SEMIRARA Mining and Power Corp. (SMPC) has earmarked P4.6 billion to refleet its mine equipment, cornering more than half of its capital expenditure budget this year, its top official said on Monday.
“For 2022, we intend to spend P8.8 billion for mine equipment refleeting, power plant maintenance, and power plant construction,” Maria Cristina C. Gotianun, SMPC president and chief operating officer, said told stockholders during the company’s annual meeting on Monday.
Up to P2.4 billion of the spending budget will go to the construction of a power plant, while the rest at P1.8 billion will be used for the maintenance of power plants.
“As a background, we are constructing a 13-megawatt (MW) power plant in Semirara Island to replace a 38-year-old facility and provide additional steady supply for our mining operations,” she added during the virtual event.
SMPC prides itself to be the only power producer in the country that owns and mines its fuel source. It is the largest local coal producer with a share of 99% of the country’s coal output.
Ms. Gotianun said the company expects stable output for its coal business segment this year as it was able to control the water level at its coal mine.
“Our goal is to produce up to 15 million metric tons. This should allow us to sell around 15 million metric tons of coal,” she said.
“As for the power segment, we see continued headwinds and tailwinds because of unit 2 election-related activities, higher fuel prices, and full reopening of the economy,” she added.
SMPC subsidiary Sem-Calaca Power Corp. previously reported a breakdown of a plant generator component in its unit 2 in December 2020 after only seven months of use. It resumed operations in September 2021 but at a derated capacity of 225 MW.
But in November, unit 2 went on an unplanned shutdown because of plant component’s failure. The downtime is being used to raise its capacity back to 300 MW.
SMPC expects the unit’s operations to resume in the third quarter of this year after faulty machinery, supplier induced delays, and an ongoing technical investigation.
“We are managing this situation very closely to improve overall availability and profitability,” Ms. Gotianun said.
She described SMPC’s financial results last year to be “historic” although she is bracing “for another year of extreme volatility.” She last year, the company faced several “headwinds and tailwinds.”
Ms. Gotianun enumerated these to include the “raging” pandemic, excessive water seepage at its coal mine, plant outages, China’s coal price cap, and a defective power plant equipment.
“On the flip-side, China demand and import quota increased on accelerating industrial activities, mine shutdowns and continuing ban on Australian coal,” she said.
Last year also marked the return of domestic electricity consumption to pre-pandemic levels, while supply constraints, prolonged plant outages and oil price hikes drove up prices.
“These developments triggered dramatic price shifts for our coal and power segments,” she said.
Isidro A. Consunji, SMPC chairman and chief executive officer, said in his report said the company last year “surged beyond and seized the growth opportunities given by the global economic reopening.”
SMPC’s consolidated net income in 2021 grew nearly five times to P16.2 billion as its gross revenue rose 85.6% to P52.42 billion.
Ms. Gotianun said improved market conditions “magnified the operating gains in our mine site and softened the impact of our power generation decline.”
“Our all-time-high top line and bottom line were mostly driven by the coal segment, which made a strong comeback in 2021,” she added.
Ms. Gotianun said SMPC has enough reserves until 2027, or the end of its coal operating contract. She placed the annual coal production until then to be at 13 million to 16 million metric tons.
In the face of China’s coal consumption slowdown because of lockdowns, she said SMPC was able to supply Semirara coal to new local buyers in the power and cement sectors, while developing new exports markets, namely: South Korea, Cambodia and Brunei.
SMPC’s coal resources come from Semirara Island in Caluya, Antique province.
At the stock exchange on Monday, SMPC shares were unchanged at P27.50 each. — VVS