TOKYO, May 11 (Reuters) - Japanese miner and smelter Sumitomo Metal Mining Co Ltd on Thursday forecast a swing to profitability in the current fiscal year to March 2018, after booking a record loss a year earlier on huge writedowns at its copper mine in Chile.
Citing higher earnings from mining, the company forecast a net profit of 63 billion yen ($552 million) for this year, below a mean estimate of 77.23 billion yen from 9 analysts polled by Thomson Reuters I/B/E/S.
For the year ended in March, it reported a net loss of 18.54 billion yen, widening from the previous year’s 309 million yen. It was the biggest net loss since it began reporting earnings on a consolidated basis in 1977, a spokesman said.
In February, the firm warned of a net loss of 15 billion yen, blaming a 79.9 billion yen impairment on the Sierra Gorda mine, co-owned with Poland’s KGHM. Sumitomo Metal wrote down 69 billion yen on the mine a year earlier.
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 don’t expect any further impairment losses on the Sierra Gorda unless its operation gets worse or the copper price falls sharply,” Sumitomo Metal Mining’s senior managing executive officer Mikinobu Ogata told a news conference.
It expects the Chilean mine will produce 100,400 tonnes in copper concentrate in 2017, up from 93,700 tonnes last year.
“The phase two expansion of the Sierra Gorda has been suspended, but we are still considering investing in the phase one to boost output capacity,” Ogata said, adding that details will be decided later.
KGHM Chief Executive Radoslaw Domagalski-Labedzki said earlier this week a planned second phase of expansion of Sierra Gorda project, which was put on hold in March, would definitely not happen now.
$1 = 114.1200 yen Reporting by Yuka Obayashi, editing by David Evans