The aggressive transition to renewable energy in developing countries has slashed the demand for coal — resulting in lower selling prices that adversely affected coal miners’ profits.

For instance, Semirara Mining and Power Corp. (SMPC), the integrated energy company led by the Consunji Family, suffered a double-digit decline in its profit in the first quarter of the year due to weaker market prices.

The company said its net income from January to March declined by 28 percent to P6.5 billion from P9.0 billion a year ago as weaker market prices muted the impact of higher coal shipments and energy sales volume.

SMPC said the global coal indices declined due to weak demand from developed countries primarily as many of these countries changed their energy policies amid their race to transition to cleaner power resources.

Pricing challenges

“While we faced some pricing challenges this quarter, our robust export sales and improved plant performance demonstrate the resilience and adaptability of our operations,” SMPC president and COO Maria Cristina C. Gotianun said on Monday.

The Newcastle index plummeted by 49 percent from an average of $247.8 to $126 while the Indonesian Coal Index 4 retreated by 25 percent from an average of $76.5 to $57.2.

Notably, in the Luzon-Visayas electricity market, average spot prices fell by 27 percent from P6.28 to P4.61 on lower fuel costs and increased supply.

Meanwhile, coal sales jumped by 37 percent from 3.5 million metric tons to 4.8 MMT, driven by exports that accelerated by 78 percent from 1.5 MMT to 2.7 MMT.

Sustained growth

Gotianun noted that this growth is likely to be sustained due to the projected stabilization of Chinese demand for coal.

“We expect coal demand from China to be stable in the near to medium term given its important role in China’s energy security program. Coal is not only a primary source of energy but also a critical backup that ensures supply sustainability,” she said.

On the other hand, domestic shipments grew by six percent, from 2.0 MMT to 2.1 MMT, influenced by an uptick in internal sales due to the highest recorded overall plant availability in the company’s history, reaching 92 percent.

With better overall plant availability, gross generation increased by seven percent from 1,316 gigawatt hours (GWh) to 1,408 GWh.

As such, electricity sales volume increased by three percent from 1,241 GWh to 1,281 GWh. This growth was primarily due to higher bilateral contract quantity (BCQ) sales, which offset the decline in spot market dispatch for the period.

BCQ sales increased by 38 percent from 361 GWh to 499 GWh, while spot sales decreased by 11 percent from 880 GWh to 782 GWh.