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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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Thursday, 17 February 22
APAC THERMAL COAL PRICES TO EASE ON END OF INDONESIA EXPORT BAN - FITCH RATINGS
Fitch Ratings-Shanghai/Singapore-14 February 2022: APAC thermal coal prices are likely to come under pressure in the near term due to seasonally we ...
Tuesday, 15 February 22
IS ANOTHER COAL SHORTAGE CRISIS LOOMING OVER INDIA? - BUSINESS STANDARD
In December last year, the Federation of Indian Mineral Industries (FIMI) shot off a letter to the Prime Minister claiming that the coal crisis was ...
Tuesday, 15 February 22
THERMAL COAL'S RECORD PRICE RUN MAY END UP ITS OWN WORST ENEMY - REUTERS
The price of benchmark Australian thermal coal rose last week to trade near record highs, providing a short-term boost to producers but increasing ...
Thursday, 10 February 22
INDONESIA: COAL EXPORT BAN - SKULD
Indonesia's coal export ban in the light of force majeure and off-hire clauses
In January 2022, Indonesia, the world's biggest exporte ...
Thursday, 10 February 22
EIA ANALYSIS CONSIDERS DIFFERENT OUTCOMES FOR COAL MARKETS IN INDIA AND SOUTHEAST ASIA
In our International Energy Outlook 2021 (IEO2021) Issues in Focus: Uncertainty in Coal Trade in India and Greater Southeast Asia, we analyze three ...
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- IEA Clean Coal Centre - UK
- Star Paper Mills Limited - India
- Globalindo Alam Lestari - Indonesia
- Bhoruka Overseas - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Borneo Indobara - Indonesia
- Marubeni Corporation - India
- Ambuja Cements Ltd - India
- Aditya Birla Group - India
- Posco Energy - South Korea
- Cement Manufacturers Association - India
- Trasteel International SA, Italy
- Petrochimia International Co. Ltd.- Taiwan
- Kobexindo Tractors - Indoneisa
- Indika Energy - Indonesia
- Larsen & Toubro Limited - India
- Planning Commission, India
- Georgia Ports Authority, United States
- International Coal Ventures Pvt Ltd - India
- Karaikal Port Pvt Ltd - India
- Commonwealth Bank - Australia
- LBH Netherlands Bv - Netherlands
- Central Java Power - Indonesia
- Orica Mining Services - Indonesia
- TeaM Sual Corporation - Philippines
- ICICI Bank Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Essar Steel Hazira Ltd - India
- Romanian Commodities Exchange
- Jindal Steel & Power Ltd - India
- Rio Tinto Coal - Australia
- Parry Sugars Refinery, India
- Vijayanagar Sugar Pvt Ltd - India
- Gujarat Sidhee Cement - India
- CNBM International Corporation - China
- Tata Chemicals Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- VISA Power Limited - India
- Bhatia International Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Eastern Energy - Thailand
- Billiton Holdings Pty Ltd - Australia
- The State Trading Corporation of India Ltd
- Goldman Sachs - Singapore
- Siam City Cement - Thailand
- SN Aboitiz Power Inc, Philippines
- Kideco Jaya Agung - Indonesia
- Kaltim Prima Coal - Indonesia
- Deloitte Consulting - India
- Chettinad Cement Corporation Ltd - India
- Anglo American - United Kingdom
- Jorong Barutama Greston.PT - Indonesia
- GMR Energy Limited - India
- Altura Mining Limited, Indonesia
- OPG Power Generation Pvt Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Ministry of Finance - Indonesia
- Antam Resourcindo - Indonesia
- Mercuria Energy - Indonesia
- Ind-Barath Power Infra Limited - India
- Port Waratah Coal Services - Australia
- Cigading International Bulk Terminal - Indonesia
- Coalindo Energy - Indonesia
- Binh Thuan Hamico - Vietnam
- Bharathi Cement Corporation - India
- Vizag Seaport Private Limited - India
- White Energy Company Limited
- Independent Power Producers Association of India
- Iligan Light & Power Inc, Philippines
- Miang Besar Coal Terminal - Indonesia
- Indian Energy Exchange, India
- Interocean Group of Companies - India
- Gujarat Electricity Regulatory Commission - India
- Malabar Cements Ltd - India
- Baramulti Group, Indonesia
- Leighton Contractors Pty Ltd - Australia
- McConnell Dowell - Australia
- Coastal Gujarat Power Limited - India
- Rashtriya Ispat Nigam Limited - India
- Semirara Mining Corp, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Parliament of New Zealand
- Alfred C Toepfer International GmbH - Germany
- Heidelberg Cement - Germany
- Directorate Of Revenue Intelligence - India
- Formosa Plastics Group - Taiwan
- ASAPP Information Group - India
- Energy Link Ltd, New Zealand
- Ceylon Electricity Board - Sri Lanka
- India Bulls Power Limited - India
- London Commodity Brokers - England
- Indogreen Group - Indonesia
- Australian Coal Association
- Eastern Coal Council - USA
- Kumho Petrochemical, South Korea
- Lanco Infratech Ltd - India
- The Treasury - Australian Government
- Kohat Cement Company Ltd. - Pakistan
- Agrawal Coal Company - India
- GAC Shipping (India) Pvt Ltd
- SMG Consultants - Indonesia
- Savvy Resources Ltd - HongKong
- Thai Mozambique Logistica
- Standard Chartered Bank - UAE
- Grasim Industreis Ltd - India
- Therma Luzon, Inc, Philippines
- Bulk Trading Sa - Switzerland
- Chamber of Mines of South Africa
- Aboitiz Power Corporation - Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Ministry of Mines - Canada
- Price Waterhouse Coopers - Russia
- Power Finance Corporation Ltd., India
- Bukit Asam (Persero) Tbk - Indonesia
- Sarangani Energy Corporation, Philippines
- European Bulk Services B.V. - Netherlands
- Bukit Makmur.PT - Indonesia
- Latin American Coal - Colombia
- SMC Global Power, Philippines
- Oldendorff Carriers - Singapore
- Singapore Mercantile Exchange
- Kepco SPC Power Corporation, Philippines
- Sakthi Sugars Limited - India
- Bhushan Steel Limited - India
- Intertek Mineral Services - Indonesia
- Ministry of Transport, Egypt
- New Zealand Coal & Carbon
- Coal and Oil Company - UAE
- Central Electricity Authority - India
- Minerals Council of Australia
- Pipit Mutiara Jaya. PT, Indonesia
- PNOC Exploration Corporation - Philippines
- Xindia Steels Limited - India
- Timah Investasi Mineral - Indoneisa
- Indonesian Coal Mining Association
- Meralco Power Generation, Philippines
- Sinarmas Energy and Mining - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Thiess Contractors Indonesia
- CIMB Investment Bank - Malaysia
- Krishnapatnam Port Company Ltd. - India
- Bangladesh Power Developement Board
- Orica Australia Pty. Ltd.
- Attock Cement Pakistan Limited
- Renaissance Capital - South Africa
- Energy Development Corp, Philippines
- Straits Asia Resources Limited - Singapore
- Samtan Co., Ltd - South Korea
- Petron Corporation, Philippines
- Jaiprakash Power Ventures ltd
- Salva Resources Pvt Ltd - India
- PowerSource Philippines DevCo
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Makarim & Taira - Indonesia
- Africa Commodities Group - South Africa
- Gujarat Mineral Development Corp Ltd - India
- South Luzon Thermal Energy Corporation
- Vedanta Resources Plc - India
- Indian Oil Corporation Limited
- Pendopo Energi Batubara - Indonesia
- Edison Trading Spa - Italy
- Wood Mackenzie - Singapore
- Holcim Trading Pte Ltd - Singapore
- Maheswari Brothers Coal Limited - India
- PTC India Limited - India
- Sree Jayajothi Cements Limited - India
- Bayan Resources Tbk. - Indonesia
- Siam City Cement PLC, Thailand
- Sojitz Corporation - Japan
- Kapuas Tunggal Persada - Indonesia
- Australian Commodity Traders Exchange
- San Jose City I Power Corp, Philippines
- Mintek Dendrill Indonesia
- Economic Council, Georgia
- Madhucon Powers Ltd - India
- Global Coal Blending Company Limited - Australia
- Bukit Baiduri Energy - Indonesia
- Global Green Power PLC Corporation, Philippines
- MS Steel International - UAE
- Global Business Power Corporation, Philippines
- The University of Queensland
- Mjunction Services Limited - India
- Merrill Lynch Commodities Europe
- Simpson Spence & Young - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Bahari Cakrawala Sebuku - Indonesia
- Mercator Lines Limited - India
- Riau Bara Harum - Indonesia
- Meenaskhi Energy Private Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Manunggal Multi Energi - Indonesia
- Videocon Industries ltd - India
- Barasentosa Lestari - Indonesia
- Banpu Public Company Limited - Thailand
- Offshore Bulk Terminal Pte Ltd, Singapore
- PetroVietnam Power Coal Import and Supply Company
- Sical Logistics Limited - India
- Dalmia Cement Bharat India
- Toyota Tsusho Corporation, Japan
- Uttam Galva Steels Limited - India
- Metalloyd Limited - United Kingdom
- Wilmar Investment Holdings
- GN Power Mariveles Coal Plant, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Indo Tambangraya Megah - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Electricity Authority, New Zealand
- GVK Power & Infra Limited - India
- Kartika Selabumi Mining - Indonesia
- Medco Energi Mining Internasional
- IHS Mccloskey Coal Group - USA
- Electricity Generating Authority of Thailand
- Tamil Nadu electricity Board
- Sindya Power Generating Company Private Ltd
- AsiaOL BioFuels Corp., Philippines
- Carbofer General Trading SA - India
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