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Asia300

Banpu's net profit for 2017 soars on rising coal prices

Thai company plans to increase production and power generating capacity this year

BANGKOK -- Banpu Public, Asia's biggest coal miner said its net profit for 2017 soared, largely due to rising global coal prices and increasing power-generating capacity abroad that helped contribute to higher revenue.

The company said its net income rose more than 4.5-fold last year to 7.9 billion baht from 1.7 billion baht in 2016.

Somruedee Chaimongkol, president and chief executive officer, said demand for coal rose sharply last year, particularly in Asia-Pacific and ASEAN countries, pushing overall global coal demand 2% to 3% higher. Global coal prices also rose substantially, helping to lift the company's revenue.

Banpu's total revenue was $2.9 billion in 2017, up from $2.3 billion the previous year.

Somruedee said 2017 "was a strong year for global coal prices, as they started rising sharply for the first time after suffering through a sluggish trend during 2011-1016."

She said global coal prices rose from an average $80 a ton in 2016 to $104 a ton in 2017. "Our coal sales hit 40 million tons globally, but rising coal prices has helped boost revenue," she said. For 2018, Banpu has set a coal sales target of 44.8 million tons.

With rising prices and increasing demand, Banpu planned to increase its coal production at its mines in Australia and Indonesia this year by digging deeper.

Currently, Banpu's mines in Indonesia have created an additional coal reserve of 76 million tons this year.

"Digging deeper into the ground to get more coal means higher production costs, but it is worth the investment, particularly at a time when global coal prices are on a rising trend," Somruedee said.

She added that Banpu will continue to increase its coal reserves further in 2018 to help boost profit.

Banpu Power, a subsidiary company, contributed a major proportion of the revenue for the group. The unit saw a rise in power generating capacity, largely in Japan and China.

Sutee Sukruan, chief executive of Banpu Power, said the company has power generating capacity from both conventional power plants and renewable power plants, currently at 2,789MW. It has a target of 4,300MW by 2025.

Among those plants, the Hongsa coal-fired power plant in Laos played a major role in contributing to the group's revenue last year, as it ran at nearly full capacity with no shutdowns for maintenance.

The Hongsa coal-fired power plant is a joint-venture between Banpu, which holds a 40% stake, Thailand's Ratchaburi Electricity Generating Holding, which also holds a 40% stake, and with the Lao government holding the rest.

Banpu Power has begun commercial operations of its solar farms in Japan and China, giving the company an additional power generating capacity of 12.6MW from Japan and 152MW from China.

Banpu Power plans to have an additional power generating capacity of 82MW from three solar farms that are under construction and expected to begin commercial operations this year.

The Banpu group has allocated a total capital expenditure of $182 million for new investment in 2018. Of that figure, $32 million will be for coal and upstream businesses, $80 million for power businesses and $70 million for downstream businesses, such as its solar rooftop service-provider business in Thailand under the subsidiary Banpu Infinergy.

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