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Published on August 18, 2007

The global lending woes have halted Banpu's plan to list its Indonesian subsidiary PT Indo Tambanraya Megah on the Jakarta Stock Exchange.

Banpu CEO Chanin Vongkusolkit said yesterday that the initial public offering would have to be postponed to next quarter or the following quarter.

Once the credit crisis has subsided around November, Banpu could float 15 per cent of its subsidiary. UBS is the financial adviser for the IPO.

The US$150 million (Bt5.2 billion) to be raised, as estimated by the Jakarta exchange, is supposed to be used by the company expand its Indonesian businesses, as it tries to consolidate all its mining operations.

Banpu could alternatively turn to its own internal cash flow, and debt financing will not be ruled out either, since the company enjoys a low debt-to-equity ratio of only 0.68, chief finance officer Somrudee Chaimongkol said.

Banpu, fuelled by strong global coal prices and profits from its utilities business, powered into the second half of the year with net income of Bt2.95 billion, up 90 per cent from the first half of last year.

In the first six months, excessive rain and floods halted coal production at its Indonesian mines, particularly in Jorong and Trubiando, causing sales to drop by 0.6 million tonnes to 9.2 million tonnes.

But the market spot price has been right - the Barlow Jonker Index price on Thursday was at $70.35. This, despite the appreciation of the baht, has helped the company's margins. The company's contracted price for the second half hovers around $40.

Chanin said Banpu had revised its estimated output for this year to 20 million tonnes, down from 21 million tonnes last year. But the impact is negligible, as production will pick up in this half.

Despite the high volume, the miner's reported turnover of Bt12.7 billion from coal sales - 88 per cent of total revenue - only yielded Bt338 million in net profit. It is Banpu's electricity-generation business that has been picking up the tab, contributing Bt2.61 billion in profit.

For this fiscal half, Banpu earned Bt2.58 billion in equity income from BLCP, a power plant in which it holds a 50-per-cent stake, dividends from Ratchaburi Electricity and revenues from its Chinese joint ventures.

With its mining concessions in Thailand running out next year, Banpu has already spent about Bt300 million this year in environmental pay-outs to close down its Lampang mine.

The company is looking to China and India, where, although minimal compared to Japan and South Korea, its sales have been growing steadily, at 0.4 million and 1.1 million tonnes respectively.

"If we don't go into India now it'll be too late," Chanin said, adding that Banpu is likely to form joint ventures with local firms to manage mines, since most mines are still tightly held by the state.

Its Bt2-billion coal mine and 1,800-megawatt power-plant project in Laos is still in limbo, as it looks for co-investors. Chanin said that he was looking for partners with mining and electricity expertise.

It is likely that the Lao government will take 20 per cent in the venture, with Banpu holding 30 per cent, he added.

Ki Nan Tsui

The Nation