Semirara falls short of target coal output this year due to mining deferral

Consunji-led Semirara Mining and Power Corporation (SMPC) indicated that it may fall behind its 15 million metric tons of coal production this year, because of its decision to voluntarily defer operation in a block within its Molave mine area due to water build-up conundrum.

To date, the company noted it is still lagging behind by 1.7 million on this year’s output goal; and “ramping up production to meet the full year target is unlikely at this point given the water seepages at NB7 (North Block 7).”

SMPC thus noted that “with the lower production, estimated financial impact is an increase of around P900 million in cost of coal sold owing to higher weighted average cost, which will impact 2020 profitability.”

The Consunji firm primarily apprised the Philippine Stock Exchange (PSE) that the temporarily ceased mining operation in the specified block had been “due to water build-up in the sump of NB7, which was caused by water seepages and aggravated by heavy rainfall from the recent typhoon.”

On that business decision, SMPC said the time leeway will allow the company’s technical consultants and mining personnel “to implement remedial measures to manage the water build-up.”

The firm noted that at this point, it cannot give yet a definitive timeframe on when operations in the affected area will be back to normal, pending the execution of warranted remedial measures.

The Semirara coal mine is the country’s biggest; and its production is being utilized by various coal-fired power facilities; and the balance is being funneled for exports.

Despite the dilemma at NB7 within the Molave mine, SMPC emphasized that “coal shipments for this year will not be affected by the deferral of the mining operations,” as the company still has 3.4 million metric tons of coal inventory as of December 1 this year.

Nevertheless, the Consunji firm qualified that it “may not be able to meet the coal quality specifications of a few customers due to the expected delay in the production of high CV (calorific value) coal.”

Given that anticipated snag, SMPC said it is now in discussion with affected customers on how they shall address the delay in the provision of coal of specified quality.

A number of power plants in the country are sourcing coal from Semirara either for their fuel blending needs or to harness them as direct fuel for electricity generation.