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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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Saturday, 06 August 22
SUMITOMO Q1 PROFIT RISES 45% ON STRONGER PRICES OF COAL, NICKEL - REUTERS
Japanese trading house Sumitomo Corp 8053.T said on Wednesday its net profit for the April-June quarter rose 45% to a record thanks to higher price ...
Saturday, 06 August 22
GERMANY'S ENERGY U-TURN: COAL INSTEAD OF GAS - DEUTSCHE WELLE
Berlin has realized it will never again import as much energy from Russia as before the Ukraine war. So the challenge is to wean Germany off its de ...
Saturday, 30 July 22
NUANCES OF FORCE MAJEURE CLAUSE - BALTIC EXCHANGE
Knowledge to Elevate
In NKD Maritime Limited v. Bart Maritime (No 2) Inc (Shagang Giant) [2022] EWHC 1615 (Comm), Bart Maritime (No 2) Inc (th ...
Saturday, 30 July 22
AEMO URGES QUICKER SHIFT TO RENEWABLES AMID COAL FAILURES AND SOARING FOSSIL FUEL COSTS
The Australian Energy Market Operator has called for an accelerated shift to wind and solar, backed up by batteries and other storage, as a devasta ...
Friday, 29 July 22
GLENCORE TO SUPPLY COAL TO NIPPON STEEL AT $375 PER TON - BLOOMBERG
Glencore Plc, agreed to supply coal to Nippon Steel at one of the highest prices ever paid by the Japan Bloomberg reported on July 27.
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- Oldendorff Carriers - Singapore
- Malabar Cements Ltd - India
- CNBM International Corporation - China
- Bahari Cakrawala Sebuku - Indonesia
- Ministry of Finance - Indonesia
- Rio Tinto Coal - Australia
- Minerals Council of Australia
- Meenaskhi Energy Private Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Alfred C Toepfer International GmbH - Germany
- Commonwealth Bank - Australia
- Coal and Oil Company - UAE
- Ind-Barath Power Infra Limited - India
- New Zealand Coal & Carbon
- Petrochimia International Co. Ltd.- Taiwan
- Bayan Resources Tbk. - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Holcim Trading Pte Ltd - Singapore
- Energy Development Corp, Philippines
- Karaikal Port Pvt Ltd - India
- Antam Resourcindo - Indonesia
- Semirara Mining Corp, Philippines
- Siam City Cement PLC, Thailand
- Carbofer General Trading SA - India
- Kohat Cement Company Ltd. - Pakistan
- Sindya Power Generating Company Private Ltd
- The State Trading Corporation of India Ltd
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Energy Link Ltd, New Zealand
- London Commodity Brokers - England
- Maharashtra Electricity Regulatory Commission - India
- Parry Sugars Refinery, India
- Electricity Authority, New Zealand
- Pendopo Energi Batubara - Indonesia
- Standard Chartered Bank - UAE
- Karbindo Abesyapradhi - Indoneisa
- Manunggal Multi Energi - Indonesia
- Kepco SPC Power Corporation, Philippines
- Romanian Commodities Exchange
- Uttam Galva Steels Limited - India
- Larsen & Toubro Limited - India
- Kalimantan Lumbung Energi - Indonesia
- GMR Energy Limited - India
- Australian Coal Association
- Sree Jayajothi Cements Limited - India
- McConnell Dowell - Australia
- PTC India Limited - India
- Meralco Power Generation, Philippines
- Barasentosa Lestari - Indonesia
- Marubeni Corporation - India
- San Jose City I Power Corp, Philippines
- Coalindo Energy - Indonesia
- Formosa Plastics Group - Taiwan
- Anglo American - United Kingdom
- Gujarat Mineral Development Corp Ltd - India
- Aboitiz Power Corporation - Philippines
- Simpson Spence & Young - Indonesia
- Globalindo Alam Lestari - Indonesia
- Xindia Steels Limited - India
- Georgia Ports Authority, United States
- Kaltim Prima Coal - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Vedanta Resources Plc - India
- Intertek Mineral Services - Indonesia
- Medco Energi Mining Internasional
- Mjunction Services Limited - India
- Vizag Seaport Private Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Aditya Birla Group - India
- Ceylon Electricity Board - Sri Lanka
- Eastern Energy - Thailand
- Singapore Mercantile Exchange
- Sojitz Corporation - Japan
- Samtan Co., Ltd - South Korea
- Planning Commission, India
- Trasteel International SA, Italy
- TeaM Sual Corporation - Philippines
- Mercator Lines Limited - India
- VISA Power Limited - India
- OPG Power Generation Pvt Ltd - India
- Power Finance Corporation Ltd., India
- Central Electricity Authority - India
- Kobexindo Tractors - Indoneisa
- Directorate Of Revenue Intelligence - India
- Eastern Coal Council - USA
- Chamber of Mines of South Africa
- Agrawal Coal Company - India
- Siam City Cement - Thailand
- Metalloyd Limited - United Kingdom
- PNOC Exploration Corporation - Philippines
- Mintek Dendrill Indonesia
- Bhatia International Limited - India
- Posco Energy - South Korea
- Goldman Sachs - Singapore
- Billiton Holdings Pty Ltd - Australia
- ICICI Bank Limited - India
- European Bulk Services B.V. - Netherlands
- Edison Trading Spa - Italy
- Indika Energy - Indonesia
- Merrill Lynch Commodities Europe
- Deloitte Consulting - India
- PetroVietnam Power Coal Import and Supply Company
- Africa Commodities Group - South Africa
- Krishnapatnam Port Company Ltd. - India
- Altura Mining Limited, Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Savvy Resources Ltd - HongKong
- Indonesian Coal Mining Association
- Sical Logistics Limited - India
- Australian Commodity Traders Exchange
- Miang Besar Coal Terminal - Indonesia
- India Bulls Power Limited - India
- Grasim Industreis Ltd - India
- Sarangani Energy Corporation, Philippines
- Electricity Generating Authority of Thailand
- White Energy Company Limited
- Salva Resources Pvt Ltd - India
- Baramulti Group, Indonesia
- SN Aboitiz Power Inc, Philippines
- Semirara Mining and Power Corporation, Philippines
- Borneo Indobara - Indonesia
- Bulk Trading Sa - Switzerland
- Therma Luzon, Inc, Philippines
- Port Waratah Coal Services - Australia
- Makarim & Taira - Indonesia
- Jindal Steel & Power Ltd - India
- Ambuja Cements Ltd - India
- Price Waterhouse Coopers - Russia
- Coastal Gujarat Power Limited - India
- Kartika Selabumi Mining - Indonesia
- Bukit Makmur.PT - Indonesia
- Maheswari Brothers Coal Limited - India
- Binh Thuan Hamico - Vietnam
- Wilmar Investment Holdings
- GAC Shipping (India) Pvt Ltd
- The Treasury - Australian Government
- Bukit Asam (Persero) Tbk - Indonesia
- Global Green Power PLC Corporation, Philippines
- Chettinad Cement Corporation Ltd - India
- Kumho Petrochemical, South Korea
- Heidelberg Cement - Germany
- IEA Clean Coal Centre - UK
- Neyveli Lignite Corporation Ltd, - India
- Indogreen Group - Indonesia
- Thiess Contractors Indonesia
- Bhushan Steel Limited - India
- Latin American Coal - Colombia
- Banpu Public Company Limited - Thailand
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Madhucon Powers Ltd - India
- Lanco Infratech Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Orica Mining Services - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Thai Mozambique Logistica
- Parliament of New Zealand
- The University of Queensland
- Economic Council, Georgia
- Cigading International Bulk Terminal - Indonesia
- Gujarat Sidhee Cement - India
- South Luzon Thermal Energy Corporation
- Bharathi Cement Corporation - India
- Riau Bara Harum - Indonesia
- Bhoruka Overseas - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Dalmia Cement Bharat India
- Kapuas Tunggal Persada - Indonesia
- ASAPP Information Group - India
- Timah Investasi Mineral - Indoneisa
- Interocean Group of Companies - India
- Orica Australia Pty. Ltd.
- Indian Energy Exchange, India
- Vijayanagar Sugar Pvt Ltd - India
- SMG Consultants - Indonesia
- Essar Steel Hazira Ltd - India
- Kideco Jaya Agung - Indonesia
- Attock Cement Pakistan Limited
- Jaiprakash Power Ventures ltd
- GVK Power & Infra Limited - India
- Rashtriya Ispat Nigam Limited - India
- Bangladesh Power Developement Board
- Videocon Industries ltd - India
- Indian Oil Corporation Limited
- Indo Tambangraya Megah - Indonesia
- Global Business Power Corporation, Philippines
- Bukit Baiduri Energy - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- PowerSource Philippines DevCo
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Independent Power Producers Association of India
- Star Paper Mills Limited - India
- Iligan Light & Power Inc, Philippines
- Ministry of Mines - Canada
- Mercuria Energy - Indonesia
- Cement Manufacturers Association - India
- Jorong Barutama Greston.PT - Indonesia
- LBH Netherlands Bv - Netherlands
- AsiaOL BioFuels Corp., Philippines
- CIMB Investment Bank - Malaysia
- Petron Corporation, Philippines
- SMC Global Power, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Renaissance Capital - South Africa
- Toyota Tsusho Corporation, Japan
- Tata Chemicals Ltd - India
- Straits Asia Resources Limited - Singapore
- IHS Mccloskey Coal Group - USA
- International Coal Ventures Pvt Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Wood Mackenzie - Singapore
- Central Java Power - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Global Coal Blending Company Limited - Australia
- Sakthi Sugars Limited - India
- Ministry of Transport, Egypt
- Tamil Nadu electricity Board
- MS Steel International - UAE
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