Four Chilean large-size mining companies granted the stable qualification by Standard and Poor’s rating
02-Jan-2013 Estrategia – News
At A and BBB levels
Four Chilean large-size mining companies granted the stable qualification by Standard and Poor’s rating
However, 2013 sets a tight scenario for new investments and a hard way to run for small and mid-size mining
The Standard & Poor’s rating agency (S&P) gave a positive-indexed evaluation to Codelco, Minera Escondida, Molymet, and CAP in the agency report regarding the Latin American mining sector outlook. The view for large-size mining companies in Chile will be stable in 2013, in spite of the 5-10% price downwards trend forecasted for iron and 5-8% for copper.
Codelco (A)
In accordance with S&P report the lower copper prices combined with higher production costs weakened the company results in 2012. This situation added to a lower cash flow and a higher investment level increased the debt level for 2012. Total EBITDA-adjusted debt was 2.1 times in the last 12 months up to September 2012.
Escondida (BBB+)
An improved ore grade would take the production to exceed the one million tons in 2013. The 2012 EBITDA would be exceeding US$4,000 million and for this year (2013) the amount would be very similar. S&P calculates capital expenses reached US$1,500 million – US$2,000 million in 2012, while for the 2013-2014 period the figure is forecasted to be between US$2,000 million and US$2,500 million. These investments would be increasing production up to 1.3 million tons per year by 2015.
Molymet (BBB-)
In 2012 Chilean Molymet purchased 13.69% of Molycorp at US$435 million. Debt increased because of the acquisitions executed by Molycorp and the EBITDA reduction to almost US$140 million resulting from lower Molybdenum price. S&P considers some conservative patterns will be followed in 2013 as a result of reduced capital expenses.
CAP (BBB-)
Iron and steel price drop during the third quarter of 2012 affected the CAP financial standing. From September 2011 until September 2012 EBITDA reduced from US$1,247 million down to US$ 775 million. As per some projections made by S&P, EBITDA should be improved in 2013 as a result of production increase to reach 18 million tons of iron. The company invested about US$700 million in 2012 and US$300 million are expected to be added in 2013.
