Australian coal mines fail to stem Banpu decline

INCREASED sales from Thai company Banpu Plc’s Australian coal mines – bought off Centennial Coal for $2.5 billion in 2010 – were not enough to prevent a 46% plunge in reported net profit for the September quarter.
Australian coal mines fail to stem Banpu decline Australian coal mines fail to stem Banpu decline Australian coal mines fail to stem Banpu decline Australian coal mines fail to stem Banpu decline Australian coal mines fail to stem Banpu decline

Cutting coal at Mandalong's longwall panel 10.

Lou Caruana

The energy group’s net profit for the quarter was 2.26 billion baht, down 17% from the previous quarter. Sales revenue fell 5% to 29.22 billion baht year-on-year.

Chief executive Chanin Vongkusolkit attributed the lower profits to weaker coal prices, which hit its Australian and Indonesian exports.

"The average coal selling price was $US79.74 per tonne, down 12% from the same period last year, due to the unfavourable global coal market," Chanin said in a statement to the Stock Exchange of Thailand.

Banpu’s Australian sales rose 130,000t to 4.23Mt, outperforming its Indonesian counterparts, which reported a 200,000t fall in sales to 6.6Mt. Banpu's overall coal sales volume dropped 1% to 10.85Mt.

Its Australian ventures include some of New South Wales’ most productive coal mines, such as the Mandalong and Angus Place longwall operations.

"Coal prices softened because of excess supply in the market, while coal demand also grew at a slower rate," Chanin said.

Banpu has lowered production costs, delayed some investment plans and cut expenditure in reaction to the downturn. It enjoyed some improvements during the quarter, with its Indonesian operations successfully lowering its production costs by 7% or $4/t from the second quarter.

"Banpu will continue to focus on cost management to minimise the impacts from lower selling prices. Our goal is to maintain a strong net profit and financial position as well as our dividend payment capacity," Chanin said.

He said Banpu expected to sell 7.4Mt of Indonesian coal and 3.4Mt of Australian coal in the December quarter.

"The prices should drop further from the third quarter because of excess supply," Chanin said. "The prices are unlikely to recover until 2013."

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