Engineering & Mining Journal

APR 2018

Engineering and Mining Journal - Whether the market is copper, gold, nickel, iron ore, lead/zinc, PGM, diamonds or other commodities, E&MJ takes the lead in projecting trends, following development and reporting on the most efficient operating pr

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REGIONAL NEWS - EUROPE 30 E&MJ • APRIL 2018 KGHM Posts Loss as Copper Prices Rise In the fourth quarter of 2017, the copper market saw prices grow by double digits compared to the previous-year period, a much welcomed market development for copper miners worldwide. Poland-based KGHM Polska Mied ź Group, one of the world's largest copper producers, however, reported a consoli- dated fourth-quarter net loss of PLN 134 million. This was an improvement from the loss of nearly PLN 5.1 billion in the fourth quarter of 2016, but the company failed to meet expectations. KGHM attributed the loss to a decrease in copper production by 8% for the quarter, mainly due to a breakdown-related shut- down at the Głogów smelter; and a lack of sales by the company of its copper concen- trate, which was a one-off sale in 2016. The decrease in sales volume was par- tially offset by higher copper prices and a strengthening PLN compared to the US dollar, the company said. Overall, the company saw a full-year net profit of PLN 1.5 billion, as compared to the loss of PLN 4.5 billion in 2016, which was driven by impairment losses, the company said. Deputy CEO Stefan Świątkowski said the company has been able "to take an enormously deep breath" thanks to a strengthening of the PLN in 2017. He added that 2016 was a depressing year for the company. "We were all wondering whether this is the end, whether it is a catastrophe, whether this type of sentiment will deep- en," Świątkowski said. "However, 2017 brought a breath of fresh air along with certainty that the macroeconomy is work- ing a bit in our favor." A few days prior to announcing its fourth-quarter results, the company an- nounced it had dismissed CEO Radoslaw Domagalski-Labedzki and deputy CEO responsible for foreign assets, Michal Jezioro. The KGHM supervisory board named Rafał Pawelczak as interim CEO, and that Świątkowski would serve as dep- uty CEO in charge of international assets. Rio Tinto Selling Aluminum Smelters in France, Iceland Rio Tinto has announced agreements for separate transactions to sell its Dunker- que aluminum smelter in northern France to Liberty House and its ISAL smelter in Hafnarjordur, Iceland, to Norsk Hydro (Hydro). The Hydro transaction also in- cludes Rio Tinto's interest in the Dutch anode facility Aluchemie and the Swedish aluminum fluoride plant Alufluor. The Dunkerque smelter has capacity to produce about 270,000 metric tons per year (mt/y) of aluminum; the ISAL smelter has capacity to produce about 205,000 mt/y of aluminum. Consid- eration for the Dunkerque sale is $500 million; consideration or the ISAL sale is $345 million. Rio Tinto is one of the world's largest aluminum producing companies, with production in 2017 totaling 3.55 million mt, and it will continue in that role follow- ing the sale of these two smelters. The Dunkerque aluminum smelter in northern France came on-stream in 1991. It is Europe's largest producer of aluminum, especially aluminum slab. The purchase proposal from Liberty House, which acquired Rio Tinto's Loch- aber smelter and assets in Scotland in December 2016, includes plans for mod- ernization of the site. Liberty House is a member of the GFG Alliance group of companies, head- ed by Executive Chairman and CEO Sanjeev Gupta. Referring to the offer for the Dunkerque smelter, Gupta said, "Our detailed analysis leads us to be- lieve that Dunkerque is the best loca- tion to drive forward our downstream automotive strategy . . . "We want to develop the plant into an international center of aluminum and downstream aluminum products expertise. This investment will help fulfil our ambitions in the sector, further en- abling us to capitalize fully on expect- ed growth in demand for aluminum over the coming years. "In 2016, we acquired Rio Tinto's Scottish operations, working in partner- ship with the Scottish government, where we are now building a high-value-added automotive components plant. We look forward to building an equally productive partnership with the French government. "This is GFG's first significant step into continental Europe, which we will hope to build on. We are particularly at- tracted by the pro-business environment that President Macron's France is quickly building. This has motivated our ambition to establish a global hub for the group in France, not only investing heavily in alu- minum, steel, and automotive, but also bringing our other divisions, including en- ergy, banking, and property development, to explore opportunities in France and Europe, also complementing and sup- porting Dunkerque." Iceland Smelter Sale: Rio Tinto's smelter in Hafnarjordur, Iceland, was in- augurated in 1969. The smelter produces extrusion ingot for the European building, construction and transportation indus- tries from a newly built casthouse with full ultrasonic testing capabilities. Hydro anticipates that the acquisition will fur- ther strengthen its position as a leading supplier of extrusion ingot to Europe. Hydro also sees synergies with re- spect to technology creep, optimization of its anode portfolio, and freight and handling. The Icelandic plant runs on the same technology platform as Hydro's Husnes plant in Norway, where Hydro re- cently announced a reopening and tech- nological upgrade of the plant's second electrolysis line. The Głogów copper smelter in Poland suffered an outage in February hindering KGHM's copper production.

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