8-10 firms still eyeing key stake in Straits Asia, says CEO
By CHEW XIANG 7 March 2009
Between eight and 10 companies are still interested in buying a key stake in Singapore-listed coal miner Straits Asia Resources, chief executive Richard Ong said yesterday.
Mr. Ong said that discussions are ongoing, primarily over pricing. He did not reveal who the interested parties were, but said that they include companies from Singapore, Indonesia and Australia.
In December, Straits Asia’s main shareholder, Australian mining company Straits Resources, said that it was undertaking a ‘strategic review’ of its 47 per cent stake after receiving unsolicited approaches from several companies.
The next month, Straits Asia’s stock surged and the company was queried by the Singapore Exchange after Reuters said that commodity trader Noble Group and Indonesia’s PT Indika Energy Tbk were among the companies interested. But reports later suggested that their interest was cooling due to concerns over Indonesia’s new mining laws.
Mr. Ong indicated that any deal would have to be at some premium to the current share price, which closed at 78.5 Singapore cents yesterday.
‘It cannot be at the share price today, I definitely will not want to support,’ he told reporters. He added that any new investor will also have to back the present management team.
Straits Asia’s main assets are two coal mines in Kalimantan, Indonesian Borneo, which produced 8.6 million tonnes of coal last year, up from 3.4 million tonnes in 2007.
This, coupled with record coal prices during the year, propelled net profit fourfold, from US$28.6 million to US$124.4 million, as sales doubled to US$585.2 million from US$251 million.
Thermal coal hit a record US$200 a tonne in July last year but the price has slumped since, touching a 20-month low of just over US$62 a tonne this week.
But Mr. Ong said that Straits Asia has forward-sold 7.3 million tonnes of this year’s targeted production of 9.5 million tonnes at an average price of US$108 a tonne.
He said that the company aims to raise output to 20 million tonnes by 2012, through acquisitions and capacity expansion at existing mines.
Production at one of its mines, Sebuku, will fall a third, from 3.5 million tonnes last year to 2.2 million tonnes this year due to problems with a forestry permit, Mr. Ong said, but added that ‘there is no reason why’ the authorities will not soon grant the necessary clearances.
Straits Asia is also in discussions to buy another mine in Kalimantan. ‘We are not looking at greenfield, we are looking at a mine that is currently in production,’ said Mr. Ong. The deal could be finalised soon, and could add another two million tonnes to annual output.
Straits Asia has a US$170 million war chest to fund acquisitions and aims to spend US$70 million this year on capital expenditure, he said.
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8-10 firms still eyeing key stake in Straits Asia, says CEO
By CHEW XIANG
7 March 2009
Between eight and 10 companies are still interested in buying a key stake in Singapore-listed coal miner Straits Asia Resources, chief executive Richard Ong said yesterday.
Mr. Ong said that discussions are ongoing, primarily over pricing. He did not reveal who the interested parties were, but said that they include companies from Singapore, Indonesia and Australia.
In December, Straits Asia’s main shareholder, Australian mining company Straits Resources, said that it was undertaking a ‘strategic review’ of its 47 per cent stake after receiving unsolicited approaches from several companies.
The next month, Straits Asia’s stock surged and the company was queried by the Singapore Exchange after Reuters said that commodity trader Noble Group and Indonesia’s PT Indika Energy Tbk were among the companies interested. But reports later suggested that their interest was cooling due to concerns over Indonesia’s new mining laws.
Mr. Ong indicated that any deal would have to be at some premium to the current share price, which closed at 78.5 Singapore cents yesterday.
‘It cannot be at the share price today, I definitely will not want to support,’ he told reporters. He added that any new investor will also have to back the present management team.
Straits Asia’s main assets are two coal mines in Kalimantan, Indonesian Borneo, which produced 8.6 million tonnes of coal last year, up from 3.4 million tonnes in 2007.
This, coupled with record coal prices during the year, propelled net profit fourfold, from US$28.6 million to US$124.4 million, as sales doubled to US$585.2 million from US$251 million.
Thermal coal hit a record US$200 a tonne in July last year but the price has slumped since, touching a 20-month low of just over US$62 a tonne this week.
But Mr. Ong said that Straits Asia has forward-sold 7.3 million tonnes of this year’s targeted production of 9.5 million tonnes at an average price of US$108 a tonne.
He said that the company aims to raise output to 20 million tonnes by 2012, through acquisitions and capacity expansion at existing mines.
Production at one of its mines, Sebuku, will fall a third, from 3.5 million tonnes last year to 2.2 million tonnes this year due to problems with a forestry permit, Mr. Ong said, but added that ‘there is no reason why’ the authorities will not soon grant the necessary clearances.
Straits Asia is also in discussions to buy another mine in Kalimantan. ‘We are not looking at greenfield, we are looking at a mine that is currently in production,’ said Mr. Ong. The deal could be finalised soon, and could add another two million tonnes to annual output.
Straits Asia has a US$170 million war chest to fund acquisitions and aims to spend US$70 million this year on capital expenditure, he said.
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