Miner MMG in no hurry to buy ‘dog’ assets amid downturn
Lower metal prices meant lower economically recoverable amounts of ore from its mines in Australia, Canada and Africa
MMG, the overseas mining unit of state-owned metals trading major China Minmetals, is in no hurry to buy assets even as the supply-demand balance of copper and zinc is tightening amid depressed prices, chief executive Andrew Michelmore said on Thursday.
Speaking after the Hong Kong- and Australia-listed firm posted a US$1.05 billion net loss for last year due to asset impairment arising from lower metal prices, Michelmore said its priority was to get its Las Bambas mine in Peru to start commercial production and reach its output target.
“Lots of companies have been under huge pressure in the past three years due to debt payment obligations and some have made their assets available for sale,” he said. “But many of them are dog assets ... we don’t have to buy anything, our first, second and third priority is to get Las Bambas up and running and generate good cash flows.”
Our first, second and third priority is to get Las Bambas up and running and generate good cash flows
Output ramp-up of the 450,000 tonne-a-year Las Bambas mine, which will be the world’s fourth-largest copper mine when in full production, would see MMG’s main profit driver change from zinc to copper this year as its mainstay zinc mine in Australia entered decommissioning late last year.
Excluding the US$784.3 million non-cash impairment on assets, based on year-end metal prices, MMG booked an underlying after-tax loss of US$264.4 million, compared with a profit of US$99.2 million.
The impairment charge was recorded mostly because lower metal prices meant lower economically recoverable amounts of ore from its mines in Australia, Canada and Africa.
The average price of copper on the London Metals Exchange tumbled 20 per cent last year, while that of zinc fell 11 per cent.