Philippines' Emerging Coal Industry

06.12.2011 -

The Philippines will launch its fourth and biggest global tender early next year to explore 30 prospective coal blocks that may require $600 million in total investment, as it aims to cut imports of costly fossil fuels and secure energy supply.

The step is required because domestic demand for coal is seen growing by 10% each year, with Philippine power costs among the highest in Asia, amid intensifying competition for coal from India, China and other North Asian consumers.

Here are some facts and figures about the Southeast Asian country's emerging coal industry.

Coal Potential

The Philippines is estimated to have total coal resource potential of 3.53 billion tons, mainly thermal coal used for power generation, the Department of Energy says.

In contrast, mineable reserves of low-quality coal in Indonesia, the world's top exporter of thermal coal, may reach 10 billion tons or half the current total reserves of 21 billion tons, within the next two to three years.

Coal is mined mainly from the central Visayas region, particularly in the provinces of Cebu, Negros Occidental and Antique, with nine sites in either developmental or production stages and seven still being explored.

Small mines are also operating in different parts of the archipelago, such as in Albay on the main island of Luzon and in the southern province of Zamboanga del Sur.

The Department of Environment and Natural Resources has identified 60 prospective coal sites across the country, but has cleared only half for bidding. Each site may need investments of about $20 million to explore for a period of two to four years.

Last Thursday, the Department of Energy (DOE) launched the Philippine Energy Contracting Round for coal, to offer investors in the first quarter 30 areas for exploration, development and production.

The list includes nine sites on Luzon, three in central Philippines, and 18 in southern Mindanao. Officials hope the new contracts can be awarded by next June.


The Philippines produced a total of 7.33 million tons of coal last year, of which 7.02 million tons, or 95.8%, came from Semirara island in Antique, equivalent to barely 2% of Indonesian production.

Last year's output was 2.5 times the 2005 volume of 2.83 million tons. From 1977 to 2005, the country had produced a total of 35.62 million tons of coal.

A total of 32,604 tons were also produced last year from mines in Albay; 63,501 tons in Cebu; 72,871 tons in Zamboanga del Norte; 3,298 tons in Surigao del Sur; and 1,457 tons in Negros. Small-scale mines contributed 135,123 tons to total production.

Semirara Island, 350 km south of Manila, is home to the country's only large-scale coal producer, Semirara Mining Corp.

Semirara Mining, previously known as Semirara Coal Corp and now a unit of conglomerate DMCI Holdings Corp, was awarded a 35-year coal operating contract in 1977.

Coal produced by Semirara Mining has a heating value ranging from 8,600 to 10,450 BTU/lb, with moisture ranging from 11 to 15%, ash content between 5 and 10%, and sulphur content ranging from 0.3 to 0.9%.

Such specifications make Semirara coal suitable to a wide variety of industries.

Only one foreign-owned company - Philex Mining Corp, controlled by Hong Kong's First Pacific Co Ltd - is listed in a mining project in the Philipplines, according to the DOE. It is involved in an exploration project in Diplahan and Buug towns in Zamboanga Sibugay in the southern Philippines.

Domestic Demand Exceeds Output

Philippine coal consumption last year reached 13.31 million tons, exceeding local output and forcing imports of 10.97 million tons, valued at about $466 million.

Domestic consumption of the fossil fuel has more than doubled from the 1999 figure of 6.42 million tons.

About 9.64 million tons of coal was used to generate electricity last year, or 72.5% of the total. The cement industry used 3.11 million tons, or 23.4%.

A total of 550,839 tons of coal was also used to make cement, alcohol, sinter, rubber boots, paper, chemicals, fertilizer and in smelting.

The country imported a record 10.6 million tons last year from Indonesia, or nearly 97% of total imports. It also bought 65,000 tons from Australia; 277,517 tons from Vietnam; 18,018 tons from Russia; and 2,993 tons from the United States.

Coal imports between 1988 and 2005 stood at 66.24 million tons, mainly from Indonesia, China, Vietnam and Australia.

Development Plans

Coal made up about a third of the country's installed power capacity last year, followed by natural gas with a 19.5% share and oil with 17.5%.

Several coal-fired power projects in development to boost electricity supply, including a 600-megawatt facility to be built in Subic Bay Freeport Zone, north of Manila, by Redondo Peninsula Energy Inc, also known as RP Energy.

RP Energy is controlled by Meralco PowerGen Corp, a unit of Manila Electric Co, which is indirectly controlled by the First Pacific Co Ltd and partly owned by San Miguel Corp.

Challenges Facing Miners

Energy officials said investors will need permits from local governments for coal exploration and mining projects, and sites on offer are in provinces where mining is not yet banned.

The anti-mining lobby in the Philippines is strong, led by environmentalists and the Catholic Church, with some provinces having banned open-pit methods.