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, 09 October 12
REALM RESOURCES RECOMMENCES DRILLING AT KATINGAN RIA COAL PROJECT
COALspot.com : Realm Resources Ltd. (ASX) has announced that it has commenced work on the phase three technical programme at its Katingan Project in ...
Sunday, 07 October 12
INDONESIAN GOVERNMENT DECLARED HBA FELL AGAIN IN OCTOBER
COALspot.com - The Indonesian government’s declared coal reference price has lost US$ 0.17 per MT M-M.
The monthly coal referen ...
Saturday, 06 October 12
CFR SOUTH CHINA COAL SWAPS FOR DECEMBER'13 DELIVERY GAINED 1.3 PERCENT W-W
COALspot.com - Sub-Bit Indonesia coal swaps (FOB ) for December 2012 delivery gained 0.098 percent and 0.164 percent W-W and D-D respectively o ...
Saturday, 06 October 12
FREIGHT MARKET IS LIKELY TO PICK AFTER THE HOLIDAYS IN CHINA - VISTAAR
COALspot.com - The freight market appeared to be seeing some increase BDI up by 14.23 pct closing at 875 points. The Cape and Panamax index also saw ...
Thursday, 04 October 12
CAPESIZE : IN SPITE OF THE HOLIDAYS IN CHINA, RATES ARE CLIMBING UP - FEARNLEYS AS
Handy
Atlantic market remains quiet due to lack of cargoes and more supply of ships. Rates from Continent to east Med were around USD 13k and Black ...
|
|
|
Showing 4546 to 4550 news of total 6871 |
|
 |
|
|
|
|
| |
|
 |
|
|
| |
|
- Dalmia Cement Bharat India
- GN Power Mariveles Coal Plant, Philippines
- PTC India Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Electricity Authority, New Zealand
- Xindia Steels Limited - India
- Bharathi Cement Corporation - India
- Timah Investasi Mineral - Indoneisa
- The Treasury - Australian Government
- Semirara Mining and Power Corporation, Philippines
- Eastern Coal Council - USA
- Asmin Koalindo Tuhup - Indonesia
- Indika Energy - Indonesia
- Sindya Power Generating Company Private Ltd
- European Bulk Services B.V. - Netherlands
- Globalindo Alam Lestari - Indonesia
- CIMB Investment Bank - Malaysia
- VISA Power Limited - India
- Siam City Cement - Thailand
- Anglo American - United Kingdom
- Kepco SPC Power Corporation, Philippines
- Sree Jayajothi Cements Limited - India
- Lanco Infratech Ltd - India
- PowerSource Philippines DevCo
- Petrochimia International Co. Ltd.- Taiwan
- Krishnapatnam Port Company Ltd. - India
- Global Coal Blending Company Limited - Australia
- Marubeni Corporation - India
- Formosa Plastics Group - Taiwan
- Bhatia International Limited - India
- Kaltim Prima Coal - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Ambuja Cements Ltd - India
- Intertek Mineral Services - Indonesia
- Africa Commodities Group - South Africa
- Rio Tinto Coal - Australia
- Planning Commission, India
- Cigading International Bulk Terminal - Indonesia
- Coal and Oil Company - UAE
- Gujarat Sidhee Cement - India
- Deloitte Consulting - India
- Holcim Trading Pte Ltd - Singapore
- ASAPP Information Group - India
- Star Paper Mills Limited - India
- Goldman Sachs - Singapore
- Rashtriya Ispat Nigam Limited - India
- Port Waratah Coal Services - Australia
- Commonwealth Bank - Australia
- Indian Oil Corporation Limited
- Baramulti Group, Indonesia
- Mercator Lines Limited - India
- Kapuas Tunggal Persada - Indonesia
- McConnell Dowell - Australia
- Bayan Resources Tbk. - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Neyveli Lignite Corporation Ltd, - India
- Meralco Power Generation, Philippines
- Directorate Of Revenue Intelligence - India
- Latin American Coal - Colombia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Interocean Group of Companies - India
- Vedanta Resources Plc - India
- Central Electricity Authority - India
- Trasteel International SA, Italy
- Bahari Cakrawala Sebuku - Indonesia
- Banpu Public Company Limited - Thailand
- Straits Asia Resources Limited - Singapore
- Indo Tambangraya Megah - Indonesia
- Heidelberg Cement - Germany
- Semirara Mining Corp, Philippines
- Bukit Baiduri Energy - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Wilmar Investment Holdings
- Ind-Barath Power Infra Limited - India
- Mjunction Services Limited - India
- CNBM International Corporation - China
- Parliament of New Zealand
- MS Steel International - UAE
- Aditya Birla Group - India
- The State Trading Corporation of India Ltd
- GAC Shipping (India) Pvt Ltd
- Larsen & Toubro Limited - India
- Australian Coal Association
- GVK Power & Infra Limited - India
- Parry Sugars Refinery, India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Billiton Holdings Pty Ltd - Australia
- Kalimantan Lumbung Energi - Indonesia
- Bhoruka Overseas - Indonesia
- OPG Power Generation Pvt Ltd - India
- Thiess Contractors Indonesia
- Economic Council, Georgia
- Power Finance Corporation Ltd., India
- Malabar Cements Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Renaissance Capital - South Africa
- Pendopo Energi Batubara - Indonesia
- PNOC Exploration Corporation - Philippines
- Indogreen Group - Indonesia
- Meenaskhi Energy Private Limited - India
- Grasim Industreis Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Agrawal Coal Company - India
- Bangladesh Power Developement Board
- Price Waterhouse Coopers - Russia
- Maharashtra Electricity Regulatory Commission - India
- Kartika Selabumi Mining - Indonesia
- Wood Mackenzie - Singapore
- SN Aboitiz Power Inc, Philippines
- ICICI Bank Limited - India
- Chettinad Cement Corporation Ltd - India
- Bukit Makmur.PT - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- SMG Consultants - Indonesia
- Posco Energy - South Korea
- Kohat Cement Company Ltd. - Pakistan
- Coalindo Energy - Indonesia
- Salva Resources Pvt Ltd - India
- Samtan Co., Ltd - South Korea
- Videocon Industries ltd - India
- Orica Australia Pty. Ltd.
- Edison Trading Spa - Italy
- SMC Global Power, Philippines
- Kideco Jaya Agung - Indonesia
- Vizag Seaport Private Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Tamil Nadu electricity Board
- Indonesian Coal Mining Association
- Jorong Barutama Greston.PT - Indonesia
- Uttam Galva Steels Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Romanian Commodities Exchange
- Barasentosa Lestari - Indonesia
- The University of Queensland
- Thai Mozambique Logistica
- Pipit Mutiara Jaya. PT, Indonesia
- Coastal Gujarat Power Limited - India
- Tata Chemicals Ltd - India
- Manunggal Multi Energi - Indonesia
- Aboitiz Power Corporation - Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Cement Manufacturers Association - India
- India Bulls Power Limited - India
- Borneo Indobara - Indonesia
- White Energy Company Limited
- Jindal Steel & Power Ltd - India
- Simpson Spence & Young - Indonesia
- Sojitz Corporation - Japan
- Chamber of Mines of South Africa
- Antam Resourcindo - Indonesia
- IHS Mccloskey Coal Group - USA
- South Luzon Thermal Energy Corporation
- Altura Mining Limited, Indonesia
- Australian Commodity Traders Exchange
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Savvy Resources Ltd - HongKong
- GMR Energy Limited - India
- Global Green Power PLC Corporation, Philippines
- Medco Energi Mining Internasional
- Georgia Ports Authority, United States
- IEA Clean Coal Centre - UK
- Jaiprakash Power Ventures ltd
- Global Business Power Corporation, Philippines
- Siam City Cement PLC, Thailand
- Madhucon Powers Ltd - India
- Attock Cement Pakistan Limited
- Makarim & Taira - Indonesia
- Minerals Council of Australia
- London Commodity Brokers - England
- Metalloyd Limited - United Kingdom
- Bulk Trading Sa - Switzerland
- Ministry of Transport, Egypt
- Iligan Light & Power Inc, Philippines
- Mintek Dendrill Indonesia
- Gujarat Electricity Regulatory Commission - India
- Binh Thuan Hamico - Vietnam
- Sinarmas Energy and Mining - Indonesia
- LBH Netherlands Bv - Netherlands
- New Zealand Coal & Carbon
- Ministry of Finance - Indonesia
- Maheswari Brothers Coal Limited - India
- Central Java Power - Indonesia
- Kobexindo Tractors - Indoneisa
- TeaM Sual Corporation - Philippines
- Therma Luzon, Inc, Philippines
- Leighton Contractors Pty Ltd - Australia
- Singapore Mercantile Exchange
- Standard Chartered Bank - UAE
- Karaikal Port Pvt Ltd - India
- Oldendorff Carriers - Singapore
- Bhushan Steel Limited - India
- Ministry of Mines - Canada
- International Coal Ventures Pvt Ltd - India
- Sakthi Sugars Limited - India
- Essar Steel Hazira Ltd - India
- Toyota Tsusho Corporation, Japan
- TNB Fuel Sdn Bhd - Malaysia
- Petron Corporation, Philippines
- Energy Link Ltd, New Zealand
- Riau Bara Harum - Indonesia
- Kumho Petrochemical, South Korea
- Gujarat Mineral Development Corp Ltd - India
- Mercuria Energy - Indonesia
- Independent Power Producers Association of India
- Sarangani Energy Corporation, Philippines
- Eastern Energy - Thailand
- San Jose City I Power Corp, Philippines
- Carbofer General Trading SA - India
- Orica Mining Services - Indonesia
- Electricity Generating Authority of Thailand
- Indian Energy Exchange, India
- Sical Logistics Limited - India
- Merrill Lynch Commodities Europe
- Energy Development Corp, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
|
| |
| |
|
