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