Coal is defined as a sedimentary rock composed predominantly of solid organic materials with a greater or lesser proportion of mineral matter. It is derived from the accumulation of plant remains in sedimentary basins, and is altered to solid rock by heat and pressure applied during the basin’s development. Its quality varies according to the content of ash, impurities, and volatile matter which decreases as coal rank gets higher. It has a natural dark brown to black, graphite-like appearance and is primarily used as a fuel. Types of coal according to increasing rank (in terms of hardness, purity and heating value) are peat, lignite, subbituminous, bituminous and anthracite.

 

Worldwide, coal is a sought-after energy source. It has the largest reserve and is often the cheapest of the fuel options. Now that clean coal technologies are available, the demand for coal has remained steady despite the current stringent standard on environmental concerns. The Philippines is largely a coal consuming country with coal having the highest contribution to the power generation mix at 58% in 2021. But, local demand for coal is not limited to power generation. In 2021, the cement industry utilized 6.66% of the country’s coal supply, 7.08% went to other industries such as alcohol, sinter, rubber boots, paper and chemical manufacturing, fertilizer production and smelting processes.

 

The coal industry has never been so robust than these past years. From a historical yearly average of 1.5 million MT, local coal production began increasing at a steady rate since 2002. Within a span of 19 years, annual coal production has reached to as high as 15.3 million MT in 2019 and 14.3 million MT in 2021. Consumption likewise, increase steadily as new coal-fired power plants are installed and industries switch to coal because of the highly volatile price of oil.

 

 

The Philippines has a vast potential for coal resources just awaiting full exploration and development to contribute to the attainment of the country's energy self- sufficiency program. As of 31 December 2020, our in-situ coal reserves amount to 315 million metric tons or 13.29% of the country's total coal resource potential of 2.37 billion metric tons.

 

 

Recent upswing development in the coal industry encouraged increased interest in coal exploration. There are 21 Coal Operating Contracts in the Development and Production phase, 6 Coal Operating Contracts in the Exploration phase, and 47 small-scale coal mining operators as of May 2022.

 

To supplement these exploration activities, the Coal and Nuclear Minerals Division (CNMD) is actively implementing the Philippine Conventional Energy Contracting Program (PCEPC) for Coal.

 

 

It is but very timely to invest in coal facilities as the price of oil continues to rise with coal being still the cheapest option with abundant supply worldwide. For private companies, the key investment opportunities in the coal sector are (1) the setting-up of coal preparation plants to upgrade the quality of Philippine coals and make them acceptable to current coal users; (2) the expansion of production volumes of higher-rank Philippine coals which can be used without upgrading and/or blending with high-quality imported coal; (3) the introduction of clean coal technologies (i.e., circulating fluidized bed combustion) to ensure utilization of Philippine coals with minimal adverse effects on the environment; and (4) the putting-up of mine-mouth power plants designed to utilize the abundant low-rank coals that have no alternative markets.

 

 

In the downstream coal sector, particularly the utilization of coal for power generation and cement manufacturing companies, it can introduce clean coal technologies in existing and future power/cement plants to minimize adverse effects of coal on the environment and still be competitive, are definitely welcome.

 

 

(1) Coal washing/preparation – This is a wet method of cleaning low-rank coal by separating coal from the wastes using their specific gravity differences. This method reduces ash and sulfur contents of coal and increases its heating value.

 

(2) Circulating Fluidized Bed (CFB) Combustion Technology – Crushed coal is fed with crushed limestone or dolomite to a fluidized bed furnace with a bed material (silica sand). At a controlled furnace temperature of 800-950 C, the limestone or dolomite due to its reactive CaO or MgO absorbs and reacts with SOx gas, thereby reducing the formation of this gas. At the said temperature, NOx emission is also controlled.

 

(3) Flue Gas Desulfurizer (FGD) - This equipment is installed to control the SOx emissions by spraying or scrubbing the flue gas with limestone slurry whose MgO content absorbs and reacts with SOx to form a stable substance (gypsum).

 

 

Finally, companies wanting to get involved in the Philippine coal sector in a major way are invited to consider putting up coal-fired mine-mouth power plants in the country's major undeveloped coal areas through joint ventures with existing holders of coal operating contracts. As in the case of natural gas and geothermal, private companies are allowed to put up their own plants at the mine site to assure a market for the coal by selling electricity to the grid. 

 

Specific programs, forecast and coal project schedules are found in the Philippine Energy Plan. 

 

Incentives

 

The current coal operating contract (COC) system gives the following incentives to contractors:

• Exemption from all taxes except income tax

• Exemption from payment of tariff duties and compensating tax on importation of machinery/equipment/spare parts/materials required for the coal operations

• Allow entry of alien technical personnel

• The right of ingress to and egress from the COC areas

• Recovery of operating expenses

 

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