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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, 31 July 13
COAL GASIFICATION
IBC’s Coal Gasification conference explores the opportunities for coal gasification investment and development in Asia.
With depleting dome ...
Wednesday, 31 July 13
SUPRAMAX : THE PACIFIC BASIN WAS MOVING ON A POSITIVE PATH - EVA TZIMA
COALspot.com: Cape - Despite holding their ground fairly well early on in the week, Capes in the Atlantic basin gave in to the mounting pressure fro ...
Tuesday, 30 July 13
HARD COAL ON THE WAY TO BECOMING THE WORLD'S MOST IMPORTANT ENERGY SOURCE - VDKI
Press Release : Hard coal continued to be the world’s fastest-growing fossil primary energy source in 2012. It covered about 28% of the world ...
Tuesday, 30 July 13
WIJAYA TRI UTAMA PURCHASES MICROCOAL TECHNOLOGIES' CLEAN COAL UPGRADING FACILITY
- First MCI commercial scale application of proprietary microwave technology to upgrade coal thermal output and reduce pollutants
- MicroCoal to re ...
Tuesday, 30 July 13
KOMIPO INVITES BIDS FOR 520,000 MT OF 5,700 KCAL/KG COAL ON NAR BASIS FOR H1, 2014
COALspot.com : Korea Midland Power Co., Ltd. has invited bids for 520,000 Metric Tons (MT) of coal with calorific value 5,700 kcal/kg on NAR basis f ...
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- Electricity Authority, New Zealand
- Kalimantan Lumbung Energi - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Jindal Steel & Power Ltd - India
- Thai Mozambique Logistica
- India Bulls Power Limited - India
- Billiton Holdings Pty Ltd - Australia
- Makarim & Taira - Indonesia
- Holcim Trading Pte Ltd - Singapore
- VISA Power Limited - India
- Singapore Mercantile Exchange
- Alfred C Toepfer International GmbH - Germany
- Global Business Power Corporation, Philippines
- Larsen & Toubro Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Uttam Galva Steels Limited - India
- Kobexindo Tractors - Indoneisa
- Timah Investasi Mineral - Indoneisa
- Indian Energy Exchange, India
- Siam City Cement PLC, Thailand
- Global Green Power PLC Corporation, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Orica Mining Services - Indonesia
- Commonwealth Bank - Australia
- Central Electricity Authority - India
- Savvy Resources Ltd - HongKong
- Therma Luzon, Inc, Philippines
- Samtan Co., Ltd - South Korea
- Semirara Mining Corp, Philippines
- GMR Energy Limited - India
- Romanian Commodities Exchange
- Kumho Petrochemical, South Korea
- Kohat Cement Company Ltd. - Pakistan
- Wilmar Investment Holdings
- Rashtriya Ispat Nigam Limited - India
- Wood Mackenzie - Singapore
- Mercuria Energy - Indonesia
- MS Steel International - UAE
- Riau Bara Harum - Indonesia
- Latin American Coal - Colombia
- Global Coal Blending Company Limited - Australia
- Attock Cement Pakistan Limited
- New Zealand Coal & Carbon
- Lanco Infratech Ltd - India
- Kepco SPC Power Corporation, Philippines
- Electricity Generating Authority of Thailand
- Planning Commission, India
- Antam Resourcindo - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Bahari Cakrawala Sebuku - Indonesia
- Jaiprakash Power Ventures ltd
- Edison Trading Spa - Italy
- Bulk Trading Sa - Switzerland
- IEA Clean Coal Centre - UK
- Karaikal Port Pvt Ltd - India
- Central Java Power - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Coastal Gujarat Power Limited - India
- Indonesian Coal Mining Association
- Bhushan Steel Limited - India
- Globalindo Alam Lestari - Indonesia
- Parliament of New Zealand
- White Energy Company Limited
- Standard Chartered Bank - UAE
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Altura Mining Limited, Indonesia
- Orica Australia Pty. Ltd.
- Sakthi Sugars Limited - India
- Trasteel International SA, Italy
- Videocon Industries ltd - India
- SMC Global Power, Philippines
- Bayan Resources Tbk. - Indonesia
- Thiess Contractors Indonesia
- Ambuja Cements Ltd - India
- PowerSource Philippines DevCo
- AsiaOL BioFuels Corp., Philippines
- SMG Consultants - Indonesia
- Parry Sugars Refinery, India
- Vizag Seaport Private Limited - India
- Sinarmas Energy and Mining - Indonesia
- Indian Oil Corporation Limited
- Meralco Power Generation, Philippines
- Directorate Of Revenue Intelligence - India
- Renaissance Capital - South Africa
- Mercator Lines Limited - India
- Leighton Contractors Pty Ltd - Australia
- Manunggal Multi Energi - Indonesia
- Energy Development Corp, Philippines
- Sindya Power Generating Company Private Ltd
- Malabar Cements Ltd - India
- TeaM Sual Corporation - Philippines
- PetroVietnam Power Coal Import and Supply Company
- The University of Queensland
- Bhatia International Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- CNBM International Corporation - China
- Iligan Light & Power Inc, Philippines
- Banpu Public Company Limited - Thailand
- Binh Thuan Hamico - Vietnam
- Asmin Koalindo Tuhup - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Energy Link Ltd, New Zealand
- Metalloyd Limited - United Kingdom
- Independent Power Producers Association of India
- Carbofer General Trading SA - India
- International Coal Ventures Pvt Ltd - India
- Australian Coal Association
- Vedanta Resources Plc - India
- TNB Fuel Sdn Bhd - Malaysia
- Price Waterhouse Coopers - Russia
- Semirara Mining and Power Corporation, Philippines
- Agrawal Coal Company - India
- The State Trading Corporation of India Ltd
- Bhoruka Overseas - Indonesia
- Eastern Energy - Thailand
- Port Waratah Coal Services - Australia
- ASAPP Information Group - India
- Xindia Steels Limited - India
- Heidelberg Cement - Germany
- The Treasury - Australian Government
- SN Aboitiz Power Inc, Philippines
- Australian Commodity Traders Exchange
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Essar Steel Hazira Ltd - India
- Deloitte Consulting - India
- Medco Energi Mining Internasional
- ICICI Bank Limited - India
- Cement Manufacturers Association - India
- Interocean Group of Companies - India
- Oldendorff Carriers - Singapore
- Krishnapatnam Port Company Ltd. - India
- Petron Corporation, Philippines
- CIMB Investment Bank - Malaysia
- Georgia Ports Authority, United States
- Maheswari Brothers Coal Limited - India
- Borneo Indobara - Indonesia
- Coal and Oil Company - UAE
- Power Finance Corporation Ltd., India
- San Jose City I Power Corp, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Meenaskhi Energy Private Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Tamil Nadu electricity Board
- Bukit Makmur.PT - Indonesia
- Baramulti Group, Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Madhucon Powers Ltd - India
- Formosa Plastics Group - Taiwan
- Ministry of Mines - Canada
- Chettinad Cement Corporation Ltd - India
- Gujarat Sidhee Cement - India
- Salva Resources Pvt Ltd - India
- GAC Shipping (India) Pvt Ltd
- Dalmia Cement Bharat India
- Directorate General of MIneral and Coal - Indonesia
- Siam City Cement - Thailand
- Ind-Barath Power Infra Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- LBH Netherlands Bv - Netherlands
- PNOC Exploration Corporation - Philippines
- Bangladesh Power Developement Board
- Straits Asia Resources Limited - Singapore
- Minerals Council of Australia
- GVK Power & Infra Limited - India
- Barasentosa Lestari - Indonesia
- Merrill Lynch Commodities Europe
- Africa Commodities Group - South Africa
- Kartika Selabumi Mining - Indonesia
- Aditya Birla Group - India
- Gujarat Electricity Regulatory Commission - India
- Ministry of Transport, Egypt
- Sarangani Energy Corporation, Philippines
- Indogreen Group - Indonesia
- Economic Council, Georgia
- Eastern Coal Council - USA
- Pendopo Energi Batubara - Indonesia
- Sical Logistics Limited - India
- OPG Power Generation Pvt Ltd - India
- Kapuas Tunggal Persada - Indonesia
- Rio Tinto Coal - Australia
- Coalindo Energy - Indonesia
- London Commodity Brokers - England
- Ceylon Electricity Board - Sri Lanka
- Jorong Barutama Greston.PT - Indonesia
- Ministry of Finance - Indonesia
- IHS Mccloskey Coal Group - USA
- Grasim Industreis Ltd - India
- Aboitiz Power Corporation - Philippines
- Sojitz Corporation - Japan
- Intertek Mineral Services - Indonesia
- Toyota Tsusho Corporation, Japan
- Marubeni Corporation - India
- Kideco Jaya Agung - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Goldman Sachs - Singapore
- McConnell Dowell - Australia
- Pipit Mutiara Jaya. PT, Indonesia
- Mjunction Services Limited - India
- Bharathi Cement Corporation - India
- Mintek Dendrill Indonesia
- Posco Energy - South Korea
- Karbindo Abesyapradhi - Indoneisa
- European Bulk Services B.V. - Netherlands
- Chamber of Mines of South Africa
- Bukit Baiduri Energy - Indonesia
- Star Paper Mills Limited - India
- Indika Energy - Indonesia
- Cigading International Bulk Terminal - Indonesia
- South Luzon Thermal Energy Corporation
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Sree Jayajothi Cements Limited - India
- PTC India Limited - India
- Anglo American - United Kingdom
- Simpson Spence & Young - Indonesia
- Tata Chemicals Ltd - India
- Kaltim Prima Coal - Indonesia
- Indo Tambangraya Megah - Indonesia
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