* KGHM recognises $494 mln loss after impairment tests
* Group also books $510 mln loss on key Sierra Gorda asset
* One-off losses stem from commodity price slump
* KGHM maintains dividend policy despite losses
(Adds more detail, company comments)
WARSAW, Feb 8 (Reuters) - Poland's KGHM KGH.WA , Europe's
second-biggest copper producer, on Monday flagged a record $1
billion in writedowns on key foreign assets, including the
Sierra Gorda mine in Chile, due to plunging metals prices.
The state-controlled group 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.
KGHM, which closed the first three quarters of the year with
a consolidated net profit of 1.2 billion zlotys ($301.6
million), recognised a $494 million loss following impairment
tests on its assets in Chile, the United States, and Canada.
It also announced a $510 million loss on its investment in
the Sierra Gorda SCM firm that owns the Sierra Gorda mine -
KGHM's largest foreign asset - bringing the group's total
impairments for the year to just over $1 billion.
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 to their lowest since
mid 2009 last month.
The group, which ended the third quarter of 2015 with its
ratio of net debt to core profit at 1.0, said it wants to cap
the ratio at below 2.0 in order to make a planned dividend
payout from 2015 stand-alone profit.
"I believe that in the longer term KGHM's assets will show
the envisaged investment returns," KGHM's newly appointed chief
executive, Krzysztof Skora said in a statement.
KGHM 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. The
mine launched commercial production only last year.
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.
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)
($1 = 3.9793 zlotys)