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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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- Energy Development Corp, Philippines
- Bulk Trading Sa - Switzerland
- India Bulls Power Limited - India
- Ministry of Transport, Egypt
- Parliament of New Zealand
- Indonesian Coal Mining Association
- Semirara Mining and Power Corporation, Philippines
- Antam Resourcindo - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Medco Energi Mining Internasional
- Interocean Group of Companies - India
- Bayan Resources Tbk. - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Asmin Koalindo Tuhup - Indonesia
- VISA Power Limited - India
- New Zealand Coal & Carbon
- PowerSource Philippines DevCo
- Thai Mozambique Logistica
- Jaiprakash Power Ventures ltd
- IHS Mccloskey Coal Group - USA
- McConnell Dowell - Australia
- Bukit Baiduri Energy - Indonesia
- Eastern Coal Council - USA
- South Luzon Thermal Energy Corporation
- Siam City Cement PLC, Thailand
- Electricity Generating Authority of Thailand
- Krishnapatnam Port Company Ltd. - India
- Madhucon Powers Ltd - India
- Bangladesh Power Developement Board
- Siam City Cement - Thailand
- Therma Luzon, Inc, Philippines
- Anglo American - United Kingdom
- Chettinad Cement Corporation Ltd - India
- PTC India Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Ministry of Finance - Indonesia
- Coastal Gujarat Power Limited - India
- Orica Mining Services - Indonesia
- Power Finance Corporation Ltd., India
- Thiess Contractors Indonesia
- SMG Consultants - Indonesia
- Australian Coal Association
- Semirara Mining Corp, Philippines
- LBH Netherlands Bv - Netherlands
- Trasteel International SA, Italy
- Sarangani Energy Corporation, Philippines
- Rio Tinto Coal - Australia
- Salva Resources Pvt Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Goldman Sachs - Singapore
- European Bulk Services B.V. - Netherlands
- Sinarmas Energy and Mining - Indonesia
- Pendopo Energi Batubara - Indonesia
- San Jose City I Power Corp, Philippines
- Baramulti Group, Indonesia
- Indo Tambangraya Megah - Indonesia
- Essar Steel Hazira Ltd - India
- Straits Asia Resources Limited - Singapore
- Binh Thuan Hamico - Vietnam
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Formosa Plastics Group - Taiwan
- Deloitte Consulting - India
- Wilmar Investment Holdings
- Wood Mackenzie - Singapore
- Kumho Petrochemical, South Korea
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Oldendorff Carriers - Singapore
- Central Electricity Authority - India
- Karbindo Abesyapradhi - Indoneisa
- Rashtriya Ispat Nigam Limited - India
- Mercator Lines Limited - India
- Banpu Public Company Limited - Thailand
- Bukit Makmur.PT - Indonesia
- CIMB Investment Bank - Malaysia
- London Commodity Brokers - England
- Meenaskhi Energy Private Limited - India
- Mjunction Services Limited - India
- White Energy Company Limited
- Metalloyd Limited - United Kingdom
- Eastern Energy - Thailand
- IEA Clean Coal Centre - UK
- Leighton Contractors Pty Ltd - Australia
- Aditya Birla Group - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Kobexindo Tractors - Indoneisa
- Neyveli Lignite Corporation Ltd, - India
- Billiton Holdings Pty Ltd - Australia
- TeaM Sual Corporation - Philippines
- Riau Bara Harum - Indonesia
- Posco Energy - South Korea
- Simpson Spence & Young - Indonesia
- Intertek Mineral Services - Indonesia
- MS Steel International - UAE
- Agrawal Coal Company - India
- Dalmia Cement Bharat India
- Maheswari Brothers Coal Limited - India
- Ind-Barath Power Infra Limited - India
- Kapuas Tunggal Persada - Indonesia
- The State Trading Corporation of India Ltd
- Port Waratah Coal Services - Australia
- Edison Trading Spa - Italy
- Timah Investasi Mineral - Indoneisa
- Jindal Steel & Power Ltd - India
- Sree Jayajothi Cements Limited - India
- The Treasury - Australian Government
- Singapore Mercantile Exchange
- Maharashtra Electricity Regulatory Commission - India
- Coalindo Energy - Indonesia
- Mercuria Energy - Indonesia
- Planning Commission, India
- Africa Commodities Group - South Africa
- Minerals Council of Australia
- Aboitiz Power Corporation - Philippines
- Price Waterhouse Coopers - Russia
- Petrochimia International Co. Ltd.- Taiwan
- Indian Oil Corporation Limited
- Bahari Cakrawala Sebuku - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Videocon Industries ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Ambuja Cements Ltd - India
- Global Green Power PLC Corporation, Philippines
- Georgia Ports Authority, United States
- Jorong Barutama Greston.PT - Indonesia
- Borneo Indobara - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Tamil Nadu electricity Board
- Cement Manufacturers Association - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Commonwealth Bank - Australia
- Samtan Co., Ltd - South Korea
- Mintek Dendrill Indonesia
- Gujarat Electricity Regulatory Commission - India
- Bhushan Steel Limited - India
- Meralco Power Generation, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Ministry of Mines - Canada
- Renaissance Capital - South Africa
- Merrill Lynch Commodities Europe
- Central Java Power - Indonesia
- PNOC Exploration Corporation - Philippines
- Manunggal Multi Energi - Indonesia
- Bhoruka Overseas - Indonesia
- The University of Queensland
- Savvy Resources Ltd - HongKong
- International Coal Ventures Pvt Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Kartika Selabumi Mining - Indonesia
- Globalindo Alam Lestari - Indonesia
- Sojitz Corporation - Japan
- Malabar Cements Ltd - India
- Vizag Seaport Private Limited - India
- Electricity Authority, New Zealand
- Global Coal Blending Company Limited - Australia
- SN Aboitiz Power Inc, Philippines
- Indian Energy Exchange, India
- Global Business Power Corporation, Philippines
- GMR Energy Limited - India
- Lanco Infratech Ltd - India
- Xindia Steels Limited - India
- Energy Link Ltd, New Zealand
- Sindya Power Generating Company Private Ltd
- Toyota Tsusho Corporation, Japan
- OPG Power Generation Pvt Ltd - India
- Carbofer General Trading SA - India
- Orica Australia Pty. Ltd.
- Marubeni Corporation - India
- Grasim Industreis Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Alfred C Toepfer International GmbH - Germany
- ICICI Bank Limited - India
- Tata Chemicals Ltd - India
- CNBM International Corporation - China
- Australian Commodity Traders Exchange
- Attock Cement Pakistan Limited
- Standard Chartered Bank - UAE
- SMC Global Power, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- ASAPP Information Group - India
- Directorate Of Revenue Intelligence - India
- Makarim & Taira - Indonesia
- Kaltim Prima Coal - Indonesia
- Petron Corporation, Philippines
- Altura Mining Limited, Indonesia
- Kepco SPC Power Corporation, Philippines
- Romanian Commodities Exchange
- Kalimantan Lumbung Energi - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Larsen & Toubro Limited - India
- Bhatia International Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Gujarat Sidhee Cement - India
- Vedanta Resources Plc - India
- Bharathi Cement Corporation - India
- Independent Power Producers Association of India
- Indika Energy - Indonesia
- Star Paper Mills Limited - India
- Sakthi Sugars Limited - India
- Karaikal Port Pvt Ltd - India
- Uttam Galva Steels Limited - India
- Coal and Oil Company - UAE
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Latin American Coal - Colombia
- Economic Council, Georgia
- GVK Power & Infra Limited - India
- Sical Logistics Limited - India
- GAC Shipping (India) Pvt Ltd
- Iligan Light & Power Inc, Philippines
- Indogreen Group - Indonesia
- Heidelberg Cement - Germany
- Parry Sugars Refinery, India
- Kohat Cement Company Ltd. - Pakistan
- Chamber of Mines of South Africa
- Kideco Jaya Agung - Indonesia
- Barasentosa Lestari - Indonesia
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