Semirara Mining Corp. (SCC), the Philippines’ largest coal producer, plans to spend $400 million to boost power plant capacity, forecasting that two-thirds of profit will come from generation in three years.
The company may sign a syndicated loan for 70 percent of the cost of the expansion as early as next quarter, Chief Executive Officer Isidro Consunji said in an interview.
Fresh supply is being added as the Southeast Asian nation saw power demand rise by 50 percent in the 10 years to 2012, more than three times the 16 percent increase in generation capacity over the same period, according to government data.
“It’s more logical to grow the power business,” Consunji said in a June 20 interview. “It’s simpler to run and is more profitable. We do what’s easy for us and we forget what’s not.” Semirara fell 1.3 percent in Manila yesterday. The stock has risen 27 percent this year, overtaking the benchmark stock index’s 15 percent advance.
The expansion will increase the Calaca coal-fired power plant’s capacity by 350 megawatts to 1,200 megawatts, Consunji said. It bought the plant from the government in 2009 for $362 million.
Power accounted for 54 percent of Semirara’s revenue in 2013, compared with six years ago when almost all sales came from its coal business, according to data compiled by Bloomberg. Semirara is 56 percent owned by DMCI Holdings Inc. (DMC), a company that’s also involved in construction, infrastructure, water and real estate. Consunji is president of DMCI Holdings.
Stop Exports?
As power demand increases, Semirara by 2015 may stop exporting the coal it produces from its mine in Antique province in central Philippines, Consunji said. In 2013, it exported almost half of its 7.63 million metric ton output.
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