The copper miner Kazakhmys today took an $823 million (£527 million) hit on its 26 per cent stake in ENRC, the scandal-scarred miner poised to be taken private after five turbulent years on the London Stock Exchange.
The blow plunged Kazakhmys into the red with a half-year loss of $962 million against a $122 million profit last year. The interim dividend is scrapped.
Kazakhmys accepted what many in the City consider to be a low-ball offer for its stake in ENRC after increasing concerns over its prospects. ENRC has been weighed down by an anti-fraud probe and boardroom bust-ups, and was infamously labelled "more Soviet than City" by one former director.
A consortium led by the three founding oligarchs of ENRC will soon buy back the iron ore-to-aluminium group for about £3 billion. Kazakhmys will receive $875 million in cash, which will be used to pay off debt. Chief executive Oleg Novachuk said ENRC "did not create the opportunities that we had anticipated". He added: "The outlook for ENRC as a listed business became increasingly uncertain, and the board believed that the risk of further erosion in value was considerable."
The shares today edged 3.95p up to 305.45p but longer-term investors have nursed huge losses after Kazakhmys began the year at more than 800p. However, Novachuk argued that cost inflation has proved lower than anticipated, and annual copper production should be at the "upper end" of expectations.
Philip Aiken stepped down as a non-executive director. He was chairman of Kazakhmys' health, safety and environment committee but said that this seemed an "appropriate time to retire from the board".
Aiken was also the senior non-executive director, a role that will be filled by Michael Lynch-Bell.