Banpu mines Indonesia for coal mergers

Banpu mines Indonesia for coal mergers

SET-listed Banpu Plc, Thailand's biggest coal mine operator, is in talks
with industry peers in Indonesia on possible mergers and acquisition (M&As)
deals to help increase its long-term coal reserves, says deputy chief
executive Somyot Ruchirawat.

The talks are part of a plan to acquire coal mines near Banpu's existing
Bharinto and Trubaindo operations in Kalimantan, Borneo.

Mr Somyot said most of the mines are yet to be opened, and still need more
funding to get operations off the ground, creating M&A opportunities for
Banpu.

Banpu's Bharinto operations generate 2.5 million tonnes of coal annually,
while 5.2 million tonnes are produced at Trubaindo.

"If we can seal the merger deals, they will also help cut production and
operating costs for Banpu," Mr Somyot said.

The capital expenditure prepared fro the M&A deals is not included in the
company's annual capex outlays, he said.

Mr Somyot said Banpu is also planning to increase its coal reserves by
drilling deeper at its existing mines in Indonesia.

Although expanding those mines would tack on US$8 (266 baht) a tonne in
production costs, he said the investment costs are worth it, as global coal
prices are high.

The company aims to boost its reserves from 13 years to 15.

While those potential M&A deals are being worked out in Indonesia, Banpu
will also increase coal production at its Airly and Myuna mines in
Australia.

The company aims to increase production at Airly to 1.8 million tonnes by
2019, up from the 800,000 tonnes at present. Likewise, Banpu aims to raise
production at Myuna to 2.3 tonnes in 2018, up from 1.8 million tonnes, he
said.

For the company's midstream coal business, chief executive Somruedee
Chaimongkol said Banpu is planning to increase business revenue from this
segment by blending and mixing several grades of coal to serve rising
demand.

The company already operates a midstream coal business in Shanghai serving
major clients in China, she said.

For its downstream business, Banpu successfully listed its subsidiary, Banpu
Power Plc (BPP) in October last year. BPP aims to increase its power
generating capacity to 4,300 megawatts by 2025, up from 2,057MW currently.

BANPU shares closed yesterday on the Stock Exchange of Thailand at 17.10
baht, unchanged, in trade worth 616.1 million baht.

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Link to Original Article:
http://www.bangkokpost.com/business/news/1307511/banpu-mines-indonesia-for-c
oal-mergers

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John Diecker
APT Consulting Group Co., Ltd.

www.aptthailand.com