Banpu sees 40% rise in sales on coal prices

Banpu sees 40% rise in sales on coal prices

Arijit Ghosh
Bloomberg
Bangkok

Banpu Pcl, Thailand's biggest coal miner, forecast sales may
rise 40 percent next year, aided by higher prices and demand for
the fuel.

Sales will probably rise to 22 billion baht (US$531 million)
in 2005 from an estimated 15.7 billion baht this year, Chief
Executive Chanin Vongkusolkit said at a briefing in Bangkok. The
company posted sales of 12.48 billion baht in 2003.

Average coal prices this year may rise 15 percent, he said.

Banpu and other coal miners are benefiting from higher prices
because of rising demand from China and Japan. Demand for coal
rose faster last year than for any other fuel, according to

BP Plc, as China, the world's largest coal consumer, burnt
about a sixth more. Producers such as Australia and South Africa
have been constrained by port and rail capacity. BP is the
world's No. 2 oil company.

``Given the six to 12 month lag of Banpu's contract coal
prices to global spot prices, the windfall of rising coal prices
may have just begun for the company,'' Peter Gastreich, an
analyst with the Thai unit if UBS AG, said in a note to
investors.

``We expect a rise in Banpu's contract coal prices, on
average, for each of the next four quarters.''

Gastreich yesterday raised his recommendation on Banpu's
shares to ``buy 1'' from ``neutral 1.''

Banpu last week reported its biggest quarterly profit in
almost six years on higher demand and gains from the sale of
shares in a petrochemical maker. Second-quarter net income almost
doubled to 1.13 billion baht.

The company said it would invest $444 million by 2007 to
expand its mines in Indonesia and China and invest in a power
project in Thailand.

Banpu also expects to boost coal sales to Italy and Germany
to 10 percent this year from 4 percent in 2003, said Somruedee
Somphong, Banpu's chief financial officer. The company sells more
than a third of its coal to Japan.