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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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- Georgia Ports Authority, United States
- Jaiprakash Power Ventures ltd
- Renaissance Capital - South Africa
- San Jose City I Power Corp, Philippines
- Africa Commodities Group - South Africa
- GAC Shipping (India) Pvt Ltd
- Carbofer General Trading SA - India
- Salva Resources Pvt Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Central Java Power - Indonesia
- Directorate Of Revenue Intelligence - India
- Baramulti Group, Indonesia
- Posco Energy - South Korea
- Sindya Power Generating Company Private Ltd
- Attock Cement Pakistan Limited
- Petrochimia International Co. Ltd.- Taiwan
- Straits Asia Resources Limited - Singapore
- Vizag Seaport Private Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Siam City Cement PLC, Thailand
- Kapuas Tunggal Persada - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Savvy Resources Ltd - HongKong
- SN Aboitiz Power Inc, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Rashtriya Ispat Nigam Limited - India
- Borneo Indobara - Indonesia
- Electricity Authority, New Zealand
- Larsen & Toubro Limited - India
- Mercator Lines Limited - India
- Neyveli Lignite Corporation Ltd, - India
- CIMB Investment Bank - Malaysia
- Sinarmas Energy and Mining - Indonesia
- Power Finance Corporation Ltd., India
- Toyota Tsusho Corporation, Japan
- Sojitz Corporation - Japan
- Coalindo Energy - Indonesia
- Intertek Mineral Services - Indonesia
- Iligan Light & Power Inc, Philippines
- Miang Besar Coal Terminal - Indonesia
- Bukit Makmur.PT - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Orica Mining Services - Indonesia
- Price Waterhouse Coopers - Russia
- Bhushan Steel Limited - India
- Vedanta Resources Plc - India
- Parry Sugars Refinery, India
- Sical Logistics Limited - India
- Orica Australia Pty. Ltd.
- Trasteel International SA, Italy
- Karbindo Abesyapradhi - Indoneisa
- GMR Energy Limited - India
- Wood Mackenzie - Singapore
- Kartika Selabumi Mining - Indonesia
- Bhatia International Limited - India
- Riau Bara Harum - Indonesia
- Romanian Commodities Exchange
- Asmin Koalindo Tuhup - Indonesia
- Coal and Oil Company - UAE
- Wilmar Investment Holdings
- Oldendorff Carriers - Singapore
- Grasim Industreis Ltd - India
- Agrawal Coal Company - India
- Kepco SPC Power Corporation, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Malabar Cements Ltd - India
- PNOC Exploration Corporation - Philippines
- Lanco Infratech Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- International Coal Ventures Pvt Ltd - India
- Indian Energy Exchange, India
- Timah Investasi Mineral - Indoneisa
- Gujarat Sidhee Cement - India
- Pendopo Energi Batubara - Indonesia
- Makarim & Taira - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Medco Energi Mining Internasional
- Jindal Steel & Power Ltd - India
- Antam Resourcindo - Indonesia
- Anglo American - United Kingdom
- Minerals Council of Australia
- Planning Commission, India
- SMG Consultants - Indonesia
- ICICI Bank Limited - India
- Dalmia Cement Bharat India
- Bayan Resources Tbk. - Indonesia
- Bukit Baiduri Energy - Indonesia
- Globalindo Alam Lestari - Indonesia
- Coastal Gujarat Power Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- OPG Power Generation Pvt Ltd - India
- Thiess Contractors Indonesia
- Formosa Plastics Group - Taiwan
- Manunggal Multi Energi - Indonesia
- Australian Commodity Traders Exchange
- Chettinad Cement Corporation Ltd - India
- Holcim Trading Pte Ltd - Singapore
- Rio Tinto Coal - Australia
- Bank of Tokyo Mitsubishi UFJ Ltd
- The Treasury - Australian Government
- Ministry of Finance - Indonesia
- Sakthi Sugars Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Tamil Nadu electricity Board
- Alfred C Toepfer International GmbH - Germany
- Sree Jayajothi Cements Limited - India
- Independent Power Producers Association of India
- Therma Luzon, Inc, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Videocon Industries ltd - India
- Indian Oil Corporation Limited
- Star Paper Mills Limited - India
- Singapore Mercantile Exchange
- Bukit Asam (Persero) Tbk - Indonesia
- Metalloyd Limited - United Kingdom
- SMC Global Power, Philippines
- Eastern Energy - Thailand
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Sarangani Energy Corporation, Philippines
- Bharathi Cement Corporation - India
- Altura Mining Limited, Indonesia
- Latin American Coal - Colombia
- Indogreen Group - Indonesia
- PowerSource Philippines DevCo
- Krishnapatnam Port Company Ltd. - India
- Uttam Galva Steels Limited - India
- AsiaOL BioFuels Corp., Philippines
- Commonwealth Bank - Australia
- Kaltim Prima Coal - Indonesia
- McConnell Dowell - Australia
- Aditya Birla Group - India
- Energy Development Corp, Philippines
- Meenaskhi Energy Private Limited - India
- IHS Mccloskey Coal Group - USA
- Ambuja Cements Ltd - India
- Merrill Lynch Commodities Europe
- Global Green Power PLC Corporation, Philippines
- ASAPP Information Group - India
- Kobexindo Tractors - Indoneisa
- The State Trading Corporation of India Ltd
- Mercuria Energy - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Energy Link Ltd, New Zealand
- Simpson Spence & Young - Indonesia
- Eastern Coal Council - USA
- Mjunction Services Limited - India
- Samtan Co., Ltd - South Korea
- TNB Fuel Sdn Bhd - Malaysia
- Barasentosa Lestari - Indonesia
- PTC India Limited - India
- Bulk Trading Sa - Switzerland
- Tata Chemicals Ltd - India
- LBH Netherlands Bv - Netherlands
- Interocean Group of Companies - India
- Global Business Power Corporation, Philippines
- Edison Trading Spa - Italy
- VISA Power Limited - India
- Cigading International Bulk Terminal - Indonesia
- Karaikal Port Pvt Ltd - India
- Central Electricity Authority - India
- Aboitiz Power Corporation - Philippines
- Essar Steel Hazira Ltd - India
- Goldman Sachs - Singapore
- IEA Clean Coal Centre - UK
- European Bulk Services B.V. - Netherlands
- Parliament of New Zealand
- Semirara Mining Corp, Philippines
- Ministry of Mines - Canada
- New Zealand Coal & Carbon
- PetroVietnam Power Coal Import and Supply Company
- Indo Tambangraya Megah - Indonesia
- London Commodity Brokers - England
- CNBM International Corporation - China
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Indika Energy - Indonesia
- Chamber of Mines of South Africa
- The University of Queensland
- Meralco Power Generation, Philippines
- Binh Thuan Hamico - Vietnam
- Bhoruka Overseas - Indonesia
- Australian Coal Association
- Bangladesh Power Developement Board
- Standard Chartered Bank - UAE
- Kumho Petrochemical, South Korea
- Thai Mozambique Logistica
- Cement Manufacturers Association - India
- White Energy Company Limited
- India Bulls Power Limited - India
- Petron Corporation, Philippines
- GVK Power & Infra Limited - India
- Port Waratah Coal Services - Australia
- Deloitte Consulting - India
- Electricity Generating Authority of Thailand
- Mintek Dendrill Indonesia
- Siam City Cement - Thailand
- Economic Council, Georgia
- TeaM Sual Corporation - Philippines
- Heidelberg Cement - Germany
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Maheswari Brothers Coal Limited - India
- Indonesian Coal Mining Association
- Xindia Steels Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Global Coal Blending Company Limited - Australia
- South Luzon Thermal Energy Corporation
- Ind-Barath Power Infra Limited - India
- Semirara Mining and Power Corporation, Philippines
- MS Steel International - UAE
- Leighton Contractors Pty Ltd - Australia
- Gujarat Electricity Regulatory Commission - India
- Kalimantan Lumbung Energi - Indonesia
- Ministry of Transport, Egypt
- Banpu Public Company Limited - Thailand
- Madhucon Powers Ltd - India
- Marubeni Corporation - India
- Kideco Jaya Agung - Indonesia
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