ENRC posts loss on writedown

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IOL BR mining PIC001 REUTERS File image: Reuters

London - Eurasian Natural Resources, a metals and power producer in Kazakhstan and Africa, posted a full-year loss as a result of a $1.5 billion impairment charge and lower commodity prices.

The net loss of $804 million in 2012 compared with a profit of $1.97 billion a year earlier, ENRC said today in a statement.

Sales declined 18 percent to $6.32 billion.

The company won’t pay a final dividend.

“2012 was a challenging year for the group, with deteriorating prices having materially impacted our earnings,” chief executive Felix Vulis said in the statement.

“The investment of $2.3 billion into our assets in 2012 is important to our success as it will support our low cost position in Kazakhstan, bring new copper volumes in 2013 and reinforce our market-leading position in ferrochrome.”

ENRC produces iron ore and ferroalloys, used in steelmaking, as well as aluminum and power in Kazakhstan.

The London-based company also owns copper and cobalt units in Africa and is investing in iron ore projects in Brazil to broaden its geographic reach.

The company wrote down $608 million from the value of its aluminum unit in Kazakhstan, according to the statement.

It also wrote down $240 million from its Boss copper and cobalt mine in the Democratic Republic of Congo, and $96 million from Chambishi, the Zambian copper and cobalt smelter acquired in 2010.

It gained access in 2009 to copper and cobalt resources in the DRC, a platinum operation in Zimbabwe, a coal project in Mozambique and a bauxite deposit in Mali through its acquisition of Central African Mining and Exploration, for 584 million pounds ($882 million).

Onerous Contract

The company wrote down $120 million from the value of its 13.5 percent stake in Johannesburg-listed Northam Platinum, and booked a $328 million charge related to an “onerous contract” with United Co.

Rusal, the world’s largest aluminum producer.

Ferrochrome prices dropped to $1.25 a pound in the third quarter and to $1.10 a pound in the fourth quarter “as the market caught up with the reality of the worsening global economic situation,” ENRC said.

Iron ore for immediate delivery at the Chinese port of Tianjin, a global benchmark, averaged $128.30 a metric ton last year, down from $167.59 in 2011, according to The Steel Index Ltd.

“Although volatility around pricing will continue, we expect strong demand for our products in the year ahead,” Vulis said. - Bloomberg News

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