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Polish KGHM flags more than $1 bln writedowns in 2015

Published 2016-02-08, 12:32 p/m
© Reuters. Polish KGHM flags more than $1 bln writedowns in 2015
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WARSAW, Feb 8 (Reuters) - Poland's KGHM KGH.WA , Europe's
second-biggest copper producer, on Monday flagged more than $1
billion in writedowns on key foreign assets, including the
Sierra Gorda mine in Chile, due to plunging metals prices.
The company said the writedowns will not impact its
dividends and credit covenants, adding that it has begun
revising its 2015-2020 strategy to significantly reduce capital
needs in the short and medium term.
The move is the latest in a series of writedowns on resource
assets and downgrades of earnings forecasts by miners in the
face of a global commodity slump.
Last week Sierra Gorda's co-owner, Japan's Sumitomo 8053.T
5713.T , said it cut its profit forecast due to the investment
loss at the Chilean mine in the face of falling metal prices and
its late production start-up.
KGHM on Monday recognised a $494 million loss following an
asset impairment test prompted by persistently low commodity
prices. Copper prices CMCU3 fell to their lowest since mid
2009 last month.
It also announced a $510 million loss on its investment in
the Sierra Gorda SCM firm that owns the Sierra Gorda mine,
bringing its total consolidated impairments for the year to
$1.04 billion.
State-run KGHM said last month it would have to run an asset
impairment test the face of the commodity rout.
The company gained control of Sierra Gorda in 2011 when it
bought Canadian rival Quadra FNX for C$2.87 billion ($2.07
billion), the largest ever foreign acquisition by a Polish
company.
According to Sumitomo, Sierra Gorda produced about 85,000
tonnes of copper concentrate in 2015 and aims to reach full
utilisation by the end of June.
($1 = 1.3882 Canadian dollars)

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