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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, 30 August 13
US COAL PRODUCTION FELL 0.48 PERCENT WEEK ON WEEK - EIA
COALspot.com – United states the world’s second largest coal producer produced totaled approximately 20.70 million short tons (mmst) of ...
Thursday, 29 August 13
HANDY: THE PACIFIC MARKET STARTED HEALTHY THIS WEEK - FEARNRESEARCH
Handy
The Pacific market started healthy this week. We have seen many bauxite, iron ore and few coal fixtures. Ships passing Singapore were able to ...
Thursday, 29 August 13
NO RATING IMPACT ON INDONESIAN ENERGY COMPANIES FROM RUPIAH DEPRECIATION - FITCH RATINGS
Fitch Ratings says the credit profiles of rated Indonesian energy and utilities companies, including thermal coal producers, will largely remain una ...
Wednesday, 28 August 13
THE BDI HAS MOVED TO LEVELS CONSIDERABLY STRONGER THAN THE BEGINNING OF THE YEAR - INTERMODAL
By George Bassakos
SnP Broker - Intermodal
We have already reached the end of August and whilst students are preparing themselves for another sc ...
Tuesday, 27 August 13
AUSTRALIA NEWCASTLE COAL EXPORTS JUMPED 15.59 PERCENT ON WEEK
COALspot.com: Power plant and semi-soft coking coal shipments from Australia's Newcastle port up 15.59 per cent week on week to 2.76 million mt for ...
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- Indo Tambangraya Megah - Indonesia
- Baramulti Group, Indonesia
- Meenaskhi Energy Private Limited - India
- SMG Consultants - Indonesia
- Mercuria Energy - Indonesia
- Rio Tinto Coal - Australia
- PTC India Limited - India
- Gujarat Electricity Regulatory Commission - India
- Ceylon Electricity Board - Sri Lanka
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Makarim & Taira - Indonesia
- CNBM International Corporation - China
- Latin American Coal - Colombia
- Orica Australia Pty. Ltd.
- Sical Logistics Limited - India
- Singapore Mercantile Exchange
- Kapuas Tunggal Persada - Indonesia
- Agrawal Coal Company - India
- Carbofer General Trading SA - India
- Vijayanagar Sugar Pvt Ltd - India
- Planning Commission, India
- Coalindo Energy - Indonesia
- Goldman Sachs - Singapore
- Directorate Of Revenue Intelligence - India
- ASAPP Information Group - India
- Kepco SPC Power Corporation, Philippines
- India Bulls Power Limited - India
- Indian Oil Corporation Limited
- European Bulk Services B.V. - Netherlands
- Kobexindo Tractors - Indoneisa
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- TeaM Sual Corporation - Philippines
- Africa Commodities Group - South Africa
- Iligan Light & Power Inc, Philippines
- Minerals Council of Australia
- Gujarat Mineral Development Corp Ltd - India
- Merrill Lynch Commodities Europe
- Siam City Cement PLC, Thailand
- Petron Corporation, Philippines
- Binh Thuan Hamico - Vietnam
- Kohat Cement Company Ltd. - Pakistan
- Kumho Petrochemical, South Korea
- Karaikal Port Pvt Ltd - India
- Holcim Trading Pte Ltd - Singapore
- Independent Power Producers Association of India
- Posco Energy - South Korea
- Bhatia International Limited - India
- London Commodity Brokers - England
- Altura Mining Limited, Indonesia
- Romanian Commodities Exchange
- Bhoruka Overseas - Indonesia
- San Jose City I Power Corp, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Attock Cement Pakistan Limited
- Eastern Energy - Thailand
- Parry Sugars Refinery, India
- Madhucon Powers Ltd - India
- Ministry of Finance - Indonesia
- Essar Steel Hazira Ltd - India
- GAC Shipping (India) Pvt Ltd
- Borneo Indobara - Indonesia
- Electricity Authority, New Zealand
- South Luzon Thermal Energy Corporation
- Ministry of Transport, Egypt
- Leighton Contractors Pty Ltd - Australia
- Savvy Resources Ltd - HongKong
- Central Electricity Authority - India
- Economic Council, Georgia
- CIMB Investment Bank - Malaysia
- PetroVietnam Power Coal Import and Supply Company
- Cigading International Bulk Terminal - Indonesia
- Globalindo Alam Lestari - Indonesia
- Gujarat Sidhee Cement - India
- Mintek Dendrill Indonesia
- Sree Jayajothi Cements Limited - India
- Pendopo Energi Batubara - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Indian Energy Exchange, India
- Kideco Jaya Agung - Indonesia
- Standard Chartered Bank - UAE
- Ind-Barath Power Infra Limited - India
- Edison Trading Spa - Italy
- Renaissance Capital - South Africa
- PowerSource Philippines DevCo
- OPG Power Generation Pvt Ltd - India
- PNOC Exploration Corporation - Philippines
- Formosa Plastics Group - Taiwan
- VISA Power Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Star Paper Mills Limited - India
- Vedanta Resources Plc - India
- GMR Energy Limited - India
- Riau Bara Harum - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Tata Chemicals Ltd - India
- The Treasury - Australian Government
- Bank of Tokyo Mitsubishi UFJ Ltd
- Offshore Bulk Terminal Pte Ltd, Singapore
- Parliament of New Zealand
- Global Business Power Corporation, Philippines
- Australian Commodity Traders Exchange
- Coal and Oil Company - UAE
- Power Finance Corporation Ltd., India
- Sindya Power Generating Company Private Ltd
- Chettinad Cement Corporation Ltd - India
- Anglo American - United Kingdom
- Maharashtra Electricity Regulatory Commission - India
- Heidelberg Cement - Germany
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Sojitz Corporation - Japan
- Manunggal Multi Energi - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Georgia Ports Authority, United States
- Global Green Power PLC Corporation, Philippines
- Metalloyd Limited - United Kingdom
- Bukit Baiduri Energy - Indonesia
- Ministry of Mines - Canada
- Indika Energy - Indonesia
- Grasim Industreis Ltd - India
- Price Waterhouse Coopers - Russia
- SMC Global Power, Philippines
- Wilmar Investment Holdings
- Kartika Selabumi Mining - Indonesia
- The University of Queensland
- International Coal Ventures Pvt Ltd - India
- Electricity Generating Authority of Thailand
- Xindia Steels Limited - India
- Toyota Tsusho Corporation, Japan
- Kalimantan Lumbung Energi - Indonesia
- Bhushan Steel Limited - India
- Port Waratah Coal Services - Australia
- Indonesian Coal Mining Association
- IHS Mccloskey Coal Group - USA
- Semirara Mining and Power Corporation, Philippines
- IEA Clean Coal Centre - UK
- Jaiprakash Power Ventures ltd
- Energy Development Corp, Philippines
- Deloitte Consulting - India
- Bukit Asam (Persero) Tbk - Indonesia
- Bayan Resources Tbk. - Indonesia
- Marubeni Corporation - India
- Aditya Birla Group - India
- Meralco Power Generation, Philippines
- Asmin Koalindo Tuhup - Indonesia
- ICICI Bank Limited - India
- Tamil Nadu electricity Board
- Krishnapatnam Port Company Ltd. - India
- Oldendorff Carriers - Singapore
- Commonwealth Bank - Australia
- Salva Resources Pvt Ltd - India
- Bukit Makmur.PT - Indonesia
- Wood Mackenzie - Singapore
- Australian Coal Association
- McConnell Dowell - Australia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Global Coal Blending Company Limited - Australia
- Bulk Trading Sa - Switzerland
- Videocon Industries ltd - India
- MS Steel International - UAE
- GVK Power & Infra Limited - India
- Bangladesh Power Developement Board
- Rashtriya Ispat Nigam Limited - India
- Kaltim Prima Coal - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Interocean Group of Companies - India
- LBH Netherlands Bv - Netherlands
- Uttam Galva Steels Limited - India
- Maheswari Brothers Coal Limited - India
- Energy Link Ltd, New Zealand
- Thai Mozambique Logistica
- Billiton Holdings Pty Ltd - Australia
- Samtan Co., Ltd - South Korea
- Barasentosa Lestari - Indonesia
- Lanco Infratech Ltd - India
- Central Java Power - Indonesia
- Dalmia Cement Bharat India
- Orica Mining Services - Indonesia
- SN Aboitiz Power Inc, Philippines
- Aboitiz Power Corporation - Philippines
- Malabar Cements Ltd - India
- Banpu Public Company Limited - Thailand
- AsiaOL BioFuels Corp., Philippines
- Chamber of Mines of South Africa
- New Zealand Coal & Carbon
- Larsen & Toubro Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Coastal Gujarat Power Limited - India
- Vizag Seaport Private Limited - India
- Simpson Spence & Young - Indonesia
- Siam City Cement - Thailand
- Therma Luzon, Inc, Philippines
- Sarangani Energy Corporation, Philippines
- The State Trading Corporation of India Ltd
- Indogreen Group - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Medco Energi Mining Internasional
- Trasteel International SA, Italy
- White Energy Company Limited
- Cement Manufacturers Association - India
- Thiess Contractors Indonesia
- Sakthi Sugars Limited - India
- Ambuja Cements Ltd - India
- Mjunction Services Limited - India
- Mercator Lines Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Timah Investasi Mineral - Indoneisa
- Semirara Mining Corp, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Antam Resourcindo - Indonesia
- Straits Asia Resources Limited - Singapore
- Miang Besar Coal Terminal - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Bharathi Cement Corporation - India
- Intertek Mineral Services - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Eastern Coal Council - USA
- Jindal Steel & Power Ltd - India
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