Banpu lowers capex plan on falling prices
Banpu has downsized its five-year capital-expenditure plan by US$600 million (Bt19 billion) to reflect falling coal prices.
Chanin Vongkusolkit, chief executive officer of the country’s largest coal miner, said yesterday that investment from 2012-16 would be scaled back from $1.75 billion to $1.15 billion, as coal prices should stay at the current level until late this year or early next.
The original plan earmarked $600 million for Australia but the revision will delay spending by $200 million.
Mongolia was expected to get $400 million but half of that will be deferred.
Banpu’s production and sales target for this year has been cut to 44 million tonnes from 47 million tonnes, and for 2015 to 55 million tonnes from 60 million tonnes.
The step was taken to maintain the company’s financial strength, deal with the volatile coal price and keep cash for future investment or business take-overs. The company is still looking for opportunities to buy new assets.
The decline in the global coal price will also pressure the company’s sales. Its revenue is now expected to grow by only 3 per cent this year, instead of 15 per cent, from Bt112 billion last year.
The coal price is now at $88-$89 per tonne versus the peak of $125-$130, indicating that the average price this year will be $95, close to last year, because of the oversupply in the world market.
But the price will improve at the end of this year or the first quarter of next year, since some mining firms will suspend production in line with the falling price.
Banpu’s middle- and long-term business plans are not affected, as the price decline will not last long, but the company will continue to closely monitor the situation, Chanin said.
