SHARES in central Asian miner Kazakhmys sank yesterday as it said it had taken a $2.2bn (£1.5bn) impairment charge on its stake in fellow metals miner ENRC.
Kazakhmys, which has a 28 per cent shareholding in ENRC, took the writedown as a slide in the market value of the FTSE 100 miner weighed heavily on its balance sheet.
In February, Kazakhmys warned that it was likely to take a writedown on its ENRC stake – a holding left over from a takeover attempt that pre-dates ENRC’s London listing in 2007.
The miner – which was this week relegated to the FTSE 250 – said that ENRC’s carrying value had more than halved to $2.03bn, which prompted the impairment charge.
Last week, ENRC itself slumped to a full-year loss of $550m as it was dragged down by a $1.5bn impairment charge primarily related to weak aluminium prices, troubles in platinum and the impact of reshuffling copper operations in the Congo.
Analysts from Investec yesterday highlighted the ENRC stake as a “significant negative” for Kazakhmys, which had “adversely affected” its share price for some time.
The writedown comes as Kazakhmys swung to a pre-tax loss of $2.2bn – from a profit of $1.6bn in 2011 – on revenues of $3.4bn, down from $3.6bn over the previous year.
Weak commodity prices and rising costs also weighed on the miner, with the average London Metal Exchange copper price 10 per cent lower in 2012 than in the previous year. Kazakhmys shares closed down 8.63 per cent yesterday to close at 405.3p as the market reacted negatively to the news.