Merkado Barkada
October 16, 2024 | 8:00am
Semirara Mining and Power [SCC 34.00, down 0.7%; 344% avgVol] [link] confirmed a report that it was planning to spend approximately P291 billion (~$5.07 billion) over a five-year span to run both of its existing coal pits (Molave and Narra) at the same time, then to run the new Acacia pit when the Molave and Narra pits are depleted. The Molave pit reached its end-of-mine life in November 2023. SCC expects the Narra pit to reach its end-of-mine life in 2026. The expansion project will be undertaken until 2027. SCC plans to mine its new Acacia pit once the (expanded) Molave and Narra pits have been fully monetized. The company has submitted its documents to the Department of Environment and Natural Resources.
MB bottom-line: SCC says all the right things when it talks about how the expansion will support the local economy through added employment, infrastructure development, and economic activity, but the truth of the matter is that coal is still in demand because it takes time to build energy generation facilities, and our country’s coal power plants are still relied on to produce “baseload” power that “naked” renewable energy facilities (without attached battery builds) cannot. Yes, coal is dirty. Yes, coal kills. Yes, this new Acacia pit is going to be “open pit”-style just like the Molave and the Narra, which is one of the most dangerous for workers and the environment (both land and sea). But the reality of the grid is that coal is still needed to get us through the day. Even if our grid didn’t need a single metric ton of coal, I imagine SCC would still push through with the expansion to sell its coal on the open market. Sure the price is a lot lower than it was during that crazy pump, but money is money, and SCC makes a lot of it. This expansion could help extend the life of this coal party for SCC and its shareholders.
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