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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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Sunday, 08 January 23
ELEVATED COAL PRICE A DRAG ON MARGINS OF DOMESTIC BASE METAL PLAYERS: ICRA
The increased price of coal continue to be a drag on the margin of domestic base metal players with no immediate relief in sight, rating agency ICR ...
Monday, 02 January 23
CHINA’S COAL CONSUMPTION TO PEAK BY 2035: REPORT - REUTERS
China’s primary energy consumption is likely to peak at nearly 6.03 billion tonnes of standard coal between 2030 and 2035, refining giant Chi ...
Thursday, 29 December 22
INDIA'S COAL DEMAND LIKELY TO PEAK BETWEEN 2030-2035: MINISTER - ANI
The demand for coal in India will continue and is likely to peak between 2030-2035, Union Minister of Coal, Mines, and Parliamentary Affairs Pralha ...
Thursday, 29 December 22
RIO TINTO AND PARTNERS COULD RECEIVE AS MUCH AS $450M IN GOVERNMENT COMPENSATION FOR COAL PRICE CAP - THE GUARDIAN
Compensation payments for the Gladstone power plant remain the sticking point in the federal government’s coal price cap compensation negotia ...
Wednesday, 28 December 22
MARKET INSIGHT - INTERMODAL
The United Nations Conference on Trade and Development (UNCTAD) published a Global Trade Update on December 13th highlighting that global trade wou ...
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- MS Steel International - UAE
- Energy Link Ltd, New Zealand
- Kepco SPC Power Corporation, Philippines
- Therma Luzon, Inc, Philippines
- Star Paper Mills Limited - India
- Central Java Power - Indonesia
- OPG Power Generation Pvt Ltd - India
- Tamil Nadu electricity Board
- Tata Chemicals Ltd - India
- Iligan Light & Power Inc, Philippines
- Cigading International Bulk Terminal - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Meralco Power Generation, Philippines
- The Treasury - Australian Government
- Mercuria Energy - Indonesia
- Ministry of Transport, Egypt
- Indian Energy Exchange, India
- Riau Bara Harum - Indonesia
- Singapore Mercantile Exchange
- Kumho Petrochemical, South Korea
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Trasteel International SA, Italy
- Posco Energy - South Korea
- Bukit Baiduri Energy - Indonesia
- Goldman Sachs - Singapore
- Pipit Mutiara Jaya. PT, Indonesia
- Petron Corporation, Philippines
- Leighton Contractors Pty Ltd - Australia
- CNBM International Corporation - China
- Mercator Lines Limited - India
- Manunggal Multi Energi - Indonesia
- Directorate Of Revenue Intelligence - India
- GMR Energy Limited - India
- Metalloyd Limited - United Kingdom
- Savvy Resources Ltd - HongKong
- SMG Consultants - Indonesia
- Bangladesh Power Developement Board
- Asmin Koalindo Tuhup - Indonesia
- Attock Cement Pakistan Limited
- Sakthi Sugars Limited - India
- Bayan Resources Tbk. - Indonesia
- Economic Council, Georgia
- The State Trading Corporation of India Ltd
- Rashtriya Ispat Nigam Limited - India
- India Bulls Power Limited - India
- Krishnapatnam Port Company Ltd. - India
- Coalindo Energy - Indonesia
- Lanco Infratech Ltd - India
- SMC Global Power, Philippines
- Chamber of Mines of South Africa
- Timah Investasi Mineral - Indoneisa
- GVK Power & Infra Limited - India
- Port Waratah Coal Services - Australia
- Sindya Power Generating Company Private Ltd
- Price Waterhouse Coopers - Russia
- VISA Power Limited - India
- Africa Commodities Group - South Africa
- Karaikal Port Pvt Ltd - India
- Power Finance Corporation Ltd., India
- Meenaskhi Energy Private Limited - India
- Kapuas Tunggal Persada - Indonesia
- Electricity Generating Authority of Thailand
- Pendopo Energi Batubara - Indonesia
- Standard Chartered Bank - UAE
- Interocean Group of Companies - India
- Eastern Energy - Thailand
- Globalindo Alam Lestari - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Sree Jayajothi Cements Limited - India
- The University of Queensland
- IHS Mccloskey Coal Group - USA
- Ambuja Cements Ltd - India
- Marubeni Corporation - India
- Parry Sugars Refinery, India
- Bukit Asam (Persero) Tbk - Indonesia
- Australian Commodity Traders Exchange
- Miang Besar Coal Terminal - Indonesia
- Independent Power Producers Association of India
- Global Green Power PLC Corporation, Philippines
- European Bulk Services B.V. - Netherlands
- Baramulti Group, Indonesia
- Malabar Cements Ltd - India
- Rio Tinto Coal - Australia
- Electricity Authority, New Zealand
- Gujarat Mineral Development Corp Ltd - India
- Central Electricity Authority - India
- IEA Clean Coal Centre - UK
- Kartika Selabumi Mining - Indonesia
- Thiess Contractors Indonesia
- Renaissance Capital - South Africa
- White Energy Company Limited
- CIMB Investment Bank - Malaysia
- Maheswari Brothers Coal Limited - India
- Jaiprakash Power Ventures ltd
- Jorong Barutama Greston.PT - Indonesia
- Oldendorff Carriers - Singapore
- Straits Asia Resources Limited - Singapore
- Agrawal Coal Company - India
- Anglo American - United Kingdom
- Coastal Gujarat Power Limited - India
- Uttam Galva Steels Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Kobexindo Tractors - Indoneisa
- Gujarat Sidhee Cement - India
- PTC India Limited - India
- Parliament of New Zealand
- South Luzon Thermal Energy Corporation
- Dalmia Cement Bharat India
- Thai Mozambique Logistica
- Sarangani Energy Corporation, Philippines
- TeaM Sual Corporation - Philippines
- Videocon Industries ltd - India
- Intertek Mineral Services - Indonesia
- Ministry of Mines - Canada
- Orica Mining Services - Indonesia
- Xindia Steels Limited - India
- Medco Energi Mining Internasional
- Sinarmas Energy and Mining - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Toyota Tsusho Corporation, Japan
- Maharashtra Electricity Regulatory Commission - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Jindal Steel & Power Ltd - India
- Latin American Coal - Colombia
- Barasentosa Lestari - Indonesia
- Antam Resourcindo - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Vizag Seaport Private Limited - India
- Deloitte Consulting - India
- Borneo Indobara - Indonesia
- Altura Mining Limited, Indonesia
- LBH Netherlands Bv - Netherlands
- GAC Shipping (India) Pvt Ltd
- Vijayanagar Sugar Pvt Ltd - India
- Bulk Trading Sa - Switzerland
- Directorate General of MIneral and Coal - Indonesia
- Chettinad Cement Corporation Ltd - India
- McConnell Dowell - Australia
- Larsen & Toubro Limited - India
- Coal and Oil Company - UAE
- Holcim Trading Pte Ltd - Singapore
- Bhatia International Limited - India
- Simpson Spence & Young - Indonesia
- Bhushan Steel Limited - India
- Indo Tambangraya Megah - Indonesia
- Cement Manufacturers Association - India
- GN Power Mariveles Coal Plant, Philippines
- SN Aboitiz Power Inc, Philippines
- Sical Logistics Limited - India
- Alfred C Toepfer International GmbH - Germany
- Aboitiz Power Corporation - Philippines
- Grasim Industreis Ltd - India
- Edison Trading Spa - Italy
- Gujarat Electricity Regulatory Commission - India
- Romanian Commodities Exchange
- Kideco Jaya Agung - Indonesia
- Energy Development Corp, Philippines
- London Commodity Brokers - England
- Vedanta Resources Plc - India
- Sojitz Corporation - Japan
- New Zealand Coal & Carbon
- Commonwealth Bank - Australia
- Indonesian Coal Mining Association
- Bharathi Cement Corporation - India
- PowerSource Philippines DevCo
- Mintek Dendrill Indonesia
- Georgia Ports Authority, United States
- Carbofer General Trading SA - India
- Mjunction Services Limited - India
- Billiton Holdings Pty Ltd - Australia
- Samtan Co., Ltd - South Korea
- Bukit Makmur.PT - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Eastern Coal Council - USA
- Minerals Council of Australia
- Indian Oil Corporation Limited
- Salva Resources Pvt Ltd - India
- Binh Thuan Hamico - Vietnam
- Petrochimia International Co. Ltd.- Taiwan
- Siam City Cement PLC, Thailand
- Makarim & Taira - Indonesia
- Banpu Public Company Limited - Thailand
- Aditya Birla Group - India
- Merrill Lynch Commodities Europe
- TNB Fuel Sdn Bhd - Malaysia
- Heidelberg Cement - Germany
- PNOC Exploration Corporation - Philippines
- Ministry of Finance - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Bhoruka Overseas - Indonesia
- ASAPP Information Group - India
- Siam City Cement - Thailand
- Offshore Bulk Terminal Pte Ltd, Singapore
- Bahari Cakrawala Sebuku - Indonesia
- Wilmar Investment Holdings
- San Jose City I Power Corp, Philippines
- Essar Steel Hazira Ltd - India
- ICICI Bank Limited - India
- Formosa Plastics Group - Taiwan
- Kaltim Prima Coal - Indonesia
- Semirara Mining Corp, Philippines
- Global Business Power Corporation, Philippines
- Global Coal Blending Company Limited - Australia
- Planning Commission, India
- International Coal Ventures Pvt Ltd - India
- Indika Energy - Indonesia
- Indogreen Group - Indonesia
- Ind-Barath Power Infra Limited - India
- Australian Coal Association
- Madhucon Powers Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Wood Mackenzie - Singapore
- Orica Australia Pty. Ltd.
- Ceylon Electricity Board - Sri Lanka
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