The owners of Sultan Mining and Energy Development Corporation are reportedly moving ahead on their negotiations with San Miguel Corporation (SMC) for prospective divestment of one of their coal concessions in Mindanao.

The company somehow confirmed an earlier statement set out by SMC president Ramon S. Ang, indicating that Sultan Mining already opened its doors into selling its awarded coal blocks – the ones adjacent to the Daguma coal mine acquisition of SMC in General Santos.

“The negotiations are ongoing and the parties are hopeful of coming up with a deal soon,” highly-placed sources noted.

Sultan Mining, it was gathered, opted to sell its coal concession so it can raise cash for its coal mining venture in Bislig – seen to have better yield than what it can actually draw from the Surigao del Sur prospect.

The Bislig coal mine undertaking of the company badly needs cash infusion so it can move forward with targeted production volumes. The coal mined from Bislig was reported having rated heating value of 10,000 BTU (British thermal unit).

Additional capital, it was noted, will be needed for acquisition of equipment and facilities to prop up production expansion – and this shall include dump trucks, bulldozers, backhoes, graders and compactors as well as in building better road infrastructure as access to the mining area.

Part of the company’s projected output has already been committed to local power projects, including the 200-megawatt Naga coal facility expansion of Korea Electric Power Corporation and SPC Power Corporation. The other buyers are industries, primarily those in cement manufacturing.

“All of the committed coal supply by Sultan Mining will be honored. The Bislig prospect could be relied upon for production,” the source stressed.

Just about two years ago, Sultan Mining has been upbeat about increasing its production by about three times, referencing on what it logged at 100,000 metric tons in 2007 to 300,000 MT. That was the time then when coal prices have been reaching their peaks in the international market.

Apart from setting its eyes on prospective market overseas, there is also an anticipated encouraging demand growth in the domestic power market with all the projects being lined up to plug electricity supply gap which may start from 2011.

For upcoming power projects, local coal is reportedly preferred over imported coal since buyers can save on shipping costs, import duties and value-added tax payments.