UPDATE 1-Falling copper forces Poland's KGHM to scale back

(Wraps KGHM stories, adds comments, background)
By Adrian Krajewski
WARSAW, Nov 13 (Reuters) - Europe's No. 2 copper producer,
Poland's KGHM KGH.WA , cut 2015 production targets for its main
overseas mine and flagged lower spending as well as mining asset
write-downs on Friday, as copper prices hit a six-year low.
"The situation on the commodity market is getting worse and
there are reasons to presume the possibility of testing our
mining assets for value loss," KGHM's Chief Financial Officer
Jaroslaw Romanowski said.
"We see 2016 as a turnaround year, but we presume that this
crisis may continue into next year," he added. "Our capital
expenditures will surely go down or be postponed."
Worries over growth in China, which consumes half of global
copper production, have pushed copper CMCU3 prices below
$5,000 a tonne, seen as a stress-test level for KGHM.
ID:nL3N1383VE
State-run KGHM, also the world's top silver producer, said a
21 percent surge in the dollar against the Polish zloty helped
limit the effect of an 18 percent fall in copper prices in the
first nine months of 2015. But its net profit for the period
dropped 31 percent to 1.23 billion zlotys ($312.1 million).
Earnings before interest, taxes, depreciation and
amortization (EBITDA) inched up 1 percent to 3.72 billion
zlotys, capped by losses at KGHM's key Sierra Gorda mine in
Chile, launched commercially last quarter.
The group gained control of the Sierra Gorda facility in
2011 when it bought Canada's Quadra FNX, for C$2.87 billion
($2.16 billion), inking the largest ever foreign acquisition by
a Polish company.
Sierra Gorda, which KGHM co-owns with Japan's Sumitomo
5713.T , holds 5.5 million tonnes of copper deposits.
KGHM and Sumitomo are testing for deposits near the mine,
calling their potential "second Sierra Gorda." They also want to
cut the mine's costs and expect it to book positive EBITDA in
the fourth quarter of 2015.
However, they also cut Sierra Gorda's 2015 production
targets to around 90,000 copper tonnes and around 20 million
pounds of molybdenum, planning to hit previous goals of 120,000
tonnes and 50 million pounds in 2016.
While Chinese demand worries weigh on copper, used by power
and construction industries, swelling oil stocks have hit
molybdenum, used in oil refining and steel production.
That has helped send KGHM shares down 25 percent this year.
A stronger dollar increases KGHM's dollar-denominated debt.
The group said it expects its net debt to EBITDA ratio to hit
1.3 this year versus 1.0 at the end of the third quarter.
($1 = 3.9409 zlotys)
($1 = 1.3303 Canadian dollars)