MANILA, Philippines—A wholly owned subsidiary of Philex Petroleum Corp. has suspended its coal operations to review the viability of the business and its prospects in view of the “unexpected change in market conditions.”
In a disclosure to the Philippine Stock Exchange on Wednesday, Philex Petroleum reported that its coal arm, Brixton Energy and Mining Corp., “has recently been adversely affected by the significant drop in coal prices.”
“In response to this 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,” Brixton Energy general manager Isagani H. Francisco was quoted in the disclosure as saying.
According to Francisco, the review is expected to take up to six months.
“(While) this assessment is being undertaken, (Brixton Energy) thought it would be prudent to suspend its underground mining operations. In the meantime, activities will be confined to maintenance and repair of the coal mine, and to the processing and marketing of existing coal inventory,” Francisco explained.
Philex Petroleum also reported that Brixton Energy had already advised on Tuesday the Department of Energy of the review of its coal mining operations.
In the first three quarters of 2012, Brixton Energy generated coal sales of P34 million.
The company had an existing coal purchase agreement with Republic Cement Corp.
The contract was for a firm tonnage of 50,000 metric tons plus an additional optional tonnage of 10,000 metric tons, at the buyer’s option. The base price for these deliveries has been set but will be subject to adjustments depending on the calorific value of the coal delivered.
In the first half of 2012, Brixton Energy was able to deliver 4,886 metric tons of coal.