Shares in FTSE 100 copper miner Kazakhmys tumbled by more than 7 per cent yesterday after it wrote down the value of its stake in fellow Kazakh miner ENRC by $2.2bn (£1.4 bn).
The writedown plunged Kazakhmys into a $2.2bn loss for 2012, down from a $1.6bn profit the year before, forcing the group to slash its dividend by more than half, from 28 cents a share to 11 cents. The shares fell 38p to 405.3p.
Revenues for 2012 were relatively flat at $3.3bn, down from $3.56bn the year before, as the miner was hit by falling copper prices.
The chief financial officer Matthew Hird said: "Cost management will be a key focus in 2013 as we seek to improve cash flow from our core business."
Kazakhmys is the largest investor in ENRC with a 26 per cent stake. That stake had a market value of $1.54bn at the end of 2012, compared with $3.3bn a year earlier. Last week ENRC revealed a $1.5bn charge that pushed it $550m into the red for 2012, down from a $2.76bn profit the year before. Its revenues tumbled by 18 per cent to $6.32bn.
Stripping out the effect of ENRC on the bottom line, Kazakhmys reported a 31 per cent decline in profits to $1.36bn for 2012.