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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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Sunday, 03 July 22
CHINESE VICE PREMIER STRESSES CLEAN, EFFICIENT USE OF COAL - XINHUA
Chinese Vice Premier Han Zheng has stressed efforts to promote the clean and efficient use of coal, and pursue green, low-carbon and high-quality d ...
Sunday, 03 July 22
SOVEREIGN SECTOR OUTLOOK REVISED TO NEUTRAL ON UKRAINE WAR IMPACT - FITCH RATINGS
The deterioration in global sovereign credit conditions this year relative to our expectations at end-2021 has caused Fitch Ratings to change its g ...
Saturday, 02 July 22
GLOBAL SEABORNE COAL EXPORTS IN 2021 INCREASED BY 4.4% Y-O-Y TO 1147 MLN TONNES - BANCHERO COSTA
In the full 12 months of 2021, global seaborne coal exports increased by +4.4% y-o-y to 1147 mln tonnes, from 1099 mln tonnes in 2020, according to ...
Friday, 01 July 22
INDIA'S TOP CEMENT MAKER PAYING FOR RUSSIAN COAL IN CHINESE YUAN - REUTERS
India’s biggest cement producer, UltraTech Cement ULTC.NS, is importing a cargo of Russian coal and paying using Chinese yuan, according to a ...
Thursday, 30 June 22
FINANCIAL GAINS SUPPORT COAL TRANSITION - BALTIC EXCHANGE
Support for the shift away from coal dependency continues to mount, with the International Monetary Fund (IMF) calculating that the move would gene ...
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- Indian Oil Corporation Limited
- Electricity Authority, New Zealand
- Holcim Trading Pte Ltd - Singapore
- Attock Cement Pakistan Limited
- Billiton Holdings Pty Ltd - Australia
- Goldman Sachs - Singapore
- Ambuja Cements Ltd - India
- Australian Commodity Traders Exchange
- PNOC Exploration Corporation - Philippines
- Energy Development Corp, Philippines
- Heidelberg Cement - Germany
- Miang Besar Coal Terminal - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Bhatia International Limited - India
- Siam City Cement - Thailand
- Essar Steel Hazira Ltd - India
- PowerSource Philippines DevCo
- Central Electricity Authority - India
- Eastern Coal Council - USA
- Energy Link Ltd, New Zealand
- Offshore Bulk Terminal Pte Ltd, Singapore
- Karaikal Port Pvt Ltd - India
- Bulk Trading Sa - Switzerland
- Directorate Of Revenue Intelligence - India
- The Treasury - Australian Government
- PetroVietnam Power Coal Import and Supply Company
- New Zealand Coal & Carbon
- Maheswari Brothers Coal Limited - India
- Africa Commodities Group - South Africa
- Bahari Cakrawala Sebuku - Indonesia
- Kaltim Prima Coal - Indonesia
- Parliament of New Zealand
- Wood Mackenzie - Singapore
- Cigading International Bulk Terminal - Indonesia
- Grasim Industreis Ltd - India
- Ministry of Transport, Egypt
- TeaM Sual Corporation - Philippines
- Semirara Mining Corp, Philippines
- Price Waterhouse Coopers - Russia
- European Bulk Services B.V. - Netherlands
- Bharathi Cement Corporation - India
- Videocon Industries ltd - India
- Gujarat Sidhee Cement - India
- Renaissance Capital - South Africa
- Antam Resourcindo - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Deloitte Consulting - India
- Thiess Contractors Indonesia
- Indo Tambangraya Megah - Indonesia
- Metalloyd Limited - United Kingdom
- Neyveli Lignite Corporation Ltd, - India
- Bukit Asam (Persero) Tbk - Indonesia
- Altura Mining Limited, Indonesia
- Simpson Spence & Young - Indonesia
- Tamil Nadu electricity Board
- Oldendorff Carriers - Singapore
- Samtan Co., Ltd - South Korea
- CNBM International Corporation - China
- Australian Coal Association
- Thai Mozambique Logistica
- Formosa Plastics Group - Taiwan
- Kumho Petrochemical, South Korea
- Globalindo Alam Lestari - Indonesia
- Minerals Council of Australia
- Riau Bara Harum - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- San Jose City I Power Corp, Philippines
- Medco Energi Mining Internasional
- Binh Thuan Hamico - Vietnam
- Siam City Cement PLC, Thailand
- SN Aboitiz Power Inc, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- PTC India Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Indonesian Coal Mining Association
- Sree Jayajothi Cements Limited - India
- Kideco Jaya Agung - Indonesia
- ASAPP Information Group - India
- Kepco SPC Power Corporation, Philippines
- Interocean Group of Companies - India
- Sakthi Sugars Limited - India
- Aditya Birla Group - India
- Sojitz Corporation - Japan
- Indian Energy Exchange, India
- Alfred C Toepfer International GmbH - Germany
- Meenaskhi Energy Private Limited - India
- Bhushan Steel Limited - India
- Leighton Contractors Pty Ltd - Australia
- Pendopo Energi Batubara - Indonesia
- Semirara Mining and Power Corporation, Philippines
- IEA Clean Coal Centre - UK
- Petrochimia International Co. Ltd.- Taiwan
- Planning Commission, India
- Bayan Resources Tbk. - Indonesia
- VISA Power Limited - India
- Uttam Galva Steels Limited - India
- Sindya Power Generating Company Private Ltd
- CIMB Investment Bank - Malaysia
- Dalmia Cement Bharat India
- Agrawal Coal Company - India
- Mintek Dendrill Indonesia
- GVK Power & Infra Limited - India
- Sical Logistics Limited - India
- Star Paper Mills Limited - India
- Trasteel International SA, Italy
- OPG Power Generation Pvt Ltd - India
- Edison Trading Spa - Italy
- Mercator Lines Limited - India
- Vedanta Resources Plc - India
- Ind-Barath Power Infra Limited - India
- Borneo Indobara - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Romanian Commodities Exchange
- Therma Luzon, Inc, Philippines
- Coal and Oil Company - UAE
- Standard Chartered Bank - UAE
- ICICI Bank Limited - India
- South Luzon Thermal Energy Corporation
- Ministry of Finance - Indonesia
- Lanco Infratech Ltd - India
- Jaiprakash Power Ventures ltd
- Merrill Lynch Commodities Europe
- Wilmar Investment Holdings
- Independent Power Producers Association of India
- Karbindo Abesyapradhi - Indoneisa
- Kobexindo Tractors - Indoneisa
- Directorate General of MIneral and Coal - Indonesia
- Power Finance Corporation Ltd., India
- Makarim & Taira - Indonesia
- Banpu Public Company Limited - Thailand
- Mercuria Energy - Indonesia
- Carbofer General Trading SA - India
- Maharashtra Electricity Regulatory Commission - India
- Jindal Steel & Power Ltd - India
- Singapore Mercantile Exchange
- Ministry of Mines - Canada
- India Bulls Power Limited - India
- Electricity Generating Authority of Thailand
- Krishnapatnam Port Company Ltd. - India
- London Commodity Brokers - England
- Barasentosa Lestari - Indonesia
- Sinarmas Energy and Mining - Indonesia
- IHS Mccloskey Coal Group - USA
- Anglo American - United Kingdom
- White Energy Company Limited
- GN Power Mariveles Coal Plant, Philippines
- Commonwealth Bank - Australia
- Kartika Selabumi Mining - Indonesia
- Malabar Cements Ltd - India
- Baramulti Group, Indonesia
- Coastal Gujarat Power Limited - India
- AsiaOL BioFuels Corp., Philippines
- Vizag Seaport Private Limited - India
- Toyota Tsusho Corporation, Japan
- Bhoruka Overseas - Indonesia
- Tata Chemicals Ltd - India
- Global Business Power Corporation, Philippines
- Manunggal Multi Energi - Indonesia
- McConnell Dowell - Australia
- Petron Corporation, Philippines
- International Coal Ventures Pvt Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- Orica Australia Pty. Ltd.
- MS Steel International - UAE
- Meralco Power Generation, Philippines
- The State Trading Corporation of India Ltd
- Chettinad Cement Corporation Ltd - India
- Latin American Coal - Colombia
- Salva Resources Pvt Ltd - India
- Bukit Makmur.PT - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Madhucon Powers Ltd - India
- Georgia Ports Authority, United States
- Xindia Steels Limited - India
- Sarangani Energy Corporation, Philippines
- Central Java Power - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- GAC Shipping (India) Pvt Ltd
- Intertek Mineral Services - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Economic Council, Georgia
- LBH Netherlands Bv - Netherlands
- SMG Consultants - Indonesia
- Posco Energy - South Korea
- Port Waratah Coal Services - Australia
- Pipit Mutiara Jaya. PT, Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Ceylon Electricity Board - Sri Lanka
- Mjunction Services Limited - India
- Coalindo Energy - Indonesia
- Straits Asia Resources Limited - Singapore
- Rio Tinto Coal - Australia
- Indogreen Group - Indonesia
- The University of Queensland
- Timah Investasi Mineral - Indoneisa
- Larsen & Toubro Limited - India
- Marubeni Corporation - India
- Aboitiz Power Corporation - Philippines
- Iligan Light & Power Inc, Philippines
- Orica Mining Services - Indonesia
- Parry Sugars Refinery, India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Cement Manufacturers Association - India
- Eastern Energy - Thailand
- Savvy Resources Ltd - HongKong
- Bangladesh Power Developement Board
- Chamber of Mines of South Africa
- SMC Global Power, Philippines
- Bukit Baiduri Energy - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Global Coal Blending Company Limited - Australia
- GMR Energy Limited - India
- Global Green Power PLC Corporation, Philippines
- Indika Energy - Indonesia
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