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Last updated: August 21, 2014 11:32 am
A significant devaluation of the Kazakh currency helped copper miner Kazakhmys cut costs and surpass analysts’ earnings forecasts amid a corporate restructuring.
Delivering its last interim financial results before an expected break-up of the company, UK-listed Kazakhmys also lamented its inability to improve its safety record. It said there had been 11 staff deaths in the first half of the year that could have been avoided. “Progress on safety is slower than we had hoped,” Oleg Novachuk, chief executive, said on Thursday.
Kazakhmys, once a FTSE 100 member, has been weighed down in recent years by higher costs at a number of its ageing mines in the former Soviet republic. Shareholders this month approved a plan to spin off most of the mines, along with a working capital injection, to a company led by Vladimir Kim, the group’s largest investor.
The remaining company hopes to make up for the lost output by completing the development of two large open-pit mines capable of operating at lower cost.
Group earnings were $324m before interest, tax, depreciation and amortisation, down 54 per cent on last year but about 15 per cent of consensus forecast, “primarily driven by improved cost control”, according to analysts at Citi.
Kazakhmys has been trying to pay down debt by selling assets, including a 50 per cent stake in a large Kazakh power station for $1.25bn in April. It also split last year from another miner, Eurasian Natural Resources Corporation, by selling its stake.
Kazakhmys’ pre-tax loss halved from $244m in the first half of 2013 to $118m in the same period this year, on revenues that fell from $1.6bn to $1.3bn.
The miner warned that costs were likely to rise in the second half of the year because of inflationary pressures caused by the 17 per cent devaluation of its currency, the tenge, in February.
Kazakhmys shares fell 4.4 per cent to 294.9p in late morning trade in London.
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