Coal Age

OCT 2018

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38 www.coalage.com October 2018 operating ideas Exporting: An Important Revenue Stream for Energy Producers by jim burrows Coal companies across the United States are benefiting from exporting. Selling overseas is a great way to grow a business and boost the bottom line. In fact, U.S. coal exports have increased by 61% in 2017, as exports to Asia have more than doubled. These export opportunities are encouraging as U.S. electric utilities con- tinue to close coal-fired power generators and shift toward natural gas. While exporting makes sense and is not a new concept to the coal industry, there are still plenty of opportunities in untapped markets especially since 95% of the world's consumers live outside the United States. Despite the potential up- side, many companies still feel that ven- turing overseas is too complicated or too risky. They are reluctant to enter new mar- kets or build sales in existing ones. Some businesses are content with selling to just one or two markets internationally or to a few long-standing buyers. It's not a surprise that some energy producers are trepidatious. There are also hurdles associated with different govern- ments, languages, and legalities, in addi- tion to unexpected risks such as war, po- litical upheaval, currency conversion and logistics. And, of course, the biggest deter- rent to exploring export opportunities is fear of nonpayment — the credit risk. Getting paid is the primary concern of U.S. companies selling goods and services beyond our borders. If the foreign buyers don't pay, there is very little recourse for the seller, and the financial hit can some- times be significant. The good news is that there's help avail- able. Many American companies are ex- porting with fewer hurdles and more confi- dence by partnering with the Export-Import Bank of the U.S. (EXIM). This independent federal government agency can provide the financial support necessary to enable U.S. businesses of all sizes to boost their inter- national sales, even in emerging and fron- tier markets. EXIM also levels the playing field so U.S. companies can compete with foreign competitors — many of whom have similar backing by their home governments. Selling on Open Account EXIM's export credit insurance is a popular product among U.S. exporters. The in- surance policy protects foreign accounts receivable generated by the sale of goods and services from U.S.-based companies to international customers. The poli- cy covers up to 95% of the sales invoice against nonpayment due to commercial (e.g., bankruptcy, protracted default) and political (e.g., war, insurgency) risks. A key advantage of this coverage is that it also improves competitiveness in the world market. While many American exporters resort to cash in advance to avoid nonpay- ment risk, most foreign competitors are able to offer open account credit terms, which are significantly more attractive to potential buyers. Buyers expect credit terms, and coal companies that are unable to extend credit may lose out on valuable opportunities. An EXIM export credit insurance poli- cy empowers U.S. businesses to negotiate credit terms with foreign buyers up front, typically in 30, 60 or 90 days. This feature is a powerful marketing tool and can be the competitive edge that wins deals. EXIM can protect a coal company's entire port- folio of customers or just a single buyer. In addition to reducing the risk of nonpayment and offering open account credit terms to foreign buyers, EXIM's ex-

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