DOE: No change in government royalty share in new Semirara contract

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March 12, 2026 | 12:00am

MANILA, Philippines —  Amid speculation over higher royalty demands, the government will maintain its current share of proceeds under the new coal contract on Semirara Island in Antique, a senior energy official said.

Energy Undersecretary Alessandro Sales said the coal mining contract on the island is already structured, with royalties legally defined.

“It’s not as if the bid goes up. The government’s share is already defined by the law,” Sales told The STAR.

He was referring to the Coal Development Act of 1976, which provides for the award of coal operating contracts through either direct negotiation or public bidding, as amended by Presidential Decree 1174.

Under the existing contract, current operator Semirara Mining and Power Corp. (SMPC) of the Consunji group is required to remit 30 percent of its net proceeds as royalties to the Department of Energy (DOE).

SMPC, whose current contract is set to expire in July 2027, had earlier sought an extension to continue its decades-long operations in Antique.

The DOE, however, rejected the request following a negative opinion from the Department of Justice (DOJ) and decided to put the contract up for bidding instead.

“It is legally infirmed. The opinions are different about it. So, the action of the DOE is just to follow what they want (DOJ),” Sales said.

He added that approving SMPC’s extension could have led to controversy and potential complaints.

“If there is a complaint, mining will stop,” Sales warned, highlighting the importance of domestic coal operations in shielding the country from global price shocks.

“If we have more indigenous, we shelter the shock,” the DOE official added.

The DOE recently opened the auction for 18 coal blocks across three locations, including those on Semirara Island currently operated by SMPC.

For Semirara blocks, the DOE estimates reserves of approximately 160 million metric tons (MT) of coal.

Coal mining has long been a primary growth driver for SMPC, which currently produces the majority of the domestic coal output.

Despite record coal production and power sales, SMPC saw its net income fall by 33 percent to P13.1 billion in 2025 from P19.6 billion a year earlier.

“Prices were softer this year, but our operations still delivered record coal production and electricity sales,” SMPC president, COO and chief sustainability officer Maria Cristina Gotianun said.

Coal production reached another all-time high of 19.9 million MT last year, up by 24 percent from the 16 million MT recorded in 2024.

The integrated energy firm also continued to widen its market reach, delivering initial shipments to Indonesia.

Total shipments, however, went down by seven percent year-on-year to 15.4 million MT amid softer demand.

For the power business, SMPC sold 5,296 gigawatt-hours of electricity, up seven percent from 4,945 GWh.

Of the total electricity sold, 54 percent was dispatched to the spot market, while 46 percent was delivered through bilateral contracts.