Banpu Plc poised to gain as demand drives up coal prices

Wednesday, 16 Nov 2011

Thailand's biggest coal miner Banpu Plc expects average coal prices in 2012 to be higher than the price of USD 97 per tonne in 2011, thanks to higher regional demand.

Ms Somruedee Somphong CFO of Banpu Plc said that the company would secure 50% of next year's coal sales contracts by next month. The company this year expects to sell 40 million tonnes of coal, with 25 million from its five mines in Indonesia. Of the 15 million tonnes sold in Australia, 35% is exported.

Ms Somruedee said that the target next year would be 16 million tonnes with 40% exported. She added that "This will cause average selling prices to increase, as export prices are higher than prices in the domestic market."

Banpu, which last year acquired Australia's Centennial Coal Co, expects a minimal impact from Australia's new clean energy act, which will impose carbon taxes starting in July. It estimated the law would add only 30 cents a tonne to Centennial's cost of production.

Meanwhile, Banpu expects its most recent acquisition of Perth based Hunnu Coal to be finalized by December 2011. Production will start in 2013 at 3 to 5 million tonnes per year initially.

Banpu's net profit in the third quarter of this year totaled THB 4.21 billion, dropped by 68.4% YoY from THB 13.28 billion. However, last year it had an extraordinary gain from selling an 8.72% stake in PT Indo Tambangraya Megah Tbk worth THB 11.7 billion. Net profit in the third quarter was down 33% from the second quarter.

Nine month consolidated net profit was THB 16.53 billion as compared with THB 19.76 billion in the same period last year. Sales revenue in the third quarter totaled THB 30.69 billion, a rise of THB 16.99 billion or 124% from the same period last year due to a 117% increase in volume to 10.94 million tonnes.

The average selling price of coal from the company's Indonesian mines rose by 27% YoY in the third quarter to USD 98.99 per tonne. Revenue from coal sales is 96% of total sales revenue, which includes THB 20.7 billion from sales in Indonesia, THB 8.83 billion from Australia and THB 8 million from Thailand, where the company's mines are almost depleted. Revenue from electricity sales from its three plants in China as well as other revenue totaled THB 1.15 billion or 4% of total sales.

Mr Chanin Vongkusolkit CEO of Banpu Plc said that profit margin in the third quarter for the coal business was 47%, with higher sales in Indonesia and rising prices.

(source from Bangkokpost)