Disaster leaves mining industry under siege
It is the second mining disaster to occur in the country in seven months, putting the local mining industry under siege, but investors do not expect a prolonged suspension of operations of Semirara Mining Corp.’s Panian open-pit coal mine in Antique, given that the disaster was “not environmental” in nature.
Some investors, however, expressed concern that the partial collapse of the mine could lead to potential intervention by the government.
As of the latest count, five persons are still missing while five were confirmed dead. A company spokesperson said three workers survived the collapse on Wednesday night of part of the wall of the open-pit mine.
“As there is more than one road leading from the bottom of the mine to the processing facilities, the scenario of a full stoppage of operations due to repairs is unlikely. The voluntary suspension is only one of prudence on the part of DMCI and is expected to be temporary,” said Jose Mari Lacson, head of research at local stock brokerage Campos Lanuza & Co.
The risk that cannot be ignored, however, is the potential intervention of the government, he added.
“While the accident is not environmental in nature like that of Philex Mining, it may raise concerns over mine safety and structural engineering practices. When we consider the ongoing election season, it is not improbable that a ‘concerned’ government agency or even Congress may take issue over the unfortunate accident to encourage voter awareness and support for the two competing political alliances,” Lacson said.
Joseph Roxas, president of Eagle Equities Inc., agreed that the suspension of operations at the Semirara coal mine would only be temporary. “My own assessment is that this mine will reopen in one or two months,” he said, adding that the accident was not a result of environmental damage.
But Roxas conceded that coal mining was one of the most dangerous industries in the world, adding that in all countries where coal was being extracted, there were fatalities. He cited coal mining deaths in China, Indonesia and Poland, and said this was part of the risk factors considered by investors.
“The company claimed [to have] followed everything in the international safety code. I don’t think they were making any shortcuts. They just got unlucky,” Roxas said.
But Labor Secretary Rosalinda Baldoz on Friday ordered an inspection of the labor conditions at the open coal mine pit on Semirara Island in Antique to determine if the company was complying with labor and occupational safety and health standards governing surface mining activities.
Baldoz said she had dispatched inspectors Lorraine Villegas, officer in charge of the labor department’s Antique Field Office, and Engr. Michael Gison, labor employment officer, and added that they were closely coordinating with the local government of Caluya, the Departments of the Interior and Local Government, and Energy, and with the Mines and Geosciences Bureau (MGB), the lead agencies conducting the investigation on the mining accident.
Roxas said many investors were now waiting for Semirara’s share prices to bottom out.
As of Friday, Semirara—one of the most valuable mining companies in the local stock market—lost another 2.44 percent to close at P231.40 per share. On Thursday, when news about the mining cave-in came out, Semirara’s shares tumbled by about 8 percent.
Semirara, a subsidiary of the Consunji family-led DMCI Holdings, had a market capitalization of P84.5 billion. DMCI shares have likewise fallen in the last two days because of the Semirara incident.
“Not much is known about the ongoing situation at Semirara’s open-pit mine, which leaves much room for speculation. The company, however, has assured [the public] that as far as operations and fuel inventory at the Calaca power plant are concerned, there is no immediate risk. This should be taken positively by [its] investors,” Lacson said.
Given that this was a “true force majeure” event, Lacson said a weakness in the share price due to regulatory risk should be considered an opportunity to acquire both DMCI and Semirara Mining Corp. shares. “However, if an investigation does reveal culpability on the part of [Semirara], this strategy could backfire,” he warned.
Seven months ago, the country’s largest mining firm, Philex Mining, suffered a leakage of its tailing pond at its Padcal mine in Benguet, resulting in a suspension of its mining operations. It was also asked to pay about P1 billion in fines to the government.