SEC Approves Coal Asia Application for Philippines IPO

The Securities and Exchange Commission (SEC) has approved Coal Asia Holdings’ application for an IPO listing 800 million shares on the Philippine Stock Exchange’s first board.Coal Asia, the parent company of Titan Mining and Energy Corporation, earlier announced its planned IPO aiming to raise P726.87 million net of IPO expenses.

They aim to complete exploration and further expand production works for both Davao Oriental and Zamboanga-Sibugay mines, to bring them into commercial production by 2014 and 2015 respectively. Presently, the mines producw less than 100,000Mt of coal per annum.

The offered shares, representing 20% of the company’s total issued capital stock, are being made available at par value of P1 apiece to attract retail investors to own a stake in Coal Asia.

And all indications are pointing towards Coal Asia becoming the second major player in supplying the country’s energy generation sector after industry leader Semirara Mining Corp. who controls 94% of the market.

Under the Department of Energy’s 2009 to 2030 Philippine Energy Plan, some 16,550MW of additional power capacity is needed between now and 2030. The country’s installed generating capacity is currently only slightly over 15,000MW.

The bulk of the capacity is needed by Luzon of 11,900 MW, followed by Mindanao of 2,500 MW and Visayas of 2,150 MW.In total, there are over 3,000 MW of coal projects in the pipeline that would need a secure source of fuel supply.

Energy Secretary Jose Rene Almendras is pushing for baseload power generation such as coal to address the power deficit in Mindanao, which is heavily dependent on hydro. Hydro plant’s seasonality has caused widespread power outage in Mindanao during summer.

“The only choice we have today for baseload generation is coal and we have got to secure supply for these coal plants,” Almendras said.

Considering that majority of these expansion and new coal power projects will adopt circulating fluidized bed (CFB) combustion technology that can utilize blended coal, demand for coal is set to increase tremendously.