Mexico's largest mining company, Grupo Mexico SAB, looks set to reduce the value of its booked copper sales in the fourth quarter after a plunge in copper prices.
The company records sales under a method known as provisional pricing, where sales on copper concentrate are booked at the time of shipment but are altered to reflect market prices when payment is received. Copper prices have fallen by almost two-thirds since hitting a high of $4.2605/lb.
“There will be an impact and it will be considerable,” said Juan Rebolledo, a spokesman for Grupo Mexico said.
However, Mr Rebolledo also said that the adjustment may be offset by hedges and exchange-rate fluctuations, Rebolledo said. The company is set to report fourth-quarter earnings on 30 January.
Rodrigo Heredia, an analyst with Ixe Casa de Bolsa SA, estimates the pricing adjustment could cause net income to fall 62 percent to $80 million in the quarter. with the price of recorded sales of copper and molybdenum cut by $231 million. The adjustments are limited to the fourth quarter and are unlikely to be repeated, he said.
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