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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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Wednesday, 12 October 22
MARKET INSIGHT - INTERMODAL
Sale and Purchase activity during the first three quarters of 2022 has been remarkable.
Focusing only on Tankers and Bulkers, such v ...
Monday, 10 October 22
ENERGY TRANSITION BOOSTS GLOBAL LONG-TERM DEMAND FOR METALS - FITCH RATINGS
The energy transition will significantly increase demand for metals used in manufacturing of electric vehicles (EVs) and renewable power generation ...
Monday, 10 October 22
GLOBAL CEOS EXPECT IMPENDING RECESSION TO BE 'SHORT AND SHARP,' POLL SHOWS - CNBC
Global CEOs are anticipating a recession in the next 12 months, according to a new survey by professional services firm KPMG, which said more than ...
Thursday, 06 October 22
AUSTRALIA’S RESOURCES REVENUE TO HIT RECORD AMID UKRAINE CONFLICT - REUTERS
Australian resources and energy export earnings are forecast to jump 7% to a record A$450 billion ($290 billion) this fiscal year, bolstered by soa ...
Thursday, 06 October 22
COAL INDIA ASKED TO ENHANCE SUPPLY TO THERMAL POWER PLANTS - IANS
With the festival season round the corner, Coal India Ltd. has been directed by the government to scale up dispatch to thermal power plants.
&n ...
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- ASAPP Information Group - India
- Meenaskhi Energy Private Limited - India
- Toyota Tsusho Corporation, Japan
- Alfred C Toepfer International GmbH - Germany
- Semirara Mining and Power Corporation, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Larsen & Toubro Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Marubeni Corporation - India
- Cigading International Bulk Terminal - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Thai Mozambique Logistica
- Savvy Resources Ltd - HongKong
- Star Paper Mills Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Barasentosa Lestari - Indonesia
- Baramulti Group, Indonesia
- International Coal Ventures Pvt Ltd - India
- Chettinad Cement Corporation Ltd - India
- Borneo Indobara - Indonesia
- Edison Trading Spa - Italy
- Bukit Asam (Persero) Tbk - Indonesia
- Mintek Dendrill Indonesia
- Aditya Birla Group - India
- Jaiprakash Power Ventures ltd
- Attock Cement Pakistan Limited
- Global Green Power PLC Corporation, Philippines
- New Zealand Coal & Carbon
- Medco Energi Mining Internasional
- Heidelberg Cement - Germany
- ICICI Bank Limited - India
- Interocean Group of Companies - India
- Tamil Nadu electricity Board
- Australian Coal Association
- LBH Netherlands Bv - Netherlands
- Sree Jayajothi Cements Limited - India
- Vizag Seaport Private Limited - India
- Indian Oil Corporation Limited
- Karbindo Abesyapradhi - Indoneisa
- Manunggal Multi Energi - Indonesia
- Carbofer General Trading SA - India
- Ministry of Transport, Egypt
- Energy Development Corp, Philippines
- Power Finance Corporation Ltd., India
- Simpson Spence & Young - Indonesia
- European Bulk Services B.V. - Netherlands
- Central Electricity Authority - India
- Bhoruka Overseas - Indonesia
- Gujarat Electricity Regulatory Commission - India
- London Commodity Brokers - England
- Petrochimia International Co. Ltd.- Taiwan
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Parry Sugars Refinery, India
- Aboitiz Power Corporation - Philippines
- Kaltim Prima Coal - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Electricity Generating Authority of Thailand
- Eastern Coal Council - USA
- Bahari Cakrawala Sebuku - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Kepco SPC Power Corporation, Philippines
- Xindia Steels Limited - India
- Indogreen Group - Indonesia
- TeaM Sual Corporation - Philippines
- GMR Energy Limited - India
- Bangladesh Power Developement Board
- Kartika Selabumi Mining - Indonesia
- Kideco Jaya Agung - Indonesia
- SMG Consultants - Indonesia
- PNOC Exploration Corporation - Philippines
- Timah Investasi Mineral - Indoneisa
- Merrill Lynch Commodities Europe
- GVK Power & Infra Limited - India
- Globalindo Alam Lestari - Indonesia
- Sindya Power Generating Company Private Ltd
- Altura Mining Limited, Indonesia
- Central Java Power - Indonesia
- Bukit Baiduri Energy - Indonesia
- Goldman Sachs - Singapore
- MS Steel International - UAE
- Pendopo Energi Batubara - Indonesia
- Therma Luzon, Inc, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Ind-Barath Power Infra Limited - India
- Africa Commodities Group - South Africa
- Mercuria Energy - Indonesia
- Parliament of New Zealand
- IEA Clean Coal Centre - UK
- Cement Manufacturers Association - India
- Indian Energy Exchange, India
- Economic Council, Georgia
- Siam City Cement PLC, Thailand
- White Energy Company Limited
- PTC India Limited - India
- Electricity Authority, New Zealand
- Vedanta Resources Plc - India
- Salva Resources Pvt Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Directorate Of Revenue Intelligence - India
- Deloitte Consulting - India
- Bulk Trading Sa - Switzerland
- Singapore Mercantile Exchange
- San Jose City I Power Corp, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Kumho Petrochemical, South Korea
- SN Aboitiz Power Inc, Philippines
- Samtan Co., Ltd - South Korea
- Grasim Industreis Ltd - India
- Formosa Plastics Group - Taiwan
- Miang Besar Coal Terminal - Indonesia
- Bukit Makmur.PT - Indonesia
- Gujarat Sidhee Cement - India
- Independent Power Producers Association of India
- Bhatia International Limited - India
- Romanian Commodities Exchange
- Uttam Galva Steels Limited - India
- Standard Chartered Bank - UAE
- Karaikal Port Pvt Ltd - India
- Bhushan Steel Limited - India
- Mercator Lines Limited - India
- AsiaOL BioFuels Corp., Philippines
- Indo Tambangraya Megah - Indonesia
- Banpu Public Company Limited - Thailand
- Eastern Energy - Thailand
- Semirara Mining Corp, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Dalmia Cement Bharat India
- Energy Link Ltd, New Zealand
- Jorong Barutama Greston.PT - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Videocon Industries ltd - India
- Agrawal Coal Company - India
- Wood Mackenzie - Singapore
- Global Business Power Corporation, Philippines
- Wilmar Investment Holdings
- Minerals Council of Australia
- Malabar Cements Ltd - India
- India Bulls Power Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Lanco Infratech Ltd - India
- Metalloyd Limited - United Kingdom
- Rio Tinto Coal - Australia
- Bayan Resources Tbk. - Indonesia
- Meralco Power Generation, Philippines
- Trasteel International SA, Italy
- SMC Global Power, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Indika Energy - Indonesia
- Jindal Steel & Power Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- GAC Shipping (India) Pvt Ltd
- Renaissance Capital - South Africa
- Anglo American - United Kingdom
- Straits Asia Resources Limited - Singapore
- South Luzon Thermal Energy Corporation
- Antam Resourcindo - Indonesia
- Georgia Ports Authority, United States
- Petron Corporation, Philippines
- Leighton Contractors Pty Ltd - Australia
- Tata Chemicals Ltd - India
- Binh Thuan Hamico - Vietnam
- The State Trading Corporation of India Ltd
- Posco Energy - South Korea
- Riau Bara Harum - Indonesia
- PowerSource Philippines DevCo
- Sarangani Energy Corporation, Philippines
- Coal and Oil Company - UAE
- Madhucon Powers Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Latin American Coal - Colombia
- IHS Mccloskey Coal Group - USA
- The Treasury - Australian Government
- Bharathi Cement Corporation - India
- Planning Commission, India
- VISA Power Limited - India
- Global Coal Blending Company Limited - Australia
- Siam City Cement - Thailand
- Sakthi Sugars Limited - India
- Indonesian Coal Mining Association
- Ministry of Finance - Indonesia
- Intertek Mineral Services - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Sinarmas Energy and Mining - Indonesia
- Chamber of Mines of South Africa
- Kapuas Tunggal Persada - Indonesia
- Price Waterhouse Coopers - Russia
- CNBM International Corporation - China
- Coalindo Energy - Indonesia
- Ministry of Mines - Canada
- Orica Mining Services - Indonesia
- Makarim & Taira - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Commonwealth Bank - Australia
- Sojitz Corporation - Japan
- Kohat Cement Company Ltd. - Pakistan
- The University of Queensland
- GN Power Mariveles Coal Plant, Philippines
- Mjunction Services Limited - India
- Thiess Contractors Indonesia
- Maheswari Brothers Coal Limited - India
- Sical Logistics Limited - India
- Coastal Gujarat Power Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Australian Commodity Traders Exchange
- CIMB Investment Bank - Malaysia
- TNB Fuel Sdn Bhd - Malaysia
- McConnell Dowell - Australia
- Oldendorff Carriers - Singapore
- Essar Steel Hazira Ltd - India
- Kobexindo Tractors - Indoneisa
- Krishnapatnam Port Company Ltd. - India
- OPG Power Generation Pvt Ltd - India
- Port Waratah Coal Services - Australia
- Ambuja Cements Ltd - India
- Iligan Light & Power Inc, Philippines
- Orica Australia Pty. Ltd.
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