Semirara sees challenging year
Semirara Mining and Power Corp. (SMPC) expects a challenging 2020 due to depressed coal and electricity prices, but sees a rebound in 2021, company officials said last week.
SMPC chairman and CEO Isidro Consunji said during its virtual stockholders’ meeting last week that the company faces unprecedented disruption and difficulties because of coronavirus pandemic.
This as the pandemic affected global coal prices, as well as power demand in the country, he said.
“Unfortunately, we don’t see any significant movement of coal prices until the end of this year. The market is highly dependent on the economic recovery after the COVID-19 pandemic,” he said.
This is compared to what the company had already projected this year—higher spot market prices and stable coal demand to drive its net profit.
“At the start of the year, we expected tight electricity supply and favourable spot market prices to drive our bottom-line results. We also anticipated low, but stable demand for Semirara coal,” SMPC president and COO Maria Cristina Gotianun said.
“However, the outbreak of COVID-19 and the containment measures imposed in China and Luzon drastically reduced coal and electricity consumption, driving down market prices,” she said.
Moreover, the economy is seen to contract this year, with foreign experts projecting a contraction of around two to four percent and the Philippine government hoping to keep gross domestic product (GDP) between negative two percent and negative 3.4 percent, Consunji said.
“Given the market situation today and in the immediate future which is highly unpredictable, we don’t see the company performing better in financial terms,” he said.
But unlike the previous recession experienced by the country, Consunji said the government is in a better position to help the economy cope and recover.
“Our worst recession on record was in 1984 and 1985 when GDP contracted by 7.3 percent due to political uncertainty, massive foreign debt and extremely tight monetary policies,” he said.
“Using a combination of fiscal and monetary measures and a multi-pronged economic recovery plan, they expect GDP growth in 2021 to hit anywhere between seven and eight percent,” the company chairman said.
Following this projection, SMPC expects to rebound next year.
“So far, these scenarios tell us that while 2020 will be very difficult, we can anticipate a strong rebound the following year,” Consunji said.