Banpu Aims to Invest $423m in 2015, Plans Power Unit IPO


FEBRUARY 24, 2015

Banpu, Thailand’s top coal miner, plans to invest $423 million this year to expand its coal and power businesses and aims to list its Banpu Power unit on the Thai bourse in late 2015 or early 2016 to raise funds for regional expansion.

Banpu has diversified into the power business given the strong demand for electricity in Asia, while its coal business has been hit by falling prices as the industry faces oversupply, chief executive Chanin Vongkusolkit told reporters.

The company is studying details about the initial public offering of Banpu Power, which has stakes in BLCP Power, a 1,434-megawatt coal-fired power plant in eastern Rayong province and a 1,800 megawatt Hongsa power plant in Laos.

The IPO is one of Banpu’s new three strategies outlined to boost growth to 2020, Chanin said adding the company will focus on synergies in its regional coal and power business.

“Overall, we still have strong growth potential in our coal business in Indonesia and Australia,” he said, adding Banpu planned to buy third-party coal for mixing and creating premium products, while demand for electricity in Asia should grow further until 2035.

Chanin also announced that chief financial officer Somruedee Chaimongkol will be appointed as the company’s next CEO, while Chanin will be as board director.

Somruedee, who has worked at Banpu for three decades, said that of the 2015 budget, the company plans to spend $149 million on the Hongsa lignite power plant in Laos, which is expected to begin commercial operations in the middle of this year.

Banpu will also spend another $192 million on the 40-percent owned Hongsa project in 2016 when the company expects to fully realize profit from the $3.7 billion power plant with capacity of 1,800-megawatts, Somruedee said.

The funding will come from cash as Banpu generates earnings before interest, tax, depreciation and amortization (Ebitda) of about $650-700 million a year, Someruedee said.

The power business contributed nearly 20 percent of Banpu’s 2014 EBITDA, with the rest coming from the coal business, it said in a statement.

Banpu, which has coal mines in Indonesia, Australia and China, has production target of 48.5 million metric tons this year, with 30 million tons from Indonesian mines, 14 million from Australia and 4.5 million from China, another executive said.

The coal miner said it was building a new power plant in China that was expected to be operational in 2017.