Consunji-led SMPC ordered to suspend coal mining activities

THE Department of Energy (DoE) has ordered Semirara Mining and Power Corp. (SMPC) to suspend its coal mining activities as a result of the mudflow incident in Semirara Island in Antique province last month, the Consunji-led listed company told the stock exchange on Wednesday.

“In compliance with this directive, the Company has suspended its mining operations effective immediately,” SMPC said.

The company said it had received late afternoon on Tuesday a letter from the DoE dated Nov. 14, 2019 directing the mining and energy company to “suspend any and all mining activities under Coal Operating Contract No. 5.”

“The DoE orders of suspension will result to opportunity loss in production per day from 40,000-45,000 MT (metric tons). The financial impact, however, shall depend on the prevailing price of coal,” it added.

“We advised however that as of today, total production is already at 14.5 million MT which is 12% higher than total 2018 production of 12.9 million MT. Moreover, coal shipment already reached 14.6 million MT, 26% higher compared to 11.5 million MT total shipment in 2018,” it added.

The DoE directive will remain in effect until the conditions set by the agency are met, the company added. The mudflow incident happened on Oct. 2, 2019. SMPC’s mining operator went missing after the incident and his remains were found after a three-day search and rescue operation, the DoE said on Oct. 5.

The number one condition is for SMPC to address the “existing and continuing apparent risk” in the Casay Lake area near and adjacent to the operations of its Molave pit.

In line with this, the company “must immediately conduct” a geo-hazard assessment of the Casay Lake area and submit a specific plan to remove the hazard, for evaluation and approval of the DoE. It should also implement the DoE-approved plan subject to assessment and approval of the department.

The second main condition for SMPC relates to areas under the development and production stage.

The DoE said the company should conduct geo-hazard assessment “in all existing and proposed mining areas to identify and determine the risks and appropriate mitigating measures to these geo-hazards such as landslides, mudflows, flooding, storm surge, liquefaction, among others,” to be approved by the agency.

It should also conduct a “comprehensive review of health and safety program which must include, management leadership, worker participation, hazard identification and assessment, hazard prevention and control, education and training, program evaluation and improvement and coordination and communication, among others.”

SMPC was also directed to reorganize its safety department to address its deficiencies and provide appropriate competencies to implement a DoE-approved health and safety program, and allocate sufficient budget for its implementation.

The company said that since the Oct. 2 incident, it had been in “close coordination and full cooperation” with the Energy department on its legal and regulatory compliance, particularly its operations’ safety aspect.

SMPC said it was completing the DoE requirements for submission and “is confident that the conditions for resuming operations can be speedily met.”

“Lastly, SMPC is committed to providing all the needed health and safety trainings and amendments to further enhance the safety and welfare of our employees,” it said.

The company’s disclosure on the suspension comes a day after it told the stock exchange that it had received a DoE resolution dated Oct. 15, 2019 finding SMPC in violation of a department circular that set the guidelines on the accreditation of coal traders and registration of coal end-users.

The company was suspended for a month for its coal trading or transaction with an entity that is not accredited as a coal trader. It was also fined P1.735 million because of its “unabated and continuous coal trading despite suspension of its accreditation.”

SMPC said it would file a motion to the DoE seeking reconsideration of the resolution. It said it would continue its coal trading activities to serve its existing customers considering that the said resolution is not yet final and executory.

On Wednesday, shares in SMPC fell by 6.62% to P21.85 each. — Victor V. Saulon