Friday, January 30, 2015

Whitehaven confident of coal’s future despite lacklustre market

Despite the declining coal prices, ASX-listed producer Whitehaven Coal remains upbeat about the company’s prospects for the future.
“While not ignoring the current weakness in coal markets, we remain confident that coal has a growing role to play in the world’s future energy requirements and that the high-quality coals produced by Whitehaven will be in strong demand from Whitehaven’s key Asian markets for many years into the future,” said MD Paul Flynn on Friday.
During the six months ended December, Whitehaven set both production and sales records, on the back of its Maules Creek mine, in New South Wales, producing and shipping its first coal.
Saleable coal production for the interim period reached 4.4-million tonnes, which was 9% higher than the previous corresponding period.
During the same period, a record six-million tonnes of managed coal was sold, 4.7-million of which was Whitehaven’s share, generating revenue of A$371.8-million.
“We are delighted to have achieved a wide range of very positive financial, strategic and operational outcomes during the half, in spite of a lacklustre coal   market,” said Flynn.
“Importantly, we have been able to commence production at our Maules Creek project three months ahead of schedule,” Flynn said, adding that the project would be transformational for Whitehaven as it would double production.
Furthermore, Flynn pointed out that Whitehaven had been able to maintain its earnings before interest, taxes, depreciation and amortisation margin in a period of falling commodity prices by improving the efficiency of each of its operations, and continuing with sustainable cost cutting at all of its mines.
The cost reduction programme delivered an average cost of A$63/t in the half-year period, down from the A$71/t reported in the previous corresponding half.
“The 6% reduction in costs from the previous half and the 11% reduction from the previous corresponding half were pleasing, and shows our leadership team is making a difference,” Flynn said.
He added that the fundamentals of the business were also continuing to improve, with new low-cost production established at Maules Creek and more upside potential identified at the Narrabri mine.
“These two tier one assets will underpin Whitehaven for many years into the future.”

Wednesday, January 21, 2015

Colombia adopts Argus coking coal and freight assessments in volatile market

Colombia's mining regulatory agency ANM has started pricing coking coal for royalty calculations using price assessments published by global energy and commodity news and price reporting agency Argus.  This expands Colombian´s innovative use of market-based tax calculations to the coking coal sector and is joined by enhanced use of Argus indexation in the thermal coal tax formula.
Colombian authorities will begin using Argus fob Colombia coking coal price assessments to calculate market values for export shipments from the country's coal mines. Colombia's market-based pricing will benefit all stakeholders in the country's coal industry during a period of historically low prices. The Colombian programme will provide relief for producers while coal prices are low, keeping these industries competitive in international markets. And it will ensure that the Colombian sector benefits when coking coal prices recover.
Argus exclusively publishes these fob Colombia coking coal price assessments, which Latin America's coal markets have rapidly adopted for robust, reliable price indexation. The assessments are published in Argus Steel Feedstocks, a service covering coking coal, iron ore and ferrous scrap markets around the world.
Argus freight assessments have also been incorporated into Colombia's coal royalties for thermal coal produced in the central region of the country, joining the Argus/IHS McCloskey API 2 index for this calculation. Argus' assessment of Panamax rates from Colombia to Rotterdam will be used to calculate a netback price from the northwest Europe trading hub. These freight assessments are available in Argus Coal Daily International and Argus Freight.
"Argus price assessments are used extensively by governments as independent references for taxation and other purposes," Argus Media chairman and chief executive Adrian Binks said. "We fully expect other growing and liberalising economies in Latin America to take similar steps in the near future."
Colombia is one of the top coal exporters in the world, and is the third-biggest exporter of coking coal in the Americas. Coking coal is used to make metallurgical coke, which is a feedstock in primary steel production.
Argus coal price assessments are widely used in physical and derivative contracts around the world. Its transparent price assessment methodology has been increasingly adopted throughout the Americas and globally. Argus price assessments are used by major energy producers and consumers as price references in long-term supply contracts, and by market participants for portfolio mark-to-market, counterparty exposure management, derivatives and a wide range of investment and market analysis purposes.

Tuesday, January 20, 2015

US, Russian coking coal prices holding up better than Australian cargoes

Prices for commonly available mainstream brands of Australian hard coking coal into China remained under pressure on Tuesday January 20.

However, materials from other countries that contain lower ash and sulphur are holding up relatively well price-wise.

A number of top Australia brands were heard done in the region of $115 per tonne cfr China while a second-tier product is said to have changed hands at around $107 per tonne cfr. 

But recent transactions involving Russian and US cargoes did not move in tandem with their Australian counterparts, according to market sources. They either traded higher than expected or kept to levels similar to those over the past month, unlike the weakening Australian brands.

Participants told that the supply of low-ash, low-sulphur materials has been tighter of late, even as multiple cargoes of premium Australian coal were continuously pushed into the market.

Several sellers were heard to have slashed offers in order to move cargoes or to generate better cash flows, sources said.

"We’re staying away from the market now as we wait for more clarity," a source at a large trading firm stated.

CFR Jingtang premium hard coking coal index fell  $0.19 per tonne to $114.69 per tonne on Tuesday while the cfr Jingtang hard coking coal index shed $0.30 per tonne to $106.42 per tonne. 

The fob Australia premium hard coking coal index lost $1.60 per tonne to $112.43 per tonne while the fob Australia hard coking coal index dipped $0.57 per tonne to $101.07 per tonne.

On the Dalian Commodity Exchange, the most-traded May coking coal futures contract closed at 726 yuan ($118) per tonne on Tuesday, up slightly from Monday’s close of 724 yuan ($118) per tonne. The most-traded May coke contract closed lower at 1,038 yuan ($169) per tonne, compared with the previous day’s close of 1,045 yuan ($170) per tonne.

Rio Tinto disclosed on Tuesday that it produced 1.6 million tonnes of hard coking coal and 728,000 tonnes of semi-soft coking coal during the fourth quarter of last year. The figures brought its full-year total for hard coking coal to 7.1 million tonnes and semi-soft coking coal to 3.2 million tonnes – year-on-year falls of 8% and 17%, respectively.