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Covid-19 uncertainty will dent profits this year–Semirara

Consunji-led Semirara Mining and Power Corp. (SMPC) is expecting its coal business to improve this year but it would still not be enough to push its income to pre-pandemic levels.

SMPC Chairman Isidro A. Consunji also said the end of the pandemic remains unclear at this point as Covid-19 is hitting the country harder because of the new variants.

“For 2021, we expect some improvements on our bottom line as the coal and electricity markets recover from last year’s historic lows. However, 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,” he said during the company’s annual stockholders’ meeting.

SMPC’s consolidated net income after tax in 2020 plunged by 66 percent to P3.29 billion due to lower revenues, which fell 36.2 percent to P23.2 billion. Both the coal and power businesses of SMPC reeled from low demand and weak prices.

This year, its coal business is expected to perform better on the back of recovering consumption and prices, said SMPC President Maria Cristina C. Gotianun.

“The remedial measures we have been implementing since December have also allowed us to steadily normalize production. Now that the water seepage at NB7 (Molave North Block 7) has gone down to manageable levels, we expect annual production to hit 13 million metric tons [MMT],” said Gotianun.

SMPC deferred mining activities in NB7 last year because of excessive water seepages. Coal sales last year dropped by 16 percent to 13.1 MMT, as demand from China declined because of quarantine restrictions and tighter import quotas.

For its power generation businesses, SMPC expects uneven results from Sem-Calaca Power Corp. (SCPC) and Southwest Luzon Power Generation Corp. (SLGPC). Gotianun said this year’s goal is to secure bilateral contracts for around 70 percent of total capacity by 2022.

“SLPGC is set to stage a strong profit recovery because of higher plant availability and better spot market prices,” said Gotianun.

SLGPC owns 300MW coal plant in Calaca, Batangas.

“SCPC, meanwhile, is likely to deliver disappointing results because of the forced outage of its Unit 2 beginning December 3 last year,” added Gotianun.

SCPC owns the 600MW coal-fired power plant in Calaca, Batangas which the Consunji Group acquired from the government in July 2009.

The outage was caused by the breakdown of its 7-month-old generator. The company wants its supplier, GE, to shoulder all the cost to be incurred in the repair.

“Negotiations with GE—our generator supplier—are ongoing. While they have agreed to cover majority of the costs related to fixing the equipment, we are intent on making them shoulder all the necessary expenses. We expect to complete our negotiations within the year,” she said, adding that Unit 2 is likely to resume operation in third quarter.

Meanwhile, SMPC plans to vaccinate over 5,000 of its employees and indirect workers in its mine site, power plant complex and corporate office by the second semester.

SMPC owns the country’s biggest coal mining operations in Antique.

The bulk of the vaccines will go to its mining workforce as Semirara Island residents have limited access to timely and quality healthcare.

To enhance the island’s Covid-19 containment measures, the company also repurposed its sports facilities into a 217-bed quarantine facility for employees and residents.

Gotianun added that SMPC will provide free jabs to Semirara Island residents who want to be inoculated. The company will also assist its host local government units in transporting, storing and administering the vaccines.

Last April 30, SMPC donated 3,000 rapid antigen kits to the Antique provincial government to help identify Covid-19 positive cases.

To aid in decongesting the quarantine facilities in the Province of Batangas, SMPC repurposed a building inside its power complex in Calaca to serve as its employee quarantine facility. The building can accommodate nearly 60 employees.

Its power subsidiaries also remitted over P225 million to its Batangas host communities to aid the LGUs in managing the effects of Covid-19.

Read full article on BusinessMirror

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