Semirara looking at bumpy 2022 amid ‘erratic’ coal, fuel prices

Integrated energy company Semirara Mining and Power Corp. is less optimistic about its earnings prospects for the year, mainly due to the surge in prices of electricity and other commodities.

Nevertheless, the Consunji-led listed firm has programmed P8.8 billion in capital expenditures for 2022, with over half of the budget earmarked for its coal segment.

“The erratic movement of coal, fuel and electricity prices should translate to uneven quarterly results, reduced margins and high cash burn rate for our company,” said Semirara Mining chair and CEO Isidro Consunji during the company’s annual stockholders’ meeting held virtually.

“But I would like to assure you that we’re doing everything we can to mitigate the risks, protect our cash flow and deliver our performance worthy of commemoration,” he added.

Semirara Mining president and CEO Maria Cristina Gotianun said that for the power business, headwinds and tailwinds would come from the operation of Unit 2 of 300-megawatt of Sem-Calaca coal-fired power plant in Batangas, election-related activities, higher fuel prices and full reopening of the economy.

Forced shutdown

The power facility was on forced shutdown beginning November last year because of an equipment failure. It was supposed to go back online in January, but Gotianun said they were now looking at resuming operations in the third quarter as it was bogged down by faulty machinery, supplier-induced delays and an ongoing technical investigation.

Gotianun assured Semirara Mining was monitoring this situation “very closely” to improve overall availability and profitability.

Semirara Mining logged a net income of P16.2 billion in 2021, an increment of 393 percent from the P3.3 billion recorded a year ago, the highest in its 41-year history, thanks largely to skyrocketing coal prices.

Highest profit level

In the fourth quarter of 2021, Semirara Mining’s bottom line expanded by nearly 20 times from P297 million to P5.9 billion, its highest profit level for any given quarter.

This, as Semirara Mining reported an 8-percent rise in coal production, 16-percent jump in coal shipments and 71-percent surge in average coal selling prices.

Gotianun said the 2022 capex would be broken down as follows: P4.6 billion for mine equipment refleeting, P2.4 billion for power plant construction and P1.8 billion for power plant maintenance.

The firm is building a 30-MW power plant on Semirara Island to replace a 38-year-old facility and provide additional steady supply for its mining operations.

Gotianun also said they have completed backfilling operations for North Panian pit last January, months ahead of the May 2022 schedule that was committed to the Department of Energy.

The Panian mine—once the largest open-pit mine in the Philippines—spanned 400 hectares with topographic elevations ranging from 300 meters below sea level to 30 meters above sea level during its mine life. Three hundred meters is roughly the height of a 90-story building.

Semirara Mining, in a statement, said it fully covered the pit in six years, way ahead of the original 10-year rehabilitation plan. INQ