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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, 13 December 22
YANCOAL AUSTRALIA TO PREPAY $459 MLN DEBT AS RECORD COAL PRICES BOOST CASHFLOWS - REUTERS
Coal miner Yancoal Australia Ltd. said on Friday it intended to prepay $459 million of its debt on or around Dec. 16, as elevated coal prices were ...
Tuesday, 13 December 22
WHY COAL LEADS THE RISE IN COMMODITIES THIS YEAR - MARKETWATCH
This year marked a resurgence for coal, often known — and loathed — by environmentalists as the dirtiest energy source, with prices mor ...
Thursday, 08 December 22
BIMCO TO REVISE WAR RISK CLAUSES
Work to revise the BIMCO War Cancellation Clause 2004, the BIMCO War Risks Clause for Time Chartering 2013 (CONWARTIME 2013) and the BIMCO War Risk ...
Thursday, 08 December 22
COAL ROYALTY PAYMENTS BOOST AUSTRALIAN STATE'S BUDGET FORECAST - REUTERS
Australia’s Queensland state on Wednesday forecast a record surplus for the current financial year, largely driven by higher royalty payments ...
Wednesday, 07 December 22
MARKET INSIGHT - INTERMODAL
China’s coal imports from January to October were 230.1m mt, a decrease of around 10.7% y-o-y (2021 totalled 323.2m mt). The question is if t ...
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- Offshore Bulk Terminal Pte Ltd, Singapore
- Kumho Petrochemical, South Korea
- Tata Chemicals Ltd - India
- London Commodity Brokers - England
- Chettinad Cement Corporation Ltd - India
- Ministry of Mines - Canada
- International Coal Ventures Pvt Ltd - India
- Altura Mining Limited, Indonesia
- Xindia Steels Limited - India
- The University of Queensland
- GVK Power & Infra Limited - India
- Orica Mining Services - Indonesia
- Cement Manufacturers Association - India
- Global Coal Blending Company Limited - Australia
- Asmin Koalindo Tuhup - Indonesia
- Price Waterhouse Coopers - Russia
- Economic Council, Georgia
- Globalindo Alam Lestari - Indonesia
- Australian Commodity Traders Exchange
- Planning Commission, India
- Kohat Cement Company Ltd. - Pakistan
- Gujarat Sidhee Cement - India
- Madhucon Powers Ltd - India
- Intertek Mineral Services - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Semirara Mining Corp, Philippines
- Meralco Power Generation, Philippines
- VISA Power Limited - India
- Goldman Sachs - Singapore
- Bukit Asam (Persero) Tbk - Indonesia
- Power Finance Corporation Ltd., India
- Standard Chartered Bank - UAE
- Bukit Makmur.PT - Indonesia
- Sakthi Sugars Limited - India
- Independent Power Producers Association of India
- Mintek Dendrill Indonesia
- Posco Energy - South Korea
- Uttam Galva Steels Limited - India
- Star Paper Mills Limited - India
- Ind-Barath Power Infra Limited - India
- Binh Thuan Hamico - Vietnam
- Merrill Lynch Commodities Europe
- Cigading International Bulk Terminal - Indonesia
- Bayan Resources Tbk. - Indonesia
- Kaltim Prima Coal - Indonesia
- Karaikal Port Pvt Ltd - India
- European Bulk Services B.V. - Netherlands
- The State Trading Corporation of India Ltd
- GN Power Mariveles Coal Plant, Philippines
- Energy Development Corp, Philippines
- PTC India Limited - India
- ICICI Bank Limited - India
- Rashtriya Ispat Nigam Limited - India
- Timah Investasi Mineral - Indoneisa
- Vedanta Resources Plc - India
- Alfred C Toepfer International GmbH - Germany
- Bank of Tokyo Mitsubishi UFJ Ltd
- Billiton Holdings Pty Ltd - Australia
- Baramulti Group, Indonesia
- Indogreen Group - Indonesia
- Iligan Light & Power Inc, Philippines
- Parry Sugars Refinery, India
- Eastern Coal Council - USA
- Electricity Generating Authority of Thailand
- Gujarat Electricity Regulatory Commission - India
- Vizag Seaport Private Limited - India
- Holcim Trading Pte Ltd - Singapore
- Medco Energi Mining Internasional
- Directorate General of MIneral and Coal - Indonesia
- Orica Australia Pty. Ltd.
- PetroVietnam Power Coal Import and Supply Company
- Bharathi Cement Corporation - India
- Ministry of Transport, Egypt
- Aditya Birla Group - India
- Kapuas Tunggal Persada - Indonesia
- Indo Tambangraya Megah - Indonesia
- New Zealand Coal & Carbon
- Manunggal Multi Energi - Indonesia
- Marubeni Corporation - India
- Commonwealth Bank - Australia
- Siam City Cement - Thailand
- Thiess Contractors Indonesia
- Straits Asia Resources Limited - Singapore
- Lanco Infratech Ltd - India
- Port Waratah Coal Services - Australia
- MS Steel International - UAE
- AsiaOL BioFuels Corp., Philippines
- Barasentosa Lestari - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Minerals Council of Australia
- Energy Link Ltd, New Zealand
- Vijayanagar Sugar Pvt Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Global Business Power Corporation, Philippines
- Petron Corporation, Philippines
- The Treasury - Australian Government
- Bangladesh Power Developement Board
- PowerSource Philippines DevCo
- Formosa Plastics Group - Taiwan
- Wood Mackenzie - Singapore
- Metalloyd Limited - United Kingdom
- Pipit Mutiara Jaya. PT, Indonesia
- Sojitz Corporation - Japan
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Wilmar Investment Holdings
- Borneo Indobara - Indonesia
- Carbofer General Trading SA - India
- GAC Shipping (India) Pvt Ltd
- Central Electricity Authority - India
- Oldendorff Carriers - Singapore
- Siam City Cement PLC, Thailand
- TeaM Sual Corporation - Philippines
- Eastern Energy - Thailand
- McConnell Dowell - Australia
- Indonesian Coal Mining Association
- Indian Energy Exchange, India
- Malabar Cements Ltd - India
- South Luzon Thermal Energy Corporation
- OPG Power Generation Pvt Ltd - India
- Singapore Mercantile Exchange
- Deloitte Consulting - India
- ASAPP Information Group - India
- Indika Energy - Indonesia
- LBH Netherlands Bv - Netherlands
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Tamil Nadu electricity Board
- Anglo American - United Kingdom
- Ceylon Electricity Board - Sri Lanka
- Meenaskhi Energy Private Limited - India
- Kideco Jaya Agung - Indonesia
- Savvy Resources Ltd - HongKong
- Bhushan Steel Limited - India
- Antam Resourcindo - Indonesia
- Heidelberg Cement - Germany
- IEA Clean Coal Centre - UK
- Bukit Baiduri Energy - Indonesia
- Sarangani Energy Corporation, Philippines
- Jindal Steel & Power Ltd - India
- Bhoruka Overseas - Indonesia
- Romanian Commodities Exchange
- Parliament of New Zealand
- Interocean Group of Companies - India
- Riau Bara Harum - Indonesia
- Georgia Ports Authority, United States
- Coalindo Energy - Indonesia
- Kepco SPC Power Corporation, Philippines
- Therma Luzon, Inc, Philippines
- Kobexindo Tractors - Indoneisa
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Krishnapatnam Port Company Ltd. - India
- Global Green Power PLC Corporation, Philippines
- Larsen & Toubro Limited - India
- Electricity Authority, New Zealand
- Leighton Contractors Pty Ltd - Australia
- Africa Commodities Group - South Africa
- Videocon Industries ltd - India
- Sree Jayajothi Cements Limited - India
- Essar Steel Hazira Ltd - India
- Pendopo Energi Batubara - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Sical Logistics Limited - India
- CIMB Investment Bank - Malaysia
- Mercuria Energy - Indonesia
- Samtan Co., Ltd - South Korea
- Indian Oil Corporation Limited
- SMG Consultants - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Makarim & Taira - Indonesia
- Ambuja Cements Ltd - India
- Thai Mozambique Logistica
- Aboitiz Power Corporation - Philippines
- Agrawal Coal Company - India
- Maheswari Brothers Coal Limited - India
- San Jose City I Power Corp, Philippines
- Trasteel International SA, Italy
- Simpson Spence & Young - Indonesia
- GMR Energy Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Grasim Industreis Ltd - India
- Attock Cement Pakistan Limited
- CNBM International Corporation - China
- Mjunction Services Limited - India
- White Energy Company Limited
- Kartika Selabumi Mining - Indonesia
- Salva Resources Pvt Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Karbindo Abesyapradhi - Indoneisa
- Dalmia Cement Bharat India
- Coastal Gujarat Power Limited - India
- Jaiprakash Power Ventures ltd
- Renaissance Capital - South Africa
- Bulk Trading Sa - Switzerland
- Latin American Coal - Colombia
- Edison Trading Spa - Italy
- Semirara Mining and Power Corporation, Philippines
- Rio Tinto Coal - Australia
- Toyota Tsusho Corporation, Japan
- Sindya Power Generating Company Private Ltd
- Bhatia International Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Mercator Lines Limited - India
- India Bulls Power Limited - India
- SMC Global Power, Philippines
- Central Java Power - Indonesia
- IHS Mccloskey Coal Group - USA
- PNOC Exploration Corporation - Philippines
- Neyveli Lignite Corporation Ltd, - India
- Chamber of Mines of South Africa
- SN Aboitiz Power Inc, Philippines
- Directorate Of Revenue Intelligence - India
- Coal and Oil Company - UAE
- Australian Coal Association
- Ministry of Finance - Indonesia
- Banpu Public Company Limited - Thailand
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