Banpu sees small profits

Banpu Plc, Asean's largest coal miner, expects only a slight increase in its bottom line this year despite last year's acquisition of Australia-based Centennial Coal and rising prices that will push revenue growth by 40 percent.

"This year's profit should still be higher than in 2010, but it may not jump in the short term following the Centennial purchase. Oil prices are our main risk, and there are no signs of them falling soon. Fixed and machinery costs have risen too," said chief executive Chanin Vongkusolkit.

"In addition, financing, amortisation and depreciation costs are still rising after the Centennial purchase."

Oil prices in Indonesia have climbed by 30-40 percent from last year's 68 US cents a litre. The miner expects it will almost double its coal output this year from 22.5 million tonnes in 2010. Centennial Coal will contribute 14.5 million tonnes and Indonesian mines 26 million. Mr. Chanin said average coal prices should exceed US$80 a tonne. They already rose from US$80-90 a tonne in last year's fourth quarter to $122 last week at Newcastle Port in Australia, considered a benchmark price for Asia.

Banpu's 2010 revenue is estimated to exceed 60 billion baht, with the figure expected to grow by 40 percent this year driven by Centennial.

Last year, Centennial's turnover was A$850 million or around 25 billion baht. The Australian firm two years ago was posting annual net profits of A$50-70 million. Meanwhile, Mr. Chanin said Banpu would spend hundreds of millions of dollars to raise its coal reserves in Indonesia.

Banpu now has coal reserves of 276 million tonnes covering 12-13 years. Banpu plans to spend US$140 million this year - $120 million to develop existing mines in Indonesia and the rest in China.