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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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Wednesday, 01 May 13
NEWCASTLE PORT SHIPPED 23.14 PER CENT MORE COAL WEEK ON WEEK
COALspot.com - Newcastle port in Australia has loaded 2,997,729 tons of thermal and coking coal for week ended 0700 hours 29 April 2013, Newca ...
Tuesday, 30 April 13
KATINGAN RIA THERMAL COAL TO START PRODUCTION FROM EARLY 2014
COALspot.com - Realm Resources Ltd. (ASX: RRP) has announced the completion of the Feasibility Study for its 51% owned Katingan Ria thermal co ...
Monday, 29 April 13
FIRST TRADES OF SGX API 8 CFR SOUTH CHINA COAL SWAP
COALspot.com - The SGX API 8 CFR South China Coal Swap went live for clearing on SGX-DC today with a total volume of 25,000 metric tonnes (25 lots). ...
Sunday, 28 April 13
SUB BIT INDONESIA COAL & CFR SOUTH CHINA COAL SWAPS STAY POSITIVE
COALspot.com - Sub-Bit Indonesia coal swaps (FOB ) for average May 2013 delivery has gained 0.34 percent and CFR South China coal shipment gai ...
Sunday, 28 April 13
PANAMAX FREIGHT COULD BE SOFT NEXT WEEK - CAPT. REDDY
COALspot.com - This BDI closed slightly lower at 871 points (down by 1.91 pct) mainly due to drop in the Panamax index by almost 10 pct.
Th ...
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- Latin American Coal - Colombia
- Semirara Mining and Power Corporation, Philippines
- Siam City Cement PLC, Thailand
- Kaltim Prima Coal - Indonesia
- Maheswari Brothers Coal Limited - India
- Intertek Mineral Services - Indonesia
- Kobexindo Tractors - Indoneisa
- Indo Tambangraya Megah - Indonesia
- South Luzon Thermal Energy Corporation
- Central Electricity Authority - India
- AsiaOL BioFuels Corp., Philippines
- Carbofer General Trading SA - India
- Merrill Lynch Commodities Europe
- PetroVietnam Power Coal Import and Supply Company
- Global Green Power PLC Corporation, Philippines
- Anglo American - United Kingdom
- The Treasury - Australian Government
- Indian Oil Corporation Limited
- Karbindo Abesyapradhi - Indoneisa
- Simpson Spence & Young - Indonesia
- Iligan Light & Power Inc, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Directorate Of Revenue Intelligence - India
- Kumho Petrochemical, South Korea
- Ceylon Electricity Board - Sri Lanka
- Central Java Power - Indonesia
- Grasim Industreis Ltd - India
- ASAPP Information Group - India
- India Bulls Power Limited - India
- Jorong Barutama Greston.PT - Indonesia
- London Commodity Brokers - England
- Energy Link Ltd, New Zealand
- Mintek Dendrill Indonesia
- Uttam Galva Steels Limited - India
- Toyota Tsusho Corporation, Japan
- Attock Cement Pakistan Limited
- Economic Council, Georgia
- Straits Asia Resources Limited - Singapore
- Globalindo Alam Lestari - Indonesia
- Georgia Ports Authority, United States
- Videocon Industries ltd - India
- MS Steel International - UAE
- Samtan Co., Ltd - South Korea
- Bhoruka Overseas - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Australian Coal Association
- Meenaskhi Energy Private Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Star Paper Mills Limited - India
- Indika Energy - Indonesia
- Sindya Power Generating Company Private Ltd
- Indonesian Coal Mining Association
- Petrochimia International Co. Ltd.- Taiwan
- Ministry of Finance - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Antam Resourcindo - Indonesia
- CIMB Investment Bank - Malaysia
- Holcim Trading Pte Ltd - Singapore
- Electricity Generating Authority of Thailand
- Banpu Public Company Limited - Thailand
- Jaiprakash Power Ventures ltd
- Sinarmas Energy and Mining - Indonesia
- Marubeni Corporation - India
- Bahari Cakrawala Sebuku - Indonesia
- Bukit Baiduri Energy - Indonesia
- TeaM Sual Corporation - Philippines
- Wood Mackenzie - Singapore
- Sojitz Corporation - Japan
- GAC Shipping (India) Pvt Ltd
- SMC Global Power, Philippines
- Electricity Authority, New Zealand
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Metalloyd Limited - United Kingdom
- Manunggal Multi Energi - Indonesia
- Price Waterhouse Coopers - Russia
- Bukit Makmur.PT - Indonesia
- Dalmia Cement Bharat India
- Meralco Power Generation, Philippines
- Australian Commodity Traders Exchange
- CNBM International Corporation - China
- TNB Fuel Sdn Bhd - Malaysia
- Petron Corporation, Philippines
- LBH Netherlands Bv - Netherlands
- Indogreen Group - Indonesia
- Bayan Resources Tbk. - Indonesia
- Posco Energy - South Korea
- Ind-Barath Power Infra Limited - India
- GVK Power & Infra Limited - India
- Renaissance Capital - South Africa
- Bank of Tokyo Mitsubishi UFJ Ltd
- Singapore Mercantile Exchange
- Vijayanagar Sugar Pvt Ltd - India
- Kapuas Tunggal Persada - Indonesia
- Bhatia International Limited - India
- PNOC Exploration Corporation - Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Thiess Contractors Indonesia
- Planning Commission, India
- Chamber of Mines of South Africa
- Barasentosa Lestari - Indonesia
- Trasteel International SA, Italy
- Savvy Resources Ltd - HongKong
- ICICI Bank Limited - India
- Kideco Jaya Agung - Indonesia
- New Zealand Coal & Carbon
- The State Trading Corporation of India Ltd
- Coalindo Energy - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Malabar Cements Ltd - India
- PTC India Limited - India
- Romanian Commodities Exchange
- Orica Mining Services - Indonesia
- Altura Mining Limited, Indonesia
- Eastern Coal Council - USA
- Coal and Oil Company - UAE
- Siam City Cement - Thailand
- Essar Steel Hazira Ltd - India
- Sical Logistics Limited - India
- Tata Chemicals Ltd - India
- Parliament of New Zealand
- Madhucon Powers Ltd - India
- SN Aboitiz Power Inc, Philippines
- Vizag Seaport Private Limited - India
- Sarangani Energy Corporation, Philippines
- White Energy Company Limited
- PowerSource Philippines DevCo
- Kalimantan Lumbung Energi - Indonesia
- Heidelberg Cement - Germany
- Goldman Sachs - Singapore
- Kepco SPC Power Corporation, Philippines
- Xindia Steels Limited - India
- VISA Power Limited - India
- Standard Chartered Bank - UAE
- Bharathi Cement Corporation - India
- Bhushan Steel Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Independent Power Producers Association of India
- Jindal Steel & Power Ltd - India
- Energy Development Corp, Philippines
- Interocean Group of Companies - India
- Thai Mozambique Logistica
- Minerals Council of Australia
- Therma Luzon, Inc, Philippines
- Formosa Plastics Group - Taiwan
- Gujarat Sidhee Cement - India
- International Coal Ventures Pvt Ltd - India
- San Jose City I Power Corp, Philippines
- Salva Resources Pvt Ltd - India
- Edison Trading Spa - Italy
- Ministry of Transport, Egypt
- Port Waratah Coal Services - Australia
- Deloitte Consulting - India
- Vedanta Resources Plc - India
- Sakthi Sugars Limited - India
- Timah Investasi Mineral - Indoneisa
- Mercator Lines Limited - India
- The University of Queensland
- Binh Thuan Hamico - Vietnam
- Miang Besar Coal Terminal - Indonesia
- Aditya Birla Group - India
- Rio Tinto Coal - Australia
- Tamil Nadu electricity Board
- Chettinad Cement Corporation Ltd - India
- Parry Sugars Refinery, India
- Mjunction Services Limited - India
- Riau Bara Harum - Indonesia
- Global Coal Blending Company Limited - Australia
- European Bulk Services B.V. - Netherlands
- Baramulti Group, Indonesia
- Aboitiz Power Corporation - Philippines
- IEA Clean Coal Centre - UK
- Agrawal Coal Company - India
- Ministry of Mines - Canada
- Gujarat Mineral Development Corp Ltd - India
- GMR Energy Limited - India
- Commonwealth Bank - Australia
- Global Business Power Corporation, Philippines
- Eastern Energy - Thailand
- Krishnapatnam Port Company Ltd. - India
- McConnell Dowell - Australia
- Lanco Infratech Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Mercuria Energy - Indonesia
- Karaikal Port Pvt Ltd - India
- Kartika Selabumi Mining - Indonesia
- Power Finance Corporation Ltd., India
- Borneo Indobara - Indonesia
- Indian Energy Exchange, India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Orica Australia Pty. Ltd.
- IHS Mccloskey Coal Group - USA
- Cigading International Bulk Terminal - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- SMG Consultants - Indonesia
- Makarim & Taira - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Cement Manufacturers Association - India
- Medco Energi Mining Internasional
- Sree Jayajothi Cements Limited - India
- Gujarat Electricity Regulatory Commission - India
- Oldendorff Carriers - Singapore
- OPG Power Generation Pvt Ltd - India
- Bangladesh Power Developement Board
- Wilmar Investment Holdings
- Ambuja Cements Ltd - India
- Bulk Trading Sa - Switzerland
- Billiton Holdings Pty Ltd - Australia
- Larsen & Toubro Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Semirara Mining Corp, Philippines
- Coastal Gujarat Power Limited - India
- Pendopo Energi Batubara - Indonesia
- Africa Commodities Group - South Africa
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