PTT to finalize coal divestment plan this week

Thailand?s leading energy PTT Plc will finalize plans for spinning off its coal business at a board meeting on Friday, President and Chief Executive Tevin Vongvanich said as reported by bangkokpost.com Wednesday.

The company had last year decided to sell its coal mining operation amid falling coal prices, but postponed the plan after applying measures that reduced coal production costs substantially.

Operating costs at coal mines in Indonesia?s Jembayan and Sebuku fell from US$35 a ton to $30. With global coal prices at $50 a ton, Tevin said there is room to make a profit. "We will maintain coal production only if it can be profitable. We can cut transport costs and share facilities, while other coal miners have to cut operating costs," he said.

PTT started diversifying into coal in 2009 through PTT Mining Co, a wholly owned subsidiary of PTT International Co, by purchasing Straits Bulk & Industrial, which is the holding company for coal mines in Madagascar, Brunei and Straits Asia Resources, the latter of which owns mines in Indonesia including the Jembayan, Sebuku, and Laung coal mines in East and South Kalimantan.

PTT's annual coal production reached 11 million tons last year and is forecast at 8 million tons this year -- well below previous forecasts of 15 million by 2015 and 20 million by 2020.

Last year, PTT booked an impairment loss of 20.3 billion baht from its coal assets as prices hit an 11-year low in late 2015.

"We are not spinning off the coal business because we want cash, since we have hefty cash flow of more than 380 billion baht," said Wirat Uanarumit, PTT's chief financial officer. "If the business can go further, we will maintain it."(*)