The Asia Miner

APR-JUN 2019

The ASIA Miner - Reporting Important Issues to Mining Companies in the Asia Pacific Region

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the asia miner • volume 16 • issue 2 12 REGIONAL FOCUS: SE Asia & Indonesia The rapid drop in the cost of renewable energy has opened new possibiliঞes in energy systems around the world, including the Philippines. Coal has become a liability, both in terms of its high cost to consumers and the environment, as well as the negaঞve financial consequences for banks and investors. In India, China, Malaysia, and, most recently, Vietnam, a trend has emerged of cancellaঞons and delays involving new coal plants. Vietnam is witnessing a rapid adopঞon of renewable energy while cumbersome coal power producers struggle to remain compeঞঞve. Here in the Philippines, the Panay Energy Development Corporaঞon signed a deal in 2016 to deliver coal-fired power at P3.96 per kilowa hour (kWh). But because of favourable provisions in the contract, the company was allowed to game the system. The actual cost to ratepayers was 37 per cent higher at P5.41/kWh. San Miguel Corporaঞon Global Power Holdings appears to have also missed the memo about invesঞng in coal. Its power arm, SMC Global Power Holdings Corp, plans to forge ahead with the construcঞon of a 300-megawa (MW) coal plant in Negros Occidental. San Miguel needs to take a good look around before it leaps. At the very least, the company's shareholders need to pay close aenঞon to moves planned by the conglomerate's execuঞves in the province. The first factor to consider is insurance, since it is the sector most adept at assessing risk. It should come as no surprise that insurance and reinsurance companies, including global behemoths such as Swiss Re, AXA, Allianz, Dai-ichi Life Insurance, and Nippon Life Insurance, will no longer insure coal. Since 2015, 17 of the largest insurers have divested approximately US$30 billion from coal companies to reduce their coal risk exposure. Wise investors are also steering clear of coal as it becomes 'stranded' – a term which describes an asset, such as a coal- fired power staঞon, which suffers from unanঞcipated write- downs or devaluaঞons. This is happening with increasing regularity to coal plants, including those from neighbouring countries in Asia, which Consumers should not pay the price for risky coal deals By Sara Jane Ahmed

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