KGHM says Sierra Gorda may not need support from next year

Sierra Gorda mine is located in the richest copper basin in Chile – the Atacama Desert in the Antofagasta region. (Image courtesy of KGHM)

Polish copper producer KGHM’s Sierra Gorda mine in Chile is likely to no longer need financial support from next year, it said on Thursday as the mine posted a 150% leap in second-quarter core profit despite risks related to coronavirus.

KGHM owns a 55% stake in Chile’s Sierra Gorda copper-molybdenum mine in the Atacama Desert that produces around 110,000 tonnes of ore per day.

Sierra Gorda’s EBITDA in the second quarter jumped by 150% year on year to 324 million zlotys on record high production, KGHM said.

“We are looking with optimism at Sierra Girda’s future financial results,” Pawel Gruza, KGHM deputy head in charge of foreign assets told a press conference.

He added that starting from next year, Sierra Gorda would no longer need financial support from its owners, a year later than initially planned due to the pandemic.

Also speaking to the conference, KGHM Chief Executive Marcin Chludzinski said only three out of 15 global mining companies managed to increase copper production in the second quarter.

“I find it a success that we are among the three companies,” Chludzinski said, adding that all KGHM mines in Poland and oversees, employing 30,000 people, have continued operations despite the pandemic.

“Personally, for me it has been the most difficult time in this company – the time that started in February and has continued up to date. My worst nightmare was getting a phone call saying that the scale of infections is such that our mining or smeltering sections have to be closed,” he said.

He added that KGHM had initially considered reducing output preventively to limit the risks of infections in its mines, but eventually decided to continue normal operations with special security procedures.

While KGHM copper and silver mines have kept operating, many of Poland’s hard coal mines have been hit by the covid-19 crisis as many miners caught the disease and operations were closed.

(By Agnieszka Barteczko; Editing by David Evans)

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