Good afternoon, everyone. Thank you for joining the first quarter 2025 analyst briefing of Semirara Mining and Power Corporation. My name is Hannah Chan, Investor Relations Officer of DMCI Holdings. I will be walking you through SCC's financial and operational performance for the period before we open the floor for Q&A. Joining us today are members of the SCC top management team, as shown on your screen, led by our Chairman and CEO, Mr. Isidro A. Consunji, and our President, Chief Operating Officer, and Chief Sustainability Officer, Ms. Cristina C. Gotianun. Before we begin, please take note of the following. This meeting is being recorded. Questions should be sent through the panelist box. Those who submitted questions in advance will be prioritized, but we will address as many as time allows. Any unanswered questions will receive a response via email after the briefing.
This session is intended for analysts and investors to gain insights into SCC's financial performance and strategic direction. Management may discuss forward-looking statements about our plans, expectations, and growth prospects. These statements are based on current assumptions and beliefs and are not guarantees of future performance. Actual results may differ due to various risks and uncertainties. With that, let's begin the presentation. In the first quarter, SCC's financial results reflected the continued normalization of the energy market. Net income was PHP 4.4 billion, down 33% year-on-year, mainly due to lower coal prices. The impact was partially offset by stronger performance from the power segment. We maintained a solid cash position of PHP 11.5 billion, enabling a PHP 2 per share dividend payout in regular and special dividends, totaling PHP 8.5 billion, which was paid on April 23.
This represented 43% of last year's reported net income and well above our 20% dividend policy. Let's begin with an overview of the coal market. In Q1, Asian coal prices adjusted amid elevated supply, slower demand from major importers such as China and India, and global trade uncertainties ahead of the Trump administration's April 2 tariff announcements. The Newcastle Index declined more sharply between December 2024 and March 2025, dropping 24% to $97 , while the ICI4 remained relatively stable, slipping just 2% to around $50, supported by Indonesia's HBA index policy and steady demand for low to mid-calorific coal. Notably, mid-grade coal prices showed relative stability compared to the broader equity and commodities markets, which saw significant volatility during the same period. Looking ahead with demand from markets like Vietnam providing support, coal prices are expected to hover near the current levels. Shifting to the power market.
Average spot prices in the Luzon-Visayas grid fell 21%, driven by the continued impact of approximately 2,700 MW in new capacity added last year, which eased supply tightness. This led to an 11% increase in average supply capacity year-over-year. Demand, on the other hand, grew by only 3%. La Niña conditions this quarter led the lower demand growth, in contrast to El Niño-related demand increase seen in early 2024. Further capacity additions expected later this year are likely to keep prices moderated. Going back to our consolidated results. While coal prices appear to have generally settled in the short to medium term, return on equity remained healthy at 8% for the quarter, with coal contributing 56% of earnings, down from 65% last year. The power segment's contribution declined from PHP 2.3 billion- PHP 2 billion, mainly due to the high base effect of eliminating entries.
Excluding these, standalone net income of the power segment rose by 6%. Eliminating entries reflect the gross margin from coal sold to the power segment, which is booked under the power group. Lower eliminations this year resulted from more efficient fuel use and lower coal prices. Quarter-over-quarter, net income rose by 11% on stronger power segment performance. Turning to our group income statement. Revenues fell 11% due to lower coal selling prices and shipments, while cash costs dipped slightly as higher coal production costs were offset by a lower government share. Core EBITDA margin narrowed to 41%, and net margin eased to 26%, still slightly above the pre-pandemic levels. On the balance sheet, we further strengthened our financial position.
Total debt was reduced by 19% to PHP 2.1 billion, just 3% of total assets, and our cash balance improved to PHP 10.5 billion, with PHP 8.5 billion paid out as dividends in April. In the past five years, we have shifted from a net debt of PHP 15.8 billion to a net cash position of PHP 8.4 billion, a testament to strong financial prudence and flexibility to manage market shifts and pursue growth. Moving on to the standalone results. All revenues fell by 18%, driven by stabilizing selling prices, lower grade sales, and a slight decline in shipments. Cash costs dropped 8% to PHP 7.6 billion, helped by a 45% reduction in government share, though this was partly offset by higher labor, fuel, and insurance costs.
Depreciation and amortization rose 26%, reflecting new mining equipment and the continued amortization of the Narra mine stripping asset, which totaled PHP 1.4 billion and was capitalized last year as part of pre-stripping activities to benefit the operations up to 2026. On the balance sheet, coal segment debt fell 20% to around PHP 447 million, now just 22% of the total group debt. With a stabilizing top line and higher cash and non-cash costs, standalone net income came in at PHP 2.8 billion, down 44% from last year. Let's now look at the coal operational highlights. Production jumped 16% to 5.7 million metric tons, driven by better access to coal seams in the Narra mine blocks after continuous pre-stripping in 2024, which also improved the strip ratio by 7%. Shipments slipped by 2% due to lower domestic sales but were cushioned by stronger sales to our power plants.
Exports remained steady at 2.7 million metric tons, with growth in China and Brunei, plus a new shipment to Vietnam. Meanwhile, selling prices softened on stabilizing global coal indices and a higher share of non-commercial grade shipments, which made up 36% of total sales this quarter. Finally, ending inventory dipped slightly by 5% to 1.8 million metric tons, while commercial grade inventory stayed stable at 0.6 million metric tons. Starting this year, we're reporting combined power segment results to give a clearer view of SCC's energy businesses. Standalone results for SCPC and SLPGC are still available in the annex of our briefing materials. Now, looking at the power standalone results. Revenues rose 10% on stronger power generation with stable selling prices, pushing standalone net income up by 6% to PHP 1.6 billion.
Cash costs grew in line with top-line, driven by higher dispatch, replacement power purchases, maintenance, and insurance, though partly offset by efficient fuel management. Spot purchases rose to PHP 106 million due to SCPC's four-day simultaneous outage of both units. As a result, the core EBITDA margin narrowed slightly to 44%. On the balance sheet, debt dropped 24% to PHP 1.6 billion on ongoing SCPC amortization and cash decline following a PHP 2 billion dividend payout to SMPC. SLPGC remained debt-free. Turning to the operations. While overall plant availability dipped to 89% due to the continued plant maintenance of SCPC Unit 1 and SLPGC Unit 2 from last year, the segment's performance was driven by a 13% increase in average capacity following the full restoration of SCPC's Unit 2 dependable capacity to 300 MW in late May 2024.
Power sales rose by 11%, reflecting improved operating performance and stronger spot market sales, supported by higher capacity and a 6% increase in contracted capacity. A key highlight of this quarter was the success of the contracting strategy. Overall, ASP, or average selling price, remained firm despite a sharp drop in spot prices, owing to stronger BCQ pricing under new contracts with more favorable terms. As of March 31, 40%, or 334 MW of the total 840 MW dependable capacity was contracted, with 7% under fuel pass-through arrangements. This is close to the management's target of about half of the net sellable capacity, with 62% of contracted capacity expected to expire in 2026. Moving on to our outlook. We continue to focus on strengthening our core operations and cost discipline to navigate the evolving market landscape.
On the coal segment, we're advancing production efficiency in the Narra mine while continually progressing our exploration efforts at Acacia mine, which is essential to sustain future production targets and improve coal quality. While we're optimistic about securing DENR approval over the Acacia ECC amendment, which will sustain operations over the medium term. We're also moving forward with our plan to use wind energy for part of our mining power needs, with implementation targeted in the second quarter of 2025. For power, we're reinforcing our contracting strategies and working to enhance fuel efficiency and plant performance. We're also watching for infrastructure movements, like upcoming transmission line upgrades that will support grid stability and growth. On the risk side, we remain mindful of global demand trends, policy shifts, and potential economic slowdown.
While these issues are external factors, we are addressing these risks through disciplined spending, operational improvements, and carefully targeted investments to maintain strong business fundamentals. To end the presentation, let me summarize our key takeaways for the quarter. While earnings softened in line with normalizing coal prices, strong operating performance across both our power and coal segments, as well as effective contracting and marketing strategies, helped support overall results. We remain focused on cost discipline, operational improvements, and customer growth to sustain performance and protect margins, especially as we navigate a more settled yet evolving market landscape. With a solid balance sheet and prudent investment approach, we are well-positioned to navigate market shifts and capture new opportunities moving forward. This ends my presentation, and we open the floor for questions. To open the floor to questions, let's start off with questions sent via email.
So we'll start off with questions sent to the coal segment. The first few questions are addressed to Mr. Mark Bentayo, Head of Coal Marketing and Product Delivery. Hi, sir M LAB. The first question goes: What is the most prevalent thermal coal benchmark you use for coal pricing? Can you provide more updates on the Indonesian government's HBA-based pricing scheme? What do you think is the reason for the sequential decline in ICI4 price? Have this mirrored the decline in HBA prices?
Hi, Hannah. Good afternoon. For the index that we use, we primarily reference our pricing to ICI3 and ICI4, for pricing our low to mid-grade coal. This closely aligns with the coal grade that we have here for Semirara. We are also monitoring the Newcastle Index for broader market trends, and we are also using this Newcastle Index for benchmark pricing, index-based pricing for some of our domestic customers. With regards to the HBA price, HBA index being implemented by the Indonesian government, it remained relatively stable over the past few months, largely due to Indonesia's efforts to balance domestic supply with the coal export pricing.
However, major markets like China still reject the idea of HBA and still use ICI for the pricing of their coal imports, because there's a lack of clear and tangible implementing rules for HBA, that discourage them from using it, primarily because they are citing concerns about transparency and the frequency of the release of these indices. So right now, as long as the miners and traders trade below the HBA prices, the government of Indonesia allows it. That's why Chinese market is still using it. With regards to the sequential decline in the ICI4, this is primarily due to the softer demand in the key importing countries like China, India, South Korea, and Japan, amid high stockpiles, preference over the domestic use of coal, and of course, on the cost procurement strategies they are implementing.
Additional seasonal factors like the mild winter weather that they have experienced. This has reduced coal burning in some regions. Both of these factors are reflected on the ICI index and the HBA index. As you mentioned earlier, there's a 2% decline in the ICI4 index from the fourth quarter of last year to the Q1 of this year. Likewise, on the HBA index, there's a 6% decline from January of this year up to the end of the first quarter of this year. Since Indonesia started using the HBA index, there's a 2% decline also from March 1 up to April 1 of this year.
Thank you, sir, for providing more colors on the coal indices. Next question, excluding coal sales to the owned plants, what was the proportion of non-commercial grade shipments to overall sales in the first quarter of 2025 relative to last year's first quarter and relative to the fourth quarter of 2024?
For Q1 of 2025, excluding coal sales to our own plants, non-commercial grade shipments accounted for about 10.68% of coal, or around 506,000 metric tons out of the 4.7 million metric tons that we shipped for the first quarter of this year. This is up by about 9.89% from the same quarter last year, which is about 472,000 metric tons. In comparison, we have no non-commercial grade coal shipment for the fourth quarter of last year except for our own plant. This shows a slight increase in the proportion of our non-commercial grade coal shipment year-on-year basis and a sequential increase from last quarter.
Thank you, sir. Sir, on the market side, what's the effect of U.S. tariffs on China on SCC's coal shipments to China?
So far, there is no direct effect on the U.S. tariffs on China on our coal shipments, as our coal exports to China are not subject to these U.S.-China tariff measures. Since our primary product is a thermal coal, this is not really directly affected by these trade actions by the U.S. However, we recognize that the broader U.S.-China tensions can create some macroeconomic headwinds ahead that directly influence our Chinese industrial demand and even the coal importations. Let's say there's a slowdown in China's manufacturing sector, this could lead to a softer industrial electricity demand, which may affect the thermal coal importations also. We're proactively managing this external risk by diversifying export markets that solely not focusing on China. But there's a growing source in Vietnam, Brunei, and hopefully in other Southeast Asian countries and even in India.
Also we increase allocation to our own power plants and other domestic plants to ensure the stability of the domestic demand. Also we secure more term contracts, which we did this year for our domestic market. Also we focus on the cost discipline and the cost reduction measures that we have for our production and our mine site.
Thank you, sir. Sir, last question. What developments could trigger a reversal in the current downtrend in coal prices?
Well, several factors could reverse the current downtrend in the coal prices. Number one, if there's a strong demand recovery from key importation countries like China and India, then there will probably be a slight increase in the prices as faster than expected. Also the weather-related disruptions, let's say hotter summer and colder winter, can boost electricity demand for cooling and heating also. Also, if there's supply constraints, let's say there are import-export restrictions or production cuts from major exporting countries. So this will also affect the pricing and of course, the policy changes that some of the key markets and countries that are involved in the coal business might affect also. So we continue to monitor these market trends and maintain operational flexibility so that we can capture these price improvements, hopefully.
Thank you so much, sir MLAB, for the very insightful answers. Now we proceed to questions addressed to the mine site. So we have this afternoon is Mr. Danny S. Tirona, Mining Division Head and Operations. Hi, good afternoon, sir DST.
Good afternoon, Hannah.
Good afternoon, sir. Question goes, what strip ratio are you targeting for the full year of 2026, especially as Narra winds down and Acacia ramps up?
Okay. Yes, Hannah. Good afternoon, everyone. Even with us transitioning from Narra to Acacia, we still expect our aggregate strip ratio to be within our previous guidance of 12 is to 1. So we are looking at that number for the next year.
Thank you, sir. Sir, next question. What is the current status of the Acacia mine, and are there any recent developments or milestones we should be aware of?
Yes. Currently, Acacia is undergoing exploration and pre-development activities. This will enable us to continue to produce about 16 million metric tons per year, as mentioned earlier. In addition, we are hoping to get DENR's approval to our amended environmental compliance certificate. Hopefully, we get it before this quarter ends.
Thank you so much, sir. Sir, how soon can you extract coal from the Acacia mine once you receive DENR's approval?
Yes. Assuming we get the ECC approval and we complete our development and pre-stripping activities, we expect Acacia production by second half of next year. This is in line with our approved work program as approved by the DOE.
Thank you so much, sir DST. Now we move on to questions addressed to Ms. Carla T. Levina, CFO of SMPC. Hi, ma'am. In connection to the question addressed to DST earlier on the Acacia mine, are there any cost differences that you foresee from operating Acacia versus Narra?
Okay. Good afternoon, everyone. We do not expect much difference as to cost versus Acacia and Narra. Like a standard open-pit mining, we would need to do the usual series of stripping, construction of cut off walls, seepage management. Normally, at first, it will have a higher strip ratio, as we need to do the stripping, so production cost would be higher. But it would eventually even out, as we will be able to get access to the coal seams already. It more or less, the costing charging for the mining would vary on the timing of the mine plan on the shipping and the production, but we do not expect much difference.
Thank you, ma'am. Ma'am, next question. What could explain the 38% quarter-over-quarter increase in cash cost, excluding royalties for the mining unit in the first quarter, despite favorable crude oil prices and Philippine pesos appreciation against the U.S. dollars? Were there unusually heavy pre-stripping activities done in the first quarter that you reckon should subside in the second quarter?
For the quarter one, the increase in cash cost is really mainly due to the higher production cost. Apart from the stripping that we normally do, while we have access to coal seams of Narra North Block 3 and 4, as mentioned by Hannah as we are doing the briefing a while ago, we are also continuously stripping on other sides of the mine. But the production cost also is also attributed to also an increase in the number of fleet, therefore, there is higher fuel consumption as well. Despite the normalization of fuel prices also, we have higher fuel consumption and higher parts also in maintenance parts. Also it was in Q1 of 2025 that we paid for the renewal of the insurance, IAR of the coal mining. That also triggered increase in our product cash cost. Yes, that is that.
Thank you, ma'am. Ma'am, last question for the coal segment. Please provide updates on your ITH extensions. Was ITH bonus year for Narra applied for and will Acacia mine also have an ITH? If so, for how long?
Okay. The previous bonus year ended already this May, will end this May of 2025. We are still eligible for our last bonus year under the foreign exchange savings criterion. We have just completed filing the standard requirements of BOI for the year ended 2024 last April 30. After that, this May, they are now open for us to start receiving our application for the bonus year. We will do that. We are expecting to have one last bonus year for Narra, so that eventually should cover from May of 2025 until May of 2026. As to Acacia mine ITH, we are awaiting for the approval of the SIPP 2025, the Strategic Investment Priority Plan for 2025 from the BOI, where we requested for the inclusion of coal exploration and development in light of Philippine energy security.
Once that is approved, and hopefully we really do get included, then we will now have a basis to apply for ITH of Acacia. Hopefully we will be able to get the standard ITH of four years, and hopefully, depending on the terms and conditions of the new SIPP, there will also be bonus years available to us. Thank you.
Thank you. Thank you so much, Ma'am CTL . We will be back. Before going back, we proceed to questions addressed to the power segment. On the power marketing side, we have Mr. Andy Estrellado, Head of Power Market and Commercial Operations. Hi, sir AOE. The first question goes: What developments could trigger a reversal in the current downtrend in the power prices?
Hi, good afternoon. Prices are always dependent on three factors: supply, demand, and fuel cost. On the supply side, supply and demand relationship in the supply and demand. If there is really less supply, more demand, then prices will definitely be higher. If there is higher supply, lower demand, then prices will be lower. One of the examples is like this March, we had these higher prices because of the outages. We have higher outages in March, compared to April. April was supposed to be at a higher price. What happened is that there were less outages. In the end, it became lower. The prices became lower this April. That is how the supply-demand situation is. For the rest of 2025, there are upcoming projects, upcoming power plants that are scheduled to be online.
If there will be delay, then probably the prices will go up. That would trigger the reversal of the current trend of decrease in the prices. We are anticipating that the coming months, like after election, prices will be higher. Another thing is fuel. Like what happened 2022, 2023, when there were world prices of fuel like coal and oil. The behavior of those bidding in the supply part of the power market, they changed their behavior, it became higher. That would trigger also the prices in the West and it may change. It may become higher if there will be some impact on the world behavior of coal prices or even on oil prices.
Thank you, sir AOE. Next, can you provide the duration of your power supply contracts and how much of these are expiring this year and next year?
Currently, we have about 334 contracts, power supply contracts. 13% of that are in the tenure period, tenure power supply. Most of the remaining contracts are between two to three years. For those expiring this year, about 71 MW will be expiring this year, and about 170 MW.
Thank you, sir. Sir, what is the allowable downtime in your contracts at which you are not required to provide replacement power?
Our existing contracts are all guaranteed supply, so we have no outage allowance for a long time.
Okay.
We have excess capacity.
Yeah, and we have excess capacity, actually. That is why we agreed on those kinds of arrangements because we have excess capacity.
Wow. Thank you, sir. Sir, last question. How are power spot prices trending so far in April and May?
In April, average price is about PHP 439. This is lower than March. Last March, it was about PHP 533. This is as I explained earlier, it is about the supply and demand situation. In May, as of May 5, average price is PHP 383. It is also because of the supply and demand. The average outage for March, as of March 5, is only about 400 MW, while comparing it with April, about 1,100 MW outages.
Wow. Thank you so much, Sir AOE, for your very valuable insights on the power market. Now we proceed to questions addressed to the Calaca Power Complex. We have Mr. Charlie V. Robles, Vice President and Head for CPC. Hi, good afternoon, Sir CVR. First question goes, what is the reason for the unscheduled outages so far this year?
Okay. Good afternoon, Hannah. Good afternoon, everyone. On SCPC Unit 1, the 30-day planned outage, which started on December 11, 2024, was extended by two days until January 12, as other maintenance activities took some time to complete. The unscheduled maintenance outages were carried out during the holidays in April, while demand is slow, as we observe hot spots in the terminals of the plug-in place switch system module, or PASS M0, between the main transformer and the NGCP switchyard, both for SCPC Units 1 and 2. To correct this high temperature, we need to desynchronize the units. Further, SCPC Unit 2 had a tube leak which took around six days to complete. For SLPGC Unit 2, one of the major activities during the 50-day planned outage was the turbine overhauling.
The outage had to be extended by 17 days, as there were turbine seals found during the inspection to be beyond tolerance and required to be replaced.
Thank you, sir, for the detailed breakdown of the outages so far this year. Sir, last question. Could you provide more color on the plant availability during the quarter? Was the recent outage scheduled or unexpected, or upfront or advanced?
As shown earlier on the slides, SCPC Units 1 and 2 had availability of 87% and 93%, respectively. Unit 1's 30-day planned outage was until January 10, but as mentioned, had to extend by two days as explained earlier. SLPGC Unit 2 likewise had to extend the 50-day outage supposed to be completed from November 11, 2024, to January 4. The 17 days extension, plus another two days forced outage due to boiler furnace issue, brought the availability down to 75%. SLPGC Unit 1, on the other hand, had 100% availability for the first quarter. Hopefully, there will be no more unplanned outages, as the team is continuously improving the maintenance and operational protocols.
Thank you so much, Sir CVR, for your very detailed answer. Now our question addressed to the finance side of the power segment. We go back to Ma'am CTL. Ma'am, what drove the quarter-on-quarter improvement in power revenues? Actually, quarter- over- quarter from last quarter. Did this already capture seasonal factors such as election related demand?
Okay. The improvement in the power generation revenue, so that's from quarter four of 2024 to Q1 of this year, mainly two factors. It's a 25% higher plant availability, mainly due to lesser outages that we have this quarter as against quarter four of last year, because there's plant outages in Q4, mainly for SCPC Unit 1 and SLPGC Unit 2. There might have been some extension in Q1, but that would just be for a few days. So it's generally lesser this quarter. Also in Q4 of 2024, there's also outage that we encountered, forced outage arising from the Typhoon Kristine that happened in October. So that's a higher plant availability this quarter.
Another thing is on a more or less 6% better ASP that we have this quarter as against Q4 of 2024, coming from the new contracts that we have that have better BCQ, bilateral contract prices. To answer the question also, to follow through on whether this captures the seasonality, yes, because Q4 is a cooler season, cooler and portion rainy season. So there is really lesser demand as compared to this quarter. As I mentioned, of election related. So there is also seasonality in it, but also taking into consideration higher plant availability and a little higher ASP that we have for the quarter. Thank you.
Thank you, ma'am. Ma'am, next question. How much of your PHP 6.9 billion CapEx guidance will you spend in the first half of this year?
Yeah. Based on forecast, we are expected to incur at least 50%-60% of this total CapEx of PHP 6.9 billion. This also includes our need to pay at least around 20 dump trucks for our coal segment for the first half. So 50%-60%.
[Non-English content]
Around PHP 2.4 billion. So, we've incurred PHP 2.4 billion of our CapEx out of the PHP 6.9 billion. So we're expecting to incur a little bit more, so that will total at least 50%-60% of the PHP 6.9 billion for the first half [2025].
Okay. Thank you, ma'am. Sorry, before we go back to some corporate questions. We have a question addressed to Ma'am CCG, Ms. Cristina C. Gotianun, our President. Hi, Ma'am CCG . Ma'am, the question goes, what is the latest update on your request for term adjustment on your coal operating contract, and what do you think is holding up the approval?
Good afternoon, Hannah. Can you hear me?
Yes, ma'am. Very clear.
I'm sorry, I cannot turn on my video. There's something wrong. The question is about the term adjustment of the COC. I really do not know why it's taking time for DOE to act on the term adjustment of the COC Semirara. But we are still hopeful that it will be a positive, favorable response. We're expecting it sometime this year. DOE knows that we need their action on the term adjustment because of the CapEx that we have to do towards the second half of this year. We're still hopeful that DOE will act favorably on the COC term adjustment.
Thank you so much, Ma'am CCG. Hello, ma'am?
Hello. Yes. Okay. Thank you.
Thank you, ma'am. We also have a question addressed to [Non-English content] Sir AOE, our Head of Power Marketing. Sir AOE, the question goes, why are you expecting power spot prices to go up after the elections?
Yeah. After the elections, we're expecting it to be higher because the DOE, there was a mandate by the DOE to prevent any outages, this coming election. Even after a few weeks of the election, in order not to disrupt the counting of those ballots. After that, we're expecting that some of the power plants who were not able to schedule their outage, they may have to do it later on. In that case, there will be a supply issue, then probably the prices will go up.
Thank you. Thank you, sir. The next question is addressed to Ms. CTL again. Ma'am, what are other cost-saving measures that the group is doing to date?
Okay. For the cost-saving measures, we are continuously exploring for cost efficiency improvements in our operations. For coal segment, we are currently studying and analyzing the savings that we can generate from increasing the availability of our equipment. That is, running them to a certain number of hours, versus spending for its major parts change out or maintenance. We're hoping that we will be able to generate savings from lesser operating expenses, and at the same time increasing the availability of our equipment. Then hopefully we can also reduce, if not normalize, having a more stable number of our fleet. On our coal segment, we are continuously implementing engineering solutions that would reduce our fuel consumption.
Like for the micro oil burner and the low vacuum economizer, we're looking at reducing the fuel consumption during start-up and also during the actual fuel consumption. Also, we're continuously doing the coal blending for our fuel efficiency. That keeps our generation cost at least low and remain competitive. These are what we call value-driven efficiency strategy that we're looking at, where we want to spend on cost that would return or give more benefit or value to the company. Thank you.
Thank you, ma'am. Now we will answer some questions addressed on St. Raphael Power Generation Corporation. So we have this afternoon is Renante Calago, from the business development team. Hi, Sir Nante. The question goes, what is the latest update on the St. Raphael Power Plant Project, and are timelines and budgets still on track?
Hi, Hannah. Good afternoon. Good afternoon, everyone. For St. Raphael, we have resumed the project development works. Currently, we are finalizing the technical descriptions and requirements of the project. We are expected to finish that one within the next few months. The acquisition of the right of way of our connection asset from Calaca II is ongoing. In terms of timeline and budget, yes, we are on track.
Thank you. Thank you, sir. Sir, next. How soon can you start building the plant? Apart from grid connection issues, what are the other requirements that you need to secure before you can start construction? Can you please provide an updated cost estimate for this expansion?
We plan to start our construction by middle of 2026. Prior to the start of the construction, we have to completely acquire the right of ways of our connection asset, as I mentioned earlier. In terms of cost, the initial budget is estimated at around $1.4 billion.
Thank you, sir. The next question is addressed to Ms. CTL, so more on the financial side of the project, sir. Ms. CTL, in light of this, what capital structure is SCC targeting over the medium term? Do you still expect to remain in a net cash position during the development?
Okay. On SRPGC, as N ante has mentioned, we are still studying and looking at studying also on the financing, the model, and the financing options that we will have for the project. For now, we are still on that stage, and we will just be able to provide updates as we progress and move forward. Thank you.
Thank you so much, Ms. CTL and Sir Nante. Now we move on to one of the most important question of this afternoon, which is addressed to Sir IAC. Sir , given the decline in commodity prices and higher CapEx guidance, could we still expect the company to declare special dividends in the second half this year?
Good afternoon, everyone. Our projection shows that if the current prices of electricity and coal stays, we should be able to give a special cash dividend for the year. If it declines, then we do not know by how much. Anyway, we tend to try our best to give a special cash dividend for this year. Thank you.
Thank you, sir. Actually, that's the last question we have for this afternoon. Before we close the session, may we request our Chairman and CEO, Mr. IAC, for your closing remarks.
Good afternoon again. Well, prices now are back to normal. I mean, coal price is back to normal. We have Trump and his tariffs negatively affecting world trade and might affect commodity prices. I hope it doesn't happen. Anyway, we're trying to do our very best to mitigate the situation by stricter cost control and higher productivity. We think that there's a lot more supply of electricity coming in end of this year and next year. However, there's a big supply that will be terminated. I think Santa Rita Power Plant will be terminated before the end of this year. It's about 1,000 MW.
Yes.
Exactly how that will affect local electricity prices remains to be seen. We don't know exactly what is the net effect of that. Anyway, thank you very much for attending our analyst briefing, and we'll keep you posted if there's any new development as far as Semirara operations are concerned. [Non-English content] for your support, and good afternoon.
Thank you to our panelists and everyone who joined us today for the Semirara Mining and Power Corporation briefing. We appreciate your time and engagement. You can find the final briefing materials on our website, www.semiraramining.com, later today. Have a great day, everyone.