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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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Tuesday, 30 July 13
AUSTRALIA'S NEWCASTLE SHIPPED 12.58 PERCENT LESS COAL W-O-W
COALspot.com: Newcastle port in Australia has loaded 2,945,848 tons of coal for the week ended 0700 hours 29 July 2013, Newcastle Port Corp. s ...
Monday, 29 July 13
INDONESIA'S ENERGY NEEDS COULD SPELL GOOD NEWS FOR TANKER OWNERS - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
Despite abundant energy resources, Indonesia has still failed meet its own demand, which led to a rising import of crude. According to the latest we ...
Sunday, 28 July 13
SUB-BIT INDONESIA COAL SWAP UP SLIGHTLY FOR SEPTEMBER CARGOES
COALspot.com – Sub-Bit Indonesia coal swaps (FOB ) for average September 2013 delivery slightly up on day and week but fell on month on ...
Saturday, 27 July 13
CEPL INDIA TO BAG 0.3 MILLION TONS OF COAL SUPPLY ORDER FROM TNPL
COALspot.com - An India based coal trader Coastal Energy Private Limited has offered the lowest price of US$ 73.00 per metric ton for calorific valu ...
Saturday, 27 July 13
INDONESIA TO INDIA SUPRAMAX FREIGHT RATES ARE EXPECTED TO REMAIN STEADY - CAPT.REDDY
COALspot.com : The freight market seemed to soften this week with BDI , Cape and Panamax indices dropped average 5 percent on week.
The BDI was d ...
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- India Bulls Power Limited - India
- Tata Chemicals Ltd - India
- Holcim Trading Pte Ltd - Singapore
- Directorate Of Revenue Intelligence - India
- Global Coal Blending Company Limited - Australia
- London Commodity Brokers - England
- Karaikal Port Pvt Ltd - India
- Bayan Resources Tbk. - Indonesia
- Mercator Lines Limited - India
- IEA Clean Coal Centre - UK
- Cement Manufacturers Association - India
- Africa Commodities Group - South Africa
- Independent Power Producers Association of India
- Kartika Selabumi Mining - Indonesia
- CNBM International Corporation - China
- TNB Fuel Sdn Bhd - Malaysia
- ASAPP Information Group - India
- Videocon Industries ltd - India
- Economic Council, Georgia
- GMR Energy Limited - India
- Deloitte Consulting - India
- Antam Resourcindo - Indonesia
- Electricity Generating Authority of Thailand
- Siam City Cement - Thailand
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Sinarmas Energy and Mining - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Central Electricity Authority - India
- Kepco SPC Power Corporation, Philippines
- Parliament of New Zealand
- Sree Jayajothi Cements Limited - India
- Gujarat Electricity Regulatory Commission - India
- Indika Energy - Indonesia
- Lanco Infratech Ltd - India
- Ministry of Finance - Indonesia
- Planning Commission, India
- Bharathi Cement Corporation - India
- Medco Energi Mining Internasional
- Interocean Group of Companies - India
- Standard Chartered Bank - UAE
- AsiaOL BioFuels Corp., Philippines
- The Treasury - Australian Government
- Intertek Mineral Services - Indonesia
- Agrawal Coal Company - India
- Energy Link Ltd, New Zealand
- Bangladesh Power Developement Board
- Semirara Mining Corp, Philippines
- Samtan Co., Ltd - South Korea
- SMC Global Power, Philippines
- Baramulti Group, Indonesia
- Borneo Indobara - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Energy Development Corp, Philippines
- Edison Trading Spa - Italy
- Manunggal Multi Energi - Indonesia
- Attock Cement Pakistan Limited
- Power Finance Corporation Ltd., India
- Australian Commodity Traders Exchange
- Banpu Public Company Limited - Thailand
- Aboitiz Power Corporation - Philippines
- Timah Investasi Mineral - Indoneisa
- Bukit Baiduri Energy - Indonesia
- Price Waterhouse Coopers - Russia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Neyveli Lignite Corporation Ltd, - India
- LBH Netherlands Bv - Netherlands
- Riau Bara Harum - Indonesia
- PTC India Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Goldman Sachs - Singapore
- Sojitz Corporation - Japan
- Minerals Council of Australia
- Salva Resources Pvt Ltd - India
- Essar Steel Hazira Ltd - India
- The State Trading Corporation of India Ltd
- Heidelberg Cement - Germany
- Sakthi Sugars Limited - India
- Asmin Koalindo Tuhup - Indonesia
- CIMB Investment Bank - Malaysia
- Electricity Authority, New Zealand
- Wood Mackenzie - Singapore
- Bhatia International Limited - India
- Port Waratah Coal Services - Australia
- MS Steel International - UAE
- Eastern Coal Council - USA
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Ministry of Mines - Canada
- Meenaskhi Energy Private Limited - India
- Madhucon Powers Ltd - India
- Georgia Ports Authority, United States
- Singapore Mercantile Exchange
- GAC Shipping (India) Pvt Ltd
- Metalloyd Limited - United Kingdom
- Jindal Steel & Power Ltd - India
- Bukit Makmur.PT - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- GVK Power & Infra Limited - India
- Thiess Contractors Indonesia
- ICICI Bank Limited - India
- Anglo American - United Kingdom
- Billiton Holdings Pty Ltd - Australia
- Vijayanagar Sugar Pvt Ltd - India
- Coastal Gujarat Power Limited - India
- Binh Thuan Hamico - Vietnam
- International Coal Ventures Pvt Ltd - India
- Orica Australia Pty. Ltd.
- Global Green Power PLC Corporation, Philippines
- Ind-Barath Power Infra Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Global Business Power Corporation, Philippines
- Therma Luzon, Inc, Philippines
- Toyota Tsusho Corporation, Japan
- Thai Mozambique Logistica
- Bhoruka Overseas - Indonesia
- New Zealand Coal & Carbon
- The University of Queensland
- PNOC Exploration Corporation - Philippines
- Mintek Dendrill Indonesia
- Siam City Cement PLC, Thailand
- Barasentosa Lestari - Indonesia
- Indian Energy Exchange, India
- Pendopo Energi Batubara - Indonesia
- Vedanta Resources Plc - India
- Kumho Petrochemical, South Korea
- VISA Power Limited - India
- Bhushan Steel Limited - India
- Merrill Lynch Commodities Europe
- Bahari Cakrawala Sebuku - Indonesia
- Marubeni Corporation - India
- Kaltim Prima Coal - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Simpson Spence & Young - Indonesia
- Petron Corporation, Philippines
- San Jose City I Power Corp, Philippines
- Xindia Steels Limited - India
- South Luzon Thermal Energy Corporation
- Romanian Commodities Exchange
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Offshore Bulk Terminal Pte Ltd, Singapore
- Ministry of Transport, Egypt
- Sindya Power Generating Company Private Ltd
- GN Power Mariveles Coal Plant, Philippines
- Aditya Birla Group - India
- Orica Mining Services - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Chettinad Cement Corporation Ltd - India
- Gujarat Sidhee Cement - India
- Ceylon Electricity Board - Sri Lanka
- Wilmar Investment Holdings
- Sarangani Energy Corporation, Philippines
- Globalindo Alam Lestari - Indonesia
- Oldendorff Carriers - Singapore
- Carbofer General Trading SA - India
- Bulk Trading Sa - Switzerland
- PowerSource Philippines DevCo
- Savvy Resources Ltd - HongKong
- Straits Asia Resources Limited - Singapore
- OPG Power Generation Pvt Ltd - India
- Indogreen Group - Indonesia
- Mercuria Energy - Indonesia
- Trasteel International SA, Italy
- Directorate General of MIneral and Coal - Indonesia
- Grasim Industreis Ltd - India
- Indian Oil Corporation Limited
- TeaM Sual Corporation - Philippines
- Semirara Mining and Power Corporation, Philippines
- Kapuas Tunggal Persada - Indonesia
- Sical Logistics Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Jaiprakash Power Ventures ltd
- Leighton Contractors Pty Ltd - Australia
- Kalimantan Lumbung Energi - Indonesia
- White Energy Company Limited
- Kobexindo Tractors - Indoneisa
- McConnell Dowell - Australia
- Meralco Power Generation, Philippines
- Mjunction Services Limited - India
- Dalmia Cement Bharat India
- Vizag Seaport Private Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Malabar Cements Ltd - India
- Chamber of Mines of South Africa
- Indonesian Coal Mining Association
- Maheswari Brothers Coal Limited - India
- Star Paper Mills Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Australian Coal Association
- SMG Consultants - Indonesia
- Commonwealth Bank - Australia
- Coal and Oil Company - UAE
- Central Java Power - Indonesia
- European Bulk Services B.V. - Netherlands
- Makarim & Taira - Indonesia
- Rio Tinto Coal - Australia
- Bank of Tokyo Mitsubishi UFJ Ltd
- IHS Mccloskey Coal Group - USA
- Eastern Energy - Thailand
- Miang Besar Coal Terminal - Indonesia
- Parry Sugars Refinery, India
- SN Aboitiz Power Inc, Philippines
- Indo Tambangraya Megah - Indonesia
- Ambuja Cements Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Kideco Jaya Agung - Indonesia
- Latin American Coal - Colombia
- Renaissance Capital - South Africa
- Altura Mining Limited, Indonesia
- Larsen & Toubro Limited - India
- Posco Energy - South Korea
- Maharashtra Electricity Regulatory Commission - India
- Tamil Nadu electricity Board
- Formosa Plastics Group - Taiwan
- Coalindo Energy - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Iligan Light & Power Inc, Philippines
- Uttam Galva Steels Limited - India
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