6419.0 - Producer and International Trade Price Indexes, 1995  
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Contents >> Chapter 9. Price Indexes of Materials Used in Coal Mining


9.1. The Price Indexes of Materials Used in Coal Mining, Australia (6415.0) was first published in February 1989 on a reference base of 1987-88 = 100.0. The Indexes were compiled for each month from July 1988. From September quarter 1997 the indexes have been compiled and released quarterly.

Nature and purpose

9.2. The indexes measure price movements in materials used in the two types of (black) coal mining, namely:

      • open cut; and
      • underground mining.

9.3. The indexes measure changes in the prices of materials used in the ongoing mining process. That is, the removal of overburden, the extraction, washing and preparation of the coal, and its transportation to the railhead.

9.4. For the purpose of these indexes, materials are defined as being consumables and those replacement parts that normally have a life span of less than 12 months (although, for some more durable items, this may extend up to three years). That is, they include those items that are normally regarded as being consumed in the mining process and exclude items of capital equipment.

9.5. In determining whether particular replacement parts were within the scope of the indexes, attention was paid to industry practice (i.e. whether the items are generally regarded as capital items) and to the cost and durability of the item. Replacement parts having a high cost and a long life-span (e.g. dragline pinions and gears) are regarded as capital equipment and are thus outside the scope of the indexes.

Composition and weighting

9.6. Details of the items included in the indexes are set out in Table 9.1 (open cut mining) and Table 9.2 (underground mining).

9.7. The items included were selected and allocated weights on the basis of the estimated average usage of materials in coal mining over the three years to June 1987.

9.8. The estimated values used to determine the item weights were derived from data reported from a sample of coal mines. The sample was selected to give appropriate representation to open cut and underground mines located in New South Wales and Queensland.

9.9. Since the weights are based on an average materials usage from a range of coal mines with particular characteristics, the index is not necessarily representative of price movements for materials used in any particular mine.

Data sources


9.10. Price collection is spread across the three months of the quarter. Prices relate to specified standards of each material and are obtained from representative suppliers of the materials used in coal mines.

9.11. In general, the point of pricing is delivered on mine site or to the primary storage site for a group of mines.

9.12. As far as possible, actual transaction prices are used (i.e. the prices actually paid by coal mines to suppliers for materials delivered on mine site). The prices used therefore include all relevant taxes and charges and freight costs, and are net of any discounts and rebates.

9.13. The ABS asks respondents to report details of the discounts they offer so that actual transaction prices can be calculated. However, as coal mining materials suppliers offer different types of discounts to buyers (e.g. quantity discounts and competitive discounts), the identification of the discounts and the way in which they are applied by sellers pose considerable problems for the ABS. To the extent that discounts are identified and can be measured, their effects are taken into account in calculating the index.


9.14. There are two broad levels at which weights are used in the compilation of index numbers. The first is the item weights mentioned earlier and shown in Table 9.1 (open cut mining) and Table 9.2 (underground mining). These weights are commonly called regimen item weights and are fixed between the periodic reviews of the whole index. As discussed previously, the regimen item weights used in the current index are based on usage by a sample of coal mines.

9.15. The second level of weights is the sample weights. These weights are the weights given to each precise specification in the sample of specifications selected to represent a regimen item. The sample of specifications priced and the sample weights are subject to regular review and may change at any time.

9.16. The main sources of data for determining sample weights are the suppliers of materials to mines.

This section contains the following subsection :
      Table 9.1: Price Indexes, Open Cut Coal Mining
      Table 9.2: Price Indexes, Underground Coal Mining

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