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Thursday, 22 December 22
COAL AND GAS PRICE CAPS MAY COMPOUND POLITICAL RISK FOR AUSTRALIAN CORPORATES - FITCH RATINGS
 Australia’s introduction of temporary price caps on domestic sales of gas and coal used for electricity generation will probably have limited direct near-term credit impact for energy-sector issuers rated by Fitch Ratings, according to the agency. However, the caps highlight that energy companies face mounting political risks that could influence investor perceptions of the sector and capex plans over the long term.
The caps have been proposed for 12 months, but even if they are extended, the direct impact should generally be limited if prices for coal and gas fall over the coming years, in line with Fitch’s base-case assumptions.
The near-term impact on Australian thermal coal miners’ financial profiles will be further mitigated, as typically around 80% of the thermal coal produced in the country is exported, and therefore is not subject to the cap.
The natural gas sector will be more exposed, as domestic demand accounts for a larger share of supply. Santos (BBB/Stable) and Woodside Energy Group (BBB+/Stable) are large suppliers of gas to the domestic market. Such sales account for more than 40% of Santos’s gas production, but we estimate that only around 15% of total production goes to the east coast markets that are exposed to the price cap.
Woodside’s domestic gas sales, including pipeline gas from the NWS Project, Pluto and Wheatstone, account for less than 6% of its gas production, with the rest exported as LNG. For both companies, most gas is already produced under long-term contracts, which will be unaffected by the caps, limiting the near-term impact. The proportion of output affected could nonetheless rise over time if the caps are extended beyond 12 months.
The prevalence of long-term supply contracts will also reduce the impact of the caps for most domestic electricity and gas retailers, including Origin Energy (BBB/Stable). If global energy prices remain high, it is possible that the caps could offer a competitive advantage to some retailers that rely more on short-term supply contracts. That said, the superior sourcing ability and flexibility in contracts should limit downside risks for large retailers. For electricity sales, the highest-cost power generator generally determines the wholesale energy market price, and we anticipate a neutral to marginally positive financial effect for entities like Origin that have flexibility in their generation portfolio.
The price caps will add to a perception that Australia’s mining sector faces mounting political risk, even though we do not believe they will have a major impact on Fitch-rated issuers in the near term. For example, the government has announced plans to implement a new system to protect sites important to Australia’s indigenous peoples. Firms in the sector, as in other parts of the world, also face political risks associated with official efforts to promote the transition to renewable energy sources.
Mounting political risk may influence investors’ perceptions of the sector, and therefore the terms on which companies are able to access finance. This could also have ramifications for M&A plans or long-term capex strategies. Nonetheless, it is likely to take time to assess the impact, which may also be offset by other market developments.
Australia’s parliament on 16 December passed legislation empowering the government to regulate gas prices, alongside an AUD1.5 billion relief package for firms and households. It remains unclear how the relief package will affect power and gas market dynamics, but we expect its impact to be temporary. The authorities plan to cap domestic gas prices at AUD12 per gigajoule. Domestic thermal coal sales prices in New South Wales and Queensland will also be capped at AUD125 per tonne.
Source: Fitch Ratings
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Tuesday, 17 January 23
CHINA'S SHANXI TARGETS 2023 COAL PRODUCTION OF NEARLY 1.37B TONS - XINHUA
China’s coal-rich province of Shanxi has set a coal production target of nearly 1.37 billion metric tons for 2023, according to a government ...
Tuesday, 17 January 23
MARKET INSIGHT - INTERMODAL
Rumor has it that the New Year has come, to set the pace in, for Russia to continue hostilities against Ukraine. Ten months on the go, into Russia& ...
Tuesday, 17 January 23
INDONESIA IS ACCOUNTING FOR 32.3% OF THE GLOBAL SEABORNE COAL MARKET IN 2022 - BENCHERO COSTA
After a slow start in the first quarter, global coal trade has really picked up pace last year, and is now fully back to pre-Covid levels, Benchero ...
Tuesday, 10 January 23
INDONESIAN HBA IS SEEING A SPIKE IN JANUARY 2023 INSTEAD OF A SIGNIFICANT FALL IN DECEMBER 2022
COALspot.com: Indonesian Coal Price Reference up 8.43% in January 2023.
HBA is seeing a dramatic spike in January 2023 i ...
Sunday, 08 January 23
INDIAN COAL POWER PLANTS SHOULD BE COMPENSATED FOR 2022 FORCED GENERATION – REGULATOR : REUTERS
Indian power plants that rely on imported coal should be fully compensated when forced to supply electricity, the country’s power regulator s ...
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- International Coal Ventures Pvt Ltd - India
- ASAPP Information Group - India
- Ministry of Transport, Egypt
- Coalindo Energy - Indonesia
- Tamil Nadu electricity Board
- Barasentosa Lestari - Indonesia
- Indian Energy Exchange, India
- PNOC Exploration Corporation - Philippines
- Attock Cement Pakistan Limited
- Heidelberg Cement - Germany
- Altura Mining Limited, Indonesia
- Makarim & Taira - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Malabar Cements Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- Dalmia Cement Bharat India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Baramulti Group, Indonesia
- Grasim Industreis Ltd - India
- Intertek Mineral Services - Indonesia
- Maheswari Brothers Coal Limited - India
- Salva Resources Pvt Ltd - India
- Globalindo Alam Lestari - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- South Luzon Thermal Energy Corporation
- Kobexindo Tractors - Indoneisa
- Bangladesh Power Developement Board
- Central Electricity Authority - India
- Therma Luzon, Inc, Philippines
- Siam City Cement - Thailand
- Sinarmas Energy and Mining - Indonesia
- Wood Mackenzie - Singapore
- Kepco SPC Power Corporation, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Orica Australia Pty. Ltd.
- Sree Jayajothi Cements Limited - India
- Mercator Lines Limited - India
- Star Paper Mills Limited - India
- Merrill Lynch Commodities Europe
- Indonesian Coal Mining Association
- Planning Commission, India
- Wilmar Investment Holdings
- Videocon Industries ltd - India
- Latin American Coal - Colombia
- PetroVietnam Power Coal Import and Supply Company
- Romanian Commodities Exchange
- Electricity Authority, New Zealand
- Coastal Gujarat Power Limited - India
- Parry Sugars Refinery, India
- Vedanta Resources Plc - India
- Alfred C Toepfer International GmbH - Germany
- Gujarat Sidhee Cement - India
- Anglo American - United Kingdom
- Ind-Barath Power Infra Limited - India
- Bhushan Steel Limited - India
- Oldendorff Carriers - Singapore
- Jaiprakash Power Ventures ltd
- Economic Council, Georgia
- Gujarat Mineral Development Corp Ltd - India
- India Bulls Power Limited - India
- CIMB Investment Bank - Malaysia
- Ambuja Cements Ltd - India
- Vizag Seaport Private Limited - India
- Borneo Indobara - Indonesia
- Agrawal Coal Company - India
- Mintek Dendrill Indonesia
- Central Java Power - Indonesia
- Essar Steel Hazira Ltd - India
- Meenaskhi Energy Private Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Deloitte Consulting - India
- Power Finance Corporation Ltd., India
- CNBM International Corporation - China
- Mercuria Energy - Indonesia
- IHS Mccloskey Coal Group - USA
- Vijayanagar Sugar Pvt Ltd - India
- Simpson Spence & Young - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Siam City Cement PLC, Thailand
- Uttam Galva Steels Limited - India
- TeaM Sual Corporation - Philippines
- Goldman Sachs - Singapore
- Bhoruka Overseas - Indonesia
- PowerSource Philippines DevCo
- Sarangani Energy Corporation, Philippines
- Toyota Tsusho Corporation, Japan
- SN Aboitiz Power Inc, Philippines
- GVK Power & Infra Limited - India
- VISA Power Limited - India
- IEA Clean Coal Centre - UK
- The University of Queensland
- Electricity Generating Authority of Thailand
- Sojitz Corporation - Japan
- Kideco Jaya Agung - Indonesia
- GMR Energy Limited - India
- Indian Oil Corporation Limited
- Sakthi Sugars Limited - India
- Global Coal Blending Company Limited - Australia
- The Treasury - Australian Government
- Australian Commodity Traders Exchange
- Kumho Petrochemical, South Korea
- GAC Shipping (India) Pvt Ltd
- Thiess Contractors Indonesia
- Rashtriya Ispat Nigam Limited - India
- Directorate General of MIneral and Coal - Indonesia
- SMG Consultants - Indonesia
- Madhucon Powers Ltd - India
- Banpu Public Company Limited - Thailand
- Metalloyd Limited - United Kingdom
- The State Trading Corporation of India Ltd
- Ceylon Electricity Board - Sri Lanka
- Xindia Steels Limited - India
- Medco Energi Mining Internasional
- Jorong Barutama Greston.PT - Indonesia
- Rio Tinto Coal - Australia
- Bhatia International Limited - India
- White Energy Company Limited
- Singapore Mercantile Exchange
- Port Waratah Coal Services - Australia
- Sindya Power Generating Company Private Ltd
- Tata Chemicals Ltd - India
- Pendopo Energi Batubara - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Energy Link Ltd, New Zealand
- Coal and Oil Company - UAE
- Manunggal Multi Energi - Indonesia
- OPG Power Generation Pvt Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Samtan Co., Ltd - South Korea
- Indika Energy - Indonesia
- Lanco Infratech Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- SMC Global Power, Philippines
- Iligan Light & Power Inc, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Bayan Resources Tbk. - Indonesia
- Parliament of New Zealand
- Global Green Power PLC Corporation, Philippines
- Price Waterhouse Coopers - Russia
- Energy Development Corp, Philippines
- Renaissance Capital - South Africa
- Independent Power Producers Association of India
- Kapuas Tunggal Persada - Indonesia
- Standard Chartered Bank - UAE
- LBH Netherlands Bv - Netherlands
- Ministry of Mines - Canada
- Australian Coal Association
- New Zealand Coal & Carbon
- Antam Resourcindo - Indonesia
- Riau Bara Harum - Indonesia
- PTC India Limited - India
- Holcim Trading Pte Ltd - Singapore
- Mjunction Services Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- European Bulk Services B.V. - Netherlands
- Petron Corporation, Philippines
- Interocean Group of Companies - India
- Indogreen Group - Indonesia
- Thai Mozambique Logistica
- Global Business Power Corporation, Philippines
- London Commodity Brokers - England
- GN Power Mariveles Coal Plant, Philippines
- Meralco Power Generation, Philippines
- Eastern Energy - Thailand
- Sical Logistics Limited - India
- MS Steel International - UAE
- Leighton Contractors Pty Ltd - Australia
- Bukit Makmur.PT - Indonesia
- Indo Tambangraya Megah - Indonesia
- Africa Commodities Group - South Africa
- Bharathi Cement Corporation - India
- Bukit Baiduri Energy - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Commonwealth Bank - Australia
- Semirara Mining Corp, Philippines
- AsiaOL BioFuels Corp., Philippines
- Trasteel International SA, Italy
- Savvy Resources Ltd - HongKong
- Cement Manufacturers Association - India
- Karaikal Port Pvt Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Marubeni Corporation - India
- Minerals Council of Australia
- Bulk Trading Sa - Switzerland
- Aditya Birla Group - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Directorate Of Revenue Intelligence - India
- Kartika Selabumi Mining - Indonesia
- Georgia Ports Authority, United States
- Carbofer General Trading SA - India
- Aboitiz Power Corporation - Philippines
- Straits Asia Resources Limited - Singapore
- McConnell Dowell - Australia
- Kaltim Prima Coal - Indonesia
- Timah Investasi Mineral - Indoneisa
- Formosa Plastics Group - Taiwan
- Binh Thuan Hamico - Vietnam
- Maharashtra Electricity Regulatory Commission - India
- Posco Energy - South Korea
- Orica Mining Services - Indonesia
- Jindal Steel & Power Ltd - India
- Larsen & Toubro Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Krishnapatnam Port Company Ltd. - India
- Eastern Coal Council - USA
- ICICI Bank Limited - India
- Ministry of Finance - Indonesia
- Chettinad Cement Corporation Ltd - India
- Chamber of Mines of South Africa
- Miang Besar Coal Terminal - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- San Jose City I Power Corp, Philippines
- Edison Trading Spa - Italy
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