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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, 30 July 13
KOMIPO INVITES BIDS FOR 520,000 MT OF 5,700 KCAL/KG COAL ON NAR BASIS FOR H1, 2014
COALspot.com : Korea Midland Power Co., Ltd. has invited bids for 520,000 Metric Tons (MT) of coal with calorific value 5,700 kcal/kg on NAR basis f ...
Tuesday, 30 July 13
AUSTRALIA'S NEWCASTLE SHIPPED 12.58 PERCENT LESS COAL W-O-W
COALspot.com: Newcastle port in Australia has loaded 2,945,848 tons of coal for the week ended 0700 hours 29 July 2013, Newcastle Port Corp. s ...
Monday, 29 July 13
INDONESIA'S ENERGY NEEDS COULD SPELL GOOD NEWS FOR TANKER OWNERS - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
Despite abundant energy resources, Indonesia has still failed meet its own demand, which led to a rising import of crude. According to the latest we ...
Sunday, 28 July 13
SUB-BIT INDONESIA COAL SWAP UP SLIGHTLY FOR SEPTEMBER CARGOES
COALspot.com – Sub-Bit Indonesia coal swaps (FOB ) for average September 2013 delivery slightly up on day and week but fell on month on ...
Saturday, 27 July 13
CEPL INDIA TO BAG 0.3 MILLION TONS OF COAL SUPPLY ORDER FROM TNPL
COALspot.com - An India based coal trader Coastal Energy Private Limited has offered the lowest price of US$ 73.00 per metric ton for calorific valu ...
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- Central Java Power - Indonesia
- Directorate Of Revenue Intelligence - India
- Neyveli Lignite Corporation Ltd, - India
- Energy Link Ltd, New Zealand
- Vizag Seaport Private Limited - India
- Commonwealth Bank - Australia
- Vedanta Resources Plc - India
- Bhoruka Overseas - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Star Paper Mills Limited - India
- Renaissance Capital - South Africa
- Globalindo Alam Lestari - Indonesia
- Bangladesh Power Developement Board
- Global Coal Blending Company Limited - Australia
- Samtan Co., Ltd - South Korea
- Carbofer General Trading SA - India
- Eastern Energy - Thailand
- Global Business Power Corporation, Philippines
- Price Waterhouse Coopers - Russia
- Kobexindo Tractors - Indoneisa
- Chettinad Cement Corporation Ltd - India
- Thiess Contractors Indonesia
- Sojitz Corporation - Japan
- Borneo Indobara - Indonesia
- Aditya Birla Group - India
- Ceylon Electricity Board - Sri Lanka
- Uttam Galva Steels Limited - India
- Leighton Contractors Pty Ltd - Australia
- Alfred C Toepfer International GmbH - Germany
- Australian Commodity Traders Exchange
- Agrawal Coal Company - India
- Bukit Baiduri Energy - Indonesia
- ICICI Bank Limited - India
- Interocean Group of Companies - India
- Edison Trading Spa - Italy
- India Bulls Power Limited - India
- Sinarmas Energy and Mining - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Maharashtra Electricity Regulatory Commission - India
- Savvy Resources Ltd - HongKong
- Asmin Koalindo Tuhup - Indonesia
- Electricity Generating Authority of Thailand
- Simpson Spence & Young - Indonesia
- Georgia Ports Authority, United States
- Krishnapatnam Port Company Ltd. - India
- Sindya Power Generating Company Private Ltd
- Indika Energy - Indonesia
- Posco Energy - South Korea
- Marubeni Corporation - India
- Iligan Light & Power Inc, Philippines
- San Jose City I Power Corp, Philippines
- Sical Logistics Limited - India
- Romanian Commodities Exchange
- Goldman Sachs - Singapore
- Tata Chemicals Ltd - India
- Gujarat Sidhee Cement - India
- Indian Energy Exchange, India
- Banpu Public Company Limited - Thailand
- GVK Power & Infra Limited - India
- PowerSource Philippines DevCo
- The Treasury - Australian Government
- Semirara Mining Corp, Philippines
- Independent Power Producers Association of India
- Mercuria Energy - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Bhushan Steel Limited - India
- Africa Commodities Group - South Africa
- Therma Luzon, Inc, Philippines
- Port Waratah Coal Services - Australia
- GMR Energy Limited - India
- Mjunction Services Limited - India
- Antam Resourcindo - Indonesia
- Coal and Oil Company - UAE
- Thai Mozambique Logistica
- PetroVietnam Power Coal Import and Supply Company
- Indian Oil Corporation Limited
- Vijayanagar Sugar Pvt Ltd - India
- Global Green Power PLC Corporation, Philippines
- Larsen & Toubro Limited - India
- Bharathi Cement Corporation - India
- SMG Consultants - Indonesia
- White Energy Company Limited
- Metalloyd Limited - United Kingdom
- Essar Steel Hazira Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Salva Resources Pvt Ltd - India
- Eastern Coal Council - USA
- Kalimantan Lumbung Energi - Indonesia
- Jaiprakash Power Ventures ltd
- Parry Sugars Refinery, India
- Cigading International Bulk Terminal - Indonesia
- Pendopo Energi Batubara - Indonesia
- London Commodity Brokers - England
- VISA Power Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- LBH Netherlands Bv - Netherlands
- Coastal Gujarat Power Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Rio Tinto Coal - Australia
- Altura Mining Limited, Indonesia
- South Luzon Thermal Energy Corporation
- European Bulk Services B.V. - Netherlands
- PTC India Limited - India
- Dalmia Cement Bharat India
- Standard Chartered Bank - UAE
- Sarangani Energy Corporation, Philippines
- Ministry of Finance - Indonesia
- OPG Power Generation Pvt Ltd - India
- Manunggal Multi Energi - Indonesia
- Madhucon Powers Ltd - India
- Central Electricity Authority - India
- IEA Clean Coal Centre - UK
- Oldendorff Carriers - Singapore
- MS Steel International - UAE
- Karaikal Port Pvt Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Bulk Trading Sa - Switzerland
- Merrill Lynch Commodities Europe
- Kapuas Tunggal Persada - Indonesia
- New Zealand Coal & Carbon
- Bahari Cakrawala Sebuku - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Parliament of New Zealand
- Kumho Petrochemical, South Korea
- Pipit Mutiara Jaya. PT, Indonesia
- IHS Mccloskey Coal Group - USA
- Ministry of Transport, Egypt
- Petron Corporation, Philippines
- Meralco Power Generation, Philippines
- Indonesian Coal Mining Association
- Baramulti Group, Indonesia
- Coalindo Energy - Indonesia
- Sree Jayajothi Cements Limited - India
- Semirara Mining and Power Corporation, Philippines
- Bhatia International Limited - India
- Bayan Resources Tbk. - Indonesia
- Siam City Cement PLC, Thailand
- SMC Global Power, Philippines
- Timah Investasi Mineral - Indoneisa
- Formosa Plastics Group - Taiwan
- Directorate General of MIneral and Coal - Indonesia
- Deloitte Consulting - India
- Ministry of Mines - Canada
- Binh Thuan Hamico - Vietnam
- GN Power Mariveles Coal Plant, Philippines
- CIMB Investment Bank - Malaysia
- International Coal Ventures Pvt Ltd - India
- Heidelberg Cement - Germany
- Siam City Cement - Thailand
- Barasentosa Lestari - Indonesia
- Intertek Mineral Services - Indonesia
- Trasteel International SA, Italy
- Orica Mining Services - Indonesia
- Aboitiz Power Corporation - Philippines
- Videocon Industries ltd - India
- Minerals Council of Australia
- Indo Tambangraya Megah - Indonesia
- Jindal Steel & Power Ltd - India
- The University of Queensland
- Kaltim Prima Coal - Indonesia
- Straits Asia Resources Limited - Singapore
- Kideco Jaya Agung - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Attock Cement Pakistan Limited
- Singapore Mercantile Exchange
- Lanco Infratech Ltd - India
- Tamil Nadu electricity Board
- Wood Mackenzie - Singapore
- Miang Besar Coal Terminal - Indonesia
- Meenaskhi Energy Private Limited - India
- Chamber of Mines of South Africa
- Ind-Barath Power Infra Limited - India
- McConnell Dowell - Australia
- Kepco SPC Power Corporation, Philippines
- Malabar Cements Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Energy Development Corp, Philippines
- Bukit Makmur.PT - Indonesia
- PNOC Exploration Corporation - Philippines
- Economic Council, Georgia
- Toyota Tsusho Corporation, Japan
- SN Aboitiz Power Inc, Philippines
- Sakthi Sugars Limited - India
- Anglo American - United Kingdom
- Power Finance Corporation Ltd., India
- Medco Energi Mining Internasional
- Australian Coal Association
- TeaM Sual Corporation - Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Orica Australia Pty. Ltd.
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Rashtriya Ispat Nigam Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Karbindo Abesyapradhi - Indoneisa
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Riau Bara Harum - Indonesia
- Cement Manufacturers Association - India
- Ambuja Cements Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- Wilmar Investment Holdings
- GAC Shipping (India) Pvt Ltd
- The State Trading Corporation of India Ltd
- Makarim & Taira - Indonesia
- Kartika Selabumi Mining - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Indogreen Group - Indonesia
- Mintek Dendrill Indonesia
- Grasim Industreis Ltd - India
- Maheswari Brothers Coal Limited - India
- Mercator Lines Limited - India
- ASAPP Information Group - India
- Electricity Authority, New Zealand
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- CNBM International Corporation - China
- Xindia Steels Limited - India
- Latin American Coal - Colombia
- Planning Commission, India
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