Thai Banpu plans $469 mln investment to spur growth

By Khettiya Jittapong and Wilawan Pongpitak

BANGKOK (Reuters) - Banpu PCL BANP.BK, Thailand's largest coal miner, said on Wednesday it planned to spend $469 million this year and next, mostly on developing its coal business in Indonesia and China.

Banpu, which has five mines in Indonesia, expected the investment to help boost its coal reserves and secure revenue growth in 2008 and 2009, chief executive Chanin Vongkusolkit said in an interview during the Reuters Global Mining and Steel Summit.

"Our investment will focus on the coal business we developed last year. Indonesia and China are our main targets," said Chanin, whose family helped found the company 24 years ago.

Of the $469 million, $281 million would be spent on its coal business in Indonesia and China and the rest on its power business in the two countries, Chanin said.

That included a plan to boost loading capacity at its Indonesian port of Bontang terminal to 18 million tonnes in 2008 from 12.5 million tonnes now, he said.

Banpu was also studying the feasibility of developing its Indonesian mines at Bharinto and Indominco, he added.

Chanin declined to give specific earnings or revenues forecasts, but 16 analysts polled by Reuters Estimates forecast a 2007 net profit of 5.52 billion baht ($160 million), up 53 percent from 2006.

Banpu has said it expects to produce 21 million tonnes of coal this year, similar to last year.

At the end of March, Banpu had reserves of 309 million tonnes and sales from its Indonesia mines accounted for 97 percent of sales in the first quarter. It also has two mines in Thailand and two in China.

With its Thai mines likely to be exhausted in the next one or two years, Banpu had been increasing its investments in Indonesia and China and was looking to invest in coal business in India and Vietnam to tap strong energy demand there, he said.

PRICES SEEN AT HIGH LEVELS

Boosted by robust economic growth, coal demand in China and India was expected to rise significantly and that would help keep global prices at high levels this year, similar to last year, Chanin said.

Chanin, 54, a finance graduate of St. Louis University, said Banpu should benefit from a recent move by China to import more coal and slow down exports, and the trend should continue until the end of this year.

"Coal demand in China and India should remain high, leading them to look for well-developed resources and seek long-term supplies. This is positive for us," he said.

In the next 3-5 years, Asian Pacific demand for coal was expected to rise 5 percent per year, compared with 2 percent growth globally, he said.  Continued...