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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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Thursday, 12 September 13
PANAMAX : PACIFIC ROUNDS ARE NOW REPORTED BETWEEN USD 13K AND 15K PER DAY - FEARNRESEARCH
Handy
Nickel ore is a key support SE Asia/Feast rate at the moment; vessel in N.China were fixed around USD 11-12k, ships in mid China can expect a ...
Thursday, 12 September 13
CAPESIZE MARKET WILL BECOME EVEN TIGHTER - JEFFREY LANDSBERG
COALspot.com : While it is no secret that current capesize availability has become tight and has caused capesize rates to surge, availability is set ...
Thursday, 12 September 13
OVER THE WORST? WE MIGHT FIND OUT THIS WEEK - BIMCO
The shipping market has a spring in its step, even as summer draws to a close. There is it seems, confidence that finally, we are emerging into the ...
Thursday, 12 September 13
DRY BULK MARKET RALLY COMES AT A GOOD TIME FOR MOST SHIP OWNERS - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The latest surge of the dry bulk market has helped offset other lingering factors, which otherwise, could have plunged freight rates to new lows. Fo ...
Wednesday, 11 September 13
ASIA - PACIFIC THERMAL COAL MARKET TO REMAIN OVERSUPPLIED IN NEXT 12 MONTHS - FITCH RATINGS
COALspot.com: Fitch Ratings says the Asia-Pacific thermal coal market will remain oversupplied in the next 12 months because strong production has b ...
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- Aditya Birla Group - India
- Timah Investasi Mineral - Indoneisa
- Gujarat Sidhee Cement - India
- Georgia Ports Authority, United States
- Semirara Mining and Power Corporation, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Wood Mackenzie - Singapore
- European Bulk Services B.V. - Netherlands
- SN Aboitiz Power Inc, Philippines
- PTC India Limited - India
- Renaissance Capital - South Africa
- Romanian Commodities Exchange
- Videocon Industries ltd - India
- Madhucon Powers Ltd - India
- Malabar Cements Ltd - India
- Bulk Trading Sa - Switzerland
- Carbofer General Trading SA - India
- Thai Mozambique Logistica
- Jaiprakash Power Ventures ltd
- Billiton Holdings Pty Ltd - Australia
- Marubeni Corporation - India
- Leighton Contractors Pty Ltd - Australia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Formosa Plastics Group - Taiwan
- India Bulls Power Limited - India
- Alfred C Toepfer International GmbH - Germany
- Indian Energy Exchange, India
- Edison Trading Spa - Italy
- Ministry of Transport, Egypt
- Price Waterhouse Coopers - Russia
- Petrochimia International Co. Ltd.- Taiwan
- Eastern Energy - Thailand
- Samtan Co., Ltd - South Korea
- Krishnapatnam Port Company Ltd. - India
- Antam Resourcindo - Indonesia
- Commonwealth Bank - Australia
- Globalindo Alam Lestari - Indonesia
- Orica Mining Services - Indonesia
- Energy Development Corp, Philippines
- Larsen & Toubro Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Pendopo Energi Batubara - Indonesia
- Parliament of New Zealand
- Interocean Group of Companies - India
- Coastal Gujarat Power Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Karaikal Port Pvt Ltd - India
- Heidelberg Cement - Germany
- Meralco Power Generation, Philippines
- Cement Manufacturers Association - India
- Minerals Council of Australia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Vedanta Resources Plc - India
- Barasentosa Lestari - Indonesia
- Chettinad Cement Corporation Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Banpu Public Company Limited - Thailand
- Aboitiz Power Corporation - Philippines
- Meenaskhi Energy Private Limited - India
- Holcim Trading Pte Ltd - Singapore
- Ambuja Cements Ltd - India
- Mjunction Services Limited - India
- Rashtriya Ispat Nigam Limited - India
- Global Business Power Corporation, Philippines
- Latin American Coal - Colombia
- Bangladesh Power Developement Board
- Directorate Of Revenue Intelligence - India
- Bharathi Cement Corporation - India
- The State Trading Corporation of India Ltd
- Xindia Steels Limited - India
- TeaM Sual Corporation - Philippines
- Energy Link Ltd, New Zealand
- Singapore Mercantile Exchange
- IHS Mccloskey Coal Group - USA
- Planning Commission, India
- Altura Mining Limited, Indonesia
- Kumho Petrochemical, South Korea
- Bahari Cakrawala Sebuku - Indonesia
- Tamil Nadu electricity Board
- Indogreen Group - Indonesia
- Attock Cement Pakistan Limited
- Simpson Spence & Young - Indonesia
- SMC Global Power, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Uttam Galva Steels Limited - India
- Sindya Power Generating Company Private Ltd
- Baramulti Group, Indonesia
- PNOC Exploration Corporation - Philippines
- Toyota Tsusho Corporation, Japan
- Australian Coal Association
- GAC Shipping (India) Pvt Ltd
- Star Paper Mills Limited - India
- Central Electricity Authority - India
- Rio Tinto Coal - Australia
- Parry Sugars Refinery, India
- Bhushan Steel Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Asmin Koalindo Tuhup - Indonesia
- Bayan Resources Tbk. - Indonesia
- Kaltim Prima Coal - Indonesia
- Sojitz Corporation - Japan
- Lanco Infratech Ltd - India
- Wilmar Investment Holdings
- Indian Oil Corporation Limited
- Indonesian Coal Mining Association
- Petron Corporation, Philippines
- Australian Commodity Traders Exchange
- Jindal Steel & Power Ltd - India
- Manunggal Multi Energi - Indonesia
- Ministry of Finance - Indonesia
- OPG Power Generation Pvt Ltd - India
- Siam City Cement - Thailand
- Essar Steel Hazira Ltd - India
- Borneo Indobara - Indonesia
- Semirara Mining Corp, Philippines
- SMG Consultants - Indonesia
- CIMB Investment Bank - Malaysia
- Vizag Seaport Private Limited - India
- LBH Netherlands Bv - Netherlands
- MS Steel International - UAE
- Goldman Sachs - Singapore
- Therma Luzon, Inc, Philippines
- VISA Power Limited - India
- Ceylon Electricity Board - Sri Lanka
- Deloitte Consulting - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- CNBM International Corporation - China
- Trasteel International SA, Italy
- Anglo American - United Kingdom
- White Energy Company Limited
- San Jose City I Power Corp, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Salva Resources Pvt Ltd - India
- ICICI Bank Limited - India
- Thiess Contractors Indonesia
- International Coal Ventures Pvt Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Kepco SPC Power Corporation, Philippines
- Agrawal Coal Company - India
- Kohat Cement Company Ltd. - Pakistan
- Global Green Power PLC Corporation, Philippines
- PowerSource Philippines DevCo
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Cigading International Bulk Terminal - Indonesia
- Global Coal Blending Company Limited - Australia
- GMR Energy Limited - India
- Sree Jayajothi Cements Limited - India
- Chamber of Mines of South Africa
- Riau Bara Harum - Indonesia
- Indika Energy - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Bukit Baiduri Energy - Indonesia
- Economic Council, Georgia
- Sakthi Sugars Limited - India
- South Luzon Thermal Energy Corporation
- Bukit Makmur.PT - Indonesia
- Standard Chartered Bank - UAE
- The Treasury - Australian Government
- Miang Besar Coal Terminal - Indonesia
- Electricity Authority, New Zealand
- New Zealand Coal & Carbon
- Metalloyd Limited - United Kingdom
- London Commodity Brokers - England
- IEA Clean Coal Centre - UK
- Jorong Barutama Greston.PT - Indonesia
- Siam City Cement PLC, Thailand
- Sical Logistics Limited - India
- Makarim & Taira - Indonesia
- Straits Asia Resources Limited - Singapore
- AsiaOL BioFuels Corp., Philippines
- Power Finance Corporation Ltd., India
- Indo Tambangraya Megah - Indonesia
- Ind-Barath Power Infra Limited - India
- Iligan Light & Power Inc, Philippines
- Savvy Resources Ltd - HongKong
- Eastern Coal Council - USA
- Tata Chemicals Ltd - India
- Sarangani Energy Corporation, Philippines
- Gujarat Electricity Regulatory Commission - India
- Port Waratah Coal Services - Australia
- Posco Energy - South Korea
- Bhoruka Overseas - Indonesia
- Coalindo Energy - Indonesia
- Kobexindo Tractors - Indoneisa
- Bukit Asam (Persero) Tbk - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Orica Australia Pty. Ltd.
- Oldendorff Carriers - Singapore
- Medco Energi Mining Internasional
- Grasim Industreis Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Ministry of Mines - Canada
- Electricity Generating Authority of Thailand
- McConnell Dowell - Australia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Central Java Power - Indonesia
- Merrill Lynch Commodities Europe
- Coal and Oil Company - UAE
- Kartika Selabumi Mining - Indonesia
- Africa Commodities Group - South Africa
- Mercator Lines Limited - India
- The University of Queensland
- Dalmia Cement Bharat India
- Mercuria Energy - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Maheswari Brothers Coal Limited - India
- Mintek Dendrill Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Bhatia International Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Binh Thuan Hamico - Vietnam
- Kideco Jaya Agung - Indonesia
- GVK Power & Infra Limited - India
- Intertek Mineral Services - Indonesia
- Independent Power Producers Association of India
- ASAPP Information Group - India
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