Bumi aims to acquire more shares in Herald Resources

Ika Krismantari, The Jakarta Post, Jakarta

Bumi Resources, the country's largest coal producer, will buy at least 31.3 percent shares of Australian-based lead and zinc miner Herald Resources next month -- a move that would see it become a majority shareholder.

Bumi corporate secretary Dileep Srivastava told reporters on Tuesday an extraordinary shareholder meeting held earlier that day had given approval for the management to acquire Herald and to start bidding at A$2.25 (about US$1.98) per share.

"The Australian regulator has already approved it and we have to wait until Feb. 15 for the Herald shareholders' response to our offer," he said.

Should Herald shareholders approve it, Bumi expects to increase its ownership in the Australian company from an existing 19.7 percent to 51 percent.

Srivastava said Bumi had been considering acquiring more of Herald's share and its bid for the company was valid up to 100 percent.

"We have seen great prospects for lead in the future, as it is the important component in the auto industry," he said.

"We have also been aiming to diversify our portfolio business, not only in coal, but also other commodities, including gold, copper and iron ore."

He said the company had secured loans worth $375 million from Switzerland-based lender Credit Suisse to finance the company's acquisition plans.

It has been reported Bumi has a number of acquisition plans in several mining projects, including an iron ore mining project in Mauritania.

Aside from the target to expand its operation, Bumi aims to reach a historic volume production of 100 million tons of coal in 2011.

Bumi last year produced 56 million tons and is targeted to produce up to 65 million tons in 2008, Srivastava said.

He said the company would spend $210 million in capital expenditure this year, double its production, and would spend $100 million every year until 2010 to upgrade its production facility.

Bumi is estimated to have recorded $800 million in net profits last year, almost quadruple from $222 million in 2006, on the back of surging coal prices and higher demand from India and China.