Lake Sebu coal low-quality; power plants to look for other sources

GENERAL SANTOS CITY, Philippines - Coal deposits from the remote village of Ned in Lake Sebu, South Cotabato are substandard and companies planning to set up power plants in the region will have to look elsewhere for their fuel requirements. Geologist Levitico C. Toquero said coal deposits in Lake Sebu are not at par with those produced in Indonesia. "The quality of coal deposits in Ned is not really very good based on our studies... That’s why there is really a need to put up a processing plant to upgrade the quality of the extracted reserve," Mr. Toquero said in an interview. Sultan Energy earlier said the coal in the area is more than enough to supply the plant requirements of Conal Holdings, with which it had signed a deal. Aside from Sultan Energy, other companies eyeing coal deposits in Lake Sebu are Daguma Agro Minerals, Inc. and its sister company Bonanza Energy Resources, Inc. Mr. Toquero is a consulting geologist of Daguma Agro. Sultan Energy earlier said its coal supply deal with Conal Holdings showed small power plants and industrial users are shifting to coal from the more expensive diesel and bunker fuel. A senior source from MG Mining and Energy Corp. Monday said the supply agreement between Sultan Energy and Conal Holdings does not limit the source to Lake Sebu. "The memorandum is a general [document] where in case Conal sets up the power plant, the possible source is the coal from Daguma [in Ned, Lake Sebu] if it conforms to their standards," said the official who wished to remain unnamed. Sultan Energy is an affiliate of MG Mining. Conal Holdings plans to build a 200-megawatt coal-fired power plant in Maitum, Sarangani, a neighbor of Lake Sebu town where Sultan Energy has been exploring coal deposits. Joel Aton, a representative of Conal Holdings, said the company did not include in its assumptions the coal deposits in Lake Sebu. "The coal deposits there could be dangerous [and] may not fit our equipment," he said. Sarangani Governor Miguel Rene A. Dominguez also said coal deposits from Lake Sebu were unlikely to be used in the $350-million coal-fed power plant. "The quality of coal from Ned is low. It may not pass the requirement of the proponent," said the governor, a scion of the Alcantara family. Conal Holdings is a 60-40 venture between the Alcantara Group of Companies and the Electricity Generating Public Company (EGCO), a unit of Thailand’s biggest power producer. When the plan to build the power plant was announced last year, the proponents said that coal would be obtained from Kaliman-tan, Indonesia. Months later, Conal Holdings and Sultan Energy signed a memorandum of understanding for a coal supply deal. Under the deal, Conal Holdings will buy 700,000 metric tons of coal a year for 25 years from Sultan Energy once its power plant starts operations in 2011. The agreement also provides for more coal supply in case of higher demand. Conal Holdings’ power plant capacity may be expanded to as much as 900 megawatts. Studies showed coal deposits in Lake Sebu’s mountains contain at least 211 million metric tons rivaling that of Semirara, one of the country’s largest coal concessions. - BusinessWorld