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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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Monday, 26 August 13
CARRIAGE OF COAL CARGOES FROM KALIMANTAN, INDONESIA - WEST OF ENGLAND P&I CLUB
The Club has recently been advised by consulting scientists and engineers Dr J H Burgoyne and Partners (International) Limited that the number of in ...
Sunday, 25 August 13
API 8 CFR SOUTH CHINA COAL: HEADING TO NORTH
COALspot.com – Sub-Bit Indonesia coal swaps (FOB ) for average Q4 2013 delivery US$ 2.39 up month on month. The swap was moved positive ...
Sunday, 25 August 13
THE FREIGHT MARKET S7 & S8 SECTOR IS EXPECTED TO BE STEADY/FIRM NEXT WEEK - VISTAAR
COALspot.com - The freight market continued to be firm with all indices moved positive except for Panamax which was slightly down (2 pct down).
T ...
Friday, 23 August 13
US PRODUCED MORE COAL WEEK ON WEEK - EIA
COALspot.com – United states the world’s second largest coal producer produced totaled approximately 20.80 million short tons (mmst) of ...
Thursday, 22 August 13
PANAMAX : PERIOD MARKET IS STILL BEING LED BY STRONGER SENTIMENT IN THE FFA'S - FEARNRESEARCH
Handy
This week started slowly as expected. Indo biz now rate APS around 7k +60k to china and around 8k+80k to India. However, there are some ships ...
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- Minerals Council of Australia
- Agrawal Coal Company - India
- TeaM Sual Corporation - Philippines
- Chamber of Mines of South Africa
- Miang Besar Coal Terminal - Indonesia
- Orica Australia Pty. Ltd.
- Kartika Selabumi Mining - Indonesia
- Kumho Petrochemical, South Korea
- Larsen & Toubro Limited - India
- CIMB Investment Bank - Malaysia
- Maharashtra Electricity Regulatory Commission - India
- Marubeni Corporation - India
- Attock Cement Pakistan Limited
- Bangladesh Power Developement Board
- Wilmar Investment Holdings
- Malabar Cements Ltd - India
- London Commodity Brokers - England
- MS Steel International - UAE
- Romanian Commodities Exchange
- Billiton Holdings Pty Ltd - Australia
- Indian Energy Exchange, India
- Ministry of Transport, Egypt
- Bukit Asam (Persero) Tbk - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Energy Development Corp, Philippines
- OPG Power Generation Pvt Ltd - India
- GAC Shipping (India) Pvt Ltd
- Indonesian Coal Mining Association
- Essar Steel Hazira Ltd - India
- Baramulti Group, Indonesia
- PTC India Limited - India
- Commonwealth Bank - Australia
- Samtan Co., Ltd - South Korea
- Mercator Lines Limited - India
- Antam Resourcindo - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Kohat Cement Company Ltd. - Pakistan
- PetroVietnam Power Coal Import and Supply Company
- Oldendorff Carriers - Singapore
- GMR Energy Limited - India
- India Bulls Power Limited - India
- IEA Clean Coal Centre - UK
- Sarangani Energy Corporation, Philippines
- The University of Queensland
- Electricity Authority, New Zealand
- Pendopo Energi Batubara - Indonesia
- Tata Chemicals Ltd - India
- Global Green Power PLC Corporation, Philippines
- Iligan Light & Power Inc, Philippines
- Aditya Birla Group - India
- Indo Tambangraya Megah - Indonesia
- Kobexindo Tractors - Indoneisa
- Lanco Infratech Ltd - India
- Kapuas Tunggal Persada - Indonesia
- South Luzon Thermal Energy Corporation
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Price Waterhouse Coopers - Russia
- Ministry of Finance - Indonesia
- Metalloyd Limited - United Kingdom
- Karbindo Abesyapradhi - Indoneisa
- PNOC Exploration Corporation - Philippines
- Ceylon Electricity Board - Sri Lanka
- Gujarat Mineral Development Corp Ltd - India
- The State Trading Corporation of India Ltd
- Sindya Power Generating Company Private Ltd
- Formosa Plastics Group - Taiwan
- Coastal Gujarat Power Limited - India
- Kideco Jaya Agung - Indonesia
- Australian Coal Association
- Merrill Lynch Commodities Europe
- SMC Global Power, Philippines
- Meralco Power Generation, Philippines
- Eastern Coal Council - USA
- Binh Thuan Hamico - Vietnam
- Mintek Dendrill Indonesia
- Grasim Industreis Ltd - India
- Tamil Nadu electricity Board
- Sojitz Corporation - Japan
- Ambuja Cements Ltd - India
- Medco Energi Mining Internasional
- Gujarat Sidhee Cement - India
- LBH Netherlands Bv - Netherlands
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- ICICI Bank Limited - India
- VISA Power Limited - India
- Simpson Spence & Young - Indonesia
- Bhatia International Limited - India
- Renaissance Capital - South Africa
- Sinarmas Energy and Mining - Indonesia
- New Zealand Coal & Carbon
- Singapore Mercantile Exchange
- Port Waratah Coal Services - Australia
- Cement Manufacturers Association - India
- Manunggal Multi Energi - Indonesia
- Sical Logistics Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Straits Asia Resources Limited - Singapore
- ASAPP Information Group - India
- Trasteel International SA, Italy
- Georgia Ports Authority, United States
- Anglo American - United Kingdom
- Indogreen Group - Indonesia
- San Jose City I Power Corp, Philippines
- Latin American Coal - Colombia
- Directorate General of MIneral and Coal - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Dalmia Cement Bharat India
- Jaiprakash Power Ventures ltd
- Global Coal Blending Company Limited - Australia
- Goldman Sachs - Singapore
- Thiess Contractors Indonesia
- Star Paper Mills Limited - India
- Interocean Group of Companies - India
- Carbofer General Trading SA - India
- Therma Luzon, Inc, Philippines
- Ind-Barath Power Infra Limited - India
- Africa Commodities Group - South Africa
- European Bulk Services B.V. - Netherlands
- Neyveli Lignite Corporation Ltd, - India
- Mercuria Energy - Indonesia
- Thai Mozambique Logistica
- Bhushan Steel Limited - India
- Altura Mining Limited, Indonesia
- Deloitte Consulting - India
- Global Business Power Corporation, Philippines
- Barasentosa Lestari - Indonesia
- Indian Oil Corporation Limited
- Posco Energy - South Korea
- GN Power Mariveles Coal Plant, Philippines
- Wood Mackenzie - Singapore
- Siam City Cement - Thailand
- Electricity Generating Authority of Thailand
- Vijayanagar Sugar Pvt Ltd - India
- PowerSource Philippines DevCo
- Madhucon Powers Ltd - India
- Central Electricity Authority - India
- Parry Sugars Refinery, India
- Ministry of Mines - Canada
- Kalimantan Lumbung Energi - Indonesia
- Parliament of New Zealand
- Toyota Tsusho Corporation, Japan
- Alfred C Toepfer International GmbH - Germany
- Bukit Baiduri Energy - Indonesia
- Edison Trading Spa - Italy
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Chettinad Cement Corporation Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Independent Power Producers Association of India
- Planning Commission, India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Indika Energy - Indonesia
- Vedanta Resources Plc - India
- Meenaskhi Energy Private Limited - India
- Videocon Industries ltd - India
- Timah Investasi Mineral - Indoneisa
- Petron Corporation, Philippines
- Energy Link Ltd, New Zealand
- SMG Consultants - Indonesia
- Standard Chartered Bank - UAE
- Power Finance Corporation Ltd., India
- Eastern Energy - Thailand
- McConnell Dowell - Australia
- Bhoruka Overseas - Indonesia
- The Treasury - Australian Government
- Bharathi Cement Corporation - India
- Semirara Mining and Power Corporation, Philippines
- Savvy Resources Ltd - HongKong
- Jindal Steel & Power Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Karaikal Port Pvt Ltd - India
- IHS Mccloskey Coal Group - USA
- Kaltim Prima Coal - Indonesia
- Kepco SPC Power Corporation, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- International Coal Ventures Pvt Ltd - India
- Globalindo Alam Lestari - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Riau Bara Harum - Indonesia
- Economic Council, Georgia
- White Energy Company Limited
- Heidelberg Cement - Germany
- SN Aboitiz Power Inc, Philippines
- CNBM International Corporation - China
- Bukit Makmur.PT - Indonesia
- Intertek Mineral Services - Indonesia
- Maheswari Brothers Coal Limited - India
- Directorate Of Revenue Intelligence - India
- Bulk Trading Sa - Switzerland
- Bank of Tokyo Mitsubishi UFJ Ltd
- Borneo Indobara - Indonesia
- Central Java Power - Indonesia
- Uttam Galva Steels Limited - India
- Sakthi Sugars Limited - India
- Semirara Mining Corp, Philippines
- Aboitiz Power Corporation - Philippines
- Vizag Seaport Private Limited - India
- Makarim & Taira - Indonesia
- Xindia Steels Limited - India
- Krishnapatnam Port Company Ltd. - India
- Pipit Mutiara Jaya. PT, Indonesia
- Coal and Oil Company - UAE
- Siam City Cement PLC, Thailand
- Rio Tinto Coal - Australia
- TNB Fuel Sdn Bhd - Malaysia
- GVK Power & Infra Limited - India
- Orica Mining Services - Indonesia
- Bayan Resources Tbk. - Indonesia
- Salva Resources Pvt Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Mjunction Services Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Coalindo Energy - Indonesia
- Sree Jayajothi Cements Limited - India
- Banpu Public Company Limited - Thailand
- Australian Commodity Traders Exchange
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