TTA to raise stake in Cebu coal-mining venture
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Thoresen Thai Agencies (TTA) plans to take a direct stake in SKI Energy Resources Inc (SERI), which controls an active coal mine as well as concessions in the Philippines' Cebu province.
“The investment is consistent with TTA’s strategy to increase its exposure to the energy sector, while making investments that offer synergies with its established shipping and logistics activities,” the company said yesterday.
In a statement to the Stock Exchange of Thailand, the company said it would inject US$5 million (Bt155 million) in cash in SERI and convert $20.3 million in debt to equity. After the capital increase, TTA’s direct economic interest in the venture will stand at 47.07 per cent. The transaction is expected to be completed in February.
SERI now holds 12,000 hectares (75,000 rai) under coal operating contracts granted by the Philippine Energy Department and has an ongoing application for 8,000 hectares, of which the award of 6,000 hectares is expected imminently.
TTA said global demand for energy continued to rise, and coal remained a primary fuel
for power generation, particularly in Asia. Forecasts from industry experts and investment analysts project coal demand to grow strongly over 20 years or more.
The Philippines imports more than 12 million tonnes of coal annually, and the government encouraging investment in the coal-mining industry to develop substantial domestic coal reserves.
Cebu, the site of SERI’s initial mining operations, has local coal demand for power generation that is currently being met largely by imports.
As regards export potential, other mining operations in the Philippines export coal, largely to China for industrial use.
Existing production at SERI is being sold domestically to power producers and the cement industry, and local demand is far in excess of SERI’s projected production in the next several years.
TTA has been involved in the venture since 2009 through a minority interest in Merton Group (Cyprus). Merton was at the time the sole international partner in SERI.
The $25.3-million investment gives TTA, through its wholly owned subsidiary Soleado Holdings, 40 per cent of the voting rights in SERI.
After the investment, Merton and SKI Construction Group will each hold 26.47 per cent in SERI.
