London 09/02/2016 - KGHM's profits will be lower by 1.052 billion zloty in 2015 due to impairment losses because copper prices are mired at their lowest since the 2008 financial crisis.
The company's total impairment costs stood at 3.320 billion zloty generated by its international assets, including its 55-percent stake in the Sierra Gorda mine and the Franke mine in Chile, the Robinson mine in the US as well as mines in the Sudbury region in Canada, it said in a statement after the market closed on Monday.
The domestic assets in Poland were also tested for impairment but there was no indication of the need to recognise a loss in their value, Europe's second-largest copper producer said.
A favourable factor affecting the value of its Polish assets is the significant weakening of the zloty against the dollar, it added.
KGHM acquired the Sierra Gorda mine in 2012 after it bought Canadian rival Quadra FNX - the largest ever foreign acquisition by a Polish company.
KGHM's impairment follows that of Japan's Sumitomo, which holds the remaining 45 percent stake in Sierra Gorda. Sumitomo recorded a 14-billion-yen loss in the copper and molybdenum mine, it said last Friday.
"Our response to the fall in the prices of the commodities which we produce is consistent efforts to control costs and a flexible approach to investment plans," Krzysztof Skora, CEO of KGHM, said.
"The company is financially stable, which guarantees that, in the current conditions, both current operations and development projects will be continued in the long-term perspective," he added.
Skora became KGHM CEO last week, replacing Herbert Wirth, after the Law and Justice (PiS) party returned to power in last October's elections. Changes to Poland's governments have typically resulted in management overhauls at state-owned companies such as KGHM.
KGHM will publish its final results on March 17.
Three-month copper on the LME recently traded at $4,615 per tonne, up $5 on the previous close.
(Editing by Martin Hayes)