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

Fri Nov 13, 2015 10:45am EST
 
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(Wraps KGHM stories, adds comments, background)

By Adrian Krajewski

WARSAW Nov 13 (Reuters) - Europe's No. 2 copper producer, Poland's KGHM, 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 prices below $5,000 a tonne, seen as a stress-test level for KGHM.

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.   Continued...