London 22/02/2016 - The Polish government, which holds around a third of copper producer KGHM, has launched an audit into the company's Sierra Gorda copper project in Chile, it said.
KGHM, which owns 55 percent of Sierra Gorda, acquired the copper and molybdenum mine in 2012 when it bought Canadian rival Quadra FNX. Japan's Sumitomo holds the other 45 percent of the project.
"KGHM's new leaders are currently auditing the company's investment in Chile, whether it was justified or not, and whether no mistakes have been made along the way," State Treasury minister Dawid Jackiewicz said on Monday.
Earlier this month, Europe's second-largest copper producer said its total impairment costs for 2015 stood at 3.32 billion zloty from its international assets, including its stake in Sierra Gorda. Sumitomo, meanwhile, recorded a 14-billion-yen loss against Sierra Gorda in the nine months to December 31.
KGHM is struggling with copper prices that are mired at their lowest since 2008 financial crisis - LME copper recently traded at $4,683 per tonne, up $62 on Friday's close, but it hit six-year lows late last year below $4,500.
The company's leadership was overhauled earlier this month - Krzysztof Skora became KGHM CEO, replacing Herbert Wirth. Changes to Poland's governments - the Law and Justice (PiS) party returned to power in last October's elections- have typically resulted in management overhauls at state-owned companies.
KGHM will publish its final results on March 17.
(Editing by Mark Shaw)