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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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Wednesday, 04 September 13
RBCT SHIPPED 16.18 PERCENT MORE COAL IN JULY
COALspot.com - Richards Bay Coal Terminal (RBCT) is the single largest coal export terminal South African as well as in the world has shipped 6,162, ...
Wednesday, 04 September 13
SUPRAS AND HANDIES : INDONESIAN COAL CARGOES ARE SUPPORTING HEALTHY ACTIVITY LEVELS - INTERMODAL
The Dry Bulk market has pooled back a bit this week after firming for two weeks in a row. The BDI is s holding above 1,100 points and despite the sm ...
Tuesday, 03 September 13
AUSTRALIA'S NEWCASTLE PORT SHIPPED 22.93 PER CENT MORE COAL W-O-W
COALspot.com: Power plant and semi-soft coking coal shipments from Australia's Newcastle port up 22.93 per cent week on week to 3.39 million mt for ...
Sunday, 01 September 13
COAL SWAP SHOWS MIXED TREND
COALspot.com – Sub-Bit Indonesia coal swaps (FOB ) for average Q4 2013 delivery 1.25 percent up month on month. The swap was moved posit ...
Sunday, 01 September 13
INDONESIA TO INDIA SPOT FREIGHT STAYS FIRM THIS WEEK - VISTAAR
COALspot.com: The freight market continued to be firm with even though the BDI and Cape index dropped by about 3 pct week on week.
The BDI was do ...
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- Kohat Cement Company Ltd. - Pakistan
- Power Finance Corporation Ltd., India
- Thiess Contractors Indonesia
- Thai Mozambique Logistica
- Petron Corporation, Philippines
- Xindia Steels Limited - India
- Mercator Lines Limited - India
- McConnell Dowell - Australia
- Neyveli Lignite Corporation Ltd, - India
- Bahari Cakrawala Sebuku - Indonesia
- Australian Commodity Traders Exchange
- Billiton Holdings Pty Ltd - Australia
- Sarangani Energy Corporation, Philippines
- Banpu Public Company Limited - Thailand
- GVK Power & Infra Limited - India
- Chamber of Mines of South Africa
- Krishnapatnam Port Company Ltd. - India
- International Coal Ventures Pvt Ltd - India
- Ministry of Transport, Egypt
- Timah Investasi Mineral - Indoneisa
- Indogreen Group - Indonesia
- Oldendorff Carriers - Singapore
- Romanian Commodities Exchange
- AsiaOL BioFuels Corp., Philippines
- Binh Thuan Hamico - Vietnam
- Vijayanagar Sugar Pvt Ltd - India
- ICICI Bank Limited - India
- MS Steel International - UAE
- Antam Resourcindo - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Barasentosa Lestari - Indonesia
- Jindal Steel & Power Ltd - India
- Aditya Birla Group - India
- TeaM Sual Corporation - Philippines
- Tata Chemicals Ltd - India
- Altura Mining Limited, Indonesia
- Indonesian Coal Mining Association
- New Zealand Coal & Carbon
- Edison Trading Spa - Italy
- Semirara Mining and Power Corporation, Philippines
- Formosa Plastics Group - Taiwan
- VISA Power Limited - India
- Leighton Contractors Pty Ltd - Australia
- Baramulti Group, Indonesia
- Videocon Industries ltd - India
- Parry Sugars Refinery, India
- Makarim & Taira - Indonesia
- Trasteel International SA, Italy
- Gujarat Electricity Regulatory Commission - India
- Global Business Power Corporation, Philippines
- Chettinad Cement Corporation Ltd - India
- GAC Shipping (India) Pvt Ltd
- Bharathi Cement Corporation - India
- IEA Clean Coal Centre - UK
- Maharashtra Electricity Regulatory Commission - India
- White Energy Company Limited
- Energy Development Corp, Philippines
- SMC Global Power, Philippines
- Deloitte Consulting - India
- CNBM International Corporation - China
- Ceylon Electricity Board - Sri Lanka
- Georgia Ports Authority, United States
- Kaltim Prima Coal - Indonesia
- Kumho Petrochemical, South Korea
- The State Trading Corporation of India Ltd
- Marubeni Corporation - India
- Intertek Mineral Services - Indonesia
- Karaikal Port Pvt Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Sakthi Sugars Limited - India
- Coalindo Energy - Indonesia
- San Jose City I Power Corp, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Orica Mining Services - Indonesia
- Salva Resources Pvt Ltd - India
- PTC India Limited - India
- Straits Asia Resources Limited - Singapore
- Ministry of Finance - Indonesia
- The University of Queensland
- Bangladesh Power Developement Board
- Simpson Spence & Young - Indonesia
- Lanco Infratech Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Medco Energi Mining Internasional
- LBH Netherlands Bv - Netherlands
- Riau Bara Harum - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Vizag Seaport Private Limited - India
- Pendopo Energi Batubara - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Bank of Tokyo Mitsubishi UFJ Ltd
- PowerSource Philippines DevCo
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Orica Australia Pty. Ltd.
- Aboitiz Power Corporation - Philippines
- Eastern Energy - Thailand
- Bhoruka Overseas - Indonesia
- Bhatia International Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Ind-Barath Power Infra Limited - India
- Sindya Power Generating Company Private Ltd
- Agrawal Coal Company - India
- Mjunction Services Limited - India
- Sojitz Corporation - Japan
- PetroVietnam Power Coal Import and Supply Company
- The Treasury - Australian Government
- Commonwealth Bank - Australia
- Bulk Trading Sa - Switzerland
- TNB Fuel Sdn Bhd - Malaysia
- Australian Coal Association
- Siam City Cement - Thailand
- Latin American Coal - Colombia
- Dalmia Cement Bharat India
- Planning Commission, India
- Uttam Galva Steels Limited - India
- Globalindo Alam Lestari - Indonesia
- Bukit Baiduri Energy - Indonesia
- Anglo American - United Kingdom
- Indika Energy - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Mintek Dendrill Indonesia
- Indian Oil Corporation Limited
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Cement Manufacturers Association - India
- Central Java Power - Indonesia
- Savvy Resources Ltd - HongKong
- Jaiprakash Power Ventures ltd
- Alfred C Toepfer International GmbH - Germany
- Kartika Selabumi Mining - Indonesia
- Ambuja Cements Ltd - India
- ASAPP Information Group - India
- Global Green Power PLC Corporation, Philippines
- Minerals Council of Australia
- Indian Energy Exchange, India
- Gujarat Sidhee Cement - India
- Africa Commodities Group - South Africa
- Holcim Trading Pte Ltd - Singapore
- Samtan Co., Ltd - South Korea
- Bayan Resources Tbk. - Indonesia
- Parliament of New Zealand
- Kapuas Tunggal Persada - Indonesia
- Metalloyd Limited - United Kingdom
- Meralco Power Generation, Philippines
- Coastal Gujarat Power Limited - India
- Economic Council, Georgia
- Standard Chartered Bank - UAE
- Eastern Coal Council - USA
- Offshore Bulk Terminal Pte Ltd, Singapore
- Port Waratah Coal Services - Australia
- Price Waterhouse Coopers - Russia
- Toyota Tsusho Corporation, Japan
- Cigading International Bulk Terminal - Indonesia
- Siam City Cement PLC, Thailand
- GMR Energy Limited - India
- CIMB Investment Bank - Malaysia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Attock Cement Pakistan Limited
- Rio Tinto Coal - Australia
- Posco Energy - South Korea
- Renaissance Capital - South Africa
- Indo Tambangraya Megah - Indonesia
- Electricity Generating Authority of Thailand
- Bukit Makmur.PT - Indonesia
- Iligan Light & Power Inc, Philippines
- Electricity Authority, New Zealand
- Kobexindo Tractors - Indoneisa
- Goldman Sachs - Singapore
- OPG Power Generation Pvt Ltd - India
- Singapore Mercantile Exchange
- Therma Luzon, Inc, Philippines
- Malabar Cements Ltd - India
- Maheswari Brothers Coal Limited - India
- Central Electricity Authority - India
- Manunggal Multi Energi - Indonesia
- IHS Mccloskey Coal Group - USA
- Essar Steel Hazira Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- Grasim Industreis Ltd - India
- Interocean Group of Companies - India
- Rashtriya Ispat Nigam Limited - India
- Tamil Nadu electricity Board
- Madhucon Powers Ltd - India
- Directorate Of Revenue Intelligence - India
- Sinarmas Energy and Mining - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Merrill Lynch Commodities Europe
- Star Paper Mills Limited - India
- Ministry of Mines - Canada
- Meenaskhi Energy Private Limited - India
- Sree Jayajothi Cements Limited - India
- Wood Mackenzie - Singapore
- Global Coal Blending Company Limited - Australia
- Bhushan Steel Limited - India
- Larsen & Toubro Limited - India
- PNOC Exploration Corporation - Philippines
- Semirara Mining Corp, Philippines
- London Commodity Brokers - England
- Carbofer General Trading SA - India
- Kepco SPC Power Corporation, Philippines
- Kideco Jaya Agung - Indonesia
- SMG Consultants - Indonesia
- South Luzon Thermal Energy Corporation
- Energy Link Ltd, New Zealand
- Heidelberg Cement - Germany
- Kalimantan Lumbung Energi - Indonesia
- Vedanta Resources Plc - India
- Wilmar Investment Holdings
- European Bulk Services B.V. - Netherlands
- Borneo Indobara - Indonesia
- Sical Logistics Limited - India
- Coal and Oil Company - UAE
- Mercuria Energy - Indonesia
- India Bulls Power Limited - India
- Independent Power Producers Association of India
- SN Aboitiz Power Inc, Philippines
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