Angelica Y. Yang, Reporter
SEMIRARA Mining and Power Corp. (SMPC) is not likely to return to its pre-pandemic profit this year, its top official said, even as the listed firm expects its coal business to fare better this year.
“Given our operational headwinds and until our country reaches herd immunity, it is unlikely that we will return to our pre-pandemic profit level this year,” said SMPC Chairman and Chief Executive Office Isidro A. Consunji said during the company’s annual stockholders meeting (ASM) held virtually on Monday.
Due to the pandemic, the firm’s businesses experienced “significant setbacks” last year, including a drop in global coal prices, China’s mandatory import quotas to boost sales for domestic producers, and a slump in electricity prices.
“Further dragging our coal and power businesses were the abnormal water seepages in Molave North Block 7 [in Antique] and multiple outages of our power plants,” Mr. Consunji said.
Although he described 2020 as a “very bad year” for the company, he expects 2021 to bring some improvements on SMPC’s bottom line as coal and electricity markets start to recover.
SMPC recorded a 66% fall in consolidated after-tax income to P3.29 billion for 2020, on the back of lower coal and power revenues. Its net income in 2019 stood at P9.68 billion.
“This year, we expect our coal business to perform better on the back of recovering consumption and prices,” SMPC President and Chief Operating Officer Maria Cristina C. Gotianun said during the annual meeting.
Water seepage at North Block 7 has been lowered to manageable levels, with yearly coal production expected to reach 13 million metric tons, she said.
Ms. Gotianun said that the company aims to manage its market exposure but contracting out the bulk of its dependable power capacity. “Our goal is to secure bilateral contracts for around 70% of our total capacity by 2022.”
However, the firm is expecting mixed results from two of its power subsidiaries Southwest Luzon Power Generation Corp. (SLPGC), and Sem-Calaca Power Corp. (SCPC) this year.
“SLPGC is set to stage a strong profit recovery because of higher plant availability and better spot market prices,” Ms. Gotianun said. “Unfortunately, SCPC is likely to deliver disappointing results because of the forced outage of its Unit 2 beginning December 3 last year,” she added.
SMPC is working on accelerating the repair of SCPC’s generator for the second unit. If repair activities are completed, the power plant unit will be up and running by the third quarter of this year, Ms. Gotianun said.
Mr. Consunji said that the company plans to take advantage of the projected upswing of the coal and power markets by “capitalizing on its COVID-19 resiliency.”
In the coming months, SMPC looks to inoculate over 5,000 employees and indirect workers in its mine site, power plant complex and head office.
“The bulk of our vaccines will go to our Semirara Island work force, as their location limits their access to timely and quality health care. We will also prioritize employees whom we consider as high risk because of their official interaction and travel outside of their work assignment,” Ms. Gotianun said.
BIG ROLE FOR OIL AND GAS
In the next decade, Ms. Gotianun said that she expects coal and oil to both play a significant role in the country’s power mix.
She said based on Department of Energy (DoE) data, the company’s Semirara business supplied around 15% of the Philippines’ total coal demand of 33 million metric tons in 2019.
While SMPC’s core competency is in coal-based power, she said that its parent DMCI Holdings, Inc. was “looking at opportunities in the renewable energy (RE) sector.”
Latest data from the DoE showed that coal-fired power plants made up 10,944 megawatts (MW) or 41.69% of the country’s installed capacity last year, while oil-based plants accounted for 4,237 MW or 16.14%. Renewables comprised 7,617 MW or 29.02%.
On Monday, SMPC shares at the local bourse improved 1.46% or 18 centavos to close at P12.48 apiece.