Banpu says may miss output target this year: Report

Thai-based coal miner Banpu may miss output targets as heavy rain jeopardizes production at a major mine in Indonesia, a letter obtained by Reuters showed on Wednesday.

Banpu's falling output due to monsoon rains may herald more production problems for other Indonesian miners -- which could aggravate Asia's supply shortage and cause coal prices to jump further from record highs.

Banpu's Indominco mine, located in East Kalimantan, has a production capacity of 11 million tons a year and accounts for about half of the company's total output. The mine produces mainly high-quality bituminous coal which is exported to utilities in Japan, Taiwan and Korea.

In a letter to customers, Banpu, which has five mines in Indonesia, said production at the Indominco mine has been heavily affected by what it called "force majeure conditions" for several weeks and the situation has become sufficiently serious.

It did not specify what it meant by force majeure conditions. The company has not formally declared force majeure at the mine. Banpu could not immediately comment on the contents of the letter.

"With such conditions, we expect the fourth quarter production will drop below target. Shipment schedules would need to be reviewed," Banpu said in the letter, which was dated Nov. 16.

Banpu said production problems were mainly caused by heavier than usual rainfall at the onset of the wet season, with October's rainfall 2.7 times the average rain level in the past six years.

The heavy rainfall is expected to extend into January and February 2008, Banpu said. (*)