Bloomberg News

Straits Asia Resources Draws Interest From Investors

February 23, 2007

Straits Asia Resources Ltd., a Singapore-listed coal producer with mines in Indonesia, said ``a range of parties'' are keen to buy stakes in the company.

The company hasn't decided on any sale, Martin Purvis, executive director at Straits Asia said in an interview in Singapore today.

``A number of people are very interested in getting their hands on resources,'' Martin Purvis, executive director at Straits Asia said in an interview in Singapore today. ``It's early days for us but going forward we will look at opportunities.''

Coal mining companies have become takeover targets as demand for coal used in power plants rises in Asia, while export cuts from China and shipping delays from Australia and South Africa increased prices. Tata Power Co., India's second- biggest utility by sales, may bid $1.6 billion to buy 30 percent of mines owned by Indonesia's PT Bumi Resources, India's Economic Times reported on Feb. 14.

``Customers, particularly the Japanese are becoming a bit concerned about their commodity supply, so they may want to take a slice,'' said Pieter Bruinstroop, a senior commodities analyst at Ord Minnett Ltd. in Melbourne. ``Thermal coal prices are firmer than many expect, you are obviously going to see the impact on the stock valuations.''

Coal Prices

Thermal coal exporters led by Xstrata Plc may get record prices this year from buyers in Japan, South Korea and Taiwan as rival producers in Russia and China demand higher-than-expected prices, Merrill Lynch & Co. said in a Feb. 13 report.

Xstrata and Rio Tinto Group may have offered to supply Chubu Electric Power Co. at $56 to $57 a metric ton for the year starting April 1, Merrill analyst Mike Harrowell said in a Feb. 13 report, citing a report by the McCloskey Group Ltd. Last year, Japanese buyers paid Xstrata $52.50, close to 2005's record.

Straits Asia's net income rose 8.6 percent to a record $48.2 million last year, the company said in a filing to the Singapore Exchange today. Its coal sales climbed 21 percent to an all-time high of 3.53 million metric tons, the company said in January.

The shares have surged 25 percent this year, more than the 11 percent gain in the benchmark Straits Times Index.

Straits Asia is pursuing ``a growth strategy at this point of time'' to become an integrated business with shipping, marine and engineering assets, Purvis said.

To contact the reporters on this story: Nesa Subrahmaniyan in Singapore at nesas@bloomberg.net; Leslie Tan in Singapore at lestan@bloomberg.net.

To contact the editors responsible for this story: Reinie Booysen at rbooysen@bloomberg.net; Julie Masuda at jmasuda@bloomberg.net


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