By Sheldeen Joy Talavera, Reporter
CONSUNJI-LED Semirara Mining and Power Corp. (SMPC) saw its shares decline by 21.39% on Monday following reports that it did not secure government approval for the renewal of its coal operating contract covering Semirara Island.
On the local bourse, the corporate’s shares slid to a session low of P25.40 before closing at P26.10, lower than Friday’s close of P33.20.
Energy Secretary Sharon S. Garin earlier said SMPC couldn’t renew its 50-year operating contract after the Department of Energy (DoE) sought a legal opinion from the Department of Justice.
The DoE said the contract will as an alternative be offered through a competitive bidding process this 12 months.
SMPC said it has yet to receive formal notice regarding the choice but noted that its long experience operating on Semirara Island gives it a competitive position.
“SMPC’s a long time of experience in managing complex engineering projects, coupled with its established operations, technical expertise, and extensive equipment fleet developed through its long-standing operations in Semirara Island, provide a robust competitive advantage, which we’ve got communicated to the DoE,” the corporate said in a disclosure.
The coal operating contract, originally issued in 1977 for 35 years, granted SMPC exclusive rights to explore, develop, and mine coal on Semirara Island until July 2012.
The DoE later prolonged the contract by 15 years, allowing operations at the location until 2027.
With the contract nearing expiration, the corporate had sought approval from the DoE to increase the agreement by one other 13 years.
Although coal deposits are situated across the country, the most important is on Semirara Island, making SMPC the country’s largest coal producer and accounting for about 97% of domestic output.
SMPC, the Consunji group’s power generation and coal-mining unit, recorded coal production of 12.9 million metric tons in the primary nine months of 2025, driven by exports and deliveries to its own power plants.
Coal revenues, nonetheless, declined by 18.7% 12 months on 12 months to P24.73 billion because of lower average selling prices.
Earnings from the coal segment accounted for nearly 45% of SMPC’s nine-month core net income, which fell by 37% to P9.89 billion.
Analysts said uncertainty over the contract renewal could weigh on earnings given the coal business’ contribution to overall profitability.
“Failing to secure the contract might be a serious setback for [SMPC], as this forces them to source coal elsewhere or pivot by coming up with a wholly latest business model in the event that they decide to avoid the margin squeeze that comes out with running the operations as usual,” Shawn Ray R. Atienza, an equity research analyst at AP Securities, Inc., told BusinessWorld.
George Ching, an analyst at COL Financial, Inc., said failure to secure a brand new contract could increase power generation costs on the Calaca power plants, which depend on Semirara coal.
If SMPC wins the bid, analysts said the corporate’s long-term outlook would still depend upon aspects corresponding to contract duration, allowable output, royalty levels, taxes, and other bid terms.
“With no substitute for the coal operations, we see an enormous drop in [SMPC’s] valuation, which investors will likely reflect in its share price,” Peter Louise D. Garnace, an equity research analyst at Unicapital Securities, Inc., said via Viber.
Mr. Garnace added that SMPC stays a robust contender for the contract given its operational experience and existing capabilities.