San Miguel Corp. Eyes Bid for Semirara Coal Mine Operating Contract

 

San Miguel Corp. (SMC) is considering joining the government auction for the next operating contract of the Semirara coal mine in Antique, potentially setting up a competition for control of one of the Philippines' most important domestic energy resources.

SMC chairman and chief executive officer Ramon Ang confirmed the conglomerate's interest, saying the company regularly participates in government bidding activities. However, he acknowledged that he has yet to review the official Terms of Reference (TOR) governing the auction.

Representatives from SMC's power generation subsidiaries had previously attended preliminary discussions concerning the government's coal blocks, according to the Department of Energy (DOE).

The agency formally relaunched the bidding process on Wednesday, with the new Coal Operating Contract (COC) targeted for award in January 2027. Energy Secretary Sharon Garin has invited qualified companies to compete for three designated areas covering 18 coal blocks in Antique, Cagayan and Isabela.

New rules introduce major asset turnover requirement

A significant change in the bidding framework concerns the treatment of equipment, facilities and other assets acquired by existing mining operators.

Under a joint administrative order issued by the DOE and the Department of Environment and Natural Resources (DENR), companies seeking contract renewals must disclose assets used in their operations that have already been fully cost-recovered, amortized or depreciated.

These properties, whether movable or immovable, must subsequently be made available for turnover and continued use under the new operating contract. The requirement remains subject to applicable decisions and directives from courts with proper jurisdiction.

The DOE emphasized that the provision implements the joint administrative order and that the agency will not assume responsibility if an incumbent operator fails to meet its obligations.

The rule places particular attention on Consunji-led Semirara Mining and Power Corp. (SMPC), which currently operates the Semirara coal mine. Should the company participate in the new bidding, it will have to submit a detailed inventory of assets covered by the requirement.

The turnover obligation will take effect upon the expiration of SMPC's existing contract on July 14, 2027.

P1-billion entry fee and minimum coal production commitment

Beyond the new asset provisions, the government has established substantial financial and operational requirements for companies seeking the Semirara contract.

Qualified bidders 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.

Proposals must demonstrate how the production target will be achieved through planned mine development, machinery, workforce deployment and supporting infrastructure.

The government is also seeking to ensure that domestic industries retain access to locally produced coal. At least 35 percent of the committed output must be designated for sale or supply to local buyers.

These conditions establish both a financial barrier to entry and a measurable production obligation, requiring prospective operators to demonstrate their capacity to sustain large-scale mining operations.

Government targets January 2027 contract award

The DOE has established an accelerated timetable for selecting the next Semirara coal mine operator.

The pre-bid conference is scheduled for November 14, followed by the December 11 deadline for bid submissions and opening of bids. The agency will conduct its substantive evaluation through December 16.

The subsequent milestones include:

• December 18, 2026: Publication of qualified bidders
• December 21, 2026: Opening of financial proposals
• December 28, 2026: Declaration of the highest-rated qualified bidder
• January 11, 2027: Issuance of the notice of award
• January 13, 2027: Target date for signing the Coal Operating Contract

The schedule is designed to secure a successor operator approximately six months before SMPC's current agreement expires.

Asset rules could affect SMPC's decision to bid

Market analyst Toby Allan Arce considers the auction's relaunch a positive development but identified the asset turnover provision as a potentially significant obstacle for the incumbent operator.

According to Arce, the requirement could discourage SMPC from seeking another contract, particularly given the substantial capital it has invested in mining equipment and infrastructure.

The provision also introduces questions surrounding asset ownership, possible financial liabilities and the company's ability to maintain operational continuity beyond July 2027.

For SMPC, the decision involves more than competing for another mining agreement. It also requires evaluating the financial implications of transferring previously recovered assets and determining how those conditions would affect future operations.

Semirara remains central to domestic coal supply

The outcome of the auction carries considerable implications for the Philippine energy sector because SMPC is the country's largest coal producer and supplies the majority of locally produced coal.

The company reported that it had already reached its full-year coal production target of 12 million to 13 million metric tons as of November 10, consistent with its approved work program.

With the existing contract approaching expiration, the government must ensure that the transition to a new operating agreement does not disrupt domestic coal production.

Whether SMPC ultimately joins the bidding or new industry players secure the contract, the auction will determine the next operator of a strategic mining asset and help shape the country's domestic coal supply over the coming years.