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Published on October 10, 2007

Even though Italian-Thai Development is the leader in the local construction industry, it will continue to focus on its mineral-resources business abroad by investing more than Bt100 billion over five years in steel, aluminium, gold, copper and coal.

Up to 70 per cent of its capital budget will be funded by project financing from banks and 30 per cent from internal cash flow.

Under its five-year plan, 90 per cent of total revenue will come from mineral resources and 10 per cent from construction, managing director Premchai Karnasuta said yesterday.

He was speaking at a press conference for the signing of a contract to construct a condominium for Thanapat Property Development. The deal is worth more than Bt2 billion.

Currently, 90 per cent of Ital-Thai's revenue comes from construction and 10 per cent from other businesses, such as cement and Ua Athorn affordable-housing projects.

The company earned Bt761.26 million on revenue of Bt22.86 billion in the first half and expects full-year revenue of Bt40 billion.

 Its construction backlog is Bt100 billion.

Premchai said the company had to diversify, because mineral resources showed good potential and generated margins of up to 20 per cent. That is better than the construction business, which has margins of less than 10 per cent.

Ital-Thai started moving into the mining business last year by acquiring 90 per cent of Asia Pacific Potash from APR, a Canadian firm that received a government concession to produce potash in Udon Thani last year.

Ital-Thai has invested up to Bt5 billion this year for coal in Indonesia and aluminium in Laos.

In Indonesia, the company won a coal concession with total production capacity of 15 million tonnes a year, which will come on the market next year.

The Lao operation will start producing aluminium in 2009, with production capacity of 500,000 tonnes a year.

The company will apply for steel concessions in Laos and Indonesia next year and is preparing to apply for gold and copper concessions abroad next year and in 2009.

"We cannot disclose where we're surveying for gold and copper ores, but both countries are located in Asia, and we believe we'll get the concessions after our survey is completed," Premchai said.

The company is targeting an internal rate of return of 50 per cent on its foreign projects.

"When we expand abroad, we'll have risk, but we know how to manage risk and generate higher income for our business," he said.

The company has won a contract to build a 1.8-gigawatt coal-fired power plant in Koh Kong, Cambodia. It also will join with the Electricity Generating Authority of Thailand to bid on a 700-800-megawatt coal-fuelled power plant in Chachoengsao's Bang Pakong district under the independent-power-producer scheme.

"Our energy business will supply the raw material - coal - from our plant in Indonesia," he said.

The company has continued to bid on infrastructure projects - both onshore and offshore - worth Bt300 billion this year, with 90 per cent located in India, Laos and Vietnam.

They are Bombay Airport in India, which will announce the winner today, the Hyderabad mass-transit system in India, several dams in Laos, and Wang Tao Port in Vietnam. The other 10 per cent consists of Bangkok's mass-transit rail system. The company will joint the bidding for the Red Line connecting Bang Sue and Taling Chan.

This year, foreign operations will contribute about 30 per cent of total revenue, but that will rise to 50 per cent in five years, when total revenue is expected to reach Bt40 billion.

Margins will also improve over the current average of less than 10 per cent.

Somluck Srimalee

 The Nation