Semirara shares plunge deeper on non-extension of coal contract

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February 17, 2026 | 12:00am

MANILA, Philippines — The shares of Semirara Mining and Power Corp. (SMPC) plunged deeper into the red as the government’s move to auction its coal contract rattled investors and clouded the company’s prospects.

SMPC’s share price tumbled by as much as 23.5 percent before closing 21.4 percent lower at P26.10 yesterday, after the Department of Energy (DOE) thumbed down the company’s bid to extend its 50-year coal contract.

The Consunji-led integrated mining firm informed the Philippine Stock Exchange yesterday that it has yet to receive formal notice of a final decision on its request for a contract term adjustment.

SMPC emphasized that its decades of experience, established operations, technical expertise and extensive equipment fleet give it a “strong competitive advantage.”

Market analysts told The STAR that the rejection of SMPC’s extension bid could sharply hit its earnings and significantly shrink its core business.

“This development could pose a huge setback for SMPC, as the coal mining business accounts for 47 percent of SMPC’s total net assets while accounting for (around) 55 percent of the company’s net profits,” COL Financial analyst George Ching said.

Rizal Commercial Banking Corp. chief economist Michael Ricafort echoed this view, noting that losing the contract could substantially reduce the company’s revenues.

In the nine months ending September 2025, SMPC posted a net income of P9.89 billion on revenues of P43.26 billion, with coal accounting for the bulk at P24.73 billion.

Coal shipments during the period rose to a record high of 12.9 million metric tons from 12.3 million MT, fueled by stronger exports and increased deliveries to its own power plants.

“Without a replacement for the coal operations, we see a massive drop in SMPC’s valuation, which investors will likely reflect in its share price,” analyst Peter Garnace of Unicapital Inc. said.

“Despite obtaining an amended environmental clearance for its P291-billion coal expansion and higher annual output, SMPC still faces uncertainty, with the non-renewal of its contract posing a “significant regulatory overhang,” Garnace said.

The contract, originally set for 35 years, grants SMPC the exclusive right to explore, develop and conduct coal-mining operations on Semirara Island in Antique.

The DOE later extended it by 15 years, moving its expiration from 2012 to July 2027.

With the contract nearing its expiration, SMPC sought another extension. But Energy Secretary Sharon Garin said the contract would instead be put up for auction.

Scheduled later this year, the bidding process will not follow the usual format of awarding the contract to the highest bidder. Instead, the winner will be selected based on qualifications, Garin said.

Given its years of experience and proven expertise in managing the project, Garin noted, SMPC still holds the “advantage” in securing the new coal operating contract.

The COL Financial analyst, however, warned that if SMPC fails to win the contract, it could negatively affect the cost of power generation at the Calaca plants, which rely entirely on Semirara coal.

SMPC, through wholly-owned subsidiaries, operates four units of power plants in Calaca, Batangas, with a total installed capacity of 900 megawatts.

For columnist and economist Bienvenido Oplas Jr., the auction for the new operating contract is likely intended to boost the government’s royalties from coal-mining operations.

“Since there is competition to win the auction, SMPC (will be) forced to offer higher royalties to the government, both national/DOE and local governments,” Oplas said.

Under its current contract, SMPC is required to remit 30 percent of its net proceeds as royalties to the DOE and compensate landowners for the use of their private lands.

Royalty payments to the DOE under the contract totaled P17.06 billion in 2023 and 2024 alone, based on the latest company data.

A source privy to the upcoming auction told The STAR a major energy player with investments in coal power generation wants to take over SMPC’s coal contract.

According to Oplas, the potential bidders could include any of the three local energy companies with big coal plants: billionaire Manuel V. Pangilinan’s Meralco PowerGen Corp., Ang-led San Miguel Global Power and Aboitiz Power Corp.

“Cement companies too will be interested, as coal is a good additive to cement. Semirara’s coal is low-medium (low rank) calorie, meaning low coal energy density, so energy generation is lower. Coal for cement production is a good option,” he added.

Juan Paolo Colet of China Bank Capital Corp., meanwhile, said the government would be better off extending SMPC’s coal contract to prevent any operational delays or disruptions.

“Perhaps the government can just negotiate terms with Semirara so that the parties achieve a win-win outcome,” Colet said.