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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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Monday, 19 September 22
BUMA AUSTRALIA AWARDED A$400 MILLION CONTRACT EXTENSION BY BMA FOR GOONYELLA PROJECT
Press Release – PT Delta Dunia Makmur Tbk. (the "Company") announced that its subsidiary, PT Bukit Makmur Mandiri Utama ("BUMA ...
Saturday, 17 September 22
CHINA WARNS COAL COMPANIES AGAINST DUAL CONTRACTS, KEEP PRICES STABLE - REUTERS
China’s state economic planner warned coal companies operating at ports in the Bohai Bay region to comply with their long-term contracts to k ...
Saturday, 17 September 22
IS A GLOBAL RECESSION IMMINENT? - WORLD BANK
Since the beginning of the year, a rapid deterioration of growth prospects coupled with rising inflation and tightening financing conditions, has i ...
Saturday, 17 September 22
FITCH RATINGS REVISES GLOBAL METALS & MINING PRICE ASSUMPTIONS
Fitch Ratings has revised its metals and mining price assumptions reflecting evolving economic growth expectations and demand and supply dynamics.
...
Friday, 16 September 22
WHEN IS A VESSEL'S INCOME EARNING CAPACITY AT RISK? 'CONTROLLED INCOME CAN BE A KEY OF SUCCESS' - MARASCO MARINE
Managing marine risks is not an easy task, which requires special knowledge and expertise on the subject per se. Customarily, big ship management c ...
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- SMC Global Power, Philippines
- Agrawal Coal Company - India
- ICICI Bank Limited - India
- Economic Council, Georgia
- Sakthi Sugars Limited - India
- Sree Jayajothi Cements Limited - India
- Leighton Contractors Pty Ltd - Australia
- Wood Mackenzie - Singapore
- Asmin Koalindo Tuhup - Indonesia
- McConnell Dowell - Australia
- Bayan Resources Tbk. - Indonesia
- Manunggal Multi Energi - Indonesia
- Central Electricity Authority - India
- Altura Mining Limited, Indonesia
- Anglo American - United Kingdom
- Indonesian Coal Mining Association
- Sinarmas Energy and Mining - Indonesia
- PNOC Exploration Corporation - Philippines
- Holcim Trading Pte Ltd - Singapore
- Ambuja Cements Ltd - India
- Siam City Cement PLC, Thailand
- New Zealand Coal & Carbon
- The State Trading Corporation of India Ltd
- Siam City Cement - Thailand
- Offshore Bulk Terminal Pte Ltd, Singapore
- Chettinad Cement Corporation Ltd - India
- Central Java Power - Indonesia
- ASAPP Information Group - India
- Barasentosa Lestari - Indonesia
- Ministry of Mines - Canada
- Formosa Plastics Group - Taiwan
- Electricity Generating Authority of Thailand
- Simpson Spence & Young - Indonesia
- Binh Thuan Hamico - Vietnam
- SMG Consultants - Indonesia
- Coalindo Energy - Indonesia
- Ind-Barath Power Infra Limited - India
- Therma Luzon, Inc, Philippines
- Jorong Barutama Greston.PT - Indonesia
- Indo Tambangraya Megah - Indonesia
- Meenaskhi Energy Private Limited - India
- Orica Mining Services - Indonesia
- Lanco Infratech Ltd - India
- Thai Mozambique Logistica
- Bukit Baiduri Energy - Indonesia
- IHS Mccloskey Coal Group - USA
- Bulk Trading Sa - Switzerland
- CNBM International Corporation - China
- Parry Sugars Refinery, India
- Georgia Ports Authority, United States
- VISA Power Limited - India
- Rio Tinto Coal - Australia
- Global Business Power Corporation, Philippines
- Metalloyd Limited - United Kingdom
- Directorate General of MIneral and Coal - Indonesia
- Riau Bara Harum - Indonesia
- White Energy Company Limited
- India Bulls Power Limited - India
- Vizag Seaport Private Limited - India
- Maheswari Brothers Coal Limited - India
- Madhucon Powers Ltd - India
- Essar Steel Hazira Ltd - India
- Attock Cement Pakistan Limited
- Indian Energy Exchange, India
- Baramulti Group, Indonesia
- Eastern Energy - Thailand
- GAC Shipping (India) Pvt Ltd
- Chamber of Mines of South Africa
- Bhushan Steel Limited - India
- Mintek Dendrill Indonesia
- Trasteel International SA, Italy
- Port Waratah Coal Services - Australia
- Australian Commodity Traders Exchange
- Tamil Nadu electricity Board
- Posco Energy - South Korea
- SN Aboitiz Power Inc, Philippines
- Australian Coal Association
- Gujarat Mineral Development Corp Ltd - India
- Standard Chartered Bank - UAE
- Singapore Mercantile Exchange
- Sojitz Corporation - Japan
- Petrochimia International Co. Ltd.- Taiwan
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- London Commodity Brokers - England
- Oldendorff Carriers - Singapore
- Planning Commission, India
- Medco Energi Mining Internasional
- Sindya Power Generating Company Private Ltd
- Gujarat Sidhee Cement - India
- Billiton Holdings Pty Ltd - Australia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Power Finance Corporation Ltd., India
- Indika Energy - Indonesia
- Meralco Power Generation, Philippines
- Latin American Coal - Colombia
- Bhoruka Overseas - Indonesia
- Directorate Of Revenue Intelligence - India
- Electricity Authority, New Zealand
- PowerSource Philippines DevCo
- Intertek Mineral Services - Indonesia
- Samtan Co., Ltd - South Korea
- International Coal Ventures Pvt Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Globalindo Alam Lestari - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Alfred C Toepfer International GmbH - Germany
- Kartika Selabumi Mining - Indonesia
- Antam Resourcindo - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Carbofer General Trading SA - India
- CIMB Investment Bank - Malaysia
- Mercuria Energy - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- The Treasury - Australian Government
- Price Waterhouse Coopers - Russia
- Cement Manufacturers Association - India
- PTC India Limited - India
- Jindal Steel & Power Ltd - India
- Independent Power Producers Association of India
- Coal and Oil Company - UAE
- Deloitte Consulting - India
- Mjunction Services Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Kapuas Tunggal Persada - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Mercator Lines Limited - India
- Bukit Makmur.PT - Indonesia
- IEA Clean Coal Centre - UK
- Semirara Mining Corp, Philippines
- Pendopo Energi Batubara - Indonesia
- Indogreen Group - Indonesia
- Heidelberg Cement - Germany
- Bharathi Cement Corporation - India
- Iligan Light & Power Inc, Philippines
- Wilmar Investment Holdings
- PetroVietnam Power Coal Import and Supply Company
- LBH Netherlands Bv - Netherlands
- Banpu Public Company Limited - Thailand
- GVK Power & Infra Limited - India
- Thiess Contractors Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Orica Australia Pty. Ltd.
- Salva Resources Pvt Ltd - India
- Karaikal Port Pvt Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Straits Asia Resources Limited - Singapore
- Bank of Tokyo Mitsubishi UFJ Ltd
- Bhatia International Limited - India
- Africa Commodities Group - South Africa
- Ministry of Finance - Indonesia
- Larsen & Toubro Limited - India
- Videocon Industries ltd - India
- Marubeni Corporation - India
- The University of Queensland
- Kalimantan Lumbung Energi - Indonesia
- TeaM Sual Corporation - Philippines
- European Bulk Services B.V. - Netherlands
- Renaissance Capital - South Africa
- Kepco SPC Power Corporation, Philippines
- San Jose City I Power Corp, Philippines
- Timah Investasi Mineral - Indoneisa
- Semirara Mining and Power Corporation, Philippines
- Ministry of Transport, Egypt
- Kaltim Prima Coal - Indonesia
- Global Coal Blending Company Limited - Australia
- AsiaOL BioFuels Corp., Philippines
- Neyveli Lignite Corporation Ltd, - India
- Makarim & Taira - Indonesia
- Jaiprakash Power Ventures ltd
- Energy Development Corp, Philippines
- Aditya Birla Group - India
- Gujarat Electricity Regulatory Commission - India
- Indian Oil Corporation Limited
- MS Steel International - UAE
- Global Green Power PLC Corporation, Philippines
- Aboitiz Power Corporation - Philippines
- Rashtriya Ispat Nigam Limited - India
- Star Paper Mills Limited - India
- Kumho Petrochemical, South Korea
- Malabar Cements Ltd - India
- Coastal Gujarat Power Limited - India
- Uttam Galva Steels Limited - India
- Tata Chemicals Ltd - India
- Toyota Tsusho Corporation, Japan
- Borneo Indobara - Indonesia
- Romanian Commodities Exchange
- Xindia Steels Limited - India
- Grasim Industreis Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Energy Link Ltd, New Zealand
- Kideco Jaya Agung - Indonesia
- Savvy Resources Ltd - HongKong
- Petron Corporation, Philippines
- Parliament of New Zealand
- Sarangani Energy Corporation, Philippines
- Interocean Group of Companies - India
- Eastern Coal Council - USA
- Merrill Lynch Commodities Europe
- Ceylon Electricity Board - Sri Lanka
- Miang Besar Coal Terminal - Indonesia
- South Luzon Thermal Energy Corporation
- Minerals Council of Australia
- Sical Logistics Limited - India
- Edison Trading Spa - Italy
- Goldman Sachs - Singapore
- Dalmia Cement Bharat India
- Bahari Cakrawala Sebuku - Indonesia
- Bangladesh Power Developement Board
- OPG Power Generation Pvt Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Kobexindo Tractors - Indoneisa
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Cigading International Bulk Terminal - Indonesia
- Commonwealth Bank - Australia
- Vedanta Resources Plc - India
- GMR Energy Limited - India
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