Straits Asia Has Capacity for $1 Billion Coal Bid

By Catherine Yang and Jesse Riseborough

Aug. 15 (Bloomberg) -- Straits Asia Resources Ltd., a supplier of coal to Japan, Taiwan and South Korea, will have the capacity to make an acquisition of more than $1 billion as coal sales rise amid record prices for the fuel.

The company will be making ``substantial cash-flows'' from next year amid higher coal prices, Chief Executive Officer Milan Jerkovic said in an interview with Bloomberg Television from Perth.

Straits reported a threefold gain in first-half profit last week after boosting output as prices rose. There's strong demand for thermal coal, used by power stations, in Europe and Asia and the market will remain under-supplied until at least 2010, according to Merrill Lynch & Co.

``Coal is on the increase and the fundamentals for coal demand and the tightness of supply hasn't changed,'' Jerkovic said. ``We can certainly see higher prices again towards the end of this year.''

Straits Asia fell 1.7 percent to S$2.38 at 12:04 p.m. Singapore time. The stock has dropped 24 percent this year.

To contact the reporter on this story: Jesse Riseborough in Melbourne at jriseborough@bloomberg.net