SMC to make bid for Semirara coal

MANILA, Philippines — Diversified conglomerate San Miguel Corp. is looking to join the closely watched auction for the contract to operate the Semirara coal mine in Antique, SMC chairman and CEO Ramon Ang said yesterday.

“We always join public biddings,” Ang told The STAR when asked if SMC will join the planned bidding to operate the country’s strategic energy asset.

Ang, however, said he has yet to study the Terms of Reference.

“I don’t know the TOR for the bidding yet,” he said.

Representatives from SMC power companies previously participated in earlier pre-bid discussions for the government coal blocks, according to the Department of Energy.

The DOE issued a formal notice of bidding on Wednesday, with the new Semirara coal operating contract (COC) expected to be awarded by January.

Energy Secretary Sharon Garin invited qualified bidders to participate in the auction covering three predetermined areas, comprising 18 coal blocks across Antique, Cagayan and Isabela.

The relaunch of the coal auction follows the issuance of a joint administrative order (JAO) by the DOE and the Department of Environment and Natural Resources, which sets the framework for the evaluation and award of contracts involving confirmed resources.

A key provision of the JAO requires existing operators seeking to participate in the auction to fully account for all assets, equipment and facilities – movable or immovable – that were used or necessary in their operations and have already been cost-recovered, amortized or depreciated over the term of their contracts.

Under the instruction to bidders (ITB), these assets must be turned over for use in implementing the resulting COC, without prejudice to any judgment, order or directive issued by a court of competent jurisdiction.

The DOE clarified that the provision is in strict compliance with the JAO and that the agency assumes no liability or obligation in the event an existing operator fails to comply with the requirement.

The provision puts the spotlight on Consunji-led Semirara Mining and Power Corp. (SMPC), the current operator of the Semirara mine, which must submit a comprehensive inventory of covered assets should it seek to secure a new contract.

These assets are subject to turnover to the government upon the expiration of SMPC’s existing contract on July 14, 2027.

Beyond the asset turnover requirement, bidders for the Semirara coal blocks must pay a non-refundable signature bonus of P1 billion.

They must also commit to producing at least 60 million metric tons of coal over a five-year work program, in line with their proposed mine development, equipment, manpower and infrastructure plans.

Of the committed coal output, at least 35 percent must be allocated for sale or supply to domestic off-takers, according to the ITB.

Based on the coal auction’s indicative timeline, a pre-bid conference is scheduled for tomorrow, ahead of the Dec. 11 deadline for bid submissions. The bids will be opened on the same day as the submission deadline, followed by a substantive evaluation that will run until Dec. 16.

The list of qualified bidders is slated for release on Dec. 18, with their financial proposals set to be opened on Dec. 21.

The highest-rated qualified bidder is expected to be declared on Dec. 28, while the notice of award will be issued on Jan. 11, 2027.

The DOE is targeting to sign the COC with winning bidders by Jan. 13, 2027, about six months before the existing Semirara mine contract expires.

Market analyst Toby Allan Arce described the relaunch of the Semirara auction as a positive development but said the asset turnover requirement could pose a significant challenge for SMPC.

“The requirement could weaken its incentive to participate, particularly given the substantial investments it has already made in mining equipment and infrastructure,” Arce told The STAR when sought for insights.

“It also creates uncertainty over asset ownership, potential financial exposure and the company’s ability to continue operating the mine beyond the expiration of its (SMPC) existing contract in July 2027.”

As the country’s largest coal producer, SMPC accounts for the majority of domestic production.

As of Nov. 10, the company had already achieved its full-year coal production target of 12 million to 13 million metric tons, consistent with its approved work program.