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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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Tuesday, 14 May 13
NEWCASTLE PORT'S COAL EXPORTS FALL 6.83 PERCENT
COALspot.com - Newcastle port in Australia has loaded 2,771,891 tons of thermal and coking coal for week ended 0700 hours 13 May 2013, Newcast ...
Monday, 13 May 13
SGX ASIACLEAR OTC COAL SWAPS : RELATIVELY STABLE
COALspot.com - Sub-Bit Indonesia coal swaps (FOB ) for average June 2013 delivery has gained 0.15 percent and API 8 CFR South China Coal shipment&nb ...
Saturday, 11 May 13
INDONESIA TO INDIA COAL FREIGHT RATES ARE EXPECTED TO BE FLAT TO SOFT NEXT WEEK
COALspot.com - This week the market remained flat compared to last week. BDI slightly up 0.68 pct and closed at 884 points and the cape size index u ...
Friday, 10 May 13
U.S. PRODUCED TOTALED APPROXIMATELY 18.5 MMST OF COAL W/E 4 MAY 2013
COALspot.com - U.S. produced totaled approximately 18.5 million short tons (mmst) of coal in a week (For the week ended 4 May, 2013), EIA said in it ...
Thursday, 09 May 13
KILLARA AUSTRALIA ACQUIRES 80% INTEREST IN BORNEO EMAS HITAM
COALspot.com - Killara Resources has announced that, the company has signed a binding MoU to acquire an 80% equity interest in PT. Borneo Emas Hitam ...
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- PowerSource Philippines DevCo
- Salva Resources Pvt Ltd - India
- Energy Link Ltd, New Zealand
- ASAPP Information Group - India
- Miang Besar Coal Terminal - Indonesia
- Altura Mining Limited, Indonesia
- Kaltim Prima Coal - Indonesia
- PNOC Exploration Corporation - Philippines
- Gujarat Electricity Regulatory Commission - India
- Trasteel International SA, Italy
- Larsen & Toubro Limited - India
- Coal and Oil Company - UAE
- Bukit Asam (Persero) Tbk - Indonesia
- Antam Resourcindo - Indonesia
- Indogreen Group - Indonesia
- Romanian Commodities Exchange
- Bahari Cakrawala Sebuku - Indonesia
- London Commodity Brokers - England
- Indika Energy - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Orica Mining Services - Indonesia
- Australian Coal Association
- MS Steel International - UAE
- Bhoruka Overseas - Indonesia
- Chamber of Mines of South Africa
- Standard Chartered Bank - UAE
- Offshore Bulk Terminal Pte Ltd, Singapore
- GAC Shipping (India) Pvt Ltd
- Bukit Baiduri Energy - Indonesia
- Riau Bara Harum - Indonesia
- Carbofer General Trading SA - India
- Gujarat Mineral Development Corp Ltd - India
- Commonwealth Bank - Australia
- Cement Manufacturers Association - India
- Posco Energy - South Korea
- Formosa Plastics Group - Taiwan
- Global Coal Blending Company Limited - Australia
- Jaiprakash Power Ventures ltd
- Sarangani Energy Corporation, Philippines
- Sical Logistics Limited - India
- Tata Chemicals Ltd - India
- OPG Power Generation Pvt Ltd - India
- Maheswari Brothers Coal Limited - India
- Heidelberg Cement - Germany
- Siam City Cement PLC, Thailand
- Rio Tinto Coal - Australia
- IEA Clean Coal Centre - UK
- Bukit Makmur.PT - Indonesia
- Parry Sugars Refinery, India
- Bhushan Steel Limited - India
- Krishnapatnam Port Company Ltd. - India
- Kalimantan Lumbung Energi - Indonesia
- Australian Commodity Traders Exchange
- Bharathi Cement Corporation - India
- Power Finance Corporation Ltd., India
- Samtan Co., Ltd - South Korea
- Alfred C Toepfer International GmbH - Germany
- Mjunction Services Limited - India
- Eastern Energy - Thailand
- Rashtriya Ispat Nigam Limited - India
- Kohat Cement Company Ltd. - Pakistan
- GVK Power & Infra Limited - India
- Port Waratah Coal Services - Australia
- Mintek Dendrill Indonesia
- Cigading International Bulk Terminal - Indonesia
- Electricity Generating Authority of Thailand
- SMC Global Power, Philippines
- ICICI Bank Limited - India
- Orica Australia Pty. Ltd.
- Petrochimia International Co. Ltd.- Taiwan
- Ambuja Cements Ltd - India
- Malabar Cements Ltd - India
- Global Business Power Corporation, Philippines
- Semirara Mining and Power Corporation, Philippines
- Kapuas Tunggal Persada - Indonesia
- Singapore Mercantile Exchange
- LBH Netherlands Bv - Netherlands
- Karbindo Abesyapradhi - Indoneisa
- Billiton Holdings Pty Ltd - Australia
- Star Paper Mills Limited - India
- Intertek Mineral Services - Indonesia
- Siam City Cement - Thailand
- Ceylon Electricity Board - Sri Lanka
- Dalmia Cement Bharat India
- Wood Mackenzie - Singapore
- TNB Fuel Sdn Bhd - Malaysia
- Electricity Authority, New Zealand
- Timah Investasi Mineral - Indoneisa
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Kepco SPC Power Corporation, Philippines
- Kumho Petrochemical, South Korea
- Attock Cement Pakistan Limited
- Jindal Steel & Power Ltd - India
- Wilmar Investment Holdings
- Independent Power Producers Association of India
- Straits Asia Resources Limited - Singapore
- Economic Council, Georgia
- Directorate Of Revenue Intelligence - India
- Goldman Sachs - Singapore
- Sindya Power Generating Company Private Ltd
- India Bulls Power Limited - India
- Petron Corporation, Philippines
- Indo Tambangraya Megah - Indonesia
- Barasentosa Lestari - Indonesia
- Marubeni Corporation - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- South Luzon Thermal Energy Corporation
- Aditya Birla Group - India
- Indian Energy Exchange, India
- Planning Commission, India
- IHS Mccloskey Coal Group - USA
- Neyveli Lignite Corporation Ltd, - India
- Ministry of Finance - Indonesia
- Iligan Light & Power Inc, Philippines
- Bulk Trading Sa - Switzerland
- Ministry of Transport, Egypt
- Banpu Public Company Limited - Thailand
- SN Aboitiz Power Inc, Philippines
- Semirara Mining Corp, Philippines
- Sree Jayajothi Cements Limited - India
- Coalindo Energy - Indonesia
- Price Waterhouse Coopers - Russia
- San Jose City I Power Corp, Philippines
- Oldendorff Carriers - Singapore
- Eastern Coal Council - USA
- Ind-Barath Power Infra Limited - India
- Makarim & Taira - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Pendopo Energi Batubara - Indonesia
- Gujarat Sidhee Cement - India
- Madhucon Powers Ltd - India
- Leighton Contractors Pty Ltd - Australia
- GMR Energy Limited - India
- Toyota Tsusho Corporation, Japan
- White Energy Company Limited
- Vedanta Resources Plc - India
- Chettinad Cement Corporation Ltd - India
- Meenaskhi Energy Private Limited - India
- Central Electricity Authority - India
- Merrill Lynch Commodities Europe
- TeaM Sual Corporation - Philippines
- Jorong Barutama Greston.PT - Indonesia
- Anglo American - United Kingdom
- Karaikal Port Pvt Ltd - India
- Global Green Power PLC Corporation, Philippines
- Kideco Jaya Agung - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Grasim Industreis Ltd - India
- Mercator Lines Limited - India
- Energy Development Corp, Philippines
- Kobexindo Tractors - Indoneisa
- New Zealand Coal & Carbon
- PTC India Limited - India
- Thai Mozambique Logistica
- CIMB Investment Bank - Malaysia
- Coastal Gujarat Power Limited - India
- Indian Oil Corporation Limited
- Bank of Tokyo Mitsubishi UFJ Ltd
- Edison Trading Spa - Italy
- PetroVietnam Power Coal Import and Supply Company
- VISA Power Limited - India
- Borneo Indobara - Indonesia
- Mercuria Energy - Indonesia
- Sojitz Corporation - Japan
- Kartika Selabumi Mining - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Tamil Nadu electricity Board
- Globalindo Alam Lestari - Indonesia
- Uttam Galva Steels Limited - India
- Agrawal Coal Company - India
- Sakthi Sugars Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Bhatia International Limited - India
- Manunggal Multi Energi - Indonesia
- Bayan Resources Tbk. - Indonesia
- Baramulti Group, Indonesia
- Interocean Group of Companies - India
- Renaissance Capital - South Africa
- The University of Queensland
- Metalloyd Limited - United Kingdom
- Binh Thuan Hamico - Vietnam
- Africa Commodities Group - South Africa
- Bangladesh Power Developement Board
- Thiess Contractors Indonesia
- International Coal Ventures Pvt Ltd - India
- Essar Steel Hazira Ltd - India
- Indonesian Coal Mining Association
- The Treasury - Australian Government
- Georgia Ports Authority, United States
- SMG Consultants - Indonesia
- Minerals Council of Australia
- McConnell Dowell - Australia
- Parliament of New Zealand
- Therma Luzon, Inc, Philippines
- Simpson Spence & Young - Indonesia
- Latin American Coal - Colombia
- Xindia Steels Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Aboitiz Power Corporation - Philippines
- Maharashtra Electricity Regulatory Commission - India
- European Bulk Services B.V. - Netherlands
- Vizag Seaport Private Limited - India
- Ministry of Mines - Canada
- Medco Energi Mining Internasional
- Videocon Industries ltd - India
- Deloitte Consulting - India
- Vijayanagar Sugar Pvt Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Central Java Power - Indonesia
- The State Trading Corporation of India Ltd
- Meralco Power Generation, Philippines
- Lanco Infratech Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- CNBM International Corporation - China
- Savvy Resources Ltd - HongKong
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