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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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Thursday, 09 May 13
THE WORLD LARGEST POWER PLANT COAL EXPORTER SHIPPED 36 MILLION TONS OF COAL IN MARCH
COALspot.com: Indonesia, the world largest multi grade coal exporter has shipped 36.165* million tons of coal in March 2013.
Ac ...
Thursday, 09 May 13
DRY BULK SHIP OWNERS KEEP BUILDING NEW VESSELS ON THE BACK OF LOWER PRICES AND IMPROVED MARKET PROSPECTS - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
Despite the doom and gloom that the dry bulk market has experienced during the past couple of years and especially during 2012, ship owners have inc ...
Thursday, 09 May 13
HANDY : RBCT ROUNDS FIXED AT USD 8000 DOP ECI - FEARNRESEARCH
Handy
The atlantic market started to pick up with new orders. The USG-Feast was at USD 20k and Black sea-feast was at USD 12k. The pacific mkt rema ...
Wednesday, 08 May 13
PANAMAX VESSELS PROVE TO BE "STARS OF THE MONTH" FOR THE DRY BULK MARKET DURING APRIL - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
They have taken a beating on various occasions during the past few years of the dry bulk market's crisis, but the fact remains, that despite the he ...
Tuesday, 07 May 13
NEWCASTLE PORT'S COAL EXPORTS HOLD STEADY WEEK ON WEEK
COALspot.com - Newcastle port in Australia has loaded 2,975,160 tons of thermal and coking coal for week ended 0700 hours 6 May 2013, Newcastl ...
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- Directorate General of MIneral and Coal - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Therma Luzon, Inc, Philippines
- PowerSource Philippines DevCo
- Alfred C Toepfer International GmbH - Germany
- PetroVietnam Power Coal Import and Supply Company
- Krishnapatnam Port Company Ltd. - India
- CIMB Investment Bank - Malaysia
- Renaissance Capital - South Africa
- Madhucon Powers Ltd - India
- Metalloyd Limited - United Kingdom
- Thai Mozambique Logistica
- Chettinad Cement Corporation Ltd - India
- Kaltim Prima Coal - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Bhatia International Limited - India
- Electricity Authority, New Zealand
- Sical Logistics Limited - India
- Planning Commission, India
- Borneo Indobara - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Bahari Cakrawala Sebuku - Indonesia
- SMG Consultants - Indonesia
- Grasim Industreis Ltd - India
- Kartika Selabumi Mining - Indonesia
- Posco Energy - South Korea
- Georgia Ports Authority, United States
- Kumho Petrochemical, South Korea
- Goldman Sachs - Singapore
- Kideco Jaya Agung - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Economic Council, Georgia
- Parliament of New Zealand
- ICICI Bank Limited - India
- Formosa Plastics Group - Taiwan
- Global Green Power PLC Corporation, Philippines
- European Bulk Services B.V. - Netherlands
- Tata Chemicals Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Global Coal Blending Company Limited - Australia
- Manunggal Multi Energi - Indonesia
- Anglo American - United Kingdom
- Indian Oil Corporation Limited
- Romanian Commodities Exchange
- Xindia Steels Limited - India
- OPG Power Generation Pvt Ltd - India
- Power Finance Corporation Ltd., India
- India Bulls Power Limited - India
- Kepco SPC Power Corporation, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Electricity Generating Authority of Thailand
- Antam Resourcindo - Indonesia
- Global Business Power Corporation, Philippines
- Parry Sugars Refinery, India
- Wilmar Investment Holdings
- Africa Commodities Group - South Africa
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- White Energy Company Limited
- Merrill Lynch Commodities Europe
- Interocean Group of Companies - India
- Bukit Makmur.PT - Indonesia
- Kobexindo Tractors - Indoneisa
- Straits Asia Resources Limited - Singapore
- ASAPP Information Group - India
- Vijayanagar Sugar Pvt Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Maheswari Brothers Coal Limited - India
- IEA Clean Coal Centre - UK
- The State Trading Corporation of India Ltd
- Ind-Barath Power Infra Limited - India
- Heidelberg Cement - Germany
- Commonwealth Bank - Australia
- Carbofer General Trading SA - India
- Intertek Mineral Services - Indonesia
- Bulk Trading Sa - Switzerland
- Medco Energi Mining Internasional
- Petrochimia International Co. Ltd.- Taiwan
- CNBM International Corporation - China
- Neyveli Lignite Corporation Ltd, - India
- SMC Global Power, Philippines
- Ceylon Electricity Board - Sri Lanka
- Malabar Cements Ltd - India
- Standard Chartered Bank - UAE
- GVK Power & Infra Limited - India
- Aditya Birla Group - India
- Indo Tambangraya Megah - Indonesia
- Mjunction Services Limited - India
- New Zealand Coal & Carbon
- Minerals Council of Australia
- Sinarmas Energy and Mining - Indonesia
- Jindal Steel & Power Ltd - India
- Bhushan Steel Limited - India
- Karaikal Port Pvt Ltd - India
- Ministry of Mines - Canada
- Holcim Trading Pte Ltd - Singapore
- GMR Energy Limited - India
- Ministry of Transport, Egypt
- San Jose City I Power Corp, Philippines
- The Treasury - Australian Government
- Savvy Resources Ltd - HongKong
- Wood Mackenzie - Singapore
- Indian Energy Exchange, India
- Samtan Co., Ltd - South Korea
- Indogreen Group - Indonesia
- GAC Shipping (India) Pvt Ltd
- Offshore Bulk Terminal Pte Ltd, Singapore
- Binh Thuan Hamico - Vietnam
- Semirara Mining and Power Corporation, Philippines
- Leighton Contractors Pty Ltd - Australia
- IHS Mccloskey Coal Group - USA
- VISA Power Limited - India
- Pendopo Energi Batubara - Indonesia
- Uttam Galva Steels Limited - India
- Star Paper Mills Limited - India
- Iligan Light & Power Inc, Philippines
- Cement Manufacturers Association - India
- Bhoruka Overseas - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Indonesian Coal Mining Association
- Sakthi Sugars Limited - India
- Ministry of Finance - Indonesia
- MS Steel International - UAE
- Sojitz Corporation - Japan
- Bangladesh Power Developement Board
- Mintek Dendrill Indonesia
- Tamil Nadu electricity Board
- Directorate Of Revenue Intelligence - India
- Jorong Barutama Greston.PT - Indonesia
- Thiess Contractors Indonesia
- Dalmia Cement Bharat India
- Edison Trading Spa - Italy
- McConnell Dowell - Australia
- International Coal Ventures Pvt Ltd - India
- Australian Commodity Traders Exchange
- Bukit Asam (Persero) Tbk - Indonesia
- Semirara Mining Corp, Philippines
- Independent Power Producers Association of India
- Siam City Cement PLC, Thailand
- Meralco Power Generation, Philippines
- Riau Bara Harum - Indonesia
- Marubeni Corporation - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Bharathi Cement Corporation - India
- Port Waratah Coal Services - Australia
- Toyota Tsusho Corporation, Japan
- Cigading International Bulk Terminal - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Ambuja Cements Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Jaiprakash Power Ventures ltd
- Larsen & Toubro Limited - India
- Coalindo Energy - Indonesia
- Barasentosa Lestari - Indonesia
- PTC India Limited - India
- TeaM Sual Corporation - Philippines
- Simpson Spence & Young - Indonesia
- Deloitte Consulting - India
- The University of Queensland
- Oldendorff Carriers - Singapore
- Vedanta Resources Plc - India
- Asmin Koalindo Tuhup - Indonesia
- AsiaOL BioFuels Corp., Philippines
- South Luzon Thermal Energy Corporation
- Gujarat Sidhee Cement - India
- Altura Mining Limited, Indonesia
- Price Waterhouse Coopers - Russia
- Kapuas Tunggal Persada - Indonesia
- SN Aboitiz Power Inc, Philippines
- Vizag Seaport Private Limited - India
- Eastern Coal Council - USA
- Eastern Energy - Thailand
- Baramulti Group, Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Banpu Public Company Limited - Thailand
- Miang Besar Coal Terminal - Indonesia
- Energy Link Ltd, New Zealand
- Energy Development Corp, Philippines
- Central Java Power - Indonesia
- Sree Jayajothi Cements Limited - India
- Chamber of Mines of South Africa
- Lanco Infratech Ltd - India
- London Commodity Brokers - England
- Australian Coal Association
- Trasteel International SA, Italy
- Pipit Mutiara Jaya. PT, Indonesia
- Bukit Baiduri Energy - Indonesia
- PNOC Exploration Corporation - Philippines
- Mercuria Energy - Indonesia
- Singapore Mercantile Exchange
- Makarim & Taira - Indonesia
- Latin American Coal - Colombia
- Orica Mining Services - Indonesia
- Sindya Power Generating Company Private Ltd
- Agrawal Coal Company - India
- Petron Corporation, Philippines
- Kalimantan Lumbung Energi - Indonesia
- LBH Netherlands Bv - Netherlands
- Meenaskhi Energy Private Limited - India
- Timah Investasi Mineral - Indoneisa
- Coastal Gujarat Power Limited - India
- Sarangani Energy Corporation, Philippines
- Videocon Industries ltd - India
- Rio Tinto Coal - Australia
- Siam City Cement - Thailand
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Attock Cement Pakistan Limited
- Bayan Resources Tbk. - Indonesia
- Orica Australia Pty. Ltd.
- Aboitiz Power Corporation - Philippines
- Globalindo Alam Lestari - Indonesia
- Essar Steel Hazira Ltd - India
- Central Electricity Authority - India
- Indika Energy - Indonesia
- Salva Resources Pvt Ltd - India
- Coal and Oil Company - UAE
- Rashtriya Ispat Nigam Limited - India
- Mercator Lines Limited - India
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