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Australia: The pain of take-or-pay


Australia: The pain of take-or-pay

Report summary

Fixed cost provisions in infrastructure contracts, otherwise known as 'take-or-pay', result in most miners in Australia paying for capacity regardless of tonnes actually shipped. In 2013, we estimate a weighted average transport and port charge of A$20/tonne for exporting mines. Of this, we estimate miners will pay an average take-or-pay 'penalty' for underutilisation of capacity of approximately A$4/tonne. This translates to 21% of total transport and port costs, but only 5% of total cash...

What's included?

This report includes 2 file(s)

  • Australia: The pain of take-or-pay PDF - 429.71 KB 5 Pages, 0 Tables, 6 Figures
  • The pain of take or pay.xls XLS - 155.00 KB

Description

This Coal Insight report highlights the key issues surrounding this topic, and draws out the implications for those involved.

Participants, suppliers and advisors can use it to look at the trends, risks and issues within the coal industry and gain an alternative point of view when making decisions.

Wood Mackenzie is the only coal industry service provider that offers a market outlook integrated with other sector analyses, including macroeconomics, coal supply, steel markets and gas and power markets.

Our coal analysts are based in the markets they analyse. They work with objective, proprietary data to help you maximise your current and future decision making. From market dynamics to trade patterns, we give you confidence in your strategic planning.

  • Executive summary
  • Introduction to 'take-or-pay'
  • Infrastructure costs and utilisation in 2013
  • Outlook: Higher utilisation, falling penalties
  • Companies most impacted by take-or-pay

In this report there are 6 tables or charts, including:

  • Executive summary
  • Introduction to 'take-or-pay'
  • Infrastructure costs and utilisation in 2013
    • Transport and port charges by mine, 2013
    • Port utilisation curve by mine, 2013
  • Outlook: Higher utilisation, falling penalties
    • Share of production at 80% utilisation by year
    • Take-or-pay penalty charge (real 2013 terms)
  • Companies most impacted by take-or-pay
    • Infrastructure take-or-pay charges by company, 2013
    • Assigned port capacity utilisation by company (%)
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