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Wednesday, 18 September 13
IRON ORE AND ZINC ARE BEST PERFORMING MINING SECTORS IN CURRENT LOW PRICE, HIGH COST ENVIRONMENT - WOOD MACKENZIE
 With the fall in commodity prices, cash margins in the mining industry have come under pressure. Accordingly, producers and investors are placing intense focus on both operating and capital costs. Wood Mackenzie's report titled 'Who hurts most' analyses cash costs and margins across the bulk commodities as well as base and precious metals. The report reveals that the iron ore and zinc sectors will perform best on average; while copper, export metallurgical coal and gold will be most challenged. Based on this, companies may have to make important decisions to protect their overall margins.
Wood Mackenzie finds that amongst the bulk commodities, iron ore stands above the rest. Despite pulling back from 2012 levels with a 19% cash margin decline, iron ore still has a very strong average industry margin of US$49/tonne (52% of average price) in 2014, enabling continued large cash generation in this high volume business. This supports the on-going focus by the major producers like Rio Tinto, BHP Billiton and Vale, on pushing ahead with expansions at their low cost iron ore operations. It is also in stark contrast to coal and bauxite, both of which have average margins of less than 25% in 2013 - the outlook is particularly bleak for export thermal coal with an average margin of only 19% in 2014.
Mr Steve Hulton, Principal Mining Analyst for Wood Mackenzie, says, "The sectors that fare the worst, with biggest average falls in margins from 2012 to 2014 are copper, export metallurgical coal and gold. Nickel has the lowest average industry margin of only 13% of price in 2013. This rises slightly in 2014, but it is still the worst of all commodities studied. As such, the nickel industry is under severe pressure. In 2012, one-third of industry production generated negative margins after taking into account total cash and sustaining capex costs."
The zinc mining sector has a very high average margin as a percentage of the metal price due to the large contribution of by-product credits like copper, lead, silver and gold, which offset operating costs. While remaining relatively high, the average zinc margin is expected to decrease to 83% in 2014, even with a rising zinc price, due to the lower value of by-product revenue in this polymetallic sector.
For the copper and gold industries, lower prices will continue to put pressure on overall operational cash-flow. In Wood Mackenzie's analysis, average industry margins in 2014 fall to 39% for copper and 44% for gold, down from 49% and 50% respectively from 2012. In export met coal, margins in 2014 are only 25% of average price, down from 30% in 2012.
Mr Hulton explains the importance of this analysis to producers, "Operating costs in the mining industry have risen rapidly over recent years, but now that prices have dropped there is a renewed focus from mining companies on reducing costs and trying to protect margins."
"To compare overall operating margins, we examine total cash cost plus sustaining capital. For producers to accurately assess cash margins at the mine level, just examining the basic C1™ operating cost can be misleading. Total cash cost plus sustaining capital is a better full cash cost measure. This comprises the C1™ operating cash cost plus indirect cash costs such as royalties & levies, and the cash spend on capital required to sustain production." The industry standard C1™ cost is the direct cash cost of mining, processing and offsite realisation costs, including any by-product credits. It is primarily used to compare the relative underlying cost efficiency of production between mines.
Mr Hulton concludes, "Individual mining companies will be variously affected depending on their exposure to the different commodities, and where their particular mines sit on the respective industry cost/margin curves. As price takers, there are limited tunes the producers can play and one of them will be to slow down on capital spend, and prioritise the commodities that have the best returns."
*Note: The base and precious metals commodities covered in the analysis are copper, nickel, zinc and gold. The bulk commodities covered in the analysis are metallurgical export coal, thermal export coal, bauxite and iron ore.
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Monday, 23 September 13
AUSTRALIA'S NEWCASTLE PORT SHIPPED 3 PERCENT LESS COAL WEEK ON WEEK
COALspot.com: Power plant and semi-soft coking coal shipments from Australia's Newcastle port fell 3 per cent week on week to 2.92 million mt for t ...
Sunday, 22 September 13
BDI STRENGTHENS FURTHER AS CAPESIZE FREIGHT RATES JUMP - CAPT. REDDY
COALspot.com: The freight market continued its upward trend and maintaining the moment with BDI and Cape index up by 16 pct week on week. The Capesi ...
Sunday, 22 September 13
API 8 CFR SOUTH CHINA COAL SWAPS ADVANCE
COALspot.com : SGX has launched API 8 CFR South China Coal Swap on 29 April 2013 and SGX replaced the previous swap.
API 8 CFR South China Coal s ...
Sunday, 22 September 13
SUB-BIT INDONESIA COAL SWAPS REMAIN UNDER PRESSURE
COALspot.com – Sub-Bit Indonesia coal swap (FOB ) for average Q4 2013 delivery down 2.09 percept month on month on Friday 20 September 2 ...
Friday, 20 September 13
SHIP OWNERS INVEST MORE THAN $9.2 BILLION ON NEW BUILDING VESSELS DURING AUGUST - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
Despite the fact that August is traditionally a slow month in terms of ships investment activity, ship owners have grasped this year the opportunity ...
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- Standard Chartered Bank - UAE
- ASAPP Information Group - India
- Bahari Cakrawala Sebuku - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Larsen & Toubro Limited - India
- Coastal Gujarat Power Limited - India
- Commonwealth Bank - Australia
- Global Green Power PLC Corporation, Philippines
- TeaM Sual Corporation - Philippines
- Kaltim Prima Coal - Indonesia
- Indogreen Group - Indonesia
- Meralco Power Generation, Philippines
- Xindia Steels Limited - India
- Tata Chemicals Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Attock Cement Pakistan Limited
- South Luzon Thermal Energy Corporation
- SMG Consultants - Indonesia
- Altura Mining Limited, Indonesia
- Leighton Contractors Pty Ltd - Australia
- Bayan Resources Tbk. - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Anglo American - United Kingdom
- Aboitiz Power Corporation - Philippines
- ICICI Bank Limited - India
- Orica Mining Services - Indonesia
- Borneo Indobara - Indonesia
- Ambuja Cements Ltd - India
- Mintek Dendrill Indonesia
- Sakthi Sugars Limited - India
- GVK Power & Infra Limited - India
- Siam City Cement PLC, Thailand
- Parliament of New Zealand
- TNB Fuel Sdn Bhd - Malaysia
- Dalmia Cement Bharat India
- Global Coal Blending Company Limited - Australia
- Ind-Barath Power Infra Limited - India
- Jindal Steel & Power Ltd - India
- Wilmar Investment Holdings
- The Treasury - Australian Government
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- PowerSource Philippines DevCo
- CNBM International Corporation - China
- Bhoruka Overseas - Indonesia
- Sindya Power Generating Company Private Ltd
- Krishnapatnam Port Company Ltd. - India
- Gujarat Sidhee Cement - India
- Ministry of Transport, Egypt
- Tamil Nadu electricity Board
- Singapore Mercantile Exchange
- Sinarmas Energy and Mining - Indonesia
- SMC Global Power, Philippines
- LBH Netherlands Bv - Netherlands
- San Jose City I Power Corp, Philippines
- Thiess Contractors Indonesia
- OPG Power Generation Pvt Ltd - India
- Australian Commodity Traders Exchange
- VISA Power Limited - India
- Mercuria Energy - Indonesia
- Formosa Plastics Group - Taiwan
- Toyota Tsusho Corporation, Japan
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Bank of Tokyo Mitsubishi UFJ Ltd
- Energy Link Ltd, New Zealand
- Indian Energy Exchange, India
- White Energy Company Limited
- The State Trading Corporation of India Ltd
- PNOC Exploration Corporation - Philippines
- Merrill Lynch Commodities Europe
- Neyveli Lignite Corporation Ltd, - India
- Indian Oil Corporation Limited
- Meenaskhi Energy Private Limited - India
- Siam City Cement - Thailand
- Kumho Petrochemical, South Korea
- Medco Energi Mining Internasional
- Central Java Power - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Banpu Public Company Limited - Thailand
- Coal and Oil Company - UAE
- Essar Steel Hazira Ltd - India
- Cement Manufacturers Association - India
- Sical Logistics Limited - India
- Intertek Mineral Services - Indonesia
- Timah Investasi Mineral - Indoneisa
- Semirara Mining and Power Corporation, Philippines
- Therma Luzon, Inc, Philippines
- Pendopo Energi Batubara - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Sree Jayajothi Cements Limited - India
- Romanian Commodities Exchange
- Bhatia International Limited - India
- Rashtriya Ispat Nigam Limited - India
- MS Steel International - UAE
- Salva Resources Pvt Ltd - India
- IHS Mccloskey Coal Group - USA
- Straits Asia Resources Limited - Singapore
- Karbindo Abesyapradhi - Indoneisa
- Malabar Cements Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Renaissance Capital - South Africa
- Coalindo Energy - Indonesia
- Marubeni Corporation - India
- Petron Corporation, Philippines
- Star Paper Mills Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Indo Tambangraya Megah - Indonesia
- Minerals Council of Australia
- Mjunction Services Limited - India
- Directorate Of Revenue Intelligence - India
- Cigading International Bulk Terminal - Indonesia
- Semirara Mining Corp, Philippines
- Electricity Authority, New Zealand
- Metalloyd Limited - United Kingdom
- Planning Commission, India
- Port Waratah Coal Services - Australia
- India Bulls Power Limited - India
- International Coal Ventures Pvt Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Jaiprakash Power Ventures ltd
- Africa Commodities Group - South Africa
- Antam Resourcindo - Indonesia
- Samtan Co., Ltd - South Korea
- Edison Trading Spa - Italy
- Ministry of Finance - Indonesia
- Australian Coal Association
- Barasentosa Lestari - Indonesia
- New Zealand Coal & Carbon
- Energy Development Corp, Philippines
- Georgia Ports Authority, United States
- Indika Energy - Indonesia
- Kartika Selabumi Mining - Indonesia
- Bharathi Cement Corporation - India
- Madhucon Powers Ltd - India
- Mercator Lines Limited - India
- Holcim Trading Pte Ltd - Singapore
- Alfred C Toepfer International GmbH - Germany
- Miang Besar Coal Terminal - Indonesia
- McConnell Dowell - Australia
- GAC Shipping (India) Pvt Ltd
- Eastern Energy - Thailand
- IEA Clean Coal Centre - UK
- European Bulk Services B.V. - Netherlands
- London Commodity Brokers - England
- Parry Sugars Refinery, India
- Billiton Holdings Pty Ltd - Australia
- Kalimantan Lumbung Energi - Indonesia
- SN Aboitiz Power Inc, Philippines
- Jorong Barutama Greston.PT - Indonesia
- Bhushan Steel Limited - India
- Chamber of Mines of South Africa
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Rio Tinto Coal - Australia
- Thai Mozambique Logistica
- PetroVietnam Power Coal Import and Supply Company
- Indonesian Coal Mining Association
- Videocon Industries ltd - India
- Binh Thuan Hamico - Vietnam
- Kobexindo Tractors - Indoneisa
- Bulk Trading Sa - Switzerland
- Economic Council, Georgia
- Grasim Industreis Ltd - India
- Global Business Power Corporation, Philippines
- Oldendorff Carriers - Singapore
- Independent Power Producers Association of India
- Orica Australia Pty. Ltd.
- Kepco SPC Power Corporation, Philippines
- Central Electricity Authority - India
- Uttam Galva Steels Limited - India
- Makarim & Taira - Indonesia
- Carbofer General Trading SA - India
- Ministry of Mines - Canada
- Simpson Spence & Young - Indonesia
- Riau Bara Harum - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Vedanta Resources Plc - India
- Power Finance Corporation Ltd., India
- Sojitz Corporation - Japan
- Kideco Jaya Agung - Indonesia
- Globalindo Alam Lestari - Indonesia
- GMR Energy Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Maheswari Brothers Coal Limited - India
- AsiaOL BioFuels Corp., Philippines
- Electricity Generating Authority of Thailand
- Latin American Coal - Colombia
- Manunggal Multi Energi - Indonesia
- Eastern Coal Council - USA
- Chettinad Cement Corporation Ltd - India
- Karaikal Port Pvt Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Pipit Mutiara Jaya. PT, Indonesia
- Savvy Resources Ltd - HongKong
- Sarangani Energy Corporation, Philippines
- Wood Mackenzie - Singapore
- Trasteel International SA, Italy
- Gujarat Mineral Development Corp Ltd - India
- Price Waterhouse Coopers - Russia
- Deloitte Consulting - India
- Gujarat Electricity Regulatory Commission - India
- PTC India Limited - India
- Iligan Light & Power Inc, Philippines
- Vizag Seaport Private Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Baramulti Group, Indonesia
- Heidelberg Cement - Germany
- Bukit Makmur.PT - Indonesia
- Lanco Infratech Ltd - India
- CIMB Investment Bank - Malaysia
- Interocean Group of Companies - India
- Agrawal Coal Company - India
- The University of Queensland
- Aditya Birla Group - India
- Goldman Sachs - Singapore
- Bangladesh Power Developement Board
- Posco Energy - South Korea
- Kapuas Tunggal Persada - Indonesia
- Bukit Baiduri Energy - Indonesia
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