PNOC unit allots P2.2B for coal mines

PNOC Exploration Corp., the upstream oil and coal unit of state-run Philippine National Oil Co., is spending P2.2 billion to develop three prospective high-grade coal mines within Zamboanga Sibugay.

Poised to become a major player in the coal industry over the long term, PNOC-EC expects the three new coal mines—Lumbog, Lower Butong and Sta. Barbara—to increase its coal production by 800,000 metric tons a year. At present, production within its area covered by Coal Operating Contract No. 41 is 150,000 MT.

PNOC-EC chairman Gemiliano Lopez Jr. said that once the three mines start producing commercially anytime between 2013 and 2015, these will have a huge impact on the company’s revenue streams, given that the company expects to mine high-grade coal.

The production from the three mines will then add to the existing coal operations of the Malangas Project Operations (MPO), Lopez said in a briefing Thursday.

Using an exploration and development budget of P818 million, the Lumbog coal mine is being developed to start commercial production by 2013. With an expected minable reserve of 1.39 million MT, this particular mine alone is targeted to produce as much as 200,000 MT a year.

The Lower Butong and Sta. Barbara sites, for which P1.35 billion has been earmarked, are expected to start producing by 2015.

Expected minable coal reserves for the Lower Butong is about a million MT. PNOC-EC is set to drill 10 to 15 holes this year to increase its level of confidence in the area. On the other hand, the Sta. Barbara has the potential to contain 2 million MT of coal, which has yet to be confirmed by drilling. An estimated 30 holes will be drilled in the area next year.

Lopez explained that the move to develop more coal areas within COC 41, aside from the Malangas site, was intended to augment the supply of indigenous coal sources in the country and help ensure energy security.

Lopez added that PNOC-EC also plans to start purchasing low-grade coal and blend these with the high-grade coal it expects to source from the Zamboanga coal mines before trading or selling these locally.

He said there was a huge market for coal locally aside from the power-generation companies as more cement firms were starting to use coal for their operations.

PNOC-EC also holds several other COCs covering coal blocks in Isabela and Surigao del Sur. It also operates coal terminals in Cebu, Batangas, Zamboanga Sibugay and North Harbor, which serve as its handling facility for local as well as imported coal that the company supplies to power plants and cement factories in the Philippines.