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SULTAN Mining & Energy Development Corp. plans to
triple its coal production this year to take advantage of rising
prices and demand in both here and abroad.
Ricardo Basallo Jr., Sultan
senior vice president for operations, said the firm has invested P50
million in the fourth quarter last year, in addition to P100 million
plunked in early last year. The investment is aimed at increasing
production from its Surigao del Sur coal mine to at least 300,000
metric tons this year from less than 100,000 last year.
Sultan’s plan to increase its
production is in line with efforts to take advantage of tightening
global supply, which has driven coal prices up.
The fresh investment in its
Bislig coal mine for additional heavy equipment will help the
company simultaneously develop and operate several open pits to
extract surface coal.
“Total sales revenues in the
first quarter of 2008, has already exceeded that of the whole year
in 2007, when the company was mostly doing incidental production,”
Basallo said.
Michael Morales, Sultan vice
president for sales, said the increased output from the company’s
Bislig mine will be sold to its local customers who have fitted out
their power plants to use local coal.
He said that preference for local
coal over imported varieties is growing since buyers save on
shipping costs, among others. Buying coal locally also assures
customers of security of supply and insulates them from foreign
exchange fluctuations.
Since it started operations,
Sultan’s wholly-owned subsidiary MG Mining and Energy Corp. has
signed two coal supply agreements with Philippine National Oil
Co.-Exploration Corp. and Toledo Power Co.
In addition, the Sultan unit has
begun coal deliveries on a per-order basis to Philbest Canning
Corp., General Tuna Corp., Truly Natural Foods Corp., Lafarge Cement
Services Philippines Inc., Holcim Philippines Inc. and PICOP
Resources Inc.
“These companies have also
expressed serious intentions to secure a long term coal supply
agreement with Sultan, in anticipation of this year’s ramp up in
production,” Morales said.
Basallo said Sultan’s
production volume would steadily increase “once additional open
pits come on stream with the help of expansion efforts financed by
fresh funds. The company plans to raise P480 million from its
initial public offering (IPO).
It has scheduled the IPO this
quarter. Apart from its Surigao operations, the company also runs a
mine in Cebu.
Sultan has tapped Asian Alliance
Investment Corp. as lead underwriter for its proposed public float.
--Euan Paulo C. Añonuevo
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