Banpu plans to expand its coalmines in Indonesia and its power business in China with a combined investment of US$110 million (Bt3.9 billion) next year.

Of this amount, $60 million will be spent on expanding its power business in China and $50 million will go towards buying coal sources or coalmines in Indonesia.

It will also spend $5 million on expanding the capacity of the port at the Indominco-Bontang mine in Indonesia.

Another $5 million is budgeted for a feasibility plan on its 1,800-megawatt power plant at Hongsa in Laos.

President Chanin Vongkusolkit told a press conference yesterday that the firm needed to expand its coal business in Indonesia because it wanted to boost its coal reserves from 249 million tonnes to more than 300 million tonnes.

He said the company planned to buy two coal projects, and each should have reserves of at least 30 million tonnes. Its current reserves can last for 12 years, but it aims to boost this to at least 15 years.

Meanwhile, Chanin said the company was studying expansion in China. "We plan to buy one or two power plants in China next year," he said. However, further details are yet to be revealed.

Banpu has a policy to reduce its dividend payment from 60 per cent of net profit to 57 per cent because it wants to keep its debt-to-equity ratio at 1.1 times. Its net debt-to-equity ratio as of December 31 was 0.66 times, compared to 0.34 times in 2005.

The company targets this year's revenue to grow by 7 per cent to 10 per cent thanks to the increased production of high-grade coal from the Trubaindo mine in Indonesia.

It targets an average coal-selling price this year of $37 per tonne, up from $35.82 last year, as a result of better quality coal and higher prices in the global market.

Chanin said cash flow would grow more than revenue because of the recognition of profit from the BLCP power plant, in which it has a 50-per-cent stake.

"During the next three to five years, the power and coal businesses will generate about 40 and 60 per cent respectively of our profit," he said.

The firm also targets the production of 21 million tonnes of coal this year.

He said Banpu had been invited to invest in coal-power plants by Indian investors.

However, he added: "Because we know little about India, we think we would be employed to operate coalmines in that country before making any decision to run our business there."

The company posted revenue of Bt33.378 billion last year, a rise of 32 per cent. The increase was due to significant production from its two Indonesian mines - Indominco-Bontang and Trubaindo - and its first consolidation of revenue from power plants in China.

However, the net profit was recorded Bt3.61 billion, a decrease of 35 per cent from the previous year, owing to higher production costs from rising fuel prices and higher tax payments after the imposition of an export tax by the Indonesian government.

Chalida

Ekvitthayavechnukul

The Nation