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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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Tuesday, 17 September 13
BUMA PRODUCED 3.57 PERCENT MORE COAL IN AUGUST
COALspot.com: BUMA has removed totaled 25.20 million bcm of overburden to produce 2.90 million tons coal in August 2013. BUMI produced 3.07 percent ...
Tuesday, 17 September 13
NEWCASTLE PORT SHIPPED ABOUT 27 PERCENT MORE COAL WEEK ON WEEK
COALspot.com: Power plant and semi-soft coking coal shipments from Australia's Newcastle port up 27.26 per cent week on week to 3.01 million mt for ...
Tuesday, 17 September 13
TAIPOWER INVITES BIDS FOR SUPPLY OF SUB-BITUMINOUS COAL
COALspot.com - Taiwan Power Company intends to procure 1.050 million tons of sub-bituminous coal for Taipower thermal power plant through open tende ...
Tuesday, 17 September 13
ORPHEUS SECURES SIGNIFICANT INFRASTRUCTURE DEAL THROUGH ACQUISITION OF SOUTH KALIMANTAN PORT CAPACITY
COALspot.com : Orpheus Energy Limited (ASX: OEG) of Australia has today announced that, it has executed a binding agreement with the proprietor of S ...
Monday, 16 September 13
WHAT RECOVERY MEANS FOR THE CAPESIZE MARKET - COMMODORE RESEARCH
COALspot.com: The simple fact that capesize rates have been able to increase above the $9,000/mark and become much more responsive to changes in car ...
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- Anglo American - United Kingdom
- Altura Mining Limited, Indonesia
- PowerSource Philippines DevCo
- Electricity Authority, New Zealand
- Parliament of New Zealand
- Kepco SPC Power Corporation, Philippines
- Ind-Barath Power Infra Limited - India
- ICICI Bank Limited - India
- Leighton Contractors Pty Ltd - Australia
- GVK Power & Infra Limited - India
- Indonesian Coal Mining Association
- Agrawal Coal Company - India
- White Energy Company Limited
- Heidelberg Cement - Germany
- ASAPP Information Group - India
- Indian Energy Exchange, India
- VISA Power Limited - India
- Jindal Steel & Power Ltd - India
- Georgia Ports Authority, United States
- Petron Corporation, Philippines
- Eastern Energy - Thailand
- Mercator Lines Limited - India
- Bharathi Cement Corporation - India
- Medco Energi Mining Internasional
- Sical Logistics Limited - India
- Central Java Power - Indonesia
- Mintek Dendrill Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Miang Besar Coal Terminal - Indonesia
- Edison Trading Spa - Italy
- Australian Commodity Traders Exchange
- Directorate Of Revenue Intelligence - India
- Meralco Power Generation, Philippines
- Tata Chemicals Ltd - India
- Sarangani Energy Corporation, Philippines
- Bukit Baiduri Energy - Indonesia
- Straits Asia Resources Limited - Singapore
- Coalindo Energy - Indonesia
- Standard Chartered Bank - UAE
- PetroVietnam Power Coal Import and Supply Company
- Siam City Cement PLC, Thailand
- Bayan Resources Tbk. - Indonesia
- Mercuria Energy - Indonesia
- Minerals Council of Australia
- Ministry of Mines - Canada
- Vijayanagar Sugar Pvt Ltd - India
- Iligan Light & Power Inc, Philippines
- Videocon Industries ltd - India
- Banpu Public Company Limited - Thailand
- TNB Fuel Sdn Bhd - Malaysia
- Kobexindo Tractors - Indoneisa
- Siam City Cement - Thailand
- Port Waratah Coal Services - Australia
- Baramulti Group, Indonesia
- Makarim & Taira - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Global Coal Blending Company Limited - Australia
- Planning Commission, India
- Timah Investasi Mineral - Indoneisa
- Offshore Bulk Terminal Pte Ltd, Singapore
- Formosa Plastics Group - Taiwan
- Trasteel International SA, Italy
- Alfred C Toepfer International GmbH - Germany
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Australian Coal Association
- Rashtriya Ispat Nigam Limited - India
- Price Waterhouse Coopers - Russia
- Orica Australia Pty. Ltd.
- Billiton Holdings Pty Ltd - Australia
- Independent Power Producers Association of India
- Coastal Gujarat Power Limited - India
- Bukit Makmur.PT - Indonesia
- SMG Consultants - Indonesia
- Dalmia Cement Bharat India
- SMC Global Power, Philippines
- Asmin Koalindo Tuhup - Indonesia
- New Zealand Coal & Carbon
- Wilmar Investment Holdings
- Holcim Trading Pte Ltd - Singapore
- Toyota Tsusho Corporation, Japan
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Singapore Mercantile Exchange
- Malabar Cements Ltd - India
- San Jose City I Power Corp, Philippines
- Vedanta Resources Plc - India
- Salva Resources Pvt Ltd - India
- Energy Link Ltd, New Zealand
- Barasentosa Lestari - Indonesia
- TeaM Sual Corporation - Philippines
- Directorate General of MIneral and Coal - Indonesia
- Kaltim Prima Coal - Indonesia
- Parry Sugars Refinery, India
- Sakthi Sugars Limited - India
- Chettinad Cement Corporation Ltd - India
- Bulk Trading Sa - Switzerland
- OPG Power Generation Pvt Ltd - India
- Globalindo Alam Lestari - Indonesia
- Ministry of Finance - Indonesia
- International Coal Ventures Pvt Ltd - India
- Manunggal Multi Energi - Indonesia
- Kapuas Tunggal Persada - Indonesia
- South Luzon Thermal Energy Corporation
- Semirara Mining Corp, Philippines
- Mjunction Services Limited - India
- Tamil Nadu electricity Board
- Kumho Petrochemical, South Korea
- Carbofer General Trading SA - India
- Thai Mozambique Logistica
- Semirara Mining and Power Corporation, Philippines
- Economic Council, Georgia
- Ceylon Electricity Board - Sri Lanka
- India Bulls Power Limited - India
- Wood Mackenzie - Singapore
- Metalloyd Limited - United Kingdom
- Romanian Commodities Exchange
- Karbindo Abesyapradhi - Indoneisa
- Grasim Industreis Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Indogreen Group - Indonesia
- Commonwealth Bank - Australia
- Posco Energy - South Korea
- London Commodity Brokers - England
- Global Business Power Corporation, Philippines
- Star Paper Mills Limited - India
- Goldman Sachs - Singapore
- Oldendorff Carriers - Singapore
- Bhoruka Overseas - Indonesia
- Central Electricity Authority - India
- The University of Queensland
- CNBM International Corporation - China
- Aboitiz Power Corporation - Philippines
- Deloitte Consulting - India
- Bhushan Steel Limited - India
- Latin American Coal - Colombia
- Attock Cement Pakistan Limited
- Maheswari Brothers Coal Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Power Finance Corporation Ltd., India
- The Treasury - Australian Government
- Ambuja Cements Ltd - India
- Riau Bara Harum - Indonesia
- Therma Luzon, Inc, Philippines
- Cement Manufacturers Association - India
- Kideco Jaya Agung - Indonesia
- Antam Resourcindo - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Interocean Group of Companies - India
- Lanco Infratech Ltd - India
- Vizag Seaport Private Limited - India
- Marubeni Corporation - India
- Thiess Contractors Indonesia
- Energy Development Corp, Philippines
- MS Steel International - UAE
- CIMB Investment Bank - Malaysia
- Pendopo Energi Batubara - Indonesia
- Madhucon Powers Ltd - India
- Kartika Selabumi Mining - Indonesia
- Merrill Lynch Commodities Europe
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Sree Jayajothi Cements Limited - India
- Aditya Birla Group - India
- The State Trading Corporation of India Ltd
- Jorong Barutama Greston.PT - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Cigading International Bulk Terminal - Indonesia
- Bhatia International Limited - India
- Sindya Power Generating Company Private Ltd
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Larsen & Toubro Limited - India
- Intertek Mineral Services - Indonesia
- Borneo Indobara - Indonesia
- GMR Energy Limited - India
- IEA Clean Coal Centre - UK
- Eastern Coal Council - USA
- Pipit Mutiara Jaya. PT, Indonesia
- GAC Shipping (India) Pvt Ltd
- Renaissance Capital - South Africa
- Indo Tambangraya Megah - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Sojitz Corporation - Japan
- Global Green Power PLC Corporation, Philippines
- Electricity Generating Authority of Thailand
- Essar Steel Hazira Ltd - India
- Indika Energy - Indonesia
- SN Aboitiz Power Inc, Philippines
- European Bulk Services B.V. - Netherlands
- Jaiprakash Power Ventures ltd
- Krishnapatnam Port Company Ltd. - India
- Bukit Asam (Persero) Tbk - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Africa Commodities Group - South Africa
- IHS Mccloskey Coal Group - USA
- Orica Mining Services - Indonesia
- Bangladesh Power Developement Board
- LBH Netherlands Bv - Netherlands
- Uttam Galva Steels Limited - India
- PTC India Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Rio Tinto Coal - Australia
- Binh Thuan Hamico - Vietnam
- Savvy Resources Ltd - HongKong
- Indian Oil Corporation Limited
- Chamber of Mines of South Africa
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Gujarat Sidhee Cement - India
- Xindia Steels Limited - India
- McConnell Dowell - Australia
- Simpson Spence & Young - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Ministry of Transport, Egypt
- Kohat Cement Company Ltd. - Pakistan
- Karaikal Port Pvt Ltd - India
- Meenaskhi Energy Private Limited - India
- Samtan Co., Ltd - South Korea
- Coal and Oil Company - UAE
- PNOC Exploration Corporation - Philippines
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