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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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Friday, 19 July 13
U.S.COAL PRODUCTION TOTALED APPROXIMATELY 19.60 MMST WEEK ENDED JULY 13
COALspot.com – United states the world’s second largest coal producer produced totaled approximately 19.60 million short tons (mmst) of ...
Friday, 19 July 13
TNPL IS LOOKING FOR 300 K MT OF 6000 GAD COAL FOR FIVE MONTH
COALspot.com - Tamil Nadu Newsprint & Papers Ltd. , an Indian paper maker, is seeking 300,000 metric tons ± 5% (In 5 shipments about 60,0 ...
Thursday, 18 July 13
3RD ANNUAL FLOATING TERMINALS, INDONESIA
Commercial applications for offshore transshipment facilities
Floating Terminal solutions are increasingly being deployed by miners, independent ...
Thursday, 18 July 13
THE CAPE MARKET APPEARS TO BE HOLDING FIRM - FEARNLEYS AS
Handy
In the Pacific, market maintained similar levels during the week. There is several Indo coal orders in the market, ships passing Singapore fi ...
Thursday, 18 July 13
DRY BULK MARKETS RETAINS RECENT GAINS, MOVES SIDEWAYS - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
The dry bulk market has kept on moving sideways this week, as evidenced by the latest trends of the industry's benchmark, the Baltic Dry Index (BDI ...
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- Salva Resources Pvt Ltd - India
- Singapore Mercantile Exchange
- Ministry of Transport, Egypt
- Global Business Power Corporation, Philippines
- Kobexindo Tractors - Indoneisa
- Aboitiz Power Corporation - Philippines
- Banpu Public Company Limited - Thailand
- Asia Pacific Energy Resources Ventures Inc, Philippines
- SMG Consultants - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Manunggal Multi Energi - Indonesia
- PNOC Exploration Corporation - Philippines
- Therma Luzon, Inc, Philippines
- ICICI Bank Limited - India
- IEA Clean Coal Centre - UK
- Essar Steel Hazira Ltd - India
- Siam City Cement - Thailand
- Commonwealth Bank - Australia
- Ministry of Mines - Canada
- White Energy Company Limited
- Port Waratah Coal Services - Australia
- Jorong Barutama Greston.PT - Indonesia
- Australian Coal Association
- Orica Mining Services - Indonesia
- MS Steel International - UAE
- Wilmar Investment Holdings
- Kalimantan Lumbung Energi - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Pendopo Energi Batubara - Indonesia
- Parliament of New Zealand
- Tata Chemicals Ltd - India
- Coal and Oil Company - UAE
- SN Aboitiz Power Inc, Philippines
- Mercuria Energy - Indonesia
- Sinarmas Energy and Mining - Indonesia
- LBH Netherlands Bv - Netherlands
- CIMB Investment Bank - Malaysia
- Sical Logistics Limited - India
- Dalmia Cement Bharat India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Maheswari Brothers Coal Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Cigading International Bulk Terminal - Indonesia
- Kumho Petrochemical, South Korea
- GMR Energy Limited - India
- Barasentosa Lestari - Indonesia
- Australian Commodity Traders Exchange
- PowerSource Philippines DevCo
- Bukit Asam (Persero) Tbk - Indonesia
- Price Waterhouse Coopers - Russia
- Carbofer General Trading SA - India
- Eastern Coal Council - USA
- Posco Energy - South Korea
- San Jose City I Power Corp, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Riau Bara Harum - Indonesia
- Chettinad Cement Corporation Ltd - India
- Star Paper Mills Limited - India
- Miang Besar Coal Terminal - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Renaissance Capital - South Africa
- Toyota Tsusho Corporation, Japan
- Videocon Industries ltd - India
- Standard Chartered Bank - UAE
- Bhatia International Limited - India
- Alfred C Toepfer International GmbH - Germany
- OPG Power Generation Pvt Ltd - India
- Trasteel International SA, Italy
- Directorate General of MIneral and Coal - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Uttam Galva Steels Limited - India
- CNBM International Corporation - China
- Bahari Cakrawala Sebuku - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- The State Trading Corporation of India Ltd
- Gujarat Electricity Regulatory Commission - India
- Larsen & Toubro Limited - India
- Sindya Power Generating Company Private Ltd
- Planning Commission, India
- Sarangani Energy Corporation, Philippines
- India Bulls Power Limited - India
- Orica Australia Pty. Ltd.
- Power Finance Corporation Ltd., India
- Bangladesh Power Developement Board
- Thiess Contractors Indonesia
- Bhushan Steel Limited - India
- Altura Mining Limited, Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Central Electricity Authority - India
- Rio Tinto Coal - Australia
- Mintek Dendrill Indonesia
- Jaiprakash Power Ventures ltd
- Straits Asia Resources Limited - Singapore
- Neyveli Lignite Corporation Ltd, - India
- ASAPP Information Group - India
- Borneo Indobara - Indonesia
- The University of Queensland
- Medco Energi Mining Internasional
- GVK Power & Infra Limited - India
- TeaM Sual Corporation - Philippines
- Global Green Power PLC Corporation, Philippines
- Formosa Plastics Group - Taiwan
- Indian Energy Exchange, India
- Savvy Resources Ltd - HongKong
- Marubeni Corporation - India
- Baramulti Group, Indonesia
- European Bulk Services B.V. - Netherlands
- Asmin Koalindo Tuhup - Indonesia
- Interocean Group of Companies - India
- Tamil Nadu electricity Board
- Minerals Council of Australia
- Coalindo Energy - Indonesia
- Bharathi Cement Corporation - India
- Agrawal Coal Company - India
- South Luzon Thermal Energy Corporation
- Simpson Spence & Young - Indonesia
- Lanco Infratech Ltd - India
- SMC Global Power, Philippines
- Electricity Authority, New Zealand
- Binh Thuan Hamico - Vietnam
- Jindal Steel & Power Ltd - India
- Merrill Lynch Commodities Europe
- Attock Cement Pakistan Limited
- Energy Link Ltd, New Zealand
- Sakthi Sugars Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Holcim Trading Pte Ltd - Singapore
- Chamber of Mines of South Africa
- Ceylon Electricity Board - Sri Lanka
- International Coal Ventures Pvt Ltd - India
- Indonesian Coal Mining Association
- Malabar Cements Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Romanian Commodities Exchange
- IHS Mccloskey Coal Group - USA
- Wood Mackenzie - Singapore
- Indogreen Group - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- GAC Shipping (India) Pvt Ltd
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Xindia Steels Limited - India
- Ind-Barath Power Infra Limited - India
- Economic Council, Georgia
- Kepco SPC Power Corporation, Philippines
- Anglo American - United Kingdom
- Mercator Lines Limited - India
- Sojitz Corporation - Japan
- Samtan Co., Ltd - South Korea
- Bukit Baiduri Energy - Indonesia
- Karaikal Port Pvt Ltd - India
- London Commodity Brokers - England
- Petron Corporation, Philippines
- Eastern Energy - Thailand
- Sree Jayajothi Cements Limited - India
- Globalindo Alam Lestari - Indonesia
- VISA Power Limited - India
- Antam Resourcindo - Indonesia
- Ministry of Finance - Indonesia
- Kartika Selabumi Mining - Indonesia
- Ambuja Cements Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Meralco Power Generation, Philippines
- The Treasury - Australian Government
- Goldman Sachs - Singapore
- Bayan Resources Tbk. - Indonesia
- PTC India Limited - India
- Energy Development Corp, Philippines
- Kideco Jaya Agung - Indonesia
- Timah Investasi Mineral - Indoneisa
- Meenaskhi Energy Private Limited - India
- Cement Manufacturers Association - India
- Intertek Mineral Services - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Semirara Mining Corp, Philippines
- Mjunction Services Limited - India
- Independent Power Producers Association of India
- Billiton Holdings Pty Ltd - Australia
- Makarim & Taira - Indonesia
- Bhoruka Overseas - Indonesia
- Electricity Generating Authority of Thailand
- Indika Energy - Indonesia
- Vedanta Resources Plc - India
- Grasim Industreis Ltd - India
- Directorate Of Revenue Intelligence - India
- Kohat Cement Company Ltd. - Pakistan
- Bulk Trading Sa - Switzerland
- Coastal Gujarat Power Limited - India
- Africa Commodities Group - South Africa
- Vizag Seaport Private Limited - India
- Deloitte Consulting - India
- Indian Oil Corporation Limited
- Gujarat Mineral Development Corp Ltd - India
- Indo Tambangraya Megah - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Madhucon Powers Ltd - India
- Gujarat Sidhee Cement - India
- Latin American Coal - Colombia
- TNB Fuel Sdn Bhd - Malaysia
- Kaltim Prima Coal - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Maharashtra Electricity Regulatory Commission - India
- McConnell Dowell - Australia
- Georgia Ports Authority, United States
- Parry Sugars Refinery, India
- Edison Trading Spa - Italy
- Aditya Birla Group - India
- New Zealand Coal & Carbon
- Thai Mozambique Logistica
- Semirara Mining and Power Corporation, Philippines
- Global Coal Blending Company Limited - Australia
- Bukit Makmur.PT - Indonesia
- Oldendorff Carriers - Singapore
- Central Java Power - Indonesia
- Iligan Light & Power Inc, Philippines
- Siam City Cement PLC, Thailand
- Metalloyd Limited - United Kingdom
- Heidelberg Cement - Germany
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