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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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Friday, 20 September 13
DRY BULK MARKET REACHES NEW HEIGHTS THIS WEEK STANDING AT THREE-YEAR HIGH - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The biggest rally of the dry bulk market in more than three years have brought back joy among ship owners, especially those active in the Capesize m ...
Friday, 20 September 13
US COAL PRODUCTION SLIGHTLY UP WEEK ON WEEK
COALspot.com – United States the world’s second largest coal producer produced totalled approximately 20.30 million short tons (mmst) of ...
Friday, 20 September 13
COLOMBIA SHIPPED 31.14 MILLION TONS OF THERMAL COAL IN H1
COALspot.com : Colombia’s coal exports fell by 20.59 percent in June 2013 compared to Colombia’s May's export of 7,633,579 MT.
Colom ...
Thursday, 19 September 13
CAPESIZE : AVERAGE DAILY EARNINGS HAVE GAINED ALMOST USD 6K WOW - FEARNLEYS
Handy
The rates in Feast are still firm this week even the activity calmed down a bit as chrtrs are not in a rush to cover even their end Sept carg ...
Wednesday, 18 September 13
DRY BULK MARKET CONTINUED TO ADVANCE - INTERMODAL
Chartering (Wet: Stable- / Dry: Firm+ )
The Dry Bulk market continued to advance at a very fast pace, with the BDI closing off the week north ...
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- Kapuas Tunggal Persada - Indonesia
- Parliament of New Zealand
- Indogreen Group - Indonesia
- Chamber of Mines of South Africa
- PTC India Limited - India
- Australian Commodity Traders Exchange
- Cement Manufacturers Association - India
- PNOC Exploration Corporation - Philippines
- Salva Resources Pvt Ltd - India
- CNBM International Corporation - China
- OPG Power Generation Pvt Ltd - India
- Sindya Power Generating Company Private Ltd
- Directorate General of MIneral and Coal - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Rashtriya Ispat Nigam Limited - India
- South Luzon Thermal Energy Corporation
- Mjunction Services Limited - India
- Agrawal Coal Company - India
- Alfred C Toepfer International GmbH - Germany
- Karbindo Abesyapradhi - Indoneisa
- Merrill Lynch Commodities Europe
- Kaltim Prima Coal - Indonesia
- Bhoruka Overseas - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Bhatia International Limited - India
- GVK Power & Infra Limited - India
- Ind-Barath Power Infra Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Gujarat Mineral Development Corp Ltd - India
- Electricity Generating Authority of Thailand
- Kalimantan Lumbung Energi - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- CIMB Investment Bank - Malaysia
- Borneo Indobara - Indonesia
- Pendopo Energi Batubara - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Goldman Sachs - Singapore
- Bhushan Steel Limited - India
- Georgia Ports Authority, United States
- Semirara Mining Corp, Philippines
- Mercator Lines Limited - India
- Ministry of Transport, Egypt
- Metalloyd Limited - United Kingdom
- Coalindo Energy - Indonesia
- Edison Trading Spa - Italy
- TeaM Sual Corporation - Philippines
- Minerals Council of Australia
- Gujarat Sidhee Cement - India
- Commonwealth Bank - Australia
- Kohat Cement Company Ltd. - Pakistan
- Uttam Galva Steels Limited - India
- Kepco SPC Power Corporation, Philippines
- Kobexindo Tractors - Indoneisa
- Antam Resourcindo - Indonesia
- Oldendorff Carriers - Singapore
- Sarangani Energy Corporation, Philippines
- The University of Queensland
- Siam City Cement PLC, Thailand
- IHS Mccloskey Coal Group - USA
- Sical Logistics Limited - India
- Straits Asia Resources Limited - Singapore
- Marubeni Corporation - India
- Banpu Public Company Limited - Thailand
- International Coal Ventures Pvt Ltd - India
- Orica Australia Pty. Ltd.
- Price Waterhouse Coopers - Russia
- Australian Coal Association
- Vijayanagar Sugar Pvt Ltd - India
- Singapore Mercantile Exchange
- Attock Cement Pakistan Limited
- VISA Power Limited - India
- Barasentosa Lestari - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Toyota Tsusho Corporation, Japan
- Mintek Dendrill Indonesia
- Petron Corporation, Philippines
- Standard Chartered Bank - UAE
- Wood Mackenzie - Singapore
- Lanco Infratech Ltd - India
- Holcim Trading Pte Ltd - Singapore
- Makarim & Taira - Indonesia
- Sojitz Corporation - Japan
- Offshore Bulk Terminal Pte Ltd, Singapore
- SMC Global Power, Philippines
- Coal and Oil Company - UAE
- Power Finance Corporation Ltd., India
- Wilmar Investment Holdings
- Indo Tambangraya Megah - Indonesia
- Xindia Steels Limited - India
- Sree Jayajothi Cements Limited - India
- Therma Luzon, Inc, Philippines
- SN Aboitiz Power Inc, Philippines
- Malabar Cements Ltd - India
- New Zealand Coal & Carbon
- Rio Tinto Coal - Australia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Renaissance Capital - South Africa
- Independent Power Producers Association of India
- Intertek Mineral Services - Indonesia
- Essar Steel Hazira Ltd - India
- Tamil Nadu electricity Board
- Bangladesh Power Developement Board
- Ceylon Electricity Board - Sri Lanka
- ASAPP Information Group - India
- Formosa Plastics Group - Taiwan
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Coastal Gujarat Power Limited - India
- Indonesian Coal Mining Association
- AsiaOL BioFuels Corp., Philippines
- Iligan Light & Power Inc, Philippines
- Bukit Makmur.PT - Indonesia
- Kumho Petrochemical, South Korea
- Deloitte Consulting - India
- Directorate Of Revenue Intelligence - India
- Ministry of Mines - Canada
- Latin American Coal - Colombia
- Africa Commodities Group - South Africa
- Medco Energi Mining Internasional
- Grasim Industreis Ltd - India
- Mercuria Energy - Indonesia
- Aditya Birla Group - India
- Posco Energy - South Korea
- Timah Investasi Mineral - Indoneisa
- Samtan Co., Ltd - South Korea
- Madhucon Powers Ltd - India
- Trasteel International SA, Italy
- Altura Mining Limited, Indonesia
- European Bulk Services B.V. - Netherlands
- Karaikal Port Pvt Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Orica Mining Services - Indonesia
- IEA Clean Coal Centre - UK
- Jindal Steel & Power Ltd - India
- Global Business Power Corporation, Philippines
- Indian Energy Exchange, India
- Anglo American - United Kingdom
- Interocean Group of Companies - India
- Indika Energy - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- ICICI Bank Limited - India
- Vizag Seaport Private Limited - India
- Star Paper Mills Limited - India
- Meralco Power Generation, Philippines
- Videocon Industries ltd - India
- Eastern Energy - Thailand
- Carbofer General Trading SA - India
- Central Electricity Authority - India
- Cigading International Bulk Terminal - Indonesia
- The State Trading Corporation of India Ltd
- Vedanta Resources Plc - India
- Gujarat Electricity Regulatory Commission - India
- Heidelberg Cement - Germany
- TNB Fuel Sdn Bhd - Malaysia
- Pipit Mutiara Jaya. PT, Indonesia
- White Energy Company Limited
- Sinarmas Energy and Mining - Indonesia
- Kartika Selabumi Mining - Indonesia
- Eastern Coal Council - USA
- Thiess Contractors Indonesia
- Bukit Baiduri Energy - Indonesia
- Chettinad Cement Corporation Ltd - India
- Bulk Trading Sa - Switzerland
- GMR Energy Limited - India
- Savvy Resources Ltd - HongKong
- Larsen & Toubro Limited - India
- Energy Development Corp, Philippines
- McConnell Dowell - Australia
- Thai Mozambique Logistica
- Globalindo Alam Lestari - Indonesia
- Meenaskhi Energy Private Limited - India
- Ambuja Cements Ltd - India
- Maheswari Brothers Coal Limited - India
- Bayan Resources Tbk. - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Electricity Authority, New Zealand
- Kideco Jaya Agung - Indonesia
- Indian Oil Corporation Limited
- PetroVietnam Power Coal Import and Supply Company
- GAC Shipping (India) Pvt Ltd
- Dalmia Cement Bharat India
- Baramulti Group, Indonesia
- SMG Consultants - Indonesia
- India Bulls Power Limited - India
- LBH Netherlands Bv - Netherlands
- Aboitiz Power Corporation - Philippines
- PowerSource Philippines DevCo
- The Treasury - Australian Government
- San Jose City I Power Corp, Philippines
- Global Green Power PLC Corporation, Philippines
- Siam City Cement - Thailand
- Miang Besar Coal Terminal - Indonesia
- Bharathi Cement Corporation - India
- Manunggal Multi Energi - Indonesia
- Planning Commission, India
- Port Waratah Coal Services - Australia
- Global Coal Blending Company Limited - Australia
- Leighton Contractors Pty Ltd - Australia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Tata Chemicals Ltd - India
- Sakthi Sugars Limited - India
- Energy Link Ltd, New Zealand
- London Commodity Brokers - England
- Jaiprakash Power Ventures ltd
- Bank of Tokyo Mitsubishi UFJ Ltd
- MS Steel International - UAE
- Parry Sugars Refinery, India
- Economic Council, Georgia
- Central Java Power - Indonesia
- Simpson Spence & Young - Indonesia
- Riau Bara Harum - Indonesia
- Binh Thuan Hamico - Vietnam
- Ministry of Finance - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Romanian Commodities Exchange
- Jorong Barutama Greston.PT - Indonesia
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