Newcrest Mining (NCM), Barrick Gold (ABX), Glencore Xstrata (GLEN), Impala Platinum Holdings (Impuy): Weak Metals Prices Force Mining Companies To Book Big Write-downs

on August 20 2013 3:25 PM

Global commodity prices, especially for gold and copper, have taken a hit lately and that has forced mining companies to book huge write-downs. Here are four examples.

Barrick Gold Corporation (NYSE:ABX), the world’s biggest gold producer, on Aug. 1 reported an $8.7 billion after-tax impairment in its second-quarter report. The Canadian company said the impairment was "largely driven by significant decreases in long-term metal price assumptions following the sharp declines in spot prices in the second quarter." The bulk of the impairment charges stemmed from Chile's government ordering Barrick to halt production at its massive Pascua-Lama project, which straddles the Chile-Argentina border, until various environmental issues were resolved.

Glencore Xstrata PLC (LON:GLEN) took a $7.7 billion write-down on the value of assets it acquired in a merger that created the mining giant. The Swiss company also wrote down $452 million against the value of its Australian nickel assets and $324 million against the value of its ownership in Rusal, the Russian aluminum producer, bringing the total size of the write-down to $8.47 billion. 

Impala Platinum Holdings Limited (Otcmkts:Impuy) operates the largest platinum operation in South Africa, home of the world’s largest reserves of platinum. The Johannesburg company wrote down assets by $230 million as it reported its full-year profit dropped by 55 percent due to higher costs.

Newcrest Mining Limited (ASX:NCM), a large Australian gold miner that operates mines in four countries with a workforce of about 16,000, has predicted that its write-downs will total $5.73 billion. Earlier this month the company reported its first annual loss in 11 years. A big part of the earnings loss was due to its 33 percent stake in Evolution, another Australian gold mining company, which lost $273 million of its value since gold prices dropped in April. “The full-year review of Newcrest’s asset carrying values in the context of the continuing lower gold price environment, combined with a compression of valuations in the gold industry and other factors, has resulted in the impairment of the carrying value of some assets, contributed to the write-down in the book value of some assets and the recognition of future costs associated with business restructuring,” the company said in a statement.

 

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