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Coal

Coal is defined as a sedimentary rock composed predominantly of solid organic materials with a greater or lesser prop
accumulation of plant remains in sedimentary basins, and is altered to solid rock by heat and pressure applied duri
according to the content of ash, impurities, and volatile matter which decreases as coal rank gets higher. It has a natura
and is primarily used as a fuel. Types of coal according to increasing rank (in terms of hardness, purity and heating valu
and anthracite.

Worldwide, coal is a sought-after energy source. It has the largest reserve and is often the cheapest of the fuel options. N
the demand for coal has remained steady despite the current stringent standard on environmental concerns. The Philip
coal having the highest contribution to the power generation mix at 27% in 2005. But, local demand for coal is not lim
utilized 20% of the country’s coal supply in 2005, 1 % went to other industries such as alcohol, sinter, rubber boots
production and smelting process.

The coal industry has never been so robust than these past three years. From a historical yearly average of 1.5 million M
in those three years. Increased production is expected in the near future as new contracts get to full blown production, a
agreements. Renewed interests in coal mining improved as coal contractors as well as small-scale permittees increase. C
coal-fired power plants are installed and industries switch to coal because of the highly volatile price of oil.

Potentials

The Philippines has a vast potential for coal resources just awaiting full exploration and development to contribute t
sufficiency program. As of 31 September 2005, our in-situ coal reserves amount to 458 million metric tons or 18 % of the
billion metric tons.

Coal Programs/Technologies/Systems

Continuing Exploration and Development Program

Recent upswing development in the coal industry encouraged increased interest in coal exploration. To date, there are
under exploration stage to verify potentials of the coal fields, and 43 small-scale coal mining operators.

To supplement these exploration activities, the Geothermal and Coal Resources Development Division (GCRDD) continu
mapping of under explored coal areas.

The Philippine Energy Contracting Round (PECR) 2

PECR2 which promoted 7 coal areas for investment concluded by the end of 2005 receiving 5 applications for four coal
Del Norte; 3) Candoni/Bayawan, Negros Oriental; and Calatrava, Negros Occidental. The applicants, however, did not qua

Other Programs on Coal

The Department through the Alternative Energy Program has entered into cooperation efforts with research entities to d
coal liquefaction, coal briquetting and coal bed methane.

Investment Opportunities

It is but very timely to invest in coal facilities as the price of oil continues to rise, coal being still the cheapest option
companies, the key investment opportunities in the coal sector are (1) the setting-up of coal preparation plants to upgrade
acceptable to current coal users; (2) the expansion of production volumes of higher-rank Philippine coals which can be
high-quality imported coal; (3) the introduction of clean coal technologies (i.e., circulating fluidized bed combustion) to en
adverse effects on the environment; and (4) the putting-up of mine-mouth power plants designed to utilize the abundant lo

Setting-Up of Coal Preparations

On the island of Cebu where the majority of small-scale coal mines are located, two feasibility studies (one funded by