The financial health of the Newcastle Coal Infrastructure Group (NCIG) coal terminal is being reviewed for potential downgrading by ratings agency Moody’s.
According to a statement from Moody’s last month, the ratings were placed on review on 21 December 2015 to reflect the escalating risks in the coal market, which are in turn causing heightened counter-party risks as financial pressures on terminal’s mine counter-parties rise.
But NCIG has rejected the criticism, saying the loader is “fully funded with no refinancing obligations due for close to two years”.
NCIG was set up in 2005 as a breakaway from Port Waratah Coal Services, which operated Newcastle’s two coal loaders in the years when demand outstripped supply, and long queues of coal ships led to a group of coal companies, including BHP-Billiton, building their own terminal on Kooragang Island. The loader opened in 2010 and expanded in stages until 2013. Analysts’ reports show NCIG had more than $1.3billion of bank debt in 2014, with BHP having put in about $400 million of its own funds.
Moody’s said the restructure would make it easier to share the burden of lost revenue if one of its coal-company shareholders – which include Peabody and Whitehaven – were to “default” and it was unable to find replacement coal. It said NCIG’s ratings could remain “stable” if the restructure went ahead “as presented to Moody’s”.
Market Forces executive director Julien Vincent said coal was in structural rather than cyclical decline.
“The environmental case to end fossil fuel is built on the work of environmental scientists,” Mr Vincent said.
“The financial warnings come from Moody’s and other market watchers, and from various projects being downgraded or bankrupted.”