* 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 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
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)