LONDON, Aug 3 (Reuters) - Power cuts in Zambia, coupled with falling copper prices, are increasing the risk of a credit rating downgrade at copper producer First Quantum, Moody’s said on Monday.
Moody‘s, which has a negative outlook on its B1 rating for Canada’s First Quantum, said that “credit metrics may deteriorate more sharply than anticipated in the next 12 months, towards levels not commensurate with the current rating.”
Power cuts in north-western Zambia have affected production at mines run by First Quantum and other producers. The mining firm said it will lay off about 1,480 workers at one of its Zambian copper projects after the reduction in power supply curbed production.
First Quantum’s problems were compounded by a fall in copper prices -- down about 18 percent so far this year -- that is denting its revenue at a time of mounting financial pressure for the company, which is consuming cash as its develops its large, open pit Cobre Panama project, Moody’s said. (Reporting by Silvia Antonioli; editing by Louise Heavens)