London 25/08/2016 - Poland's Internal Security Agency (ABW) has asked prosecutors to investigate copper miner KGHM over the purchase of Canada's Quadra FNX, which has metal deposits in Chile, it said.
KGHM management from December 2010 until March 2012 may have inflicted a large loss on the company, a crime that is punishable in Poland by up to 10 years in prison, ABW said.
KGHM bought Quadra FNX in 2011 in what was the largest ever foreign acquisition by a Polish company and acquired partial ownership of the Sierra Gorda copper and molybdenum mine in Chile in 2012.
KGHM owns 55 percent of Sierra Gorda while Japan's Sumitomo holds the other 45 percent of the project.
ABW claimed to have documents suggesting KGHM made errors that led the company to signing a "disadvantageous" deal.
The company's leadership was overhauled this year - 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 - typically result in management overhauls at state-owned companies.
Earlier this year, the Polish government ordered an audit into KGHM's foreign assets in direct reaction to the financial situation at the company's Sierra Gorda mine. KGHM had initially forecast copper output at the mine to reach 110,000-120,000 tonnes this year.
In the first half of this year, KGHM's net profit fell to 296 million zlotys ($78 million) from 1.19 billion zlotys a year earlier on foreign asset losses due to falling metal prices.
KGHM is struggling with copper prices that are mired at their lowest since 2008 financial crisis - LME copper recently traded at $4,631 per tonne.
On Wednesday, KGHM told FastMarkets it will not reach its production target of one million tonnes of copper by 2020 set the miner's previous management.
KGHM declined to comment when contacted by FastMarkets.
(Editing by Mark Shaw)