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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, 21 August 13
DRY BULK SHIPPING - POSITIVE WINDOW FOR CAPESIZE OWNERS - PETER SAND
By: Peter Sand, Chief Shipping Analyst, BIMCO
Demand:
“Expect the unexpected from the dry bulk market” was what we wrote last time ar ...
Wednesday, 21 August 13
RATES FOR CAPES MOVED DECISIVELY NORTH THIS WEEK - INTERMODAL
COALspot.com - Right when the BDI seemed ready for another dive below the 1000 points level, the Dry Bulk market made significant comeback this week ...
Tuesday, 20 August 13
AUSTRALIA NEWCASTLE COAL EXPORTS FALL 19.15 PERCENT ON WEEK
COALspot.com: Power plant and semi-soft coking coal shipments from Australia's Newcastle port fell 19.15 per cent week on week to 2.39 million mt f ...
Tuesday, 20 August 13
CAPESIZE RATES MORE SENSITIVE TO DEMAND - COMMODORE RESEARCH & CONSULTANCY
COALspot.com : Approximately 71.50 million tons of iron ore is now stockpiled at Chinese ports, 900,000 tons (-1%) less than a week ago, Commodore R ...
Sunday, 18 August 13
SUB-BIT FOB INDONESIA COAL SWAP : ON POSITIVE DIRECTION ON DAY, WEEK AND MONTH
COALspot.com – Sub-Bit Indonesia coal swaps (FOB ) for average Q4 2013 delivery US$ 1.83 up month on month. The swap was moved positive ...
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- McConnell Dowell - Australia
- The State Trading Corporation of India Ltd
- Global Business Power Corporation, Philippines
- Holcim Trading Pte Ltd - Singapore
- Directorate Of Revenue Intelligence - India
- Salva Resources Pvt Ltd - India
- Sree Jayajothi Cements Limited - India
- Globalindo Alam Lestari - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Tamil Nadu electricity Board
- Alfred C Toepfer International GmbH - Germany
- Orica Mining Services - Indonesia
- Price Waterhouse Coopers - Russia
- Jorong Barutama Greston.PT - Indonesia
- Bayan Resources Tbk. - Indonesia
- Agrawal Coal Company - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Trasteel International SA, Italy
- India Bulls Power Limited - India
- South Luzon Thermal Energy Corporation
- Rashtriya Ispat Nigam Limited - India
- Straits Asia Resources Limited - Singapore
- Oldendorff Carriers - Singapore
- Coastal Gujarat Power Limited - India
- Economic Council, Georgia
- Orica Australia Pty. Ltd.
- Makarim & Taira - Indonesia
- Tata Chemicals Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Directorate General of MIneral and Coal - Indonesia
- Energy Development Corp, Philippines
- MS Steel International - UAE
- New Zealand Coal & Carbon
- Indonesian Coal Mining Association
- Independent Power Producers Association of India
- Latin American Coal - Colombia
- PTC India Limited - India
- Bukit Makmur.PT - Indonesia
- Banpu Public Company Limited - Thailand
- Mjunction Services Limited - India
- Thiess Contractors Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Karbindo Abesyapradhi - Indoneisa
- Indian Energy Exchange, India
- Iligan Light & Power Inc, Philippines
- Romanian Commodities Exchange
- Toyota Tsusho Corporation, Japan
- Uttam Galva Steels Limited - India
- Electricity Authority, New Zealand
- Samtan Co., Ltd - South Korea
- Kumho Petrochemical, South Korea
- Mercuria Energy - Indonesia
- San Jose City I Power Corp, Philippines
- Merrill Lynch Commodities Europe
- Indogreen Group - Indonesia
- Singapore Mercantile Exchange
- Bhushan Steel Limited - India
- Larsen & Toubro Limited - India
- Global Green Power PLC Corporation, Philippines
- Australian Commodity Traders Exchange
- GVK Power & Infra Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Baramulti Group, Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Barasentosa Lestari - Indonesia
- Wilmar Investment Holdings
- Sakthi Sugars Limited - India
- Interocean Group of Companies - India
- Siam City Cement - Thailand
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Mercator Lines Limited - India
- Star Paper Mills Limited - India
- Ceylon Electricity Board - Sri Lanka
- Port Waratah Coal Services - Australia
- Maheswari Brothers Coal Limited - India
- Bharathi Cement Corporation - India
- Central Electricity Authority - India
- Ministry of Finance - Indonesia
- Marubeni Corporation - India
- Coalindo Energy - Indonesia
- Renaissance Capital - South Africa
- TNB Fuel Sdn Bhd - Malaysia
- Bhoruka Overseas - Indonesia
- Manunggal Multi Energi - Indonesia
- Kobexindo Tractors - Indoneisa
- Petron Corporation, Philippines
- Jaiprakash Power Ventures ltd
- Mintek Dendrill Indonesia
- Parliament of New Zealand
- Gujarat Mineral Development Corp Ltd - India
- Thai Mozambique Logistica
- Attock Cement Pakistan Limited
- Metalloyd Limited - United Kingdom
- Bukit Baiduri Energy - Indonesia
- Heidelberg Cement - Germany
- Borneo Indobara - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Power Finance Corporation Ltd., India
- Commonwealth Bank - Australia
- Planning Commission, India
- The University of Queensland
- Grasim Industreis Ltd - India
- Formosa Plastics Group - Taiwan
- Energy Link Ltd, New Zealand
- Medco Energi Mining Internasional
- The Treasury - Australian Government
- Sinarmas Energy and Mining - Indonesia
- White Energy Company Limited
- Malabar Cements Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- Semirara Mining Corp, Philippines
- ICICI Bank Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Kaltim Prima Coal - Indonesia
- Rio Tinto Coal - Australia
- AsiaOL BioFuels Corp., Philippines
- SMG Consultants - Indonesia
- Riau Bara Harum - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Deloitte Consulting - India
- Pipit Mutiara Jaya. PT, Indonesia
- Binh Thuan Hamico - Vietnam
- Leighton Contractors Pty Ltd - Australia
- Parry Sugars Refinery, India
- Carbofer General Trading SA - India
- PNOC Exploration Corporation - Philippines
- Ministry of Mines - Canada
- Kideco Jaya Agung - Indonesia
- GMR Energy Limited - India
- Lanco Infratech Ltd - India
- ASAPP Information Group - India
- Central Java Power - Indonesia
- Xindia Steels Limited - India
- TeaM Sual Corporation - Philippines
- Dalmia Cement Bharat India
- Bangladesh Power Developement Board
- VISA Power Limited - India
- IEA Clean Coal Centre - UK
- Siam City Cement PLC, Thailand
- Asmin Koalindo Tuhup - Indonesia
- Aditya Birla Group - India
- Miang Besar Coal Terminal - Indonesia
- Goldman Sachs - Singapore
- Kartika Selabumi Mining - Indonesia
- Australian Coal Association
- Meralco Power Generation, Philippines
- Minerals Council of Australia
- PowerSource Philippines DevCo
- Coal and Oil Company - UAE
- Savvy Resources Ltd - HongKong
- OPG Power Generation Pvt Ltd - India
- Jindal Steel & Power Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Kapuas Tunggal Persada - Indonesia
- LBH Netherlands Bv - Netherlands
- GAC Shipping (India) Pvt Ltd
- Sojitz Corporation - Japan
- Vedanta Resources Plc - India
- European Bulk Services B.V. - Netherlands
- London Commodity Brokers - England
- Bukit Asam (Persero) Tbk - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Videocon Industries ltd - India
- Krishnapatnam Port Company Ltd. - India
- Billiton Holdings Pty Ltd - Australia
- Edison Trading Spa - Italy
- Gujarat Sidhee Cement - India
- Posco Energy - South Korea
- Georgia Ports Authority, United States
- Ind-Barath Power Infra Limited - India
- Africa Commodities Group - South Africa
- Aboitiz Power Corporation - Philippines
- Sical Logistics Limited - India
- Kepco SPC Power Corporation, Philippines
- Chettinad Cement Corporation Ltd - India
- International Coal Ventures Pvt Ltd - India
- Eastern Coal Council - USA
- Vizag Seaport Private Limited - India
- Semirara Mining and Power Corporation, Philippines
- Meenaskhi Energy Private Limited - India
- Anglo American - United Kingdom
- Eastern Energy - Thailand
- Chamber of Mines of South Africa
- Intertek Mineral Services - Indonesia
- Karaikal Port Pvt Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Global Coal Blending Company Limited - Australia
- Sarangani Energy Corporation, Philippines
- Wood Mackenzie - Singapore
- Essar Steel Hazira Ltd - India
- CNBM International Corporation - China
- Therma Luzon, Inc, Philippines
- Standard Chartered Bank - UAE
- Bhatia International Limited - India
- Sindya Power Generating Company Private Ltd
- CIMB Investment Bank - Malaysia
- Cement Manufacturers Association - India
- Pendopo Energi Batubara - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- SN Aboitiz Power Inc, Philippines
- Ministry of Transport, Egypt
- IHS Mccloskey Coal Group - USA
- Antam Resourcindo - Indonesia
- Indika Energy - Indonesia
- Indian Oil Corporation Limited
- Indo Tambangraya Megah - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Bulk Trading Sa - Switzerland
- Electricity Generating Authority of Thailand
- Ambuja Cements Ltd - India
- Madhucon Powers Ltd - India
- Simpson Spence & Young - Indonesia
- Timah Investasi Mineral - Indoneisa
- Altura Mining Limited, Indonesia
- SMC Global Power, Philippines
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