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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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Thursday, 25 July 13
CAPESIZE : PACIFIC AND ATLANTIC RATES ARE HOLDING STEADY - FEARNLEYS AS
Handy
The Far East market remains quiet even if some Indo coal trip orders were fed in the market at early this week. Prompt ships passing Singapor ...
Thursday, 25 July 13
SUMMER LULL CHIPPING AWAY RECENT GAINS IN DRY BULK FREIGHT RATES - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
In what seems to be establishing as a permanent trend, at least for the time being, the dry bulk market kept on retreating yesterday, even if this r ...
Tuesday, 23 July 13
NEWCASTLE'S COAL EXPORTS CLIMB 17.82% ON WEEK, PORT'S DATA SHOWS
COALspot.com: Newcastle port in Australia has loaded 3,369,865 tons of coal for the week ended 0700 hours 22 July 2013, Newcastle Port Corp. s ...
Monday, 22 July 13
DRY BULK MARKET DIFFICULT TO MAINTAIN POSITIVE DRIVE CLAIMS SHIPBROKER - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The dry bulk market has seen a significant recovery in recent weeks, leading most ship classes to earnings above their operating expenses, thus brin ...
Monday, 22 July 13
INDO COAL SWAP FOR AUGUST 13 DELIVERY GAINED ON WEEK BUT LOST ON DAY AND MONTH
COALspot.com – Sub-Bit Indonesia coal swaps (FOB ) for average August 2013 delivery slightly up on week but fell on day and month on Fri ...
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- Ministry of Transport, Egypt
- Aboitiz Power Corporation - Philippines
- San Jose City I Power Corp, Philippines
- Antam Resourcindo - Indonesia
- Latin American Coal - Colombia
- Commonwealth Bank - Australia
- Energy Link Ltd, New Zealand
- Semirara Mining and Power Corporation, Philippines
- VISA Power Limited - India
- McConnell Dowell - Australia
- Karaikal Port Pvt Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Globalindo Alam Lestari - Indonesia
- Pendopo Energi Batubara - Indonesia
- Bukit Makmur.PT - Indonesia
- PTC India Limited - India
- Goldman Sachs - Singapore
- Intertek Mineral Services - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Orica Australia Pty. Ltd.
- Global Business Power Corporation, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- IEA Clean Coal Centre - UK
- Trasteel International SA, Italy
- Sindya Power Generating Company Private Ltd
- Miang Besar Coal Terminal - Indonesia
- Rio Tinto Coal - Australia
- Planning Commission, India
- Anglo American - United Kingdom
- Petron Corporation, Philippines
- The Treasury - Australian Government
- Ministry of Mines - Canada
- Bhushan Steel Limited - India
- Interocean Group of Companies - India
- The State Trading Corporation of India Ltd
- Gujarat Electricity Regulatory Commission - India
- Alfred C Toepfer International GmbH - Germany
- Standard Chartered Bank - UAE
- Metalloyd Limited - United Kingdom
- Oldendorff Carriers - Singapore
- Indika Energy - Indonesia
- Sarangani Energy Corporation, Philippines
- Kepco SPC Power Corporation, Philippines
- Wilmar Investment Holdings
- Bangladesh Power Developement Board
- Rashtriya Ispat Nigam Limited - India
- Tata Chemicals Ltd - India
- Meralco Power Generation, Philippines
- Star Paper Mills Limited - India
- Port Waratah Coal Services - Australia
- Deloitte Consulting - India
- Coal and Oil Company - UAE
- Kartika Selabumi Mining - Indonesia
- PowerSource Philippines DevCo
- Bharathi Cement Corporation - India
- GN Power Mariveles Coal Plant, Philippines
- Global Green Power PLC Corporation, Philippines
- Directorate General of MIneral and Coal - Indonesia
- International Coal Ventures Pvt Ltd - India
- Kobexindo Tractors - Indoneisa
- London Commodity Brokers - England
- Siam City Cement PLC, Thailand
- Coalindo Energy - Indonesia
- Edison Trading Spa - Italy
- Dalmia Cement Bharat India
- The University of Queensland
- Baramulti Group, Indonesia
- Australian Commodity Traders Exchange
- GVK Power & Infra Limited - India
- Medco Energi Mining Internasional
- Petrochimia International Co. Ltd.- Taiwan
- Manunggal Multi Energi - Indonesia
- Eastern Energy - Thailand
- Indogreen Group - Indonesia
- Iligan Light & Power Inc, Philippines
- Electricity Authority, New Zealand
- Sree Jayajothi Cements Limited - India
- ICICI Bank Limited - India
- Borneo Indobara - Indonesia
- Australian Coal Association
- SN Aboitiz Power Inc, Philippines
- Minerals Council of Australia
- Mintek Dendrill Indonesia
- Semirara Mining Corp, Philippines
- Singapore Mercantile Exchange
- Barasentosa Lestari - Indonesia
- Xindia Steels Limited - India
- Parliament of New Zealand
- Krishnapatnam Port Company Ltd. - India
- Asmin Koalindo Tuhup - Indonesia
- Bhoruka Overseas - Indonesia
- Bayan Resources Tbk. - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- CIMB Investment Bank - Malaysia
- MS Steel International - UAE
- White Energy Company Limited
- Videocon Industries ltd - India
- Samtan Co., Ltd - South Korea
- Timah Investasi Mineral - Indoneisa
- Wood Mackenzie - Singapore
- Riau Bara Harum - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Sinarmas Energy and Mining - Indonesia
- Ministry of Finance - Indonesia
- Indo Tambangraya Megah - Indonesia
- Jindal Steel & Power Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Mercuria Energy - Indonesia
- Jaiprakash Power Ventures ltd
- Ambuja Cements Ltd - India
- Kaltim Prima Coal - Indonesia
- Cement Manufacturers Association - India
- Electricity Generating Authority of Thailand
- Bank of Tokyo Mitsubishi UFJ Ltd
- Kapuas Tunggal Persada - Indonesia
- Salva Resources Pvt Ltd - India
- Mercator Lines Limited - India
- Orica Mining Services - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Formosa Plastics Group - Taiwan
- Africa Commodities Group - South Africa
- Sical Logistics Limited - India
- Makarim & Taira - Indonesia
- GAC Shipping (India) Pvt Ltd
- Lanco Infratech Ltd - India
- OPG Power Generation Pvt Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Maheswari Brothers Coal Limited - India
- Power Finance Corporation Ltd., India
- Grasim Industreis Ltd - India
- Carbofer General Trading SA - India
- Aditya Birla Group - India
- Toyota Tsusho Corporation, Japan
- Savvy Resources Ltd - HongKong
- Pipit Mutiara Jaya. PT, Indonesia
- Marubeni Corporation - India
- ASAPP Information Group - India
- Indian Energy Exchange, India
- Jorong Barutama Greston.PT - Indonesia
- Ind-Barath Power Infra Limited - India
- Kideco Jaya Agung - Indonesia
- Chamber of Mines of South Africa
- Bhatia International Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Central Electricity Authority - India
- Siam City Cement - Thailand
- Larsen & Toubro Limited - India
- Straits Asia Resources Limited - Singapore
- Karbindo Abesyapradhi - Indoneisa
- Simpson Spence & Young - Indonesia
- Coastal Gujarat Power Limited - India
- Georgia Ports Authority, United States
- LBH Netherlands Bv - Netherlands
- Essar Steel Hazira Ltd - India
- TeaM Sual Corporation - Philippines
- Chettinad Cement Corporation Ltd - India
- Renaissance Capital - South Africa
- Kohat Cement Company Ltd. - Pakistan
- Vedanta Resources Plc - India
- Uttam Galva Steels Limited - India
- Romanian Commodities Exchange
- Parry Sugars Refinery, India
- Gujarat Mineral Development Corp Ltd - India
- IHS Mccloskey Coal Group - USA
- South Luzon Thermal Energy Corporation
- Mjunction Services Limited - India
- Heidelberg Cement - Germany
- PNOC Exploration Corporation - Philippines
- Directorate Of Revenue Intelligence - India
- Central Java Power - Indonesia
- Independent Power Producers Association of India
- Therma Luzon, Inc, Philippines
- SMG Consultants - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Thiess Contractors Indonesia
- Agrawal Coal Company - India
- Eastern Coal Council - USA
- Indonesian Coal Mining Association
- CNBM International Corporation - China
- Vizag Seaport Private Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- SMC Global Power, Philippines
- Neyveli Lignite Corporation Ltd, - India
- India Bulls Power Limited - India
- Sakthi Sugars Limited - India
- Banpu Public Company Limited - Thailand
- Bulk Trading Sa - Switzerland
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- New Zealand Coal & Carbon
- Tamil Nadu electricity Board
- Energy Development Corp, Philippines
- Madhucon Powers Ltd - India
- Thai Mozambique Logistica
- European Bulk Services B.V. - Netherlands
- Merrill Lynch Commodities Europe
- Sojitz Corporation - Japan
- Bukit Asam (Persero) Tbk - Indonesia
- Meenaskhi Energy Private Limited - India
- Global Coal Blending Company Limited - Australia
- Attock Cement Pakistan Limited
- Indian Oil Corporation Limited
- Bukit Baiduri Energy - Indonesia
- Posco Energy - South Korea
- Binh Thuan Hamico - Vietnam
- Economic Council, Georgia
- GMR Energy Limited - India
- Kumho Petrochemical, South Korea
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Price Waterhouse Coopers - Russia
- Malabar Cements Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Gujarat Sidhee Cement - India
- Kalimantan Lumbung Energi - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Altura Mining Limited, Indonesia
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