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Coal-Mining Operator to Branch into China

Posted on: Wednesday, 18 January 2006, 21:00 CST

By Busrin Treerapongpichit, Bangkok Post, Thailand

Jan. 18--Regional coal-mining operator Banpu Plc is negotiating to buy a number of power plants in China from US-based power company Alliant Energy Corporation.

"We are now under negotiation as a candidate for the deal," said Banpu's chief financial officer Somruedee Somphong.

However, because the sale is underway, terms and conditions are still under review.

"It is still too early to disclose any details," Ms Somruedee stated.

An industry source said the deal involved five coal-fired power plants across China, with a total capacity of 300 MW.

The deal, worth around $100 million, was likely to be closed next week.

Alliant Energy holds a major stake in 10 power plants in China via its subsidiary Peak Pacific (China) Investment Co. Alliant started to divest its investment in all of its Chinese power facilities in mid-2005, as part of a valuation adjustment policy.

Alliant is aiming to seal a final China deal in June, involving power plants that sell electricity to single customers, provide heat and power to a local grid, steam to industry and heat to residential customers.

Nithi Wanikpun, an analyst for Phatra Securities, said the transaction would be positive to Banpu as it would help secure coal demand for its Chinese coal mines.

The power plants, which are already operational, will contribute income to Banpu, as well as provide a platform to expand its power investment portfolio.

In addition, she said, the revenue from power would help eliminate Banpu's risk from the impact of volatile coal prices.

However, it may need to take risks in terms of the unpredictable regulations implemented by the Chinese government.

Banpu previously announced its policy to increase investment in China as it aimed to see accumulated investment in the country reach $200 million by 2008.

Banpu has already invested $32 million in China through its affiliated firm Asian American Coal Inc.

Thailand's largest coal-mine firm also committed to spending $38 million as equity investment in its second Chinese joint venture Hebi Zhong Tai Mining.

Banpu has developed a 1,434-MW power-generating plant, BLCP, joining hands with China Light Power.

Banpu shares closed yesterday at 135 baht, down three baht, in trade worth 286 million baht.

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Copyright (c) 2006, Bangkok Post, Thailand

Distributed by Knight Ridder/Tribune Business News.

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LNT, BNPMF,

Source: Bangkok Post

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