Sultan Mining may increase output of Surigao coal mine

Soon-to-be-listed Sultan Mining & Energy Development Corp. is looking at the possibility of increasing production from its Surigao del Sur coal mine to at least 300,000 metric tons this year, from less than 100,000 MT last year.

Sultan Mining senior vice president for operations Ricardo Basallo Jr. said they want to take advantage of rising prices and demand in both the local and world markets.

Basallo said they have so far invested an additional P50 million in the last quarter of 2007, in addition to P100 million it initially infused early last year, to prepare for production.

The fresh capital was used to triple the number of dump trucks and double the number of heavy equipment in Bislig such as bulldozers, backhoes, graders and compactors in addition building its road infrastructure.

According to Basallo, “total sales revenues in the first quarter of 2008, has already exceeded that of the whole year in 2007, when the company was mostly doing incidental production”.

He said “production volume will still steadily increase once additional open pits come on stream with the help of expansion efforts financed by fresh funds Sultan Mining will raise from its planned P480-million initial public offering”.

“Coal production, which has been hampered by adverse weather in late 2007 and early 2008, will definitely increase in the summer,” Basallo said.

The firm’s Bislig coal mine is now in full commercial production after Sultan Mining made fresh investments to bring in more heavy equipment so it can simultaneously develop and operate several open pits to extract surface coal.

Sultan vice president for sales Michael Morales said all output from the mines are immediately sold to the company’s customers who have fitted out their power plants to use local coal.

 Since it started operations, Sultan Mining’s wholly-owned subsidiary MG Mining and Energy Corp. has signed two coal supply agreements with Toledo Power Co. and the Philippine National Oil Co.– Exploration Corp.

In addition, MGMEC has started coal deliveries on a per-order basis to Philbest Canning Corp., General Tuna Corp., Truly Natural Foods Corp., Lafarge Cement Services Philippines, Inc., Holcim Philippines, Inc. and PICOP Resources, Inc.

 Aside from exploiting its open pit reserves, Sultan Mining expects to begin the development of its underground mines at Bislig with the first underground mine starting commercial operations by late 2010.

 It has also submitted for approval, a geologic report to the Department of Energy, on coal reserves ready for production, in its Argao COC. Argao coal is known to be a high grade coal with 12,000 btu, comparable to imported coal.

Basallo, who is also one of the few experts in underground coal production, is looking forward to developing the deposit in the near future.

SMEDC is set to undertake a P480-million initial public offering this quarter to raise funds to finance its exploration and development activities in its other COCs, and the ramping up of current production from its Surigao del Sur mine site, that already has a duly approved environmental compliant certificate.