Philippines’ SMPC looks to diversify coal exports

The Philippines' sole large-scale commercial coal mining firm Semirara Mining and Power (SMPC) is eyeing a further diversification of its export destinations this year as a way to buffer itself from volatility in the international market.

One market the company is aggressively expanding into is South Korea.

Coal sales to South Korea reached over 300,000t in the first quarter of 2022, accounting for 10pc of SMPC's export sales for the period. In contrast, sales to South Korea over the whole of 2021 reached only 282,000t, or 3pc of SMPC's sales for the year.

The increase in sales to South Korea is part of SMPC's strategy of mitigating its risks in the export market. Historically, coal sales to China accounted for the vast majority of SMPC's export sales. Deliveries to China made up 95pc of the company's total exports last year, but this share has decreased to 71pc in 2022. SMPC said the fall is down to two factors — higher domestic output from China as part of the country's efforts to ensure energy security in light of the Ukraine-Russia conflict; and a move to cut down on carbon emissions by shifting to green energy.

SMPC said its expansion into other markets including South Korea will help offset the lower sales to China. SMPC noted that the fresh sales are all on a spot basis and it did not disclose its sales volume targets to the new markets.

An increase in export sales is unlikely to affect domestic deliveries, the company said. The bulk of the coal produced by SMPC is meant for export, accounting for 60pc of the company's total sales.

The bulk of the domestic coal sales that SMPC fulfils are to its own coal-fired power plants, with some deliveries to other local power and cement plants. These domestic sales are mainly under long-term contracts and as such, SMPC is obliged to fulfil these prior to selling its output on the spot export market.

The company produces low-rank GAR 4,500 kcal/kg coal and is targeting total production and sales of 15mn t for 2022.

By Antonio delos Reyes