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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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Friday, 12 July 13
U.S. PRODUCED 18.40 MMST COAL WEEK ENDED 6 JULY 2013
COALspot.com – United states the world’s second largest coal producer produced totaled approximately 18.40 million short tons (mmst) of ...
Thursday, 11 July 13
PANAMAX: PACIFIC ROUND PAY AROUND $6,500/D; ATLANTIC ROUND VOYAGE PAY AROUND US$ 10,000/D - FEARNLEYS AS
Handy
The Feast market is quiet, July date cargoes remain unfixed as there is a gap between what owners aiming and charterers willing to pay. There ...
Wednesday, 10 July 13
DRY BULK MARKET IS STILL STRUGGLING TO SURVIVE - INTERMODAL
COALspot.com : With the first half of the year now behind us and, as expected, most shipping segments in the dry bulk market are struggling to survi ...
Tuesday, 09 July 13
COAL PRICE REMAINS SLUGGISH - TRIMEGAH
COALspot.com - Newcastle coal price has reached US$ 76.30/ton (-15.9% YTD), bringing YTD’13 average to stand at US$ 87.90/ton, 6.80% lower tha ...
Tuesday, 09 July 13
NEWCASTLE COAL EXPORTS JUMP 27.53% ON WEEK TO 2.97 MILLION MT
COALspot.com - Newcastle Coal exports up 27.53% to 2.97 million tons W-o-W.
Newcastle port in Australia has loaded 2,974,715 tons of coal for the ...
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- Metalloyd Limited - United Kingdom
- Vijayanagar Sugar Pvt Ltd - India
- Global Business Power Corporation, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Bank of Tokyo Mitsubishi UFJ Ltd
- Renaissance Capital - South Africa
- Semirara Mining Corp, Philippines
- Electricity Generating Authority of Thailand
- Sindya Power Generating Company Private Ltd
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Videocon Industries ltd - India
- Indian Energy Exchange, India
- Siam City Cement PLC, Thailand
- Uttam Galva Steels Limited - India
- Romanian Commodities Exchange
- Coal and Oil Company - UAE
- Formosa Plastics Group - Taiwan
- Iligan Light & Power Inc, Philippines
- Africa Commodities Group - South Africa
- Essar Steel Hazira Ltd - India
- Indo Tambangraya Megah - Indonesia
- Sree Jayajothi Cements Limited - India
- Mintek Dendrill Indonesia
- International Coal Ventures Pvt Ltd - India
- Minerals Council of Australia
- TNB Fuel Sdn Bhd - Malaysia
- IHS Mccloskey Coal Group - USA
- Bukit Asam (Persero) Tbk - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Kalimantan Lumbung Energi - Indonesia
- Jaiprakash Power Ventures ltd
- PTC India Limited - India
- Bulk Trading Sa - Switzerland
- Altura Mining Limited, Indonesia
- Global Green Power PLC Corporation, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Attock Cement Pakistan Limited
- Anglo American - United Kingdom
- Coastal Gujarat Power Limited - India
- Chamber of Mines of South Africa
- Maheswari Brothers Coal Limited - India
- Kartika Selabumi Mining - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Directorate Of Revenue Intelligence - India
- PowerSource Philippines DevCo
- Kepco SPC Power Corporation, Philippines
- Bukit Makmur.PT - Indonesia
- Rio Tinto Coal - Australia
- Gujarat Sidhee Cement - India
- Grasim Industreis Ltd - India
- Wilmar Investment Holdings
- Price Waterhouse Coopers - Russia
- Commonwealth Bank - Australia
- Larsen & Toubro Limited - India
- Banpu Public Company Limited - Thailand
- PNOC Exploration Corporation - Philippines
- Bhatia International Limited - India
- Thiess Contractors Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Bharathi Cement Corporation - India
- Interocean Group of Companies - India
- Carbofer General Trading SA - India
- Savvy Resources Ltd - HongKong
- Mjunction Services Limited - India
- Indika Energy - Indonesia
- European Bulk Services B.V. - Netherlands
- Mercator Lines Limited - India
- Manunggal Multi Energi - Indonesia
- Medco Energi Mining Internasional
- Central Java Power - Indonesia
- Economic Council, Georgia
- Oldendorff Carriers - Singapore
- Kohat Cement Company Ltd. - Pakistan
- New Zealand Coal & Carbon
- Holcim Trading Pte Ltd - Singapore
- Central Electricity Authority - India
- Pendopo Energi Batubara - Indonesia
- IEA Clean Coal Centre - UK
- Aboitiz Power Corporation - Philippines
- Bangladesh Power Developement Board
- Australian Commodity Traders Exchange
- Pipit Mutiara Jaya. PT, Indonesia
- Malabar Cements Ltd - India
- McConnell Dowell - Australia
- Heidelberg Cement - Germany
- Xindia Steels Limited - India
- Gujarat Electricity Regulatory Commission - India
- Petrochimia International Co. Ltd.- Taiwan
- Bayan Resources Tbk. - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Orica Australia Pty. Ltd.
- Sojitz Corporation - Japan
- Jindal Steel & Power Ltd - India
- Therma Luzon, Inc, Philippines
- Agrawal Coal Company - India
- Barasentosa Lestari - Indonesia
- Singapore Mercantile Exchange
- Kaltim Prima Coal - Indonesia
- Vizag Seaport Private Limited - India
- MS Steel International - UAE
- Lanco Infratech Ltd - India
- Parliament of New Zealand
- The University of Queensland
- Billiton Holdings Pty Ltd - Australia
- Jorong Barutama Greston.PT - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Vedanta Resources Plc - India
- Bhoruka Overseas - Indonesia
- Toyota Tsusho Corporation, Japan
- CIMB Investment Bank - Malaysia
- Borneo Indobara - Indonesia
- White Energy Company Limited
- Sarangani Energy Corporation, Philippines
- Globalindo Alam Lestari - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Intertek Mineral Services - Indonesia
- Global Coal Blending Company Limited - Australia
- OPG Power Generation Pvt Ltd - India
- Cement Manufacturers Association - India
- Karaikal Port Pvt Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Australian Coal Association
- Bukit Baiduri Energy - Indonesia
- Bhushan Steel Limited - India
- Simpson Spence & Young - Indonesia
- India Bulls Power Limited - India
- Eastern Coal Council - USA
- Mercuria Energy - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Ministry of Finance - Indonesia
- Coalindo Energy - Indonesia
- Ind-Barath Power Infra Limited - India
- Kobexindo Tractors - Indoneisa
- Timah Investasi Mineral - Indoneisa
- Wood Mackenzie - Singapore
- Makarim & Taira - Indonesia
- GMR Energy Limited - India
- Kumho Petrochemical, South Korea
- AsiaOL BioFuels Corp., Philippines
- Deloitte Consulting - India
- Directorate General of MIneral and Coal - Indonesia
- Madhucon Powers Ltd - India
- Standard Chartered Bank - UAE
- Offshore Bulk Terminal Pte Ltd, Singapore
- Baramulti Group, Indonesia
- Parry Sugars Refinery, India
- Indogreen Group - Indonesia
- Trasteel International SA, Italy
- Leighton Contractors Pty Ltd - Australia
- Power Finance Corporation Ltd., India
- Ministry of Transport, Egypt
- Aditya Birla Group - India
- London Commodity Brokers - England
- Posco Energy - South Korea
- GN Power Mariveles Coal Plant, Philippines
- San Jose City I Power Corp, Philippines
- Rashtriya Ispat Nigam Limited - India
- SMC Global Power, Philippines
- Edison Trading Spa - Italy
- Miang Besar Coal Terminal - Indonesia
- Siam City Cement - Thailand
- ICICI Bank Limited - India
- Ministry of Mines - Canada
- South Luzon Thermal Energy Corporation
- Straits Asia Resources Limited - Singapore
- Energy Development Corp, Philippines
- Kapuas Tunggal Persada - Indonesia
- TeaM Sual Corporation - Philippines
- Sakthi Sugars Limited - India
- Indonesian Coal Mining Association
- Binh Thuan Hamico - Vietnam
- Dalmia Cement Bharat India
- Salva Resources Pvt Ltd - India
- Marubeni Corporation - India
- SMG Consultants - Indonesia
- Georgia Ports Authority, United States
- Ceylon Electricity Board - Sri Lanka
- Meralco Power Generation, Philippines
- Ambuja Cements Ltd - India
- Petron Corporation, Philippines
- Electricity Authority, New Zealand
- Sinarmas Energy and Mining - Indonesia
- Tata Chemicals Ltd - India
- GAC Shipping (India) Pvt Ltd
- Neyveli Lignite Corporation Ltd, - India
- Samtan Co., Ltd - South Korea
- Riau Bara Harum - Indonesia
- Eastern Energy - Thailand
- LBH Netherlands Bv - Netherlands
- Maharashtra Electricity Regulatory Commission - India
- Thai Mozambique Logistica
- Planning Commission, India
- Merrill Lynch Commodities Europe
- Antam Resourcindo - Indonesia
- Tamil Nadu electricity Board
- The State Trading Corporation of India Ltd
- Meenaskhi Energy Private Limited - India
- VISA Power Limited - India
- Independent Power Producers Association of India
- CNBM International Corporation - China
- Krishnapatnam Port Company Ltd. - India
- Star Paper Mills Limited - India
- Sical Logistics Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Orica Mining Services - Indonesia
- Chettinad Cement Corporation Ltd - India
- Energy Link Ltd, New Zealand
- Goldman Sachs - Singapore
- GVK Power & Infra Limited - India
- ASAPP Information Group - India
- Kideco Jaya Agung - Indonesia
- Latin American Coal - Colombia
- Indian Oil Corporation Limited
- SN Aboitiz Power Inc, Philippines
- Port Waratah Coal Services - Australia
- The Treasury - Australian Government
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