Posted on January 09, 2013 11:01:58 PM
BRIXTON ENERGY and Mining Corp., a wholly owned subsidiary of Pangilinan-led Philex Petroleum Corp., has decided to suspend and review its coal mining operations due to depressed prices of the mineral, the listed parent said in a disclosure yesterday.
“In response to the unexpected change in market conditions, it has been decided to undertake a detailed review of the operations and prospects of the coal mining project under coal operating contract no. 130 located at Diplahan, Zamboanga Sibugay,” the disclosure read.
The company added that review could take up to six months.
While such assessment is being undertaken, Philex Petroleum said “it would be prudent to suspend underground mining operations.”
It added that activities in the area will be confined to maintenance and repair of the coal mine, and the processing and marketing of its existing coal inventory.
OVERSUPPLY
Philex Petroleum President Carlo S. Pablo said that the drop of prices in the coal market was due to the oversupply of coal.
“Reports say that there is regional oversupply resulting from a drop in demand from major coal buyers like China,” Mr. Pablo said in an e-mail yesterday.
“There are a number of coal price indexes that affected this. The drop was in the range of 20-30% over the past 12 months,” he added.
In another e-mail, Brixton General Manager Isagani H. Francisco said that the company “will review and reassess minable reserves, coal quality, geologic structures as well as mining methodology and techniques to address geological issues which adversely affected previous production.”
He added that Brixton has already advised the Department of Energy on its plans and that the company has started its review this month.
“This review will determine the viability of continuously operating Brixton,” Mr. Francisco said.
“During this period, there will be no income from production. However, since activities underground will be maintenance and repair, operating expenses will be drastically reduced,” he clarified.
He added that Brixton “will endeavor to sell its existing inventory to cover its operating expenses.”
REQUIREMENTS
Energy Undersecretary Ramon Allan V. Oca confirmed that “the international prices of coal are going down because of oversupply of coal that leads to a lower demand.”
He added that Brixton will have to submit “an updated work plan and target date on when they [sic] will resume operations of the coal mine,” but noted that the company “is definitely allowed to review and suspend their operations.”
Brixton, which was incorporated in 2005, is Philex Petroleum’s coal mining arm.
Philex Petroleum saw its bottom line swing to a P131.858-million net loss as of September last year from a P472.112-million net income in the same nine months in 2011.
In the same comparative periods, revenues fell 60% to P154.373 million from P387.061, as its earnings from petroleum sank to P120.304 million, just a third of P385.773 million the previous year.
Earnings from coal operations -- undertaken in its only coal mine in Zamboanga Sibugay -- grew 26 times to P34.069 million from a mere P1.288 million.
Costs in the comparative nine-month periods fell 14.4% to P255.859 million from P298.978 million.
The company’s shares gained 40 centavos or 1.19% to P33.95 apiece yesterday from P33.55 last Tuesday.
First Pacific Co. Ltd., a majority owner of Philippine Long Distance Telephone Co. (PLDT), is the single largest shareholder in Philex Mining Corp., Philex Petroleum’s parent. Hastings Holdings, Inc., a unit of PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc., has a minority stake in BusinessWorld. source
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