SMPC targets diversification into LNG

Consunji-led Semirara Mining and Power Corporation (SMPC), the country's largest producer of coal, is diversifying into liquefied natural gas (LNG) for the power generation segment of its business amid strong environmental, social, and governmental (ESG) pressures, according to the conglomerate’s top executive. During the company’s annual stockholders meeting, SMPC Chairman and CEO Isidro A. Consunji stated that “we expect to expand our power projects; and maybe a shift to LNG - if and when the situation arises that makes this shift a good business opportunity.” He emphasized that a site near to their existing power generating assets in Batangas would be perfect to host the planned LNG facility, although the specific details of the targeted venture had not been laid down yet by the company. “The Calaca location is ideal for LNG as well as coal. So, the question is really just an issue of business viability, but physically and technically, there’s no reason why SMPC will not go into LNG,” Consunji stressed. The SMPC chairman, nevertheless, qualified that amid the rising environmental, social and governance (ESG) pressure on corporates, there is no "exit plan" to be pursued as far as their coal operation is concerned, as that has always been the core business of the group. “Given that coal is our primary product at SMPC, it is difficult for us to exit coal. However, our approach is carbon mitigating plan which is to offset the carbon emissions of our coal and power plants with carbon credits and other mining activities or reforestation that will mitigate a lot of these carbon that are emitted by our existing businesses,” he said. For coal production this year, SMPC President and Chief Operating Officer Maria Cristina C. Gotianun indicated that target output will be matching last year’s 16 million metric tons level. “Based on our mine plan, we are going to produce 15 to 16 million metric tons for this year. 50-percent of that will come from Molave; and 50-percent will come from the Narra mine,” she specified. Bulk of the company’s coal output, at the scale of 70-percent will be funneled to the domestic market; and the balance of 30-percent will be allocated for export. On SMPC’s power generation business, Consunji noted that the strategy will still lean on combined bilateral contracts’ mode of marketing; as well as offering capacities via the Wholesale Electricity Spot Market. “For the power business, the present prices or volatile prices prevent us from taking a firm stand on fixed rate contracts, so for the moment, we intend to stay either with bilateral contracts with fuel pass-through or stay in the WESM/spot market for the time being. And maybe, if the fuel prices settle down, we can probably go back to more bilateral contracts,” he asserted. Additionally, Gotianun conveyed that P1.5 billion worth of capital outlay had been earmarked for the firm’s Calaca plant, that way, its electricity generation could be shored up, and would in turn reinforce its contribution both to the top and bottom lines of SMPC. “Based on the asset management plan of Calaca, we’ve allocated P1.5 billion capex (capital expenditure) for this year. So far, for first quarter of this year, the power plants have been running quite well and we hope that this will continue until the end of the year,” she narrated.