Sultan Mining unit inks P8-billion coal supply deal with Kepco

MANILA, Philippines - Sultan Mining and Energy Development Corp. (SMEDC), through its subsidiary MG Mining and Energy Corp., has signed an P8-billion, 10-year coal supply contract with Kepco SPC Power Corp. (KSPC).

Under the contract, MG Mining will deliver 320,000 tons of coal to KSPC’s 200-megawatt (MW) base load power plant in Naga, Cebu once it begins commercial operations next year.

SMEDC vice chairman and senior adviser Rufino Bomasang said the supply contract would ease the country’s dependence on imported energy sources as well as help in conserving foreign currency reserves.

The quality of MG Mining’s coal reportedly met its specifications, adding that the contract is based on the delivery of coal with 4,300 kilocalorie per kilogram (kcal/kg).

However, he noted that MG Mining’s coal actually has higher calorific value than the KSPC requirement in the contract, as reflected in its ongoing coal deliveries to its existing customers since 2007.

Meanwhile, MG Mining will initially be sourcing the coal from its mine in Bislig, Surigao del Sur. It also has plans to offer coal from the much bigger Daguma coal reserves in Sultan Kudarat and South Cotabato once the mine there comes into full production next year.

With the specifications of coal required by the supply contract to KSPC, the company is confident that even the Daguma coal will meet the requirement. The Department of Energy has already granted the approval for the development and production of coal in the Daguma deposit.

Independent validation of the coal reserves indicate that the Bislig mine contains about 62 million tons of coal resources and about 30 million metric tons of minable reserves, while the company reported that Daguma has already blocked coal resources of 426 million tons.