Semirara Mining Takes Energy Department to Court Over Asset Data Dispute

MANILA, Philippines – Semirara Mining and Power Corporation (SMPC) has taken its dispute with the Department of Energy (DOE) to court as the race to operate the Philippines’ biggest coal-producing area heats up. The Consunji-led company filed a petition before a Makati court seeking protection from repeated DOE demands for a comprehensive inventory of its assets and proprietary technical information. SMPC alleged that the department intends to share the information with other companies bidding for the Semirara coal operation. According to SMPC, the DOE sent four letters seeking geological and technical data, along with a detailed inventory of equipment. These include pumps specially reconfigured to manage water flowing into the Acacia pit, which the company described as the mine’s “lifeline.” The dispute comes after the government earlier rejected SMPC’s request to extend its coal operating contract for another 13 years beyond the July 2027 expiration. Acting on a Department of Justice opinion that the contract could no longer be renewed, the DOE instead opened the area to bidding, although SMPC remains qualified to compete. The auction covers 10 coal blocks on Semirara Island in Antique. The area is currently operated by SMPC, the country’s largest coal producer. DOE Secretary Sharon Garin said that the auction could push through by the middle of the year. This would be the first time the DOE bids out an already existing coal mine, further complicating the process. SMPC argued that rival bidders should prepare their own studies and mine plans instead of relying on information built from its decades of investment and operations. The company, by far the country’s largest coal producer, operates the mine under a 50-year coal contract. It also maintained that the disputed equipment remains company property. Under SMPC’s interpretation of the Coal Development Act, movable assets would become government property only if the operator failed to remove them from the exploration or production area within one year after the contract ended. “Government ownership of these assets is merely future and conditional,” SMPC said in a press release on Friday, July 17. “The bidding is supposed to choose a winner that has a viable mine plan and knows how to run one to make sure coal production is seamless to protect the country’s baseload electricity generation.” Can DOE ask for this information? The DOE’s request for extensive operational information is not, by itself, necessarily unusual. The Coal Development Act requires an operator to furnish the government with “all information, data, and reports”information, data, and reports” it may require, maintain detailed technical records, and allow government inspectors access to equipment and mining sites. The government also has a legitimate interest in ensuring bidders can operate the technically complex mine safely and without interrupting coal production. By SMPC’s own account, the pumps controlling water seepage at the Acacia mine are critical. If pumping stops, the pit could become flooded and inoperable, losing roughly half of Semirara Island’s recoverable coal reserves. The more contentious question now is whether the DOE may disclose SMPC’s proprietary information directly to rival bidders and whether the disputed equipment already belongs to the government. SMPC maintains that it still owns the mine’s assets under its coal operating contract and that they shouldn’t be made available to rival bidders. On that basis, the company argues that the assets shouldn’t form part of competitors’ bid assumptions or mine plans. It further asserts that ownership would pass to the government only if SMPC failed to remove the assets from the production and exploration area within one year after its contract expires in July 2027. “Government ownership of these assets is merely future and conditional. The bidding is supposed to choose a winner that has a viable mine plan and knows how to run one to make sure coal production is seamless to protect the country’s baseload electricity generation. It is not about SMPC and how it runs the mine,” the company said. The DOE, however, takes the position that ownership of the equipment transfers to the government once SMPC has recovered its costs. The DOE has yet to publicly respond since SMPC released its statement. SMPC said its court petition is not intended to stop or delay the bidding process. It added that mining operations would continue until the contract expires in July 2027. – Rappler.com