STRATEGIC ALTERNATIVES

MARKET PRODUCT
PENETRATION DEVELOPMENT

Key Factors Weight AS TAS AS TAS

Opportunity
1. GDP from mining in the Philippines increased to P19,574 million in .06 4 .24 4 .24
the fourth quarter of 2018, from P17,364 million in the third quarter
of the same year.
2. Increasing Demand for Energy Consumption in the Philippines .08 4 .32 4 .32
which comprised of 2.2 MTOE in 2016 for residential sector, the
industrial sector at 2.1 MTOE, the commercial sector at 1.9 MTOE,
and the agricultural sector at 0.2 MTOE.
3. Emergence of digital technologies such as autonomous vehicles, .05 4 .20 4 .20
drones, 3D printing, wearable technologies, and Internet of Things
(IOT) sensors to capture data in real time.
4. Every one million additional investment in mining/quarrying .04 4 .16 3 .12
generates additional employment of 2.2.
5. The threat of entry for the coal industry tends to be low due to high .09 3 .27 4 .36
entry barriers.
6. The mining industry is not faced by any threat from substitutes due .12 4 .48 4 .48
to non-availability of any substitute for minerals and metals.
7. Resource Recycling is becoming more popular and easier because it .03 - 0 - 0
is seen as alternative to Exploiting Natural Resources
8. Transition of the industry into a Digitization and Automation. .10 3 .30 4 .40
Threats
1. Revenue Regulation issued by the BIR which states that the excise tax .11 3 .33 4 .44
per metric ton to be slapped on domestic as well as imported coal were
 as follows: P50 starting Jan. 1 this year; P100 on Jan. 1, 2019; and P150
from Jan. 1, 2020 onwards.
2. RA 7942: Philippine Mining Act of 1995 .03 - 0 - 0
3. The average inflation rate in 2018 was 5.2% which is above the .04 3 .12 3 .12
government’s 2-4% target range and much higher than the average
inflation rate of 2.9%.in 2017.
4. Depleted Reserves of Gold, Silver, Copper, and Cobalt that Currently .02 4 .08 4 .08
Plague the Mining Industry.
5. Demand for heightened Corporate Social Responsibility which means .07 4 .28 4 .28
that the industry is subject to higher levels of social-involvement.
6. Drought, extreme weather, and flooding that decrease food security, .10 4 .40 4 .40
worsen poverty, induce migration, contribute to civil unrest, and
increase conflict over natural resources.
7. The competition in mining industry is medium to high because of the .06 2 .12 4 .24
competition for limited and non-renewable resources and mines.
Strength
1. Strong profitability and high liquidity enables the Company to .12 4 .48 4 .48
continue pay special cash dividend of PhP1.0 per share on top of the
regular cash dividend of PhP1.25 per share.
2. Materials moved increased by 18% year-on-year to 164.3 million .08 3 .24 4 .32
banks cubic meter (BCM) from 135.4 million BCM against last year
because of increase in excavating capacity.
3. Unit 1 Power Plant increased in output capacity from 150MW to .06 3 .18 4 .24
250MW using Semirara coal due to the effective maintenance works.
4. Annual increase of 12% in demand of existing customer or returning .07 4 .28 4 .28
customer recorded in Cement Plants.
5. Average Selling Price (ASP) increased by 18% in 2018 due to higher .11 4 .44 3 .33
NewCastle Index and foreign exchange rate.
 6. Five hundred and eighty-four (584) of the successful graduates from .05 4 .20 3 .15
Semirara Training Center, Inc. remain employed with the Company
as of today.
7. Voluntary regularization of 3000 contractual workers. .03 4 .12 4 .12
8. The company’s mining concession do not only contain coal, but also .10 4 .40 4 .40
other minerals like silica and limestone which is estimated to be at
1.2 billion tons - two basic components for the production of cement.

Weakness
1. The Company weaken for the interim showing decline in operating .09 2 .18 2 .18
and financial performance. Net income decreased by 15% in 2018.
2. Consolidated Current ratio decline to 1.26x from 1.69x at the .08 3 .24 2 .16
beginning of the year.
3. Production slowed by 2% to 12.9 million metric tons (MT) from 13.2 .04 4 .16 4 .16
million MT in 2017 due to production delays in the third quarter of
2018.
4. Strip ratio (the amount of overburden materials over the amount of .05 2 .10 4 .20
coal extracted) increased to 12.0:1 from 9.5:1 due mainly to the
ongoing rehabilitation of Panian mine.
5. Maintenance shutdown of Unit 2 Power Plant which was originally .02 3 .06 4 .08
scheduled for 90 days but was extended until April 2018 to allow
additional maintenance works and to ensure power availability
during summer months. It operated for a total of 5,315 hours in
YTD 2018 and 7,562 hours in YTD 2017.
6. Decreased in sales volume by 12% in 2018 attributed to decrease in .07 4 .28 4 .28
demand for power and lower local/export sales for coal.
7. Lack of separation or segregation of duties among top officers. .03 - 0 - 0
TOTAL ATTRACTIVENESS SCORE 2 6.66 7.06
Rating Score: 4=Most Attractive, 3=Reasonably Attractive, 2=Somewhat Attractive, 1=Not Attractive, (-)=Not Acceptable