Semirara Mining and Power Corp. and the Consunji Group plan to review plans to put up a cement project on Semirara Island following the issuance of Executive Order No. 130, which lifted the moratorium on new mining projects.
“The lifting of the MPSA [mineral production sharing agreement] moratorium is a welcome development. In the meantime, we will revisit the feasibility study of the cement project given the pandemic, current market conditions and tightening credit standards,” SMCP president Cristina Gotianun said during the virtual annual stockholders’ meeting Monday.
“After all, it is the financial viability and other economic considerations which will dictate the progress of this project,” Gotianun said.
DMCI Holdings Inc. of the Consunji Group bared plans to put up a cement plant on the island as early as 2016. In 2017, the company announced possible investment of up to $300 million for the cement manufacturing facility, but the project did not materialize.
“The opportunity to venture into cement project was contemplated in the past. Today, the economics of the project has changed. And we cannot tell when this COVID pandemic will be over. We will revisit when economic recovery from this pandemic will be certain. There are still a lot of economic uncertainties right now. On a positive note, there is a no more regulatory hurdle with the lifting of EO 79,” Gotianun said.
SMPC was not spared from the impact of the COVID-19 pandemic as its coal and power businesses reeled from low demand and weak prices.
Gotianun said coal production fell by 13 percent to 13.2 million metric tons in 2020, while coal sales decreased by 16 percent to 13.1 million metric tons, as demand from China declined because of quarantine restrictions and tighter import quotas.
“This year, we expect our coal business to perform better on the back of recovering consumption and prices,” she said.
SMPC chairman Isidro Consunji said the company was not expected to return to pre-COVID profitability levels this year. The company posted a net income of P3.3 billion last year, down by 66 percent from 2019.
“For 2021, we expect some improvements on our bottom line as the coal and electricity markets recover from last year’s historic lows. To take advantage of the upswing, we will capitalize on our COVID-19 resiliency and adaptation strategy of focusing on our people, finances and execution skills. 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,” Consunji said.
Consunji said both the coal and power businesses of SMPC suffered significant setbacks last year because of the pandemic.
Global coal prices dropped by more than a fifth as COVID-19 containment measures curbed industrial production and commercial energy use, he said.
He said China’s imposition of import quotas to boost prices and sales for their domestic producers compounded the situation.
Consunji said local electricity prices slumped on lower demand as many businesses closed or operated at reduced capacity last year.
“Weak demand, coupled with stable supply, cut average spot market prices by half, which magnified the vulnerability of our uncontracted capacity,” he said.