* Books Y79.9 bln Sierra Gorda impairment loss
* Sumitomo Corp writes down Y33.6 bln on Sierra Gorda
* Companies to hold off Sierra Gorda phase two expansion (Adds quotes and Sumitomo Corp’s writedown)
By Yuka Obayashi
TOKYO, Feb 7 (Reuters) - Sumitomo Metal Mining Co Ltd said on Tuesday it expected a net loss of 15 billion yen ($134 million) for the year ending in March, against a previous profit estimate, due to huge writedowns at the Sierra Gorda copper mine in Chile.
Japan’s second-biggest copper smelter also said the company and its partners would hold off a planned phase two expansion at the mine, co-owned by Poland’s KGHM and trading firm Sumitomo Corp, as they need to focus on ramping up the existing operation.
The slow output and delayed expansion may help boost prices of the industrial metal.
In the October-December quarter, Sumitomo Metal booked a 79.9 billion yen ($714.5 million) impairment loss for the mine, due to a ramp-up delay and slumping metal prices.
It follows the company’s writedown of 69 billion yen on the mine last year, bringing the total impairment loss on Sierra Gorda to nearly 150 billion yen, its biggest loss for a project.
Sumitomo Corp also reported on Tuesday 33.6 billion yen in investment losses on the mine in the last quarter.
Like another Chile copper mine Caserones, owned by a consortium of Japanese entities including a unit of JX Holdings Inc, Sierra Gorda has been struggling to master complex ores and resulting high production costs.
“We revised Sierra Gorda’s business plan late last year and we’ve figured that we could not make a large investment now for the phase two expansion,” Mikinobu Ogata, senior managing executive officer of Sumitomo Metal, said.
The partners had planned to double output of copper concentrate to 220,000 tonnes per year after 2017.
“But we are considering a smaller investment, worth a few tens of billions of yen, instead, to raise capacity to process 140,000 tonnes of copper ore per day from around 110,000 tonnes now,” Ogata said.
The revised full-year earnings forecast compares with the company’s earlier estimate of a 19 billion yen profit and an average forecast for a 28.6 billion yen profit from nine analysts polled by Thomson Reuters I/B/E/S.
Sumitomo Metal, which owns a 31.5 percent stake in Sierra Gorda, reported a 32.8 billion net loss for the nine months through Dec. 31.
Sumitomo Corp, meanwhile, booked a 82 percent jump in net profit for the nine months and kept its annual profit guidance of 130 billion yen, citing firmer prices of metals such as zinc and copper, as well as coal, and healthy income in its cable TV and system solutions businesses.
$1 = 111.8700 yen Reporting by Yuka Obayashi; Editing by Christian Schmollinger and Mark Potter