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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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Tuesday, 13 December 22
YANCOAL AUSTRALIA TO PREPAY $459 MLN DEBT AS RECORD COAL PRICES BOOST CASHFLOWS - REUTERS
Coal miner Yancoal Australia Ltd. said on Friday it intended to prepay $459 million of its debt on or around Dec. 16, as elevated coal prices were ...
Tuesday, 13 December 22
WHY COAL LEADS THE RISE IN COMMODITIES THIS YEAR - MARKETWATCH
This year marked a resurgence for coal, often known — and loathed — by environmentalists as the dirtiest energy source, with prices mor ...
Thursday, 08 December 22
BIMCO TO REVISE WAR RISK CLAUSES
Work to revise the BIMCO War Cancellation Clause 2004, the BIMCO War Risks Clause for Time Chartering 2013 (CONWARTIME 2013) and the BIMCO War Risk ...
Thursday, 08 December 22
COAL ROYALTY PAYMENTS BOOST AUSTRALIAN STATE'S BUDGET FORECAST - REUTERS
Australia’s Queensland state on Wednesday forecast a record surplus for the current financial year, largely driven by higher royalty payments ...
Wednesday, 07 December 22
MARKET INSIGHT - INTERMODAL
China’s coal imports from January to October were 230.1m mt, a decrease of around 10.7% y-o-y (2021 totalled 323.2m mt). The question is if t ...
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- The Treasury - Australian Government
- South Luzon Thermal Energy Corporation
- Billiton Holdings Pty Ltd - Australia
- Minerals Council of Australia
- Singapore Mercantile Exchange
- San Jose City I Power Corp, Philippines
- Romanian Commodities Exchange
- Goldman Sachs - Singapore
- Madhucon Powers Ltd - India
- Tamil Nadu electricity Board
- Ministry of Transport, Egypt
- Mercuria Energy - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Independent Power Producers Association of India
- Pendopo Energi Batubara - Indonesia
- SN Aboitiz Power Inc, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Bukit Baiduri Energy - Indonesia
- Jaiprakash Power Ventures ltd
- Africa Commodities Group - South Africa
- Kaltim Prima Coal - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Coal and Oil Company - UAE
- Semirara Mining Corp, Philippines
- CIMB Investment Bank - Malaysia
- Leighton Contractors Pty Ltd - Australia
- Gujarat Electricity Regulatory Commission - India
- Sarangani Energy Corporation, Philippines
- Global Business Power Corporation, Philippines
- Standard Chartered Bank - UAE
- Larsen & Toubro Limited - India
- Meenaskhi Energy Private Limited - India
- Indogreen Group - Indonesia
- Orica Australia Pty. Ltd.
- Bhushan Steel Limited - India
- Australian Coal Association
- Parliament of New Zealand
- Petron Corporation, Philippines
- Kumho Petrochemical, South Korea
- Energy Development Corp, Philippines
- Bayan Resources Tbk. - Indonesia
- Sree Jayajothi Cements Limited - India
- Bangladesh Power Developement Board
- Eastern Energy - Thailand
- Banpu Public Company Limited - Thailand
- MS Steel International - UAE
- Simpson Spence & Young - Indonesia
- Makarim & Taira - Indonesia
- Bukit Makmur.PT - Indonesia
- Grasim Industreis Ltd - India
- Heidelberg Cement - Germany
- Metalloyd Limited - United Kingdom
- Gujarat Sidhee Cement - India
- Port Waratah Coal Services - Australia
- Latin American Coal - Colombia
- Anglo American - United Kingdom
- Directorate Of Revenue Intelligence - India
- Power Finance Corporation Ltd., India
- Coastal Gujarat Power Limited - India
- Ministry of Mines - Canada
- Global Coal Blending Company Limited - Australia
- Central Java Power - Indonesia
- Energy Link Ltd, New Zealand
- Lanco Infratech Ltd - India
- Jindal Steel & Power Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Australian Commodity Traders Exchange
- The University of Queensland
- Indika Energy - Indonesia
- Intertek Mineral Services - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Coalindo Energy - Indonesia
- Uttam Galva Steels Limited - India
- OPG Power Generation Pvt Ltd - India
- Indonesian Coal Mining Association
- Kideco Jaya Agung - Indonesia
- Therma Luzon, Inc, Philippines
- Kepco SPC Power Corporation, Philippines
- Kartika Selabumi Mining - Indonesia
- Altura Mining Limited, Indonesia
- Formosa Plastics Group - Taiwan
- Posco Energy - South Korea
- Rashtriya Ispat Nigam Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Merrill Lynch Commodities Europe
- Bhoruka Overseas - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Central Electricity Authority - India
- Vizag Seaport Private Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- VISA Power Limited - India
- Maheswari Brothers Coal Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Eastern Coal Council - USA
- SMG Consultants - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- GVK Power & Infra Limited - India
- Straits Asia Resources Limited - Singapore
- CNBM International Corporation - China
- Parry Sugars Refinery, India
- Mjunction Services Limited - India
- Sindya Power Generating Company Private Ltd
- Wood Mackenzie - Singapore
- Neyveli Lignite Corporation Ltd, - India
- Oldendorff Carriers - Singapore
- Siam City Cement PLC, Thailand
- Sical Logistics Limited - India
- Georgia Ports Authority, United States
- Vedanta Resources Plc - India
- Savvy Resources Ltd - HongKong
- Chamber of Mines of South Africa
- Kobexindo Tractors - Indoneisa
- Indian Energy Exchange, India
- New Zealand Coal & Carbon
- Timah Investasi Mineral - Indoneisa
- Vijayanagar Sugar Pvt Ltd - India
- Rio Tinto Coal - Australia
- Thai Mozambique Logistica
- Offshore Bulk Terminal Pte Ltd, Singapore
- ASAPP Information Group - India
- TeaM Sual Corporation - Philippines
- Star Paper Mills Limited - India
- Iligan Light & Power Inc, Philippines
- Medco Energi Mining Internasional
- Tata Chemicals Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Kalimantan Lumbung Energi - Indonesia
- SMC Global Power, Philippines
- Interocean Group of Companies - India
- Borneo Indobara - Indonesia
- Videocon Industries ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Cigading International Bulk Terminal - Indonesia
- IHS Mccloskey Coal Group - USA
- PTC India Limited - India
- Dalmia Cement Bharat India
- Baramulti Group, Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Edison Trading Spa - Italy
- Renaissance Capital - South Africa
- Mintek Dendrill Indonesia
- Cement Manufacturers Association - India
- Aboitiz Power Corporation - Philippines
- Toyota Tsusho Corporation, Japan
- Holcim Trading Pte Ltd - Singapore
- India Bulls Power Limited - India
- Globalindo Alam Lestari - Indonesia
- McConnell Dowell - Australia
- The State Trading Corporation of India Ltd
- Attock Cement Pakistan Limited
- Riau Bara Harum - Indonesia
- Karaikal Port Pvt Ltd - India
- Sojitz Corporation - Japan
- Electricity Authority, New Zealand
- Carbofer General Trading SA - India
- Wilmar Investment Holdings
- White Energy Company Limited
- Ambuja Cements Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Thiess Contractors Indonesia
- Malabar Cements Ltd - India
- Binh Thuan Hamico - Vietnam
- Planning Commission, India
- International Coal Ventures Pvt Ltd - India
- Marubeni Corporation - India
- Salva Resources Pvt Ltd - India
- Barasentosa Lestari - Indonesia
- Samtan Co., Ltd - South Korea
- Maharashtra Electricity Regulatory Commission - India
- GAC Shipping (India) Pvt Ltd
- Trasteel International SA, Italy
- PNOC Exploration Corporation - Philippines
- ICICI Bank Limited - India
- Deloitte Consulting - India
- Bharathi Cement Corporation - India
- Siam City Cement - Thailand
- Manunggal Multi Energi - Indonesia
- Bulk Trading Sa - Switzerland
- Kapuas Tunggal Persada - Indonesia
- Agrawal Coal Company - India
- IEA Clean Coal Centre - UK
- Antam Resourcindo - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Ministry of Finance - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Electricity Generating Authority of Thailand
- Miang Besar Coal Terminal - Indonesia
- Sakthi Sugars Limited - India
- Price Waterhouse Coopers - Russia
- GMR Energy Limited - India
- London Commodity Brokers - England
- PetroVietnam Power Coal Import and Supply Company
- Commonwealth Bank - Australia
- PowerSource Philippines DevCo
- Sinarmas Energy and Mining - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Ind-Barath Power Infra Limited - India
- Meralco Power Generation, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Orica Mining Services - Indonesia
- LBH Netherlands Bv - Netherlands
- European Bulk Services B.V. - Netherlands
- Aditya Birla Group - India
- Essar Steel Hazira Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Global Green Power PLC Corporation, Philippines
- Bhatia International Limited - India
- Indian Oil Corporation Limited
- Mercator Lines Limited - India
- Chettinad Cement Corporation Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- Xindia Steels Limited - India
- Alfred C Toepfer International GmbH - Germany
- Indo Tambangraya Megah - Indonesia
- Economic Council, Georgia
- Directorate General of MIneral and Coal - Indonesia
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