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UPDATE 1-Poland's KGHM hikes 2015 write-offs to $1.3 bln

Published 2016-03-02, 12:40 p/m
© Reuters. UPDATE 1-Poland's KGHM hikes 2015 write-offs to $1.3 bln
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(Adds details and context)
WARSAW, March 2 (Reuters) - Europe's second biggest copper
producer, Poland's KGHM KGH.WA , on Wednesday raised the
write-offs on its foreign assets in 2015 to a record $1.3
billion from a previously announced $1 billion.
The state-controlled miner said the revision of the figure
produced less than a month ago was due to updated copper price
forecasts and a new production schedule on its Victoria mine in
Canada.
KGHM, which closed the first three quarters of 2015 with a
group net profit of 1.2 billion zlotys ($301 million), said its
assets in Chile, Canada, and the U.S. have all incurred
impairment losses, mostly due to slumping metals prices.
The largest loss, pegged at $787 million, was recognised by
KGHM's largest overseas mine in Chilean Sierra Gorda, which it
co-owns with Japan's Sumitomo 8053.T 5713.T .
KGHM said it may yet revise its calculation of write-offs
again before it publishes official 2015 results on March 17.
Contrary to its statement a month-ago, the miner did not say the
writedown wouldn't impact on its dividends and credit covenants.
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.
KGHM, also the world's largest silver miner, has been hit by
persistently low commodity prices in the face of worries about
Chinese demand. Copper prices CMCU3 fell earlier this year to
their lowest since mid 2009.
KGHM gained control of Sierra Gorda in 2011 when it bought
Canadian rival Quadra FNX for C$2.87 billion ($2.13 billion),
the largest ever foreign acquisition by a Polish company. The
mine launched commercial production only last year.
($1 = 3.9923 zlotys)
($1 = 1.3476 Canadian dollars)

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