SET-listed Banpu Plc, Thailand's largest coal producer, forecasts overall coal demand to remain high throughout this year, mainly driven by Asia-Pacific markets.
Chief executive Somruedee Chaimongkol said coal prices in the second half of 2018 are expected to stay above US$100 a tonne after averaging $120 in the second quarter, up from $105 in the first.
Somruedee: Power plants drive demand
"The upward movement of coal prices will come from growing emerging countries in the region, mainly for power generation," Mrs Somruedee said.
As a result of increasing demand and competitive pricing, Banpu expects coal sales to rise by 7% to 45 million tonnes in 2018 from 42 million tonnes last year.
Banpu's main coal resource is Indonesia with 26 million tonnes, followed by Australia (14.1 million) and China (4.7 million).
Mrs Somruedee said 50% of Banpu's coal production is under fixed-price purchase contracts.
Banpu's capital spending for 2018 is $600 million (20 billion baht). Of the total, $300 million has been allocated to ongoing projects and new development of coal mines, fossil fuels, renewable power plants and other energy solutions.
Mrs Somruedee said the other half will be used to invest in new shale gas resources in the US, to add to Banpu's existing shale gas investment in the Marcellus Formation of New York.
In a related development, Banpu reported to the Stock Exchange of Thailand (SET) that a subsidiary, PT Indotambangraya Megah Tbk (ITM) in Indonesia, has taken over PT Nusa Perdana Resources (NPR), a coal mine resource in Kalimantan, in a deal worth $30 million.
NPR has a coal reserve of 77.4 million tonnes on a plot of 4,300 hectares with an average heat rate of 5,500 kilocalories per kilogramme.
Banpu holds a 68% stake in ITM and expects to reap the first coal volumes from underground mining in 2022.
The new coal resource after the acquisition is designed to integrate coal infrastructure and add value to existing coal mining in Indonesia, which includes Truba Indo, Bharinto and TIS.
Banpu's first-half revenue rose by 19% to 48 billion baht. Net profit in the period increased by 75% to 3.97 billion baht.
Separately, Banpu Power Plc (BPP), the power business arm, has prepared to invest $160 million in a wind power farm in southern Vietnam at a combined capacity of 80 megawatts in Soc Trang province.
BPP has already received an investment registration certificate from Vietnam's economic policymakers, and the company is conducting a feasibility study.
The 80MW wind power farm will be developed in three phases. The first will install 30MW of capacity for operations in 2020, while the other two phases are planned to begin operations in 2021.
Under a memorandum of understanding with Vietnamese counterparts, BPP has the right to develop up to 200MW of capacity in wind power farms, which means 120MW of capacity remains for future business opportunities.
The projects in Vietnam are part of BPP's plan for power generation capacity to reach 4,300MW by 2025.
BPP will have total capacity of 2,160MW this year, increasing to 2,790MW within 2023 from both fossil-fired and renewable power plants.
BANPU shares closed yesterday on the SET at 19.90 baht, down 20 satang, in trade worth 1.8 billion baht.