Weak coal prices pull down earnings of Semirara in 2024

By Lenie Lectura – March 3, 2025
from Business Mirror

Consunji-led Semirara Mining and Power Corp. (SMPC) posted a 30-percent decline in earnings last year due to “normalizing” energy markets.

In a report to the stock exchange Monday,  SMPC said it posted a net income of P19.6 billion last year from P27.9 billion in 2023.

In the fourth quarter alone, SMPC generated P3.9 billion in net income, down 26 percent from P5.3 billion in the same period last year, due to weaker contribution from the coal segment, while the power segment remained relatively stable. SEMCalaca Power Corp. (SCPC) and Southwest Luzon Power Generation Corp. (SLPGC) are its power subsidiaries.

The coal segment contributed 57 percent of net income, followed by SCPC, 29 percent, and SLPGC, 14 percent.

Revenues contracted by 15 percent to P65.19 billion from P76. 96 billion, mainly due to lower selling prices for both coal and electricity, while increased sales volume provided some relief.

“The effect of weaker selling prices was cushioned by record-high coal shipments and power generation, increased electricity sales and lower government share,” the company said in a report.

SMPC is the only vertically-integrated power generator in the country that runs on its own fuel. As the largest domestic coal producer, it supplies fuel to power plants, cement factories, and other industrial facilities. It also exports coal to China, South Korea, Brunei, and other nearby markets.

Operating expenses went up by 12 percent to P4.81 billion while government share plunged by 40 percent to P6.38 billion due to lower coal revenues and narrow margins.

“Despite price corrections, we focused on key factors within our control—maximizing production, achieving record-high coal shipments and power generation. Our disciplined strategy and dedicated team played a crucial role in navigating energy market shifts,” said SMPC President, Chief Operating Officer and Chief Sustainability Officer Maria Cristina C. Gotianun.

In 2024, SMPC set new records, with total shipments reaching 16.5 million metric tons (MMT), coal production hitting 16 MMT for the third consecutive year, and gross power generation totaling 5,358 gigawatt hours (GWh).

The average Newcastle Index (NEWC) in the fourth quarter of 2024 edged up by 2 percent to $137.7 from $135.6, while the Indonesian Coal Index 4 (ICI4) dropped 12 percent to $51.8 from $58.9.

Overall average selling price (ASP) of electricity slid 3 percent to P4.16/kilowatt hour (kWh) from P4.29/kWh, on the combined effect of a decline in spot average selling price (ASP), higher bilateral contract (BCQ) ASP and improved sales volume.

In the fourth quarter of  2024 versus fourth quarter of 2023, SMPC’s net income grew 26 percent from P3.1 billion, driven by better contributions from the coal segment. Total shipments contracted 19 percent to 4.3 MMT from 5.3 MMT on lower production and limited inventory of commercial-grade coal.

During the same period, Semirara coal ASP dropped 15 percent to P2,821 per metric ton (MT), from P3,305 per MT, on stabilizing market prices and higher proportion of lower-grade coal shipments. Total production decreased 31 percent, from 4.2 MMT to 2.9 MMT, following pre-stripping of two new blocks in Narra mine.

The power business contributed P4.63 billion revenues. Total gross generation rose by 8 percent to 1,290 GWh from 1,195 GWh, on expanded average capacity of SCPC following restoration of SCPC Unit 2’s dependable capacity to 300 megawatts (MW).

As a result, total power sales rose by 13 percent to 1,223 GWh from 1,078 GWh, with 56 percent of generated electricity sold to the spot market.

At the end of 2024, 30 percent of the 840MW dependable capacity of the power segment is contracted. Net of station service, which fluctuates periodically, SMPC has 504.10MW available for sale to the spot market.

For this year, SMPC expects NEWC and IC14 to consolidate around $114.6 and $48.9, respectively. “To diversify its export market, the company is actively expanding its reach beyond China and Soth Korea, establishing access to India, Thailand, Japan, and Vietnam, to reduce reliance on a single major market.”

Also this year, SMPC expects spot prices to average P4.01/KWh, 22 percent lower than P514/KWh in 2024, driven by the full impact of the recently added baseload plants and of the additional 2,100MW in supply capacity scheduled to come in the year.

“The election season may also contribute to increased electricity demand, providing upside for the market.”