We welcome article submissions from experts in the areas of coal, mining,
shipping, etc.
To Submit your article please click here.
|
|
|
Friday, 07 December 12
A NEW PHASE FOR AUSTRALIAN RESOURCES - A FITCH STREET INTERVIEW
 This week Matt Jamieson spoke with Andrew Colquhoun in Fitch's Asian sovereign rating team, and Vicky Melbourne, Fitch's commodity analyst based in Sydney, about the outlook for the Australian resources sector. Andrew and Vicky commented that Australia's resources sector is likely to enter a new phase based on sustainable volume growth, and that a high AUD/USD exchange rate is likely to persist with potentially negative implications for the non-resource economy. In this context Australia's large miners are likely to benefit from ongoing growth in commodity exports to China, notwithstanding lower commodity prices. Matt is Head of APAC Research in Fitch's Corporate Ratings Group.
Matt: Back in August 2012, Australia's Resources and Energy Minister made a comment to the effect that Australia's resources boom is over. Does Fitch agree with this view?
Vicky: No, we wouldn't subscribe to such a simplified view. Rather we believe the sector is entering a new and, perhaps, more sustainable growth phase focused on volumes, as opposed to the previous period of growth and investment based on high commodity prices. At the same time we believe that commodity prices are unlikely to return to previous high levels, and with mining cost inflation remaining stubbornly high, this may force the exit or consolidation of those miners with high-cost structures. This will result in a lower level of investment growth in the mining sector over the medium-to long-term, and related industries will be negatively impacted.
However, at least for the short-term, absolute investment levels are still growing. According to the Australian Bureau of Statistics's September capex survey, nominal spend in mining for 2012-13 is expected to increase 17.1% to AUD109bn which is only 3.5% lower than their estimate at the start of the year.
Matt: What will be impact of lower commodity prices and lower investment over the medium-to long-term on the Australian mining sector, and particularly for the larger players rated by Fitch?
Vicky: For the larger and more cost-efficient players, such as BHP Billiton Limited/Plc (BHP; 'A+'/Stable) and Rio Tinto Limited/Plc ( 'A-'/Stable), what they may lose in price, they are likely to make up for in terms of volume, particularly given their expansion over the past two to three years. Although these large miners have announced some curtailment to their expansion in light of China's slowdown, the potential for volume growth remains. Their free cash flow generation is also likely to increase as a result of a containment in operating costs and lower capex. Fortescue Metals Group Limited (Fortescue; 'BB+'/Negative), on the other hand, will benefit from a step-change in production volume and from becoming a lower cost iron ore producer from 2013 as its new Solomon Hub comes on line.
Matt: To what extent will the Australian economy be negatively impacted by the miners' likely reduction in investments and capital expenditure?
Vicky: Not substantially. At present, there are 87 mining industry projects committed and/or underway worth AUD268bn, with the majority of these in liquefied natural gas, and the balance in iron ore and coal. This represents a significant pipeline of investments despite the capex reductions announced by several entities. The bulk of this spending will peak in 2014 because of long lead times on projects, which means they will continue to provide a meaningful contribution to the Australian economy for at least two more years.
The main reduction in planned investments is related to uncommitted/not yet approved projects such as BHP's Olympic Dam, which now look unattractive given the current stage of the commodity cycle and the greater focus on capital allocations.
Matt: Andrew, what's your perspective on this? With China's economic growth slowing, does it not follow that Australia's resources sector is likely to face weakening demand?
Andrew: To the contrary, we think demand for Australia's resources from China will remain robust, although it is unlikely to grow as strongly in the next 10 years as it did in the previous decade. The chance of a Chinese "hard landing" in the near term appears to be diminishing and is certainly not Fitch's base case. Fitch still expects China to grow in the 7%-8% range over the next two to three years, albeit slower than the 9%-10% level achieved over 2009 to 2011. Importantly the size of China's economy is now around 40% greater than it was in 2008.
Under new leadership China will face the challenge of rebalancing its economy away from investment towards consumption. Even if the rate of China's growth in investment is not as strong as was the case historically, nonetheless a significant amount of investment still remains to occur. Its urbanisation rate is well below that of advanced countries, meaning that there is still a substantial amount of buildings and infrastructure to be built.
Matt: So Fitch actually expects demand for Australian resources to continue growing over the next two to three years?
Andrew: Yes. Chinese demand for key commodities including iron ore and coal will continue to grow in an absolute sense over the next two to three years, supported by government programmes to expand infrastructure and social housing construction. So while there may be fluctuations in China's demand for Australian resources in the short term, demand should continue growing over the long term.
Moreover, there is the rest of emerging Asia to consider. For example India took 6% of Australia's exports in 2011, well below China's 27% but up from 2% in 2001, and India is at an earlier stage of development than China.
Matt: Despite a lot of negative news on China's slowdown, and declines in commodity prices, the AUD/USD exchange rate has not significantly depreciated. What's behind this?
Andrew: It is partly a function of the continued strength in Australia's terms of trade due to still high commodity prices, and partly owing to the AUD gaining "reserve currency" status to some extent as global investors seek to diversify out of USD and EUR assets. The Australian sovereign is rated 'AAA' and the AUD is now the world's fifth-most traded currency.
Matt: These factors suggest that the AUD effective exchange rate could remain high even if commodity prices weaken, particularly if overall demand for Australia's resources remains strong. How will the rest of Australia's economy be able to cope?
Andrew: It will be a big challenge, but non-resource sectors will have to remain competitive by strengthening productivity to compete globally. The alternative, if companies cannot increase their productivity, is higher unemployment. The most likely outcome is probably a bit of both, depending on the particular industry and on government structural policies.
Matt: Vicky, a final question then. In light of Andrew's comments, outside of the resources industry what corporate sectors in Australia are most at risk to a higher effective exchange rate?
Vicky: The impact on the non-resource economy is significant, particularly on Australia's tourism industry, both local and inbound, on the country's export-reliant agriculture sector, and on its retail and manufacturing sectors. A higher cost base attributed to the strong AUD continues to negatively impact Australia's auto sector - and that is despite government subsidies. The Australian Industry Group's measure of manufacturing activity showed a ninth straight month of contraction in November as firms complained of soft demand, higher energy costs and a strong Australian dollar. Moreover, with most key industries under pressure, the negative spillover facing Australia's small-and-medium sized enterprises is significant.
Australia's retail sector and discretionary spending feed off the tourism industry, particularly in states like Queensland. The retail sector is already struggling from the proliferation of online shopping, and hence additional pressure due to a high exchange rate only compounds their difficulties. A high exchange rate also makes it more attractive for the larger supermarkets to source their own-brand foods and products from overseas as opposed to local producers, as they look to deliver on their "everyday low prices" campaigns. Finally, a weak retail sector has a knock-on effect on the commercial property sector.
Vicky Melbourne - Head of Industrials - South-East Asia & Australasia
Andrew Colquhoun - Head of APAC Sovereign Ratings, Hong Kong
Matt Jamieson - Head of APAC Research - Corporate Ratings Group, Seoul
If you believe an article violates your rights or the rights of others, please contact us.
|
|
Wednesday, 26 December 12
SHIP OWNERS WRAP UP NEWBUILDING DEALS PRIOR TO YEAR END - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
As the year inches closer and closer to its end, many ship owners are looking to close deals for newbuilding vessels they have been negotiating duri ...
Monday, 24 December 12
CONSTITUTIONAL COURT DECISION MAY FURTHER DELAY THE ISSUANCE OF NEW MINING BUSINESS LICENCES - TJEN SHE SIUNG
COALspot.com - In November 2012 the Constitutional Court of Indonesia issued a decision on amendments to certain provisions under the Mining Law No. ...
Monday, 24 December 12
BUNKER PRICES TO CONTINUE RISING, ALBEIT IN A SLOWER MODE, DURING THE NEXT FEW YEARS - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEW
In a recent report, US-based consulting firm Mcquilling Services attempted to forecast the course of bunker prices during the next few years, as thi ...
Sunday, 23 December 12
Q4' 2013 CFR SOUTH CHINA COAL SWAP, US$ 3.40 HIGHER COMPARED TO Q1' 2013 PRICE
COALspot.com - Sub-Bit Indonesia coal swaps (FOB ) for average Q1’ 2013 delivery gained 1.94 percent M-M and WoW by 1.57percent but lost 0.35 ...
Saturday, 22 December 12
SECOND HAND VESSELS ENJOY HIGH DEMAND AS PRICES ARE ATTRACTIVE - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
Despite the fact that the year is closing to its end, activity in the second hand vessel market has been more than high. Ship owners are looking to ...
|
|
|
Showing 4451 to 4455 news of total 6871 |
|
 |
|
|
|
|
| |
|
 |
|
|
| |
|
- PetroVietnam Power Coal Import and Supply Company
- Standard Chartered Bank - UAE
- Maharashtra Electricity Regulatory Commission - India
- Kalimantan Lumbung Energi - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Sindya Power Generating Company Private Ltd
- Australian Coal Association
- Thai Mozambique Logistica
- Makarim & Taira - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- PTC India Limited - India
- Miang Besar Coal Terminal - Indonesia
- Sakthi Sugars Limited - India
- Uttam Galva Steels Limited - India
- Metalloyd Limited - United Kingdom
- LBH Netherlands Bv - Netherlands
- GMR Energy Limited - India
- Jindal Steel & Power Ltd - India
- Coal and Oil Company - UAE
- Eastern Energy - Thailand
- Gujarat Mineral Development Corp Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Barasentosa Lestari - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Cigading International Bulk Terminal - Indonesia
- Maheswari Brothers Coal Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Xindia Steels Limited - India
- Dalmia Cement Bharat India
- Indian Energy Exchange, India
- Riau Bara Harum - Indonesia
- Carbofer General Trading SA - India
- Vedanta Resources Plc - India
- Posco Energy - South Korea
- Savvy Resources Ltd - HongKong
- Billiton Holdings Pty Ltd - Australia
- Madhucon Powers Ltd - India
- Petron Corporation, Philippines
- Leighton Contractors Pty Ltd - Australia
- Jorong Barutama Greston.PT - Indonesia
- Medco Energi Mining Internasional
- Kohat Cement Company Ltd. - Pakistan
- Semirara Mining Corp, Philippines
- GVK Power & Infra Limited - India
- San Jose City I Power Corp, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Minerals Council of Australia
- Star Paper Mills Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Meenaskhi Energy Private Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Essar Steel Hazira Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Mjunction Services Limited - India
- Romanian Commodities Exchange
- PNOC Exploration Corporation - Philippines
- ASAPP Information Group - India
- Simpson Spence & Young - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Bhatia International Limited - India
- Ambuja Cements Ltd - India
- Intertek Mineral Services - Indonesia
- Global Coal Blending Company Limited - Australia
- Globalindo Alam Lestari - Indonesia
- Aboitiz Power Corporation - Philippines
- VISA Power Limited - India
- Indika Energy - Indonesia
- Bhoruka Overseas - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Parry Sugars Refinery, India
- Price Waterhouse Coopers - Russia
- Coastal Gujarat Power Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Georgia Ports Authority, United States
- Mercator Lines Limited - India
- The State Trading Corporation of India Ltd
- Bharathi Cement Corporation - India
- CNBM International Corporation - China
- SMC Global Power, Philippines
- PowerSource Philippines DevCo
- Gujarat Sidhee Cement - India
- Kartika Selabumi Mining - Indonesia
- South Luzon Thermal Energy Corporation
- Sree Jayajothi Cements Limited - India
- Ministry of Transport, Egypt
- Formosa Plastics Group - Taiwan
- New Zealand Coal & Carbon
- Cement Manufacturers Association - India
- Therma Luzon, Inc, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Larsen & Toubro Limited - India
- International Coal Ventures Pvt Ltd - India
- Attock Cement Pakistan Limited
- Ind-Barath Power Infra Limited - India
- MS Steel International - UAE
- Agrawal Coal Company - India
- Electricity Authority, New Zealand
- Ceylon Electricity Board - Sri Lanka
- Aditya Birla Group - India
- ICICI Bank Limited - India
- Power Finance Corporation Ltd., India
- Global Green Power PLC Corporation, Philippines
- Central Electricity Authority - India
- Ministry of Mines - Canada
- Australian Commodity Traders Exchange
- Goldman Sachs - Singapore
- Bangladesh Power Developement Board
- Commonwealth Bank - Australia
- Energy Link Ltd, New Zealand
- Siam City Cement PLC, Thailand
- Heidelberg Cement - Germany
- Chamber of Mines of South Africa
- McConnell Dowell - Australia
- Jaiprakash Power Ventures ltd
- AsiaOL BioFuels Corp., Philippines
- CIMB Investment Bank - Malaysia
- Neyveli Lignite Corporation Ltd, - India
- The Treasury - Australian Government
- Videocon Industries ltd - India
- Indian Oil Corporation Limited
- Kapuas Tunggal Persada - Indonesia
- Energy Development Corp, Philippines
- GAC Shipping (India) Pvt Ltd
- Wood Mackenzie - Singapore
- Singapore Mercantile Exchange
- Kumho Petrochemical, South Korea
- Central Java Power - Indonesia
- TeaM Sual Corporation - Philippines
- European Bulk Services B.V. - Netherlands
- Krishnapatnam Port Company Ltd. - India
- Holcim Trading Pte Ltd - Singapore
- Lanco Infratech Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Indonesian Coal Mining Association
- Meralco Power Generation, Philippines
- The University of Queensland
- IEA Clean Coal Centre - UK
- Bulk Trading Sa - Switzerland
- TNB Fuel Sdn Bhd - Malaysia
- Orica Australia Pty. Ltd.
- Gujarat Electricity Regulatory Commission - India
- Tata Chemicals Ltd - India
- Bhushan Steel Limited - India
- Altura Mining Limited, Indonesia
- Rashtriya Ispat Nigam Limited - India
- Renaissance Capital - South Africa
- Kobexindo Tractors - Indoneisa
- Samtan Co., Ltd - South Korea
- Independent Power Producers Association of India
- Bukit Baiduri Energy - Indonesia
- Anglo American - United Kingdom
- London Commodity Brokers - England
- Chettinad Cement Corporation Ltd - India
- Baramulti Group, Indonesia
- IHS Mccloskey Coal Group - USA
- Rio Tinto Coal - Australia
- Vizag Seaport Private Limited - India
- Grasim Industreis Ltd - India
- Pendopo Energi Batubara - Indonesia
- Bukit Makmur.PT - Indonesia
- Ministry of Finance - Indonesia
- OPG Power Generation Pvt Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Sical Logistics Limited - India
- Antam Resourcindo - Indonesia
- Manunggal Multi Energi - Indonesia
- Parliament of New Zealand
- Economic Council, Georgia
- Planning Commission, India
- Thiess Contractors Indonesia
- Indogreen Group - Indonesia
- Port Waratah Coal Services - Australia
- Global Business Power Corporation, Philippines
- Wilmar Investment Holdings
- Orica Mining Services - Indonesia
- Siam City Cement - Thailand
- Eastern Coal Council - USA
- Borneo Indobara - Indonesia
- White Energy Company Limited
- Banpu Public Company Limited - Thailand
- Sinarmas Energy and Mining - Indonesia
- Latin American Coal - Colombia
- Malabar Cements Ltd - India
- Edison Trading Spa - Italy
- Toyota Tsusho Corporation, Japan
- Indo Tambangraya Megah - Indonesia
- Straits Asia Resources Limited - Singapore
- Kaltim Prima Coal - Indonesia
- Iligan Light & Power Inc, Philippines
- Alfred C Toepfer International GmbH - Germany
- Karaikal Port Pvt Ltd - India
- Africa Commodities Group - South Africa
- SMG Consultants - Indonesia
- Tamil Nadu electricity Board
- Bayan Resources Tbk. - Indonesia
- SN Aboitiz Power Inc, Philippines
- Sarangani Energy Corporation, Philippines
- Binh Thuan Hamico - Vietnam
- Salva Resources Pvt Ltd - India
- Trasteel International SA, Italy
- Sojitz Corporation - Japan
- Oldendorff Carriers - Singapore
- Electricity Generating Authority of Thailand
- Mercuria Energy - Indonesia
- Mintek Dendrill Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Marubeni Corporation - India
- Directorate Of Revenue Intelligence - India
- Kepco SPC Power Corporation, Philippines
- Timah Investasi Mineral - Indoneisa
- Deloitte Consulting - India
- Merrill Lynch Commodities Europe
- Kideco Jaya Agung - Indonesia
- Coalindo Energy - Indonesia
- India Bulls Power Limited - India
- Interocean Group of Companies - India
|
| |
| |
|
