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The impact on Adjusted EBITDA from changes in our cash costs are explained below:
Q1 2013 Q1 2013 compared with compared with($ millions) Q4 2012 Q1 2012--------------------------------------------------------------------------------------------------------------------------------------------------------Methanex-produced methanol costs $ - $ (9)Insurance recovery (9) (2)Proportion of Methanex-produced methanol sales 5 17Purchased methanol costs (12) (19)Logistics costs 12 12Other, net 8 9---------------------------------------------------------------------------- $ 4 $ 8----------------------------------------------------------------------------
Methanex-produced methanol costs
We purchase natural gas for the New Zealand, Trinidad, Egypt and Chile methanol facilities under natural gas purchase agreements where the unique terms of each contract include a base price and a variable price component linked to the price of methanol to reduce our commodity price risk exposure. The variable price component of each gas contract is adjusted by a formula related to methanol prices above a certain level. For the first quarter of 2013 compared with the same period in 2012, Methanex-produced methanol costs were higher by $9 million primarily due to a change in the mix of production sold from inventory.
Insurance recovery
We experienced an equipment failure at our Atlas facility in July 2011. Our operations are covered by business interruption insurance and we finalized our claim and recorded a recovery of $9 million in the fourth quarter of 2012.
Proportion of Methanex-produced methanol sales
The cost of purchased methanol is directly linked to the selling price for methanol at the time of purchase and the cost of purchased methanol is generally higher than the cost of Methanex-produced methanol. Accordingly, an increase in the proportion of Methanex-produced methanol sales results in a decrease in our overall cost structure for a given period. For the first quarter of 2013 compared with the fourth quarter of 2012 and the first quarter of 2012, Methanex-produced methanol sales made up a higher proportion of our total sales and this increased Adjusted EBITDA by $5 million and $17 million, respectively.
Purchased methanol costs
Changes in purchased methanol costs for all periods presented are primarily as a result of changes in methanol pricing.
Logistics costs
Logistics costs vary from period to period depending on the levels of production from each of our production facilities and the resulting impact on our supply chain. Logistics costs were $12 million lower in the first quarter of 2013 compared with each of the fourth quarter of 2012 and the first quarter of 2012. As a result of improvements in our asset portfolio over the past year, we have recently completed several initiatives that have reduced logistics costs and improved the efficiency of our supply chain.
