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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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Sunday, 08 January 23
ELEVATED COAL PRICE A DRAG ON MARGINS OF DOMESTIC BASE METAL PLAYERS: ICRA
The increased price of coal continue to be a drag on the margin of domestic base metal players with no immediate relief in sight, rating agency ICR ...
Monday, 02 January 23
CHINA’S COAL CONSUMPTION TO PEAK BY 2035: REPORT - REUTERS
China’s primary energy consumption is likely to peak at nearly 6.03 billion tonnes of standard coal between 2030 and 2035, refining giant Chi ...
Thursday, 29 December 22
INDIA'S COAL DEMAND LIKELY TO PEAK BETWEEN 2030-2035: MINISTER - ANI
The demand for coal in India will continue and is likely to peak between 2030-2035, Union Minister of Coal, Mines, and Parliamentary Affairs Pralha ...
Thursday, 29 December 22
RIO TINTO AND PARTNERS COULD RECEIVE AS MUCH AS $450M IN GOVERNMENT COMPENSATION FOR COAL PRICE CAP - THE GUARDIAN
Compensation payments for the Gladstone power plant remain the sticking point in the federal government’s coal price cap compensation negotia ...
Wednesday, 28 December 22
MARKET INSIGHT - INTERMODAL
The United Nations Conference on Trade and Development (UNCTAD) published a Global Trade Update on December 13th highlighting that global trade wou ...
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- Ministry of Transport, Egypt
- Borneo Indobara - Indonesia
- Merrill Lynch Commodities Europe
- Tamil Nadu electricity Board
- IEA Clean Coal Centre - UK
- Commonwealth Bank - Australia
- Manunggal Multi Energi - Indonesia
- Essar Steel Hazira Ltd - India
- Africa Commodities Group - South Africa
- Aditya Birla Group - India
- Deloitte Consulting - India
- Rio Tinto Coal - Australia
- ASAPP Information Group - India
- Aboitiz Power Corporation - Philippines
- Oldendorff Carriers - Singapore
- Australian Coal Association
- Bukit Asam (Persero) Tbk - Indonesia
- The State Trading Corporation of India Ltd
- Agrawal Coal Company - India
- Sojitz Corporation - Japan
- Siam City Cement PLC, Thailand
- Central Java Power - Indonesia
- Toyota Tsusho Corporation, Japan
- White Energy Company Limited
- Mjunction Services Limited - India
- LBH Netherlands Bv - Netherlands
- GAC Shipping (India) Pvt Ltd
- Star Paper Mills Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Ceylon Electricity Board - Sri Lanka
- Dalmia Cement Bharat India
- Chettinad Cement Corporation Ltd - India
- Anglo American - United Kingdom
- Larsen & Toubro Limited - India
- Madhucon Powers Ltd - India
- Posco Energy - South Korea
- Jaiprakash Power Ventures ltd
- Jorong Barutama Greston.PT - Indonesia
- Antam Resourcindo - Indonesia
- Sree Jayajothi Cements Limited - India
- Siam City Cement - Thailand
- Trasteel International SA, Italy
- Singapore Mercantile Exchange
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Timah Investasi Mineral - Indoneisa
- Electricity Authority, New Zealand
- Orica Australia Pty. Ltd.
- Jindal Steel & Power Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Bharathi Cement Corporation - India
- Binh Thuan Hamico - Vietnam
- Indonesian Coal Mining Association
- Videocon Industries ltd - India
- Parry Sugars Refinery, India
- Price Waterhouse Coopers - Russia
- Attock Cement Pakistan Limited
- New Zealand Coal & Carbon
- Bahari Cakrawala Sebuku - Indonesia
- Independent Power Producers Association of India
- Pipit Mutiara Jaya. PT, Indonesia
- Miang Besar Coal Terminal - Indonesia
- Bulk Trading Sa - Switzerland
- Maheswari Brothers Coal Limited - India
- Riau Bara Harum - Indonesia
- Tata Chemicals Ltd - India
- Ambuja Cements Ltd - India
- Thiess Contractors Indonesia
- Ministry of Mines - Canada
- Global Coal Blending Company Limited - Australia
- Meralco Power Generation, Philippines
- Carbofer General Trading SA - India
- Global Business Power Corporation, Philippines
- Sakthi Sugars Limited - India
- Straits Asia Resources Limited - Singapore
- Bangladesh Power Developement Board
- Samtan Co., Ltd - South Korea
- Eastern Coal Council - USA
- Eastern Energy - Thailand
- CIMB Investment Bank - Malaysia
- Karbindo Abesyapradhi - Indoneisa
- Krishnapatnam Port Company Ltd. - India
- Grasim Industreis Ltd - India
- Romanian Commodities Exchange
- PetroVietnam Power Coal Import and Supply Company
- South Luzon Thermal Energy Corporation
- GN Power Mariveles Coal Plant, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Coalindo Energy - Indonesia
- London Commodity Brokers - England
- India Bulls Power Limited - India
- Meenaskhi Energy Private Limited - India
- Coal and Oil Company - UAE
- Neyveli Lignite Corporation Ltd, - India
- Power Finance Corporation Ltd., India
- Vijayanagar Sugar Pvt Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Georgia Ports Authority, United States
- Kobexindo Tractors - Indoneisa
- Metalloyd Limited - United Kingdom
- Savvy Resources Ltd - HongKong
- Indo Tambangraya Megah - Indonesia
- Minerals Council of Australia
- Iligan Light & Power Inc, Philippines
- PNOC Exploration Corporation - Philippines
- Bhatia International Limited - India
- PowerSource Philippines DevCo
- Standard Chartered Bank - UAE
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Indogreen Group - Indonesia
- Kideco Jaya Agung - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Indika Energy - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Medco Energi Mining Internasional
- Baramulti Group, Indonesia
- Energy Development Corp, Philippines
- GMR Energy Limited - India
- Kumho Petrochemical, South Korea
- Rashtriya Ispat Nigam Limited - India
- Formosa Plastics Group - Taiwan
- Port Waratah Coal Services - Australia
- Intertek Mineral Services - Indonesia
- Interocean Group of Companies - India
- Kapuas Tunggal Persada - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Globalindo Alam Lestari - Indonesia
- ICICI Bank Limited - India
- Therma Luzon, Inc, Philippines
- The Treasury - Australian Government
- Electricity Generating Authority of Thailand
- Lanco Infratech Ltd - India
- Xindia Steels Limited - India
- Karaikal Port Pvt Ltd - India
- San Jose City I Power Corp, Philippines
- SN Aboitiz Power Inc, Philippines
- Bhoruka Overseas - Indonesia
- Bukit Makmur.PT - Indonesia
- Bayan Resources Tbk. - Indonesia
- Ministry of Finance - Indonesia
- Vizag Seaport Private Limited - India
- Semirara Mining Corp, Philippines
- Indian Oil Corporation Limited
- PTC India Limited - India
- Barasentosa Lestari - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Kalimantan Lumbung Energi - Indonesia
- Thai Mozambique Logistica
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Edison Trading Spa - Italy
- Semirara Mining and Power Corporation, Philippines
- Global Green Power PLC Corporation, Philippines
- Bhushan Steel Limited - India
- AsiaOL BioFuels Corp., Philippines
- TeaM Sual Corporation - Philippines
- Bukit Baiduri Energy - Indonesia
- IHS Mccloskey Coal Group - USA
- Ind-Barath Power Infra Limited - India
- Coastal Gujarat Power Limited - India
- Kaltim Prima Coal - Indonesia
- Sindya Power Generating Company Private Ltd
- Billiton Holdings Pty Ltd - Australia
- Offshore Bulk Terminal Pte Ltd, Singapore
- CNBM International Corporation - China
- Central Electricity Authority - India
- Latin American Coal - Colombia
- Directorate Of Revenue Intelligence - India
- Energy Link Ltd, New Zealand
- Wood Mackenzie - Singapore
- Malabar Cements Ltd - India
- Planning Commission, India
- Vedanta Resources Plc - India
- Goldman Sachs - Singapore
- Renaissance Capital - South Africa
- Holcim Trading Pte Ltd - Singapore
- Kepco SPC Power Corporation, Philippines
- SMC Global Power, Philippines
- Australian Commodity Traders Exchange
- Pendopo Energi Batubara - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Altura Mining Limited, Indonesia
- Orica Mining Services - Indonesia
- McConnell Dowell - Australia
- Chamber of Mines of South Africa
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- VISA Power Limited - India
- OPG Power Generation Pvt Ltd - India
- Mercator Lines Limited - India
- Salva Resources Pvt Ltd - India
- Uttam Galva Steels Limited - India
- Banpu Public Company Limited - Thailand
- Kartika Selabumi Mining - Indonesia
- Parliament of New Zealand
- Gujarat Sidhee Cement - India
- The University of Queensland
- Sical Logistics Limited - India
- Makarim & Taira - Indonesia
- Cement Manufacturers Association - India
- Mintek Dendrill Indonesia
- Mercuria Energy - Indonesia
- MS Steel International - UAE
- Indian Energy Exchange, India
- Heidelberg Cement - Germany
- Petron Corporation, Philippines
- Simpson Spence & Young - Indonesia
- Sinarmas Energy and Mining - Indonesia
- GVK Power & Infra Limited - India
- European Bulk Services B.V. - Netherlands
- Wilmar Investment Holdings
- Economic Council, Georgia
- Sarangani Energy Corporation, Philippines
- Cigading International Bulk Terminal - Indonesia
- SMG Consultants - Indonesia
- International Coal Ventures Pvt Ltd - India
- Marubeni Corporation - India
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