Asean's biggest coal miner answers environmentalist critics
Banpu Plc, the leading coal miner in Asean, has reiterated that mining and power generation remain its core businesses amid strong opposition from environmental activists over the use of fossil fuels.
"Look, we're in an era where power is so very essential to our lives," chief executive Somruedee Chaimongkol said.
"We have to admit that the largest reserves of fuel we have are in coal. Given the amount of reserves and the affordable cost, we cannot turn away from it but rather look for a way to use it with the least amount of pollution possible instead of being neglectful."
She pointed to technology as the answer.
"The development of clean coal technology is moving rapidly," she said. "In a developed country -- Britain or Japan, for instance -- they use the most advanced technology at their coal-fired power plants. These technologies have proved to generate lower emissions than the minimum requirement of the World Bank's Equator Principles."
The Equator Principles provide a framework for financial institutions to determine, assess and manage environmental and social risk in projects.
Banpu is set to use similar technology in the soon-to-launch second phase of the BLCP coal-fired power plant.
Once the 1,100-megawatt second phase is complete in 2017, total output at BLCP in Rayong's Map Ta Phut industrial estate will reach 2,534 MW, while the company's overall power generation will approach 4,700 MW.
Banpu's power output includes the Hongsa lignite coal-fired plant in Laos that began commercial operations in June.
Banpu and Ratchaburi Electricity Generating Holding Plc each own 40% of the Hongsa mine and the Laotian government 20%.
"Next year we'll be able to book full-year revenue from this venture," Ms Somruedee said.
The 2015 budget earmarked US$149 million for spending on power-generation projects.
"This is the final year of our five-year business plan for which we budgeted $1 billion, but we're likely to end this plan with a total of $700 million in spending," Ms Somruedee said. "The next five-year plan, starting in 2016, we've not finalised yet."
For 2016 alone, investment capital is set at $192 million.
As a leading regional firm, Banpu has business exposure in coal-rich countries such as Indonesia, China, Australia and Mongolia.
The company's biggest coal reserves are in Indonesia, amounting to 30 million tonnes.
"We see plenty of opportunities to expand further there after purchasing the first mine in Indonesia, and we've been collecting more reserves by buying new mines throughout the decade," Ms Somruedee said.
China is another country where Banpu mines coal and runs power plants. Plans call for further expansion of the Shanxi Lu Guang power plant, of which the company owns 30%. Local partners Luan Group and Gemeng International own 35% each.
The Chinese portfolio also includes the Gaohe coal mine (40% stake) with reserves of 6 million tonnes as well as the wholly owned Zhengding plant.
In Australia, Banpu has coal reserves totalling 15 million tonnes through wholly owned Centennial Coal.
With the global coal glut, prices have been historically low and now hover near $60 a tonne, making some mines unviable.
Coal sales, which account for 93% of Banpu's revenue, fell by 17% to $561 million in the first half, yielding a net profit of 14.9 million baht, down steeply from a year-earlier 2.49 billion.
During hard times for the coal business, the company prefers to focus on boosting the profit margin rather than sales volume. The profit contribution from the power business will increase gradually with new plants.
"At the balance point, profit from coal will constitute 60% and power 40% of the total, but that will take three years," Ms Somruedee added.
BANPU shares closed yesterday on the SET at 20.30 baht, down 30 satang, in trade worth 216 million baht.