Banpu has acquired the remaining 78.4-per-cent stake in Asian American Coal (AACI) to consolidate its position in the Chinese coal sector and establish China as the company's third main geographic pole.
The investment of US$420 million (Bt13.81 billion) was made through Banpu's wholly owned subsidiary, BP Overseas Development (BPOD).
Banpu executives said in a statement to the Stock Exchange of Thailand that the acquisition was aimed at giving the company board and management control of AACI, thereby determining AACI's future strategy.
The acquisition involved the purchase of 32 million shares from other shareholders, which Banpu will need to finance from its cash flow and bank loans.
BPOD first became a shareholder in AACI in 2003. Established in the British Virgin Islands, AACI is engaged in investment in and development of coal-mining businesses in China.
AACI has a 56-per-cent shareholding in Shanxi Asian American Daning Energy (SAADEC) and a 45-per-cent shareholding in Shanxi Gaohe Energy (SGEC).
The partners in both of these joint ventures are large Chinese coal-mining groups.
SAADEC has a 25-year concession until 2025, with estimated anthracite reserves of around 88 million tonnes in Shanxi Province. After being commissioned in 2006, the mine produced 3.1 million tonnes last year.
Targeted coal production is about 4 million tonnes per annum. The coal is sold mainly to power and fertiliser industries in Shanxi and neighbouring provinces.
SGEC has a 30-year concession to develop an underground mine with estimated reserves of 191 million tonnes of semi-anthracite coal. The mine is currently under construction and will commence production by 2010 with a target capacity of 6 million tonnes per annum.
Banpu closed at Bt484 yesterday, up Bt16, or 3.42 per cent, from Thursday.
ACL Securities and KGI Securities (Thailand) said the share price could rise to between Bt540 and Bt560, due to higher coal prices.
ACL Securities said Banpu had bright earnings prospects, as rising coal prices would drive the company's sales revenue until next year.
KGI added that the low coal inventory in India gave further support for prices in the short term.