World Energy Outlook 2006

Figure 5.6: Structure of Steam Coal Supply Costs for Major Exporting Countries
dollars per tonne
30
25
20
15
10
5
0
Venezuela Indonesia South Africa Australia
Mining
Coal processing
General and administrative Production taxes and royalties
Inland transportation Coal terminal and port charges
Note: FOB cost, not including capital charges, based on a standardised heat content of 6 000 kcal/kg
(comparable to a typical South African coal exported from Richard’s Bay). The heat content of internationally
traded coals ranges from 5 200 kcal/kg to 7 000 kcal/kg.
Source: IEA Clean Coal Centre analysis based on Devon and Ewart (2005).
value. The per-tonne cost of coal processing is typically around $2, while
administration and general management costs add another $1 to $3. Royalties
and taxes can be significant, amounting to almost $4 on average in Australia
and Indonesia based on current prices. The cost of transporting coal from the
mine to the port terminal, usually by rail, can account for a large share of total
supply costs. Port facilities for loading coal onto ships cost between $1 and $3
per tonne. Seaborne freight charges depend on the vessel size and the voyage
distance. In 2005, voyages in large capesize vessels (150 kt dead-weight) cost
around $10 to $20 per tonne, and in smaller panamax vessels (50 kt) between
$15 and $30. Fluctuations in demand for, and supply of, dry-bulk vessels, used
to ship coal and other commodities, can create enormous volatility in the cost
of transporting coal between continents. For example, in 2005, freight rates
accounted for half the cost of South African steam-coal exports to Japan.
Several factors will influence supply costs and, therefore, the attractiveness of
new investment in the coal industry in the coming decades:
� Energy prices: The recent surge in energy prices has put upward pressure on
coal-supply costs. The price of electricity for running mining machinery and
fuel for trucks directly affects mining costs.
Chapter 5 - Coal Market Outlook 135
© OECD/IEA, 2007
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