Wednesday, July 22, 2015

Coal supply intact, but price risk cited

Business World Online
Posted on July 22, 2015 11:24:00 PM
By Claire-Ann M. C. Feliciano, Senior Reporter

LOCAL SUPPLY of coal for power plants is expected to remain secure for at least a month even after Semirara Mining and Power Corp. halted mining operations, officials said yesterday, even as the Energy department flagged price risks once such facilities start importing requirements when domestic stock runs out.

Coal accounts for about a third of the country’s energy mix.

Semirara said in a statement yesterday that it suspended its coal exports after being ordered by the Department of Energy (DoE) “to prioritize the requirements of domestic coal consumers, pending the investigation of the cause of the landslide at North Panian last July 17...”

The directive came amid ongoing investigations of last weekend’s accident at the company’s mine in Antique that killed nine personnel.

Immediately after the accident, the department suspended the company’s mining operations on Semirara Island, effectively halting the listed miner’s coal production.

The company’s shares -- which had promptly slashed nearly 14% of value at the closing of trades on Monday from their Friday finish of P143 apiece -- yesterday marked their third straight day of losses, further shedding P11.40 or 9.31% to settle at P111.10 each.

Semirara said its annual coal production averages about 8 million metric tons (MT), of which 60% are exported.

Coal contributed about half to the company’s P7.2-billion revenues in the first quarter, while power sales accounted for the balance.

The company said yesterday that it has already advised its foreign customers that it can no longer schedule more shipments until the department reaches a decision on its mining operations, adding: “We have also advised DoE of these developments.”

The company also pledged to cooperate with authorities and manage limited coal inventory to avert supply disruptions to local power plants and cement customers that run their own smaller power facilities.

DoE records show Semirara’s coal fuels several power plants in Luzon and the Visayas with 1,593 megawatts (MW) in cumulative capacity.

“We still have 600,000 MT for the local market from the existing inventory,” Isidro A. Consunji, Semirara vice-chairman and chief executive officer, said in a text message yesterday, adding that the stockpile may be sufficient to supply local customers for one month.

‘NO IMPACT YET’
“We are finishing the loading of vessels in Semirara for the 600,000 MT that we still have there,” Mr. Consunji said.

He also emphasized that potential import requirements of the coal-fired power facilities that rely on Semirara for their fuel needs will “depend on each one’s existing inventory...”

The assurance was echoed by Zenaida Y. Monsada, officer-in-charge for the Energy secretary, who said that “Semirara can still deliver to their customers from their stockpile at the mine site.”

“There will be no impact yet on customers because there’s still existing inventory,” Ms. Monsada said in a telephone interview yesterday.

The official also acknowledged that customers of Semirara may be compelled to import for their future supply “if Semirara’s operations will be suspended for a long time.”

Asked how prices of electricity could be affected by the possible importation of coal for power supply, the DoE said in a separate statement: “Price will increase if you import your coal because of additional shipping costs.”

“The DoE assures the public of updates and continued measures to ensure no power disruptions will occur in light of these developments,” the statement read.

To recall, the northern part of Semirara’s Panian mine collapsed at around 3:45 a.m. on Friday last week.

The department yesterday said the bodies of all nine fatalities of the accident have been recovered.

Ms. Monsada said a preliminary report by the DoE’s Investigation Committee showed that “the incident was due to a slope failure characterized by the slumping of back fill materials,” adding that two weeks of rainfall may have played a role in the accident.

Ms. Monsada cited the possibility of permanent suspension of Semirara’s mining operations, but said this would depend on results of current investigation.

She also emphasized that the circumstances behind the recent incident were different from what occurred in February 2013, when a landslide at the Panian mine’s western portion resulted in 10 fatalities.

The earlier accident led to the immediate suspension of mining activities in the entire site.

Two months later, the Energy department allowed the company to resume operations at the mine’s northern portion.

Semirara last Monday pledged assistance for families of the nine workers that were killed in the latest accident. The company said it has been facilitating life and accident insurance claims of the victims, released funds to cover transportation and incidental expenses, as well as P1 million financial assistance to each of the nine grieving families.

“Moving forward, we will shoulder all the education expenses all the way to college of the children of the victims. If they are already of employment age, we are prepared to provide them with jobs,” Semirara said then. source

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