Semirara Mining Corporation, the country’s largest coal producer, expects its net profit to rise more than 20 percent this year and coal revenues to jump as much as 56 percent mainly due to higher coal prices and increased exports, the company’s chief executive said Tuesday.

Semirara hopes to sustain its double-digit profit and coal revenue growth next year with no let-up in demand especially from the fast-growing economies of China and India.

“We expect more than 20-percent growth in profits for 2008 and at least 20-percent growth in profits for 2009,” Isidro Consunji, who is also the president of Semirara’s parent firm DMCI Holdings, told Reuters in an interview.

The company booked net profit of P633.3 million ($14.2 million) in 2007, up 5.0 percent from the previous year.

Consunji said Semirara expected to book coal revenues of P9-P10 billion this year, up 41-56 percent from P6.4 billion in 2007 when revenue rose 39 percent. It expects coal revenues to further climb to P14-P16 billion in 2009.

Indonesian and Thai coal miners have also reported strong profit growth. Strong demand for coal, particularly from China and other Asian economies, has pushed prices to record highs this year, prompting the region’s miners to boost production.

Prices have since eased. A coal price benchmark in Australia hit a nine-week low of $156 a ton last week.

Semirara plans to spend P9.8 billion ($219 million) on its first foray into power generation, building two power plants in the central Visayas region running on coal from its 250-hectare mine.

The coal-fired plants with a combined capacity of 115 megawatts are expected to be commissioned in 2010 and 2011.

The power project would be funded through a combination of internally-generated cash and borrowings, Consunji said.

Shares of Semirara have jumped 25 percent so far this year, outperforming the Philippine’s mining and oil index which has lost 16 percent.

RISING COAL OUTPUT

Semirara expects coal production of five million tons next year, up from four million tons this year, Consunji said.

Of the five million tons, two million tons would be sold abroad — higher by a fourth than this year’s export sales target of 1.6 million tons — while the rest would be sold domestically, he said.

Semirara started exporting coal last year to reduce dependence on local buyers, such as the country’s largest power producer National Power Corporation (Napocor) — its main client — and take advantage of strong demand from China and India.

In the first six months of the year, Semirara sold 1.8-1.9 million tons of coal, of which 800,000 tons were exported to China, India, and Hong Kong.

Semirara currently sells its low-grade coal of 5,300 kcal/kg for P2,500-P3,000 a ton, up 25-50 percent from P2,000 a ton in 2007, Consunji said.

source : reuters

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