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Energy demand to boost coal production in Philippines

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World Coal,

Energy security concerns in the Philippines will result in increased coal production and imports to 2020, according to a new report from BMI Research, with production reaching 10.8 million t in 2020 on average annual growth of 4%.

The Philippines remains “severely exposed to power supply shortages”, according to BMI Research, as growth in power capacity has not kept up with growth in demand driven by improved electrification rates and robust GDP growth. Electricity consumption is expected to reach 111.8 TWh in 2025 compared to 73.2 TWh in 2016.

Coal remains a key part of the government’s plans to fill this gap with aims to boost its role in the energy mix by 25%. Currently coal accounts for only a third of energy production in the country, but over 55% of planned power projects in the Philippine Energy Plan 2012 – 2030: a total of 26 new plants.

On the production side, Semirara Mining Corp. will continue to dominate and account for much of the increase in output. The company currently operates one opencast mine with plans to open another in 2016 and a third thereafter. On the back of that, the company’s production is expected grow from 8.46 million t in 2014 to 10.75 million t in 2020.

Despite the expected growth in production, BMI Research expected demand to outstrip domestic output, requiring an increase in imports over the forecast period. There are also considerable infrastructure challenges associated with the fact that the Philippines is an archipelago nation comprising more than 7000 islands.

“With coal reserves scattered over many islands, developing the infrastructure to mine and transport coal that is economically recoverable after identification will be difficult and time consuming,” BMI Research concludes. This will see the country to continue to rely on imports to meet its supply gap.

Domestic protests against coal production also pose a risk with environmental groups and indigenous tribes supported by the country’s powerful Catholic Church in opposing coal mine expansion. This is likely to see a step up in government oversight of the mining sector, noted BMI Research, even if an outright ban is not likely.

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