Fitch predicts big EBITDA drop for Latin American miners

Fitch Ratings said that following a period of sustained strong revenue growth, Latin American metals and mining companies face more than a 50% drop in their EBITDA during 2009.

"The next 12 months will prove difficult for these companies," Jay Djemal, associate director in Fitch's Latin American corporate team, said in an agency report. "Leverage and interest covenants may be breached by some Latin American metal and mining companies as a result of the tightening cash flows due to the subdued demand and low metal prices."

But the agency noted that these companies amassed strong cash positions on their balance sheets during periods of high demand and high prices that peaked in mid-2008, leaving them well positioned entering the downturn.

"Very strong cash positions mean it is unlikely that any of the big players will default on their debt obligations," Djemal said.

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