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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, 23 December 21
INDONESIA’S 2022 COAL OUTPUT SEEN BETWEEN 637 MLN-664 MLN T- OFFICIAL - REUTERS
Indonesia’s 2022 coal output is estimated at between 637 million to 664 million tonnes based on production plans currently being finalised, s ...
Thursday, 23 December 21
VALE ANNOUNCES THE SALE OF ITS COAL ASSETS
Vale informs that, on this date, it has entered into a binding agreement with Vulcan to sell the Moatize coal mine and the Nacala Logistics Corrido ...
Thursday, 23 December 21
INDIA: CAPTIVE POWER PRODUCERS URGE GOVT TO ENSURE NORMAL COAL SUPPLIES - PTI
A captive power producers’ association has urged the government for 100 per cent normalisation of coal supply to captive power producers whil ...
Thursday, 23 December 21
MARKET INSIGHT - INTERMODAL
As an outstanding year for the dry bulk freight market comes to a close, so does a thriving year for the SnP market which can only be compared to 2 ...
Tuesday, 14 December 21
COAL LOCK-IN IN SOUTHEAST ASIA PRESENTS A CHALLENGE FOR THE ASIAN DEVELOPMENT BANK'S COAL RETIREMENT PLAN - IEEFA
In August, the Asian Development Bank (ADB) announced an ambitious plan to buy high emissions coal-fired power plants in Southeast Asia and retire ...
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- Chettinad Cement Corporation Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Indogreen Group - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Ambuja Cements Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Deloitte Consulting - India
- Goldman Sachs - Singapore
- Central Electricity Authority - India
- Petrochimia International Co. Ltd.- Taiwan
- MS Steel International - UAE
- Indian Oil Corporation Limited
- White Energy Company Limited
- Power Finance Corporation Ltd., India
- CNBM International Corporation - China
- Bhatia International Limited - India
- IEA Clean Coal Centre - UK
- Savvy Resources Ltd - HongKong
- SMG Consultants - Indonesia
- GVK Power & Infra Limited - India
- Indian Energy Exchange, India
- The State Trading Corporation of India Ltd
- Directorate General of MIneral and Coal - Indonesia
- Posco Energy - South Korea
- Trasteel International SA, Italy
- Heidelberg Cement - Germany
- Salva Resources Pvt Ltd - India
- Energy Development Corp, Philippines
- Coalindo Energy - Indonesia
- Mintek Dendrill Indonesia
- Sojitz Corporation - Japan
- India Bulls Power Limited - India
- Thiess Contractors Indonesia
- Directorate Of Revenue Intelligence - India
- Madhucon Powers Ltd - India
- Antam Resourcindo - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Rashtriya Ispat Nigam Limited - India
- Jindal Steel & Power Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Economic Council, Georgia
- Iligan Light & Power Inc, Philippines
- Therma Luzon, Inc, Philippines
- Latin American Coal - Colombia
- The University of Queensland
- Orica Mining Services - Indonesia
- Planning Commission, India
- Kohat Cement Company Ltd. - Pakistan
- PTC India Limited - India
- Toyota Tsusho Corporation, Japan
- Indika Energy - Indonesia
- Mercator Lines Limited - India
- San Jose City I Power Corp, Philippines
- Dalmia Cement Bharat India
- PetroVietnam Power Coal Import and Supply Company
- Wood Mackenzie - Singapore
- Xindia Steels Limited - India
- Formosa Plastics Group - Taiwan
- Aditya Birla Group - India
- London Commodity Brokers - England
- Riau Bara Harum - Indonesia
- Merrill Lynch Commodities Europe
- Ministry of Finance - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Barasentosa Lestari - Indonesia
- Wilmar Investment Holdings
- Neyveli Lignite Corporation Ltd, - India
- Tata Chemicals Ltd - India
- Chamber of Mines of South Africa
- Meenaskhi Energy Private Limited - India
- Vedanta Resources Plc - India
- Videocon Industries ltd - India
- European Bulk Services B.V. - Netherlands
- OPG Power Generation Pvt Ltd - India
- Coastal Gujarat Power Limited - India
- Cigading International Bulk Terminal - Indonesia
- Sree Jayajothi Cements Limited - India
- Aboitiz Power Corporation - Philippines
- Sindya Power Generating Company Private Ltd
- Sical Logistics Limited - India
- Singapore Mercantile Exchange
- Global Green Power PLC Corporation, Philippines
- Sakthi Sugars Limited - India
- Intertek Mineral Services - Indonesia
- Electricity Generating Authority of Thailand
- McConnell Dowell - Australia
- Mercuria Energy - Indonesia
- PowerSource Philippines DevCo
- Meralco Power Generation, Philippines
- Altura Mining Limited, Indonesia
- Carbofer General Trading SA - India
- Kartika Selabumi Mining - Indonesia
- LBH Netherlands Bv - Netherlands
- Indonesian Coal Mining Association
- Gujarat Sidhee Cement - India
- Grasim Industreis Ltd - India
- Malabar Cements Ltd - India
- International Coal Ventures Pvt Ltd - India
- Ind-Barath Power Infra Limited - India
- Jaiprakash Power Ventures ltd
- Bukit Makmur.PT - Indonesia
- Manunggal Multi Energi - Indonesia
- Pendopo Energi Batubara - Indonesia
- Simpson Spence & Young - Indonesia
- Kideco Jaya Agung - Indonesia
- Standard Chartered Bank - UAE
- Karbindo Abesyapradhi - Indoneisa
- Siam City Cement PLC, Thailand
- Bank of Tokyo Mitsubishi UFJ Ltd
- Bharathi Cement Corporation - India
- Bukit Baiduri Energy - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Independent Power Producers Association of India
- Timah Investasi Mineral - Indoneisa
- Central Java Power - Indonesia
- SN Aboitiz Power Inc, Philippines
- ICICI Bank Limited - India
- Energy Link Ltd, New Zealand
- Petron Corporation, Philippines
- The Treasury - Australian Government
- Lanco Infratech Ltd - India
- Eastern Energy - Thailand
- Gujarat Electricity Regulatory Commission - India
- Price Waterhouse Coopers - Russia
- Vizag Seaport Private Limited - India
- Samtan Co., Ltd - South Korea
- New Zealand Coal & Carbon
- Agrawal Coal Company - India
- Jorong Barutama Greston.PT - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Minerals Council of Australia
- Rio Tinto Coal - Australia
- South Luzon Thermal Energy Corporation
- Sarangani Energy Corporation, Philippines
- Bulk Trading Sa - Switzerland
- Kepco SPC Power Corporation, Philippines
- Medco Energi Mining Internasional
- Larsen & Toubro Limited - India
- Cement Manufacturers Association - India
- Bukit Asam (Persero) Tbk - Indonesia
- Kaltim Prima Coal - Indonesia
- Makarim & Taira - Indonesia
- Globalindo Alam Lestari - Indonesia
- SMC Global Power, Philippines
- Commonwealth Bank - Australia
- Romanian Commodities Exchange
- Attock Cement Pakistan Limited
- Karaikal Port Pvt Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Oldendorff Carriers - Singapore
- Borneo Indobara - Indonesia
- Straits Asia Resources Limited - Singapore
- Tamil Nadu electricity Board
- Metalloyd Limited - United Kingdom
- Global Business Power Corporation, Philippines
- IHS Mccloskey Coal Group - USA
- Billiton Holdings Pty Ltd - Australia
- Holcim Trading Pte Ltd - Singapore
- GMR Energy Limited - India
- Kobexindo Tractors - Indoneisa
- Georgia Ports Authority, United States
- Coal and Oil Company - UAE
- Pipit Mutiara Jaya. PT, Indonesia
- Bhushan Steel Limited - India
- VISA Power Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Interocean Group of Companies - India
- Bahari Cakrawala Sebuku - Indonesia
- Kumho Petrochemical, South Korea
- Electricity Authority, New Zealand
- ASAPP Information Group - India
- Australian Coal Association
- Ministry of Transport, Egypt
- TeaM Sual Corporation - Philippines
- Uttam Galva Steels Limited - India
- Port Waratah Coal Services - Australia
- Binh Thuan Hamico - Vietnam
- Star Paper Mills Limited - India
- CIMB Investment Bank - Malaysia
- PNOC Exploration Corporation - Philippines
- Bangladesh Power Developement Board
- Siam City Cement - Thailand
- Semirara Mining and Power Corporation, Philippines
- AsiaOL BioFuels Corp., Philippines
- Maheswari Brothers Coal Limited - India
- Global Coal Blending Company Limited - Australia
- Marubeni Corporation - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Eastern Coal Council - USA
- Bayan Resources Tbk. - Indonesia
- Africa Commodities Group - South Africa
- GAC Shipping (India) Pvt Ltd
- Kapuas Tunggal Persada - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Orica Australia Pty. Ltd.
- Parliament of New Zealand
- Banpu Public Company Limited - Thailand
- Thai Mozambique Logistica
- Australian Commodity Traders Exchange
- Baramulti Group, Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Edison Trading Spa - Italy
- TNB Fuel Sdn Bhd - Malaysia
- Gujarat Mineral Development Corp Ltd - India
- Mjunction Services Limited - India
- Indo Tambangraya Megah - Indonesia
- Semirara Mining Corp, Philippines
- Anglo American - United Kingdom
- Essar Steel Hazira Ltd - India
- Parry Sugars Refinery, India
- Renaissance Capital - South Africa
- Bhoruka Overseas - Indonesia
- Ministry of Mines - Canada
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