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.
|
|
Tuesday, 04 December 12
NEWCASTLE PORT SHIPPED 55.88 PERCENT MORE COAL W/E 3 DECEMBER 2012
COALspot.com - Newcastle port in Australia has loaded 2,796,341 MT of thermal and coking coal for week ended 0700 hours 3 December 2012, Newca ...
Sunday, 02 December 12
YEAR 2013, YEAR OF SUPPLY OR DEMAND?
COALspot.com - Sub-Bit Indonesia coal swaps (FOB ) for average Q1 2013 delivery gained 2.87 & 0.83 percent MoM and WoW respectively ...
Saturday, 01 December 12
TIGHT SUPPLY, DEMAND PUSH INDO-INDIA SUPRAMAX FREIGHT RATES HIGHER - VISTAAR
COALspot.com - The freight market was mixed this week as cape and Panamax indices are closing softer.
The BDI was down 0.37 pct closing at 1,086 ...
Friday, 30 November 12
FUTURE TREND OF SECOND HAND SHIP VALUES PUZZLING SHIP OWNERS - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
One of the major challenges that ship owners are facing today is whether or not to invest in a second hand vessel at any given time. For instance, i ...
Friday, 30 November 12
IS INDONESIAN COAL INDUSTRY DEPENDS HEAVILY ON INDIA AND CHINA?
COALspot.com: Indonesia, the world largest multi grade coal exporter, shipped 35,143,587* tons of coal in October 2012. October exports are 19 ...
|
|
|
Showing 4476 to 4480 news of total 6871 |
|
 |
|
|
|
|
| |
|
 |
|
|
| |
|
- Port Waratah Coal Services - Australia
- GN Power Mariveles Coal Plant, Philippines
- Thai Mozambique Logistica
- Kumho Petrochemical, South Korea
- Kapuas Tunggal Persada - Indonesia
- Krishnapatnam Port Company Ltd. - India
- White Energy Company Limited
- MS Steel International - UAE
- The University of Queensland
- Karaikal Port Pvt Ltd - India
- Semirara Mining Corp, Philippines
- Formosa Plastics Group - Taiwan
- Bukit Makmur.PT - Indonesia
- Tamil Nadu electricity Board
- Oldendorff Carriers - Singapore
- Standard Chartered Bank - UAE
- London Commodity Brokers - England
- CIMB Investment Bank - Malaysia
- Dalmia Cement Bharat India
- San Jose City I Power Corp, Philippines
- Commonwealth Bank - Australia
- Bayan Resources Tbk. - Indonesia
- Global Business Power Corporation, Philippines
- Sojitz Corporation - Japan
- European Bulk Services B.V. - Netherlands
- Anglo American - United Kingdom
- Sindya Power Generating Company Private Ltd
- Malabar Cements Ltd - India
- International Coal Ventures Pvt Ltd - India
- Xindia Steels Limited - India
- Borneo Indobara - Indonesia
- Interocean Group of Companies - India
- SMG Consultants - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Karbindo Abesyapradhi - Indoneisa
- Ministry of Mines - Canada
- Power Finance Corporation Ltd., India
- ASAPP Information Group - India
- Parliament of New Zealand
- Videocon Industries ltd - India
- Coastal Gujarat Power Limited - India
- Samtan Co., Ltd - South Korea
- Australian Commodity Traders Exchange
- SMC Global Power, Philippines
- Indian Oil Corporation Limited
- Australian Coal Association
- Vedanta Resources Plc - India
- Ceylon Electricity Board - Sri Lanka
- Altura Mining Limited, Indonesia
- Jaiprakash Power Ventures ltd
- Toyota Tsusho Corporation, Japan
- Tata Chemicals Ltd - India
- GVK Power & Infra Limited - India
- Attock Cement Pakistan Limited
- Bangladesh Power Developement Board
- Larsen & Toubro Limited - India
- Rashtriya Ispat Nigam Limited - India
- Simpson Spence & Young - Indonesia
- Antam Resourcindo - Indonesia
- New Zealand Coal & Carbon
- Bahari Cakrawala Sebuku - Indonesia
- Parry Sugars Refinery, India
- Kalimantan Lumbung Energi - Indonesia
- Therma Luzon, Inc, Philippines
- Ministry of Transport, Egypt
- PTC India Limited - India
- Chamber of Mines of South Africa
- Uttam Galva Steels Limited - India
- VISA Power Limited - India
- Timah Investasi Mineral - Indoneisa
- Kepco SPC Power Corporation, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Energy Development Corp, Philippines
- Indian Energy Exchange, India
- CNBM International Corporation - China
- Deloitte Consulting - India
- Baramulti Group, Indonesia
- Economic Council, Georgia
- Indonesian Coal Mining Association
- Semirara Mining and Power Corporation, Philippines
- Mjunction Services Limited - India
- Orica Mining Services - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Thiess Contractors Indonesia
- McConnell Dowell - Australia
- Heidelberg Cement - Germany
- Kideco Jaya Agung - Indonesia
- Indika Energy - Indonesia
- Kaltim Prima Coal - Indonesia
- Central Java Power - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Posco Energy - South Korea
- Grasim Industreis Ltd - India
- Intertek Mineral Services - Indonesia
- AsiaOL BioFuels Corp., Philippines
- PowerSource Philippines DevCo
- Meralco Power Generation, Philippines
- South Luzon Thermal Energy Corporation
- Georgia Ports Authority, United States
- Rio Tinto Coal - Australia
- Iligan Light & Power Inc, Philippines
- India Bulls Power Limited - India
- Pendopo Energi Batubara - Indonesia
- Mercuria Energy - Indonesia
- Singapore Mercantile Exchange
- GMR Energy Limited - India
- Wood Mackenzie - Singapore
- Bukit Baiduri Energy - Indonesia
- Gujarat Sidhee Cement - India
- Sree Jayajothi Cements Limited - India
- Coalindo Energy - Indonesia
- Price Waterhouse Coopers - Russia
- Cigading International Bulk Terminal - Indonesia
- Globalindo Alam Lestari - Indonesia
- IEA Clean Coal Centre - UK
- Offshore Bulk Terminal Pte Ltd, Singapore
- Planning Commission, India
- Makarim & Taira - Indonesia
- Metalloyd Limited - United Kingdom
- Billiton Holdings Pty Ltd - Australia
- Manunggal Multi Energi - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Renaissance Capital - South Africa
- Trasteel International SA, Italy
- Orica Australia Pty. Ltd.
- Salva Resources Pvt Ltd - India
- The Treasury - Australian Government
- Bukit Asam (Persero) Tbk - Indonesia
- Bhatia International Limited - India
- Mintek Dendrill Indonesia
- Agrawal Coal Company - India
- Sakthi Sugars Limited - India
- TeaM Sual Corporation - Philippines
- Siam City Cement PLC, Thailand
- Electricity Generating Authority of Thailand
- Straits Asia Resources Limited - Singapore
- Neyveli Lignite Corporation Ltd, - India
- Cement Manufacturers Association - India
- SN Aboitiz Power Inc, Philippines
- Ambuja Cements Ltd - India
- Global Green Power PLC Corporation, Philippines
- Meenaskhi Energy Private Limited - India
- Sinarmas Energy and Mining - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Barasentosa Lestari - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Independent Power Producers Association of India
- Binh Thuan Hamico - Vietnam
- Savvy Resources Ltd - HongKong
- Kartika Selabumi Mining - Indonesia
- Sical Logistics Limited - India
- Bulk Trading Sa - Switzerland
- Bhoruka Overseas - Indonesia
- Bharathi Cement Corporation - India
- Siam City Cement - Thailand
- Banpu Public Company Limited - Thailand
- Kohat Cement Company Ltd. - Pakistan
- Bhushan Steel Limited - India
- LBH Netherlands Bv - Netherlands
- Africa Commodities Group - South Africa
- Indogreen Group - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Coal and Oil Company - UAE
- Jorong Barutama Greston.PT - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Kobexindo Tractors - Indoneisa
- Electricity Authority, New Zealand
- Ministry of Finance - Indonesia
- Petron Corporation, Philippines
- OPG Power Generation Pvt Ltd - India
- Marubeni Corporation - India
- Essar Steel Hazira Ltd - India
- Chettinad Cement Corporation Ltd - India
- Eastern Coal Council - USA
- Goldman Sachs - Singapore
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Maheswari Brothers Coal Limited - India
- Mercator Lines Limited - India
- Lanco Infratech Ltd - India
- Indo Tambangraya Megah - Indonesia
- The State Trading Corporation of India Ltd
- Aboitiz Power Corporation - Philippines
- Medco Energi Mining Internasional
- Energy Link Ltd, New Zealand
- Vizag Seaport Private Limited - India
- Minerals Council of Australia
- Leighton Contractors Pty Ltd - Australia
- Romanian Commodities Exchange
- Central Electricity Authority - India
- Eastern Energy - Thailand
- Ind-Barath Power Infra Limited - India
- Merrill Lynch Commodities Europe
- Latin American Coal - Colombia
- GAC Shipping (India) Pvt Ltd
- Wilmar Investment Holdings
- Directorate Of Revenue Intelligence - India
- PNOC Exploration Corporation - Philippines
- Miang Besar Coal Terminal - Indonesia
- Madhucon Powers Ltd - India
- Edison Trading Spa - Italy
- ICICI Bank Limited - India
- Global Coal Blending Company Limited - Australia
- Holcim Trading Pte Ltd - Singapore
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Carbofer General Trading SA - India
- IHS Mccloskey Coal Group - USA
- PetroVietnam Power Coal Import and Supply Company
- Sarangani Energy Corporation, Philippines
- Star Paper Mills Limited - India
- Jindal Steel & Power Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Aditya Birla Group - India
- Pipit Mutiara Jaya. PT, Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Riau Bara Harum - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Alfred C Toepfer International GmbH - Germany
|
| |
| |
|
