How the youngest son of Thailand's largest sugar company created one of Asia's largest coal companies.
Counting on coal
Coming from a family that built its fortune on sugar, Banpu's founder made an unusual detour.
Some members of the Vongkusolkit family had their doubts when their youngest son proposed starting his own business. Sugar was what they knew and did well, but coal was a mystery to them.
Twenty-nine years later Banpu now is one of the leading coal companies in Asia, with reserves of just over one billion tons, market capitalisation of 108 billion baht, and net profit of 20 billion last year...
After following up his bachelor’s degree in economics from Thammasat University with an MBA in finance from Saint Louis University in the United States, Mr Chanin came back to Thailand with a dream to run a business. His family’s business – Mitr Phol Sugar Corp, which is Thailand’s largest sugar company – was not the answer, as his four brothers were already responsible for it. And the family itself did not want the youngest member to be involved in the sugar business as well.
"Four guys were enough for our family business. They wanted me to start something new,” ...
His journey to the coal business started at the suggestion of [a friend]. Their first coal mine was located in Banpu village in Lampang province...
The business was in the hands of the Vongkusolkit and Auapinyakul families until Banpu went public in 1989. Limited coal resources remaining in Thailand and huge capital requirements for overseas expansion were the main drivers behind the decision to raise money through the Stock Exchange of Thailand.
Mr Chanin began surveying countries including China, Australia and Indonesia for new coal mines as far back as 1983-84. Banpu finally secured one mine site in Sumatra but the operation made little progress. Opportunity presented itself in the midst of the 1997-98 Asian financial crisis, which hit Indonesia almost as hard as it had hit Thailand. Banpu was able to acquire a coal company that had four mining concessions. This was the real starting point of Banpu’s business in Indonesia, the world’s largest thermal coal exporter.
The overseas expansion was then unstoppable. Banpu is no longer a domestic coal miner, but one of the top regional players. It invested in China for the first time in 2003. Three years later, it bought three power plants in the same country, and in 2008 it acquired a 100% stake in China’s Asian American Coal (AACI).
The two deals in China made Mr Chanin more confident that the company could grow through mergers & acquisitions (M&A) ... Its biggest acquisition came in 2010 when Banpu offered to pay A$2.3 billion to control Australia’s Centennial Coal...
China is a bit different, as regulations have affected the company’s operation. The company decided to sell off its Daning coal mine while keeping two coal mine sites – Gaohe and Hebi Zhongtai – and three power plant businesses in which it holds 100% stakes. Despite the constraints, China remains Banpu’s main coal production base.
The lesson that Mr Chanin learned from China is that if Banpu ventures into any new companies there, it will focus on 100% shareholding control...
[In the future]....Banpu cannot grow without good people and teamwork. I couldn’t drive the company alone. ...anyone who succeeds me has to understand how to run and manage the business successfully, and learn to sacrifice for the whole company. [Finding a successor] is one of the tough jobs that I have to do before I retire.
(Source: Bangkok Post, Economics, Counting on coal, 15/10/2012, Nalin Viboonchart, link)
Coal Industry Vocabulary
Ban Pu - "a mining and power company in Thailand. It has coal mining operations in Thailand, Indonesia and China, and coal-fired Power generation operations in Thailand and China. Banpu plans also to invest in the Hong Sa lignite mine and power plant project in Laos. In Thailand, Banpu operates coal mines in mines in Lampang and Phayao provinces, and has stakes in BLCP... at Map Ta Phut, and in RATCH, ...in Ratchaburi Province. It has also has five coal mines in Indonesia and two in China" (See Wikipedia)
Mitr Phol Sugar Corp - "Thailand's and Asia's biggest sugar and bioenergy producer. Mitr Phol Sugar Corp is a privately owned group of companies, mainly owned by the Vongkusolkit family. As of 2011, Mitr Phol is ranked as the world's fifth largest sugar producer, and the largest producer in Asia. It is Thailand's largest sugar producer and the second largest in China through its joint venture company East Asia Sugar. In addition to Thailand and China, Mitr Phol has operations and investments in Lao PDR, Cambodia, Vietnam and most recently Australia. Its key business units include Sugar, Ethanol, Biomass Energy, Fiberboards, Logistics and Paper" (See Wikipedia)
count on - relying on, depending on, needing something
fortune - a large amount of money, goods, property, etc ทรัพย์สมบัติมากมาย
founder - a person who establishes an institution, business, or organization ผู้ก่อตั้ง
unusual - ผิดปกติ, ผิดจากธรรมดา
detour - เส้นทางอ้อม, ทางเบี่ยง, ทางอ้อม
doubt - ความสงสัย
proposed - ซึ่งถูกเสนอ
reserves - keeps something for a particular purpose or time สงวน
mystery - a quality that makes someone or something difficult to explain, understand, or get information about, especially when it also makes them seem interesting or exciting สิ่งที่ไม่สามารถอธิบายได้, ความแปลกประหลาด
market capitalisation -the total value of all a company's shares, calculated by multiplying the number of shares by their price on the stock exchange
profit - money that you make from selling goods and services after all your costs have been paid กำไร
net profit - the money that you make in business or by selling things, after all costs, tax, interest, etc have been taken off
finance - to provide money for something จัดหาเงินทุนให้
suggestion - telling someone something that they could do ข้อเสนอ, ข้อเสนอแนะ, การเสนอแนะ, การแนะนำ
in the hands of - owned and controlled by
went public - sell stock shares in the company (so that there are now company owners outside of the family)
natural resources - things such as coal, trees and oil that exist in nature and can be used by people ทรัพยากร
capital - money invested in a business
capital requirements - money needed for investment in a business
overseas expansion - moving your business into foreign countries
overseas - foreign countries (outside of Thailand)
expansion - when something increases in size, number or importance การขยายออก
survey - look over and examine something to understand and learn about them พิจารณา, ตรวจสอบ
surveying countries for new coal mines
secure - get
mine - a hole in the ground to dig out valuable minerals (iron ore, gold, silver, etc) เหมืองแร่
site - a place where something is located สถานที่
operation - an activity which is planned to achieve something การดำเนินการ
progress - improvement, growth, advancement, getting better all the time ความก้าวหน้า, ความเจริญ, ความเจริญก้าวหน้า
made little progress
crisis - an urgent, difficult or dangerous situation วิกฤตการณ์
acquire - to get; to obtain ได้มาซึ่ง
concession - when the government gives some companies special permission to do some business, franchise การยอมให้, สัมปทาน, การที่รัฐอนุญาตให้เอกชนจัด ทำบริการสาธารณะหรือจัด ทำประโยชน์ เกี่ยวกับทรัพยากรธรรมชาติ ภายในระยะเวลา และ ตามเงื่อนไขที่รัฐกำหนด
thermal - relating to or caused by heat ที่เกี่ยวกับความร้อน
thermal coal - coal for generating heat
thermal coal exporter
domestic - relating to a person's own country ภายในประเทศ
stake - a share or a financial involvement in something such as a business
confident - being certain of your abilities or of having trust in people, plans, or the future มั่นใจ
mergers & acquisitions (M&A) - the activity of buying and selling companies
acquisition - the process of buying something; something that has been bought
regulations - official rules that control the way that things are done ระเบียบปฏิบัติ ระเบียบ ข้อบังคับ
power plant - a factory that produces electricity (from coal, for example)
stake - money invested in a company
constraint - something that limits you (limits action)
base - a place from where an activity can be planned ฐานที่มั่น
production base - a place where most of the factories and production of a company takes place
venture - a business project or activity, especially one that involves taking risks
sacrifice - important or valuable things given up, so that you or other people can have or do something else ความเสียสละเพื่อส่วนรวม
successor (noun) - someone who has an important position after someone else ผู้สืบทอดตำแหน่ง สิ่งที่สืบทอด
tough - difficult to do or to deal with ยาก ยากลำบาก
retire - to stop work after many years of work when you are older