEW MANAGING DIRECTOR
COALspot.com : GB Clean Energy Ltd. (GBCE) announced today that Mr. Benjamin Wiley has been appointed as Managing Director.
Mr. Wiley has ...
Tuesday, 06 August 13
AUSTRALIAN NEWCASTLE PORT'S COAL EXPORTS FALL 23.16 PERCENT ON WEEK TO 2.26 MMT
COALspot.com: Power plant and semi-soft coking coal shipments from Australia's Newcastle port fell 15.8 percent week on week to 2.26 million mt for ...
Monday, 05 August 13
PAPERLESS TRADING (ELECTRONIC BILLS OF LADING) - FREQUENTLY ASKED QUESTIONS ("FAQS") - UK P&I CLUB
A number of Members have contacted the Club with queries regarding the use of electronic bills of lading and any potential consequences for P&I ...
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- Maheswari Brothers Coal Limited - India
- Economic Council, Georgia
- Madhucon Powers Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Bhatia International Limited - India
- Wood Mackenzie - Singapore
- Uttam Galva Steels Limited - India
- Billiton Holdings Pty Ltd - Australia
- SMC Global Power, Philippines
- Parry Sugars Refinery, India
- Miang Besar Coal Terminal - Indonesia
- Savvy Resources Ltd - HongKong
- Iligan Light & Power Inc, Philippines
- Power Finance Corporation Ltd., India
- Directorate Of Revenue Intelligence - India
- Essar Steel Hazira Ltd - India
- Altura Mining Limited, Indonesia
- Sindya Power Generating Company Private Ltd
- Kaltim Prima Coal - Indonesia
- Straits Asia Resources Limited - Singapore
- Cigading International Bulk Terminal - Indonesia
- Vedanta Resources Plc - India
- Indian Oil Corporation Limited
- Larsen & Toubro Limited - India
- Bharathi Cement Corporation - India
- Siam City Cement - Thailand
- Romanian Commodities Exchange
- Grasim Industreis Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Sarangani Energy Corporation, Philippines
- Rashtriya Ispat Nigam Limited - India
- South Luzon Thermal Energy Corporation
- IEA Clean Coal Centre - UK
- Aboitiz Power Corporation - Philippines
- Barasentosa Lestari - Indonesia
- Indika Energy - Indonesia
- Edison Trading Spa - Italy
- Commonwealth Bank - Australia
- The University of Queensland
- ICICI Bank Limited - India
- Mjunction Services Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Eastern Coal Council - USA
- Ambuja Cements Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Energy Link Ltd, New Zealand
- Bukit Makmur.PT - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Bulk Trading Sa - Switzerland
- Orica Australia Pty. Ltd.
- Chettinad Cement Corporation Ltd - India
- Globalindo Alam Lestari - Indonesia
- GMR Energy Limited - India
- Karaikal Port Pvt Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Merrill Lynch Commodities Europe
- Medco Energi Mining Internasional
- Jorong Barutama Greston.PT - Indonesia
- Indian Energy Exchange, India
- Pipit Mutiara Jaya. PT, Indonesia
- Eastern Energy - Thailand
- Coalindo Energy - Indonesia
- Videocon Industries ltd - India
- Kobexindo Tractors - Indoneisa
- Wilmar Investment Holdings
- Metalloyd Limited - United Kingdom
- Timah Investasi Mineral - Indoneisa
- PowerSource Philippines DevCo
- Cement Manufacturers Association - India
- Thiess Contractors Indonesia
- Latin American Coal - Colombia
- Singapore Mercantile Exchange
- Antam Resourcindo - Indonesia
- Central Electricity Authority - India
- Independent Power Producers Association of India
- Kideco Jaya Agung - Indonesia
- SMG Consultants - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Global Green Power PLC Corporation, Philippines
- Siam City Cement PLC, Thailand
- Rio Tinto Coal - Australia
- Parliament of New Zealand
- Port Waratah Coal Services - Australia
- PTC India Limited - India
- AsiaOL BioFuels Corp., Philippines
- Meenaskhi Energy Private Limited - India
- Borneo Indobara - Indonesia
- White Energy Company Limited
- Simpson Spence & Young - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Thai Mozambique Logistica
- SN Aboitiz Power Inc, Philippines
- Ceylon Electricity Board - Sri Lanka
- The Treasury - Australian Government
- European Bulk Services B.V. - Netherlands
- Bukit Asam (Persero) Tbk - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Salva Resources Pvt Ltd - India
- Indonesian Coal Mining Association
- London Commodity Brokers - England
- Malabar Cements Ltd - India
- Binh Thuan Hamico - Vietnam
- Bank of Tokyo Mitsubishi UFJ Ltd
- Trasteel International SA, Italy
- PNOC Exploration Corporation - Philippines
- CIMB Investment Bank - Malaysia
- Australian Commodity Traders Exchange
- Riau Bara Harum - Indonesia
- Electricity Generating Authority of Thailand
- Gujarat Sidhee Cement - India
- Mercator Lines Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Vizag Seaport Private Limited - India
- Kepco SPC Power Corporation, Philippines
- Bukit Baiduri Energy - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Jaiprakash Power Ventures ltd
- Karbindo Abesyapradhi - Indoneisa
- Holcim Trading Pte Ltd - Singapore
- Energy Development Corp, Philippines
- Anglo American - United Kingdom
- Tamil Nadu electricity Board
- Mercuria Energy - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Semirara Mining Corp, Philippines
- Alfred C Toepfer International GmbH - Germany
- San Jose City I Power Corp, Philippines
- GVK Power & Infra Limited - India
- Ministry of Transport, Egypt
- Mintek Dendrill Indonesia
- Sinarmas Energy and Mining - Indonesia
- Goldman Sachs - Singapore
- Ministry of Finance - Indonesia
- Agrawal Coal Company - India
- International Coal Ventures Pvt Ltd - India
- Planning Commission, India
- Asmin Koalindo Tuhup - Indonesia
- Manunggal Multi Energi - Indonesia
- Makarim & Taira - Indonesia
- MS Steel International - UAE
- TeaM Sual Corporation - Philippines
- McConnell Dowell - Australia
- Renaissance Capital - South Africa
- Africa Commodities Group - South Africa
- Banpu Public Company Limited - Thailand
- Attock Cement Pakistan Limited
- Toyota Tsusho Corporation, Japan
- Kapuas Tunggal Persada - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Coastal Gujarat Power Limited - India
- Central Java Power - Indonesia
- India Bulls Power Limited - India
- VISA Power Limited - India
- GAC Shipping (India) Pvt Ltd
- Meralco Power Generation, Philippines
- Therma Luzon, Inc, Philippines
- Australian Coal Association
- Price Waterhouse Coopers - Russia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Baramulti Group, Indonesia
- Sree Jayajothi Cements Limited - India
- Tata Chemicals Ltd - India
- New Zealand Coal & Carbon
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Bhoruka Overseas - Indonesia
- Coal and Oil Company - UAE
- GN Power Mariveles Coal Plant, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Petron Corporation, Philippines
- Sakthi Sugars Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Kumho Petrochemical, South Korea
- Jindal Steel & Power Ltd - India
- Kartika Selabumi Mining - Indonesia
- Bhushan Steel Limited - India
- Oldendorff Carriers - Singapore
- Global Coal Blending Company Limited - Australia
- ASAPP Information Group - India
- Formosa Plastics Group - Taiwan
- Sojitz Corporation - Japan
- Georgia Ports Authority, United States
- Electricity Authority, New Zealand
- Interocean Group of Companies - India
- Lanco Infratech Ltd - India
- Pendopo Energi Batubara - Indonesia
- Heidelberg Cement - Germany
- Deloitte Consulting - India
- Chamber of Mines of South Africa
- Ministry of Mines - Canada
- Carbofer General Trading SA - India
- Standard Chartered Bank - UAE
- The State Trading Corporation of India Ltd
- Kalimantan Lumbung Energi - Indonesia
- Marubeni Corporation - India
- Ind-Barath Power Infra Limited - India
- Bangladesh Power Developement Board
- Indo Tambangraya Megah - Indonesia
- Posco Energy - South Korea
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Xindia Steels Limited - India
- Samtan Co., Ltd - South Korea
- Gujarat Electricity Regulatory Commission - India
- CNBM International Corporation - China
- Orica Mining Services - Indonesia
- Minerals Council of Australia
- Global Business Power Corporation, Philippines
- IHS Mccloskey Coal Group - USA
- Dalmia Cement Bharat India
- Star Paper Mills Limited - India
- LBH Netherlands Bv - Netherlands
- OPG Power Generation Pvt Ltd - India
- Aditya Birla Group - India
- Sical Logistics Limited - India
- Bayan Resources Tbk. - Indonesia
- Intertek Mineral Services - Indonesia
- Indogreen Group - Indonesia
- Directorate General of MIneral and Coal - Indonesia
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