Semirara sees slower income growth in 2018 over plant shutdowns

MANILA, Philippines – Semirara Mining and Power Corporation, a coal mining and power generating firm owned by the Consunji group, expects slower net income growth this year due to scheduled and unplanned shutdowns of its 4 power plants.

Semirara Mining, however, said it will still register positive net income this year, as the expected strong performance of its coal mining business will "slightly offset the impact" of the recent shutdown of its power plants under Sem-Calaca Power Corporation (SCPC) and Southwest Luzon Power Generation Corporation (SLPGC).

For this year, Semirara Mining expects coal prices to average $80 per metric ton (MT), compared to last year's average of $50 to $60 per MT.

The company earlier said that higher coal prices, coupled with the weakening of the Philippine peso against the United States dollar, would boost its coal exports.

"We anticipate higher coal sales this year because of healthy demand from local and international consumers. The foreign exchange rate and strong coal prices will also prop up our bottom line," Semirara Mining president Victor Consunji said last week.

Higher coal prices are being driven by strong demand from China. Domestically, demand for coal is also increasing, which is also pushing coal prices higher, said Consunji. (READ: Semirara says open-pit mining ban won't affect operations)

He added that Semirara Mining would also be able to offset its replacement power costs in the succeeding quarters from its insurance claims.

Unit 2 of SCPC was offline for the most part of this quarter due to scheduled preventive maintenance and technical inspection in relation to its rehabilitation program, while Unit 2 of SLPGC was shut down for preventive maintenance work. 

Unit 2 of SCPC resumed normal operations on March 17, while Unit 2 of SLPGC went back online on April 16.

Unit 1 of SCPC and Unit 1 of SLPGC were also forced to shut down in early 2018, as the former required the removal of slags from its boiler while the latter exhibited abnormal equipment vibration.  

Unit 1 of SCPC went back online on March 17, but Unit 1 of SLPGC remains offline for repairs until August this year.

With the prolonged shutdown of SLPGC Unit 1, Semirara Mining started buying replacement power from the Wholesale Electricity Spot Market (WESM) in the last week of March, which had minimal impact on its 1st quarter earnings.

Consunji said SLPGC has business interruption insurance, covering the loss of business income as a result of damage to the insured asset. 

Meanwhile, SLPGC was issued a certificate of compliance in March by the Energy Regulatory Commission (ERC) for its 50-megawatt modular gas turbine power plant. 

SLPGC is now finalizing its contract with the National Grid Corporation of the Philippines (NGCP), allowing the Semirara Mining subsidiary to provide ancillary services to the grid operator.  

While awaiting the ancillary service contract to take effect, SLPGC is bidding its gas turbine capacity in the electricity spot market. –