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Energy Transition for Oil, Gas and Coal Sectors
by Marcelle P. Villegas - November 24, 2022
According to the Exec. Director of Philippine Chamber of Coal Miners, Inc., Semirara Mining and Power Corporation has become the template for coal mining in the Philippines due to their best practices in environmental protection and restoration. Is the Philippine oil, gas and coal sectors ready for the energy transition for reduced greenhouse gas emissions? (Photo credits: www.semiraramining.com)
Most industries are dependent on fossil fuels to operate. However, in response to climate change, there is a global trend that encourages countries to join in the energy transition of using green technologies. While in theory, this strategy looks promising and feasible. However, in some countries, like in the Philippines, this is a major challenge.
This was the scope of the roundtable discussion (RTD) last 4th of May 2022 during PH-EITI Conference with the Department of Finance and Department of Energy. The theme of the event was "Preparing the Extractives for Energy Transition".
To tackle the issues behind energy transition, PH-EITI and the Department of Energy- Energy Policy and Planning Bureau (DOE-EPPB) organised this RTD to provide energy stakeholders with information on existing policies and future government programs that will lead to the shift to a sustainable and low carbon economy. “Using the PH-EITI platform, the RTD intended to elicit stakeholder perspectives on energy transition and thresh out issues on the implications and effects of the transition on various sectors.”
Moreover, the of goal of the RTD this year is to inform the participants and involved industries about the Philippine's progress in implementing transition plans, policies and commitments, as well as the rollout of government programs to sectors that will be affected by the shift.
In the RTD, the different presenters and speakers discussed how the various sectors intend to address the issue of climate change in order to prevent future environmental problems.
On our previous article about this event, we reported the views of the mining industry about the energy transition, where most mining companies are ahead in taking proactive steps to achieve environmentally friendly operations and proper waste management.
This time, we shall highlight the reaction of the oil, gas and coal industries about the global transition.
Dir. Dona Minimo, Director, International Finance Group, Department of Finance, reported that the Philippines greenhouse gas emissions are currently a minor contributor to global warming at approximately 0.33% of the world share of greenhouse gases (GHD) emissions. “However, due to its economic development and rapidly growing population, the Philippines is projected to have sharp increases in CO2 emissions over the incoming decades. GDP growth is expected to strengthen seven to 8% in the medium term.”
Dir. Michael O. Sinocruz, OIC-Director, Energy Policy and Planning Bureau, Department of Energy, said that the Philippine Energy Plan 2020-2040 is connected with the goals of Ambisyon Natin 2040 which represents the collective long-term vision and aspirations of the Philippines in the coming years. In support of these aspirations, he shared that the DOE formulated the 9-point energy agenda, among these are providing access to electricity for all Filipinos, promoting energy efficiency, and establishing a pro-consumer framework.
According to the report in the RTD, “The mining, oil, gas, and coal industries are among industries directly affected by the global shift to net-zero emissions. As the energy transition progresses, fossil fuel producing or dependent communities and countries will face challenges sustaining revenues and the national economy in general. Communities that rely on revenues and jobs generated by fossil fuel production are among the most vulnerable to the transition.”
Therefore, in order to cope up with the difficulties that the transition will bring, producing communities and countries will have to find alternative revenue sources to replace the lost income.
“On the other hand, increased deployment of modern renewable energy and energy-efficient technologies also mean an increased demand for rare earth elements and other mined inputs. This will require a substantial ramp-up of existing production capacity. This means transition to a sustainable low carbon economy will definitely reshape the extractive industries.”
Director Arnulfo A. Robles, Executive Director of the Philippine Chamber of Coal Mines, Inc. (PHILCOAL) reported the perspective and achievements of the coal sector on the energy transition. He mentioned that Semirara has become the template for coal mining in the Philippines. Regarding environmental restoration and biodiversity, Semirara Mining and Power Corporation (SMPC) has conducted reforestation and biodiversity conservation goals, and reforestation and wildlife species propagation.
The company is currently studying and developing a concrete carbon transition roadmap. Part of SMPC’s strategy is to continuously monitor new and emerging climate-change legislation measures. They also assess its impact on business sustainability and future growth. SMPC bagged the Special Submission Category in the 2021 ASEAN Energy Awards.
For oil and gas sector’s perspective on energy transition Atty. Jose Ma. Emmanuel A. Caral, Secretary of the Petroleum Association of the Philippines. He disclosed that while companies remained focused on exploring, developing and producing the conventional oil and gas business, other companies have already started to diversify, and have made explicit commitments to achieve net zero emissions by 2050.
Atty Caral noted that there is a relatively slight growth in energy mix for power generation particularly in the wind and solar energy. He mentioned that oil and gas companies should choose to support the UN-Paris Agreement, it can significantly reduce emissions and energy consumption; lower carbon energy, reduce investment in traditional oil and gas. Unfortunately, he said that the Philippines continues to be heavily dependent on conventional fuels for transportation (by land, air or sea). He concluded that energy security is the replacement of affordable energy source to consumers.
PHEITI Website at https://pheiti.dof.gov.ph/resources/
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Philippine Resources - March 17, 2022
Semirara Mining and Power Corp earns P16.2b net income in 2021, highest in its 41-year history
Photo: Integrated energy company Semirara Mining and Power Corporation (SMPC) ended 2021 with a net income of P16.2 billion, the highest in its 41-year history. The 393-percent leap from P3.3 billion the previous year was mainly attributable to an 8- percent rise in coal production, 16-percent jump in coal shipments and 71-percent surge in average coal selling prices. “Our results reflect the hard work of our people. They rose to the challenges of the pandemic and delivered exceptional value to our stakeholders,” said SMPC president and COO Maria Cristina C. Gotianun. Contributions from the coal segment grew by 535 percent from P1.8 billion to P11.4 billion while both power subsidiaries delivered improved performances. Sem-Calaca Power Corporation contributed P3.3 billion, a 154-percent upturn from P1.3 billion the previous year. Meanwhile, Southwest Luzon Power Generation Company recorded a 1,563-percent rise in contributions from P87 million to P1.4 billion. For the fourth quarter alone, SMPC saw its net income expand by nearly twenty times from P297 million to P5.9 billion, its highest profit level for any given quarter. Average selling prices from October to December rallied by 229 percent from P1,354 to P4,452 as global supply disruptions and accelerated demand from China, India and Europe pushed index prices to record levels. Elevated coal prices offset the impact of lower shipments, which was nearly halved (46%) from 4.6 million metric tons (MMT) to 2.5 MMT owing to weather-induced coal production drops in the third quarter. Article courtesy of the Philippine Stock Exchange
Philippine Resources - May 04, 2022
SMPC completes mine rehab of largest open pit in PH
Integrated energy company Semirara Mining and Power Corporation (SMPC) has completed its backfilling operations in Panian, once the largest open-pit mine in the Philippines. SMPC spent 11.5 million man-hours to fill the pit with over 452 million bank cubic meters (bcm) of earth material, which is enough to fill 217,000 Olympic-size swimming pools. “We are mindful of our twin role as stewards and government contractor. What we accomplished in Panian is proof of that,” said SMPC president and COO Maria Cristina C. Gotianun. Located in Semirara Island, Panian mine spans 400 hectares with topographic elevations that ranged from 300 meters below sea level (mbsl) to 30 meters above sea level (masl) during its mine life. 300 meters is roughly the height of a 90-story building. SMPC fully covered the pit in six years, way ahead of the original 10-year mine rehabilitation plan. Mine rehabilitation refers to the repair of land that was disturbed by mining activities. The company is now developing a science-based plan to reforest and restore the biodiversity in the area. Panian had a mine life of 16 years and generated P12.7 billion in royalties for the government and SMPC host communities. Of the total amount, P7.6 billion went to the national government while the Municipality of Caluya and Brgy. Semirara received P2.3 billion and P1.8 billion, respectively. P1 billion went to the Province of Antique. In September 2021, SMPC won in the ASEAN Energy Awards (Special Submission category) for its accelerated rehabilitation of South Panian pit, which is considered as the fastest of its kind and scale in the Philippines. SMPC completely filled North Panian with earth material last January, four months ahead of its committed date to the Department of Energy.
Philippine Resources - January 07, 2022
Ensure stable power supply amid Indonesia coal export ban: solon
Photo credit: Dimas Ardian/Bloomberg A lawmaker on Thursday called on the government to ensure that the country's power supply derived from the consumption of coal would not be adversely affected following Indonesia's decision to ban the export of coal to secure its local supply. In a statement, Senator Sherwin Gatchalian, chair of the Senate Energy Committee, called on the Department of Energy (DOE) to prepare for contingency measures on the country’s supply of coal for power plants which, if insufficient, could lead to widespread blackouts. “Part of the contingency measures should be to ensure the adherence of coal-fired power plants to the 30-day minimum inventory requirement,” Gatchalian said. While the country is slowly attempting to promote alternative and sustainable sources of energy, the Philippines still derived 57.17 percent of power generation from coal as of 2020. Aside from Indonesia's ban on coal exports, the global demand for coal has surged following higher consumption in countries that experience cold winter months. Among the countries severely affected by Indonesia's move are Japan, China, India, and South Korea, which imported 73 percent of Indonesian coal last year. “The government should also consider looking for other suppliers, especially in the coming weeks, given the possible decline in stockpiles coming from Indonesia, which could result in soaring coal prices,” Gatchalian added. In October 2021, the Philippines acquired 96.88 percent of its imported coal supply from Indonesia, the world's top exporter of thermal coal. “This could be a wake-up call as well. The government should probably start rethinking and be more committed to reducing the share of coal by further diversifying our generation mix,” Gatchalian said. By Benjamin Pulta Article courtesy of the Philippine News Agency
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Philippine Resources - November 27, 2022
FNI posts higher nine-month net income of P2.13 billion
Photo credit: Global Ferronickel Holdings Global Ferronickel Holdings, Inc. (FNI), a diversified Filipino company with interests in ferronickel ore mining and processing, logistics and port operations, and cement and steel production, recorded a net income of P2.13 billion in the nine-month period that ended September compared to the P1.86 billion it posted during the same period last year. The results are driven by the Group’s flagship mining project in Surigao del Norte operated by Platinum Group Metals Corporation (PGMC). FNI's revenues on the sale of medium-grade nickel increased on the back of favorable forex rates and higher average realized price, while shipment volumes reel from inclement weather and a lower price for low-grade ore. The sale of nickel ore for the nine-month ended September 30, 2022 slides to 3.150 million wet metric tons (WMT), lower by 1.078 million WMT or 25.5%, compared to 4.228 million WMT of nickel ore in the same period last year. The Group only completed 58 nickel ore shipments against 78 shipments during the same period last year due to erratic weather conditions registering 161 rainy days to 137 last year. The resulting sales mix was 78% low-grade ore and 22% medium-grade ore in 2022 versus the previous period’s blend of 81% low-grade ore and 19% medium-grade ore. Shipments consisted of 2.450 million WMT low-grade nickel ore and 0.700 million WMT medium-grade nickel ore compared to 3.424 million WMT low-grade nickel ore and 0.804 WMT medium-grade nickel ore in the same period in 2021. The average realized nickel ore price for the period ended September 30, 2022 is USD28.89/WMT lower by USD1.89/WMT or 6.1% compared to last year’s USD30.78/WMT. Low-grade ore is USD25.49/WMT lower by USD4.30/WMT or 14.4% against last year’s USD29.79/WMT. On the other hand, medium-grade ore stands at USD40.79/WMT higher by USD5.80/WMT or 16.6% versus last year’s USD34.99/WMT. The average realized Peso over USD exchange rate for the Group’s export revenues is P54.87 compared to P49.22 in the same period last year, higher by P5.65 or 11.5%. “Overall outlook for FNI looks reassuring. With the opening of our Palawan mineral project, we expect healthier returns for our stakeholders. Although weather conditions have not been permissive, we have continued to improve our operations and pursue our expansion plans,” said FNI President Dante R. Bravo. FNI recently disclosed its 20% stake in China's Guangdong Century Tsingshan Nickel Industry Co. Ltd (GCTN) to enhance synergies between FNI with its nickel ore mines and GCTN as an ore processor and provide a steady value-adding enterprise for the Group. As a testament to its growth and core policy to strengthen systems and processes, PGMC has received ISO certifications for its Quality Management System (ISO 9001:2015), Occupational Health and Safety Management System (ISO 45001:2018), and Environmental Management System (ISO 14001:2015) as an Integrated Management System (IMS). The certification applies to all activities in the mining operations of nickeliferous laterite ore and other associated minerals from planning to ore production, hauling, loading and port operations.
Philippine Resources - November 27, 2022
DMCI Mining nets P1.2 billion in 9M
Photo Credit: dmcihouse.net DMCI Mining Corporation saw its net income decline by 17 percent from P1.41 billion to P1.17 billion during the first nine months of the year owing to lower nickel ore shipments and average nickel grade sold. “We expected a severe profit decline because of the depletion of our Berong mine late last year. Fortunately, the bullish nickel market allowed us to ship even the low-grade inventory of Berong,” said DMCI Mining president Tulsi Das C. Reyes. “Strong nickel prices and local currency weakness also moderated the impact of lower shipments on our bottom line,” he added. For the third quarter alone, net income tumbled by 56 percent from P181 million to P80 million due to the combined effect of lower shipment (-50%), flattish nickel grade sold (-1%), higher selling prices (+31%) and favorable average foreign exchange rates (+10%). Total shipments declined at a slower pace from January to September as the Berong mine did better than expected in the first half. Consequently, nickel ore shipments only fell by 25 percent from 1.45 million wet metric tons (WMT) to 1.09 million WMT. Despite a 4-percent decrease in average nickel grade sold from 1.38% to 1.33%, DMCI Mining posted a 16- percent improvement in nine-month average selling price from US$43 to US$50. Magnifying the impact of higher selling prices was a 10-percent increase in foreign exchange rates from US$ 1:Php 49 to US$ 1:Php 53. At the end of September, total inventory plummeted by 76 percent from 450,000 WMT to 109,000 WMT, mostly (81%) coming from Zambales. Article courtesy of the Philippine Stock Exchange
Philippine Resources - November 27, 2022
E-vehicle boom opens new opportunities for PH mining
Developing the electric vehicle (EV) industry is opening new opportunities for the Philippine mining sector, a company executive said Wednesday. In a media roundtable, DMCI Mining president Tulsi Das Reyes said the e-vehicle sector has provided new opportunities for the mining industry and his company is keen to take part in this development. He described that mining became a "sunset business" before the growth of the e-vehicle industry. "Prior to the EV boom, stainless steel was going nuts, and they don't have capacity already for the stainless steel market. And China is the only growth for stainless steel, all other countries in the world (are) slowing down," Reyes said. He said the growing demand for e-vehicles globally has offered a "fresh light" for the mining business. Nickel is a component for e-vehicle batteries. "Without EVs (e-vehicles), we would (have) ended so many other niche market(s). So it was a huge impact," Reyes added. In the recent foreign business missions of the Department of Trade and Industry (DTI) in the United States, South Korea and Japan, companies from these countries expressed their interest in the Philippine e-vehicle industry, including manufacturing batteries for electric cars. Part of the DTI's Make It Happen in the Philippines campaign is to attract investments for integrated mineral processing to have value-added activities in the mining industry instead of exporting minerals as raw materials. Reyes said DMCI Mining is in talks with possible foreign partners to explore opportunities for integrated mineral processing here, including Indonesian and Chinese partners, but this will require adequate infrastructure in place and support from the government. Meanwhile, DMCI Mining net income in January to September this year declined by 17 percent to PHP1.17 billion from PHP1.41 billion in the same period last year. The lower profit for the first nine months of 2022 was mainly due to decline in shipment. "Strong nickel prices and local currency weakness also moderated the impact of lower shipments on our bottom line," Reyes said. Article courtesy of the Philippine News Agency
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