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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, 12 August 13
GBCE SUCCESSFUL IN UPGRADING LOW RANK INDONESIAN COAL ON INDUSTRIAL SCALE
COALspot.com : GB Clean Energy Ltd. (GBCE) has annoused that, the company has successfully upgraded 2,426 tonnes of low rank 4,018 kcal NAR Ind ...
Monday, 12 August 13
INDIA - SAFE SHIPMENT OF IRON ORE FINES FROM INDIAN PORTS - WEST OF ENGLAND P&I CLUB
As Members may be aware, in 2009 two ships, the ‘Asian Forest’ and the ‘Black Rose’, capsized and sank following the liquefa ...
Sunday, 11 August 13
INDONESIAN COAL SWAPS : FLAT ON DAY
COALspot.com – Sub-Bit Indonesia coal swaps (FOB ) for average Q4 2013 delivery flat on day due to holidays in Indonesia, Malaysia & ...
Sunday, 11 August 13
SUPRAMAX FREIGHT RATES FROM INDONESIA TO INDIA CONTINUED TO BE SOFT - VISTAAR
COALspot.com : The freight market was soft this week with all indices down , the reason could be long weekend holidays in Indonesia, Singapore and M ...
Saturday, 10 August 13
MOODY'S: OUTLOOK FOR US COAL INDUSTRY CHANGES TO STABLE FROM NEGATIVE
Moody's Investors Service has changed its outlook for the US coal industry to stable from negative, the rating agency says in a new report, "U ...
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- Straits Asia Resources Limited - Singapore
- GMR Energy Limited - India
- Vizag Seaport Private Limited - India
- IEA Clean Coal Centre - UK
- Jorong Barutama Greston.PT - Indonesia
- The State Trading Corporation of India Ltd
- Sojitz Corporation - Japan
- Orica Australia Pty. Ltd.
- Planning Commission, India
- India Bulls Power Limited - India
- Rashtriya Ispat Nigam Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Formosa Plastics Group - Taiwan
- Eastern Energy - Thailand
- Merrill Lynch Commodities Europe
- Siam City Cement - Thailand
- Mercator Lines Limited - India
- Trasteel International SA, Italy
- White Energy Company Limited
- GVK Power & Infra Limited - India
- Xindia Steels Limited - India
- Georgia Ports Authority, United States
- Economic Council, Georgia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Petron Corporation, Philippines
- Uttam Galva Steels Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Directorate Of Revenue Intelligence - India
- Ind-Barath Power Infra Limited - India
- Indian Energy Exchange, India
- Malabar Cements Ltd - India
- OPG Power Generation Pvt Ltd - India
- Marubeni Corporation - India
- Metalloyd Limited - United Kingdom
- Kartika Selabumi Mining - Indonesia
- Ceylon Electricity Board - Sri Lanka
- SMG Consultants - Indonesia
- Bhoruka Overseas - Indonesia
- Bhushan Steel Limited - India
- Kobexindo Tractors - Indoneisa
- Intertek Mineral Services - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Ministry of Transport, Egypt
- Power Finance Corporation Ltd., India
- Grasim Industreis Ltd - India
- Aboitiz Power Corporation - Philippines
- Sical Logistics Limited - India
- Pendopo Energi Batubara - Indonesia
- Timah Investasi Mineral - Indoneisa
- Oldendorff Carriers - Singapore
- Iligan Light & Power Inc, Philippines
- Thiess Contractors Indonesia
- Altura Mining Limited, Indonesia
- Barasentosa Lestari - Indonesia
- MS Steel International - UAE
- Lanco Infratech Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Attock Cement Pakistan Limited
- Neyveli Lignite Corporation Ltd, - India
- Electricity Authority, New Zealand
- CNBM International Corporation - China
- Sarangani Energy Corporation, Philippines
- Manunggal Multi Energi - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Aditya Birla Group - India
- Toyota Tsusho Corporation, Japan
- Semirara Mining and Power Corporation, Philippines
- Price Waterhouse Coopers - Russia
- Global Coal Blending Company Limited - Australia
- Africa Commodities Group - South Africa
- Sree Jayajothi Cements Limited - India
- Essar Steel Hazira Ltd - India
- Coal and Oil Company - UAE
- Energy Link Ltd, New Zealand
- Meralco Power Generation, Philippines
- Alfred C Toepfer International GmbH - Germany
- Goldman Sachs - Singapore
- Port Waratah Coal Services - Australia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Cement Manufacturers Association - India
- Siam City Cement PLC, Thailand
- The University of Queensland
- Kalimantan Lumbung Energi - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Energy Development Corp, Philippines
- The Treasury - Australian Government
- Karaikal Port Pvt Ltd - India
- Kapuas Tunggal Persada - Indonesia
- Coastal Gujarat Power Limited - India
- Bukit Baiduri Energy - Indonesia
- Antam Resourcindo - Indonesia
- Anglo American - United Kingdom
- Bharathi Cement Corporation - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Maheswari Brothers Coal Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Singapore Mercantile Exchange
- Medco Energi Mining Internasional
- Baramulti Group, Indonesia
- Makarim & Taira - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Krishnapatnam Port Company Ltd. - India
- New Zealand Coal & Carbon
- PTC India Limited - India
- PNOC Exploration Corporation - Philippines
- Gujarat Sidhee Cement - India
- Meenaskhi Energy Private Limited - India
- Borneo Indobara - Indonesia
- Renaissance Capital - South Africa
- Therma Luzon, Inc, Philippines
- ASAPP Information Group - India
- Wilmar Investment Holdings
- Bukit Asam (Persero) Tbk - Indonesia
- London Commodity Brokers - England
- Standard Chartered Bank - UAE
- Jaiprakash Power Ventures ltd
- Sindya Power Generating Company Private Ltd
- Latin American Coal - Colombia
- PetroVietnam Power Coal Import and Supply Company
- Petrochimia International Co. Ltd.- Taiwan
- Tamil Nadu electricity Board
- Independent Power Producers Association of India
- Kideco Jaya Agung - Indonesia
- Romanian Commodities Exchange
- Indika Energy - Indonesia
- SMC Global Power, Philippines
- Orica Mining Services - Indonesia
- TeaM Sual Corporation - Philippines
- GN Power Mariveles Coal Plant, Philippines
- Salva Resources Pvt Ltd - India
- Bulk Trading Sa - Switzerland
- AsiaOL BioFuels Corp., Philippines
- Deloitte Consulting - India
- Bayan Resources Tbk. - Indonesia
- Ambuja Cements Ltd - India
- Vedanta Resources Plc - India
- Directorate General of MIneral and Coal - Indonesia
- Central Electricity Authority - India
- Rio Tinto Coal - Australia
- South Luzon Thermal Energy Corporation
- LBH Netherlands Bv - Netherlands
- Bangladesh Power Developement Board
- Global Green Power PLC Corporation, Philippines
- Cigading International Bulk Terminal - Indonesia
- Parliament of New Zealand
- Electricity Generating Authority of Thailand
- Thai Mozambique Logistica
- GAC Shipping (India) Pvt Ltd
- Mintek Dendrill Indonesia
- Leighton Contractors Pty Ltd - Australia
- Jindal Steel & Power Ltd - India
- Heidelberg Cement - Germany
- Bahari Cakrawala Sebuku - Indonesia
- Globalindo Alam Lestari - Indonesia
- Global Business Power Corporation, Philippines
- Wood Mackenzie - Singapore
- Agrawal Coal Company - India
- Star Paper Mills Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Sakthi Sugars Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Minerals Council of Australia
- Miang Besar Coal Terminal - Indonesia
- Posco Energy - South Korea
- VISA Power Limited - India
- Ministry of Finance - Indonesia
- Samtan Co., Ltd - South Korea
- Ministry of Mines - Canada
- Holcim Trading Pte Ltd - Singapore
- Bukit Makmur.PT - Indonesia
- Eastern Coal Council - USA
- European Bulk Services B.V. - Netherlands
- Edison Trading Spa - Italy
- Indogreen Group - Indonesia
- Interocean Group of Companies - India
- Gujarat Electricity Regulatory Commission - India
- ICICI Bank Limited - India
- Kumho Petrochemical, South Korea
- Mercuria Energy - Indonesia
- Indo Tambangraya Megah - Indonesia
- McConnell Dowell - Australia
- Riau Bara Harum - Indonesia
- Savvy Resources Ltd - HongKong
- Carbofer General Trading SA - India
- Chamber of Mines of South Africa
- IHS Mccloskey Coal Group - USA
- Chettinad Cement Corporation Ltd - India
- Banpu Public Company Limited - Thailand
- Vijayanagar Sugar Pvt Ltd - India
- CIMB Investment Bank - Malaysia
- Larsen & Toubro Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Australian Commodity Traders Exchange
- Bhatia International Limited - India
- SN Aboitiz Power Inc, Philippines
- Sinarmas Energy and Mining - Indonesia
- Parry Sugars Refinery, India
- Indian Oil Corporation Limited
- Semirara Mining Corp, Philippines
- Kepco SPC Power Corporation, Philippines
- Madhucon Powers Ltd - India
- Kaltim Prima Coal - Indonesia
- Mjunction Services Limited - India
- Commonwealth Bank - Australia
- San Jose City I Power Corp, Philippines
- Videocon Industries ltd - India
- Dalmia Cement Bharat India
- Australian Coal Association
- Tata Chemicals Ltd - India
- PowerSource Philippines DevCo
- Indonesian Coal Mining Association
- Binh Thuan Hamico - Vietnam
- Central Java Power - Indonesia
- Coalindo Energy - Indonesia
- Simpson Spence & Young - Indonesia
- International Coal Ventures Pvt Ltd - India
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