Sumitomo Metal Mining doubles annual profit f'cast on surging metal prices

FILE PHOTO: The logo of Sumitomo Metal Mining Co is pictured at the company's headquarters in Tokyo, Japan, September 13, 2018. REUTERS/Ritsuko Shimizu/File Photo

TOKYO (Reuters) - Japan's Sumitomo Metal Mining Co Ltd more than doubled its annual profit forecast on Monday thanks to surging prices of copper and nickel as well as a one-off gain from selling its stake in the Sierra Gorda copper mine in Chile.

The Japanese miner and smelter lifted its net profit estimate for the year to March 31 to a record 214 billion yen ($1.9 billion) from its May forecast of 104 billion yen, beating a mean forecast of 149 billion yen by six analysts compiled by Refinitiv.

Copper prices have surged to a record high this year as demand for the metal widely used in power and construction rebounded from the pandemic-induced slump, while prices of nickel, which is used in stainless steel and in batteries that power electric vehicles, have also risen to their highest since 2014.

Reflecting the rally, Sumitomo Metal raised its copper price forecast to $9,071 a tonne for the year from its May estimate of $7,800 and nickel price assumption to $8.14 a pound from $7.

"Market factors including a weaker yen against the U.S. dollar are behind the upward revision," Takahiro Kanayama, managing executive officer at Sumitomo Metal, told a news conference.

Sumitomo Metal and Sumitomo Corp last month agreed to sell their stakes in the Sierra Gorda to Australian miner South32 for $1.55 billion including net debt adjustment.

The deal will contribute 70 billion yen to its annual profit, Sumitomo Metal said.

Net profit for April-September jumped to 113.8 billion yen from 17.5 billion yen a year earlier as earnings at its resources, smelting and materials segments all grew on the back of soaring metal prices.

In terms of its copper assets, the loss of the Sierra Gorda will be compensated by the Quebrada Blanca 2 project in Chile, in which it owns a 25% stake and is due to start production next year, Kanayama said.

($1 = 113.3500 yen)

(Reporting by Yuka Obayashi, editing by Louise Heavens)

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