Banpu invests $548m to double coal output: Report

In pursuit of its goal to become an energy giant in Asia-Pacific, Thai energy conglomerate Banpu Plc plans about US$548 million investment in the region in four years, hoping to more than double its coal production by 2008, The Bangkok Post reported Tuesday.

Of the total, the report said, $268 million will be invested in the existing coal mining and power generation businesses overseas and at home and the remaining $280 million on new project studies, coal exploration and business takeovers.

Chief executive Chanin Vongkusolkit said Banpu would invest $147-150 million as equity in the $1.3-billion coal-fired BLCP power plant in Map Ta Phut, Rayong. The plant, with a capacity of 1,400 megawatts, is scheduled to be completed in 2007. Banpu holds a 50% stake in BLCP.

Overseas, about $67-70 million will be invested in six existing coal mining concessions in Indonesia, five of which are located in East Kalimantan and the other on Sumatra.

Part of the planned investment in Indonesia will be spent to upgrade the transport system at the Indomico-Bontang mine, the largest of its five sites on East Kalimantan, to make it a one-stop centre for its customers.

In China, Chanin said Banpu would set aside $17 million as an equity investment in Asian American Coal Inc, the operator of coal mine in Daning in Shanxi province. The mine will produce 5.5 million tonnes per year of coal in 2006. It began operations this year with an annual output of 1.7 million tonnes. Banpu holds a 12.49% stake in Asian American Coal.

Another $40 million will be invested as equity in Habi Zong Tai Mining Co, the operator of a coal mine in Habi in Henan province where one million tonnes per year of coal will be produced. Banpu holds a 40% stake in Habi Zong Tai Mining.

According to Chanin, the remaining $280 million would be earmarked for the feasibility studies for any future projects or takeovers of coal mining or coal-based power generation ventures.

Financing sources will be acquired from accumulated profits which are now at $540 million, working capital $200 million and cash on hand of $150 million. Banpu also has high creditworthiness due to its low debt-to-equity ratio of 0.23.

Banpu projects its coal production will reach 18-20 million tonnes this year, compared with 15 million produced last year.

Coal production is expected to reach 21-26 million tonnes next year and will increase to 32 million per year after its planned investments are completed in four years, or more than double the 2004 total, with the new output mostly from Indonesia and China.

Next year the company expects half of its total revenues to come from Indonesia, 40% from Thailand and 10% from China. Within three years, it expects each of the three countries will account for an almost equal proportion of 30-35% of its total revenue.(*)