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Interview: Arnulfo Robles, Executive Director of the Chamber of Coal Mines Philippines

Arnulfo provides insights into the evolution of the coal industry in the Philippines and more particularly, the growing acceptability of local coal quality both domestically and in the Asian region and into the challenges coal producers are facing locally.




How much coal is currently produced in the Philippines? Does it meet the country’s requirements or will there always be a need to import coal from elsewhere?

In 2014, the Philippines produced 8.416 million MT of coal. Out of this production, 3.17 million MT (38%) was used domestically while 5.246 million MT (62%) was exported. 4.708 million MT (90%) of this went to China, Thailand took 0.324 million MT (6%), Cambodia 0.152 million MT (2.9%), India 0.055 million MT (1%) and Papua New Guinea 0.005 million MT (0.1%).

The country’s coal production did meet its requirements for low grade coal, but it still needs to import high grade coal for domestic consumption, especially for power generation. Also last year, coal importation of the country stood at 15.182 million MT and projected to increase dramatically in the coming years as new coal-fired power plants come on stream.
 
Are there many untapped reserves in the Philippines? If so, will they be explored any time soon?

At present, the resource potential of the Philippines stands at 2.366 billion MT widely distributed throughout the country, with Semirara Island having the largest share at 570 million MT or 24% followed by Cagayan Valley at 336 million MT or 14%. In early 2015, the Philippine Department of Energy conducted the Philippine Energy Contracting Round 5 (PECR5) for Coal where there are 15 coal areas/blocks for bid. The coal areas are all located on the island of Mindanao. Subsequently in the middle of this year, Coal Operating Contracts (COC) have been awarded to the winning bidders.

At this year’s Coaltrans Emerging Asian Coal Markets conference in Manila, you will be speaking about the limitations and opportunities for investors in Philippine coal mines. What would you say are the main challenges facing coal producers in the Philippines at the moment? And do you think foreign investment is needed?

At the moment, one of the main challenges facing coal producers in the Philippines is the seeming inconsistency in the government policy, particularly in mining, between the national government and the local government units (LGUs) hosting the resources and those in the periphery of the mining concessions, usually further complicated with the involvement of non-governmental organizations (NGOs) and other people organizations (POs).

To cite an example, the national government awarded the contract to the winning bidder or investor but the concerned LGUs hosting the resources are reluctant to issue local permits and licenses despite the fact that the investor had already acquired all the necessary, normally stringent, requirements from the national government. Although the Philippines is awash with domestic savings, it needs long term capital, especially foreign investments in several areas including strategic services and infrastructure, energy and mining. This is required to attain and sustain a 7-10% growth in GDP as well as to address in particular the energy self-sufficiency program of the government.
 
You have worked in the coal industry for over 25 years. In your experience, what is the biggest change that the market has gone through?

The biggest change, based on my 25-year experience in the local coal industry, is the increase of local coal production from 2.726 million MT in 2004 to 8.416 million MT in 2014 – a jump of 311%. This can be attributed to the growing acceptability of local coal quality not only domestically but in the Asian region as well. Semirara Mining and Power Corporation, the country’s largest coal producer, envisions an increase in annual coal production from current 8.160 million MT to about 10 million MT in the coming years.

This content is provided by Coaltrans Conferences for informational purposes only, and it reflects the market and industry conditions and presenter’s opinions and affiliations available at the time of the presentation.

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