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Friday, 08 June 12
NO IMMEDIATE IMPACT ON ADARO'S RATING FROM BEP TRANSACTION - FITCH RATINGS
 Fitch Ratings has said that PT Adaro Indonesia's (Adaro, 'BB+'/ Stable) ratings are not immediately affected by its parent PT Adaro Energy Tbk's (Adaro Energy) planned investment in greenfield coal miner PT Bhakti Energi Persada (BEP).
Adaro Energy recently signed an agreement for the right to acquire up to 51% of BEP over three years for up to USD500m through a convertible loan or to issue a pre-specified number of shares of Adaro Energy to the shareholders of BEP (participating in this agreement) in exchange for 79.8% of BEP. Adaro Energy currently owns 10.22% of BEP.
BEP has seven coal concessions, all IUPs (Izin Usaha Pertambangans - mining business licences), with estimated Australasian Joint Ore Reserves Committee (JORC)-compliant coal resources of 9.53 billion tonnes. Fitch expects that a large part of the investment required before bringing these resources to production will relate to the coal hauling road connecting the mines to barging and shipping points. Coal resources of BEP are of low energy content (3,379kcal on a gross as received basis) and as such will trade at a substantial discount to benchmark thermal coal prices. However, the favourable geology of BEP mines will allow the extraction of coal at an extremely low strip ratio (i.e., units of overburden to be removed on per unit of coal extracted) over the average life of a mine of below 0.5x as estimated by Adaro Energy, supporting the economic viability of these operations. The materially shorter supply chain of BEP's mines at 130km (versus 320km for Adaro's existing mines) would provide further support.
However, BEP coal mines have substantially lower cash margins than Adaro Energy's currently main cash generating mine, Tutupan, and are more susceptible to low coal prices. There is also uncertainty relating to coal mining regulations in Indonesia at present, such as restrictions on coal exports and a resource export tax. Any unfavourable regulatory developments can affect the commerciality of BEP's operations. However, Adaro Energy's options to invest in rather than an outright purchase of BEP resources provide a meaningful level of flexibility and safety. Fitch believes that any investments in the first half of the three-year option period will not be significant and can be funded from Adaro Energy's projected internal cash generation.
If successfully executed, BEP can over time contribute to the increasing diversity of Adaro Energy's mining operations. The limited diversity of Adaro Energy's existing mine sites is one of the factors currently constraining its ratings.
The ratings of Adaro are based on the credit profile of Adaro Energy given their strong rating linkages as per Fitch's parent-subsidiary linkage methodology. At end-March 2012 Adaro Energy's funds from operations (FFO)-adjusted gross leverage was 2.4x and FFO interest coverage 7.0x.
Negative rating action may result from FFO gross leverage rising above 2.75x or FFO interest coverage falling below 5x for two consecutive years. Other negative rating guidelines are material deviation from its policy of maintaining strong liquidity; adverse regulatory developments that will significantly impair Adaro Energy's financial profile; further substantial investments that weaken Adaro's financial or operating risk profile and a sustained weakening of coal prices.
Source: Fitch (Hong Kong) Limited
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Tuesday, 29 November 22
SEABORNE COAL FLOWS IN 2022 - SIGNAL
This year is crucial for the energy mix in European countries, as the EU has imposed new sanctions on Russia. It is important to emphasize that the ...
Friday, 25 November 22
APAC THERMAL COAL PRICES CORRECT FROM RECORD HIGH - FITCH RATINGS
Prices of Newcastle 6,000kcal/kg coal have corrected following falling European gas and coal prices, and more supply from Australia could help miti ...
Thursday, 24 November 22
VIETNAM BOOSTS COAL USE PLAN FOR 2030 AS G7 CLIMATE OFFER STALLS - REUTERS
Vietnam has increased its coal power target for 2030 under a revised draft energy plan, government documents seen by Reuters show, while renewables ...
Tuesday, 22 November 22
THE GENCON 2022 CHARTERPARTY - GARD
KNOWLEDGE TO ELEVATE
BIMCO has published a revamped version of the popular GENCON charterparty. Our author, Helena Biggs, was a member of the ...
Tuesday, 22 November 22
INDIA POWER BINGES ON COAL, OUTPACES ASIA - REUTERS
India’s coal-fired power output has increased much faster than any other country in the Asia Pacific since Russia’s invasion of Ukraine ...
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- Makarim & Taira - Indonesia
- Altura Mining Limited, Indonesia
- Thiess Contractors Indonesia
- Samtan Co., Ltd - South Korea
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- Jaiprakash Power Ventures ltd
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- Thai Mozambique Logistica
- LBH Netherlands Bv - Netherlands
- Oldendorff Carriers - Singapore
- Indonesian Coal Mining Association
- Truba Alam Manunggal Engineering.Tbk - Indonesia
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- Metalloyd Limited - United Kingdom
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- Neyveli Lignite Corporation Ltd, - India
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- Directorate Of Revenue Intelligence - India
- Minerals Council of Australia
- Gujarat Electricity Regulatory Commission - India
- Miang Besar Coal Terminal - Indonesia
- Bulk Trading Sa - Switzerland
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- Mercuria Energy - Indonesia
- Ceylon Electricity Board - Sri Lanka
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- Planning Commission, India
- Heidelberg Cement - Germany
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- Agrawal Coal Company - India
- Jorong Barutama Greston.PT - Indonesia
- Intertek Mineral Services - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Maheswari Brothers Coal Limited - India
- Rio Tinto Coal - Australia
- Antam Resourcindo - Indonesia
- Merrill Lynch Commodities Europe
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- London Commodity Brokers - England
- Ministry of Finance - Indonesia
- Kideco Jaya Agung - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Gujarat Mineral Development Corp Ltd - India
- PowerSource Philippines DevCo
- Straits Asia Resources Limited - Singapore
- Bank of Tokyo Mitsubishi UFJ Ltd
- ASAPP Information Group - India
- Cigading International Bulk Terminal - Indonesia
- Ministry of Transport, Egypt
- Standard Chartered Bank - UAE
- Marubeni Corporation - India
- Indogreen Group - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Electricity Generating Authority of Thailand
- SN Aboitiz Power Inc, Philippines
- Economic Council, Georgia
- Georgia Ports Authority, United States
- GN Power Mariveles Coal Plant, Philippines
- Renaissance Capital - South Africa
- Sindya Power Generating Company Private Ltd
- Indian Oil Corporation Limited
- Lanco Infratech Ltd - India
- Orica Australia Pty. Ltd.
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- Eastern Coal Council - USA
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- Global Business Power Corporation, Philippines
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- Power Finance Corporation Ltd., India
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- Aboitiz Power Corporation - Philippines
- Tata Chemicals Ltd - India
- OPG Power Generation Pvt Ltd - India
- Australian Commodity Traders Exchange
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- Interocean Group of Companies - India
- Baramulti Group, Indonesia
- Gujarat Sidhee Cement - India
- Indian Energy Exchange, India
- Deloitte Consulting - India
- Edison Trading Spa - Italy
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- International Coal Ventures Pvt Ltd - India
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- Energy Link Ltd, New Zealand
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- Alfred C Toepfer International GmbH - Germany
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- IHS Mccloskey Coal Group - USA
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- Energy Development Corp, Philippines
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- ICICI Bank Limited - India
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- Romanian Commodities Exchange
- Aditya Birla Group - India
- MS Steel International - UAE
- Siam City Cement PLC, Thailand
- The State Trading Corporation of India Ltd
- Price Waterhouse Coopers - Russia
- Global Green Power PLC Corporation, Philippines
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