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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, 10 September 13
COAL EXPORTS AT AUSTRALIA'S NEWCASTLE PORT SLIP 30.31% ON WEEK TO 2.36 MMT
COALspot.com: Power plant and semi-soft coking coal shipments from Australia's Newcastle port down 30.31 per cent week on week to 2.36 million mt f ...
Tuesday, 10 September 13
WORLDWIDE COAL CONSUMPTION RISES SHARPLY - RA DR. ERICH SCHMITZ
By: RA Dr. Erich Schmitz, Verein der Kohlenimporteure (Germany Coal Importers Association)
World hard coal market in the first half of 2013: worl ...
Monday, 09 September 13
REBOUND IN NEWBUILDING ORDERS HASN'T HURT DRY BULK MARKET PROSPECTS, BUT SHIP OWNERS SHOULD STILL BE CAUTIOUS - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
Since the start of 2013 and up until the end of August, one thing has really caught the headlines in the dry bulk market, except of course, the frei ...
Sunday, 08 September 13
Q3 2014 THERMAL COAL SWAPS : STEADY DIRECTION
COALspot.com – Sub-Bit Indonesia coal swap (FOB ) for average Q4 2013 delivery up 1.88 percent month on month. The swap was moved ...
Sunday, 08 September 13
BALTIC INDEX UP ON HIGHER CAPESIZE, PANAMAX RATES
COALspot.com : The freight market continued saw one of the biggest rally last week with Cape Size taking the lead followed by Panamax.
The BDI wa ...
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- Romanian Commodities Exchange
- Attock Cement Pakistan Limited
- Edison Trading Spa - Italy
- Savvy Resources Ltd - HongKong
- Wilmar Investment Holdings
- CNBM International Corporation - China
- TNB Fuel Sdn Bhd - Malaysia
- Energy Development Corp, Philippines
- Merrill Lynch Commodities Europe
- Petron Corporation, Philippines
- Simpson Spence & Young - Indonesia
- San Jose City I Power Corp, Philippines
- Bharathi Cement Corporation - India
- Coalindo Energy - Indonesia
- Jaiprakash Power Ventures ltd
- Holcim Trading Pte Ltd - Singapore
- Gujarat Sidhee Cement - India
- Trasteel International SA, Italy
- SN Aboitiz Power Inc, Philippines
- Siam City Cement PLC, Thailand
- The University of Queensland
- Billiton Holdings Pty Ltd - Australia
- Petrochimia International Co. Ltd.- Taiwan
- Kartika Selabumi Mining - Indonesia
- Jindal Steel & Power Ltd - India
- Sarangani Energy Corporation, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Star Paper Mills Limited - India
- Bangladesh Power Developement Board
- GN Power Mariveles Coal Plant, Philippines
- Gujarat Electricity Regulatory Commission - India
- ICICI Bank Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Directorate General of MIneral and Coal - Indonesia
- Maheswari Brothers Coal Limited - India
- Straits Asia Resources Limited - Singapore
- Heidelberg Cement - Germany
- Standard Chartered Bank - UAE
- Binh Thuan Hamico - Vietnam
- Kalimantan Lumbung Energi - Indonesia
- Eastern Energy - Thailand
- Marubeni Corporation - India
- Barasentosa Lestari - Indonesia
- Deloitte Consulting - India
- Tamil Nadu electricity Board
- Global Green Power PLC Corporation, Philippines
- IHS Mccloskey Coal Group - USA
- Krishnapatnam Port Company Ltd. - India
- Indonesian Coal Mining Association
- Miang Besar Coal Terminal - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Orica Mining Services - Indonesia
- Essar Steel Hazira Ltd - India
- Thai Mozambique Logistica
- Wood Mackenzie - Singapore
- White Energy Company Limited
- OPG Power Generation Pvt Ltd - India
- Goldman Sachs - Singapore
- Kideco Jaya Agung - Indonesia
- Rio Tinto Coal - Australia
- IEA Clean Coal Centre - UK
- Central Java Power - Indonesia
- Madhucon Powers Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- South Luzon Thermal Energy Corporation
- Indo Tambangraya Megah - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Bhushan Steel Limited - India
- Toyota Tsusho Corporation, Japan
- Borneo Indobara - Indonesia
- The State Trading Corporation of India Ltd
- Ministry of Transport, Egypt
- Mintek Dendrill Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Pendopo Energi Batubara - Indonesia
- Power Finance Corporation Ltd., India
- Thiess Contractors Indonesia
- Mjunction Services Limited - India
- Kumho Petrochemical, South Korea
- Africa Commodities Group - South Africa
- Indika Energy - Indonesia
- Electricity Authority, New Zealand
- Rashtriya Ispat Nigam Limited - India
- Banpu Public Company Limited - Thailand
- Indian Oil Corporation Limited
- Gujarat Mineral Development Corp Ltd - India
- PNOC Exploration Corporation - Philippines
- Port Waratah Coal Services - Australia
- Xindia Steels Limited - India
- GMR Energy Limited - India
- Anglo American - United Kingdom
- Samtan Co., Ltd - South Korea
- Mercator Lines Limited - India
- Altura Mining Limited, Indonesia
- Central Electricity Authority - India
- International Coal Ventures Pvt Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Kobexindo Tractors - Indoneisa
- Karaikal Port Pvt Ltd - India
- Meralco Power Generation, Philippines
- Economic Council, Georgia
- Indian Energy Exchange, India
- Medco Energi Mining Internasional
- VISA Power Limited - India
- Meenaskhi Energy Private Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Ind-Barath Power Infra Limited - India
- Siam City Cement - Thailand
- Semirara Mining Corp, Philippines
- Minerals Council of Australia
- Australian Commodity Traders Exchange
- Semirara Mining and Power Corporation, Philippines
- Global Business Power Corporation, Philippines
- Bulk Trading Sa - Switzerland
- The Treasury - Australian Government
- SMG Consultants - Indonesia
- Kaltim Prima Coal - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Aboitiz Power Corporation - Philippines
- Sojitz Corporation - Japan
- Iligan Light & Power Inc, Philippines
- Lanco Infratech Ltd - India
- Electricity Generating Authority of Thailand
- Carbofer General Trading SA - India
- SMC Global Power, Philippines
- Independent Power Producers Association of India
- Bahari Cakrawala Sebuku - Indonesia
- Riau Bara Harum - Indonesia
- Coal and Oil Company - UAE
- CIMB Investment Bank - Malaysia
- Commonwealth Bank - Australia
- Aditya Birla Group - India
- Makarim & Taira - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Metalloyd Limited - United Kingdom
- Uttam Galva Steels Limited - India
- Grasim Industreis Ltd - India
- Tata Chemicals Ltd - India
- Sindya Power Generating Company Private Ltd
- Mercuria Energy - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Energy Link Ltd, New Zealand
- Indogreen Group - Indonesia
- Malabar Cements Ltd - India
- Singapore Mercantile Exchange
- Karbindo Abesyapradhi - Indoneisa
- Bukit Baiduri Energy - Indonesia
- GAC Shipping (India) Pvt Ltd
- PowerSource Philippines DevCo
- Globalindo Alam Lestari - Indonesia
- Formosa Plastics Group - Taiwan
- Leighton Contractors Pty Ltd - Australia
- Therma Luzon, Inc, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Sree Jayajothi Cements Limited - India
- GVK Power & Infra Limited - India
- McConnell Dowell - Australia
- PetroVietnam Power Coal Import and Supply Company
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- TeaM Sual Corporation - Philippines
- Ministry of Finance - Indonesia
- Kepco SPC Power Corporation, Philippines
- Latin American Coal - Colombia
- Vijayanagar Sugar Pvt Ltd - India
- Interocean Group of Companies - India
- MS Steel International - UAE
- Sinarmas Energy and Mining - Indonesia
- Intertek Mineral Services - Indonesia
- Baramulti Group, Indonesia
- Cement Manufacturers Association - India
- New Zealand Coal & Carbon
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Price Waterhouse Coopers - Russia
- Planning Commission, India
- Salva Resources Pvt Ltd - India
- PTC India Limited - India
- Timah Investasi Mineral - Indoneisa
- Bayan Resources Tbk. - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Orica Australia Pty. Ltd.
- Asmin Koalindo Tuhup - Indonesia
- Antam Resourcindo - Indonesia
- Oldendorff Carriers - Singapore
- Bhatia International Limited - India
- Manunggal Multi Energi - Indonesia
- Chettinad Cement Corporation Ltd - India
- Posco Energy - South Korea
- Coastal Gujarat Power Limited - India
- Ambuja Cements Ltd - India
- Chamber of Mines of South Africa
- Global Coal Blending Company Limited - Australia
- Directorate Of Revenue Intelligence - India
- Vizag Seaport Private Limited - India
- Videocon Industries ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Australian Coal Association
- Kohat Cement Company Ltd. - Pakistan
- European Bulk Services B.V. - Netherlands
- LBH Netherlands Bv - Netherlands
- London Commodity Brokers - England
- Georgia Ports Authority, United States
- India Bulls Power Limited - India
- Sical Logistics Limited - India
- ASAPP Information Group - India
- Larsen & Toubro Limited - India
- Renaissance Capital - South Africa
- Bukit Makmur.PT - Indonesia
- Parliament of New Zealand
- AsiaOL BioFuels Corp., Philippines
- Vedanta Resources Plc - India
- Bhoruka Overseas - Indonesia
- Parry Sugars Refinery, India
- Dalmia Cement Bharat India
- Sakthi Sugars Limited - India
- Eastern Coal Council - USA
- Agrawal Coal Company - India
- Ministry of Mines - Canada
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