PTT buys Madagascar coal mine in US$50-million deal

Project could fuel power in India, Europe

PTT Plc acquired the remaining shares in the Perth, Australia-based Red Island Minerals (RIM) yesterday through PTT International's wholly owned subsidiary PTT Asia Pacific Mining Pty (PTTAPM).

PTTAPM held a 33.5% stake in RIM, which owns a coal mine in Madagascar. PTTAPM had the rights to buy the remaining 66.5% stakes in RIM under the price and terms of an existing investment-and-option agreement, which it did for US$50.2 million.

"We got a very reasonable price," said Pailin Chuchottaworn, PTT's chief executive.

RIM holds the exploration licences and concessions for the development of a coal mine in Madagascar (the Sakoa Coal Field project) via its 80%-interest subsidiary Madagascar Consolidated Mining Ltd.

The Sakoa Coal Field is in the southwest of the country. The field has total Joint Ore Reserves Committee resources of 180 million tonnes of good quality thermal coal of a similar product specification to coal currently exported from South Africa.

The project is a likely future supply source to power plants and other industries in India and Western Europe.

"It's our long-term strategy to expand coal production to 22 million tonnes a year by 2020 from 11 million last year," said Mr Pailin.

This transaction is qualified as an investment in another company resulting in that company becoming a subsidiary of PTT.

Chitrapongse Kwangsukstith, the chairman of PTT International, said Madagascar and other African countries are strategic investment areas of the PTT Group.

The transaction is expected to be completed in the first quarter, at which point RIM will be consolidated with PTT.

PTT is now studying how much further to spend to develop the Sakoa field.

PTT shares closed yesterday on the Stock Exchange of Thailand at 365 baht, up one baht, in heavy trade worth 2.16 billion baht.

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Writer: Yuthana Praiwan and Nareerat Wiriyapong