Analysts at Goldman Sachs JBWere, who attended the conference, said they had previously believed cost pressures were more severe in Australia than other countries.
But estimates of 42% increases in Canada, 22% in South Africa, 30% in Indonesia, 19% in China, 38% in Columbia and 25% in the US highlighted costs had increased substantially throughout the industry.
Russia and the US had suffered most from increased freight and port handling charges, Goldman Sachs said. US rail transport costs were equivalent to $US55/yt from the Powder River Basin to the east coast.
In the US, since 2003 labour costs have risen 15%, roof bolts by 145%, cable bolts 278%, royalties 56%, conveyor belts 268%, trucking 5% and other costs by 58%.
Conference speakers estimated costs at Australian operations had risen 29% since 2003, largely due to currency fluctuations and skill shortages.
Many of the conference speakers focused on the up-and-coming coal contract price negotiations. Goldman Sachs said it came away with an overall impression of lower coking coal prices, lower PCI and semi-soft prices, and lower thermal coal prices.
“We have made an adjustment to the premium we expect Macarthur and Felix to get for their ultra low vol PCI compared to PCI from $US5/t to $US10/t,” the analysts said.
“This is a contentious issue and is material for both Macarthur and Felix.”
Goldman Sachs added the pricing outcome for low volatile PCI was not clear at this stage, but McCloskey has predicted a Japanese financial year 2006-07 forecast for PCI in the $US60/t range.
A premium for ultra low volatile PCI of $US10-15/t was also suggested.
Premium hard coking coal received the most positive outlook at the conference with prices expected to remain reasonably solid.
McCloskey Group head of consulting Colin Gubbins forecast a coking coal price of $US115/t, and semi-soft price in the $US60/t range for the 2006-07 Japanese financial year.
Weaker coking coal on the other had was more likely to suffer larger falls, but Goldman Sachs said Europeans buyers may perceive this to be a disadvantage to them and settle first.
Thermal coal producers can expect a drop with supply outpacing demand largely due to increased supply from Indonesia.
“The Indonesian influence on the thermal coal price in the immediate term is considered to be the greatest threat with Kaltim Prima stated to be producing at 3Mt/month,” Goldman Sachs said.