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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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Sunday, 04 August 13
COAL SWAP MARKET HAS LOST DIRECTION; STRUGGLING TO CATCH UP
COALspot.com – Sub-Bit Indonesia coal swaps (FOB ) for average October 2013 delivery slightly down on day, week and month on Friday, 2 A ...
Sunday, 04 August 13
INDONESIA TO INDIA SUPRAMAX FREIGHT SOFT DUE TO HOLIDAYS IN INDONESIA - VISTAAR
COALspot.com : The freight market was fairly steady this week with the BDI recovering towards north since second half of the week with the support o ...
Friday, 02 August 13
DRY BULK MARKET STABILIZES ON RENEWED MARKET ACTIVITY - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
The dry bulk market has kept its positive footing this week, although it's still a far cry to deem the market situation as a growing one, especiall ...
Friday, 02 August 13
ASIA ACCOUNTS FOR 27.95 PERCENT OF US COAL EXPORTS IN Q1, 2013
COALspot.com – United states the world’s second largest coal producer produced totaled approximately 20.80 million short tons (mmst) of ...
Thursday, 01 August 13
CAPESIZE: THE FLOW OF CARGOES REMAINS RELATIVELY STABLE, AND THE PACIFIC IS LOOKING PROMISING - FEARNLEYS AS
Handy
The Pacific market is still facing low activity, so no wonder that the tonnage list is getting longer. It´s still Ramadan and only a fe ...
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- Kobexindo Tractors - Indoneisa
- Aboitiz Power Corporation - Philippines
- Toyota Tsusho Corporation, Japan
- Heidelberg Cement - Germany
- Petron Corporation, Philippines
- Meralco Power Generation, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Tata Chemicals Ltd - India
- CNBM International Corporation - China
- Kohat Cement Company Ltd. - Pakistan
- Vizag Seaport Private Limited - India
- Samtan Co., Ltd - South Korea
- The State Trading Corporation of India Ltd
- SMC Global Power, Philippines
- Sarangani Energy Corporation, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Posco Energy - South Korea
- CIMB Investment Bank - Malaysia
- Latin American Coal - Colombia
- LBH Netherlands Bv - Netherlands
- Sojitz Corporation - Japan
- Power Finance Corporation Ltd., India
- Thai Mozambique Logistica
- Holcim Trading Pte Ltd - Singapore
- Siam City Cement - Thailand
- Bhatia International Limited - India
- Merrill Lynch Commodities Europe
- Aditya Birla Group - India
- Bayan Resources Tbk. - Indonesia
- McConnell Dowell - Australia
- Bukit Makmur.PT - Indonesia
- Uttam Galva Steels Limited - India
- Carbofer General Trading SA - India
- San Jose City I Power Corp, Philippines
- Barasentosa Lestari - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Australian Coal Association
- Wood Mackenzie - Singapore
- Indogreen Group - Indonesia
- Chamber of Mines of South Africa
- Medco Energi Mining Internasional
- Malabar Cements Ltd - India
- Parliament of New Zealand
- Romanian Commodities Exchange
- Bukit Baiduri Energy - Indonesia
- Madhucon Powers Ltd - India
- GMR Energy Limited - India
- Tamil Nadu electricity Board
- The Treasury - Australian Government
- Indian Oil Corporation Limited
- Africa Commodities Group - South Africa
- Simpson Spence & Young - Indonesia
- Grasim Industreis Ltd - India
- Minerals Council of Australia
- Port Waratah Coal Services - Australia
- Australian Commodity Traders Exchange
- Timah Investasi Mineral - Indoneisa
- Oldendorff Carriers - Singapore
- Central Java Power - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Manunggal Multi Energi - Indonesia
- Therma Luzon, Inc, Philippines
- Sakthi Sugars Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Global Coal Blending Company Limited - Australia
- Commonwealth Bank - Australia
- Ind-Barath Power Infra Limited - India
- Rio Tinto Coal - Australia
- Formosa Plastics Group - Taiwan
- Essar Steel Hazira Ltd - India
- Ministry of Finance - Indonesia
- Eastern Coal Council - USA
- Semirara Mining Corp, Philippines
- Salva Resources Pvt Ltd - India
- Energy Development Corp, Philippines
- Kepco SPC Power Corporation, Philippines
- Indika Energy - Indonesia
- Electricity Generating Authority of Thailand
- Trasteel International SA, Italy
- Indo Tambangraya Megah - Indonesia
- PowerSource Philippines DevCo
- Edison Trading Spa - Italy
- ICICI Bank Limited - India
- Vedanta Resources Plc - India
- Kideco Jaya Agung - Indonesia
- Kumho Petrochemical, South Korea
- White Energy Company Limited
- Intertek Mineral Services - Indonesia
- Ministry of Mines - Canada
- Attock Cement Pakistan Limited
- Renaissance Capital - South Africa
- Maheswari Brothers Coal Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Globalindo Alam Lestari - Indonesia
- London Commodity Brokers - England
- Larsen & Toubro Limited - India
- Deloitte Consulting - India
- Ministry of Transport, Egypt
- MS Steel International - UAE
- Dalmia Cement Bharat India
- IEA Clean Coal Centre - UK
- Thiess Contractors Indonesia
- Gujarat Electricity Regulatory Commission - India
- Global Green Power PLC Corporation, Philippines
- Planning Commission, India
- Singapore Mercantile Exchange
- Price Waterhouse Coopers - Russia
- Gujarat Mineral Development Corp Ltd - India
- Indian Energy Exchange, India
- Bhushan Steel Limited - India
- Indonesian Coal Mining Association
- Central Electricity Authority - India
- International Coal Ventures Pvt Ltd - India
- Sree Jayajothi Cements Limited - India
- Meenaskhi Energy Private Limited - India
- Bharathi Cement Corporation - India
- Binh Thuan Hamico - Vietnam
- PNOC Exploration Corporation - Philippines
- Banpu Public Company Limited - Thailand
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Electricity Authority, New Zealand
- Kapuas Tunggal Persada - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- New Zealand Coal & Carbon
- Metalloyd Limited - United Kingdom
- Mjunction Services Limited - India
- Videocon Industries ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Baramulti Group, Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Maharashtra Electricity Regulatory Commission - India
- European Bulk Services B.V. - Netherlands
- SN Aboitiz Power Inc, Philippines
- The University of Queensland
- Marubeni Corporation - India
- Semirara Mining and Power Corporation, Philippines
- Cement Manufacturers Association - India
- Standard Chartered Bank - UAE
- Ceylon Electricity Board - Sri Lanka
- Coastal Gujarat Power Limited - India
- Kartika Selabumi Mining - Indonesia
- Independent Power Producers Association of India
- Jaiprakash Power Ventures ltd
- Cigading International Bulk Terminal - Indonesia
- Jindal Steel & Power Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Kaltim Prima Coal - Indonesia
- Agrawal Coal Company - India
- Georgia Ports Authority, United States
- Savvy Resources Ltd - HongKong
- Miang Besar Coal Terminal - Indonesia
- Sical Logistics Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Riau Bara Harum - Indonesia
- Orica Mining Services - Indonesia
- Lanco Infratech Ltd - India
- Interocean Group of Companies - India
- Alfred C Toepfer International GmbH - Germany
- Energy Link Ltd, New Zealand
- Mintek Dendrill Indonesia
- Bulk Trading Sa - Switzerland
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Chettinad Cement Corporation Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- GVK Power & Infra Limited - India
- Borneo Indobara - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- AsiaOL BioFuels Corp., Philippines
- Altura Mining Limited, Indonesia
- VISA Power Limited - India
- Ambuja Cements Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Wilmar Investment Holdings
- Siam City Cement PLC, Thailand
- ASAPP Information Group - India
- Directorate Of Revenue Intelligence - India
- Coalindo Energy - Indonesia
- Anglo American - United Kingdom
- Karaikal Port Pvt Ltd - India
- Parry Sugars Refinery, India
- Krishnapatnam Port Company Ltd. - India
- Bahari Cakrawala Sebuku - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Coal and Oil Company - UAE
- India Bulls Power Limited - India
- Straits Asia Resources Limited - Singapore
- Goldman Sachs - Singapore
- Pendopo Energi Batubara - Indonesia
- IHS Mccloskey Coal Group - USA
- PTC India Limited - India
- GAC Shipping (India) Pvt Ltd
- Xindia Steels Limited - India
- Gujarat Sidhee Cement - India
- Eastern Energy - Thailand
- Mercator Lines Limited - India
- Makarim & Taira - Indonesia
- Iligan Light & Power Inc, Philippines
- Bangladesh Power Developement Board
- Jorong Barutama Greston.PT - Indonesia
- OPG Power Generation Pvt Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Orica Australia Pty. Ltd.
- Sindya Power Generating Company Private Ltd
- South Luzon Thermal Energy Corporation
- Kalimantan Lumbung Energi - Indonesia
- TeaM Sual Corporation - Philippines
- Economic Council, Georgia
- Pipit Mutiara Jaya. PT, Indonesia
- Global Business Power Corporation, Philippines
- SMG Consultants - Indonesia
- Mercuria Energy - Indonesia
- Antam Resourcindo - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Star Paper Mills Limited - India
- Bhoruka Overseas - Indonesia
- Rashtriya Ispat Nigam Limited - India
- PetroVietnam Power Coal Import and Supply Company
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