Severe wet weather has put a dampener on quarterly results from Straits Asia Resources" Sebuku coal operations in Indonesia with production down by more than 20%. In the second quarter 623 million tones of coal was produced compared to 791 for the same quarter last year.

Torrential rain continued into July, causing Sebuku to declare Force Majeure under its coal sales contracts. It is the first time the mine has been forced to apply such measures.

Straits Asia's chief executive officer Richard Ong says: "It is disappointing that the positive steps and improvements made to increase the production capacity

of Sebuku in the past six months have been compromised by the highest level of sustained rainfall recorded on Sebuku in more than 20 years.

"Conversely, a factor in the strong results for the corresponding period of 2006 was lower than average rainfall affecting production over that period."

About 3.2 metres of rain was recorded at the mine in the seven month period to the end of July with 417mm falling in the week before the declaration of Force Majeure. This compares with typical average rainfall on Sebuku over a 12 month period of close to 2.5 metres.

Notwithstanding this situation the mine continued to enlarge its footprint, with expansion plans underway for increased production levels. The necessary plant and infrastructure upgrades to achieve 6 million tonnes annual production capacity are still on track for completion by mid 2008.

However, as a result of production disruptions caused by wet weather during the first half of 2007, mining operations to meet this production target will lag this timeframe by about 3-4 months. Part of the recovery plan underway also captures a significant upgrade to the operation's pumping and water management capabilities that will serve to bolster the mine's ability to operate through similar rainfall events.