Unfortunately with the AGM just passed and Xmas next month I doubt we'll see any new developments this year... Buyers demand looks very, very weak :(
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Unfortunately with the AGM just passed and Xmas next month I doubt we'll see any new developments this year... Buyers demand looks very, very weak :(
Also in the last two months Bunker oil and diesel have significantly reduced, around 20%, further reducing transport costs. Another couple of bad Fonterra auctions and this could be a goer.
O.K. - lets see ...
BRL claimed in their April 2014 business update (page 11) that their FoB (Free on Board in NZ) cost is NZD 148 per ton (that's including handling costs, rail and port costs)
The current chinese coking coal price (according to SunSirs website - I assume they use as well the FoB price but in China - can anybody confirm this?) is 924 yuan, or NZD 194.
Whats missing is the cost to bring the ship from NZ to China ... didn't found this information in the BRL reports, but various references putting recent coal shipping costs half way around the globe at between US$12 and US$26 per ton. Lets be conservative and take the highest number - USD 26 equivalent NZD 32.
I.e. if BRL would sell their coal to the Chinese market for NZD 194 per ton and have to pay NZD 32 for shipping, than they still would get a FoB (free on Board) of NZD 162. If their cost to bring the coal to the ship is NZD 148, than they would still have NZD 14 per ton as margin.
Not a very comfortable margin (and might easily disappear again if the NZD creeps up or the coking price down again, but if both NZD and coking coal head from here into the right direction and shipping prices stay reasonable (they are currently quite low), than we should be fine to go.
Not sure, whether I expect them to take action anytime soon, but if the current trends prevail (and my calculation didn't oversee any major cost), than I could imagine that they are going to ramp Cascade up sometimes in 2015.
Discl: hold BRL and am neither a coal nor a shipping specialist - DYOR
I'm not sure that the domestic production is a great money spinner at the moment, nor what the terms of their sale contracts are, but I wouldn't have thought that BRL would be banking too much there to fund development in Buller. There's a lot riding on continued strengthening in the price of coking coal.
You are probably right related to the contract price. However still assuming that the buyer would look at the overall cost of the supplied coal (i.e. coal plus shipping) and compare that to the alternatives they might have (unless there are none around). If he can pick between local Chinese coal (with lower shipping cost) and NZ coal, than I would assume that they compare the cost based on resource cost plus shipping (no matter, who is finally paying the ship), i.e. the NZ coal needs to be a bit cheaper than the Chinese index price.
Anyway - if BRL could indeed get the Chinese Spot Price paid for FoB from Lyttleton, than they would already now have a margin of NZD 46 / ton - which sounds much better than the conservative NZD 14 I came up with.
In reality the margin would be probably between the NZD 14 and the NZD 46, given that most local suppliers would have some (though lower) shipping cost as well, unless the mine is directly next to the steel mill ...
I would like to think that they would ramp up production for export in the near future as is being suggested here, but if they were contemplating that then surely those 2 directors wouldn't have just stood down? The fact they stood down last week suggests they might not be planning anything anytime soon and still think things are quite far away from beginning?