Banpu expansion eyes stakes in aust, indian power plants

Company also plans to buy another coal mine in Indonesia 

By Nalin Viboonchart, The Nation, Hua Hin, March 7, 2009 

Thailand's coal mine and energy firm Banpu plans to acquire controlling stakes in power plants in both Australia and India as well as to purchase an additional coal mine in Indonesia, chief executive Chanin Vongkusolkit said yesterday. 

The move is part of the company's 2009-2013 business development plan. The company started developing the plan in October and is still adjusting it to be in line with the current economic situation. 

Besides the interest in the power plants in Australia and India, the company plans to purchase the coal mine in Indonesia as part of its coal-mine business expansion. It currently has five coal mines in Indonesia and two in China. 

Chanin added that the move to acquire shares in the power plants and the coal mine depends on the market situation. 

He said that currently the share prices of power plants in Australia have dropped, while some of them have had to shut down, giving Banpu a business expansion opportunity. 

For this year the company plans to spend US$208 million (Bt7.5 billion) on expanding the production capacity of its coal mines in Indonesia and in China. Of the total, $126 million is set aside for its mines in Indonesia and the remaining $82 million for those in China. 

The company aims to boost the combined total production capacity of coal mines in Indonesia to 20.5 million tonnes this year from the present 18.1 million tonnes, and that in China to 5.6 million tonnes from the present 4.5 million tonnes. 

"There's still coal demand in the market," Chanin added. 

As of the first two months of the year, the company already secured coal contracts totalling 71 per cent of its full production capacity in Indonesia and China this year. 

Of the total contracts, 57 per cent feature coal that will be sold at a fixed price, while 14 per cent is for coal that will be sold according to the market price at the product delivery date to the buyers. 

For the remaining 29 per cent of production capacity, 14 per cent is in the process of price negotiation and the other 15 per cent is for contracts that have yet to be finalised. That coal is expected to be sold at the spot price. 

Chanin said the sale price of Banpu coal was expected to be around US$72 per tonne this year on average, unchanged from last year. The sale price jumped from $41 per tonne in 2007 to $72 per tonne last year. 

Banpu will issue debentures in the second quarter of this year worth Bt6 billion to refinance debt while keeping some part of the amount as working capital. The refinancing will help cut its interest burden by at least 0.5 per cent per year. 

The debt it will refinance was incurred by a loan of Bt14 billion it assumed on taking over 100 per cent of the shares of the Asian-American Coal mine in China last year.

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Thai Banpu to invest $208 mln in Indonesia, China