Semirara takes conservative growth stance

MANILA, Philippines — After a record year, integrated energy company Semirara Mining and Power Corp. (SMPC) is taking a conservative growth stance as it expects its coal segment to be tempered by the performance of its power generation business.

During the company’s virtual stockholders’ meeting yesterday, SMPC chairman and CEO Isidro Consunji said “the erratic movement of coal, fuel, and electricity prices should translate to uneven quarterly results, reduced margins and high cash burn rate for our company.”

“But I would like to assure you that we’re doing everything we can to mitigate the risks, protect our cash flow, and deliver our performance worthy of commemoration,” Consunji said.

For this year, SMPC is targeting coal production to reach 15 million metric tons (MT), up from last year’s 14.3 million MT.

“We expect stable output from the coal segment given the controlled water level at Molave NB7. Our goal is to produce up to 15 million MT. This should allow us to sell around 15 million MT of coal,” SMPC president and COO Maria Cristina Gotianun said.

Last year, the company sold 15.2 million MT of coal, with a 16 percent rise in coal shipments boosted by a 71 percent surge in average coal selling prices.

Due to Indonesia’s coal export ban in January, Gotianun said the company was able to close new customers for its coal business.

“We were able to establish and supply Semirara coal to new local buyers in the power and cement plants, namely San Miguel’s power plants in Masinloc, Limay, Malita and Petron, AboitizPower Therma Luzon Incorporated and Therma South Inc., Northern Cement and Goodfound [Cement]. We also were able to develop new export markets, namely Korea, Cambodia and Brunei,” she said.

For its power business, Gotianun said the company sees continued headwinds and tailwinds because of the Unit 2 of Sem-Calaca Power Corp. (SCPC), election-related activities, higher fuel prices and full reopening of the economy.

“We are managing the situation very closely to improve overall availability and profitability,” she said.

SCPC Unit 2 had a forced shutdown because of equipment failure on Nov. 18 last year. It was supposed to resume operations online in January, but its shutdown was extended due to faulty machinery, supplier-induced delays, and an ongoing technical investigation.

The company is targeting Unit 2 to resume operations in the third quarter with the operations and management (O&M) contractor providing results of the technical investigation by then, Gotianun said.

“Currently, the plant’s technical team is reviewing the inspection and test plan of the OEM (original equipment manufacturer) so that more stringent acceptance criteria can be agreed and any additional reliability tests needed can already be identified,” she said.

“During the repair, independent third-party tests will also be conducted with our technical advisor to comprehensively test the required repair of the unit,” the company president and COO said.

To improve overall availability and profitability, SMPC has set a capital expenditure of P8.8 billion this year for mine equipment refleeting, power plant maintenance and power plant construction.

“As a background, we are constructing a 30 megawatt (MW) power plant in Semirara Island to replace a 38-year-old facility, and provide additional steady supply for our mining operations,” Gotianun said.

Meanwhile, SMPC has completed its backfilling operations in Panian, once the largest open-pit mine in the country.

The company spent 11.5 million man-hours to fill the pit with over 452 million bank cubic meters (bcm) of earth material, which is enough to fill 217,000 Olympic-size swimming pools.

“We are mindful of our twin role as stewards and government contractor. What we accomplished in Panian is proof of that,” Gotianun said.

Located in Semirara Island, the Panian mine spans 400 hectares with topographic elevations that ranged from 300 meters below sea level (mbsl) to 30 meters above sea level (masl) during its mine life.

SMPC fully covered the pit in six years, way ahead of the original 10-year mine rehabilitation plan.

Mine rehabilitation refers to the repair of land that was disturbed by mining activities.

The company is now developing a science-based plan to reforest and restore the biodiversity in the area.

Panian had a mine life of 16 years and generated P12.7 billion in royalties for the government and SMPC host communities.

Of the total amount, P7.6 billion went to the national government while the municipality of Caluya and Brgy. Semirara received P2.3 billion and P1.8 billion, respectively. The Province of Antique received P1 billion.

In September last year, SMPC won in the ASEAN Energy Awards (Special Submission category) for the  accelerated rehabilitation of South Panian pit, which is considered as the fastest of its kind and scale in the Philippines.

SMPC completely filled North Panian with earth material in January, four months ahead of its committed date to the Department of Energy.