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Banpu looks to power-plants in China, Japan; focusing on cost and efficiency

Leading coal and electricity producer Banpu Plc expects to conclude talks for power plant projects in China and Japan by early next year.

CEO Chanin Vongkusolkit told a press conference yesterday that Banpu would continue to emphasise cost and efficiency improvements in its businesses, while preparing to resume its investment in power generation.

The company will postpone some coal mining projects to help it cut costs next year in Australia by nearly US$100 million (Bt3.2 billion) and in Mongolia by about $50 million. However, it will keep its planned investment outlays from now to next year at $779 million, of which half is for the Hongsa mine-mounted power project in Laos.

Banpu has renewed its interest in China's power generation industry and has been in discussions with its Chinese partner to invest in a 1.2-gigagawatt mine-mounted, coal-fired power plant project in Gaohe. A power company is likely to come in as the third partner.

"We are likely to see some growth from our Chinese coal-fired power business in the next one to two years. These prospects including expanding existing power plants and acquiring existing plants of other producers," Chanin said.

Banpu was serious about pursuing a solar power project, especially in Japan, and was expected to finalise a deal by the end of this year or early next year.

The 1,800MW Hongsa project that would begin production next June was the company's main focus.

The company recently dispatched a new management team to improve the efficiency of its mining and power plant operations there.

Chanin said he was surprised at the further drop in international coal prices during the first half of this year but believes prices have reached bottom. Banpu plans to sell its coal at nearly $70 a tonne this year, down slightly from over $72 last year.

To provide "immunity" against possible interest rates hikes in the future, Banpu plans to increase fixed-interest debt to 70 per cent of total debt from 65 per cent at present, he added.

Despite falling coal prices, Banpu reported a nearly doubling in consolidated net profit to $76 million for the first six months of this year form the same period last year.

Earnings before interest, tax, depreciation and amortisation rose 17 per cent to $358 million, thanks to increased profits from its power businesses in Thailand and China and cost savings in all business units.


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