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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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Monday, 01 July 13
12TH CLEAN COAL FORUM INDONESIA 2013
Press Release: Produced by CDMC Events, The 12th Clean Coal Forum Indonesia 2013 will be held on Dec 5-6,2013 in Jakarta, Indonesia. It will generat ...
Monday, 01 July 13
INDIA AND CHINA STILL DOMINATING THE INDONESIAN THERMAL COAL EXPORT MARKET
COALspot.com: Indonesia, the world's largest multi types coal exporter shipped 35.83* million tons of coal in May 2013, 1.40 per cent l ...
Sunday, 30 June 13
YEAR 2014 INDO SUB-BIT COAL SWAPS EXPECTED TO STAY BELOW 2013 LEVEL
COALspot.com – Sub-Bit Indonesia coal swaps (FOB ) for average August 2013 delivery have gained 0.08 percent on a day lost on week ...
Sunday, 30 June 13
CAPESIZE RATES SEEN INCREASING ON HIGH DEMAND - VISTAAR
COALspot.com - The BDI continued to rise and saw a big gain on Friday. BDI increased 14 per cent week ended 28 June 2013, closed at 1171 points driv ...
Friday, 28 June 13
U.S. PRODUCED 1.52 PERCENT LESS COAL WEEK ON WEEK
COALspot.com – United states the world’s second largest coal producer produced totaled approximately 19.40 million short tons (mmst) of ...
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- The State Trading Corporation of India Ltd
- Africa Commodities Group - South Africa
- Leighton Contractors Pty Ltd - Australia
- Banpu Public Company Limited - Thailand
- Pipit Mutiara Jaya. PT, Indonesia
- Mercator Lines Limited - India
- Thai Mozambique Logistica
- Kaltim Prima Coal - Indonesia
- Savvy Resources Ltd - HongKong
- Ministry of Mines - Canada
- Goldman Sachs - Singapore
- Riau Bara Harum - Indonesia
- Economic Council, Georgia
- San Jose City I Power Corp, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Electricity Authority, New Zealand
- Price Waterhouse Coopers - Russia
- Electricity Generating Authority of Thailand
- GAC Shipping (India) Pvt Ltd
- Aditya Birla Group - India
- Australian Coal Association
- Bukit Baiduri Energy - Indonesia
- McConnell Dowell - Australia
- Barasentosa Lestari - Indonesia
- Tamil Nadu electricity Board
- Wood Mackenzie - Singapore
- Maheswari Brothers Coal Limited - India
- Marubeni Corporation - India
- Uttam Galva Steels Limited - India
- Indian Energy Exchange, India
- Anglo American - United Kingdom
- Malabar Cements Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Global Coal Blending Company Limited - Australia
- The Treasury - Australian Government
- Vizag Seaport Private Limited - India
- PTC India Limited - India
- Videocon Industries ltd - India
- Power Finance Corporation Ltd., India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- OPG Power Generation Pvt Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Energy Development Corp, Philippines
- IEA Clean Coal Centre - UK
- Indo Tambangraya Megah - Indonesia
- Mjunction Services Limited - India
- TeaM Sual Corporation - Philippines
- Sarangani Energy Corporation, Philippines
- Jaiprakash Power Ventures ltd
- Merrill Lynch Commodities Europe
- Borneo Indobara - Indonesia
- Lanco Infratech Ltd - India
- International Coal Ventures Pvt Ltd - India
- Rio Tinto Coal - Australia
- Sical Logistics Limited - India
- Billiton Holdings Pty Ltd - Australia
- Bhatia International Limited - India
- Minerals Council of Australia
- Grasim Industreis Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- Sakthi Sugars Limited - India
- AsiaOL BioFuels Corp., Philippines
- Thiess Contractors Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Ind-Barath Power Infra Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Madhucon Powers Ltd - India
- Straits Asia Resources Limited - Singapore
- Essar Steel Hazira Ltd - India
- Therma Luzon, Inc, Philippines
- Attock Cement Pakistan Limited
- Renaissance Capital - South Africa
- Bharathi Cement Corporation - India
- White Energy Company Limited
- The University of Queensland
- Mintek Dendrill Indonesia
- Bhoruka Overseas - Indonesia
- SMG Consultants - Indonesia
- Wilmar Investment Holdings
- Intertek Mineral Services - Indonesia
- Orica Australia Pty. Ltd.
- Cigading International Bulk Terminal - Indonesia
- Energy Link Ltd, New Zealand
- ASAPP Information Group - India
- Iligan Light & Power Inc, Philippines
- Metalloyd Limited - United Kingdom
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Directorate General of MIneral and Coal - Indonesia
- CNBM International Corporation - China
- Directorate Of Revenue Intelligence - India
- Carbofer General Trading SA - India
- Star Paper Mills Limited - India
- Simpson Spence & Young - Indonesia
- European Bulk Services B.V. - Netherlands
- Singapore Mercantile Exchange
- Kepco SPC Power Corporation, Philippines
- Ministry of Finance - Indonesia
- Mercuria Energy - Indonesia
- Kideco Jaya Agung - Indonesia
- Karaikal Port Pvt Ltd - India
- Petron Corporation, Philippines
- Baramulti Group, Indonesia
- SMC Global Power, Philippines
- Cement Manufacturers Association - India
- Altura Mining Limited, Indonesia
- Edison Trading Spa - Italy
- Kohat Cement Company Ltd. - Pakistan
- Bayan Resources Tbk. - Indonesia
- Larsen & Toubro Limited - India
- Kapuas Tunggal Persada - Indonesia
- Indogreen Group - Indonesia
- Holcim Trading Pte Ltd - Singapore
- GMR Energy Limited - India
- Meenaskhi Energy Private Limited - India
- GVK Power & Infra Limited - India
- Latin American Coal - Colombia
- Kalimantan Lumbung Energi - Indonesia
- Medco Energi Mining Internasional
- Sojitz Corporation - Japan
- PNOC Exploration Corporation - Philippines
- Bangladesh Power Developement Board
- Coal and Oil Company - UAE
- Siam City Cement PLC, Thailand
- Timah Investasi Mineral - Indoneisa
- Dalmia Cement Bharat India
- Formosa Plastics Group - Taiwan
- Gujarat Sidhee Cement - India
- Meralco Power Generation, Philippines
- Romanian Commodities Exchange
- Manunggal Multi Energi - Indonesia
- Sree Jayajothi Cements Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- CIMB Investment Bank - Malaysia
- Orica Mining Services - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Kartika Selabumi Mining - Indonesia
- Central Electricity Authority - India
- Standard Chartered Bank - UAE
- Vijayanagar Sugar Pvt Ltd - India
- Ministry of Transport, Egypt
- Bahari Cakrawala Sebuku - Indonesia
- Siam City Cement - Thailand
- Salva Resources Pvt Ltd - India
- Eastern Coal Council - USA
- Offshore Bulk Terminal Pte Ltd, Singapore
- Kobexindo Tractors - Indoneisa
- Antam Resourcindo - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- LBH Netherlands Bv - Netherlands
- Xindia Steels Limited - India
- Ambuja Cements Ltd - India
- Posco Energy - South Korea
- Vedanta Resources Plc - India
- Petrochimia International Co. Ltd.- Taiwan
- VISA Power Limited - India
- Australian Commodity Traders Exchange
- Indika Energy - Indonesia
- Agrawal Coal Company - India
- Port Waratah Coal Services - Australia
- Binh Thuan Hamico - Vietnam
- Indian Oil Corporation Limited
- Globalindo Alam Lestari - Indonesia
- Toyota Tsusho Corporation, Japan
- Deloitte Consulting - India
- Samtan Co., Ltd - South Korea
- Chettinad Cement Corporation Ltd - India
- Kumho Petrochemical, South Korea
- GN Power Mariveles Coal Plant, Philippines
- Planning Commission, India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Karbindo Abesyapradhi - Indoneisa
- Commonwealth Bank - Australia
- Independent Power Producers Association of India
- Global Green Power PLC Corporation, Philippines
- Sindya Power Generating Company Private Ltd
- Parliament of New Zealand
- Parry Sugars Refinery, India
- Trasteel International SA, Italy
- Indonesian Coal Mining Association
- New Zealand Coal & Carbon
- Pendopo Energi Batubara - Indonesia
- Heidelberg Cement - Germany
- Oldendorff Carriers - Singapore
- Bukit Asam (Persero) Tbk - Indonesia
- Coastal Gujarat Power Limited - India
- Alfred C Toepfer International GmbH - Germany
- India Bulls Power Limited - India
- PowerSource Philippines DevCo
- Miang Besar Coal Terminal - Indonesia
- Tata Chemicals Ltd - India
- Aboitiz Power Corporation - Philippines
- Ceylon Electricity Board - Sri Lanka
- Jindal Steel & Power Ltd - India
- Interocean Group of Companies - India
- Eastern Energy - Thailand
- Sinarmas Energy and Mining - Indonesia
- MS Steel International - UAE
- Makarim & Taira - Indonesia
- Chamber of Mines of South Africa
- Semirara Mining Corp, Philippines
- Georgia Ports Authority, United States
- London Commodity Brokers - England
- IHS Mccloskey Coal Group - USA
- Rashtriya Ispat Nigam Limited - India
- Global Business Power Corporation, Philippines
- Krishnapatnam Port Company Ltd. - India
- TNB Fuel Sdn Bhd - Malaysia
- Central Java Power - Indonesia
- Coalindo Energy - Indonesia
- Bulk Trading Sa - Switzerland
- ICICI Bank Limited - India
- South Luzon Thermal Energy Corporation
- Bukit Makmur.PT - Indonesia
- SN Aboitiz Power Inc, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Neyveli Lignite Corporation Ltd, - India
- Bhushan Steel Limited - India
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