Banpu's senior vice president, Amarit Suwansawet, who is responsible for Banpu's coal operations in Thailand, said last week that the fund was part of a road map the company had drawn up to meet international standards of quality, safety and environmental protection (QSE).

"The fund has been established to finance environment programmes at the firm's three mines in Lampang, Lamphun and Phayao," said Amarit, adding that the money would also be used for community-development programmes.

A small amount of revenue from each mine is still being added to the fund. The Chiang Muan mine in Phayao province, for example, contributes Bt6 for every tonne of coal sold.

Banpu's newfound emphasis on environmental restoration comes as its Thai coalmining operations draw to a close. The company's Lamphun mine has already ceased operating while the Lampang mine will close next year, followed by the Phayao mine in 2008.

"We have to return the environment to as close to normal as possible," said Amarit.

While the company wants to restore the environment around its mine sites once they are closed, it has not waited until now to begin the task.

At the 2,569-rai Chiang Muan mine, which opened in 1996, a tree-planting project has been running for five years, resulting in 120,000 trees being planted on the mine's 500-rai slag heap.

Meanwhile, 11 occupational projects in the nearby Bansra community have been undertaken to help more than 2,000 people living there find alternative sources of income once the mine closes.

Included in these is a sewing project that is reported to have earned locals a total of Bt335,355 since 2004 and a weaving project that has recorded a total income of Bt821,196 since 2005.

Though it is a small mine with a production capacity of 500,000 tonnes per year, the Chiang Muan mine has received a number of awards for its QSE management, including the ISO 9001: 2000 & TIS/OHSAS 18001, the National Safety Award, a Zero Accident Campaign award and the ISO 14001.

Amarit said that Banpu's goal was to maintain its QSE standards at an international level.

Currently the Lampang mine has reserves of about 4.2 million tonnes while the Chiang Muan mine retains about 1.6 million tonnes.

Around 3.76 million tonnes of coal have been extracted from the Chiang Muan mine. Siam City Cement bought 60 per cent of this while 28 per cent was sold to the Electricity Generating Authority of Thailand, 10 per cent to Siam Cement Group and the rest to tobacco factories.

Amarit said that though the two mines contributed 25 per cent of Banpu's coal revenue, their closure would not heavily impact the company because of gains in other areas of its diversified power business.

Banpu operates 10 coal mines in Indonesia, Thailand and China.

As of September 30, Banpu's total assets and liabilities on its consolidated balance sheet were Bt44.28 billion and Bt24.38 billion respectively.

The company reported a 47-per-cent drop in its third-quarter net profits, which fell to Bt884 million.

The decrease was attributed to a decline in earnings from core businesses resulting from higher production costs, in particular the soaring price of diesel, Indonesian export taxes and management costs on low-return Indonesian assets.

In the same period, Banpu's sales revenue was Bt8.44 billion, up 12 per cent on last year. The increase was driven by larger coal sales and the consolidation of revenue from power businesses in China.

Of the company's total revenue, 90 per cent came from coal sales and the remainder from sales of power and steam.

Despite the drop in quarterly profits, many brokers are still recommending investors buy Banpu stock in the belief that its final-quarter results will improve as a result of the company's steel and power operations in China.

Sasithorn Ongdee

The Nation

Phayao