Asarco takes loss for quarter

Asarco (AR-N) declared a net loss for the fourth quarter of 1998 as a result of low copper prices.

After non-recurring items, the company lost US$68.7 million (or $1.73 per share), compared with net earnings of US$5.1 million (13 cents per share) for the corresponding period of the previous year.

Non-recurring items included funds for environmental remediation, severance packages related to the closing of the El Paso smelter in western Texas, and a writedown on the carrying value of the Black Cloud mine in Colorado. The company closed the smelter in December 1998, and was to have closed the underground base metal mine at the end of January.

Revenues for the quarter declined 17% to US$501.8 million as a result of lower copper prices. The average price on the New York Mercantile Exchange’s Comex division dipped to US70 cents per lb., compared with US87 cents per lb. in the corresponding period of 1997.

Asarco’s attributable copper production rose 3% during the fourth quarter, to 270.6 million lbs. The increase resulted from higher production at its North American mines, and at mines operated by Southern Peru Copper (PCU-N), in which Asarco owns a 54% interest.

For the year, attributable production reached 1 billion lbs. copper — an increase of 5%. Greater solvent extraction-electrowinning (SX-EW) production at the Ray and Silver Bell mines in Arizona accounted for much of the increase.

Cash production costs fell US5 cents to US$65 cents per lb. for the year, largely through operating improvements, such as SX-EW, and a cost reduction program. Asarco expects to reduce costs by another US4 cents in 1999.

Revenues slid to US$2.2 billion from $2.7 billion between 1997 and 1998. Copper prices for the past year on the Comex averaged US75 cents, compared with US$1.04 per lb. in 1997.

Asarco posted a net loss of US$130.6 million ($3.29 per share), compared with earnings of US$143.4 million ($3.42 per share) in 1997.

“The decline in metal prices, particularly copper, made the past year a difficult one for Asarco,” says Chairman Richard Osborne. “However, despite the poor financial results, the company achieved a number of its objectives.” One of these objectives was greater SX-EW production.

Southern Peru Copper reported net earnings of US$3.4 million (or 4 cents per share) for the fourth quarter, compared with earnings of US$30.4 million (38 cents per share) for the corresponding period in 1997.

For the year, the company earned US$54.6 million (68 cents per share), compared with US$185.7 million ($2.32 per share) in 1997.