A shadow has fallen over Semirara Island, the heart of the Philippines’ coal production. Semirara Mining and Power Corp. (SMPC), the nation’s dominant force in coal, recently revealed a significant dip in its first-quarter earnings, a stark signal of shifting tides.
Net income plummeted by 12%, settling at P3.8 billion, a consequence of diminished power output and a slowdown in coal shipments. The company’s overall revenue also took a hit, shrinking 7% to P15.43 billion compared to the previous year’s P16.51 billion.
Coal, the bedrock of SMPC’s operations, saw revenues decline by 5%, reaching P11.18 billion. While the price per metric ton remained relatively stable, a reduction in export volumes contributed to the downturn.
Despite the challenges, SMPC managed to increase coal production to 5.9 million metric tons, a 4% rise attributed to improved access to coal seams at the Narra mine. However, this victory is bittersweet, as the Narra mine is nearing the end of its operational life this year.
Total shipments decreased by 4% to 4.5 million metric tons, primarily due to a drop in exports, while domestic demand held steady. The average selling price for Semirara coal lingered around P2,479 per metric ton, a delicate balance between lower-grade shipments and favorable global market conditions.
The power generation side of SMPC’s business faced even greater headwinds, with revenues falling by 19% to P5.08 billion. Unplanned outages significantly hampered electricity generation and sales, though higher contracted sales offered a partial buffer.
Electricity sales themselves dropped by 22% to 1,120 gigawatt-hours, a direct reflection of the plant’s reduced performance. Despite this, the average selling price per kilowatt-hour edged up 3% to P4.54, driven by a greater reliance on contracted sales agreements.
Currently, nearly half (49%) of SMPC’s 860 megawatts of dependable capacity is secured through contracts, leaving 363.3 MW available for the volatile spot market.
As the nation’s largest coal producer, responsible for 97% of domestic output, SMPC’s future hangs in the balance. The company’s crucial operating contract, governing its activities on Semirara Island, is now up for auction, a process fraught with uncertainty.
The Department of Energy has postponed the auction deadline, originally slated for April 28th, citing the need for “further notice.” This delay adds another layer of suspense as major power companies, including Meralco PowerGen Corp. and San Miguel Global Power Holdings Corp., have already expressed keen interest in vying for control of this vital resource.
