Fitch upgrades CAP Group outlook from negative to stable

Tuesday, 09 March 2021 23:07:16 (GMT+3)   |   Sao Paulo

Credit rating agency Fitch Ratings has upgraded the outlook of mining and steelmaking holding CAP Group from negative to stable. Fitch said the upgraded outlook reflects the Chilean company’s cash-flow generation “full recovery” after the Guacolda port incident in late 2018.

As reported by SteelOrbis, in November 2018 CAP Group shut down activities at its Port Guacolda, following a deadly iron ore ship-loading incident. The port only resumed activities in December 2019.

Fitch said CAP Group’s improved financial metrics in the full-year 2020 helped the company increase its outlook.

“The significant improvement on its credit metrics together with the very positive perspectives for iron ore positions CAP as a strong 'BBB-' and has led to an upgrade of its National Long Term Ratings,” the credit rating agency said.

The credit rating agency said the company’s iron ore cash costs in 2021 and 2022 should reach $45/mt.

“The improvement should be driven by the normalization of its operations and considering a product mix with higher participation of pellet, a more expensive to produce. Higher pellet production is related to current elevated premiums that Fitch is conservatively projecting at $33/mt,” the agency said.

“CAP shows an average cost position at the upper part of the second quartile on the business cost curve for iron ore, that could vary according to the production blend,” Fitch added.

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