Lubin, March 2023
THE MANAGEMENT BOARD’S REPORT ON
THE ACTIVITIES OF KGHM POLSKA MIEDŹ
S.A. AND OF THE KGHM POLSKA MIEDŹ
S.A. GROUP IN 2022
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 2
the Company and the Group in 2022 – translation from the original Polish version
TABLE OF CONTENTS
Useful terms and abbreviations 4
Aggregated data of the Company and Group for the years 2015-2022 6
Significant events in 2022 and to the date of preparation of this report 7
Statement on non-financial information 9
External auditor’s opinion on the statement on non-financial information 10
1 Information about KGHM 14
1.1 Who we are 14
1.2 Organisational structure of KGHM Polska Miedź S.A. 16
1.3 Organisational structure of the KGHM Polska Miedź S.A. Group 17
1.4 Business model of the KGHM Polska Miedź S.A. Group 20
1.5 Production process 20
1.6 Major assets 23
1.7 Other assets (equity investments and their financing) 27
1.8 Main efficiency indicators 28
1.9 Macroeconomic environment and market trends 28
1.10 Competitive advantages of the KGHM Polska Miedź S.A. Group 36
1.11 Stakeholders and external relations 39
1.12 Shareholders and the capital market 41
1.13 Key partnerships and supported initiatives 45
1.14 Awards and distinctions 46
2 Corporate governance 47
2.1 Management Structure of KGHM S.A. and the KGHM S.A. Group 47
2.2 Corporate governance 49
2.3 Strategy of KGHM Polska Miedź S.A. 51
2.4 Management of ESG issues 59
2.5 Contribution to the Sustainable Development Goals (SDGs) 61
2.6 Risk Management 63
2.7 Ethics / Ethical foundations 83
2.8 Counteracting corruption 86
2.9 Human rights 88
2.10 Sustainable supply chain 91
2.11 Information on sources of supply of materials used in production, in goods and services 94
2.12 Information about suppliers / customers whose share exceeds 10% of total revenues 94
2.13 Due diligence policies and procedures 95
2.14 Personal data protection policy in KGHM Polska Miedź S.A. 96
2.15 Declaration on the application of corporate governance 97
3 Care for the environment 121
3.1 Approach to the management of environmental impacts and climate protection 121
3.2 Importance of copper for the energy transition 127
3.3 Approach to climate risk management 128
3.4 Environmentally-friendly investment and description of measures taken 133
3.5 Energy transition - projects implemented by KGHM 134
3.6 Environmental impact of operations 135
3.7 Disclosures in accordance with the European Union taxonomy for sustainable activities in 2022 153
4 Employees and society 165
4.1 KGHM as a responsible employer – responsibility in the workplace (approach to managing employee issues) 165
4.2 Structure of employment 167
4.3 Organisational culture 170
4.4 Communication with employees 170
4.5 Relations with trade unions 171
4.6 Working conditions and staff development 173
4.7 Diversity in the workplace 176
4.8 Occupational Health and Safety 178
4.9 Responsibility towards society / society as a pillar of the KGHM Group's sustainable development activities 182
4.10 Cooperation with local communities in the KGHM Polska Miedź S.A. Group 183
4.11 Employee voluntary work 184
4.12 Expenditures incurred by the Company and the Group to support culture, sports, charities, media, social organisations, trade unions,
etc.
186
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 3
the Company and the Group in 2022 – translation from the original Polish version
4.13 Public engagement during the war in Ukraine 186
4.14 The KGHM Polska Miedź S.A. Foundation and sponsorship activities 187
5 other non-financial information 189
5.1 Litigation and claims 189
5.2 Significant contracts for the Company and Group 190
5.3 Information on transactions entered into between related parties, under other than arm’s length conditions 190
6 About the Statement on non-financial information 190
6.1 About the Statement on non-financial information 190
6.2 List / matrix of material reporting topics for 2022 191
6.3 Index of GRI content 192
6.4 Information on external auditing 199
6.5 Contact 199
Economic results 200
7 Economic performance of the Group 201
7.1 Production 201
7.2 Sales structure – geographic and product 202
7.3 C1 cost of producing payable copper in the Group 202
7.4 Financial results 203
7.5 Financing in the Group 207
7.6 Economic outlook for 2023 and achievements of 2022 targets 211
8 Economic results of the segment KGHM Polska Miedź S.A. 212
8.1 Production 212
8.2 Sales 215
8.3 Costs 216
8.4 Financial results of the segment KGHM Polska Miedź S.A. 218
8.5 Capital expenditures 222
9 Economic results of the segment KGHM INTERNATIONAL LTD. 224
9.1 Production 224
9.2 Revenues 224
9.3 Costs 225
9.4 Financial results 225
9.5 Cash expenditures 227
10 Economic results of the segment Sierra Gorda S.C.M. 227
10.1 Production 228
10.2 Sales 228
10.3 Costs 229
10.4 Financial results 229
10.5 Cash expenditures 231
11 Economic results of other segments 231
APPENDIX 1 – KGHM Polska Miedź S.A. Group structure 233
APPENDIX 2 – KGHM INTERNATIONAL LTD. Group structure 234
APPENDIX 3 – Activities of subsidiaries and joint ventures of KGHM Polska Miedź S.A. 235
APPENDIX 4 - disclosure in accordance with Annex III of Delegated Regulation 2022/1214, supplementing Delegated
Regulation 2021/2178 with Annex XII, concerning standard templates for the disclosure of information
referred to in Article 8(6) and (7) - i.e. for activities related to nuclear power and natural gas 238
APPENDIX 5 – List of tables, charts and diagrams 251
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 4
the Company and the Group in 2022 – translation from the original Polish version
USEFUL TERMS AND ABBREVIATIONS
Adjusted EBITDA
(Earnings Before Interest,
Taxes, Depreciation and
Amortisation)
Profit on sales plus depreciation/amortisation recognised in profit or loss and recognition/reversal
of impairment losses on non-current assets
Barren rock
Rock which accompanies the extraction of mineral ore and is not considered as useful
BAT
(Best Available
Technique)
Best Available Technique, as defined in Directive 96/61/EC, means the most effective and advanced
stage in the development of activities and their methods of operation which indicate the practical
suitability of particular techniques for providi
ng in principle the basis for emission limit values
designed to prevent and, where that is not practicable, generally to reduce emissions and the
impact on the environment as a whole
BREF
“BAT REFerence document”, the reference document of best available techniques (BAT)
Bearer shares In accordance with the Polish legal system the term: "bearer shares" has a different meaning than
"bearer shares" (anonymous and unregistered shares facilitating illicit actions) eliminated from the
market by certain countries, e.g. in the UK. The obligatory dematerialisation of shares carried out
in Poland in 2021 abolished the anonymity of all shareholders of joint-stock companies. The
necessity to register bearer shares makes it possible to identify each shareholder entitled to hold
shares. The division into registered and bearer shares has been upheld largely due to the legal
tradition in Poland
Cost of producing
payable copper (C1)
Unit cash cost of producing payable copper, reflecting ore mining and processing costs, transport
costs, the minerals extraction tax, administrative expenses during the mining phase and smelter
treatment and refining charges (TC/RC) less by-product value. C1 cost is in regard to payable copper
in own concentrate in the case of the segment KGHM Polska Miedź S.A. and payable copper in end
products of individual mines of the segment KGHM INTERNATIONAL LTD. and the segment Sierra
Gorda S.C.M.
Copper cathodes
The basic form of electrolytically-refined copper; the product of electrolytic copper refining
Copper concentrate
The product of enriching low-grade copper ore
Copper wire rod Drawn copper rod, usually with a diameter of 6-12 mm, universally used as a starting material in
the cable industry
Deposit/Orebody
Natural collection of minerals in the earth, arising as a result of various geological processes
Electrolytic copper
The product of electrolytic copper refining
Electrolytic copper
refining technology
A process involving the electrolytic refining of metal, in this case copper. The periodic removal of
portions of the electrolite is required to maintain the level of contaminates at an acceptable level,
which is the one of decisive factors determining the quality of electrolytically-refined copper. The
contaminated electrolyte and slimes are used as the raw materials in the recovery of some of the
metals accompanying the copper, such as silver, gold, selenium and nickel
Electrorefining The process of electrolising dissoluble anodes which are produced from refinable alloys. During
this process refined metal is collected on starter sheets under controlled conditions, while
contaminants remain in the electrolyte as solids or liquid
Flotation (ore
enrichment)
A stage in the process of breaking down ore into fr
agments of varying composition of useful
elements which exploits differences in the degree of wettability of individual mineral grains. Well-
wetted minerals fall to the bottom of the flotation tank, while the poorly-
wetted grains (those
whose wettability additionally decreases due to the action of so-called collecting agents, e.g.
xanthates) collect at the surface of the froth created from froth-inducing agents
Flotation tailings
Waste remaining after the ore enrichment process
ISO
International Organization for Standardization
LTIFR
KGHM
(Lost Time Injury
Frequency Rate)
Indicator of the number of accidents at work (as defined in Poland) in the Company KGHM Polska
Miedź S.A., standardised to 1 million worked hours
Mine excavation
Open area left after the mining work
Muck
Rock removed from a mine face. Contains both ore and barren rock
NBP
National Bank of Poland
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 5
the Company and the Group in 2022 – translation from the original Polish version
Net debt
Borrowings and debt securities less cash and cash equivalents. This category includes lease
liabilities and excludes reverse factoring liabilities
OFE rod
Oxygen-free copper wire rod produced at the Cedynia Wire Rod Plant using UPCAST technology
Ore
Rock which contains one or more useful elements. Ore can be monometallic (containing a single
metal) or polymetallic (containing more than one metal)
Payable metal
Volume of metal produced less the loss incurred in further processing to pure metal
Pillar (mining)
An unremoved mass of rock in an underground mine used to support the ceiling against collapse
Pre-precious
metals credit unit
cost of electrolytic
copper production
from own
concentrate
The sum of costs of mining, flotation, smelter processing per cathode and support functions (the
Data Center Division, the Mine-Smelter Emergency Rescue Division and the Head Office), together
with cathode selling costs, adjusted by the value of inventories of half-finished products and work
in progress divided by the volume of electrolytic copper production from own concentrate.
Indicator used solely in the Parent Entity
REACH Registration, Evaluation, Authorisation and Restriction of Chemicals -
regulation issued by the
European Parliament and of the Council (EU) on the safe use of chemicals through their registration
and evaluation, and in certain cases through the issuance o
f permits and restrictions in the sale
and use of certain chemicals
Silver smelting and
electrolytic refining
technology
Comprised of: batch preparation (the mixture of batch elements followed by drying); the smelting
of Doré metal and the casting of anodes (melting of the batch in a Kaldo furnace to remove slag or
gasify impurities followed by casting of the product [99% silver] into anodes); silver electrorefining
(forming into cathodes containing a min. 99.99% silver); melting in an electric induction furnace
and the casting of refined silver into commercial form (billets or granules)
SMR
(Small Modular
Reactor)
Small modular nuclear reactor technology
SX-EW
(solvent extraction
and
electrowinning)
Copper cathode production technology applied in some plants of KGHM INTERNATIONAL LTD.
based on solvent extraction (the process of leaching useful minerals using a solvent) of the copper
ore heap, with the aid of diluted sulphuric acid, under the atmospheric conditions
Total unit cost of
producing copper
from own
concentrate
The sum of costs of mining, flotation, smelter processing per cathode and support functions (the
Data Center Division, the Mine-Smelter Emergency Rescue Division and the Head Office), together
with cathode selling costs, adjusted by the value of inventories of half-finished products and work
in progress and less the value of anode slimes, divided by the volume of electrolytic copper
production from own concentrate
The Group
The KGHM Polska Miedź S.A. Group
TSF
Tailings Storage Facility
TPM
(Total Precious
Metals)
Precious metals (gold, platinum, palladium)
TRIR
(Total Recordable
Incident Rate)
Indicator of the number of accidents at work meeting the conditions of registration as defined in
the ICMM (International Council on Mining & Metals) standard, standardised to 200 000 worked
hours
Troy ounce (oz t) A unit of measure mainly used in English-speaking countries. The troy ounce (abbreviated as oz t)
is universally used in jewellery and precious metals commerce. 1 troy ounce equals 31.1035 grams
YoY
year on year, i.e. comparison between one year and the next year
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 6
the Company and the Group in 2022 – translation from the original Polish version
AGGREGATED DATA OF THE COMPANY AND GROUP FOR THE YEARS 2015-2022
GRI 201-1
Basic items of the consolidated financial statements
2022
2021
2020
2019
2018
2017
2016
2015
Revenues from contracts with customers
PLN mn
33 847 29 803 23 632 22 723 20 526 20 358 19 156 20 008
Profit/(loss) for the period
PLN mn
4 774 6 155 1 797 1 421 1 658 1 525 (4 449) (5 009)
Adjusted EBITDA
1
PLN mn
8 865 10 327 6 623 5 229 4 972 5 753 4 666 4 710
Total assets
PLN mn
53 444 48 027 42 780 39 409 37 237 34 122 33 442 36 764
Liabilities
PLN mn
21 298
20 889
21 699
19 207
18 012
16 337
17 531
16 350
Earnings per share (EPS)
2
PLN
23.86 30.78 9.00 7.11 8.29 7.84 (21.86) (25.06)
Share price of the Company at the end of
the period
PLN
126.75 139.40 183.00 95.58 88.88 111.20 92.48 63.49
Net debt/EBITDA
3
0.8
0.6
0.9
1.5
1.6
1.3
1.6
1.4
Payable copper production
4
kt
733.1 753.7 709.1 701.6 633.9 656.4 676.9 697.1
Payable silver production
5
t
1 327 1 366 1 353 1 417 1 205 1 234 1 207 1 299
C1 payable copper production cost
6
USD/lb
2.20
1.96
1.59
1.70
1.81
1.59
1.41
1.59
Cash expenditures on property, plant and
equipment and intangible assets
PLN mn
4 118 3 890 3 457 3 232 2 875 2 796 3 251 3 939
Basic items of the separate financial statements
2022
2021
2020
2019
2018
2017
2016
2015
Revenues from contracts with customers
PLN mn
28 429 24 618 19 326 17 683 15 757 16 024 15 112 15 939
Profit/(loss) for the period
PLN mn
3 533
5 169
1 779
1 264
2 025
1 323
-4 085
-2 788
Adjusted EBITDA
PLN mn
5 400 5 474 4 458 3 619 3 416 4 160 3 551 4 163
Total assets
PLN mn
47 995 43 458 39 342 35 989 34 250 30 947 30 100 33 120
Liabilities
PLN mn
18 320
17 618
18 616
16 100
15 205
13 691
14 200
12 841
Earnings per share (EPS)
7
PLN
17.67 25.85 8.90 6.32 10.13 6.62 -20.42 -13.94
Electrolytic copper production
kt
586.0 577.6 560.4 565.6 501.8 522.0 535.6 574.3
Metallic silver production
t
1 298 1 332 1 323 1 400 1 189 1 218 1 191 1 283
C1 payable copper production cost
USD/lb
2.38
2.26
1.62
1.74
1.85
1.52
1.3
1.47
Cash expenditures on property, plant and
equipment and intangible assets
PLN mn
2 731 2 407 2 422 2 366 1 907 1 991 2 604 2 481
Macroeconomic data (average annual)
2022
2021
2020
2019
2018
2017
2016
2015
Copper prices per the LME
USD/t
8 797 9 317 6 181 6 000 6 523 6 166 4 863 5 495
Silver prices per the LBMA
USD/oz t
21.73 25.14 20.54 16.21 15.71 17.05 17.14 15.68
Exchange rate
USD/PLN
4.46 3.86 3.90 3.84 3.61 3.78 3.94 3.77
1
Comprises Sierra Gorda S.C.M. proportionally to interest held (55%)
2
Attributable to shareholders of the Parent Entity
3
Adjusted EBITDA for the year, excluding EBITDA of the joint venture Sierra Gorda S.C.M.
4
Comprises Sierra Gorda S.C.M. proportionally to interest held (55%)
5
As above
6
As above
7
Attributable to shareholders of the Parent Entity
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 7
the Company and the Group in 2022 – translation from the original Polish version
SIGNIFICANT EVENTS IN 2022 AND TO THE DATE OF PREPARATION OF THIS REPORT
Date
Event
Section
CHANGE IN MACROECONOMIC CONDITIONS
2022
A decrease in average annual prices of copper and silver respectively by 6% and 14%
1.9
2022
Changes in average annual exchange rates: USD/PLN by +15%, USD/CAD by +4%
and USD/CLP by 15%
1.9
KGHM POLSKA MIEDŹ S.A. ON THE STOCK EXCHANGE
2022
A decrease in the share price of KGHM Polska Miedź S.A. by 24% from PLN 139.40 to PLN
126.75
1.12
CHANGES IN THE COMPOSITION OF KGHM POLSKA MIEDŹ S.A.’S BODIES
21 February 2022
Dismissal of Dariusz Świderski from the Management Board of KGHM Polska Miedź S.A.
from the position Vice President of the Management Board (Production)
2.15
14 March 2022
Appointment (as of 15 March 2022) of Marek Świder to the Management Board to the
position Vice President of the Management Board (Production)
2.15
21 June 2022
Appointment as of 22 June 2022 to the composition of the new, 11th-term Supervisory
Board: Piotr Dytko, Robert Kaleta, Andrzej Kisielewicz, Katarzyna Krupa, Agnieszka Winnik-
Kalemba, Wojciech Zarzycki as well as persons elected by employees of the KGHM Polska
Miedź S.A. Group: Józef Czyczerski, Przemysław Darowski and Bogusław Szarek.
2.15
9 August 2022
Resignation of Paweł Gruza from the function Member of the Management Board
2.15
11 August 2022
Resignation (as of 31 August 2022) of Adam Bugajczuk from the function Member of the
Management Board
2.15
31 August 2022
Appointment (as of 1 September 2022) of Tomasz Zdzikot and Jerzy Paluchniak to the
Management Board to the position respectively: Vice President of the Management Board
(Development) and Vice President of the Management Board (International Assets)
2.15
7 October 2022
Dismissal from the Supervisory Board: Piotr Dytko and Robert Kaleta with appointment in
their places: Marek Wojtków and Radosław Zimroz
2.15
11 October 2022
Dismissal from the Management Board of Marcin Chludziński and Jerzy Paluchniak
2.15
4 November 2022
Appointment of Tomasz Zdzikot to the function President of the Management Board
2.15
24 November 2022
Appointment (as of 10 December 2022) of Mirosław Kidoń to the function Vice President of
the Management Board (International Assets)
2.15
24 November 2022
Appointment to the Supervisory Board of Piotr Ziubroniewicz
2.15
6 December 2022
Dismissal from the Management Board of Andrzej Kensbok
2.15
21 December 2022
Appointment of Mateusz Wodejko to the Management Board to the position Vice President
of the Management Board (Finance)
2.15
ALLOCATION OF PROFIT
23 May 2022
Proposal of the Management Board regarding the allocation of profit for 2021
(recommended dividend payout of PLN 600 million)
1.12
21 June 2022
Decision of the Ordinary General Meeting of KGHM Polska Miedź S.A. to pay a dividend in
the amount of PLN 600 million, representing PLN 3.00 per share
1.12
SIGNIFICANT AGREEMENTS
20 April 2022
Letter of intent signed, regarding cooperation in the area of power generation sources using
SMR nuclear technology, with Tauron Polska Energia S.A.
5.2
CHANGES IN THE STRUCTURE OF THE GROUP
1 January 2022
Sale of the SG Oxide project to Sierra Gorda S.C.M. 1.6
21 February 2022
Sale of hotel companies: INTERFERIE S.A. and Interferie Medical SPA sp. z o.o.
1.3
26 April 2022
Sale of the company SCM Franke
1.3
OTHER
14 January 2022
Approval by the Supervisory Board of the Strategy of the KGHM Polska Miedź S.A. Group to
the year 2030 with an outlook to 2040
7.6
14 January 2022
Approval by the Supervisory Board of the Budget of KGHM Polska Miedź S.A. and of the
Budget of the KGHM Group for 2022
7.6
10 February 2022
Repayment of a loan granted to the joint venture Sierra Gorda S.C.M. – the Group received
payment from Sierra Gorda S.C.M. due to a loan drawn in the amount of PLN 431 million
(USD 110 million)
7.5
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 8
the Company and the Group in 2022 – translation from the original Polish version
Date
Event
Section
22 February 2022
Finalisation of the sale of all of the shares held by Sumitomo in the joint venture company
Sierra Gorda SCM to the Australian mining group South32
1.6
10 March 2022
Coming into force of the act altering the act on the minerals extraction tax. The formula for
calculating the tax rate for copper and silver was changed, which during the transition
period from 1 January to 30 November 2022, set the tax rate based on a factor reduced by
0.25 (this factor amounted to 0.85, and after the change amounted to 0.6), which in
consequence reduced the monthly tax by around 30%.
8.3
21 December 2022
Approval by the Supervisory Board of the Budget of KGHM Polska Miedź S.A. and of the
Budget of the KGHM Group for 2023
7.6
6 January 2023
Notification dated 5 January 2023 on an increase in the share of the share capital held by
Allianz OFE, Allianz DFE and Drugi Allianz OFE to a level above 5%
1.12
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 9
the Company and the Group in 2022 – translation from the original Polish version
Statement on non-
financial information
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 10
the Company and the Group in 2022 – translation from the original Polish version
EXTERNAL AUDITOR’S OPINION ON THE STATEMENT ON NON-FINANCIAL INFORMATION
Warsaw, 9 March 2023
To the Management Board of KGHM POLSKA MIEDŹ S.A.
Description of the subject matter of the opinion
The formal basis for drawing up this opinion is the Contract to render the service of making an expert assessment and
attestation of the methodological accuracy and integrity of the preparation of the “Statement on non-financial information
of KGHM Polska Miedź S.A. and the KGHM Polska Miedź S.A. Group for 2022” (hereinafter referred to as the “KGHM
Statement on non-financial information”), constituting a part of the “Report of the Management Board on activities of KGHM
Polska Miedź S.A. and the KGHM Polska Miedź S.A. Group in 2022”.
The KGHM Statement on non-financial information comprises qualitative and quantitative data for the period from 1
January 2022 to 31 December 2022 pertaining to corporate social responsibility of the Group and the Parent Entity,
understood as sustainable development of these organisational entities.
The Management Board of KGHM Polska Miedź S.A. has prepared the statement under assessment following the guidelines
of the Directives of the European Parliament and of the Council (2014/95/EU and 2013/34/EU) and the Act of 15 December
2016 Amending the Accounting Act (Journal of Laws of 2017, Item 61; consolidated version: Journal of Laws of 2021 Item
217, as amended) implementing them in Poland and the Guidelines for reporting non-financial information (OJ C.215 of 5
July 2017) as well as applying the elements of TCFD (Task Force on Climate-related Financial Disclosures) guidelines for
reporting environmental issues, the Communication from the European Commission no. 2019/C 209/01: Supplement on
reporting climate-related information, and taking into account the main assumptions for the European Union development
program till 2050 (The European Green Deal) and in accordance with Regulation (EU) 2020/852 of the European Parliament
and of the Council of 18 June 2020 on the establishment of a framework to facilitate sustainable investment, and amending
Regulation (EU) 2019/2088 (“EU Taxonomy”) obligating companies to disclose whether and to what extent their economic
activity is consistent with the assumptions of the EU Taxonomy classifying and describing environmentally sustainable
activities, in accordance with the provisions of Commission Delegated Regulation (EU) 2021/2178 and Commission
Delegated Regulation (EU) 2022/2014, amending Commission Delegated Regulation (EU) 2021/2139.
The KGHM Statement on non-financial information covers seven major fundamental parts.
The first one contains basic information on the Group and the Parent Entity, describing their mission and vision and a
historical overview, including recalling key dates and anniversaries. This is followed by the presentation of the
organisational structure, the business model and, in its perspective, the production process and the main assets of the
Group and the Parent Entity. The final element of this section provides, in turn, a description of competitive advantages of
the KGHM Polska Miedź S.A. Group, in terms of the relative context in which they are achieved and maintained,
demonstrating them through key partnerships and supported initiatives, as well as awards and distinctions obtained.
The second part of the KGHM Statement on non-financial information comprises an extensive chapter describing the
corporate governance applied in the KGHM Group. It describes the management structure of KGHM Polska Miedź S.A and
the KGHM Polska Miedź S.A. Group, including its compliance foundations. The KGHM strategy implemented with their
participation is also presented, along with its reliance on the idea of sustainable development, prepared on the basis of the
UN Sustainable Development Goals - Agenda 2030, and the implementation of activities using the concept of mapping and
stakeholder involvement. The next section of this chapter indicates the use of the risk management concept (describing in
detail also this aspect for individual non-financial areas) as the primary means of building the management system for non-
financial issues in the Group and in the Parent Entity. In this context, the most significant policies and projects implemented
in their framework are shown, addressing the areas of non-financial activities understood as the sustainable development
of these organisational units. The chapter also broadly describes the reliance of the above-mentioned management system
on a strong and comprehensive ethical basis and full respect for human rights. Due diligence and data protection policies
and procedures are also presented as key policies in place to ensure the application of appropriate corporate governance.
The entire chapter closes with the resulting corporate governance statement relating to the application of the Best Practice
for GPW Listed Companies 2021.
The following chapters of the reviewed KGHM Statement on non-financial information focus on results and metrics for the
environmental area (including the climate and the circular economy) and for the employee and social area. They have been
prepared using globally recognised non-financial reporting standards, relying on the methodology for corporate social
responsibility reporting as published by the Global Reporting Initiative in the form of GRI Standards (hereinafter: GRI
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 11
the Company and the Group in 2022 – translation from the original Polish version
Standards), including the latest 2021 edition for universal indicators and using other guidelines for observing corporate
social responsibility, including mainly the indications of the EU Taxonomy.
The third chapter is devoted to the Group's and Parent Entity's care for the environment. It is based on the presentation of
their impact on the environment and the climate, indicating the high importance of copper in the process of climate
protection through energy transition (towards minimising the carbon footprint) and the implementation of activities in the
field of the circular economy (towards minimising the level of the environmental footprint), while identifying the needs and
direction of action of the Group and Parent Entity in terms of mitigating the adverse environmental impact in the production
of their finished products. In terms of climate, the approach presented in the chapter described is in compliant with the
risk management methodology indicated in chapter two, including the compliance with the TCFD (Task Force on Climate-
related Financial Disclosures) guidelines and the Communication from the Commission No. 2019/C 209/01: Supplement on
reporting climate-related information. The described initiatives of the Group and the Parent Entity to counteract these risks
and translate them into opportunities are based on the presentation of the Climate Policy of KGHM Polska Miedź S.A. and
the resulting environmentally-friendly investments, including in terms of energy transition. The chapter also shows the non-
climate elements of the Group's and Parent Entity's environmental impact management, focusing on the management of
water, waste, pollutants to the air and biodiversity, which are elements of the environmental scopes separated under the
EU Taxonomy. All the elements described above are also described in the context of the results achieved during the
reported period. Taking into consideration the fundamental role of the EU Taxonomy for conducting environmentally
sustainable activities, the final section of the chapter presents disclosures in compliance with Regulation (EU) 2020/852 of
the European Parliament and of the Council of 18 June 2020 on the establishment of a framework to facilitate sustainable
investment, and amending Regulation (EU) 2019/2088 and the Delegated Regulations, including based on comprehensive
due diligence, implementing the taxonomy aligned approach for the first two environmental goals - climate change
mitigation and climate change adaptation.
The next, fourth chapter provides a description of activities implemented by the Group and the Parent Entity in terms of
the employee and society area. In connection with the dualism of the stakeholders’ nature, it consists of two main parts.
The first one, comprising subsections 4.1 to 4.8, describes the approach of the Group and the Parent Entity as a responsible
employer. It outlines the employment structure, organisational culture and the approach and results concerning
communication with employees, trade union relations, working conditions and employee development, diversity at a
workplace and the occupational health and safety area of fundamental importance in the metals and mining industry. The
second part of the fourth chapter described deals with the responsibility of the Group and the Parent Entity towards the
society, describing the implementation of activities for local communities, including employee volunteering, activities to
support culture, sport, charitable institutions, the media, social organisations and community involvement in connection
with the war in Ukraine. The chapter closes with the description of the KGHM Polska Miedź S.A. Foundation and sponsorship
activities.
The fifth chapter of the KGHM Statement on non-financial information reviewed deals with other important and cross-
cutting non-financial information. It focuses on the presentation of litigation matters, the description of contracts significant
for the operations of the Group and the Parent Entity, the identification of transactions with related parties on terms other
than arm's length basis and on contracts for conducting the audit or review of the 2022 financial statements or consolidated
financial statements.
The KGHM Non-Financial Statement reviewed is concluded by chapter six. It presents all the important methodological
information pertaining to it, including the manner in which it was conducted, also the principles used in it regarding the
approach to information disclosed. It also presents the matrix and the resulting list of material reported topics and the GRI
Standards content index, as well as the contact for stakeholders in case of any questions or concerns.
Defining the Management Board’s responsibility
The auditor concludes that correct preparation of the KGHM Statement on non-financial information subject to the
assessment and attestation is the responsibility of the Management Board of KGHM Polska Miedź S.A. The framework for
this responsibility consists of the selection, implementation and description of the application of the following: business
model of entities observing their corporate social responsibility, key non-financial performance indicators associated with
the operations of these entities, policies applied by these entities with regard to social, employee, environmental and
climate, respect of human rights and prevention of corruption issues and due diligence procedures as part of the above
policies, as well as the risks and their management in the context of these policies. The level of the above responsibility will
be validated by constant compliance of globally executed sustainable development principles and goals specified in the
description of the subject matter of the opinion, including the applicable provisions and legislative acts setting forth the
European Union development program named the European Green Deal, as well as a methodology based on GRI
Standards.
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 12
the Company and the Group in 2022 – translation from the original Polish version
Defining the auditor’s responsibility
The auditor declares that its objective was to draw its own conclusions regarding the methods used for setting sustainable
development goals, indicators and policy for the KGHM Polska Miedź S.A. Group and KGHM Polska Miedź S.A. as the Parent
Entity and their operations presented in the KGHM Statement on non-financial information in the descriptive form and
confirmed by the figures and levels of selected indicators provided for by GRI Standards. The audit actions based on best
knowledge and experience and the auditor’s due diligence were applied to that. In addition, the figures presented in the
text and in the indicators provided for by GRI Standards were verified to determine the risk of material distortion of data
and/or the method for calculating them.
The audit was carried out using the International Standard on Assurance Engagements (ISAE) 3000 Revised, Assurance
Engagements Other Than Audits or Reviews of Historical Financial Information.
Audit activities performed
The activities performed by the auditor comprised the following five stages:
− Stage 1. Assessment of the methodological accuracy of the selection by the KGHM Polska Miedź S.A. Group and Parent
Entity of the following: the business model as a group of entities observing their corporate social responsibility, key
non-financial performance indicators associated with the operations of these entities, policies used by the entities with
regard to social, employee, natural environment and climate (including in respect to eligibility of the activities for the
EU Taxonomy), respect of human rights and prevention of corruption issues and due diligence procedures as part of
the above policies, and the risks, including climate risks, and their management in the context of these policies and
selection of the corporate social responsibility indicators in light of the reporting standards compliant with GRI
Standards and the distinct nature of the metals and mining industry.
− Stage 2. Verification of the knowledge of the management concerning the business model used by the KGHM Polska
Miedź S.A. Group and Parent Entity as a group of entities observing their corporate social responsibility, key non-
financial performance indicators associated with the operations of these entities, policies used by the entities with
regard to social, employee, natural environment and climate (including in respect to eligibility of the activities for the
EU Taxonomy), respect of human rights and prevention of corruption issues and due diligence procedures as part of
the above policies, and the risks and their management in the context of these policies and selection of corporate social
responsibility indicators in light of the reporting standards compliant with GRI Standards and the distinct nature of the
metals and mining industry.
− Stage 3. Assessment of the structure and effectiveness of material mechanisms used by the KGHM Polska Miedź S.A.
Group and Parent Entity with regard to collection, processing and reporting of data for the key non-financial
performance indicators associated with the operations of these entities, policies used by the entities with regard to
social, employee, natural environment and climate (including in respect to eligibility of the activities for the EU
Taxonomy), respect of human rights and prevention of corruption issues and due diligence procedures as part of the
above policies, and the risks and their management in the context of these policies and the corporate social
responsibility indicators in light of the reporting standards compliant with GRI Standards and the distinct nature of the
metals and mining industry.
− Stage 4. Assessment of the structure and effectiveness of the key mechanisms for risk management and audit and
internal control used by the KGHM Polska Miedź S.A. Group and Parent Entity with regard to collection, processing and
reporting of data for the key non-financial performance indicators associated with the operations of these entities,
policies used by the entities with regard to social, employee, natural environment and climate (including in respect to
eligibility of the activities for the EU Taxonomy), respect of human rights and prevention of corruption issues and due
diligence procedures as part of the above policies, and the risks and their management in the context of these policies
and the corporate social responsibility indicators in light of the GRI reporting standards and the distinct nature of the
metals and mining industry.
− Stage 5. Verification of a sample of source documents for the non-financial indicators used by the KGHM Polska Miedź
S.A. Group and Parent Entity, illustrating execution of the actions in the area of corporate social responsibility policies
and procedures to define the risk of material distortion on the data presented in the KGHM Non-Financial Report and/or
the method for determining them.
The above activities of the auditor, in which the checklist tool was also used, have made it possible to obtain sufficient and
adequate evidence to issue a positive conclusion for the Management Board of the KGHM Polska Miedź S.A. Group as
presented below.
Auditor’s conclusion
On the basis of the actions it has completed, the auditor states that the “Statement on non-financial information of KGHM
Polska Miedź S.A. and the KGHM Polska Miedź S.A. Group for 2022” has been prepared correctly in its entirety from a
methodological perspective and following the rules on overall integrity, and nothing has been identified therein that would
indicate that the aforementioned provisions pertaining to the business model as a group of entities observing corporate
social responsibility, key non-financial performance indicators associated with the operations of these entities, policies used
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 13
the Company and the Group in 2022 – translation from the original Polish version
by these entities with regard to social, employee, natural environment (including the climate and circular economy), respect
of human rights and prevention of corruption issues and due diligence procedures as part of the above policies, and the
risks (constituting the starting point for actions in the field of sustainable development) and their management in the
context of these policies, fail to follow the guidelines of the Directives of the European Parliament and of the Council
(2014/95/EU and 2013/34/EU) and the and the Act of 15 December 2016 Amending the Accounting Act (Journal of Laws of
2017, Item 61; consolidated version: Journal of Laws of 2021 Item 217, as amended) implementing them in Poland and the
Guidelines for reporting non-financial information (OJ C.215 of 5 July 2017). The auditor also states that the KGHM
Statement on non-financial information subject to this opinion has also applied all elements of the TCFD guidelines (Task
Force on Climate-related Financial Disclosures) to report environmental issues and Communication from the European
Commission no. 2019/C 209/01: Supplement on reporting climate-related information and the key assumptions of The
European Green Deal 2050 and Regulation (EU) 2020/852 of the European Parliament and of the Council and the provisions
of Commission Delegated Regulations (EU) 2021/2178 and (EU) 2022/1214 amending Commission Delegated Regulation
(EU) 2021/2139, which should be deemed to be an important element specifying the awareness and liability of KGHM Polska
Miedź S.A. and the KGHM Polska Miedź S.A. Group for issues associated with curtailing the adverse climate-related changes
and rational resource management, in respect to both primary and secondary resources.
The clauses of the KGHM Statement on non-financial information are also consistent with the global corporate social
responsibility standards and the reporting standards provided for in GRI Core option Standards and guidelines taking into
account the distinct nature of the metals and mining industry.
Scope of application of the conclusion
This opinion, particularly the resulting conclusion, has been prepared by the auditor (following the performance of an
independent auditing process in accordance with the order of KGHM Polska Miedź S.A. of 1 December 2022) only for the
needs of the KGHM Polska Miedź S.A. Management Board and should not be used for any other purpose. The auditor does
not assume in connection with this opinion any liability towards any persons other than the KGHM
Polska Miedź S.A.
Management Board.
Translation:
Paweł Bogacz, Ph.D. Hab. Eng. (Stanisław Staszic AGH University of Science and Technology in Kraków)
Auditor
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 14
the Company and the Group in 2022 – translation from the original Polish version
1 INFORMATION ABOUT KGHM
Mission and vision Structure Assets Market Stakeholders
1.1 WHO WE ARE
GRI 2-1
GRI 2-6
MISSION AND VISION
The KGHM Polska Miedź S.A. Group is a global and innovative organisation, which conducts technologically advanced
exploration-mining and metallurgical activities. For more than 60 years KGHM has been mining and processing the Earth’s
precious natural resources, supplying the world with products which enable its sustainable development. The heart of the
organisation is the largest copper ore deposit in Europe located in south-western Poland. The KGHM Polska Miedź S.A.
Group is present on four continents – in Europe, South America, North America and Asia. Thanks to its rich experience,
openness and continual enhancement of skills, the Company has built a unique culture of cooperation and has achieved a
high position in the international arena, in 2021 holding seventh place amongst the world’s mined copper producers
8
and
second place globally in terms of silver production
9
.
The Company’s mission reflects its goal „to always have copper”, while the consistently-advanced vision remains
„to use our resources efficiently to become the leader in sustainable development”.
HISTORICAL BACKGROUND
The Company’s history began in 1957 with the discovery of one of the world’s largest deposits of polymetallic ores,
predominantly copper and silver, located in south-western Poland. The deposit has been effectively and rationally mined
to this day.
In 2022 KGHM Polska Miedź S.A. celebrated important jubilees.
65th anniversary of the discovery of the copper deposit in Poland
The discovery on 23 March 1957 of one of the world’s largest copper ore deposits in Lower Silesia became the stable, strong
foundation on which rose the modern company KGHM Polska Miedź S.A. The long history of KGHM (the company was
founded in 1961) is above all a fascinating tale of people joined by knowledge and strong belief in what they were doing.
The construction of each mine, processing plant and smelter/refinery was an enormous technological challenge,
demanding the solving of numerous geological, construction and social problems. The most talented engineers, geologists,
physicists and builders were drawn to work for KGHM. Thanks to their cooperation – both within interdisciplinary teams as
well as with local communities – there arose modern and environmentally-friendly mines, metallurgical and processing
plants.
Today this Polish copper deposit is accessed through three underground mines: Lubin, Polkowice-Sieroszowice and Rudna.
The production of copper, silver, gold, lead and other metals takes place in metallurgical plants in Głogów, Legnica and
Cedynia. A new stage in the mining of the Lower Silesian deposit is the Deep Głogów (Głogów Głęboki-Przemysłowy) mining
area opened in 2014, where ore is extracted at a depth below 1200 meters. A milestone in the development of KGHM was
the commissioning in 2016 at the Głogów Copper Smelter and Refinery of one of the most modern flash smelters in the
world.
25th anniversary of the Emergency Mine-Smelter Rescue Division of KGHM
The Emergency Mine-Smelter Rescue Division (JRGH) was established on 1 January 1997 by Resolution No. 434/II/96 of the
Management Board of KGHM Polska Miedź S.A. in Lubin, at the District Mine Rescue Station.
The duties of the JRGH comprise the provision of required assistance to all of the Divisions of KGHM Polska Miedź S.A.
within a wide spectrum of activities: liquidation of the effects of fires, tremors and mine collapses, the inflow of water,
emergencies of a mechanical and power-related nature, emergencies of a technical, chemical and ecological nature at the
surface and underground in the mines. The rescuers are also responsible for ensuring uninterrupted production by the
core business by carrying out a variety of preventative work.
8 KITCO, April 2022
9 World Silver Survey
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 15
the Company and the Group in 2022 – translation from the original Polish version
The rescuers of KGHM also participate in actions outside of the Company’s mining and metallurgical activities. Twice, in
August and November 1999, they assisted earthquake victims in western Türkiye.
An important part of the activities of the JRGH is the actions of Sections 1 and 2 of the Fire Fighting Service, which monitor
fire safety on the grounds of KGHM, but also cooperate in providing assistance to, amongst others, the State Fire Service.
Their professional aid has been needed more than once during incidents on roads or extinguishing fires within the Copper
Basin.
The rescuers of KGHM are appreciated and distinguished in the international arena. They have frequently stood on the
victors podium in mine rescue competitions. In 2022 an Emergency Mine-Smelter Rescue Division team won third place in
a first aid competition during the International Mine Rescue Competition in the United States. They were also awarded the
title of Masters of Poland in Medical and Roadway Rescue, and are champions in a variety of competitions. The unit has
received many awards and prizes, including first place in the competition „Employer - organiser of workplace safety". The
State Mining Authority awarded the JRGH with a Silver Treasurer Statuette.
45th anniversary of the Żelazny Most Tailings Storage Facility
The Żelazny Most Tailings Storage Facility (TSF) represents an extraordinarily important element in the copper production
process. It is here that, for 45 years, mine tailings from the mining and processing of copper ore have been deposited. The
facility is managed by KGHM’s Tailings Division.
Construction of the TSF began in 1974, and its utilisation in February 1977. It is the largest such facility in Europe and one
of the largest in the world, with a surface area of around 2100 ha, together with the Southern Quarter. The volume of
deposited material is nearly 675 mn m
3
, the length of the dam wall exceeds 20 km, with a maximum height of 78 m.
The Żelazny Most TSF arose to meet the needs of the core business, as nearly 96% of the copper ore from the mines of
KGHM is so-called barren rock. Its separation from the pure metal happens during the flotation process, while the broken-
down rock, in the form of particulates in water, is transported by a system of pipes to the facility.
The facility is not only the sole site for the deposition of flotation tailings from all of KGHM’s mines in the Copper Basin, but
also serves as a retention reservoir for mine and process water. The underground water from KGHM’s mines is sent to it at
a rate of approximately 72000 m
3
per day.
The TSF, by meeting strict EU environmental standards, ensures the continuity of the flotation tailings collection system,
and at the same time the efficient functioning of the process of copper ore mining and processing, as well as the
environmentally safe storage of tailings from the enrichment process. Therefore, it is an essential link in copper production,
without which the processing of this resource would simply be impossible.
25th anniversary of the debut on the Warsaw Stock Exchange
On 10 July 1997 the shares of KGHM Polska Miedź S.A. debuted on the Warsaw Stock Exchange. The first step towards a
listing of its shares on the Warsaw Stock Exchange was the transformation in 1991 of the state enterprise into the state-
owned, joint stock company KGHM Polska Miedź S.A. 25 years after it market debut, KGHM Polska Miedź S.A. is one of the
largest and most financially liquid companies on the Warsaw Stock Exchange. During this period, the value of KGHM’s shares
increased many-fold.
BASIC GROUP PRODUCTS
Table 1. Basic products of the KGHM Polska Miedź S.A. Group
Copper cathodes
Copper cathodes made from electrolytic copper with a minimum copper content of 99.99% are the basic
product of KGHM Polska Miedź S.A. They meet the highest quality requirements and are registered as Grade
„A” on the London Metal Exchange (LME), the Shanghai Futures Exchange (SHFE) and the International Energy
Exchange in Shanghai (INE) under three brands: HMG-S, HMG-B and HML.
Copper cathodes are also the primary product of the Carlota mine in the USA, belonging to the KGHM
INTERNATIONAL LTD. Group, and also the Franke mine (until April 2022).
The main customers for the cathodes are producers of wire rod, other rods, flat bars, pipes, sheets and
tapes.
Copper wire rod
8 mm copper wire rod is manufactured through the Contirod® continuous process of melting, casting and
drawing. It is mainly produced from cathodes manufactured by KGHM Polska Miedź S.A. In volume terms,
wire rod is the second most numerous copper product produced by KGHM. The Cedynia Wire Rod Plant
produces wire rod in five classes of quality, depending on the needs of the customer. The product is primarily
used in the cable, electromechanical and electrotechnical industries.
Silver
Electrolytic silver is produced mainly by KGHM Polska Miedź S.A., in the form of bars (ingots, billets) and
grains containing 99.99% silver. Silver bars (weighing approx. 32 kg) hold a certificate registered on COMEX
in New York as well as a Good Delivery certificate issued by the London Bullion Market Association. Grain
silver is packed in bags weighing 25 kg or 500 kg. The main customers for silver are financial institutions, the
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 16
the Company and the Group in 2022 – translation from the original Polish version
jewellery industry and the electronics and electrical industries, photovoltaic industry, catalytic converter
producers as well as producers of coins, bars and medallions.
Copper concentrate
Copper concentrate is a product of the Robinson mine in the USA, part of the KGHM INTERNATIONAL LTD.
Group, containing about 20% of copper. This product is also produced by the Sierra Gorda mine in Chile
(copper content is above 20%). Both of these concentrates also include gold and silver as additional products.
The copper concentrates are sold for further processing as a commercial product.
Molybdenum oxide
One of the main commercial products of the company Sierra Gorda is molybdenum oxide, arising from the
processing of the molybdenum sulphide concentrate (containing approx. 48% Mo) produced by the Sierra
Gorda mine. Molybdenum is used in the aircraft industry.
Molybdenum concentrate
Molybdenum concentrate is another commercial product (apart from copper concentrate) produced by the
Robinson mine in the USA, part of the KGHM INTERNATIONAL LTD. Group. Production of molybdenum
concentrate is derivative of the process of copper concentrate production.
Gold
Gold in the form of bars weighing approximately 0.5 kg, 1 kg, 4 kg, 6 kg and 12 kg, containing 99.99% gold, is
produced by KGHM Polska Miedź S.A. Gold is used in the jewellery industry, the mint industry, by banks and
in the electrical industry.
Ore containing copper,
nickel and TPM (precious
metals – gold, platinum,
palladium)
Ores containing copper, nickel and TPM are produced by the mines in the Sudbury Basin in Canada, part of
the KGHM INTERNATIONAL LTD. Group. They are sold for further processing to one of the plants in the Basin.
Oxygen-free copper rod
The Cedynia Wire Rod Plant Division of KGHM Polska Miedź S.A. produces two types of rod using UPCAST®
technology: Cu-OFE oxygen-free rod and CuAg(OF) oxygen-free, silver-bearing rod. Depending on customer
need, the rod is produced in several diameters: 8 mm, 12.7 mm, 16 mm, 20 mm, 22 mm, 24 mm and 25 mm
with possible silver content. This product is mainly used in the cable industry to produce thin wires,
enamelled wires and fire-resistant cables, as well as cables for transmitting audio and video signals. Oxygen-
free copper rod is also an ideal material for the process of extrusion into flat profiles and for processing
through the Conform® process. In addition, oxygen-free, silver-bearing rod is used in the manufacture of
trolleys and commutators.
ETP/OFE nuggets
Copper nuggets are obtained from Cu ETP1 (99.90% Cu) wire rod and Cu OFE (99.99% Cu) rod, with their
main use being in the manufacture of alloys and in galvanisation. Sample nugget sizes produced by KGHM
Polska Miedź S.A.: diameter of 8 mm, 12.7 mm; length of 10-35 mm.
1.2 ORGANISATIONAL STRUCTURE OF KGHM POLSKA MIEDŹ S.A.
GRI 2-2
In 2022, the multi-divisional organisational structure of the Company, acting under the name KGHM Polska Miedź S.A.,
comprised the Head Office of the Company and ten Divisions.
Diagram 1. Organisational structure of KGHM Polska Miedź S.A.
Mines
- Lubin mine Division
- Polkowice-Sieroszowice mine Division
- Rudna mine Division
- Concentrators Division
- Tailings Division
Metallurgical plants
- Głogów Smelter/Refinery Division
- Legnica Smelter/Refinery Division
- Cedynia Wire Rod Division
Other
- Head Office
- Mine-Smelter Emergency Rescue
Division
- Data Center Division
CHANGES IN THE PRINCIPLES FOR MANAGING THE COMPANY
The Supervisory Board of the Company adopted Resolution No. 84/XI/22 dated 21 November 2022 regarding a change in
the Management Board Bylaws adopted by Resolution No. 436/XI/2022 of the Management Board of KGHM Polska Miedź
S.A. dated 18 November 2022, due among others to the amendment of the Commercial Partnerships and Companies Code
resulting from art. 3801 of the Commercial Partnerships and Companies Code in the wording in force from 13 October
2022.
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 17
the Company and the Group in 2022 – translation from the original Polish version
1.3 ORGANISATIONAL STRUCTURE OF THE KGHM POLSKA MIEDŹ S.A. GROUP
GRI 2-2
GRI 2-6
As at 31 December 2022, the Group was composed of the Parent Entity – KGHM Polska Miedź S.A. – and 65 subsidiaries,
located on four continents: Europe, North America, South America and Asia. Some of these subsidiaries form their own
groups. The largest of these, in terms both of the number of entities as well as the value of equity, is the KGHM
INTERNATIONAL LTD. Group, whose main assets are located in Canada, the USA and Chile. It was comprised of KGHM
INTERNATIONAL LTD. and its 25 subsidiaries. At the end of the reporting period the KGHM Polska Miedź S.A. Group owned
shares in two joint ventures - Sierra Gorda S.C.M. and NANO CARBON Sp. z o.o. in liquidation.
The detailed structure of the KGHM Polska Miedź S.A. Group, together with the relationships between entities, may be
found in Appendices 1 and 2.
The Group’s main entities, which are engaged in the mining sector, comprise three primary reporting segments which are
independently evaluated by management bodies. These are: KGHM Polska Miedź S.A., KGHM INTERNATIONAL LTD. and
Sierra Gorda S.C.M. Other companies, excluding Future 1 Sp. z o.o., Future 3 Sp. z o.o., Future 4 Sp. z o.o., Future 5 Sp. z o.o.
and Future 7 Sp. z o.o. in liquidation, are part of the segment called Other segments.
The following diagram presents the significant production assets and projects underway within the reporting segments:
KGHM Polska Miedź S.A., KGHM INTERNATIONAL LTD., Sierra Gorda S.C.M. and Other segments.
Diagram 2. Reporting segments of the KGHM Polska Miedź S.A. Group
KGHM Polska Miedź
S.A.
KGHM
INTERNATIONAL LTD.
Sierra Gorda S.C.M. Other segments
Activities Mined and
metallurgical
production of metals –
Cu, Ag, Au
Mined production of
metals - Cu, Ni, Au, Pt,
Pd, Ag
Mined production of
metals - Cu, Mo, Au, Ag
− Companies
supporting the core
business of KGHM
Polska Miedź S.A.
− Companies
comprising the so-
called Polska Grupa
Uzdrowisk
− Companies playing
an important role in
advancing CSR
policy,
− Other companies,
incl. special-purpose
companies in the
holding structure
Main production
assets
Underground mines
− Lubin mine
− Polkowice-
Sieroszowice mine
− Rudna mine
− Metallurgical plants
− Legnica Copper
Smelter and Refinery
− Głogów I and Głogów
II Copper Smelter and
Refinery
− Cedynia wire rod
plant
Robinson mine in the
USA (open pit)
Sierra Gorda mine in
Chile (open pit)
Most important
development projects
−
Głogów Głęboki-
Przemysłowy (Deep
Głogów)
Pre-production projects
and exploration
projects in south-west
Poland
Victoria project in the
Sudbury Basin in
Canada
- construction of an
underground copper
and nickel mine
Sierra Gorda Oxide
project in Chile
The following companies were not included in any of the aforementioned segments:
− Future 1 Sp. z o.o., which acts as a holding company with respect to the KGHM INTERNATIONAL LTD. Group,
− Future 3 Sp. z o.o., Future 4 Sp. z o.o., Future 5 Sp. z o.o. (which operate in the structure related to the establishment of
a Tax Group).
These companies do not conduct operating activities which could impact the results achieved by individual segments, as a
result of which their inclusion could disrupt the data presented in the consolidated financial statements due to the
significant internal settlements with the other entities from the Group.
The segments KGHM Polska Miedź S.A., KGHM INTERNATIONAL LTD. and Sierra Gorda S.C.M. have separate Management
Boards, which report their operational results to the Management Board of the Parent Entity.
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 18
the Company and the Group in 2022 – translation from the original Polish version
The segment KGHM Polska Miedź S.A. only includes the Parent Entity, while the segment Sierra Gorda S.C.M. only includes
the joint venture Sierra Gorda. Diagram 2 presents the other companies of the KGHM Polska Miedź S.A. Group with a
breakdown by segment: KGHM INTERNATIONAL LTD. and Other segments.
CHANGES IN THE BASIC PRINCIPLES FOR MANAGING THE GROUP
Following the restructuration of KGHM INTERNATIONAL LTD. in 2020, comprised of the transferral of management and
most support processes to the Company’s Head Office, this action being a result of the adopted strategy of implementation
of the cooperation model and integration of key international assets with domestic activities, in 2022 actions were
continued mainly with respect to developing unified reporting principles, coherent internal regulations, procedures and
standardised solutions with respect to individual functional areas of the international entities.
In 2022, in terms of management of the group of domestic companies, the decision was made to end the structure of funds
comprising mainly spa assets. The entities comprising the companies of the fund portfolios were acquired by one of the
direct subsidiaries, and the funds were liquidated.
CHANGES IN THE GROUP STRUCTURE, EQUITY INVESTMENTS AND THEIR FINANCING
Equity investments in domestic assets
In 2022, PLN 375 million was incurred on equity investments comprised of the acquisition of shares of Polish companies of
the Group. In addition, PLN 22 million in owners loans were granted to companies. The amounts incurred were covered by
inflows from domestic entities due to the following: the redemption of investment certificates, dividends received and loans
repaid, in the total amount of PLN 410 million.
The largest share of internal cash flow due to equity investments between KGHM Polska Miedź S.A. and the domestic
companies of the Group was in respect of operations related to the liquidation of the funds structure, and consequently
the transfer of the portfolio companies of the KGHM VII FIZAN fund to one of the subsidiaries of KGHM Polska Miedź S.A.,
i.e. CUPRUM Zdrowie sp. z o.o.
A detailed description of all operations carried out amongst the group of companies in Poland is provided in the following
table.
Table 2. Changes in the Group’s structure and organisation (Polish assets) in 2022
Sale of hotel companies:
− INTERFERIE S.A.,
− Interferie Medical SPA
sp. z o.o.
On 21 February 2022 the KGHM VII Closed-end Non-public Investment Fund (hereafter: Fund), in respect of
which KGHM Polska Miedź S.A. owns 100% of the Investment Certificates, sold all of the indirectly held shares
of Interferie Medical SPA sp. z o.o. with its registered head office in Legnica to Polski Holding Hotelowy sp. z
o.o., i.e. 41.309 shares representing 67.37% of the share capital and the same percentage of votes at the
general shareholders meeting. The owner of the remaining 32.63% of the share capital of the company
Interferie Medical SPA sp. z o.o. was the indirect subsidiary of the Fund – INTERFERIE S.A.
On 28 February 2022, as a result of the settlement of a call to sell shares of INTERFERIE S.A., announced by
Polski Holding Hotelowy sp. z o.o., the Fund’s portfolio companies: Fundusz Hotele 01 Sp. z o.o. S.K.A. and
Fundusz Hotele 01 Sp. z o.o., sold all of the shares held in INTERFERIE S.A., i.e. in total 10 152 625 shares,
representing 69.71% of the share capital and the same percentage of votes at the general meeting.
As a result of the above, neither KGHM Polska Miedź S.A. nor any of the entities of the KGHM Group hold
shares in the companies: INTERFERIE S.A. and Interferie Medical SPA sp. z o.o.
Deregistration of the
company Future 7
sp. z o.o. in liquidation
On 3 January 2022 the company Future 7 sp. z o.o. in liquidation, whose process of liquidation began in July
2020, was removed from the registry.
Submission of a request to
the court for the
bankruptcy of NANO
CARBON sp. z o.o. in
liquidation
On 21 January 2022 the liquidator of NANO CARBON Sp. z o.o. submitted a request to the court for the
bankruptcy of the company.
Acquisition of newly-
issued shares of KGHM
Centrum Analityki sp. z
o.o.
On 28 June 2022, the Extraordinary General Shareholders Meeting of KGHM Centrum Analityki sp. z o.o.
adopted a resolution to increase the share capital of the company by PLN 7 million. All of the newly-issued
shares in the increased share capital were acquired by KGHM Polska Miedź S.A. and paid for in cash in the
amount of PLN 7 million. The share capital following the increase amounts to PLN 7 050 thousand. The
increase was registered by the court on 11 July 2022. KGHM Polska Miedź S.A. owns 100% of the shares of
the company.
The company operates in the modern technology sector, in the area of data analysis and their utilisation in
the optimisation of business and production processes as well as energy efficiency.
Acquisition of newly-
issued shares of TUW-
CUPRUM
On 30 June 2022 the Ordinary General Meeting of Towarzystwo Ubezpieczeń Wzajemnych (Mutual Insurance
Society) CUPRUM adopted a resolution regarding the appropriation of profit for 2021 by allocating PLN 6
million as an increase in share capital. The shares arising from this increase in share capital were distributed
to the existing shareholders of the Society, proportionally to their interest in the share capital as of 30 June
2022. The shareholders of the Society are six companies of the KGHM Group, of which the largest share, or
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 19
the Company and the Group in 2022 – translation from the original Polish version
96.8% of the share capital, belongs to KGHM Polska Miedź S.A. KGHM Polska Miedź S.A. acquired newly-
issued shares in the increased share capital of the Society in the total amount of PLN 5.8 million, while its
interest following the increase in share capital amounts to PLN 27 million.
Acquisition of newly-
issued shares of CUPRUM
Zdrowie sp. z o.o.
As a result of carrying out the process of reorganisation within the Group and in respect of the portfolio
companies of the KGHM VII FIZAN Fund, on 20 July 2022 the Extraordinary General Shareholders Meeting of
the indirect subsidiary CUPRUM Nieruchomości sp. z o.o. (currently CUPRUM Zdrowie sp. z o.o.) increased
the share capital of this entity by PLN 368 million. All of the newly-issued shares in the increased share capital
were acquired by KGHM Polska Miedź S.A. and paid for in cash.
Sale/acquisition of shares
between Group entities
From 27 July to 1 August 2022 the process of selling all of the shares of portfolio companies held by the
KGHM VII FIZAN Fund to CUPRUM Nieruchomości sp. z o.o. took place, including four spa companies:
Uzdrowiska Kłodzkie S.A. - Grupa PGU, Uzdrowisko Połczyn Grupa PGU S.A., Uzdrowisko Cieplice Sp. z o.o. -
Grupa PGU, Uzdrowisko Świeradów - Czerniawa Sp. z o.o. – Grupa PGU. As at 1 August 2022, all of the shares
of portfolio companies held by the Fund were transferred to CUPRUM Nieruchomości sp. z o.o.
Liquidation of
KGHM VII FIZAN
On 2 August 2022 the KGHM VII FIZAN Fund purchased on demand of KGHM Polska Miedź S.A. 99.8% of the
investment certificates for the amount of PLN 366 million.
On 19 September 2022 the liquidation of the KGHM VII FIZAN Fund commenced, while on 22 November 2022
the liquidation concluded, as a result of which PLN 666 thousand was paid to KGHM Polska Miedź S.A.
KGHM VII FIZAN was removed from the registry of funds on 20 December 2022.
Table 3. Subsequent events in the KGHM Polska Miedź S.A. Group’s structure and organisation (assets in Poland)
Acquisition of newly-
issued shares of
„Energetyka”
spółka z o.o.
On 12 January 2023 the Extraordinary General Shareholders Meeting of „Energetyka” spółka z o.o. adopted
a resolution to increase the share capital of the company by PLN 115 million to be used to increase the share
capital of the subsidiary WPEC w Legnicy S.A. All of the newly-issued shares in the increased share capital
were acquired by KGHM Polska Miedź S.A. and paid for in cash in the amount of PLN 115 million. The share
capital following the increase amounts to PLN 585 million. KGHM Polska Miedź S.A. owns 100% of the
company’s shares. The increase was registered by the court on 28 February 2023.
Decrease in share capital
of WMN „ŁABĘDY” S.A.
On 16 January 2023 a decrease in the share capital of the company WMN „ŁABĘDY” S.A. was registered by
the National Court Registry. The share capital was decreased by PLN 11 million, from PLN 24 million by PLN
13 million, through a decrease in the nominal value of the shares. The decrease in the share capital results
from the coverage of losses recognised in the company’s financial statements for prior years.
Increase in share capital
of non-operating
companies
On 7 March 2023, the Extraordinary Shareholders Meetings of three non-operating companies: Future 3
Spółka z o.o., Future 4 Spółka z o.o., Future 5 Spółka z o.o. adopted resolutions on increasing the share
capital of these entities, in the total amount of PLN 242 thousand, in order to ensure financing of current
operations of companies. All shares in the increased share capitals were acquired by the sole shareholder:
KGHM Polska Miedź S.A.
Conclusion of an
Agreement for the sale of
100% of shares in KGHM
TFI S.A.
On 13 March 2023, KGHM Polska Miedź S.A. concluded an Agreement for the sale of 100% of shares of KGHM
TOWARZYSTWO FUNDUSZY INWESTYCYJNYCH SPÓŁKA AKCYJNA with Agencja Rozwoju Przemysłu S.A.
The sale of Shares was contingent on meeting the conditions precedent, among others no objections raised
by the Polish Financial Supervision Authority. The ownership rights to the shares will be transferred to the
buyer at the moment an appropriate entry is made in the Share Register. Sale of shares is the last stage of
the reorganisation under the Group’s structure, which comprised the liquidation of closed-end, non-public
investment funds. KGHM TFI S.A. has not managed any funds since 20 December 2022, that is from the date
of deregistration of KGHM VII FIZAN fund.
Equity investments in international assets
Equity investments carried out in 2022 were made by increases in share capital.
Table 4. Changes in the KGHM Polska Miedź S.A. Group’s structure and organisation (international assets) in 2022.
Franke Holdings Ltd.
Due to the sale of the company SCM Franke in April 2022 there was a restructuring of intra-group debt,
as a result of which the companies KGHM INTERNATIONAL LTD. and FNX Mining Company Inc.
transferred to the company Franke Holdings Ltd. receivables in the amounts respectively of USD 97.9
million (PLN 430.056 million
1
) and USD 11.3 million (PLN 49.74 million
10
). As a result they acquired shares
in the increased share capital of the company Franke Holdings Ltd. of the same value.
Subsequently the company Franke Holdings Ltd. transferred these receivables in their nominal value to
the company SCM Franke in exchange for the newly-issued shares in this company.
Moreover, on 23 February 2023, a loan agreement was entered into between KGHM Polska Miedź S.A. and KGHM
INTERNATIONAL LTD. in the amount of USD 105.5 million (PLN 473 million, 4.4879 USD/PLN) for the advancement of the
Victoria project. The loan’s interest was set at arm’s length. The agreement expires on 31 December 2033.
10
as of the average NBP exchange rate of 30 December 2022
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 20
the Company and the Group in 2022 – translation from the original Polish version
1.4 BUSINESS MODEL OF THE KGHM POLSKA MIEDŹ S.A. GROUP
GRI 2-6
Diagram 3. Business model of the KGHM Polska Miedź S.A. Group
A list of the main assets of the KGHM Polska Miedź S.A. Group with their locations is presented in section 1.6 Major Assets.
1.5 PRODUCTION PROCESS
GRI 2-6
PRODUCTION PROCESS OF KGHM POLSKA MIEDŹ S.A.
Production in KGHM Polska Miedź S.A. is a fully integrated process, in which the end product of one technological phase is
the starting material (half-finished product) used in the next phase. Mining in KGHM Polska Miedź S.A. is performed by
three mining divisions: Lubin, Rudna and Polkowice-Sieroszowice. In the subsequent phase the Concentrators Division
prepares concentrate for the smelters and refineries, while the Tailings Division is responsible for storing and managing
the tailings generated by the copper ore enrichment process. The organisational structure of KGHM includes two
metallurgical facilities: the Legnica Copper Smelter and Refinery and the Głogów Copper Smelter and Refinery, as well as
the Cedynia copper wire rod plant. The Legnica Copper Smelter and Refinery and the Głogów Copper Smelter and Refinery
belong to the prestigious Copper Mark program, and are entitled to use the certificate attesting to the fact that they produce
copper efficiently and in compliance with the highest standards.
Mining
The technology of mining the copper ore in all three mines is based on the room-and-pillar system with the use of blasting
technology for ore extraction. This involves access and preparatory work, comprised of the excavation of a drift network
on all sides of the site to be mined, cutting of the unmined rock mass with rooms and drifts separating a number of
technological pillars, as well as extraction of the ore followed by the transport of the ore to underground dumping stations,
where the large rocks (oversized) are crushed and sifted through a grate, and then the crushed muck is transported to the
storage areas near the shafts, from which it is transported to the surface by skip hoisting shafts.
The work related to mining of the copper ore is fully mechanised, in a 4-shift labour system, with the use of motorised
mining rigs, most of which are equipped with air-conditioned cabins and systems supporting the work of the operators.
Mining work is conducted in the following cycle: drilling the blasting holes with the support of motorised drilling rigs, loading
blasting material into drilled holes by motorised blasting rigs, group blasting in mining areas, followed by a time of waiting
(without the presence of mining crews) for the possible occurrence of seismic tremors caused by the blasting works and
the ventilation of the areas blasted. The next stage involves the loading of the muck using motorised loaders into haulage
vehicles and its transport to dumping stations. The shielded face is protected by roof anchor bolts using bolting rigs. The
crushed muck is transported by conveyor belts or mine rail trolleys to the storage sites near the shafts, and is then
transported to the surface. After the muck is unloaded at the shaft top, it is transported by conveyor belts or railway to the
located at each of the three mines.
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 21
the Company and the Group in 2022 – translation from the original Polish version
The operations and processes applied in all three ore concentrators are the same. However, due to the varied lithological
and mineralogical composition of the ore from individual mines, the production layout of each facility differs. The
processing technologies applied include the following individual operations: screening and crushing, milling and
classification, flotation and drying of the concentrate.
The flotation process results in concentrate with an average copper content of approx. 22-23%, and flotation waste. The
Rudna mine concentrator produces concentrate with the highest copper content (approx. 26%), while the lowest is at the
Lubin mine concentrator (approx. 13.4%). The Polkowice mine concentrator produces concentrate of approx. 24.6% copper
content.
The dried concentrate of approx. 8.8% moisture content is transported by rail to the following smelters/refineries: the
Legnica Copper Smelter and Refinery located in Legnica, the Głogów I Copper Smelter and Refinery and the Głogów II
Copper Smelter and Refinery, located in Głogów.
The flotation waste, in the form of slimes, are transported through pipelines to the Żelazny Most Tailings Storage Facility,
where the sedimentation of the solid particles takes place and the clarified water is collected and redirected to the ore
concentrators. The storage site also serves as a retention-dosage reservoir for excess mine and process water in circulation.
Excess water is hydrotechnically discharged (periodically) to the Odra River. This method was developed and implemented
in partnership with research institutions, and it has been officially approved for use under the provisions of the Water Law.
Studies demonstrate that the discharging of mine and process water to the Odra River cannot result in any changes that
would make the proper functioning of water ecosystems impossible or prevent conformance with the applicable water
quality requirements.
Metallurgy
The copper smelters/refineries produce electrolytic copper from own concentrates as well as from purchased metal-
bearing material (copper concentrates, copper scrap, blister copper).
The Legnica Copper Smelter and Refinery uses a multi-stage process whose main stages include: preparation of the charge
material, its reduction smelting in shaft furnaces to the form of matte copper, conversion to the form of blister copper with
approx. 98.5% copper content; fire refining in anode furnaces to produce anodes of 99.2% copper content; and
electrorefining. The final product is electrolytic copper cathodes with 99.99% copper content.
The Głogów Copper Smelter and Refinery applies one-stage flash furnace technology, based on a license of the Finnish
company Outokumpu. The concentrate dried to a moisture content of 0.3% H
2
O, is smelted in a flash furnace into blister
copper containing around 98.6% Cu, which is subject to fire refining in anode furnaces. The slag, which still contains on
approximately 12%-14% copper, is sent to an electric furnace, where the copper is removed while the CuPbFe alloy obtained
is sent to the convertors, from which the resulting copper, containing 98.5% copper, is also sent for refining in anode
furnaces. The copper anodes produced from fire refining are then sent for electrorefining, and the end product is
electrolytic copper in the form of cathodes containing 99.99% copper.
Approx. 49% of the electrolytic copper produced by KGHM Polska Miedź S.A.’s smelters and refineries are further processed
in the Cedynia Copper Wire Rod Division, where copper wire rod is produced by a continuous smelting, casting and rolling
process as well as oxygen-free copper rod and oxygen-free, low-alloy, silver-bearing copper rod using the UPCAST
technology are produced.
The anode slime produced during the electrorefining process at KGHM’s smelters and refineries contains precious metals,
and is the raw material used by the Precious Metals Plant at the Głogów Copper Smelter and Refinery to produce the
following products: refined silver, gold, platinum-palladium concentrate and selenium. The electrolyte in the Tank Hall, once
the copper is removed, is used to produce crude nickel sulphate.
The lead-bearing dust and slimes collected as a result of the removal of dust from technological exhaust gases at the
smelters and refineries are smelted, together with decopperised convertor slag from the flash furnace production line, in
Dörschel furnaces at the Lead Section of the Głogów Copper Smelter and Refinery into crude lead containing 99.3% lead.
This crude lead is then refined at the Legnica Copper Smelter and Refinery to obtain the end product in the form of refined
lead containing 99.85% lead.
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 22
the Company and the Group in 2022 – translation from the original Polish version
Diagram 4. Integrated geological, mining and metallurgical activities in KGHM Polska Miedź S.A.
PRODUCTION PROCESS OF KGHM INTERNATIONAL LTD.
The core business of the KGHM INTERNATIONAL LTD. Group of companies is the mined production of metals, such as
copper, nickel, gold, platinum and palladium, from both open-pit and underground mines, as well as advancement of
mining and exploration projects. The following drawing shows a simplified flowchart of the core business of the KGHM
INTERNATIONAL LTD. Group.
Diagram 5. Simplified flowchart of the core business of the KGHM INTERNATIONAL LTD. Group
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 23
the Company and the Group in 2022 – translation from the original Polish version
1.6 MAJOR ASSETS
The KGHM Polska Miedź S.A. Group holds geographically diversified mining assets (copper ore mines with associated
minerals, such as silver, molybdenum, nickel, gold and other precious metals) located in Poland, the USA, Chile and Canada
as well as metallurgical facilities in Poland. The key international asset – the Sierra Gorda mine, which is a joint venture of
KGHM INTERNATIONAL LTD. and South32 – is located in Chile. In addition, the KGHM Polska Miedź S.A. Group has a mine
project which is at the preproduction phase (Victoria), as well as other exploration projects.
Diagram 6. Location of the production assets of the KGHM Polska Miedź S.A. Group
POLAND
Polkowice-Sieroszowice mine
Location
Lower Silesia, Poland
Ownership
KGHM Polska Miedź S.A.
Type of mine
underground
Main ore type
copper ore
Associated metals
silver, lead, rock salt, gold
Type of orebody
stratiform
End product
copper ore
Copper in extracted ore in 2022
196.8 kt
The Polkowice-Sieroszowice mine is located in Lower Silesia, to the west of the town of Polkowice. Currently, it conducts
mining works in four mining areas: Polkowice, Radwanice Wschodnie, Sieroszowice and in a part of the Głogów Głęboki –
Przemysłowy (Deep Głogów) area.
Within the Sieroszowice mining area, there are also rich deposits of rock salt above the copper-bearing horizon.
Mining of the deposit is conducted using room-and-pillar methods with natural roof settlement, using blasting technology.
The Polkowice-Sieroszowice mine’s current production capacity is around 12 million tonnes of ore per year.
Rudna mine
Location
Lower Silesia, Poland
Ownership
KGHM Polska Miedź S.A.
Type of mine
underground
Main ore type
copper ore
Associated metals
silver, lead, gold
Type of orebody
stratiform
End product
copper ore
Copper in extracted ore in 2022
174.6 kt
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 24
the Company and the Group in 2022 – translation from the original Polish version
The Rudna mine is located in Lower Silesia, to the north of the town of Polkowice. It mines the copper deposit in the Rudna
mining area as well as in parts of the mining areas of Sieroszowice, Lubin-Małomice and Głogów Głęboki-Przemysłowy
(Deep Głogów).
The copper orebody in the currently mined deposit ranges from 844 meters to 1250 meters. Mining is conducted using
room-and-pillar methods with natural roof settlement with hydraulic backfill, using blasting technology. The current
average production capacity is approx. 12 million tonnes of ore per year.
Lubin mine
Location
Lower Silesia, Poland
Ownership
KGHM Polska Miedź S.A.
Type of mine
underground
Main ore type
copper ore
Associated metals
silver, lead, gold
Type of orebody
stratiform
End product
copper ore
Copper in extracted ore in 2022
71.3 kt
The Lubin mine is located in Lower Silesia, Poland, to the north-west of the town of Lubin. It mines the copper deposit in
the mining area Lubin-Małomice at a depth from 550 meters to 1006 meters.
Mining is conducted using room-and-pillar methods with natural roof settlement with hydraulic backfill, in the vicinity of
the support pillar of the town of Lubin, using blasting technology.
The mine’s current production capacity is around 8.6 million tonnes of ore per year.
Głogów Copper Smelter and Refinery
Location
Lower Silesia, Poland
Ownership
KGHM Polska Miedź S.A.
Type of metallurgical plant
smelter/refinery
End product
electrolytic copper
Electrolytic copper production in 2022
463.5 kt
This complex of metallurgical plants located in Głogów comprises two copper concentrate smelting lines based on the one-
stage smelting of concentrate in a flash furnace directly into blister copper. Apart from electrolytic copper, the Głogów
Copper Smelter and Refinery produces crude lead (around 30 thousand tonnes annually), silver (around 1400 tonnes), gold
(around 2 tonnes) and sulphuric acid (over 550 thousand tonnes).
Legnica Copper Smelter and Refinery
Location
Lower Silesia, Poland
Ownership
KGHM Polska Miedź S.A.
Type of metallurgical plant
smelter/refinery
End product
electrolytic copper
Electrolytic copper production in 2022
122.5 kt
The copper smelter and refinery located in Legnica has a current production capacity of 123 thousand tonnes of electrolytic
copper. In operation since the 1950s based on shaft furnace technology. Apart from electrolytic copper, the plant also
annually produces around 30 thousand tonnes of refined lead and also around 100 thousand tonnes of sulphuric acid, as
well as copper sulphate and nickel sulphate.
Cedynia Wire Rod Plant
Location
Lower Silesia, Poland
Ownership
KGHM Polska Miedź S.A.
Type of metallurgical plant
processing
End product
copper wire rod and Cu-OFE rod
Production in 2022
260.9 kt of copper wire and 17.0 kt of Cu-OFE rod
Production at the Cedynia Wire Rod Plant, located in the vicinity of Orsk, is based on the use of copper cathodes from the
Głogów Copper Smelter and Refinery and from the Legnica Copper Smelter and Refinery. The basic product of the Cedynia
Wire Rod Plant is copper wire rod produced in a Contirod line amounting to around 265 thousand tonnes annually and
around 18 thousand tonnes annually of oxygen-free copper wire rod produced in an UPCAST line, including oxygen-free,
silver-bearing copper wire rod.
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 25
the Company and the Group in 2022 – translation from the original Polish version
THE UNITED STATES
Robinson mine
Location
Nevada, USA
Ownership
100% KGHM INTERNATIONAL LTD.
Type of mine
open pit
Main ore type
copper ore
Associated metals
gold and molybdenum
Type of orebody
porphyry/skarn
End product
copper and gold concentrate, molybdenum concentrate
Payable copper production in 2022
46.8 kt
Life of mine
14 years
The mine is located in White Pine county, Nevada, USA, around 11 km west of Ely (approx. 400 km north of Las Vegas), in
the Egan range, at an average altitude of 2130 meters a.s.l., near highway no. 50.
The mine is comprised of 3 large pits: Liberty, Tripp-Veteran and Ruth. Currently, Ruth is in operation. The sulphide ore is
extracted by conventional methods, and is then enriched through flotation. The end product is copper and gold
concentrate, and separately molybdenum concentrate.
Carlota mine
Location
Arizona, USA
Ownership
100% KGHM INTERNATIONAL LTD.
Type of mine
open pit
Main ore type
copper ore
Type of orebody
porphyry
End product
copper cathodes
Payable copper production in 2022
4.1 kt
Life of mine
2 years
The Carlota mine is located in the Western part of the Miami-Globe mining region, in the state of Arizona at an altitude of
1 300 meters a.s.l. Surrounding the mine is mountainous, desert terrain.
Copper ore extraction by the Carlota mine is by conventional methods typical for open-pit metals mines, i.e. the ore is
mined by blasting and then is transported by haulage trucks. In 2018 mining re-commenced in the Eder South area, while
in 2021 mining commenced in the Eder North area.
Due to the nature of the oxide ore, it is processed using the heap leach, solvent-extraction and electrowinning method. The
end product is electrolytic copper in the form of cathodes.
On 30 June 2022 the criteria described in IFRS 5 were re-assessed, based on which Carlota Copper Company was classified
as held for sale. As a result of the analysis conducted, the Management Board of the Parent Entity on 30 June 2022
reclassified the company’s assets and liabilities as continued activities, due to the fact that their sale was not highly
probable. The process of selling the mining assets of Carlota Copper Company was not completed.
In accordance with IFRS 5.27, immediately following reclassification the recoverable amount of the assets of Carlota Copper
Company was determined. There were no significant differences compared to the carrying amount as at 30 June 2022.
In November 2022 the process of selling Carlota Copper Company was renewed, though in the opinion of the Management
Board of the Parent Entity it is not sufficiently advanced as to be able to state that the sale is highly probable. Therefore, as
at 31 December 2022 the company’s assets and liabilities associated with them are not recognised as held for sale.
CANADA
Sudbury Basin
Location
Sudbury, Ontario, Canada
Ownership
100% KGHM INTERNATIONAL LTD.
Type of mine
underground
Main ore type
copper, nickel, platinum, palladium and gold ore
Type of orebody
footwall/contact Ni
End product
copper and nickel ore with precious metals
Payable copper production in 2022
2.5 kt
Life of mine
5 years
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 26
the Company and the Group in 2022 – translation from the original Polish version
The Sudbury Basin is located in central Ontario in Canada, approx. 400 km north of Toronto. In this region KGHM
INTERNATIONAL LTD. owns a variety of assets, though since April 2019 mining has only been conducted in the underground
McCreedy West mine, due to the fact that the Morrison/Levack mine has been placed into Care & Maintenance. Extraction
is through mining methods which are dependent on the geometry of the deposit – mainly a mechanised method of selective
extraction using undercutting of successive levels from bottom to top at various mine levels. All of the ore extracted from
the mine, containing copper, nickel and precious metals, is processed in the Clarabelle plant in Sudbury, owned by Vale.
Victoria project
Location
Sudbury Basin, Ontario, Canada
Ownership
100% KGHM INTERNATIONAL LTD.
Type of mine
underground
Main ore type
copper-nickel ore
Associated metals
gold, platinum and palladium
End product
copper, nickel and precious metals ore
Forecasted annual production
16 kt of nickel, 18 kt of copper
Life of mine
14 years
This project is located in the Canadian province of Ontario, around 35 km west of the town of Sudbury. In 2002 rights
were acquired to the Victoria mineral deposit and a campaign of exploration in this region commenced. The current
development scenario for the project calls for the sinking of two shafts to access the deposit (a production shaft and a
ventilation shaft).
Based on analytical work performed in 2017, the current base scenario assumes the Victoria project will be developed in
two stages, comprised of the sinking of a first shaft along with additional exploration, followed by a second shaft for
production.
In 2022, work continued on project terrain connected with preparing selected elements of the surface infrastructure for
further development of the project. Amongst others the construction of a headframe for one of the shafts was completed,
there was progress in the construction of the foundations of the lifting machinery building, construction of the water
treatment plant was completed, while work continues on a mine water reservoir. Engineering work also continued on the
construction of a production shaft, as well as actions aimed at maintaining good relations and cooperation with key
stakeholders in the Project.
Ajax project
Location
Kamloops, British Columbia, Canada
Ownership
KGHM INTERNATIONAL LTD. 80%; Abacus Mining and Exploration Inc. 20%
Type of mine
open pit
Main ore type
copper ore
Associated metals
precious metals (gold and silver)
End product
copper concentrate
Forecasted annual production
53 kt of copper, 114 thousand ounces of gold
Life of mine
19 years
The Ajax project is located in British Columbia, Canada, 400 km north-east of Vancouver near the town of Kamloops. The
project assumes the construction of an open-pit copper and gold mine and an ore processing plant, with associated
infrastructure. Up to 2016 work had been carried out on a Feasibility Study for the project, setting out the preliminary
economic conditions for the venture.
In compliance with Canadian law, the Ajax project underwent the Environmental Assessment process. In 2017 the
Ministers of Environment and of Energy, Mines and Petroleum Resources of British Columbia (provincial authorities)
decided against the granting of an Environmental Assessment Certificate for the Ajax project. In 2018 the Government of
Canada, through the Governor-in-Council (federal authorities), issued a negative decision regarding the Ajax project.
As a result of the decision not to grant an EA Certificate, in 2022 work continued which was mainly related to monitoring
and securing of the project terrain in accordance with law in force.
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 27
the Company and the Group in 2022 – translation from the original Polish version
CHILE
Sierra Gorda mine and Sierra Gorda Oxide project
Location
Region II, Chile
Ownership
11
55% KGHM INTERNATIONAL LTD, 45% South32
Type of mine
open pit
Main ore type
copper ore
Associated metals
molybdenum, gold
Life of mine
26 years for the current deposit based on phase 1 of the investment, including actions to remove
bottlenecks. Moreover, there is a possibility to extend the mine’s life using new deposits
End product
copper concentrate, molybdenum concentrate
Payable production in 2022
165.1 kt of copper in concentrate, 5.3 million pounds of molybdenum in concentrate – on a 100%
basis, share of KGHM Polska Miedź S.A. is 55%
Life of mine
26 years
The Sierra Gorda mine is located in the Atacama desert, in the Sierra Gorda administrative area in the Antofagasta region,
in northern Chile, approx. 60 km south-west of the city of Calama. The mine is situated at an altitude of 1 700 meters a.s.l.
and 4 km from the town of Sierra Gorda.
On 1 July 2015 the Sierra Gorda mine commenced commercial production (since then it has prepared statements of profit
or loss). The ore is extracted using explosives, and next is loaded and hauled away in trucks to the processing plant, where
it is crushed and milled.
The end product of Sierra Gorda’s processing plant is copper concentrate and molybdenum concentrate.
Sierra Gorda concentrated on implementing an optimisation program aimed at improving the work of the mine, processing
plant, infrastructure and tailings storage facility.
In the fourth quarter of 2021, an agreement was signed between KGHM Polska Miedź S.A. and the then-joint venture
partner of Sierra Gorda S.C.M. – Sumitomo (Sumitomo Metal Mining Co., Ltd. and Sumitomo Corporation) involving the sale
of the SG Oxide project to Sierra Gorda S.C.M., wherein the date of the sale was set as 1 January 2022. Cash payment was
made on 4 March 2022 with the gains from the sale amounting by PLN 135 million. The Sierra Gorda Oxide project involves
the leaching of the copper oxide ore of Sierra Gorda on a permanent heap and the production of high-quality copper
cathodes in a solvent extraction and electrowinning (SX-EW) installation, with production capacity of approx. 30 thousand
tonnes/year. At present most of the oxide ore planned for processing has already been excavated and is currently stored
near the site of the future plant.
Franke mine
On 26 April 2022 subsidiaries of KGHM INTERNATIONAL LTD., i.e. Franke Holdings Ltd. and Centenario Holdings Ltd. signed
an agreement for the sale of 100% of the shares of the company Sociedad Contractual Minera Franke (SCMF), being the
owner of the Franke mine in Chile, to the company Minera Las Cenizas S.A. for the initial-negotiated purchase price of USD
25 million.
1.7 OTHER ASSETS (EQUITY INVESTMENTS AND THEIR FINANCING)
In terms of assuring the operations of the core business of KGHM Polska Miedź S.A. the domestic companies operating
mainly on its behalf are significant, including among others:
− PeBeKa S.A. – mining work contractor;
− KGHM ZANAM S.A. – a supplier and service provider for mining machinery, and also provides production maintenance
services in selected areas and participates in investment tasks;
− KGHM Metraco S.A. – a supplier of copper scrap;
− „Energetyka” sp. z o.o. – the company secures part of the energy needs of KGHM Polska Miedź S.A;
− POL-MIEDŹ TRANS Sp. z o.o – main logistics company in the Group.
In terms of other entities – non-core companies – a significant portion of the assets are investments in the general field of
healthcare, including the Polish Spa Group (Polska Grupa Uzdrowisk).
Moreover, amongst the international companies is a group operating under the DMC Mining Services brand: DMC Mining
Services Ltd., FNX Mining Company Inc. (a branch of DMC), Raise Boring Mining Services S.A. de C.V. (from 11 February 2022
operating under the changed name DMC Mining Services Mexico, S.A. de C.V.), DMC Mining Services Corporation, DMC
Mining Services Colombia S.A.S., DMC Mining Services (UK) Ltd. and DMC Mining Services Chile SpA, which provide services
in shaft sinking, preparatory work, construction of above-ground and underground mine facilities, mine drilling, tunnel
drilling for general construction purposes and engineering services.
11
On 22 February 2022 the sale of 45% of the shares of Sierra Gorda S.C.M. by Sumitomo Metal Mining Co., Ltd. and Sumitomo Corporation
to South32, an Australian mining group with its registered head office in Perth, was completed. The transaction took place on the basis of
sales agreements entered into on 14 October 2021.
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 28
the Company and the Group in 2022 – translation from the original Polish version
In terms of the amount of capital engaged, the shares of the company TAURON Polska Energia S.A., listed on the Warsaw
Stock Exchange, represent a significant and long-term investment. As at 31 December 2022 the share of KGHM Polska Miedź
S.A. in the share capital of TAURON Polska Energia S.A. amounted to 10.39%. The value of the shares of TAURON Polska
Energia S.A. held by KGHM Polska Miedź S.A. amounted by PLN 386 million.
1.8 MAIN EFFICIENCY INDICATORS
Table 5. Key non-financial indicators of KGHM Polska Miedź S.A. for the years 2021-2022
2022
2021
Society
Maintaining position in WIG-ESG (previously the RESPECT Index)
YES
YES
Maintaining position in the FTSE4Good Index Series
YES
YES
0% investment activity without a social dialogue policy
YES
YES
Conclusion and maintaining of long-term contracts as well as achievement
of a proper sales structure ensuring long-term relations with customers
YES
YES
Sponsorship and charitable activities in building corporate social
responsibility [sponsorship expenses for the purposes of the Company's
promotion and regional support, i.e. sports/culture/science]
PLN 51.6 million
PLN 36.1 million
Resource efficiency
Ore extraction (wet weight) per mine employee [tonne]
2 565
2 540
Production of electrolytic copper per Company / metallurgical employee
[tonne]
31/162
31/160
Copper smelting yields [%]
98.08
98.33
Zero harm
LTIRF
KGHM
(Lost Time Injury Frequency Rate KGHM)
5.1
5.6
1.9 MACROECONOMIC ENVIRONMENT AND MARKET TRENDS
MACROECONOMIC ENVIRONMENT
2022 was another tough year for the global economy. Following the experience of the pandemic, who would have imagined
that, just beyond the borders of the European Union, a full-scale armed conflict caused by Russia’s aggression against
Ukraine would erupt. And when the Western world had emerged from the problems associated with COVID-19, the virus
struck the world’s economy again through the realisation of China’s different health policy. The event beyond Poland’s
eastern border affected, to quite a large degree, the shape of the global commodities market, in particular the energy
markets. A substantial portion of the global increase in prices resulted from the rise in prices of energy carriers, which are
frequently an intrinsic cost factor for the entire economy, including in the metals mining and processing sectors.
The initial reaction to the Russian armed invasion of Ukraine was an increase in commodities prices based on fears of a
decrease in their availability and the potential for interruptions in supply. Such interruptions have a noticeable impact on
the markets and prices of certain commodities (mainly nickel, aluminium and palladium, but also copper).
Energy prices, which have remained very high for several months have however turned out to be a challenge for the global
economy, while the inflation which they among other factors have generated, spurred the world’s largest central banks to
react and led to a change in the monetary policy rhetoric by 180 degrees. As a result, this led to a rapid rise in the cost of
money in the world aimed at restricting rapidly rising price pressure. The high inflation readings and increases in interest
rates led to expectations of economic slowdown or even recession in selected parts of the world.
Europe was affected to a larger degree by the increase in prices of energy carriers. As a result the European currency visibly
weakened versus the American dollar which, supported by the decisive tightening of monetary policy by the Fed,
appreciated in value compared to most other currencies. This strengthening of the USD had a negative impact on
commodities denominated in this currency, as they become more expensive in domestic currencies.
At the same time, China adopted a fairly restrictive approach to the SARS-CoV-2 pandemic, resulting in a series of lockdowns
in the Chinese economy, the world’s largest consumer of commodities. The restriction in activity also affected copper
processors in China and led to lower consumption of the red metal, because of which the price of copper decreased in the
second half of the year, reaching its minimum in July of 7 000 USD/t. Citizen protests in China and the authorities’ loss of
control over the spread of the Omicron variant led to a long-awaited reaction by the authorities towards the zero-COVID
policy, with the consequence of changes in the existing health policy conducted by Beijing being higher copper prices in the
last quarter of 2022. Nonetheless, the health situation in China is difficult to evaluate, while the long-expected economic
recovery in China has been deferred.
According to recent data of Cochilco, a Chilean institution dealing with the copper market, annual production of copper in
Chile fell in 2022 to its lowest level in 16 years and amounted to 5.3 million tonnes. It means a drop of 5.4% y/y and it is the
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 29
the Company and the Group in 2022 – translation from the original Polish version
lowest annual production in Chile since 2006. This decrease is connected with a lower production by some of the world’s
largest copper producers, including Codelco, Collahuasi, Los Bronces and Los Pelambres. Lower-than-expected mine
production (interruptions to production, project delays) is a stabilising factor in the copper market’s fundamental situation.
Initially it was expected that there would be a substantial surplus in production due to an expected economic slowdown
and production from new mine projects.
The continuation of copper prices at a relatively high level was also caused by the record low level of inventories in the main
exchanges, the lowest in many years. Moreover, according to data of CRU International, a similar situation exists in Chinese
duty-free warehouses, where inventories in the final weeks of 2022 were at their lowest since the start of recording such
data.
Diagram 7. Forecasts of real GDP growth per the International Monetary Fund from January 2023 versus previous
forecasts (source: World Economic Outlook)
12
Chart 1. Change in commodities prices in 2022 (first vs last day of the year) (source: Refinitiv, KGHM Polska Miedź S.A.)
The average annual price of copper (cash settlement on the LME) in 2022 amounted to 8 797 USD/t. The highest price was
recorded on 7 March. At that time it amounted to 10 730 USD/t, and set a historic record. The lowest level was recorded on
15 July. On that day the price of copper amounted to 7 000 USD/t. Taking into consideration the cash settlement price,
copper in 2022 fell by 13% (the closing price on the first versus last day of the year). It is also worth noting that 2022 was a
12
Forecasts (F) of real GDP growth per the International Monetary Fund - World Economic Outlook – January 2023 compared to October
2022; for Chile the data are from October 2022, and are compared to April 2022
USA
2022: 2.0%
2023F: 1.4% +0.4 pp.
2024F: 1.0% -0.2 pp.
World
2022: 3.4%
2023F: 2.9% +0.2 bp.
2024F: 3.1% -0.1 bp.
Canada
2022: 3.5%
2023F: 1.5% 0.0 bp.
2024F: 1.5% -0.1 bp.
Chile
2022: 2.0%
2023F: -1.0% -1.5 bp.
2024F: 2.0% +0.4 bp.
Eurozone
2022: 3.5%
2023F: 0.7% +0.2 bp.
2024F: 1.6% -0.2 bp.
Poland
2022: 5.4%
2023F: 0.3% -0.2 bp.
2024F: 2.4% -2.7 bp.
China
2022: 3.0%
2023F: 5.2% +0.8 bp.
2024F: 4.5% 0.0 bp.
-50%
0%
50%
Base metal Energy resources Precious metal
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 30
the Company and the Group in 2022 – translation from the original Polish version
record year in terms of copper prices denominated in the Polish złoty. The average price in 2022 amounted to 39 037 PLN/t
(daily LME prices calculated after the NBP fixing).
Chart 2. Copper price (average monthly) per the London Metal Exchange in the years 2018-2022 (in USD/t) (source:
Bloomberg, KGHM Polska Miedź S.A.)
At the start of 2022, in an environment of heightened risk being the result first of threats, and then an actual Russian
invasion of Ukraine, the price of silver, following its sister gold, recorded a rapid increase, reaching its maximum level for
2022 of over 26 USD per ounce. From that moment silver began a falling trend, reaching its 2022 minimum on 1 September
of around 17.50 USD/oz. Similarly, whether in the case of an increase or a decrease, silver followed gold, which was
negatively impacted by a tightening of monetary policy by the Fed and higher interest rates, which strengthened the
American dollar. An additional burden for silver, resulting from tightened monetary policy both within and outside of the
USA, the negative impact of rising global inflation and pandemic lockdowns in China, was the weakening of global industrial
production, raising fears about demand for silver. The average price of this metal according to the London Bullion Market
Association (LBMA) in 2022 fell by 13.5% and amounted to 21.73 USD/oz t versus 25.14 USD/oz t in 2021.
Chart 3. Silver price (average monthly) per the London Bullion Market Association in the years 2018-2022 (in USD/oz t)
(source: Bloomberg, KGHM Polska Miedź S.A.)
The price of molybdenum until May remained at a level of around 19 USD/lb, in August it fell below 14 USD/lb, but from
this moment it systematically rose, to end the year at 26.13 USD/lb. The reason for the drop in August were the fears
regarding demand for the metal, especially from Chinese stainless steel producers, which nevertheless turned out to be
unfounded. Meanwhile, the somewhat later fears about lower supply from South America due to logistical interruptions
and limitations in mine production became an impulse for substantial rises in prices, especially in the last weeks of the year.
The average price of the metal in 2022 amounted to 18.51 USD/lb and was 17% higher than the average for 2021 (15.82
USD/lb).
Chart 4. Molybdenum price (average monthly) per Platts (in USD/lb) in the years 2019-2022 (in USD/lb) (source: Platts,
KGHM Polska Miedź S.A.)
3000
5000
7000
9000
11000
2018 2019 2020 2021 2022
10
15
20
25
30
2018 2019 2020 2021 2022
6
11
16
21
26
2019 2020 2021 2022
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 31
the Company and the Group in 2022 – translation from the original Polish version
Quotations of the Polish złoty, both in comparison to the euro as well as the American dollar, continued to be under the
influence of events related to the Russian invasion of Ukraine. In the first months of the year, the Polish złoty was under
the impact of heightened volatility, despite attempts to stabilise the PLN through the intervention of the National Bank of
Poland (NBP). The NBP continued its tightening of monetary policy, similarly to the actions of other central banks in the
region, thanks to which the PLN did not undergo further depreciation. The maximum price of the PLN versus the euro of
around 4.96 was recorded on 7 March, while the maximum of 5.04 to the USD was reached on 28 September. The Polish
złoty ended 2022 at around 4.40 to the USD (NBP fixing at 30 December 2022). The average USD/PLN exchange rate (per
the NBP) in 2022 amounted to 4.4615 and was higher by 15.44% than in 2021 (3.8647 USD/PLN).
Chart 5. USD/PLN exchange rate (average monthly) per the National Bank of Poland in the years 2018-2022 (source:
Bloomberg, KGHM Polska Miedź S.A.)
In 2022 the Canadian dollar weakened versus the American dollar, taking into consideration the quotations of this currency
pair in the first and last days of the year. This devaluation versus the USD was due to a general global trend of USD
strengthening. The average USD/CAD exchange rate (per the Bank of Canada) in 2022 amounted to 1.3013 and was 3.8%
higher than the rate recorded in 2021 (1.2535).
Chart 6. USD/CAD exchange rate (average monthly) per the Bank of Canada in the years 2018-2022 (source: Bloomberg,
KGHM Polska Miedź S.A.)
The USD/CLP exchange rate during the year systematically weakened. The average annual USD/CLP exchange rate (per the
Bank of Chile) in 2022 amounted to 872, meaning a weakening of the local currency as compared to the USD by 14.9% (759
in 2021).
Chart 7. USD/CLP exchange rate (average monthly) per the Bank of Chile in the years 2018-2022 (source: Bloomberg,
KGHM Polska Miedź S.A.)
3,00
3,50
4,00
4,50
5,00
2018 2019 2020 2021 2022
1,10
1,20
1,30
1,40
1,50
2018 2019 2020 2021 2022
500,00
600,00
700,00
800,00
900,00
1000,00
2018 2019 2020 2021 2022
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 32
the Company and the Group in 2022 – translation from the original Polish version
Table 6. Market conditions significant for the operations of the KGHM Polska Miedź S.A. Group in the years 2021-2022 –
average prices
Unit 2022 2021
Change
(%)
IVQ'22 IIIQ'22 IIQ'22 IQ'22
Copper price on the LME
USD/t
8 797
9 317
(5.6)
8 001
7 745
9 513
9 997
Copper price on the LME in PLN
PLN/t
39 037
36 017
+8.4
37 118
36 469
41 485
41 273
Silver price per the LBMA
USD/ oz t
21.73
25.14
(13.6)
21.17
19.23
22.60
24.01
Molybdenum price per Platts
USD/lb
18.51
15.82
+17.0
20.61
15.97
18.48
19.07
USD/PLN exchange rate per the NBP
4.4615
3.8647
+15.4
4.6397
4.7139
4.3597
4.1260
USD/CAD exchange rate per the
Bank of Canada
1.3013
1.2535
+3.8
1.3578
1.3056
1.2768
1.2662
USD/CLP exchange rate per the
Bank of Chile
872
759
+14.9
915
926
842
809
ANALYSIS OF THE GLOBAL MARKET FOR THE GROUP’S BASIC PRODUCTS
The primary products of the KGHM Group, i.e. copper concentrates, cathodes, copper wire rod and silver in the form of
bars and grains, are traded on the highly-competitive global market as well as in reference to the commodity markets.
Markets for the individual products offered by KGHM have varied rules and customs concerning trading and standard
prices. Their incomparability is also due to the characteristics of products, which impacts their usage and the diversity of
market participants.
Copper
The primary products offered by the companies of the KGHM Group are concentrates, cathodes and copper wire rod. They
are the result of various stages of processing copper ore and recycling of copper scrap. For all of these products, the price
benchmark (i.e. the global benchmark of copper prices for physical sales contracts of copper-bearing materials and
products) is stock market quotations, with the cash settlement of the London Metal Exchange (LME) being most commonly
used. Less commonly used are alternative quotations of copper on the stock exchanges in New York (COMEX) and the
Shanghai (Shanghai Futures Exchange -SHFE). Grade “A” type refined copper cathodes, with a copper content of at least
99.99%, are quoted on the LME (under the standard BS:EN 1978:1998 - Cu-CATH-1). In order to be able to apply stock
exchange prices to purchase/sale transactions of the products to which this quality standard is not applied (i.e. all types of
copper-bearing materials such as copper concentrates, copper scrap or more processed products like copper wire rod),
market participants have developed a premium and discount system, which adjusts stock quotations. It allows setting of a
market price for a product which takes into account its processing stage, its physical state and chemical makeup, as well as
costs of transport and insurance to an agreed delivery destination and the current availability of the metal in a given
location.
Copper concentrates
Copper concentrate is a product made by processing and enriching copper ore, which usually has a relatively low metal
content and is not suitable for direct metallurgical processing. Usually, copper content in concentrate varies from
percentages in the teens to several tens of percent, which enables further processing in copper smelters and refineries.
The cost of transporting products with a lower copper content (for example copper ore) basically eliminates them from
trade in the global market (with certain exceptions). Therefore it may be assumed that copper concentrate is the first
product of processing copper ore that may be generally traded. As a result of metallurgical processes copper is produced
as well as the by-products of processing (mainly precious metals, sulphuric acid, lead etc.). The main participants of the
concentrate markets are mines supplying the product on the market and smelters and refineries, for which the
concentrates are materials for production. Trading companies also play a role in the international trading, intermediating
in the purchase/sale transactions and offering additional services expected by the parties. In 2022, the total global
production of copper in copper concentrate is estimated at 18.2 million tonnes (according to CRU).
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 33
the Company and the Group in 2022 – translation from the original Polish version
Chart 8. Geographical breakdown of global copper concentrates production in 2022 (source: CRU, KGHM Polska Miedź
S.A.)
Copper concentrates require processing into refined copper, which leads to incurring processing costs and the incomplete
recovery of metals at individual production stages. Therefore, the transaction price should have a set of discounts as
compared to quoted prices for refined copper. The benchmark of these discounts (for TC/RC) is determined during
negotiations with the main producers of concentrates (Freeport McMoRan, Antofagasta) and their customers (mainly
Chinese and Japanese smelters and refineries).
Companies of the KGHM Group participate in the copper concentrate markets mainly by selling concentrate from Sierra
Gorda in Chile and from Robinson in the USA. At the same time, the Company purchases copper concentrates from the
market with characteristics suitable for more efficient utilisation of the production capabilities of the smelters and refineries
in Poland.
Copper cathodes
Refined copper in the form of copper cathodes is the end product of the smelting and refining processes to which the
copper-bearing materials are subjected (including concentrates, copper blister, anodes and copper scrap). Primary
commodities exchanges (including the LME, SHFE and INE) enable cathodes to be registered (Grade A type, with a copper
content of at least 99.99% under the BS:EN 1978:1998 - Cu-CATH-1 standard), and therefore their trading on exchanges and
through LME-approved warehouses. The copper cathodes produced by KGHM are registered on the LME, SHFE and INE
under the brands HML, HMG-B and HMG-S. Unregistered cathodes are also traded on the physical market (for example
those that do not meet quality parameters or the minimal yearly production conditions set by exchanges). One example of
unregistered cathodes produced by KGHM is the Carlota brand. The main participants in the cathodes market are mining
and smelting companies producing copper in the form of cathodes and wire rod plants and other companies engaged in
copper processing, which use cathodes to produce wire rod, other rods, flat bars, pipes, sheets and tapes. Similarly as in
the case of copper concentrates, trading companies and financial institutions intermediating in the cathodes trade also
participate in the market. In 2022, CRU estimated total global production of refined copper at 24.6 million tonnes.
It is a standard practice on the Grade “A” copper cathodes market to add a producer’s premium to the prices set by global
exchanges. Its level allows the producer to cover the cost of transport and insurance to the agreed delivery destination,
and it also includes the premium for quality (of a given cathodes brand) and supply-demand situation on a given market.
The companies of the KGHM Group participate on the cathodes market mainly by selling cathodes from the Group’s Polish
assets. The Głogów Copper Smelter and Refinery produces cathodes of the HMG-S and HMG-B brands, while the Legnica
Copper Smelter and Refinery produces cathodes of the HML brand, registered on the exchanges in London (LME) and in
Shanghai (SHFE and INE). Moreover, the KGHM Group offers cathodes produced through the leaching and electrowinning
(SX/EW) process in Chile and the Franke mine (until April 2022) and in the Carlota mine in the United States. Production of
refined copper by companies of the KGHM Group amounted to 593 thousand tonnes in 2022, which represents approx.
2.4% of global production.
South and Central America
40%
Asia
26%
North America
10%
Africa
9%
Other Europe
8%
Australasia
5%
Poland
2%
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 34
the Company and the Group in 2022 – translation from the original Polish version
Chart 9. Geographical breakdown of global refined copper production in 2022 (source: CRU, KGHM Polska Miedź S.A.)
Chart 10. Geographical breakdown of global refined copper consumption in 2022 (source: CRU, KGHM Polska Miedź S.A.)
Copper wire rod
Copper wire rod is manufactured in the continuous process of melting, casting and drawing in plants processing refined
copper. The material used in this production cycle is mainly copper in the form of cathodes, although higher-grade copper
scrap may also be used. Wire rod is a half-finished product used in the production of single wires and strands used to
produce conducting cores in cables and electric wires (for example: enamelled cable, car cables, power cords etc.) Similarly
as for copper cathodes, trading companies are also involved in trading of half-finished products, apart from companies
with production facilities (wire rod plants and companies processing wire rod into cables and bundled wires). The wire rod
market, due to the quality characteristics of the product, is more of a local market, which also means that it is highly
competitive and demanding. In 2022, total global production of copper in the form of wire rod is estimated by CRU at 19.7
million tonnes.
Asia 60%
Europe 14%
South and Central America
11%
Africa 7%
North America 7%
Australasia 1%
Asia 75%
Europe 13%
North America 9%
South and Central America
2%
Other 1%
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 35
the Company and the Group in 2022 – translation from the original Polish version
Chart 11. Geographical breakdown of global copper wire rod production in 2022 (source: CRU, KGHM Polska Miedź S.A.)
Chart 12. Geographical breakdown of global wire rod consumption in 2022 (source: CRU, KGHM Polska Miedź S.A.)
Wire rod’s price structure, apart from the copper quotations on the London Metals Exchange, also includes a producer’s
fee (added to cathodes) and the refining charges due to the costs of processing cathodes into wire rod. KGHM Polska Miedź
S.A. offers wire rod which is produced in the Cedynia Wire Rod Plant in Orsk.
Copper wire rod and wires are utilised in numerous sectors of the modern economy, while the products created from them
(cables and bundled wires) account for approx. 63% of world copper consumption. The vast majority of wire rod and wires
(estimated at over 10 million tonnes annually), is used in construction and infrastructure. Distribution of electricity, building
wiring and transmission as well as distribution networks are the most dominant subsectors. Amongst the most popular
products manufactured from wire rod and wires are power lines, cables in the electrical installations in buildings and
winding wires (together approx. 80%).
In 2022, production of wire rod and wire by KGHM Polska Miedź S.A. amounted to 284.8 thousand tonnes, or nearly 11% of
European production. This result makes the Company one of Europe’s leading producers of these copper half-finished
products.
Silver
Approximately 72% of global metallic silver production is a by-product of mining ores of other metals. Silver, due to its
unique physical characteristics, is used in the jewellery, electronics and electrical industries, as well as in medicine, optics,
the energy industry and many others. It is also applied in the latest technological solutions, among others in infrastructure,
the automotive industry and photovoltaics. In total, industry utilises approx. 50% of global silver production. It is also a
valued investment metal. According to Metals Focus preliminary estimates, in 2022 global production of mined silver
amounted to 26 thousand tonnes.
Asia 74%
Europe 14%
North America 10%
South and Central America
2%
Asia 72%
Europe 13%
North America 10%
South and Central America
2%
Other 3%
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 36
the Company and the Group in 2022 – translation from the original Polish version
Chart 13. Geographical breakdown of global mined silver production in 2022 (source: Metal Focus – preliminary data, KGHM
Polska Miedź S.A.)
Usually, participants in the silver market make use of London Bullion Market Association quotations when setting the price
for silver in physical transactions, after adjusting for current market conditions.
KGHM sells silver in the form of bars and grains (produced at the Głogów Copper Smelter and Refinery) and is one of the
largest global producers of metallic silver. In 2022, KGHM produced 1338 tonnes of silver, making the Company one of the
world’s leading producers of silver. This metal in the form of bars is registered under the brand KGHM HG and has a
registered certificate on the NYMEX (New York Mercantile Exchange) as well as Good Delivery certificates issued by the
London Bullion Market Association. Silver is supplied in the form of grains to the jewellery and metals industries, which
produce alloys containing silver. Silver in the form of bars (ingots) is mainly purchased by financial institutions.
1.10 COMPETITIVE ADVANTAGES OF THE KGHM POLSKA MIEDŹ S.A. GROUP
The broad scope of activities of the KGHM Polska Miedź S.A. Group, the unique comprehensiveness of our mining and
processing operations on a global scale, the integration of our operations, our focus on innovation and financial stability,
along with our extensive in-depth experience and long-term Strategy, combined with extension of the value chain, broad
product portfolio and access to rich deposits, allow the KGHM Group to offer products and services that satisfy the
expectations of even the most demanding buyers.
GLOBAL REACH OF OPERATIONS
Over the recent decades, KGHM Polska Miedź S.A. has become a global mining and processing entity with presence on four
continents. On the one hand, such a large scale of operation substantially curtails the risk of disturbance in the continuity
and quality of production, while on the other hand, it facilitates the continuous transfer of knowledge and experience
between its various units. Its mobility policy enables it to post the most prominent experts in the KGHM Group wherever
their expert knowledge is needed to derive business benefits. The key for success is also a diversified and constantly
enlarged product portfolio. For over a decade, KGHM Polska Miedź S.A. has owned mining assets not only in Poland but
also in Canada, the USA and Chile.
KGHM is part of the elite group of companies which can claim a full value chain, including mining, smelting/refining and
processing.
ACCESS TO ITS OWN RICH, SECURE DEPOSITS IN POLAND AND ABROAD
KGHM Polska Miedź S.A. holds a geographically diversified portfolio of mining projects. It has production facilities in Europe
and North and South America. The global copper ore resources controlled by KGHM – over 40 million tonnes – guarantee
KGHM an important position in the global mining sector. KGHM mines and processes precious natural materials. At its heart
is one of Europe’s largest copper ore deposits, located in southwestern Poland, which is also rich in associated metals. Apart
from the rich deposits on which KGHM operates, the Company continues its exploration and assessment work in order to
develop and expand its resource base. A broad range of exploration work is conducted, i.e. exploration and geological
appraisal, which may be divided into three main areas:
- greenfield exploration – exploring new deposits,
- brownfield exploration – appraisal of resources which have been partially surveyed and documented,
- in-mine and near-mine exploration – appraisal of areas adjacent to the currently worked assets in order to extend
the operational life.
Mexico 25%
China 13%
Peru 12%
Chile 6%
Australia 5%
Poland 5%
Bolivia 5%
Russia 5%
Other 24%
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 37
the Company and the Group in 2022 – translation from the original Polish version
A FULLY-INTEGRATED PRODUCTION PROCESS WITH A COMPLETE CHAIN OF MINING AND PROCESSING NATURAL
RESOURCES – FROM ASSESSMENT AND EXPLORATION TO SALES
Production in KGHM Polska Miedź S.A. is a fully integrated process whereby the end product of one technological phase
forms the input (intermediate product) for the subsequent phase.
A description and diagrams of the production process in KGHM Polska Miedź S.A. and KGHM INTERNATIONAL LTD. Is
presented in section 1.5. Production process
.
A fact worth noting is that KGHM Polska Miedź S.A. has been rapidly developing and implementing certain elements of the
circular economy concept in its operations. To this end, it has been making progress in the areas of recycling and further
improving the utilisation of post-production waste as a so-called secondary source of raw materials.
UNIQUE KNOW-HOW AND SKILLS
During its more than 60 years of history, KGHM Polska Miedź S.A. has acquired extraordinary human capital, experience,
knowledge and skills that have enabled the Company to transform its business from a local mining company into an
international group acting as a major player in the global market for non-ferrous metals. The skills developed by our
employees are and will be used in the future as one of the fundamental assets for winning a competitive edge in the industry
and for building a strong position of Poland as an industrial centre.
The focus on sustainable development – commitment to actions involving the climate and natural environment, social
responsibility and corporate governance – plays an important role in the above processes. Thanks to its transparent and
comprehensive activities (as well as its commitment to stakeholder relations), the Company is perceived as committed not
only to developing its own business activities, but also to making a significant contribution to the common good. More on
this subject may be found in section 2.4. Management of ESG issues.
The Company has received many prestigious awards and prizes, granted both during international competitions (including:
Award of the State Mining Union of Chile for the Sierra Gorda mine, the Nevada Excellence in Mine Reclamation Award for
the Robinson mine in the USA for restoration of the Lane City Waste Rock Facility (WRF), as well as Polish ones (such as for
actions related to communicating with investors and its presence on the capital market).
MORE THAN 60 YEARS OF EXPERIENCE IN UNDERGROUND COPPER MINING
The global mining industry is dominated by open-pit mining; underground mining is a much rarer form of sourcing raw
materials. KGHM mines copper ore in three underground mines: Lubin, Rudna and Polkowice-Sieroszowice. The extraction
of copper ore, its processing and production of a finished product that is fit for sale is a difficult and complex process. The
Company has many years of unique experience and know-how in this area, which is sought after by experts from around
the world.
Underground mining has many advantages in terms of environmental footprint and climate action. Since most of the work
is carried out underground, there is much less impact on the landscape and natural environment. This form of operation
is also less burdensome on the surroundings and local communities. The processes of reclamation of post-mining areas
and the activities required to restore them for people and nature are also easier. KGHM has unique knowledge associated
with the work carried out at great depths, extracting copper ores and other precious metals from underground mines. In
2022, KGHM advanced work on deepening the key GG-1 shaft to a depth of over 1.34 km, which is a European record in
shaft sinking. This is a strategic investment for the mining of copper in Poland related to the utilisation of a new copper ore
deposit in the Deep underground (Głogów Głęboki-Przemysłowy) area.
KGHM carries out innovative research and development projects (associated among others with the testing of battery-
powered mining machines, the robotisation of production and auxiliary processes, broadband data transmission in the
underground mines), which are aimed at increasing the efficiency of processes and work safety. In spite of unfavourable
natural conditions, the Company operates successfully thanks to innovative, advanced technologies.
A RICH PORTFOLIO OF PRODUCTS / MINERALS
The strength of the KGHM Group lies in its geographically-diversified mining assets which operate in Europe (Poland), North
America (USA and Canada) and South America (Chile), which extract copper ore, associated minerals and precious metals.
In its facilities located in Poland its activities are also based on smelting, refining and processing. The deposit mined by
KGHM in Poland is one of the largest copper deposits in the world that will allow the company to continue its activity for
several decades. KGHM also produces silver, gold, molybdenum, nickel, rhenium, lead, platinum metals and rock salt.
KGHM is famous for its metal production, however it is also worth noting that other products are also produced in its
technological processes – these include crude and refined lead, sulphuric acid, nickel sulphate and selenium. KGHM is also
the only European producer of rhenium from its own resources, a valuable and extremely rare metal used mainly in the
aircraft and petrochemical industries.
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 38
the Company and the Group in 2022 – translation from the original Polish version
EXTENSION OF THE VALUE CHAIN
The main business model of the KGHM Polska Miedź S.A. Group is divided into seven areas: the exploration and evaluation
of deposits, mining and restoration of deposits, ore enrichment, smelting and refining (including recycling), processing and
sales of finished products. The core business so organised enables optimisation and the efficient management of natural
resources, while at the same time minimising waste, in accordance with the Circular Economy concept.
KGHM Polska Miedź S.A. not only has an extensive product portfolio, but also considerable potential for extending the value
chain, which it is gradually tapping into. KGHM cooperates with its Group companies to implement the concept of
intensifying the acquisition of copper-bearing scrap to use it as feedstock in KGHM’s metallurgical furnaces, increasing the
production of recycled copper. By diversifying backwards, the Company boosts the utilisation of its production capacity and
makes a positive contribution to the environment by recovering valuable metals from waste. In 2022 alone, a total of more
than 150 thousand tonnes of copper scrap was processed, which was recycled in line with the Circular Economy concept.
By increasing production, the Company at the same time strives to increase the share of highly processed products in the
KGHM Group’s total sales.
Diversification allows it to increase the flexibility of finished products offered to customers. In addition to the base product
of cathodes, KGHM produces the aforementioned processed copper products in the form of wire rod and wire. KGHM
continues to develop and implement innovative products. Such activities include, for example, low-loss power cables
featuring copper and silver alloys.
INNOVATION
Work on innovative solutions is conducted at various business levels, by drawing on cooperation with independent entities
and consortia, scientific centers and appreciating the creative potential and ingenuity of our own employees. All these
activities will ultimately contribute to, among others, the increased effectiveness of R&D efforts, higher innovation, reduced
production costs, stimulation of implementation activity, improved occupational health and safety, effective environmental
protection activities and in the context of sustainable development, as well as searching for new deposits. KGHM Group
employees are the most familiar with specific needs and are able to identify areas and solutions that translate into better
performance and greater safety, improved ergonomics of their work and protection of the environment. For this reason,
within the framework of activities, various opportunities to manage knowledge and build synergies on cooperation within
the KGHM Polska Miedź S.A. Group are constantly looked for. An example of an activity supporting employee innovation is
the Inventors Market, which in November 2022 was introduced in all of the Company’s Divisions. In accordance with the
Company’s Inventing Bylaws, also sought after are solutions of a technical or technical-organisational nature as regards
technology, but also in the area of workplace environment, in particular improving occupational health and safety.
In 2022 the second edition of the CuValley Hack was held – a hackathon organised by KGHM Polska Miedź S.A. and KGHM
Centrum Analityki sp. z o.o. under the Dolina Miedziowa (Copper Valley) program. 250 people took part in the hackathon,
where teams presented 40 projects (three projects acquired under the second edition are in the process of being
implemented in KGHM).
PARTNERSHIP WITH COMPANIES AND INSTITUTIONS
KGHM builds permanent partnerships with renowned domestic and international companies and institutions. The
Company is a member of numerous domestic and international organizations, including employer organizations, economic
associations, sector societies, foundations and other entities representing the European mining industry. KGHM engages
in ongoing dialogue with technological experts, universities, suppliers, governments, social groups, leaders of industry and
citizen social organisations at all stages of the lifecycles of their projects. Through ongoing cooperation with stakeholders
and exchanges of opinions, KGHM takes an active role in social development, becoming at the same time a more valuable
company for shareholders.
INTEGRATION WITHIN THE KGHM GROUP
The KGHM Polska Miedź S.A. Group is internally integrated and, in many aspects, comprehensive in its operations. It is
comprised of entities with unique and significant competencies, which is required for the broadly-defined operational
assurance of the core production line, but also skills that secure future development prospects, continuity of electricity
supply or know-how in technology development. These entities provide services which are indispensable to KGHM, such as
underground construction services, the performance of mining work (PeBeKa S.A.), manufacture and maintenance of
mining machinery and equipment (KGHM ZANAM S.A.), activities supporting the Circular Economy based for example on
the supply of copper scrap, production of road aggregate (KGHM Metraco S.A.) and securing a portion of KGHM’s energy
needs (“Energetyka” Sp. z o.o.), or rail transport and rolling stock maintenance services (POL-MIEDŹ TRANS Sp. z o.o.). The
Group also comprises entities engaged in supporting and complementary activities, such as: comprehensive research and
development services (KGHM CUPRUM Sp. z o.o. – Centrum Badawczo-Rozwojowe), work involving advanced data analysis
and the implementation of new technology (KGHM Centrum Analityki Sp. z o.o.), various laboratory tests and analyses (CBJ
sp. z o.o.), health care services (Miedziowe Centrum Zdrowia S.A., Polska Grupa Uzdrowisk) and even catering services (PHU
„Lubinpex” Sp. z o.o.).
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 39
the Company and the Group in 2022 – translation from the original Polish version
An important group is comprised of subsidiaries playing a key role in activities involving Sustainable Development and ESG,
in particular connected with environmental protection. The KGHM Group is implementing a variety of development
initiatives based on the Circular Economy concept (GOZ), aimed at limiting environmental impact. Thanks to subsidiaries
such as KGHM Metraco S.A. and Centrozłom Wrocław S.A., KGHM Polska Miedź S.A. has guaranteed supplies of copper
scrap in in this highly competitive and unstable market. Additionally, the development of complementary activities enable
the KGHM Group to reduce the costs of buying concentrates.
The scope of the Group’s operations is very broad and diverse, but at the same time integrated and adapted to market
challenges, which offers significant competitive advantage for the whole Group.
FINANCIAL STABILITY
One of the pillars of growth of the KGHM Group is to ensure the Group’s financial stability and implement systemic solutions
aimed at increasing the Group’s value. As part of enhancing its competitive advantage in this respect, KGHM Polska Miedź
S.A. strives to base the KGHM Group’s financing structure on long-term instruments, shorten the cash conversion cycle and
manage the KGHM Group’s market and credit risk effectively. These actions improve the liquidity of the Company and the
KGHM Group and affect the availability of funds for the company’s growth, implementation of strategic tasks and increase
profits by reducing costs of financing. This allows a number of significant long-term investment projects to be planned and
implemented.
1.11 STAKEHOLDERS AND EXTERNAL RELATIONS
GRI 2-29
MAP OF STAKEHOLDERS OF THE KGHM POLSKA MIEDŹ S.A. GROUP
In the first half of 2022, based substantively on the methodology of Johnson&Scholes, the process of updating the
identification and mapping of the Stakeholders of the KGHM Polska Miedź S.A. Group was performed. The first stage was
to break down the Stakeholder groups. This was done, similarly as in prior years, with the aid of questionnaires, filled out
by representatives of senior management in the individual entities of the KGHM Polska Miedź S.A. Group, representing the
various activities conducted therein. In the second stage the degree of interest was assessed – the perception of
Stakeholders towards the organisation and of the organisation towards the Stakeholders, as well as their levels of mutual
impact. The results of this research enabled the identification of four Stakeholder categories, broken down under the
Johnson&Scholes matrix for the KGHM Polska Miedź S.A. Group. One of these was Key Stakeholders, representing the most
influential and important Stakeholders for the Group. It was determined that this category includes all of the current Key
Stakeholders of KGHM, but also that the individual companies of the KGHM Group, including the Parent Entity, should be
treated separately.
Table 7. Map of Key Stakeholders of the KGHM Polska Miedź S.A. Group in 2022
Stakeholder type Specification
Key stakeholders
Employees, including trade union
members
Also including former employees and potential employees
Owners
Parent Entity - KGHM Polska Miedź S.A. and Group companies
Representatives of local and
national administration
Local governments of the municipalities, in which the company operates; State Treasury
Local community members
Social groups that are not non-government organizations, or e.g. social assistance centres
Suppliers
Suppliers of the entire value chain, including partners in JVs in which KGHM has shares
Clients
Domestic and international
Regulators
Including, among others, the legislator, the judiciary, standardization/metrological units
Stock exchange environment
Shareholders, bondholders, rating agencies
Supervisory authorities E.g. the Polish Financial Supervision Authority, the National Labour Inspectorate, certification
entities, entities granting sector rights (e.g. PSSE, PIWet)
Exchanges in Warsaw and London
London Metal Exchange and the Warsaw Stock Exchange
Financial markets
Including, among others, banks and insurers
Other Stakeholders
Media
All types, domestic and international
Competitors
Domestic and international, e.g. chambers of commerce, International Copper Association
Indigenous people
This refers to the KGHM Group, mainly the First Nations of North America
Trade organisations
Domestic and international
International organisations
E.g. the UN
Academic and research institutions,
universities
Running their operations in Poland and abroad
Non-governmental organizations
Non-governmental organizations (NGOs) with a social and environmental profile
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 40
the Company and the Group in 2022 – translation from the original Polish version
CHANNELS OF COMMUNICATION WITH STAKEHOLDERS
A good relationship with stakeholders based on mutual understanding and trust is crucial for the KGHM Polska Miedź S.A.
Group, as an organization which exerts a significant impact on its economic, social and natural environment, of which it is
fully aware and for which it accepts responsibility. Cooperation, as one of the Company’s values, is the basis for its success
in business and social activities. The Group builds relationships with Stakeholders based on partnership and complete
transparency, with an awareness of their importance in its long-term strategy and sustainable approach to business. The
basis of this process is dialogue geared towards learning about mutual expectations and capabilities and implementing
agreements.
KGHM carries out an effective informational policy and dialogue based on partnership with its key Stakeholders.
Responding to their needs has an impact on the image and perception of KGHM as a reliable and well-managed economic
entity.
Table 8. Examples of actions by the KGHM Polska Miedź S.A. Group towards selected key stakeholder groups in 2022
Employees
KGHM's priority is the health and safety of
employees, their professional development and
the constant improvement of working conditions
Examples of communication channels and tools applied in 2022:
− meetings and consultations with employee representatives regarding important
decisions or events,
− the Internet, internal publications and television, newsletters, 921 centrally
published information on Intra/Extranet, 331 videos (news) in KGHM TV, 22
publications of semi-monthly CUrier newspaper,
− company events, competitions, employee volunteering, trainings, engagement
research (17 internal competitions),
− publications in local and national medi
a regarding activities and projects
implemented by the Company.
Administration representatives
The Company cooperates with
all levels of
administration in the use of local resources, as well
as employee and environmental policy. KGHM
organizes consultations and information meetings
with representatives of the areas where it operates
or intends to operate.
Examples of communication channels and tools applied in 2022:
− meetings and consultations,
− traditional correspondence and e-mail
− the Internet.
Members of the local communities
KGHM conducts an extensive dialogue with local
communities. The result is carrying out activities in
the scope of infrastructure development by:
supporting local social organisations, as well as
science, culture and sports organizations. Out of
concern for the health of employees and residents
of the region, the campaigns promoting an active
lifestyle are organized.
Examples of communication channels and tools applied in 2022:
− publications in local media and social media (in 2022: 1005 publications on the
KGHMtoMy page on Facebook, 515 publications on LinkedIn), the naMiedzi mobile
phone app,
− meetings, conferences seminars and sporting events sponsored by KGHM,
− CSR programs, e.g. Eco-Health,
− participation of representatives of KGHM in events and ceremonies organized in
the municipalities and districts of the Copper Belt.
Shareholders
and the stock market environment
KGHM, as a public company, develops additional
forms of dialogue with capital market participants.
It conducts an open and effective information
policy based on, among others, electronic media at
the local and national level. It organizes meetings
and study visits for analysts and fund managers.
Examples of communication channels and tools applied in 2022:
− General Meetings of Shareholders,
− regulatory filings and periodic reports, newsletter,
− conferences, meetings and study visits, Investor Days,
− the Internet and social media, press releases posted on the website kghm.com
.
Media
KGHM builds good relations with the media by
providing them with precise, comprehensive
information about the current situation of the
Company and the actions taken.
Examples of communication channels and tools applied in 2022:
− press conferences, teleconferences,
− meetings between journalists and company representatives, study visits,
− press releases and information (in 2022, 103 press releases were issued),
− the Internet and corporate website kghm.com
,
−
direct contacts of KGHM and representatives of the media.
Contractors
KGHM is in daily contact with the contractors in
order to monitor their needs and the level of
satisfaction with the service in commercial
relations.
Examples of communication channels and tools applied in 2022:
− conferences and trade fairs,
− meetings, traditional and electronic correspondence,
− the corporate website kghm.com
.
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 41
the Company and the Group in 2022 – translation from the original Polish version
1.12 SHAREHOLDERS AND THE CAPITAL MARKET
SHAREHOLDER STRUCTURE OF KGHM POLSKA MIEDŹ S.A.
As at 31 December 2022 and as of the date of signing this report, the share capital of the Company, in accordance with the
entry in the register of entrepreneurs of the National Court Register, amounted by PLN 2 000 million and was divided into
200 million shares, series A, fully paid, having a face value of PLN 10 each. All shares are bearer shares. The Company has
not issued any preference shares. Each share grants the right to one vote at the general meeting. The Company does not
hold any treasury shares.
In 2022 and 2021 there was no change in either registered share capital or in the number of shares. Moreover, in 2022 and
2021 there were no changes in the ownership structure of significant blocks of shares of KGHM Polska Miedź S.A.
The Company’s shareholder structure as of 31 December 2022, established on the basis of notifications received by the
Company pursuant to art. 69 of the Act on public offerings and conditions governing the introduction of financial
instruments to organised trading, and on public companies, was as follows:
Table 9. Shareholder structure of KGHM Polska Miedź S.A. as of 31 December 2022
shareholder
number of
shares/votes
interest in the share
capital/total number of votes
State Treasury
13
63 589 900 31.79%
Nationale-Nederlanden Otwarty Fundusz Emerytalny
14
10 104 354 5.05%
Aviva Otwarty Fundusz Emerytalny Aviva Santander
15
10 039 684
5.02%
Other shareholders
116 266 062
58.14%
Total
200 000 000
100.00%
On 5 January 2023 the Company was informed of the merger of the companies Powszechne Towarzystwo Emerytalne
Allianz Polska Spółka Akcyjna (PTE Allianz Polska S.A.) and Aviva Powszechne Towarzystwo Emerytalne Aviva Santander
Spółka Akcyjna. As a result of the merger, the total number of shares of KGHM Polska Miedź S.A. held on the accounts of
funds managed by TE Allianz Polska S.A.: Allianz Otwarty Fundusz Emerytalny, Allianz Polska Dobrowolny Fundusz
Emerytalny and Drugi Allianz Polska Otwarty Fundusz Emerytalny, amounted to 12 241 453 shares, representing 6.12% of
the share capital of the Company.
The Company’s shareholder structure as of the date this report was signed was as follows:
Table 10. Shareholder structure of KGHM Polska Miedź S.A. as of the date this report was signed
shareholder
number of
shares/votes
interest in the share
capital/total number of votes
State Treasury
63 589 900
31.79%
Powszechne Towarzystwo Emerytalne Allianz Polska Spółka Akcyjna
16
12 241 453
6.12%
Nationale-Nederlanden Otwarty Fundusz Emerytalny
10 104 354
5.05%
Other shareholders
114 064 293
57.04%
Total
200 000 000
100.00%
Other shareholders, whose combined interest in the share capital and in the total number of votes amounts to 57.04%, are
mainly institutional investors, both international and domestic.
Following is the geographic distribution of the shareholder structure of KGHM Polska Miedź S.A. The data is based on
research into the Company’s shareholder structure performed in February 2023.
13
based on a notification received by the Company dated 12 January 2010
14
based on a notification received by the Company dated 18 August 2016
15
based on a notification received by the Company dated 17 July 2018
16
Total on the accounts of funds managed by Powszechne Towarzystwo Emerytalne Allianz Polska Spółka Akcyjna: Allianz Otwarty Fundusz
Emerytalny, Allianz Polska Dobrowolny Fundusz Emerytalny and Drugi Allianz Polska Otwarty Fundusz Emerytalny.
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 42
the Company and the Group in 2022 – translation from the original Polish version
Chart 14. Geographic shareholder structure of KGHM Polska Miedź S.A. as of the date this report was signed (%) (Source:
CMi2i, February 2023)
The Management Board of the Company is unaware of any agreements which could result in changes in the proportion of
the Company’s shares held by present shareholders in the future and bondholders. Similarly, the Management Board is
unaware of any agreements between bondholders, which could result in changes in the number of bonds held by them.
Based on information held by KGHM Polska Miedź S.A., as of 31 December 2022 and as of the date this report was signed,
neither the Members of the Management Board nor of the Supervisory Board of the Company held shares of KGHM Polska
Miedź S.A. or rights to them.
Based on the knowledge of the Company, as of 31 December 2022 and as of the date this report was signed, none of the
Members of the Management Board held shares of the related entities of KGHM Polska Miedź S.A.
Amongst the Members of the Supervisory Board of the Company, as of 31 December 2022 and as of the date this report
was signed, only Wojciech Zarzycki held 10 thousand shares of PKO BP S.A. with a total notional value of PLN 10 thousand.
Based on the knowledge of the Company, none of the other Members of the Supervisory Board of the Company hold shares
of the related entities of KGHM Polska Miedź S.A.
In 2022, the Company did not have an employee share incentive program.
BONDS OF KGHM POLSKA MIEDŹ S.A. ON THE CATALYST MARKET
On 27 May 2019 an issue agreement was signed under which the Management Board of KGHM Polska Miedź S.A.
established a bond issue program to the amount of PLN 4 billion. The Parties to the Issue Agreement were KGHM Polska
Miedź S.A. as Issuer and Powszechna Kasa Oszczędności Bank Polski Spółka Akcyjna, Bank Handlowy w Warszawie Spółka
Akcyjna, Bank Polska Kasa Opieki Spółka Akcyjna and Santander Bank Polska Spółka Akcyjna as Organizers and Dealers.
The issue took place in June 2019, and the maximum total nominal value of bonds amounted to PLN 2 billion. Under the
Bond Issue Program, Series A and Series B bonds were issued. The bond offer was made through a private placement and
was directed toward no more than 149 investors and was offered exclusively in Poland.
On 20 September 2019, by a resolution of the Management Board of the Warsaw Stock Exchange, bearer bonds Series A
and Series B of KGHM Polska Miedź S.A. were introduced to the alternative trading system on the Catalyst. The first day of
trading of the bonds on the Alternative Trading System was set at 3 October 2019.
Detailed information is available on the Company’s website, kghm.com
in the section Investors – Shares and bonds – Bonds.
KGHM POLSKA MIEDŹ S.A. ON THE WARSAW STOCK EXCHANGE
KGHM Polska Miedź S.A. debuted on the Warsaw Stock Exchange (WSE) in July 1997. The Company’s shares are traded on
the primary market of the WSE in the continuous trading system and are a component of the WIG, WIG20 and WIG30 main
indices as well as the WIG–ESG index published since 3 September 2019, comprising listed companies which adhere to the
principles of corporate social responsibility.
KGHM Polska Miedź S.A. is also a component of the sector index WIG-Mining and is a component company of the prestigious
FTSE4Good Index Series. The FTSE4Good Index Series is part of the group of ethical investment indicators, reflecting criteria
of corporate social responsibility and ESG risk management.
Poland
64%
USA
13%
United Kingdom
7%
Unidentified
7%
Other
9%
Other
36%
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 43
the Company and the Group in 2022 – translation from the original Polish version
The year 2022 brought a general deterioration of sentiment on the stock exchange due to existing uncertainty as to the
development of the global macroeconomic situation in reaction to the armed conflict resulting from Russia's aggression
against Ukraine and the continued consequences of the coronavirus pandemic.
During the analysed 12-month period of 2022 the highest price that investors were prepared to pay for the Company’s
shares – 182.20 PLN – was recorded on 24 March. The subsequent falling trend that lasted for several months meant that
on 28 September the share price of KGHM Polska Miedź S.A. reached its minimum of PLN 84.22. At year’s end the Company’s
share price began to rise, and at the close of trading on 30 December amounted to PLN 126.75. Nevertheless, the share
price of the Company fell by 9.1% compared to the share price from the last trading day of 2021.
The aforementioned factors also had a significant impact on the price of copper – the Company’s main product – which fell
to PLN 8 387, or by 13.5% compared to the price at the end of 2021, alongside an increase in the average USD/PLN exchange
rate by 8.4%.
The effects of the macroeconomic situation were also reflected in the stock market indices WIG, WIG20 and WIG30, which
decreased respectively by 17.08%, 20.95% and 20.88%. A similar situation prevailed in terms of the London-based FTSE 350
mining index – comprised of companies from the mining sector listed on the London Stock Exchange – which from the start
of the year fell by 43.3% compared to its level at the end of 2021.
Chart 15. Percentage change in the share price of KGHM Polska Miedź S.A. versus the WIG index and FTSE 350 mining
indices (compared to the price from the last trading day in 2021) (source: own work, Bloomberg)
Table 11. Key share price data of the Company on the Warsaw Stock Exchange in the years 2021-2022 (Source: own work,
WSE Statistic Bulletin for 2021 and 2022, Bloomberg)
Symbol: KGH ISIN: PLKGHM000017
Unit
2022
2021
Number of shares issued
million
200
200
Market capitalisation of the Company at year’s end
PLN bn
25.4
27.9
Average trading volume per session
shares
727 127
584 783
Turnover
million PLN
23 189.58
26 308.89
Change in share price from the end of the prior year
%
-9.1
-23.8
Highest closing price during the year
PLN
182.20
223.80
Lowest closing price during the year
PLN
84.22
133.10
Closing price from the last day of trading in the year
PLN
126.75
139.40
DIVIDEND
In accordance with Resolution No. 6/2022 of the Ordinary General Meeting of KGHM Polska Miedź S.A. dated 21 June 2022
regarding the appropriation of profit for the year 2021 in the amount of PLN 5 169 million, the earned profit was
appropriated as follows: as a shareholders dividend in the amount of PLN 600 million (3.00 PLN/share) while the amount
of PLN 4 569 million was transferred to the Company’s reserve capital. The Ordinary General Meeting of KGHM Polska
Miedź S.A. set the dividend date for 2021 at 7 July 2022, and the dividend payment date for 2021 at 14 July 2022.
All of the Company’s shares are ordinary shares.
INVESTOR RELATIONS
The Investor Relations team, on behalf of the Management Board of KGHM Polska Miedź S.A., maintains an open dialogue
with capital market participants pursuant to its policy of ensuring a transparent company and adherence to Warsaw Stock
Exchange Best Practices. For KGHM Polska Miedź S.A., as a global company operating on four continents, it is a priority to
ensure equal access to information to all members of the global capital markets. KGHM Polska Miedź S.A.’s actions are
aimed at maintaining regular communication and transparent dialogue with analysts, institutional and individual investors
as well as of ensuring conformance with regulatory legal obligations. The Company fulfils its disclosure obligations by
publishing regulatory filings and periodic reports via the official reporting system (ESPI).
-60%
-40%
-20%
0%
20%
40%
12/21 01/22 02/22 03/22 04/22 05/22 06/22 07/22 08/22 09/22 10/22 11/22
KGHM
-9%
WIG
-17%
FTSE
mining
-43%
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 44
the Company and the Group in 2022 – translation from the original Polish version
2022 was another year of intense activities by KGHM Polska Miedź S.A. in terms of communicating with investors. During
this period, activities aimed at maintaining relations with investors using a hybrid format were successfully engaged in. The
main actions taken by the Company were as follows:
Domestic and
international
investor
conferences
The Company actively meets with investors and analysts in Poland and abroad during conferences organised by
brokers. In 2022, the Company took part in more than a dozen investor conferences and in about 100 meetings
with portfolio managers and analysts representing investment and pension funds as well as other asset
management firms.
Results
conferences
The Investor Relations Department organises meetings with the Management Board to discuss the financial
results of the Company and Group. In 2022, the publication of financial results was accompanied by results
conferences open to all stakeholders via webcasts in Polish and English, with the possibility of submitting
questions by email. Video recordings of these conferences are available on the Company’s website,
www.kghm.com, in the section Investors.
Capital Market
Days
The Company regularly organises events for the capital market. This type of meeting is aimed at familiarising
investors with the degree of advancement of the development strategy as well as with the current operating and
financial situation of the Group and its individual assets. In September 2022, following a break caused by the
pandemic, the Investor Relations Department, in cooperation with the Individual Investors Association
(Stowarzyszenie Inwestorów Indywidualnych), organised an Individual Investors Day in the Company. The invited
guests visited the mines, the Precious metals Plant at the Głogów Copper Smelter and Refinery, and also the
Tailings Division with its new Southern Quarter. This was followed by presentations by senior management and
a joint panel discussion at the Head Office of KGHM Polska Miedź S.A., where subjects involving finances, strategy,
production and the macroeconomic situation were discussed.
WallStreet 26
conference
In 2022, KGHM Polska Miedź S.A. once again actively participated in the WallStreet conference and was a Main
Partner of the 26th edition of the Conference. During the conference, representatives of KGHM took part in a
panel discussion, gave a lecture and granted an interview to the quarterly „Akcjonariusz” (“Shareholder”). On the
conference website, throughout the event, KGHM’s virtual stand was available.
Investor chats Representatives of the Company are available to individual investors during on-line chats. These are organised
on a regular basis following the publication of the Company’s results.
In 2022, four investor chats were held.
Quarterly IR
Newsletter
The initiative related to publication of the IR Newsletter for Investors was continued, which summarises the most
important quarterly events and is distributed to subscribers via email. The goal of the IR Newsletter is to assure
its recipients with an accurate source of knowledge about KGHM and the global copper market and to facilitate
analysis and assessment of the possibilities associated with investing in the Company’s shares.
KGHM IR profile on
LinkedIn
A KGHM Investor Relations profile was created on the social media platform LinkedIn, which is dedicated to
investors and analysts. This is a place where we share news which might be of interest to capital market
participants.
IR Release
Information for investors and analysts on important events for the Company and Group. The IR Release is a
cyclical announcement published after the disclosure of the quarterly results and distributed by email, and is also
available to all stakeholders on the Company’s corporate website.
In 2022, sell-side reports on KGHM Polska Miedź S.A. were published by nine sell-side analysts based in Poland and eight
based abroad.
Table 12. Brokerages which prepare analytical reports on KGHM Polska Miedź S.A.
Poland
Biuro Maklerskie mBanku
Dom Maklerski BOŚ
Santander Biuro Maklerskie
Dom Maklerski Banku Handlowego
Erste Group
IPOPEMA Securities
Biuro Maklerskie PKO BP
Trigon Dom Maklerski
Biuro Maklerskie Pekao
Abroad
Bank of America Merrill Lynch
Global Mining Research
Goldman Sachs
Morgan Stanley
UBS
WOOD & Company
JP Morgan
EVA Dimensions
REGULATORY FILINGS PUBLISHED AFTER THE BALANCE SHEET DATE
− Announcement on a crossing of the 5% threshold in the total number of votes.
− Information on the Member of the Management Board of the Company appointed as of 21 December 2022 by the
Supervisory Board of the Company.
− Preliminary production and sales data of the KGHM Polska Miedź S.A. Group for December 2022 and for January 2023.
− Update of the Climate Policy by the Management Board of KGHM Polska Miedź S.A.
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 45
the Company and the Group in 2022 – translation from the original Polish version
1.13 KEY PARTNERSHIPS AND SUPPORTED INITIATIVES
GRI 2-28
Currently, representatives of the company participate in the works of 44 entities of this type, including: 26 operating in the
country and 18 operating at the international level (local, European and global).
Table 13. National organisations of which KGHM Polska Miedź S.A. is a member
Year of accession
Professional organisations
Association of Accountants in Poland
1975
Association of Non-Ferrous Metals Engineers and Technicians
2005
Sector organisations
GS1
2002
Economic Chamber for Advanced Technologies
2008
Economic Chamber for Non-Ferrous Metals and Recycling
2009
"Safe Mining" Foundation
2010
Polish Committee of the World Mining Congress Association
2011
Polish Chamber of Chemical Industry
2019
Chamber of Commerce and Industry of Scrap Management
2022
Lower Silesian Hydrogen Valley Association
2022
Group of Joint Social Initiatives MINING OK (GÓRNICTWO OK)
2017
Organisations operating on the energy market
Chamber of Industrial Power Engineering and Energy Recipients
2006
Economic organisations
Polska Miedź Employers' Association
1996
Polish Association of Listed Companies
1997
Polish-Canadian Chamber of Commerce
2012
Polish Management Forum Association OH&S ISO 45000
2018
Association of Entrepreneurs and Employers
2019
American Chamber of Commerce
2019
Polish Economic Association
2021
Polish ISO 14000 Forum Association (environmental management)
2022
Environmental organisations
Polish Chamber of Ecology in Katowice
2002
Polish Eco Development Chamber of Commerce
2011
Understandings, Alliances, Academia
Economic Security of Poland Consortium
2014
Polish Committee for Standardization
2018
MACROKLASTER – Technologies in Public Security
2022
Table 14. International organisations of which KGHM Polska Miedź S.A. is a member
Year of accession
Raw material organisations
International Copper Study Group
1996
London Bullion Market Association
2000
International Copper Association
2007
International Lead and Zinc Study Group
2012
Sector organisations
International Wrought Copper Council
1996
Eurometaux
2005
EPMF - European Precious Metals Federation
2009
Minor Metals Trade Association
2013
CEFIC- ESA (European Sulphuric Acid Association)
2013
Employers’ Association Business&Science Poland
2019
ILA - International Lead Association
2020
Organisations operating on the energy market
Nucleareurope
2022
Mining organisations
Euromines
2005
European Technology Platform on Sustainable Mineral Resources
2010
Consejo Minero Chile
2014
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 46
the Company and the Group in 2022 – translation from the original Polish version
Agreements, Alliances, Academia
European Innovation Partnership
2014
EIT on Raw Materials – European Institute of Innovation and Technology
2018
European Raw Material Alliance
2020
1.14 AWARDS AND DISTINCTIONS
In 2022, the Company and the Group were appreciated and awarded on numerous occasions. The award of the Golden
Card is of the high importance as it was granted once again, for the years 2023-2024. The Central Institute for Labour
Protection – the National Research Institute awarded KGHM with the Card of the Safe Work Leader. The Company received
the first Safe Work Leader Card in 2000, and the first golden card in 2002. Since then, the Company has continuously
maintained its position as a leader in safe work. KGHM informs about the awards and distinctions granted on its website
media.kghm.com/en/awards
.
Selected awards and distinctions awarded to KGHM Polska Miedź S.A. in 2022:
− first place in the non-financial companies category in Rzeczpospolita’s ranking of the Most Important Companies for
Poland;
− second place in the competition of the Humanites Institute for the implementation of the campaign Two Hours for the
Family in 2022;
− the Decoration of Honour “Meritorious for Polish Culture” award – distinction awarded by the Ministry of Culture and
National Heritage and the Union of Entrepreneurs and Employers;
− "Ace" of the Polska Miedź Employers' Association - in the “Best Practices” category, the Communication Department of
KGHM Polska Miedź S.A. was awarded for the CSR policy in the implementation of social programs. Whereas, in the
"Legislation" category, the award went to the Regulatory Department of KGHM for the highly professional level of
submitted opinions and expert opinions;
− 2022 Super Business Golden Laurel award in the “Innovation” category;
− Golden Emblem of the Highest Quality Programme. The award in the QI ORDER category for anti-corruption
management system according to ISO 37001;
− 'Trustworthy Employer' in the 'Education' category for its activities and cooperation with institutions, schools and
organisations involved in science, training and education of young people;
− ‘Patron of Culture' - Award from the Minister for Culture and National Heritage;
− Award of the Copper Belt NGO Academy for its work for the people of the region;
− The Best Annual Report 2021 organised by the Institute of Accounting and Taxes – the distinction was awarded to the
Consolidated Financial Statements of KGHM Polska Miedź S.A. Group for 2021;
− Award in the “National Champions” ranking, organised by Polityka Insight.
Awards and distinctions in 2022 for activities related to communicating with investors and being present on the
capital market:
− Best Investor Relations amongst individual investors – 1st place for the KGHM IR Team as judged by individual
investors, in a survey on IR quality by the newspaper „Parkiet” and the Chamber of Brokerage Houses,
− The Best of the Best – KGHM Polska Miedź S.A. was again awarded the title The Best of The Best in the competition
„The Best Annual Report 2021” organised by the Institute of Accounting and Taxes,
− Partner 25-lecia - the Individual Investors Association granted KGHM Polska Miedź S.A. the award „Partner 25-lecia”
(25-year partner) during WallStreet 26, Poland’s largest meeting of individual investors.
Moreover, the KGHM Polska Miedź Foundation received an award for its support for the " “Help Poles in the East Campaign”.
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 47
the Company and the Group in 2022 – translation from the original Polish version
2 CORPORATE GOVERNANCE
Corporate
governance
Strategy ESG
Risk
management
Human rights Supply chain
2.1 MANAGEMENT STRUCTURE OF KGHM S.A. AND THE KGHM S.A. GROUP
GRI 2-9 GRI 2-19 GRI 2-20 GRI 2-21
A description of the management structure of KGHM Polska Miedź S.A. and of the KGHM Polska Miedź S.A. Group, including:
− the principles for appointing and dismissing the Members of the Management Board,
− the Management Board’s principles of functioning,
− a breakdown of the duties of the Members of the Management Board,
− biograms of the Members of the Management Board,
− changes in the composition of the bodies of the Parent Entity,
− rights of the Management Board as regards the issuance or buyback of the Company’s shares,
− the principles for appointing and dismissing the Members of the Supervisory Board,
− the Supervisory Board’s principles of functioning,
− the duties of the Members of the Supervisory Board and their independence, and
− the Committees of the Supervisory Board,
are described in detail in subsection 2.15. Corporate Governance statement.
REMUNERATION OF THE PARENT ENTITY’S BODIES AND OF OTHER KEY MANAGERS OF THE GROUP
Information on remuneration of Members of the Management Board KGHM Polska Miedź S.A.
Detailed principles for setting the terms of remuneration of the Management Board Members were established by the
Supervisory Board in accordance with "Policy of remuneration of Management Board and Supervisory Board Members of
KGHM Polska Miedź S.A.” in the templates for the management services contracts for the Company’s Management Board
(set forth in the form of resolutions, separately for the President of the Management Board and for the Vice Presidents of
the Management Board).
The management services contracts were signed for the time Members of the Management Board serve in the Management
Board, within one term. This means that the termination of a contract will occur on the final day on which the function is
served, with no notice period and without the need to take additional actions.
Total remuneration received on their basis consists of a fixed part in the form of basic monthly remuneration, as well as
variable remuneration representing supplementary remuneration for the Company’s financial year.
The fixed monthly remuneration for individual members of the Company’s Management Board amounts to fifteen times
(in the case of the President of the Management Board) and fourteen times (in the case of the Vice Presidents of the
Management Board) of the average monthly salary in the corporate sector, excluding payments from profit in the fourth
quarter of the previous year, announced by the President of the Central Statistical Office.
Variable remuneration depends on the level of achievement of the management goals set by the Supervisory Board for a
given financial year and may not exceed 100% of the annual fixed remuneration of the given Manager. In the case of a
Manager functioning in the position for a period of less than one reporting year, with the provision that the contract was
performed for a period of at least three months, variable remuneration is calculated proportionally.
Management Goals of the Management Board of KGHM Polska Miedź S.A. for 2022
Based on the Statutes of KGHM Polska Miedź S.A., the Bylaws of the Supervisory Board, the management services contracts,
resolution no. 8/2016 of the Extraordinary General Meeting and the Act on the terms of setting the remuneration of
individuals managing certain companies, the Supervisory Board set Management Goals for the Management Board of
KGHM Polska Miedź S.A. for 2022.
Individual groups of goals describe:
− management goals whose execution is a contigent condition to receive variable remuneration,
− management goals for individual members of the Management Board per the duties assigned,
− management goals involving the achievement of key strategic management projects.
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 48
the Company and the Group in 2022 – translation from the original Polish version
Payment of variable remuneration is made following the submission by individual members of the Management Board of
reports on the achievement of the management goals. Payment of the variable part is contingent on the achievement by a
manager of the aforementioned management goals, approval of the Management Board’s report on the activities of the
Company and the Company’s financial statements for the prior financial year, and the granting of approval by the General
Meeting for the given Management Board Member’s performance of duties. On this basis, the Supervisory Board evaluates
the execution of the aforementioned goals and sets the amount of the variable remuneration due.
Potentially-due remuneration of Members of the Management Board of KGHM Polska Miedź S.A. for 2022
Table 15. Potentially-due remuneration of Members of the Management Board of KGHM Polska Miedź S.A. for 2022
Last name
First
name
Position
Potentially-due variable
remuneration for 2022
(PLN thousand)
Zdzikot
Tomasz
Member of the Management Board - President of the Management Board
360.18
Świder
Marek
Member of the Management Board - Vice President of the Management Board
833.17
Wodejko
Mateusz
Member of the Management Board - Vice President of the Management Board
0
Kidoń
Mirosław
Member of the Management Board - Vice President of the Management Board
0
Pietrzak
Marek
Member of the Management Board - Vice President of the Management Board
1 045.09
Chludziński
Marcin
Member of the Management Board - President of the Management Board
874.02
Kensbok
Andrzej
Member of the Management Board - Vice President of the Management Board
975.42
Bugajczuk
Adam
Member of the Management Board - Vice President of the Management Board
696.73
Świderski
Dariusz
Member of the Management Board - Vice President of the Management Board
0
Gruza
Paweł
Member of the Management Board - Vice President of the Management Board
635.77
Paluchniak
Jerzy
Member of the Management Board - Vice President of the Management Board
0
The management services contracts also regulate issues involving the granting of other benefits deriving from the
Remuneration Policy:
− the possibility of joining the Employee Pension Program;
− the possibility for the Management Board Member’s life insurance to be covered by the group life insurance policies in
place in the Company;
− local housing appropriate to the Function served (in respect of which the Company covers the cost of such housing to
the net amount of PLN 2 500);
− a company car;
− incurring or refinancing costs of individual training for the Management Board Member related to the Contract in
question and contractual obligations, in each case with the prior consent of the Chairman of the Supervisory Board of
the Company;
− civil liability insurance for the Management Board Member related to serving in the function; and
− other benefits, in particular such as those ensured by the Company to the Company’s management staff in appropriate
internal regulations or resolutions of Company bodies – under condition that the principles for the granting of such
benefits to the Management Board Member, or their utilisation of such, are set forth by the Supervisory Board in
resolutions.
The Contracts also provide that if the Management Board Member serves as a member of a body in a subsidiary of the
Company within the Group, the Management Board Member will not receive additional remuneration for this function,
apart from the remuneration provided for in the management services contract. In addition, the Management Board
Member is obligated to inform the Supervisory Board of the possession of shares in publicly-listed companies and to gain
its consent for accepting a position or serving in a function in the body of another commercial law company – excluding
companies of the Group, the acquisition or possession of shares in another commercial law company, as well as performing
work or services on behalf of other entities based on an employment contract, mandate contract or based on any other
legal relationship.
The contracts signed with the Members of the Management Board regulate the question of compensation in the case of
termination, with or without notice, of the management services contract for reasons other than breach of the contract’s
basic obligations. The contracts foresee that the Company will provide severance pay of no higher than three times the
amount of the fixed part of remuneration (if the contract was in force for at least 12 months).
The contracts with the Members of the Management Board – both during the period of employment as well as following
the period of employment – deal with the question of forbidding competition. In particular, they establish that for a period
of six months from the date when employment in the function ceases, the Management Board Member is not allowed to
engage in any competing activities. For adherence to the clause on forbidding competitive activities, KGHM pays the
Management Board Member compensation throughout the period during which competitive activities are banned in the
amount of 50% (and in the case of the President of the Management Board 100%) of the monthly fixed remuneration. The
payment of compensation is conditional on the Management Board Member’s having served in the function for at least six
months and having provided the Company with an appropriate written declaration.
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 49
the Company and the Group in 2022 – translation from the original Polish version
Information on the remuneration of Members of the Supervisory Board of KGHM Polska Miedź S.A.
The remuneration of members of supervisory boards was set on 7 June 2019 by the General Meeting based on the Act
dated 9 June 2016 on the terms of setting the remuneration of individuals managing certain companies. According to "Policy
of remuneration of Management Board and Supervisory Board Members of KGHM Polska Miedź S.A.” the amount of
monthly remuneration of individual members of the Supervisory Board depends on the function served and is set as 2.2x
or twice the average monthly remuneration in the corporate sector excluding payments from profit in the fourth quarter
of the previous year, announced by the President of the Central Statistical Office. Members of the Supervisory Board are
not remunerated for any month in which they did not attend any of the formally convened meetings for unjustified reasons,
which are assessed and qualified by the Supervisory Board.
Apart from the above-mentioned remuneration, Members of the Supervisory Board are not entitled to receive any
additional remuneration components, including bonuses or other cash benefits.
According to the Commercial Partnerships and Companies Code, the Company also covers or reimburses costs related to
participation in the work of the Supervisory Board.
Detailed information on the amount of remuneration and other benefits for Supervisory Board and Management Board
members may be found in the "Report on the remuneration of members of the Management Board and Supervisory Board
KGHM Polska Miedź S.A. for 2022”.
General information on the adopted and applied remuneration system for key managers of KGHM Polska Miedź
S.A.
The principles of the remuneration of key managers of KGHM Polska Miedź S.A. – the Executive Directors of the Head Office
and the Executive Directors of the Company’s divisions – is set by the Company’s Management Board.
The employment contracts concluded with the above-mentioned directors provide that they are entitled to the following
components of remuneration and benefits:
− basic monthly remuneration, which amounts – depending on the function served – from 9- to 12-times the average
monthly remuneration in the corporate sector, excluding payments from profit, in the fourth quarter of the previous
year, announced by the President of the Central Statistical Office.
− an annual bonus up to 40% of the annual fixed part of remuneration, paid in accordance with the principles for bonuses
based on:
− part A – evaluation of the degree of achievement of business KPIs and individual goals (up to 20%) - the system is
based on collective and individual KPIs, the basis of which are the key performance indicators of the Management
Board and goals resulting from the Company's strategy;
− part B - evaluation of the work of a given director (up to 20%) reflecting among others their attitude, initiative,
engagement, innovation and creativity;
− additional benefits, such as life insurance, the Employee Pension Program, a Health Care Package,
− a company car, and
− severance pay of no higher than three times the amount of the basic monthly remuneration, in the case of termination,
of the contract by the Employer prior to the contractual period (if the contract was in force for at least 6 months).
2.2 CORPORATE GOVERNANCE
GRI 2-24
Legal basis and corporate governance regulations, as well as a set of corporate governance principles and the scope of its
application are included in section 2.15. Statement on the application of Corporate Governance
.
POLICIES IN FORCE WITHIN KGHM POLSKA MIEDŹ S.A. AND THE KGHM POLSKA MIEDŹ S.A. GROUP
In the KGHM Polska Miedź S.A. Group the following policies are in force, introducing global, unified standards which have
been adapted to the laws applicable in all of the jurisdictions in which the KGHM Polska Miedź S.A. Group operates.
Information on the implemented and applied standards and operating principles of the KGHM Polska Miedź S.A. Group
may be found on the corporate website of KGHM Polska Miedź S.A. „Policies and Codes”:
https://kghm.com/en/investors/esg/policies-and-codes
. Following is a list of only some of them, representing a general
framework for the functioning of basic systems in the management processes of the KGHM Polska Miedź S.A. Group.
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 50
the Company and the Group in 2022 – translation from the original Polish version
Table 16. Selected Policies in force within KGHM Polska Miedź S.A. and the KGHM Polska Miedź S.A. Group
Document name
Document description
Compliance Management
Policy in the KGHM Polska
Miedź S.A. Group
The Compliance Management Policy in the KGHM Polska Miedź S.A. Group serves as the framework of
the compliance management system and an organisation-wide approach, based on recognised
international standards and industry best practices. The adopted solution to the creation of the
compliance system has been tailored to the specific nature of the Group and is an important business
tool used to prevent the occurrence of events that could result in the imposition of sanctions. It enables
the systematic identification, assessment and analysis of the risk of non-compliance or possible non-
compliance with generally applicable law, internal corporate regulations and voluntarily adopted legal
obligations and standards, including ethical standards, in order to design and implement actions to
ensure compliance.
Competition Law Policy in
the KGHM Polska Miedź
S.A. Group
The purpose of the Competition Law Policy is to establish an operational framework for a system that
will enable the maintenance of conformity with the competition law and is applicable in all the countries
in which the KGHM Polska Miedź S.A. Group operates. Therefore, the Group undertakes an obligation to
compete on the markets in a legal and ethical manner, as well as to prevent, counteract and detect
violations in accordance with the applicable legal regulations.
Procurement Policy in the
KGHM Polska Miedź S.A.
Group
The aim of the Procurement Policy is to establish the overarching principles that should be followed by
all participants of the procurement process in the KGHM Polska Miedź S.A. Group, as well as the general
regulations of this process. The Policy specifies supervision measures limiting the risk of irregularities in
the procurement process.
Anti-corruption Policy in
the KGHM Polska
Miedź S.A. Group
The Anti-corruption Policy establishes basic principles and standards, whose goal is to ensure
compliance with the anti-corruption regulations applicable in the jurisdictions in which the KGHM Polska
Miedź S.A. Group operates and voluntary commitments to counteract corruption. The Group applies a
zero tolerance policy towards corruption and bribery. The Policy includes a declaration by the top
management of their full commitment to activities related to the maintenance and continuous
improvement of the implemented Anti-Corruption Management System, compliant with the
requirements of the PN-ISO 37001:2016 standard.
Responsible Supply Chain
Policy in the KGHM Polska
Miedź S.A. Group
The Responsible Supply Chain Policy is aimed at guaranteeing the selection only of responsible suppliers
and at ensuring that the goods and services purchased by the KGHM Polska Miedź S.A. Group are not
contributing to financing terrorism, and are manufactured or provided in accordance with basic human
rights, labour standards, environmental protection and counteracting corruption.
Security Policy in the
KGHM Polska Miedź S.A.
Group
The Security Policy sets forth joint principles and goals for the entities and organisational units of the
KGHM Polska Miedź S.A. Group related to safety and preventing losses. Pursuant to its clauses, all of the
Group’s employees act in accordance with basic principles: professional integrity, diligence in the
discharge of professional duties, loyalty towards the employer, a results oriented approach, courage,
teamwork, accountability, mutual responsibility for safety and preventing losses and avoidance of
actions harmful to the employer.
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 51
the Company and the Group in 2022 – translation from the original Polish version
2.3 STRATEGY OF KGHM POLSKA MIEDŹ S.A.
STRATEGY DESCRIPTION – BASIC ELEMENTS OF THE STRATEGY OF KGHM POLSKA MIEDŹ S.A.
On 14 January 2022 the Company’s Supervisory Board approved the „Strategy of the KGHM Polska Miedź S.A. Group to the
year 2030 with an outlook to 2040” as presented by the Management Board. The Company’s Strategy reflects the
macroeconomic environment and the geopolitical situation affecting the mining sector. A special place in the planned
activities is occupied by the green transformation based on renewable energy and modern technologies.
The Strategy does not alter the Company’s existing approach to its business activities. The Parent Entity continues to act
responsibly and to think long-term about the Company’s future. At the same time the Company’s mission and vision remain
unchanged. The goals of the Strategy are ambitious, but attainable. To reflect the changes in the environment, the four
existing strategic development directions (Elasticity/flexibility, Efficiency, Ecology and E-industry) were updated to include a
fifth element – Energy.
Diagram 8. Mission, Vision and Development Directions of the Strategy of KGHM Polska Miedź S.A.
This „5E” Strategy is now comprised of 5 pillars (Core business, New activities, Supporting activities, Health, Prosociality),
based on 5 updated development directions.
Diagram 9. 5 Pillars based on 5 updated development directions in the Strategy of KGHM Polska Miedź S.A.
To always have copper
VISION
MISSION
#5E
DEVELOPMENT
DIRECTIONS
Energy
Ecology,
Safety and
sustainability
Efficiency
Elasticity/
flexibility
E-industry
To use our resources efficiently to become the leader in sustainable development
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 52
the Company and the Group in 2022 – translation from the original Polish version
These pillars have been assigned individualised main goals as well as key performance indicators. The base year of 2020
was identified consciously and intentionally to ensure consistency with the base of the Climate Policy as well as to show the
effects over a full decade. The key assumptions of the pillars are presented below.
I Pillar - Core business, comprised of the following elements:
− advanced technology and R&D creating an intelligent production line,
− optimisation of mine production domestically and abroad ensuring long-term operational continuity,
− leadership in the development of low-emissions mining capacity as regards new metals and minerals deposits in Poland,
− development of metallurgy utilising efficient processing based on Circular Economy principles.
Main goal
Goals for 2030:
Base level (2020)
Strengthen the
position of the KGHM
Polska Miedź S.A.
Group as a global
player in the mining
and metallurgy sector
1. Domestic copper production – approx. 600 thousand tonnes of electrolytic
copper (including production based on a higher amount of purchased
materials and copper from recycling)
approx. 560 kt of
electrolytic copper
2. International copper production – Higher production by the international
assets of KGHM by extending their life-of-mine, developing assets in the
mine projects portfolio held and increasing the resource base thanks to
advancement of the International Exploration Strategy
approx. 150 kt of
payable copper
3. Silver production – Maintain the position amongst the world’s top-three
producers of silver (approx. 1200 tonnes of silver annually)
approx. 1 320 tonnes
of silver
4. Profitability – 10.2% - Average ROCE (return on capital employed) from the
last 3 years
8.5%
5. Cost competitiveness – 3rd decile
4th decile
II Pillar - New activities, comprised of the following elements:
− To be one of the leading, environmentally-friendly electricity producers, supporting Poland’s energy transformation.
− Expansion along the value chain by developing the production of new products from copper and other metals (including
initiating relationships with partners in Poland and abroad).
Main goal Goals for 2030: Base level (2020)
Diversification and
aiming at
sustainable
development by
building internal
generation capacity
from low-emission
sources
1. Energy produced – min. 50% of consumption
22% of
consumption (694
GWh)
2. A reduction in estimated CO
2
emissions resulting from electricity
consumed – 1.0 million tonnes of eCO
2
1.9 million tonnes
of eCO
2
(in 2019).
3. Diversification of the commercial offer in terms of metals (increase
in share of new half-finished copper products and highly
processed copper products (OFE-Cu wire, OFE-Cu granules) and
other metals in the total sales of the Group) – 10%
2%
III. Pillar - Supporting activities, comprised of the following elements:
− To be a major supplier of Smart Mining solutions for products and services sold in Poland and globally.
− Ensure the financial stability of the KGHM Polska Miedź S.A. Group and implement systemic solutions aimed at
enhancing its value.
Main goal
Goals for 2030:
Base level (2020)
Redefine the way
that existing assets
supporting the core
business are
utilised
1. Recycling of scrap - approx. 350 thousand tonnes of copper scrap
(copper-bearing materials of varied metals % content)
124 kt of copper
scrap
2. Revenues from sales on foreign markets of selected Group
companies - using 2020 as the base year = 100%: an increase by
2030 of 147% versus the base year for the companies KGHM
Zanam S.A., Nitroerg S.A. and PeBeKa S.A., and 163% versus the
base year for the company DMC Mining Services Ltd.
2020 as base level =
100%
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 53
the Company and the Group in 2022 – translation from the original Polish version
IV. Pillar - Health, comprised of the following elements:
− Development of activities promoting health and health resorts (spas) as a contribution to extending the length and
quality of life for citizens.
Main goal Goals for 2030: Base level (2020)
Development of the
spa assets held as a
contribution to
extending the
length and quality
of life for society as
a whole
1. LTIFR – the goal of 0 accidents
LTIFR – 7.3
2. TRIR – the goal of 0 accidents
TRIR – 0.52
3. Level of support for the area of Health carried out by the KGHM
Polska Miedź Foundation – approx. PLN 7 million
approx. PLN 11.5
million
17
V. Pillar - Prosociality, comprised of the following elements:
− Growth based on the idea of sustainable development and safety.
Main goal
Goals for 2030:
Base level (2020)
Growth based on
the idea of
sustainable
development and
safety
Support for the fair transformation of the mining sector.
Not applicable
Number of volunteer projects advanced – 30.
25
Level of support for the arts, sport and health approx. PLN 48
million.
approx. PLN 38.5 million
DEVELOPMENT DIRECTIONS OF THE KGHM POLSKA MIEDŹ S.A. GROUP
Policy regarding the development directions of the KGHM Group
During the reporting period being discussed, policy regarding the development directions of the KGHM Group was
continued. Further actions were also taken aimed at adapting the Group’s organisational functioning model to the business
model of KGHM Polska Miedź S.A. and the market environment. In terms of the domestic companies, development policy
was also aimed at cooperation between the Group’s entities and at eliminating overlapping areas of competence in terms
of individual entities.
With respect to implementation of the Strategy of KGHM Polska Miedź S.A., as regards the Group’s international companies,
a variety of reorganisational actions were undertaken aimed at integration of KGHM INTERNATIONAL LTD. in Canada with
the Company’s activities in Poland and the transferal of some of the business functions of KGHM INTERNATIONAL LTD. to
Poland. In 2022, these actions were continued, mainly in terms of developing uniform internal regulations, procedures and
the standardisation of solutions in individual areas of the Company’s activities. In addition, internal actions were undertaken
aimed at advancing development scenarios for individual international assets in the Company’s portfolio. On 26 April 2022
an Agreement to sell the shares of S.C.M. Franke was signed. As at the date the agreement was signed, Minera Las Cenizas
became the owner and operator of the Franke mine.
Intentions regarding equity investments
In the case of the companies in Poland, the primary development goal is to ensure continuity and safe working conditions
in the core business of KGHM Polska Miedź S.A. and at integrating the KGHM Group around the idea of sustainable
development, including the implementation of development initiatives under the Circular Economy aimed at limiting the
environmental footprint. As regards the international part of the Group, the Company is focused on maximising the value
of the portfolio of assets owned.
Investment goals
Investment projects planned and approved for advancement in 2022 support the achievement of strategic goals in all areas
of the Strategy. Maintaining cost-effective domestic production in 2022 was possible by continuing and bringing into
operation key investments, such as:
− outfitting the mines along with the construction of conveyor belts;
− replacement of mining machinery;
− construction of mine de-watering systems;
− construction of air cooling systems;
− construction of the Tailings Segregation and Compacting Station at the Żelazny Most Tailings Storage Facility;
− modernisation and renovation during the maintenance shutdown of the Głogów II Copper Smelter and Refinery.
17
Due to the epidemic situation, the area of activity of the KGHM Polska Miedź Foundation - „Health and Safety” was a particular priority in
2020, thus the significantly higher financing in this area in the base year.
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 54
the Company and the Group in 2022 – translation from the original Polish version
Taking into consideration the development of KGHM Polska Miedź S.A. by enhancing the efficiency and flexibility of the
KGHM Group in terms of its Polish assets, investments which will be advanced include:
− the Deposit Access Program (Deep Głogów along with access and development tunnels),
− searching for and exploring deposits in areas under exploration concessions,
− development of the Żelazny Most Tailings Storage Facility above a crown height of 195 m a.s.l.,
− documentation for the Hybrid Legnica Smelter and Refinery,
− construction of photovoltaic power plants.
Moreover, following the idea of sustainable development, in 2022 investment projects were continued, such as those
adapting the metallurgical installations to BAT conclusions for the non-ferrous metals industry and to restrict emissions of
arsenic (BATAs). In 2022, a further six installations were brought into operation.
In addition, the Company continued to carry out work on new, intelligent technologies and production management
systems, based on online communication between elements of the production process and advanced data analysis, in
accordance with the KGHM 4.0 Program concept.
ADVANCEMENT OF THE STRATEGY IN 2022 - BEST PRACTICE AND KEY ACHIEVEMENTS IN THE IMPLEMENTATION OF
THE STRATEGY
Best practice in the Strategy of KGHM Polska Miedź S.A.
In the Strategy implementation process, KGHM takes advantage of the best practices developed over years of experience.
The Company ensures that the Strategy is comprehensive and complementary. It covers all of the Company’s activities and,
for many years now, it has broadly addressed sustainable development and ESG topics.
Because of the dynamic changes in the macroeconomic environment that are strategically important for the copper mining,
smelting and processing industry, KGHM has been performing comprehensive and regular analyses of its surroundings and
identifying megatrends, while at the same time running its own internal reviews of the Business Strategy. Based on the
results of these activities, decisions are made to continue or refresh the accepted strategic assumptions. The whole
organization is engaged in the process of operationalizing and advancing the Strategy. The Company makes sure that the
flexible business Strategy is a living organism responding to changes in real time and adapting to market challenges, while
also maintaining consistency in long-term activities. KGHM uses a dedicated internal procedure to also monitor and oversee
the Strategy implementation work through the lens of Strategic Programs, which are gradually implemented in successive
periods. The Strategic Programs are aimed at achieving the key objectives of the KGHM Strategy and allow attention to be
focused on the tasks that create the most value in the Company.
Key achievements in advancing the Strategy of KGHM Polska Miedź S.A.
During the reporting period being discussed, KGHM Polska Miedź S.A. advanced the „Strategy of the KGHM Polska Miedź
S.A. Group to the year 2030 with an outlook to 2040”, approved in January 2022. Based on the adopted Strategy, the
Company endeavoured to maintain stable production in its domestic and international assets, and a level of costs
guaranteeing financial security while ensuring safe working conditions and minimising its impact on the environment and
surroundings, pursuant to the idea of sustainable development. KGHM is advancing a variety of initiatives and strategic
programs which are crucial to ensuring the continuity of the core business and development.
In the context of the impact of the Russian aggression against Ukraine on the implementation of the Strategy, no significant
negative consequences have been recorded and neither they are expected. The risk of disrupting the business continuity
of the Group is assessed as low. Rising prices of goods and services may turn out to be potentially negative, which may
result in an increase in the overall costs of implementing the Strategy. Consequently, the Company is intensifying mitigating
actions, among others: efforts to ensure access to its own, low-emissions energy sources, the introduction of instruments
to enhance financial security and the realisation of a broad spectrum of efficiency initiatives.
Table 17. Key achievements of the KGHM Polska Miedź S.A. Group in advancing the strategic activities in individual
strategic directions of development in 2022
Efficiency
Production in Poland and
abroad (accrued)
− Mined production in Poland amounted to 442.7 thousand tonnes of copper in ore with a C1 cost
of 5 247 USD/t (2.38 USD/lb) of payable copper
− Payable copper production abroad:
Sierra Gorda: 90.8 thousand tonnes (on a 55% basis),
Robinson: 46.8 thousand tonnes,
Carlota: 4.1 thousand tonnes,
Franke: 2.8 thousand tonnes (production to date of sale of the mine, i.e. 26 April 2022),
Sudbury Basin: 2.5 thousand tonnes.
− Metallurgical production of KGHM Polska Miedź S.A. amounted to 586 thousand tonnes.
−
Production of silver amounted to 1 327 tonnes
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 55
the Company and the Group in 2022 – translation from the original Polish version
Continued advancement of
the Deposit Access Program
− The GG-1 shaft reached a depth of 1 348 m. Construction and installation work is underway to
prepare the shaft to serve a ventilation function during the transition period. Work is underway on
designing final facilities to ultimately serve in a material and personnel transport function.
− Work continues on tenders aimed at tasks related to building the GG-2 „Odra” Shaft, involving
shaft site drilling and research
− The task „Area management concept for the Gaworzyce shaft” was completed, finalising the
purchase of property for the investment
− The task „Area management concept for the Retków shaft” was completed
− 41 kilometers of tunnelling were excavated in the Rudna and Polkowice-Sieroszowice mining
areas. All of the work carried out under the Mine Projects Group enables the successive opening
of new mining areas
− Work continued on building and developing the Surface-based Air Conditioning Station at the GG-
1 Shaft in terms of the Central Air Conditioning System. The technological start-up of equipment is
underway. The process commenced of developing to 40MW power capacity
− The technical handover of the first part of the Ice Water Transportation System was completed.
Construction continues on building part 2 of the System
Development of the Żelazny
Most Tailings Storage Facility
− Southern Quarter: operational permits were obtained. Total advancement of the physical scope of
work for the Southern Quarter together with slurry, water and power infrastructure reached 95%.
Tailings are being deposited in the Southern Quarter
− Tailings Segregation and Compacting Station (TSCS): work was completed on assembling the
technological part of the Station. Work continues on developing infrastructure in the vicinity of the
station. Total advancement of the physical scope of work on the TSCS is 85%. The process of
segregation and compacting is underway for the purpose of deposition of waste in the Southern
Quarter as well as a separate process of building up the dam in the Southern Quarter
Maintenance shutdown of
the Głogów II Copper Smelter
and Refinery
− The Głogów II Copper Smelter and Refinery was shut down for maintenance after four years of the
production line’s operation. On 3 July 2022 concentrate was fed to the flash furnace. The
maintenance shutdown was shorter than initially planned by 8 calendar days. In the fourth
quarter of 2022, the process of settling investment projects carried out during the maintenance
shutdown of the Głogów II Copper Smelter and Refinery was completed
R&D initiatives to enhance
the efficiency of the core
production business
− R&D activities were carried out, aimed at seeking innovative solutions mainly for the Core
Production Business of KGHM, which have a high potential for implementation and
commercialisation. Cooperation was engaged in with academic and research bodies, universities
and business partners
− The second edition of the CuValley Hack Hackathon was held under the Dolina Miedziowa
initiative, aimed at seeking innovative, ready-to-implement solutions
−
Information technology to collect and transfer knowledge was developed
Use of external financing for
R&D&I projects
− Advancement of European research projects continued and applications were submitted for the
subsidising of initiatives under the Horizon Europe and KIC Raw Materials Programs, and a list of
potential subjects of interest to the Company was prepared under efforts to obtain future
financing. In 2022, the Company advanced a total of 12 projects using subsidies in the amount of
EUR 2.84 million
Intellectual property
− Proceedings are underway to obtain legal protection for selected trademarks
− The word-figurative trademark „KGHM” was registered on the territory of China
− Protection was prolonged for a European patent, validated in 16 European countries, to which
KGHM Polska Miedź S.A. is jointly entitled under the CuBR project being advanced. Two inventions
were announced to the European Patent Office
− In the Patent Office of the Republic of Poland protection was prolonged for six patents, and four
inventions, a utility model and an industrial model were announced. The Patent Office of the
Republic of Poland also granted a patent for two inventions
− Proceedings are underway in the Patent Office of the Republic of Poland for the granting of
patents for five inventions announced for protection
Flexibility
Extension of the value chain
− Detailed technical and economic analyses continued with respect to the development of copper
processing in the Cedynia Wire Rod Plant Division. A concept to build a dedicated installation was
prepared. It is assumed that further design work will continue to enable determination of the
investment’s target parameters
Hybrid Legnica Smelter and
Refinery
− A preliminary business model for the Hybrid Legnica Smelter and Refinery was developed,
assuming flexible work by the facility based on own copper concentrate and purchased copper-
bearing materials, including concentrates and scrap. Design documentation is being prepared for
the modernisation of the production line at the Legnica Copper Smelter and Refinery as well as
construction of the Scrap Turnover Base at the Legnica Copper Smelter and Refinery
Exploration projects with
respect to exploring for and
evaluating copper ore
deposits
− In the concession areas „Retków-Ścinawa” and „Głogów” geological work continued. At the start of
November 2022 the concession-granting body, at the request of KGHM, confirmed geological
documentation for another copper ore deposit called „Retków-Grodziszcze”. The „Retków-
Grodziszcze” deposit was separated from the exploration concession „Retków-Ścinawa”. In March
2022 the concession for the „Głogów” area was altered
−
Geological work continued within the Synklina Grodziecka and Konrad concession areas
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 56
the Company and the Group in 2022 – translation from the original Polish version
−
Analytical and conceptual work was carried out on synergies in concession work between KGHM’s
neighbouring geological concession areas in the „Bytom Odrzański” concession
− Within the Kulów-Luboszyce concession area exploration work continued using surface-based
drillholes
− In the Radwanice concession area, evaluation work was carried out using underground mine
workings, and surface-based geophysical research was performed
Realisation of exploration
projects with respect to
exploring for and evaluating
other deposits
− On the terrain of the Puck concession, work began on subsequent drillholes. The concession was
altered – an addition was approved to the Geological Work Project
− In terms of the „Nowe Miasteczko” concession, a concept was developed to conduct further
geological work. A request to alter the concession was submitted to the concession-granting body
Continuation of
development projects in the
international assets
− Sierra Gorda: there were no substantial interruptions in the operations. Maintenance and
conservation work was carried out according to plan, and no significant production shutdowns
were recorded. In February 2022 a transaction was concluded for sale of all of the shares in the
joint venture company Sierra Gorda S.C.M. by Sumitomo Metal Mining Co., Ltd. and Sumitomo
Corporation to the Australian mining group South32
− Sierra Gorda Oxide: design work continued aimed at determining the subsequent direction of
development of the project by the owners (Sierra Gorda S.C.M.). At present most of the oxide ore
planned for processing has already been excavated and is currently stored near the site of the
future copper leaching and recovery (SX-EW) plant
− Victoria project: engineering work continued along with actions related to preparing selected
elements of the infrastructure for further development of the project, as well as actions aimed at
maintaining good relations and cooperation with key stakeholders in the project
CuBR venture
− Under the four editions of the Venture competition, co-financed by the National Centre for
Research and Development (NCBR) and KGHM, 25 R&D projects having a total value of over PLN
180 million were launched. 6 projects are currently being advanced while 19 projects have been
completed
Implementation Doctorates
Program
− Advancement of the Implementation Doctorates Program for employees of the KGHM Group was
continued. At the end of the fourth quarter of 2022, 28 doctoral students from the two editions
had participated in the program
Financial stability
− Basing the KGHM Group’s financing structure on long-term instruments: in 2022 the KGHM Polska
Miedź S.A. Group was fully capable of meeting its financial obligations. The financial needs of
KGHM Group companies were met by using intra-group cash transfers. This process is mainly
based on managing the KGHM Group’s current liquidity based on cash pooling (the system was
modified in 2022 to optimise the process of exchanging currencies by the domestic companies of
the KGHM Group), as well as on long-term owner loans and active use of guarantees and letters of
credit
− Shortening the cash conversion cycle: actions were taken aimed at optimising the receivables
recovery period and the payables payment period, matching them to current needs and market
conditions, reverse factoring and factoring were used for this purpose, as needed
− Effective management of market and credit risk in the KGHM Group: in terms of advancing the
strategic plan of hedging KGHM Polska Miedź S.A. against market risk, in 2022 put options were
purchased on the currency market for USD 205 million of planned revenues from sales, with
maturities falling from April 2022 to December 2022. Actions were also continued aimed at
reducing exposure to credit risk by ongoing monitoring of receivables, the evaluation and
monitoring of the financial condition of customers, setting credit limits, securing receivables and
non-recourse factoring
Ecology, safety and sustainable development
Continuation of the
Occupational Health and
Safety’s Improvement
Program in KGHM
Polska Miedź S.A.
− LTIFR ratio of KGHM Polska Miedź S.A.: 5.05 (lower than the amount recorded for the same period
of 2021 by 0.59). Number of workplace accidents: 149 or lower by 16 compared to the 12 months
of 2021. TRiR ratio for the international assets (total for the employees of the KGHM
INTERNATIONAL LTD. Group and Sierra Gorda S.C.M. as well as contractors for these entities) in
2022: 0.34
− The Company was awarded the title Gold Card Leader of Workplace Safety for the years 2023 –
2024 for achievements in improving OHS
− The Workplace Safety Management System PN ISO 45000:2018 introduced in the Company was
positively assessed by external auditors during a periodic review
− Cooperation with domestic and international academic institutions and opinion makers was
engaged in, among others partcipation in work on new EU regulations regarding hygienic and
biological standards, in particular for metals and fumes from diesel engines; in cooperation with
the State Labour Inspectorate, the first national Polish conference called „Diesel engine fumes in
underground mining based on the experience of KGHM Polska Miedź S.A.” was organised;
partcipation in interdisciplinary work and international problem teams
− An active model of coordination of the work of OHS units was applied. 15 inspections were
performed in the Divisions as well as two behavioural audits. Active forms of education and
employee support were prepared
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 57
the Company and the Group in 2022 – translation from the original Polish version
E-Industry
Continued advancement of
projects to automate the
production lines of the
Mining Divisions of KGHM
Polska Miedź S.A.
− Work continued related to the electromobility of mining machinery. Work continued connected
with testing electric battery-powered mining machinery. In the Lubin mine, following the
completion of tests, a mobile bolting rig was brought into operation, while tests continue on a
mobile drilling rig. Certification procedures are underway for a prototype vehicle for the
transportation of people and materials in the underground mines, which are planned to be
completed in 2023. In the Rudna mine, operational tests are underway on an Epiroc ST14B fork
loader. Actions are underway aimed at expanding the testing of electric machinery
− The anti-collision system was integrated as well as the system for locating and identifying
machinery and people in the underground mines
− Robotisation of production and auxiliary processes continued. Work continues on building a
CuXRF robot to scan for copper content at the working faces
− The acquisition was completed of equipment and elements of the dewatering monitoring system,
which was built and brought into operation at the Polkowice-Sieroszowice mine with visualisation
in the dispatcher’s office
− Supplementary workshops were held for internal Auditors of the Energy Management System (ISO
50001) and of the Occupational Health and Safety Management System (ISO 45001)
− Work continued on managing the risk of a lack of improvement in the energy results of KGHM
(risk was analysed in line with the cascade model, including the identification of actions to mitigate
this risk)
KGHM 4.0 program
Advancement of the KGHM 4.0 Program was continued, divided into two main areas:
− In the area of ICT (Information and Communication Technology) and Cybersecurity:
Work was carried out in terms of ensuring ICT security due to the war in Ukraine, and the Charlie
CRP alarm level (involving cyberspace threats) was introduced at a country-wide level. Thanks
to this there were no interruptions recorded in the business operations of the KGHM Group,
and security processes were supported
− In the area of Digitalisation of business processes:
Implementation work was completed under the project to implement the platform –
construction of a Digital Workplace. The implementation of a Digital Workplace supports the
development of KGHM in terms of increasing employee efficiency, managing information and
building the potential to implement new application solutions and to cooperate with external
clients
In terms of the project APO/BDG2.0 – testing was performed in cooperation with all of KGHM’s
Mining Divisions and the Head Office, and five tasks were implemented for use
In terms of the project „Optimisation of the Production Planning and Settlement Process”, in
2022 work on the implementation of nine tasks was completed
The fourth and fifth stages of implementation of the CMMS system (Computerized Maintenance
Management System), supporting production and material logistics in the Metallurgical Plants,
Concentrator Division and Tailings Division, continued. The project is aimed at increasing the
Company’s organisational and cost efficiency in terms of maintaining operational continuity
−
Documentation required to commence the investment project Workplace Environment Reports
Generator was prepared
−
The „Human Rights Policy in KGHM Polska Miedź S.A.” was adopted
Program to adapt the
technological installations of
the Company to the
requirements of BAT
conclusions for the
nonferrous metals industry
and to restrict emissions of
arsenic (BATAs)
− The Program to adapt the technological installations of the Głogów Copper Smelter and Refinery
and Legnica Copper Smelter and Refinery Divisions was continued. In 2022, 6 projects were
advanced
− The following were brought into operation: a unit to remove arsenic and mercury from gases
before the SOLINOX installation at the Legnica Copper Smelter and Refinery; an installation to
remove sulphur from gases from the crude lead production furnaces at the Głogów Copper
Smelter and Refinery; an installation to remove particulates from gases emitted from the
convertor furnaces at the Głogów Copper Smelter and Refinery; an installation to remove
particulates containing arsenic from gases from the installation for the granulation of copper at
the Legnica Copper Smelter and Refinery
Environmental policy and
pro-environmental activities
− A decision was received on recognising the acid waste generated by the metallurgical facilities of
KGHM Polska Miedź S.A. as a by-product
− A decarbonisation installation was brought online at the Concentrators Division, where diluted
sulphuric acid – a by-product arising in the smelters of KGHM Polska Miedź S.A. – is used
− Freely-acquired rights for 2022 were distributed to KGHM Polska Miedź S.A.
− Certification by the Copper Mark for the Głogów Copper Smelter and Refinery and the Legnica
Copper Smelter and Refinery was maintained
− The balance of scope 1, 2 and 3 greenhouse emissions for 2021 by the KGHM Polska Miedź S.A.
Group was calculated
− The environmental footprint and carbon footprint of some of the products of KGHM Polska Miedź
S.A. was analysed
− The Polish Chamber of Commerce “Eco-development” ("Ekorozwój") awarded the "Green Laurels –
2022” (“Zielony Laur – 2022”) prize for an installation to remove arsenic and mercury from gases
before the SOLINOX installation
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 58
the Company and the Group in 2022 – translation from the original Polish version
In terms of the project „Improvement and automatisation of the accounting processes in CUK
(accounting services center)” advancement of over 20 initiatives, aimed at enhancing the
efficiency of the Company’s accounting and reporting processes, was completed
Energy
Development of
solar energy
− Actions continued involving construction of the HMG I-III photovoltaic power plants complex.
Technical conditions were issued for the connection of all three localities of the HMG I-III
Photovoltaic Power Plants. In the fourth quarter of 2022, a legally-binding environmental decision
was received and work began on developing project documentation. The wording of the
connection agreement is being discussed
− Actions continued involving construction of the Obora I Sandpit photovoltaic power plant –
documentation needed to advance the investment was developed. Cartographic and geodesic
work was completed, involving an alteration of land use in the Registry of Land and Buildings in
the County Office in Lubin
− In 2022, three new projects at the preparatory stage of building photovoltaic power plants were
initiated: „Polkowice”, „Tarnówek” and „Kalinówka” for the Tailings Division. Proceedings
commenced aimed at selecting a designer for these three projects
− A multi-scenario study of the possibilities of connecting new generating sources to the power
network of KGHM in the vicinity of the Lubin Mine was received. Preparations are underway
aimed at initiating another photovoltaic power plant on the grounds of liquidated shafts of the
Lubin mine
− A project was initiated to commence preparations to build a photovoltaic power plant on the
grounds of the Cedynia Wire Rod Plant
− Analytical work is underway involving the utilisation of other terrain belonging to KGHM for the
development of renewable energy sources. At the same time analyses are being conducted of the
market environment in terms of acquiring companies either in possession of projects to build
photovoltaic farms or having functioning installations
Development of wind energy,
including offshore
− A Memorandum of Understanding was entered into with Total Energies Renewables SAS. Joint
engagement was agreed in proceedings involving the obtaining of location decisions for the
construction of Offshore Wind Farms. In the first half of 2022, seven applications were submitted
for the issuance of siting permits. By the end of 2022 all proceedings aimed at identifying sites
included in the applications of the Company and its Strategic Partner had commenced. Complete
documentation was submitted for the purpose of proceedings conducted by the Ministry of
Infrastructure. The issuance of siting decisions is expected in the first half of 2023
− Analyses commenced on the possibilities of building wind farms on Company property and
discussions continued with entities in possession of interesting projects for sale
Development of hydrogen
technology
− A „Sector Agreement for the development of hydrogen power in Poland” was signed under the
patronage of the Minister of Climate and Environment of the Republic of Poland, and
establishment of the Lower Silesia Hydrogen Association was initiated
Development of nuclear
energy
− In February 2022, an agreement with NuScale Power LLC (a supplier of nuclear technology) was
signed for preliminary work (Early Works Agreement), constituting the first step in the process of
implementing SMR technology in the business activities of the KGHM Group
− In April 2022, KGHM and TAURON Polska Energia S.A. signed a letter of intent regarding
cooperation in the construction of low-carbon energy sources, including with the use of small
modular reactors (SMR)
− In July 2022 the Company submitted an application, being the first time in Poland, for the
implementation of small modular reactors (SMR) to the National Atomic Energy Agency. In
September 2022, KGHM Polska Miedź S.A. and SN Nuclearelectrica S.A. signed a memorandum of
cooperation on the development of SMRs. Work is currently underway on the preliminary
selection of a site for the SMRs
Power Purchase Agreements
(PPAs)
− In November 2021 the Company announced an open tender for the Purchase of Electricity
generated from Renewable Energy Sources (RES). In the first quarter of 2022, bids for the sale of
energy from RES under PPAs were received. In the third quarter of 2022, an Agreement was signed
with Solartechnik (Invest PV 7 Spółka z o.o.). The sale of electricity to KGHM, generated by the Żuki
Solar Power Farm in the Municipality of Turek, commences from 1 April 2023. The planned volume
of sales is 5 300 MWh/year
Self-generation of electricity
− In 2022, 11.71% of the Parent Entity’s need for electricity was met by its own internal sources,
including RES
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 59
the Company and the Group in 2022 – translation from the original Polish version
2.4 MANAGEMENT OF ESG ISSUES
GRI 3-3
material topic: Management of sustainable development and ESG risks
GRI 2-22
GRI 2-23
KGHM POLSKA MIEDŹ S.A. STRATEGY AND SUSTAINABLE DEVELOPMENT
Sustainable Development Areas of KGHM Polska Miedź S.A.
KGHM Polska Miedź S.A. is a global company, open to development aimed at ensuring its stable operation for many decades
to come for the benefit of present and future generations.
KGHM has adopted a focus on the concept of sustainability, protection of the environment and climate – both to prevent
climate change and to effectively adapt to climate change. This is reflected in the internal regulations adopted within the
Company and in the action it undertakes. KGHM’s strategy is executed based on the sustainable development concept, with
special focus on its commitment to health and safety, environment and community.
In the Strategy of the KGHM Polska Miedź S.A. Group to the year 2030 with an outlook to 2040, described in detail in
subsection 2.3. Strategy of KGHM Polska Miedź S.A.
, an additional, fifth element - “Energy” - was added, ultimately creating
the “5Es” Strategy, including five pillars based on five updated development directions:
− Pillar I - Core business
− Pillar II - New activities
− Pillar III - Supporting activities
− Pillar IV - Health
− Pillar V - Prosociality
The current Strategy has not changed the Company’s existing approach to its business activity. KGHM Polska Miedź S.A.
continues to maintain its responsible attitude and forward-looking approach to the future of an enterprise operating in
compliance with the principles of sustainable development, which are taken into account at the level of the Company's
business strategy and in the ESG analysis of individual strategic initiatives.
Diagram 10. Sustainable Development Areas of KGHM Polska Miedź S.A.
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 60
the Company and the Group in 2022 – translation from the original Polish version
Sustainable Development Council
The Sustainable Development Council (hereinafter: the Council) was appointed pursuant to the resolution of the
Management Board of KGHM to implement the Strategy of KGHM Polska Miedź S.A., given the dynamic changes in the
mining and processing industry caused by macroeconomic, technological and legislative challenges, the evolution of global
economic development directions and growth based on sustainable development and safety ideas.
The Council is comprised of individuals representing the areas that are critically important for the idea of sustainable
development, i.e., among others, ecology, environment, community, security, investor relations, finance, resource
management, regulatory analysis and broadly defined supply chain management. The key premise for the activities of the
Council is our business development vision of operating according to the accepted standards and canons shaping the future
functioning of raw material companies across the world as well as the need for internal information integrity and coherence
in the Company's operations.
The main goal of the Council is to identify needs, set directions, issue opinions and coordinate activities associated with the
implementation of the rules and regulations guiding the sustainable development concept in the entire KGHM Group.
Furthermore, the Council serves as a kind of open forum for sharing knowledge and promoting activities furthering the
idea of sustainable development and a forum for aggregating and promoting mineral resource industry standards and
solutions accepted in Poland and globally in this field.
The Council’s other activities include:
− issuing opinions on information materials in the field of sustainable development, in particular in areas with impact
on the environment (including climate change) and society, included in documents published outside the Company;
− consulting on and supervising the preparation of documents that are important for pursuing sustainable
development goals;
− analysing legislative changes related to sustainable development and their impact on the KGHM Group;
− identifying potential elements of improvements in the entire value chain of KGHM Polska Miedź S.A. based on the
sustainable development concept.
During the Council’s meetings, the following topics were discussed in 2022:
− the requirements imposed on listed companies in the context of respecting human rights, including the guidelines of
the Copper Mark program which KGHM Polska Miedź S.A. joined in 2020. The Copper Mark initiative demonstrates
the contribution of the copper industry to the implementation of the Global Sustainable Development Goals;
− the Management Board issued its positive opinion and adopted, within the scope of its competence, the “Human
Rights Policy in KGHM Polska Miedź S.A.”. The document was finally adopted by Resolution No. 150/XI/2022 of the
Management Board of KGHM Polska Miedź S.A. of 27 April 2022 and introduced for application in the Company.
ESG in investor relations of KGHM Polska Miedź S.A.
The Company continues its participation in processes related to ESG (Environmental, Social & Corporate Governance) and,
in accordance with the adopted Strategy of the KGHM Polska Miedź S.A. Group to the year 2030 with an outlook to 2040,
engages in communicating in this area with the capital market, investors and rating agencies. An expression of our concern
for stakeholders is the creation and continuous development of our ESG section under Investors tab on the Company’s
corporate website, which is dedicated to the ESG issues in a broad sense and facilitates access to a broad scope of
information related to non-financial and integrated reporting by KGHM Polska Miedź S.A.. Our commitment is expressed
among others by the granting of certificates to two of our metallurgical plants under the prestigious Copper Mark program
and our efforts to implement the procedures announced in the climate policy. In 2022, the Company also published the
Human Rights Policy adopted by the Management Board, at the same time accepting responsibility for protecting and
respecting these rights. To ensure the highest due diligence, transparency and compliance with best practice for listed
companies, the Investor Relations Team regularly provides responses to surveys, questionnaires or information requests
regarding ESG, among others: Sustainalytics, CDP, FTSE Russell, MSCI, WOOD, Refinitiv, Vigeo Eiris and BlackRock.
In the summation of Carbon Clean 200
TM
for 2022, the Company was recognised in a ranking of 200 companies globally
which, in the opinion of the authors of the ranking (Corporate Knights and As You Sow) which make the greatest efforts
towards protecting the environment and counteracting climate change, at the same time earning more than 10% of so-
called green revenues.
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 61
the Company and the Group in 2022 – translation from the original Polish version
2.5 CONTRIBUTION TO THE SUSTAINABLE DEVELOPMENT GOALS (SDGS)
SUSTAINABLE DEVELOPMENT GOALS AND ACTIONS UNDERTAKEN TO ACHIEVE THEM
KGHM pursues far more of the sustainable development goals (SDGs) presented in the 2030 Agenda for Sustainable
Development adopted by the UN in 2015 than just those considered typical for companies in the sector of its operations.
The goals pursued by KGHM Polska Miedź S.A. are presented in the following diagram:
Diagram 11. UN sustainable development goals for the years 2015-2030 pursued by KGHM Polska Miedź S.A.
Since December 2017, KGHM Polska Miedź S.A. is a signatory of the charter called “the Partnership for the realisation of
Sustainable Development Goals”. In its declaration, the Company indicated selected goals of the Agenda 2030, which it
aimed to support. In the following years, actions were taken in KGHM Polska Miedź S.A. consequently that resulted in an
evolution and extension of the portfolio of supported goals. Today, after over five years since joining the Partnership, the
Company has almost doubled the number of supported goals.
The positive aspects of KGHM’s operations drive economic growth across the region, through ensuring attractive and stable
jobs and development of cooperating companies, increasing the well-being of its communities (SDG 8), efforts to broaden
access to health care (SDG 3), decent work and education (SDG4), development of employees, benefits and training. KGHM
addresses its activities to employees and their families, but it also cares for all residents of the region, contributing to the
equality of opportunities in many aspects of life (SDG 10, 11).
The draft Directive on due diligence in the area of sustainable development, currently in the pipeline of the European Union,
imposes an obligation on companies to identify risks in the area of human rights. In order to meet the measures in this
area, in April 2022 the Company adopted the Human Rights Policy. The adoption of the document is an expression of care
and the confirmation that human rights represent an area of particular importance for KGHM. The document defines the
potential risks in this area while identifying persons responsible as well as possible forms of prevention and mitigation of
effects of such measures. The Human Rights Policy was also audited in 2022 in terms of maintaining the Copper Mark
certification by the Company, with a positive result. The Human Rights Policy covers issues such as labour rights, social
dialogue or occupational health and safety standards - both at KGHM and throughout the value chain (SDGs 5, 10).
Because of the international and broad scope of its operations, cultural differences and the specific nature of the industries
in which it operates, the Group has long conducted a variety of human rights protection activities, such as: counteracting
discrimination, not using forced labour (including child labour and slavery), respecting women’s rights and equal pay
principles, caring for the natural environment and conducting its activities with respect for the rights of the First Nations –
in accordance with the applicable normative acts. Work is currently pending to ensure the consistency and
comprehensiveness of these activities.
Other objectives pursued by the Company include responsible consumption and innovative production (SDG 12). KGHM is
striving to ensure that the entire core production line is optimized, safe, innovative and sustainable, seeking methods for
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 62
the Company and the Group in 2022 – translation from the original Polish version
its continuous improvement, also through innovation, research and development activities (SDG 9). The Company is also
trying to focus its activities on efficient resource management (while striving to eliminate waste in accordance with the
Circular Economy idea), reclamation of land and maintenance of biodiversity in post-mining areas (SDG 15).
The activities undertaken by KGHM Polska Miedź S.A. reflect the sustainable value chain, as presented in the chart below:
KGHM POLSKA MIEDŹ S.A.’S SUSTAINABLE VALUE CHAIN
Diagram 12. KGHM Polska Miedź S.A.’s sustainable value chain
On 16 November 2021, the Management Board of KGHM Polska Miedź S.A. adopted a resolution approving for application
the “KGHM Polska Miedź S.A. Climate Policy”, a document setting out the Company’s greenhouse gas emission goals in the
horizon of 2030 and 2050 and the scope and degree of changes required to achieve them. The provisions of the document
are described in section 3.1. Approach to the management of environmental impacts and climate protection
.
The KGHM Polska Miedź S.A. Climate Policy will directly support the implementation of UN Sustainable Development Goals
in the following areas:
− SDG 7 – to ensure access to stable, sustainable and modern energy for everyone at an affordable price;
− SDG 12 – to provide sustainable patterns of consumption and production;
− SDG 13 – to take urgent action to combat climate change and its impacts.
Every year KGHM implements solutions to manifest its efforts to operate in line with the idea of a circular economy. One of
the ways of using raw material constituting waste within the circular economy activities is the production of roadbuilding
aggregates from copper scrap.
The Strategy of the KGHM Polska Miedź S.A. Group assumes that a stable level of copper production will be maintained in
Poland and internationally, also based on increased processing of third party materials and recycled copper. Given the
limited sources of copper ore, the acquisition of raw material by recycling copper scrap has become an important element
of the Group’s activities. It is the ambition of KGHM to increase the recycling of scrap metal to reuse it in accordance with
the Circular Economy concept.
One of the new development directions within 5E is the “Energy” area. The priority in this area is to acquire energy from its
own sources and renewable sources.
The Company carries out a range of projects in the scope of preparation for the construction of its own photovoltaic farms
as well as the acquisition of companies with photovoltaic farm projects or with operating installations. Moreover, the
opportunities of acquiring new RES projects from the market in the scope of offshore wind energy and onshore wind farm
development are identified.
KGHM's flagship project should not be omitted related to nuclear power development, i.e. the construction of small
modular nuclear reactors (SMRs), described in detail in section 3.5 Energy transformation - projects implemented by KGHM
.
In addition, at the end of February 2022, KGHM became one of the initiators of the newly founded Lower Silesian Hydrogen
Valley Association.
The Company is also involved in a number of research and development projects aimed at developing the design of battery-
powered mining vehicles and machines adapted to operate in the extremely difficult environmental conditions of KGHM
Polska Miedź S.A.’s underground mines. In KGHM’s mines, the first tests of underground electric machines and a vehicle for
transporting people and materials have been launched.
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 63
the Company and the Group in 2022 – translation from the original Polish version
In order to minimize the negative environmental impact of metallurgical technologies and maintain fully operational
equipment protecting the environment, the Company has successfully adapted the units to the BAT Conclusions for the
non-ferrous metals industry, including limitation of arsenic emissions. The metallurgical emission reduction parameters
achieved as a result of investment projects are much better than the levels required by the law.
2.6 RISK MANAGEMENT
GRI 3-3 material topics: Management of sustainable development and ESG risks
GRI 2-12
GRI 2-13
GRI 2-16
COMPREHENSIVE RISK MANAGEMENT SYSTEM IN THE KGHM POLSKA MIEDŹ S.A. GROUP
The KGHM Polska Miedź S.A. Group defines risk as uncertainty, being an integral part of the activities conducted and having
the potential to result in both opportunities and threats to achievement of the business goals. The current and future,
actual and potential impact of risk on the KGHM Polska Miedź S.A. Group’s activities is assessed. Based on this assessment,
management practices are reviewed and adjusted in terms of responses to risk.
Under the Corporate Risk Management Policy and Procedure and the Rules of the Corporate Risk and Compliance
Committee, the process of corporate risk management in the KGHM Polska Miedź S.A. Group is consistently performed.
KGHM Polska Miedź S.A. oversees the process of managing corporate risk in the KGHM Polska Miedź S.A. Group, while in
the companies of the KGHM Polska Miedź S.A. Group, documents regulating the management of corporate risk are
consistent with those of the Parent Entity.
The introduction of the aforementioned Policy and Procedure and approval of their updating is made at the level of the
Management Board of KGHM Polska Miedź S.A. following recommendations by the Corporate Risk and Compliance
Committee. The Company publishes key documents concerning risk and risk management on its website
https://kghm.com/en/investors/corporate-governance/risk-management, while those of only an internal nature are
published through internal IT systems available to employees.
Publicly-available documents on the subject of corporate risk management may also be addressed to various external
stakeholder groups in terms of establishing business relationships. Operational documents developed at individual stages
of the risk management process are addressed to those persons who are directly engaged in carrying out this process
within the KGHM Polska Miedź S.A. Group.
Each year, the process of managing corporate risk is subjected to an efficiency audit compliant with the guidelines of “Best
Practice for GPW Listed Companies 2021”.
Risk factors in various areas of the KGHM Polska Miedź S.A. Group’s operations are continuously identified, assessed and
analysed in terms of their possible limitation. Key risk factors in the KGHM Polska Miedź S.A. Group undergo in-depth
analysis in order to develop a Risk Response Plan and Corrective Actions. Other risk factors undergo monitoring by the
Department of Corporate Risk Management and Compliance, and in terms of financial risk by the division of the Executive
Director for Financial Management.
The reporting of key types of corporate risk in the KGHM Polska Miedź S.A. Group is performed cyclically to the Management
Board of KGHM Polska Miedź S.A. and to the Audit Committee of the Supervisory Board of KGHM Polska Miedź S.A.
In order to unify the approach to the systematic identification, evaluation and analysis of the risk of a loss of compliance,
defined as adherence to the requirements arising from existing laws (external and internal) or from voluntarily-assumed
legal obligations and standards (including ethical standards), since 2020 a Compliance Management Policy for the KGHM
Polska Miedź S.A. Group together with a Procedure and Methodology for managing compliance in KGHM Polska Miedź S.A.
as adopted by the Management Board of KGHM Polska Miedź S.A. has been in force. The process of managing compliance,
which is connected with the process of managing corporate risk within the KGHM Group, is an important business tool for
the prevention of events which could lead to the imposition of penalties.
In 2022, the process continued of implementing a comprehensive business continuity management system, which also
enables a detailed breakdown of the scope of actions undertaken as regards managing corporate risk in terms of the risk
of a catastrophic impact and the small probability of their occurrence. This is expressed in the Operational continuity
management policy of KGHM Polska Miedź S.A. along with the Procedure and Methodology of managing compliance in
KGHM Polska Miedź S.A. The prepared documentation of the comprehensive business continuity management system sets
forth the principles and requirements to build the robustness of KGHM as regards catastrophic events by sorting out and
unifying the existing approach to management of the risk of loss of operational continuity of the core production business
and preparing for unforeseen events.
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 64
the Company and the Group in 2022 – translation from the original Polish version
The corporate risk management process adopted in the KGHM Polska Miedź S.A. Group is inspired by the solutions adopted
by the ISO 31000 standard, best practice in risk management and the specific nature of the Group, and is comprised of the
following steps:
Diagram 13. Corporate risk management process in the KGHM Polska Miedź S.A. Group
STEP 1
Defining the
context
The first step in the process is comprised of three actions: defining the external context, the internal context and
the risk management context.
The external context is the environment in which the KGHM Polska Miedź S.A. Group advances its Strategy. Here
the definition needs to update the understanding of the social, political, legal, regulatory, financial, economic and
technological aspects of the environment which affect its activities. During this step also assessed, based on the
results of scenario analysis, are the most important factors for transitioning to a low-emission economy and the
paths of climate change and weather models, which are processed in subsequent steps of the process.
During the process of defining the internal context, goals are analysed (strategic/business), changes in the
organisational structure are planned and performed, new areas of activities, projects, etc.
The last part of this step is to define the risk management context, which comprises the setting or updating of
goals, the scope, responsibilities and procedures and methods applied in the risk management process.
STEP 2
Identification
and Evaluation
In this step of the process risks which could impact the achievement of goals at the level of the KGHM Polska
Miedź S.A. Group
are identified and evaluated. The main task in this step is to prepare a complete list of threats
which could facilitate, impede, accelerate or delay the achievement of goals. Each identified risk is assigned to a
category and a sub-category in the form of a Risk Model, which provides the KGHM Polska Miedź S.A. Group with
a consistent risk taxonomy.
Following its identification, each corporate risk is evaluated using a Risk Evaluation Matrix, containing a scaled
breakdown of assessments by impact, vulnerability and probability. A risk may have various effects, and therefore
in order to ensure the broadest recognition of potential impact and the limitation of subjective evaluation, the
following Impact evaluation measures have been defined:
- finance – impact of the effects of a given risk in its financial aspect by applying value ranges.
- strategy – evaluation of the risk’s impact on the ability to achieve strategic goals.
- reputation and stakeholders – impact of the risk on the Company’s reputation, trust in the brand,
investor relations, relations with stakeholders, also including on the effectiveness of actions related
to building a responsible business and sustainable development.
- health and safety – direct impact on health and safety and human life.
- natural environment – impact of the materialisation of risk on the natural environment, the
functioning of the ecosystem and the time required to restore the disturbed balance.
- regulations and laws – evaluation of the compliance of events with existing laws, with the need to
participate in proceedings before bodies of public administration of a supervisory and regulatory
nature as well as potential sanctions as a result of such proceedings.
- operational continuity – evaluation of the impact of risk on interruptions to activities resulting in
significant/irreversible effects and loss of access to information important from the point of view of
conducted activities.
The results of the identification and evaluation of risk are presented in a graphic form, i.e. Risk Maps. These
provide a profile of the given risk and support the process of identifying the key risk.
STEP 3
Analysis and
Response
The goal of this step is to deepen knowledge and to understand the specific nature of the types of key risks
identified in the previous step. Cause and effect analyses and a more substantive description of the means of
dealing with risk are aimed at facilitating decision making on whether to maintain or eventually change current
actions.
A directional decision is called a Response to risk. A change in the way an action is taken requires the
determination of Corrective Actions, meaning organisational, process, systemic and other changes which are
aimed at reducing the level of the key risk.
During this step KRIs – Key Risk Indicators – are also defined, being a set of business process parameters or
environmental parameters which reflect changes to a given risk profile.
1. Defining the
context
2. Identification and
Evaluation
4. Monitoring and
Communication
3. Analysis and
Response
RISK
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 65
the Company and the Group in 2022 – translation from the original Polish version
STEP 4
Monitoring and
Communication
The goal of this step is to ensure that the adopted Risk Response Plan is effective (ad hoc and periodic reports),
new risks are identified (updating of the Risk Registry), changes in the internal and external environments and
their impact on activities are identified, and appropriate actions are taken in response to incidents (updating of
information on Incidents).
Effective, well-planned and appropriately performed monitoring of risk enables flexible and prompt reaction to
changes occurring in the external and internal environments (e.g. risk escalation, changes in actions related to
risk response, or risk evaluation parameters, etc.).
Achievement of this step provides the assurance that risk management in the KGHM Polska Miedź S.A. Group
fulfils the expectations of the Management Board of KGHM Polska Miedź S.A., the Audit Committee of the
Supervisory Board of KGHM Polska Miedź S.A. and other stakeholders by supplying reliable information about
risk, continuous improvement and adaptation of the quality and effectiveness of Risk Response to the demands
of the external and internal context.
Diagram 14. Organisational structure of risk management in KGHM Polska Miedź S.A
Supervisory Board (Audit Committee)
Performs annual assessment of the effectiveness of the risk management process
and monitors the level of risk factors and ways to address them.
Management Board
Has ultimate responsibility for the risk management system and supervision of its individual elements.
1st line of
defence
2nd line of defence
3rd line of
defence
Management
Risk Committees
Audit
Managers are
responsible for
identifying,
assessing and
analysing risk and
for the
implementation,
within their daily
duties, of responses
to risk. Managers
are tasked with
ongoing supervision
over the application
of appropriate
responses to risk
within the realised
tasks, to ensure the
expected level of
risk is not
exceeded.
Support the effectiveness of the risk management process.
The Internal Audit
Plan is based on
assessing risk and
subordinated to
business goals, the
current level of risk
factors and the
degree of efficiency
of their management
are assessed.
Corporate Risk
and Compliance
Committee
Market Risk
Committee
Credit Risk
Committee
Financial Liquidity
Committee
Manages
corporate risk and
continuously
monitors key risk
Manages risk of
changes in metals
prices (e.g.:
copper and silver)
as well as
exchange and
interest rates
Manages risk of
failure of
customers to
meet their
obligations
Manages risk of loss of
liquidity, understood as the
ability to pay financial
liabilities on time and
to carry
out required purchases as
well as the ability to rapidly
obtain financing for
operations
Corporate Risk
Management Policy
Compliance
Management Policy
Operational
Continuity
Management Policy
Market Risk
Management Policy
Credit Risk
Management Policy
Liquidity Management Policy Internal Audit Rules
Department of
Corporate Risk
Management and
Compliance
Executive Director for Financial Management
Executive Director for
Audit
Reports to the
Management
Board
Reports to the Vice President
of the Management Board (Finance)
Reports to the
President of the
Management Board
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 66
the Company and the Group in 2022 – translation from the original Polish version
CORPORATE RISK – KEY RISK AND RISK FACTORS AND THEIR MITIGATION
A comprehensive approach to risk management is consistent across the KGHM Polska Miedź S.A. Group and it was designed
in such a way as to support the building of a resistant corporate structure. KGHM Polska Miedź S.A. also took steps to
include issues related to climate change in the risk taxonomy in accordance with the Recommendations of TCFD (Task Force
on Climate-Related Financial Disclosures). In subsection 3.3, we describe a climate risk management strategy in more detail
and indicate that our activities and such an approach in this area is the result of, among others, the Company's pursuit of
operational excellence and the mission of acting in regard to the principles of sustainable business. As a result of the above
work, KGHM distinguishes a category of climate risk, the importance of which is equivalent to the other risk categories for
the Company. A tool used in identifying risk in the KGHM Polska Miedź S.A. Group is the Risk Model. The Risk Model, whose
structure is based on sources of threats, is divided into the following 6 categories: Technological, Value chain, Market,
External risk, Internal risk and Climate. Several dozen sub-categories have been identified and defined for each of these
categories, covering particular areas of the operations or management. The KGHM Polska Miedź S.A. Group applies due
diligence when undertaking actions aimed at minimising exposure to risk by lowering vulnerability to individual risk factors
and reducing the probability of the materialisation of events which such factors could induce. The KGHM Polska Miedź S.A.
Group, as part of the improvement of the corporate risk management process, applies a two-track approach consisting not
only of limitation of the risk and minimisation its negative effects, but also in optimisation of the ability to take on risk and
the effectiveness of the tools used and their profitability.
Diagram 15. Risk categories in the Risk Model of KGHM Polska Miedź S.A. and their definitions
Technology
This category is associated with changes in competitiveness resulting from the application of industrial
technology, IT, innovation management, protecting and/or managing intellectual property as well as the impact
of investment projects involving productivity and technology quality, or changes in the quality and efficiency of IT
infrastructure affecting business units, support functions and infrastructure.
Value chain
This category is associated with changes in the operational efficiency of logistics and warehousing in the
production process and in providing services, in managing sales, in managing waste and restoration as well as
being correlated with the process of managing the supply chain, the availability of utilities and materials in the
production process, changes in the evaluation and management of mineral deposit resources, or the
advancement of research and exploration projects.
Market
This category is associated with changes in the value of assets, the level of liabilities or profit and loss resulting in
a change in the sensitivity to exchange rates, currencies, liquidity, inflation rates, customer insolvency,
commodities prices, energy and property rights. This category also involves changes in the impact of demand
and supply on the products of the KGHM Polska Miedź S.A. Group, the selection of appropriate tools to advance
the marketing strategy, changes in expected rates of return on equity investments or the efficiency of transferring
risk to the insurer.
External risk
This category is associated with the conditions involved in conducting activities resulting from changes in
economic conditions, changes in laws and regulations (compliance), political decisions, changes in the natural
environment or climate (transitional risk) as well as catastrophic natural events and force majeure. This category
also comprises changes in market share or margins due to changes in the competitive environment or
substitutes, the risk of the result of decisions in the courts or arbitration proceedings, the risk of unfavourable
administrative decisions, changes in obligations, the designation of tax liabilities or their payment deadlines.
Internal risk
This category is associated with changes in an entity's activities affected by changes in its structure, organisation,
procedures, processes or business model, as well as the risk of changes in corporate image, its products or
services, the effectiveness of principles of proceedings related with ethics and anti-corruption, a company's
interests, or efforts to ensure against loss of trust, and the integrity, availability and authenticity of informational
assets.
Climate
This category is associated with climate-related risk (climate risk) and its impact on the KGHM Polska Miedź S.A.
Group’s business activities, comprising physical risk (violent and chronic) and temporary risk (regulatory,
reputational, market and technological).
Following is a description of the key risk factors in the KGHM Polska Miedź S.A. Group in 2022, broken down into individual
categories along with means for their mitigation, including identification of specific risks for the Parent Entity and the KGHM
INTERNATIONAL LTD. Group. A key risk is future uncertain events having the greatest impact on the achievement of the
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 67
the Company and the Group in 2022 – translation from the original Polish version
business goals of the KGHM Polska Miedź S.A. Group, reflecting an evaluation of vulnerabilities, i.e. the ability of the
organisation to limit the possibility of the occurrence of risk and the impact of its materialisation.
The tables below uses the following abbreviations: for the KGHM Polska Miedź S.A. Group – KGHM Group, for the KGHM
INTERNATIONAL LTD. Group – KGHM INTERNATIONAL Group, for KGHM Polska Miedź S.A. – the Parent Entity.
Table 18. Risk category – Technology, in the Risk Model of KGHM Polska Miedź S.A.
Risk and description of risk factors Mitigation
(Parent Entity)
Risk of failure to adhere to the efficient working time
parameter and of failure to fully utilise the capacity of
metallurgical installations to process own concentrate.
Sources of risk include potential breakdowns of key elements of
the core production line and failure to adapt technology to
production requirements, which could affect the availability of
metallurgical infrastructure. An important risk factor is the need to
maintain the production of concentrates in an amount and quality
required to optimise the utilisation of the metallurgical facilities.
Exposure to risk is also associated with the need to ensure required
utilities to maintain the expected level of infrastructure availability.
Optimum utilisation of infrastructure, maintaining an appropriate
selection of concentrates, R&D initiatives and advancement of
programs and projects to adapt metallurgical structure and
technology to ensure highe
r processing capacity for own
concentrates, imported copper-bearing materials and purchased
scrap. Actions are continuously undertaken aimed at guaranteeing
the technical efficiency of production continuity and servicing
systems. The skills of people controlling processes are constantly
being improved, including employees responsible for warehouses,
tanks and distribution networks. A maintenance policy is applied,
breakdown procedures have been developed and suppliers are
continuously monitored within the scope set forth in instructions
and agreements. Actions undertaken are aimed at maintaining the
availability of metallurgical equipment at the expected level and
improving the productivity parameters of metallurgical
infrastructure, as well as limiting the negative impact of this risk on
operations.
Table 19. Risk category – Value Chain, in the Risk Model of KGHM Polska Miedź S.A.
Risk and description of risk factors
Mitigation
(KGHM Group)
Risk related to an ineffective process of monitoring and
providing early warning to management staff on deviations
from the budget and financial plans as well as with respect to
adopting inappropriate economic parameters related to
production, investments, macroeconomics and finance, for
forecasts of company results.
An ineffective process of monitoring and providing early warning
to management staff on deviations from the budget and financial
plans may impede or delay the appropriate early identification of
deviations in respect of forecasted results, at the same time
shortening the time for taking appropriate corrective actions.
Sources of risk are related to the possibility of ineffective
mechanisms to control these processes.
In 2022, an important factor impacting exposure to risk was the
general uncertainty on financial markets related to the armed
conflict in Ukraine, which slowed down the expected economic
recovery in the country and world given the improved situation
with the COVID-19 pandemic. The lack of an end to the war in
Ukraine continues to remain a key factor implying either a potential
global economic recovery or resulting in a global recession, in
particular in connection with the potential appearance of a
subsequent wave of the COVID-19 pandemic.
Forecasts related to specific areas of the operations prepared by
appropriate specialised units and ensuring the uniformity of
operating plans with strategic plans. Cyclical reporting of execution
on forecasts in all critical areas. Regular contacts with and
systematic streamlining of the communication process together
with setting criteria enabling the identification of symptoms of
potential deviations from the expected results of the KGHM Group.
Evaluation of key risk factors, on which the coronavirus pandemic
and/or the war in Ukraine has an impact, were subjected to specific
analysis by the ongoing monitoring of selected information in
terms of production, sales, supply chains, management of
personnel and finances, aimed at supporting management
processes in conditions of heightened uncertainty.
(KGHM INTERNATIONAL Group)
Risk related to the precision of estimated costs of
decommissioning certain mines.
With respect to risk factors related to the precision of estimated
costs of decommissioning certain mines, there are questions
related to the need to meet obligatory environmental conditions
connected with realistic concepts for such liquidation. There is also
the risk that the company will have to cover restoration costs more
quickly than initially assumed, which could lead to the necessity to
update the estimated costs of in this regard.
Estimated costs of restoration and mine decommissioning based
on expert reports and providing guarantees of future
environmental obligations related to the decommissioning and
restoration of mining areas in accordance with existing laws and
regulations. Work is also underway to extend the Life of Mine of
individual active mines, which should enable a decrease and/or
delay in their decommissioning costs and optimisation of cash flow
to allow potential restoration costs to be covered.
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 68
the Company and the Group in 2022 – translation from the original Polish version
(KGHM INTERNATIONAL Group)
Risk related to the exhaustion of deposits and/or the
insufficient recognition of their
parameters and
characteristics, both in exploration projects (estimation of
input data for deposit evaluation models) as well as in current
operations.
The risk of changes in the evaluation and management of ore
resources involves, among others, geological factors related to the
reliable estimation of resources or mining conditions. Risk factors
related to the limited reliability and completeness of data, based
on which new resource projects are evaluated, may lead to the
taking of less than optimal decisions on advancing or suspending
projects.
Input data for models are collected in accordance with geological
documentation possessed, which is prepared pursuant to laws in
force as well as reviewed and consulted internally with experienced
staff. The results of current work undergo particular analysis and
preliminary project assumptions are updated. Expenditures
incurred on exploration and evaluation enable the estimation of
mineral resources and investigation of geological-mining
conditions aimed at planning further mining activities.
(Parent Entity)
Risk of the inability to store mine tailings or restrictions
thereof.
The Parent Entity is exposed to the risk of a lack of sufficient tailings
storage capacity at the “Żelazny Most” Tailings Storage Facility. Risk
factors involve the management and control of the facility,
maintaining the technological regime and meeting environmental
requirements. Another source of risk are external factors with
respect to administrative bodies and the requirement to obtain the
necessary administrative decisions for the functioning of the
facility. Exposure to risk is also related with potential unplanned
shutdowns resulting from infrastructure breakdowns, which could
impact the continuity of the Core Business.
Operating in accordance with the operating instructions.
Cooperation with a Team of International Experts (TIE) and a
General Designer
and National Geotechnical Expert. Applying
observational methods based on assessing the geotechnical
parameters obtained on the basis of evaluations of the results of
monitoring, enabling conclusions to be drawn about the
functioning of the expanded facility. Systematic supervision and
control over the entire “Żelazny Most” Tailings Storage Facility,
including cyclical detailed analysis of all risk factors affecting the
facility’s stability. Ensuring that all legal and administrative
requirements are met. Ongoing monitoring of procedures
conducted by administrative bodies.
(KGHM Group)
Risk related to the lack of availability of required energy
sources.
The KGHM Group is exposed to the risk of lack of availability of
utilities for its operations. Potential disruptions in the supply of key
power sources is mainly related to risk on the part of external
suppliers and breakdowns of their distribution infrastructure. Risk
is also related to the suspension of delivery of power supplies as a
result of long-lasting droughts, leading to periodically lower water
levels in rivers, which could cause restrictions in the operations of
power plants belonging to KGHM’s suppliers. Amongst internal
factors, the most important involve questions of maintaining
operations, utilisation and investments and modernisation work.
Ensuring back-up systems for the supply of critical utilities and on-
going assessment of the security of the power network. Conducting
a variety of investments aimed at strengthening energy security. A
framework agreement with suppliers of utilities to increase the
security of supplies. Systematic limitation of energy consumption
under the implemented Energy Management System compliant
with ISO 50001:2018. Planned increase in the efficiency and
flexibility of t
he KGHM Group in terms of its Polish and
international assets, among others by partially satisfying the needs
for electricity from its own sources as well as from Renewable
Energy Sources („RES”) in accordance with the Strategy of the
KGHM Polska Miedź S.A. Group to the year 2030 with an outlook to
2040.
(KGHM Group)
Risk related to infrastructure breakdowns which disrupt the
core production operations, related to natural hazards as well
as internal factors related to the applied technology.
The KGHM Group is exposed to risk related to the technological
potential and efficiency of its infrastructure to meet the needs of
the production process. By utilising infrastructure required to
maintain its operations, KGHM is exposed to the risk of industrial
breakdowns resulting in unplanned shutdowns. Such breakdowns
could result both from natural hazards, i.e. catastrophic natural
events and force majeure, as well as internal factors dependent on
the KGHM Group (on-going operations, maintaining operations,
key suppliers, servicing).
Preventive management of key infrastructure elements affecting
production continuity. Appointment of a taskforce and expert
teams with respect to counteracting breakdowns of infrastructure.
Ongoing analysis of geotechnical risk and the verification of
planned recoveries. In terms of ICT (information-communication
technology) separating groups of projects related to reducing
technological debt. Gradual replacement of older technology with
newer solutions, reflecting the corporate architecture standard.
In 2022, the process continued of implementing a comprehensive
system to manage operational continuity compliant with the ISO
22301:2019 standard, which establishes procedural frameworks at
the level of the entire organisation aimed at applying a joint
approach to building solutions ensuring operational continuity and
enabling its return.
( KGHM Group)
Risk related to the cost efficiency of the production process,
mining projects, processing of copper-
bearing materials,
reflecting the risk of a substantial rise in prices of materials,
services, electricity, gas and water and restoration costs.
The KGHM Group is exposed to the risk of external and internal
factors, such as metals prices, exchange rates, costs of supply of
purchased metal-bearing materials, the level of TC/RCs and selling
premiums and costs of services and utilities. This risk is also related
to the estimation of costs of provisions for the restoration of
mining terrain based on existing law for the territories in which the
KGHM Group operates.
Ongoing control of processing costs, monitoring the market
situation, optimising costs, including supplies of purchased metal-
bearing materials, hedging transactions and management of the
net position. Creating multi-year plans and budgets enabling the
achievement of profitability under conditions prevailing on the
market. Evaluation of key risk factors, on which the coronavirus
pandemic and/or the war in Ukraine has an impact, were subjected
to
specific analysis by the ongoing monitoring of selected
information in terms of production, sales, supply chains,
management of personnel and finances, aimed at supporting
management processes in conditions of heightened uncertainty.
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 69
the Company and the Group in 2022 – translation from the original Polish version
A critically related risk is the rise in operating costs activities due to
further increases in the prices of energy carriers (as well as due to
the conflict in Ukraine).
In 2022, an important factor impacting exposure to risk was the
general uncertainty on financial markets related to Russia's
aggression against Ukraine, which slowed down the expected
economic recovery in the country and world given the improved
situation with the COVID-19 pandemic in the second half of 2022.
Uncertainty as to the potential continuation of increases in the
prices of fuels and energy carriers may continue to be the main
factor generating further increases in basic operating costs.
In terms of increases in the prices of energy carriers, KGHM Polska
Miedź S.A., as one of Poland’s largest consumers of electricity, has
for many years been diversifying its sourcing of power according to
an effective strategy developed over the years, reflecting its own
generation. Purchases are made under bilateral contracts,
framework agreements with many suppliers and on the Polish
Power Exchange (Towarowa Giełda Energii).
The policy of
purchasing electricity and natural gas has for years been realised
under a Permanent Committee for the purchase of electricity,
natural gas and property rights.
(KGHM Group)
The risk of interruptions to the continuity of sales and services
(including due to the COVID-19 pandemic and/or the war in
Ukraine)
The KGHM Group, due to its well-developed sales and services
structure, is exposed to the risk of interruptions to the continuity
of these processes, mainly due to external factors. Sources of risk
are changes in demand for certain product groups and on
individual geographic markets, production restrictions, transport
and logistical interruptions (especially in terms of international
transport), force majeure (extreme weather phenomena) and
operational restrictions due to laws introduced at the domestic and
international level. This risk has a substantial impact on a decrease
the revenues generated by the KGHM Group, and consequently
lower operating profits.
In 2022, an important factor impacting exposure to risk was the
general uncertainty on markets related to the armed conflict in
Ukraine, which slowed down the expected economic recovery in
the country and world given the improved situation with the
COVID-19 pandemic in the second half of 2022. The lack of an end
to the war in Ukraine continues to remain a key factor implying
either a potential global economic recovery or resulting in a global
recession, in particular i
n connection with the potential
appearance of a subsequent wave of the COVID-19 pandemic.
In the first half of 2022 the COVID-19 pandemic had the greatest
impact on the Group’s secondary activities involving hotel and spa
services.
Ongoing monitoring of the situation prevalent amongst customers,
enabling a rapid response to customer needs (such as regular
teleconferences, the availability and mobilisation of employees, the
utilisation of various channels to exchange information and react
to interruptions), analysis of the situation’s impact on customers
and logistics in individual customer countries as well as transit
routes, rapid changes in the structure of sales (changes of sales in
individual assortments, amongst customers from individual
sectors and on individual geographic markets enabling reaction to
potential changes in demand in individual consumer sectors).
Diversification made to customer portfolios, providing the
possibility to neutralise smaller orders from some customers by
selling more to others, participation in the spot market (enabling
immediate product allocation given actual customer demand)
apart from the main strategy based on carrying out long-term and
annual contracts on the basis of long-term business relationships.
Those companies providing hotel and spa services fully realised
their sales plans while maintaining a sanitary regime and
regulatory restrictions as to permissible
frequency in hotel
facilities.
Table 20. Risk category – Market, in the Risk Model of KGHM Polska Miedź S.A.
Risk and description of risk factors
Mitigation
(KGHM Group)
Market risk related to volatility in metals prices and risk of
changes in exchange rates and interest rates.
Market risk is understood as the possibility of a negative impact on
the results of the KGHM Group resulting from changes in the
market prices of goods, exchange rates and interest rates, as well
as changes in the value of debt securities and in the share prices of
listed companies.
In 2022, an important factor impacting exposure to risk was the
general uncertainty on financial markets related to the armed
conflict in Ukraine, which slowed down the expected economic
recovery in the country and world despite the improved situation
with the COVID-19 pandemic in the second half of 2022.
The lack of an end to the war in Ukraine continues to remain a key
factor implying either a potential global economic recovery or
resulting in a global recession, in particular in connection with the
potential appearance of a subsequent wave of the COVID-19
pandemic.
This risk is actively managed by the Parent Entity, in accordance
with the Market Risk Management Policy. One of the basic
techniques for managing market risk in the company are hedging
strategies utilising derivatives. Natural hedging may also be
observed, related to the existence of a negative correlation
between the price of copper and the USD/PLN exchange rate, as
well as the copper price and the prices of gold and silver, which
mitigates the negative effects of price fluctuations.
Information on the impact of COVID-19 and/or the war in Ukraine
on the functioning of the Company and Group is described in detail
below.
Further information on market risk is presented later in this
section.
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 70
the Company and the Group in 2022 – translation from the original Polish version
(KGHM Group)
Credit risk related to trade receivables.
The KGHM Group sells some of its products with deferred payment
terms, as a result of which there may arise the risk of late payments
from customers for delivered products.
In 2022, an important factor impacting exposure to risk was the
general uncertainty on financial markets related to the armed
conflict in Ukraine, which slowed down the expected economic
recovery in the country and world given the improved situation
with the COVID-19 pandemic in the second half of 2022. The lack
of an end to the war in Ukraine continues to remain a key factor
implying either a potential global economic recovery or resulting in
a global recession, in particular in connection with the potential
appearance of a subsequent wave of the COVID-19 pandemic.
This risk is actively managed by the Parent Entity, in accordance
with the Credit Risk Management Policy. Exposure to credit risk is
limited by evaluating and monitoring the financial condition of
customers, setting credit limits and applying creditor security. The
companies of the KGHM Group have been working for many years
with a large number of customers, which affects the geographic
diversification of trade receivables.
Information on the impact of COVID-19 and/or the war in Ukraine
on the functioning of the Company and Group is described in detail
below.
Further information on market risk is presented later in this
section.
(KGHM Group)
Liquidity risk.
The risk of loss of liquidity is understood as the ability to pay
liabilities on time and carry out required purchases as well as to
rapidly obtain financing for the operations.
In 2022, an important factor impacting exposure to risk was the
general uncertainty on financial markets related to Russian’s
aggression against Ukraine, which slowed down the expected
economic recovery in the country and world given the improved
situation with the COVID-19 pandemic in the second half of 2022.
This risk is actively managed in the Parent Entity, as well as in the
short, medium and long term time horizons, in accordance with the
existing Financial Liquidity Management Policy.
Information on the impact of COVID-19 and/or the war in Ukraine
on the functioning of the Company and Group is described in detail
below.
Further information on market risk is presented later in this
section.
Table 21. Risk category – External Risk, in the Risk Model of KGHM Polska Miedź S.A.
Risk and description of risk factors
Mitigation
(KGHM Group)
Risk of restrictions to production due to seismic tremors and
associated roof collapses or destressings of the rock mass, and
the occurrence of uncontrolled rock bursts.
The KGHM Group is exposed to the risk of natural hazards and
force majeure and related insufficient geological knowledge of the
rock mass. Key risk factors which affect the materialisation of such
risk also involve the results of periodic analyses of the mining
situation and the state of hazard and applied measurement
methods. Natural hazards associated with the underground
mining of copper ore deposits arise in particular from mining
tremors and their potential effects in the form of roof and wall
collapses.
These factors affect safety, as their occurrence can lead to serious
or fatal injuries as well as damage to underground machinery,
equipment and infrastructure, along with production downtimes,
leading to restrictions to production.
Actions aimed at preventing rock bursts and roof collapses, such
as systematic seismological observations, ongoing assessment of
the rock mass and the marking off of areas of particular threat of
roof collapse. Use of active methods of preventing rock bursts and
roof collapses based on provoking dynamic events through mass
blasting of mining faces and through blasting to release stress in
the orebody or its roof.
Preparation of reserve fields in the orebody which could handle
limited production.
Cyclical meetings of the KGHM Polska Miedź S.A. Team for
Preventing Rock Bursts and Roof Collapses. Securing access to the
functionality of mine geophysics systems prior to loss of data
under the applied approach in the area of IT/OT systems.
(Parent Entity)
Risk of restrictions to production or to the advancement of
development work due to geodynamic gas-related events and
the occurrence of naturally-occurring gases.
KGHM is exposed to the specific risk of natural hazards and force
majeure (gas-related geodynamic hazards and the occurrence of
naturally-occurring hazardous gases) leading to restrictions in
realising production plans and the advance of preparatory work.
These factors affect safety, as their occurrence can lead to serious
or fatal injuries as well as damage to underground machinery,
equipment and infrastructure, along with production downtimes,
leading to restrictions to production.
The risk of gas hazards occurring is being assessed and principles
are being developed for working under the risk of such hazards.
Individual employee safety measures are applied as well as
equipment and means for reducing concentrations of hydrogen
sulphides and neutralising oppressive odours.
Preparation of reserve fields which could handle limited
production.
The creation of a KGHM Polska Miedź S.A. Team for Mine
Ventilation and Air Cooling, whose job is to analyses and provide
an opinion on tasks involving the recognition and prevention of gas
threats and the threat of gas and rock bursts in the mines.
Gas and gas-related geodynamic threats in all of the mines are
evaluated on a cyclical basis at the meetings of the Mine Team for
the Recognition and Prevention of gas threats and the threat of gas
and rock bursts.
(Parent Entity)
Risk of production restrictions due to unfavourable climatic
conditions in the mines.
The use of solutions to counteract underground climate risk using
neutral means (e.g. the use of short airways and directing air from
the lowest temperature rock mass, high-speed air) and through the
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 71
the Company and the Group in 2022 – translation from the original Polish version
KGHM is exposed to a specific risk related to climatic conditions
restricting activities or increasing costs, related to geological
conditions, the temperature of the air sent into the mines and the
conditions prevalent in the underground mines.
use of central, workplace and personal air conditioning. The
ongoing monitoring of microclimate parameters and the
introduction of remote control and visualisation systems and
monitoring (industrial cameras) in working areas subject to
particularly unfavourable climatic parameters.
Securing access to the functionality of systems prior to loss of data
under the applied approach in the area of IT/OT systems.
Decreasing external and internal losses and relative air moisture,
as well as increasing air movement intensity. The use of shortened
working time.
(Parent Entity)
Risk of loss of mine functionality due to underground water
hazards.
KGHM is exposed to the risk of natural hazards and force majeure
in the form of underground water hazards resulting from
breakdowns of the main dewatering equipment, human error
(actions contrary to the project or technology) or mistaken
geological conclusions.
Unfavourable hydrogeological conditions may result in restriction
of activities (e.g. limited extraction) or higher costs related among
others to the management of increased water inflow.
Research into hydrogeological conditions and water hazards,
measuring water inflow to the mines, conducting mining
operations pursuant with technology for the safe conduct of
mining operations in underground mines. Systematic control of
mining areas threatened by water inflow, control of water flow
pathways and dams according to a set schedule. The preparation
and updating of the Rescue Plan in case of water inflow.
Development of regional pumps and the piping system,
construction of water dams aimed at restricting water inflow,
drilling exploratory holes to stabilise uncontrolled water inflow. To
minimise the risk of uncontrolled underground water inflow, a
project is continued called „Construction of a main dewatering
complex in the region of the SW-4 shaft”, aimed at increasing the
dewatering capabilities of the mines.
Securing access to the functionality of the system prior to loss of
data under the applied approach in the area of IT/OT systems.
Monitoring of hydrotechnical conditions and the condition of
technical facilities and infrastructure. Ongoing modernisation,
maintenance, acting in accordance with operating instructions.
(KGHM Group)
Risk of exceeding the permissible emissions limits set forth in
permits.
The KGHM Group is exposed to the risk of impacting individual
components of the natural environment resulting from the
extraction of copper ore and its subsequent processing at all stages
of production, which could result in exceeding permissible
emissions limits.
In this regard actions are taken arising from the Air Protection
Programs and R&D.
Ongoing measurements are made of
emissions levels compared to the limits set in the permits.
Work is being finalised with respect to adaptation of the
technological installations of KGHM to the requirements of BAT
conclusions for the nonferrous metals industry along with
restriction of particulates emissions.
(Parent Entity)
Risk of restrictions to the ability to sell sulphuric acid (due to
loss of market/customers and/or a drop in demand as well as
due to the war in Ukraine).
Risk related to macro-
and microeconomic factors involving
political actions which result in privileges for a specific group of
producers or the introduction of additional fees/legal restrictions.
Risk related to unfavourable prices (volatility to the disadvantage
of KGHM), high requirements in terms of market parameters for
selling sulphuric acid and lower demand for the product on
international markets, including as a result of the deterioration in
the financial condition of a key customer.
In 2022, one of the factors affecting exposure to risk was the
situation on the fertilizers market related to the war in Ukraine. The
lack of an end to the war in Ukraine continues to remain a key
factor implying either a potential global economic recovery or
resulting in a global recession, in particular in relation to the
potential emergence of a new mutation of the SARS-CoV-2 virus.
Increase the number of internal storage facilities at the
metallurgical plants as well as of warehouses at the port of
Szczecin. Search for new sales markets. Long term contracts.
Payments to customers and incur transport costs. Search for
alternative ways to manage the acid and utilise it in the
Concentrators. In 2022, actions were continuously taken related to
the situation on the fertilizers market as a result of the war in
Ukraine involving volatility in levels of customer demand.
(KGHM Group)
Risk related to interruptions in the supply of strategic
materials and components affecting the continuity of
production by the Core Business (including due to the COVID-
19 pandemic and/or the war in Ukraine)
The KGHM Group is exposed to the risk of interruptions in the
management of the supply chain resulting mainly from external
factors, resulting in an increase in supply chain sensitivity. These
factors include unpredictable volatility in supply and demand,
Continuous contact is maintained with suppliers, which enables
prompt reaction to delays by utilising the strategy of diversification
of suppliers and directions of deliveries applied by the KGHM
Group and by applying alternative solutions, for example by using
substitutes, changes in production/assembly schedules. Also used
are alternative supply channels, buffers in the form of warehouses,
prior planning in terms of materials and components while
maintaining the compatibility of applied infrastructure solutions.
Moreover, a plan has been developed for the KGHM Group to
maintain operational continuity in case of restrictions, production
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 72
the Company and the Group in 2022 – translation from the original Polish version
changes in supplier bases, technological changes, changes in
inventory buffers and in timeframes for realising orders,
dependency on suppliers, as well as logistical interruptions, force
majeure and volatility in exchange rates and metals prices. The
efficiency of global supply chains may also be impacted by high
inflation.
In 2022, an important factor impacting exposure to risk was the
general uncertainty related with the armed conflict in Ukraine,
which slowed down the expected economic recovery in the country
and world given the improved situation with the COVID-19
pandemic in the second half of 2022. The lack of an end to the war
in Ukraine continues to remain a key factor implying either a
potential global economic recovery or resulting in a global
recession, in particular in relation to the potential emergence of a
new mutation of the SARS-CoV-2 virus.
suspensions or the temporary switch to a stand-by operating
mode. As a result of the COVID-19 pandemic and/or the war in
Ukraine, actions are systematically taken to eliminate sporadic
instances of delays by suppliers due to lack of availability of
components, logistical restrictions or delays by producers of
materials and equipment or parts thereof.
(KGHM Group)
Risk of failure to adhere to established principles and
standards of behaviour with respect to counteracting
corruption, business ethics and with respect to the
procurement processes as well as the risk of incurring losses
from actions which are harmful to KGHM.
The KGHM Group is exposed to the risk of actions which are
harmful to KGHM taken by external entities participating in the
processes of procurement, sales and investment. Threats are in the
form of potential losses by the KGHM Group resulting from the
intentional actions of external entities, i.e. collusion over minimum
pricing, the insufficient technical and economic potential of
contractors, falsification of documentation, fictional contractors,
conflicts of interest. Other important risk factors include threats as
regards all types of improprieties related to breaching anti-
corruption and ethical standards (such as corruption, conflicts of
interest, abuse, discrimination, illegality, nepotism) as well as
breaches of human rights (such as child labour, forced work,
modern slavery, women’s rights).
Implementation of the Code of Ethics of the KGHM Polska Miedź
S.A. Group as the main tool in the corporate culture of the KGHM
Group, and other appropriate policies and procedures ensuring
the efficiency of implemented principles and values. Meeting
global corporate governance standards and increased stakeholder
expectations, including above all those of customers and financial
institutions. Application under the Responsible Supply Chain Policy
of guarantees of the selection of responsible suppliers, especially
in the case of acquiring so-called conflict minerals and ensuring
that the goods and services acquired by the KGHM Group will not
be used to finance terrorism, and that they will be manufactured
or provided while respecting human rights, labour standards,
environmental protection and counteracting corruption. Proactive
monitoring and analysis of procurement processes in terms of
identifying abuse and threats of corruption within the organisation
and the supply chain, as well as undertaking actions with respect
to ethics and counteracting corruption along with the
implementation of corrective actions. Internal control with respect
to the identification and uncovering of fraud, abuse and corruption
in KGHM Group entities and the prevention of such based on the
Internal Control Procedure in order to eliminate risk at the level of
prevention. The management of compliance under a
comprehensive compliance management system.
The KGHM Group has implemented an Anti-Bribery Management
System (ABMS) compliant with the ISO 37001 standard, which
resulted in the adoption of an Anti-Corruption Policy. Under the
ABMS new procedures were implemented as regards corruption
risk management, ensuring the compliance of actions taken by
KGHM Group entities with the adopted Anti-Corruption Policy.
These procedures regulate among others the rules for dealing with
business gifts, suspected situations involving corruption or
conflicts of interest. In each entity of the KGHM Group persons
have been appointed to ensure anti-corruption compliance, and
have been granted appropriate authority while at the same time
maintaining their independence and impartiality.
In 2022, a „Human Rights Policy in KGHM Polska Miedź S.A.” was
adopted, which supports the Company’s existing regulations and
procedures concerning aspects of human rights in accordance with
the sustainable development model, such as the Code of Ethics,
Code of Conduct, OHS Policy, Climate Policy and the Responsible
Supply Chain Policy.
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 73
the Company and the Group in 2022 – translation from the original Polish version
(KGHM Group)
Risk of loss of compliance with requirements (general laws in
force, internal corporate regulations and voluntarily-adopted
legal obligations and standards).
The KGHM Group operates in unstable regulatory environments in
many jurisdictions. A consequence of the need for technological
and organisational adaptation to a variable legal environment
(including environmental and tax requirements) may be higher
costs of activities or their limitation. Risk of interruptions to
operations or the need to reorganise work as a result of new laws
may have a significant impact on the KGHM Group’s activities
(including the risk of switching to a low-emissions economy, a
circular economy).
Active cooperation with the academic environment, which issues
opinions on changes to legal acts, and the on-going providing of
positions and opinions with respect to numerous areas subject to
legislative change (including as part of the membership of
numerous organisations at the national and EU level). Cooperation
with renowned law firms and the creation of specialised
organisational units which monitor the regulatory environment.
Taking preventive actions aimed at adapting to organisational,
infrastructural and technological changes. In order to have a
consistent approach to ensuring compliance, defined as adherence
to requirements arising from external (laws in force) and internal
regulations or voluntarily-adopted legal obligations and standards
(including ethical standards), a Compliance Management Policy for
the KGHM Polska Miedź S.A. Group together with a Procedure and
Methodology for managing compliance in KGHM Polska Miedź S.A.
are in force. Having a consistent compliance system in the KGHM
Polska Miedź S.A. Group is an element of effective corporate
governance management by among others more efficient reaction
to and preparedness for regulatory changes, protecting reputation
and building an ethical culture in the organisation as well as
increasing awareness and a sense of accountability for compliance
amongst employees.
Table 22. Risk category – Internal Risk, in the Risk Model of KGHM Polska Miedź S.A.
Risk and description of risk factors
Mitigation
(KGHM Group)
The risk of serious accidents or industrial illnesses caused by
improper worke organisation, the failure to follow procedures
or the use of improper protective measures.
The failure to adhere to occupational health and safety rules and
procedures, as well as the employment of persons lacking an
appropriate psychophysical predisposition, could be a source of
potential accidents. Exposure to unfavourable natural conditions
together with associated natural hazards requires, apart from the
high requirements in terms of essential professional preparation,
that employees possess appropriate qualifications in terms of
health, physical ability and psychological fitness. Risk is also
associated with the possibility of temporary production stoppages
caused by serious accidents, which could potentially affect the
operations of the KGHM Group financially, legally and image-wise.
The KGHM Group is also exposed to the risk of professional
illnesses as a result of the impact of the workplace environment on
people. Enhanced exposure to risk is also associated with external
factors in the form of sub-contractors and their safety culture.
A detailed division of obligations between management and
supervisory staff on the one hand and entities providing services
to the Company on the other, to ensure safe working conditions
and the proper coordination of work. Systematic discussion of
workplace safety with the participation of representatives of sub-
contractors and mining oversight authorities. Analysis of the
causes of accidents, drawing conclusions and taking the necessary,
possible corrective actions to avoid similar situations in the future.
Engaging employees and sub-contractors in campaigns carried out
in the KGHM Group aimed at improving OHS standards.
Advancement of development initiatives based on the idea of
sustainable development and safety and enhancing the Group’s
image as being socially responsible under the adopted Strategy.
Actions consistent with the cycle of self-improvement in order to
continuously seek and prepare for implementation the catalogue
of initiatives aimed at further improveme
nt of OHS and
advancement of the long-term goal of the Company, „Zero
accidents due to human and technical errors, zero occupational
illnesses among our employees and contractors”. The Employee
Safety Improvement Program „Think About The Consequences”
includes actions as regards behaviours, and is expanded each year
by new goals. The result should be achieved by changes in
employee behaviour and habits as regards occupational health
and safety, as well as by improving the Occupational health and
safety management system, aimed at preventing injuries and
health-related problems amongst employees and ensuring a safe
and hygienic workplace.
Optimisation of health care for employees, especially following
workplace accidents and the systematic search f
or new
organisational and technical initiatives enabling achievement of a
high level of safety for employees in the divisions of KGHM Polska
Miedź S.A. Threats are identified and professional risk is evaluated
on a cyclical basis as well as in accordance with the needs of the
moment, including those related to the SARS-CoV-
2 virus
pandemic.
(KGHM Group)
The risk of lack of acceptance by the public, local governments
or other stakeholders for the conduct of development and
exploration work.
The KGHM Group is exposed to the risk of exposure to external
factors involving the environment in which it operates and
Advancement of CSR Strategy and close cooperation with
government bodies. Meetings and negotiations with stakeholders,
informational campaigns, conferences, publications. Cooperation
with academic and sector bodies and authorities in order to meet
the highest communication-public relations standards. Caring
about and paying due diligence to the identification of expectations
and demands by the external environment. Establishing
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 74
the Company and the Group in 2022 – translation from the original Polish version
consequently, exposure to changes in the image of the
organisation and its products or services. Risk of ineffective
management of relations with stakeholders, which affects the
willingness of the environment and the taking of actions towards
the KGHM Group. In extreme cases, the materialisation of this risk
may lead to the blocking of development plans. Risk related to the
heightened exp
ectations and awareness by stakeholders of
questions related to sustainable development and corporate social
responsibility, which could lead to higher operating and investment
costs, and in extreme cases to their limitation. Variable consumer
requirements, which is also connected with paying attention to the
manner of production, and not only to the quality and price of the
final good.
commercial and business relationships with entities who declare
an attitude of caring about environmental protection and
compliance with existing laws in this regard.
(KGHM Group)
The risk of not being able to secure appropriate staff to
advance the Group’s business goals (including the lack of
sufficient human resources to maintain the continuity of the
Core Business operations due to the COVID-19 pandemic)
The risk of not being able to acquire and keep human resources,
among others to support on-going operations and development
projects. The KGHM Group is exposed to risk related to the
availability of qualified staff in the market as well as on-going
identification of staffing needs in terms of required qualifications
and supplying them while reflecting staffing fluctuations. Of
significance is access to qualified employees in the future in the
context of an aging society and a market deficit of certain
professions.
In the first half of 2022, an important factor affecting exposure to
risk was the COVID-19 pandemic and the impact of its subsequent
seasonal waves on the availability in particular of key employees
necessary to maintain the continuity of the Core Business.
Advancing a number of initiatives and activities in the field of HR,
identification of potential successors for key positions (including in
terms of mobility) and preparations for advancement. On-going
comparison of remuneration packages (including in relation to
working conditions) to offers on the market. Cooperation with
schools and universities to promote the company as an employer
and to ensure qualified employees. Implementation of programs
to develop employee skills and to secure funds for this purpose.
Development of recruiting tools and the identification of key skills
to advance the business goals of the KGHM Group.
Existing solutions in the KGHM Group undergo systematic ongoing
analysis and evaluation in terms of ensuring employee safety and
the implementation of additional solutions aimed at limiting the
risk of spreading the SARS-CoV-2 virus amongst the staff.
Continually updating developed operating procedures in case of
the need to limit or cease production, concepts are prepared for
new working systems enabling contact between working shifts as
well as lists of employees/specialists and their substitutes, who are
vital to ensuring the operational continuity of the Core Business.
Maintaining procedures on what to do in the case of detection of
SARS CoV-2 amongst the employees in line with the guidelines of
appropriate governmental institutions.
(KGHM Group)
Risk that the confidentiality, integrity or availability of
informational assets which have been collected, stored or
processed on IT resources may be compromised, as well as
cybernetic threats.
The KGHM Group, due to its well-developed IT structure, is exposed
to the risk of a breach in the confidentiality, integrity, availability or
authenticity of informational assets which have been collected,
stored or processed on IT resources. The sources of this risk are
both forces of nature (e.g. fires, construction catastrophes,
downpours) as well as hazards arising from human activities
(intentional or not). The KGHM Group is exposed to the risk of an
unauthorised loss, change or destruction of critical data and
information as well as loss of the possibility of the operational
control of equipment and systems as a result of cybernetic attacks
on the infrastructure of the KGHM Group. Such incidents could
generate the risk of production shutdowns, leading to production
and financial losses and claims due to the loss/disclosure of
personal data. This risk has a large impact on the reputation of the
KGHM Group.
Strict adherence to and application of principles arising among
others from the IT Security Policy and from Facility Protection
Plans. The systematic evaluation of risk of loss of the
confidentiality, integrity, availability or authenticity or availability of
informational assets which have been collected, sto
red or
processed on IT resources. Ongoing monitoring of the usefulness
of existing infrastructure as well as the analysis of and planning for
the implementation of teleinformational solutions to increase
security, in accordance with global trends and best practice in this
regard. Implementation of security systems and adequate
organisational solutions at various levels of the infrastructure,
aimed at staying ahead of any decrease in the utility of systems at
risk and minimising the potential losses of the KGHM Group.
KGHM Polska Miedź S.A. engages in a variety of investments to
enhance the cybersecurity level of IT/OT systems as regards among
others the investigation of incidents and data security.
In 2022, a Security Operation Center (SOC) was created. The main
task of the new unit is to provide 24-hour first-line support to deal
with cybersecurity incidents.
(KGHM Group)
The risk of exceeding project/program budgets and schedules,
deviating from defined scopes and failing to meet defined
quality parameters as a result of the improper management
of portfolios and projects. Risk related to the operational
management and development of strategic projects,
reflecting the question of incurred costs, permits and
infrastructural requirements.
The KGHM Group is exposed to risk related to the advancement of
projects and programs as a result of their improper management.
The risk of changes in budgets, schedule, scope and deviations
from the expected quality of project products and/or programs is
Improve standards in the management of portfolios and projects
and implement a projects management system aimed at
supporting the organisation in the planning and management of
portfolios and projects. Standardisation of planning and
preparation processes and in the advancement of investment
projects, comprising such aspects as scheduling, preparing costs
projections, technical designing, project review, investment
handover documentation, risk analysis of projects/programs.
Management of projects in accordance with international
standards and conducting on-going monitoring of progress. On-
going evaluation of the economic feasibility of existing and
anticipated development projects.
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 75
the Company and the Group in 2022 – translation from the original Polish version
related to a variety of factors of an internal nature involving both
the methodological approach and the projected structure of
management and supervision. Improperly selected tools and
techniques, lack of established criteria and principles for evaluating
projects, or inconsistency in their application or adherence to them
may restrict or prevent the achievement of the KGHM Group’s
strategic goals. In terms of external factors, there remains the
question of meeting legal and formal requirements which could
generate deviations from the assumed schedule, and in extreme
instances may halt the advancement of a project/program.
In 2022, KGHM Polska Miedź S.A. commenced an InvestCUp
Development Program, dedicated to people involved in the
preparation and realisation of projects, as a tool to raise their
effectiveness by developing skills
and enhancing employee
engagement.
Table 23. Risk category – Climate, in the Risk Model of KGHM Polska Miedź S.A.
Risk and description of risk factors
Mitigation
(KGHM Group)
Climate risk related to the negative impact of climate change
on the activities of the KGHM Group.
The KGHM Group is exposed to the risk of climate change due to
the negative impact of factors arising from specified events, in
particular related to violent and chronic weather phenomena
resulting from changes in the climate, such as storms, floods, fires
or heat waves, as well as permanent changes in weather patterns,
which could interrupt the values chain or the continuity of
operations of the KGHM Group.
This risk is related to changes in the conditions under which
activities are conducted or to interruptions in the operations of the
Core Business, as a result of climate change and adaptation to
these changes. Permanent changes in weather patterns due to
climate change may also in consequence may also
lead to
degraded working conditions and higher operating costs related
directly to business activities.
The development and publication of the Climate Policy of KGHM
Polska Miedź S.A. as a directional document, whose chief goal is to
present the climate-related ambitions of the Company and to set
forth the scope of process and organisational changes needed to
achieve them. The primary goals and assumptions of the Climate
Policy of KGHM Polska Miedź S.A. are presented in section
3.1.
Approach to the management of environmental impacts and
climate protection.
An implemented and improved system of risk management, which
also comprises management of climate risk, including the
categorisation, identification, assessment and manner of dealing
with this risk, along with plans for its mitigation.
An implemented and improved system of compliance
management, which also comprises management of the risk of loss
of compliance with climate-related requirements.
Continued implementation of a climate reporting system based on
the Recommendations of the Task Force on Climate-Related
Financial Disclosures from 2017.
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 76
the Company and the Group in 2022 – translation from the original Polish version
(KGHM Group)
Climate risk related to the transition to a low-emissions
economy and resistance to climate change.
The KGHM Group is exposed to risk arising from the need of the
economy to adapt to gradual climate change, in particular by
utilising low-emissions solutions. The temporary risk category
comprises questions related to legal requirements, perceptions of
customers and other stakeholders to climate questions,
technological progress towards a low-
carbon economy and
changes in demand and supply for certain products and services,
whose production is associated with negative climate impact.
This risk is related to changes in the conditions under which
activities are conducted arising from climate changes and
adaptation to these changes in the context of observed challenges
presented to the mining and metallurgical sector.
Continued implementation of changes involving key business and
management processes – in particular those related to or having
an impact on restrictions by the Parent Entity in greenhouse gas
emissions by among others changes in corporate governance and
changes as regards indicators, whose goal is to introduce the
process of measuring emissions for the KGHM Group in a manner
fully compliant with GHG Protocol and implementation of the first
indicators responsible for monitoring improvements in the
business robustness model to climate change.
Detailed information on the subject of climate risk may be found in
section 3.3. Approach to climate risk management
.
INFORMATION ON THE IMPACT OF COVID-19 AND/OR THE WAR IN UKRAINE ON THE COMPANY’S AND GROUP’S
OPERATIONS
The greatest impact on the operations and results of the KGHM Polska Miedź S.A. Group is from the Parent Entity and, to a
lesser extent, the KGHM INTERNATIONAL LTD. Group.
Key risk categories
The most significant risk factors related to the COVID-19 pandemic and/or the war in Ukraine, impacting the Company’s
and the Group’s activities are:
- increased absenteeism amongst employees of the core production line as a result of subsequent waves of the
SARS CoV-2 virus;
- further increases in the prices of fuels and energy carriers;
- interruptions in the supply chain and materials availability (e.g. steel), fuels and energy on international markets;
- interruptions and logistical restrictions in international transport;
- restrictions in certain sales markets, a drop in demand and optimisation of inventories of raw materials and
finished products amongst customers;
- a potential global economic slowdown or recession;
- potential exceptional legal changes;
- volatility in copper and silver prices on the metals markets;
- volatility in molybdenum prices;
- volatility in the USD/PLN exchange rate;
- volatility in electrolytic copper production costs, including in particular due to the minerals extraction tax,
changes in the value of purchased copper-bearing materials consumed and volatility in prices of energy carriers
and electricity;
- higher prices of materials and services due to observed high inflation;
- the effects of the implemented hedging policy, and
- the general uncertainty on financial markets and the impact of the economic crisis connected with the COVID-19
pandemic and the ongoing conflict in Ukraine.
Evaluation of the key categories of risk which are impacted by the coronavirus pandemic and/or the war in Ukraine
underwent detailed analysis by the on-going monitoring of selected information in the areas of production, sales, supply
chains, personnel management and finance, in order to support the process of reviewing the current financial and
operating situation of the KGHM Polska Miedź S.A. Group. As a result, some of the aforementioned threats had a negative
impact on the Group’s operations and ultimately resulted in deviations from achievement of the budget targets for 2022 in
terms of costs of the KGHM Polska Miedź S.A. Group. Details regarding the results of the operating segments may be found
in sections 8-11
.
Impact on the metals market and share price
From the point of view of the Company, the impact of the COVID-19 pandemic and/or the war in Ukraine is their impact on
market risk connected with volatility in metals prices and stock exchange indices during the reported period. The Company’s
share price at the end of 2022 rose by 45% compared to prices at the end of the third quarter of 2022 and fell by 9%
compared to the end of 2021, and at the close of trading on 30 December 2022 amounted by PLN 126.75. During these
same periods the WIG index rose by 14% and fell by 17%, while the WIG20 index rose by 30% and fell by 21%. As a result of
these changes in share prices, the Company’s capitalisation decreased from PLN 27.88 billion at the end of 2021 to PLN
25.35 billion at the end of 2022.
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 77
the Company and the Group in 2022 – translation from the original Polish version
After a stable first half of 2022, when the average copper price amounted to 9 761 USD/t, the situation on the metals
markets demonstrated a falling trend. The average copper price in the third quarter of 2022 fell by 18.6% compared to the
average copper price in the second quarter of 2022. Since November 2022 there has been a rising trend on metals markets
and in the fourth quarter of 2022 the average copper price rose by 3.3% compared to the average copper price in the third
quarter. The average price of copper in 2022 amounted to 8 797 USD/t, an amount expected in the budget.
Impact on the fuels market, energy carriers and availability of raw and other materials
Uncertainty as to the potential continuation of rises in prices of fuels and energy carriers may continue to be the main
factor generating further increases in the costs of core activities.
Individual deviations can be observed in the availability of raw and other materials, although at the present time the KGHM
Polska Miedź S.A. Group is still not experiencing a significant negative impact from such variability on its operations. Taking
into consideration the continuity of supplies of energy carriers (natural gas, coal, coke) the KGHM Polska Miedź S.A. Group
at the present time is not experiencing a significant negative impact from the suspension of deliveries of Russian natural
gas, coal and coke, and is fully capable of maintaining the continuity of the Core Production Business and all production
processes.
Impact on the Group’s spa activities
The increased number of infections by the omicron variant of the SARS-CoV-2 virus recorded at the start of 2022, and in
subsequent months the war in Ukraine, led to a temporary drop in the number of reservations and visits by customers to
the spa entities. Nevertheless, the situation, starting from the turn of April and May 2022, began to systematically improve
and stabilise. Starting from 16 May 2022 the state of epidemic was rescinded, and was replaced by the introduction of a
state of epidemiological threat, which remains in force until rescinded. In the fourth quarter of 2022 there was no direct
negative impact of COVID-19 recorded on the functioning of the market where the companies conducts their business. At
the same time the companies do not anticipate in their financial targets for 2023 and for subsequent years further
restrictions in the conduct of their activities or the temporary suspension of activities in their curative facilities.
Spa companies, which are engaged in curative activities and are financed from public funds, take advantage of protections
resulting from the act on specific solutions serving to protect the recipients of gaseous fuels due to the situation on the
natural gas market. The protection foreseen by the act will function to the end of 2023. The financial obligations of the spa
companies towards lenders and lessors in the fourth quarter of 2022 were paid on time, while the improvement in results,
despite higher than expected costs of electricity, natural gas and debt servicing, had a positive impact on meeting the terms
of the investment loan agreement with the bank Pekao S.A.
As a result of receiving funds from 2.0 Shield for Large Enterprises from the Polish Development Fund (Polski Fundusz
Rozwoju S.A.) for periods subject to the closure of activities, in August 2022 the spa companies Uzdrowisko Połczyn Grupa
PGU S.A. and Uzdrowiska Kłodzkie S.A. Grupa PGU settled the support received and obtained remission of the loans. Other
companies which received subsidies under the PFR’s Financial Shield program for the SME sector, are awaiting a decision
by the PFR regarding the settlement of the support.
Impact on the activities of the Parent Entity and other Group companies
The epidemic situation caused by COVID-19 did not have a significant impact on the operations of the Company and the
other companies of the Group. As at the date of publication of this report the Management Board of the Parent Entity
estimates the risk of loss of going concern caused by COVID-19 as low.
The geopolitical situation related to the direct aggression of Russia against Ukraine and the implemented system of
sanctions at the present time is not restricting the operations of KGHM Polska Miedź S.A. or other Group companies, while
the risk of interruptions to the continuity of the activities of the Company and the KGHM Polska Miedź S.A. Group in this
regard continue to be estimated as low.
Despite the high level of inflation observed in the global economy, leading to a tightening of monetary policy, demand for
the Company’s key products did not substantially deteriorate in the fourth quarter of 2022r. Metals prices experienced a
rising trend, being the result among others of depreciation of the USD. Additionally, the easing by Chinese authorities of
the „zero COVID” policy raised hope of increased metals consumption by China in 2023, which also had a positive impact
on the rise in metals prices at the end of 2022.
In 2023 the main sources of risk for economic development remain the high level of inflation and Russian aggression against
Ukraine, which consequently may bring an economic slowdown in sectors which are critical for metals consumption (such
as construction). Today it is not possible to estimate the impact of these factors on possible profit, and the situation is under
constant monitoring while at the same time taking possible mitigating actions.
With respect to the availability of capital and the level of debt, KGHM does not hold bank loans drawn from institutions
threatened with sanctions.
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 78
the Company and the Group in 2022 – translation from the original Polish version
From the point of view of exchange differences (the revaluation of balance sheet items), a weakening of the PLN may mean
foreign exchange gains (unrealised) due to the fact that the amount of the loans granted by KGHM in USD is higher than
the amount of borrowings in USD.
In terms of the other companies of the KGHM Polska Miedź S.A. Group, the situation in Ukraine in 2022 did not have a
substantial impact on the operating results generated by these entities.
Preventive actions in the Group
In KGHM Polska Miedź S.A., as well as in all international mines of the KGHM Polska Miedź S.A. Group as well as Sierra
Gorda S.C.M., thanks to the implementation of a variety of preventative measures there were no production stoppages
which would have been directly attributable to the pandemic and/or the war in Ukraine. As a result, the Group’s production
of copper, silver and molybdenum in 2022 was in line with the targets set in the budget.
KGHM Polska Miedź S.A. for years has applied procedures to monitor receivables. The punctuality of payments by
customers is reported daily, while potentially recorded interruptions in cash flow from clients are immediately explained.
In terms of sales, most customers are not currently experiencing a strong negative impact from prior waves of the epidemic
on their operations, thanks to which the trade receivables towards the Parent Entity are paid on time, while deliveries to
customers are proceeding without major problems.
The strategy of diversification of suppliers and the use of alternative solutions which are effectively applied by the KGHM
Polska Miedź S.A. Group at the present moment mitigate the risk interruptions to the supply chain for raw and other
materials.
The Group is fully capable of meeting its financial obligations. The financial resources held by the Group and available
borrowings guarantee its continued financial liquidity. The basing of the financing structure of the Group at the level of the
Parent Entity on long-term and diversified sources of financing, provided the Company and the Group with long-term
financial stability by maintaining a stable schedule of debt maturity dates and by optimising its cost.
Due to the centralisation of the process of obtaining external financing for the needs of the entire Group, in order to transfer
liquidity within the Group, a debt instrument in the form of owners loans is used to support the investment process, and
the Group uses local and international cash pooling to service its daily operations.
At present the Parent Entity is not aware of any significant risk of a breach in the financial conditions (so-called covenants)
contained in external financing agreements related to the COVID-19 pandemic and/or the war in Ukraine.
The Group continues to advance its investment projects in accordance with established schedules and is not aware of any
increase in risk related to their continuation as a result of the coronavirus pandemic and/or the war in Ukraine.
During the reporting period there were no interruptions in the continuity of the Group’s operations caused by infections of
this virus amongst the employees. There continues to be a lack of any substantial heightened level of absenteeism amongst
employees of the Parent Entity’s core business or domestic and international production assets related to the pandemic.
The process is continuing in the Company of implementing a comprehensive business continuity management system,
which also enables a detailed breakdown of the scope of actions undertaken as regards managing corporate risk in terms
of the risk of a catastrophic impact and the small probability of its occurrence.
Taking into consideration the risk of a new mutation of the SARS-CoV-2 virus and the subsequent wave of the COVID-19
pandemic observed in China, there still remains uncertainty regarding the potential development of the epidemic situation
in the world, in particular in terms of the consequences of its impact on the economic and social situation in Poland and
globally. Since the start of the COVID-19 pandemic, China had maintained a rigorous „zero covid” policy, but in the fourth
quarter of 2022 the decision was made to remove most of the restrictions. The expected economic recovery in the country
and the world given the current improvement in the epidemiological situation was slowed by Russian’s aggression against
Ukraine, whose impact on food security and high energy prices and producer inflation, as well as problems with access to
artificial fertilizers. From the point of view of the stability and continuity of energy carriers supply chains, of importance will
be geopolitical directions as regards issues related to energy and the climate, especially in the context of European countries
gaining independence from Russian natural gas and coal deliveries as well as the impact of the plan adopted by EU member
countries to reduce natural gas consumption during the winter months. The Parent Entity continually monitors the
international economic situation to assess its potential negative impact on the KGHM Polska Miedź S.A. Group and to
undertake pre-emptive actions to mitigate this impact.
POLITICAL RISK IN CHILE
Due to the ongoing work on the new Constitution in Chile, there is visible increased exposure to political risk which could
in future have an impact on operations there. In September 2022 the citizens of Chile voted in a decisive majority against
the new draft constitution. The rejected draft constitution assumed among others that more pressure would be placed on
the question of protecting the natural environment, indigenous peoples and their habitats, increasing the country’s
regionalisation (tax autonomy, political autonomy for individual regions etc.), as well as the anticipated possible
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 79
the Company and the Group in 2022 – translation from the original Polish version
nationalisation of the mining industry. Despite this, work on the new constitution has continued. At the same time work is
underway in Chile to introduce a new tax royalty for the mining sector. The projected changes from October 2022, which
are lighter than those initially proposed, involve both an ad valorem tax on sales, as well as a tax calculated based on
operating margin. As regards the aforementioned changes, the company Sierra Gorda SCM is however temporarily
protected under a DL600 investment agreement. The Parent Entity continually monitors the political situation in Chile and
the related impact on the mining industry, to maintain an update assessment of its potential impact on the KGHM Polska
Miedź S.A. Group. Depending on the direction of changes and the decisions taken by the Chilean social authorities, various
scenarios are being analysed which will require the taking of appropriate adaptive actions.
Taking into consideration the complicated legislative process in Chile, as well as the variable support for the proposed
solutions, it may turn out that the draft constitution will not be accepted by Chilean lawmakers within a specific timeframe
or form.
MARKET, CREDIT AND LIQUIDITY RISK
The goal of market, credit and liquidity risk management in the KGHM Polska Miedź S.A. Group is to restrict the undesired
impact of financial factors on cash flow and results in the short and medium terms and to enhance the Group’s value over
the long term. The management of risk includes both the elements of risk identification and measurement as well as its
restriction to acceptable levels. The process of risk management is supported by an appropriate policy, organisational
structure and procedures. In the Parent Entity these issues are covered in the following documents:
− Market Risk Management Policy and the Rules of the Market Risk Committee,
− Credit Risk Management Policy and the Rules of the Credit Risk Committee, and
− Financial Liquidity Management Policy and the Rules of the Financial Liquidity Committee.
The „Market Risk Management Policy in the KGHM Polska Miedź S.A. Group” covers selected mining companies in the Group
(KGHM Polska Miedź S.A., KGHM INTERNATIONAL LTD., FNX Mining Company Inc., Robinson Nevada Mining Company,
KGHM AJAX MINING Inc.).
Financial liquidity management is carried out in accordance with the „Financial Liquidity Management Policy in the KGHM
Group” which regulates financial liquidity management in the Group and is carried out by individual Group companies,
while its organisation and coordination as well as the supervision thereof is performed in the Parent Entity.
Credit risk management in the Parent Entity is carried out in accordance with the Management Board-approved “Credit Risk
Management Policy”. The Parent Entity serves as an advisor to the Group’s companies with respect to managing credit risk.
The „Credit Risk Management Policy in the KGHM Polska Miedź S.A. Group” applies to selected Group companies, the goal
of which is to introduce a comprehensive, joint approach and the most important elements of the credit risk management
process.
Market risk management
Market risk is understood as the possible negative impact on the Group’s results arising from changes in the market prices
of commodities, exchange rates and interest rates, as well as from changes in the value of debt securities and share prices
of listed companies.
In terms of market risk management (in particular the risk of changes in metals prices and exchange rates) of greatest
significance and impact on the results of the Group are the scale and nature of the activities of the Parent Entity and the
mining companies of KGHM INTERNATIONAL LTD.
The Parent Entity actively manages market risk, undertaking actions and decisions in this regard within the context of the
global exposure throughout the KGHM Polska Miedź S.A. Group.
The Management Board is responsible for market risk management in the Parent Entity and for adherence to policy in this
regard. The main body involved in performing market risk management is the Market Risk Committee, which makes
recommendations to the Management Board in this area.
Table 24. Risk category – Market, in the Risk Model of the KGHM Polska Miedź S.A. Group
Commodity risk,
currency risk
In 2022, the Group was mainly exposed to the risk of the changes in the prices of metals it sells: copper and silver.
Of major significance for the Parent Entity was the risk of changes in exchange rates, in particular the USD/PLN
exchange rate. The Group’s companies are additionally exposed to the risk of volatility in the prices of other
metals. Market risk related to changes in metals prices arises from the formula for setting prices in physical metals
sales contracts, which are usually based on the average monthly market prices for the relevant future month.
In accordance with the Market Risk Management Policy, in 2022 the Parent Entity continuously identified and
measured market risk related to changes in metals prices, exchange rates and interest rates (analysis of the
impact of market risk factors on the Parent Entity’s activities – profit or loss, balance sheet, statement of cash
flows), and also analysed the metals, currencies and interest rates markets. These analyses, along with
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 80
the Company and the Group in 2022 – translation from the original Polish version
assessment of the internal situation of the Parent Entity and the Group, represented the basis for taking decisions
on the application of hedging strategies on the metals, currency and interest rates markets.
In terms of the realisation of the strategic plan of hedging against market risk, in 2022 the Parent Entity
purchased put options on the currency market in the amount of USD 205 million to cover planned revenues from
sales with maturities from April 2022 to December 2022, as well as collar options structures on the currency
market in total for USD 400 million of planned revenues from sales in the period from August 2022 to December
2022 as well as collar options structures for USD 2 640 million for the period from January 2023 to December
2024.
As part of the execution of the strategic hedging plan of the Parent Entity against market risk,
in 2022 implemented strategies to hedge planned revenues from copper sales. Seagull options strategies were
entered into for the period from January 2023 to December 2023 for the total volume of 90 thousand tonnes. In
addition, a hedged position on the copper market for this same period was restructured for the total volume of
12 thousand tonnes. In 2022, the Parent Entity did not implement hedging strategies on the silver market.
Detailed disclosures on the actions taken in 2022 with respect to market risk management is presented in notes
7.5.1.2 and 7.5.1.3 of the consolidated financial statements.
As at 31 December 2022, the Parent Entity also held open CIRS (Cross Currency Interest Rate Swap) transactions
for the notional amount of PLN 2 billion, hedging against market risk related to the issue of bonds in PLN with a
variable interest rate. Debt due to bonds denominated in PLN generate currency risk due to the fact that most of
the Parent Entity’s sales revenue is denominated in USD.
In terms of managing currency risk, the Parent Entity applies natural hedging by borrowing in currencies in which
it has revenues. The value of bank and investment loans as of 31 December 2022 drawn in USD, following their
translation into PLN, amounted to PLN 3 435 million (as of 31 December 2021: PLN 2 980 million).
In 2022, none of the Group’s mining subsidiaries implemented forward transactions on the metals and currency
markets and did not hold open positions as of 31 December 2022. Risk related to changes in metals prices did
however exist in the case of embedded derivative instruments in contracts for the purchase of metal-bearing
materials.
Some of the Group’s Polish companies managed the currency risk related to their core businesses by opening
derivative transactions on the EUR/PLN and USD/PLN markets.
Interest rate risk Interest rate risk is the possibility of the negative impact of changes in interest rates on the Group’s position and
results. In 2022, the Group was exposed to such risk due to loans granted, free cash invested on deposits, the
reverse factoring program and borrowings.
As at 31 December 2022, the following positions were exposed to interest rate risk by impacting the amount of
interest income and costs:
−
cash and cash equivalents: PLN 1 200 million,
−
borrowings: PLN 2 656 million,
−
trade and similar payables: PLN 18 million.
As at 31 December 2021, the following positions were exposed to interest rate risk due to changes in the fair
value of instruments with fixed interest rates:
−
receivables due to loans granted by the Group: PLN 21 million,
−
borrowings: PLN 3 787 million.
As at 31 December 2022, the Parent Entity held open CIRS (Cross Currency Interest Rate Swap) transactions for
the notional amount of PLN 2 billion, hedging against market risk related to the issue of bonds in PLN with a
variable interest rate.
The Group uses financial instruments based on variable interest rates, which fall under the reference rates
reform. As a result of the reform, publication of certain IBOR rates ceased from 1 January 2022 and the next ones
will cease to be published from 30 June 2023.
The Group identified agreements which include clauses based on LIBOR and which will be changed once the
reference rates are superseded. These are mainly borrowing and factoring agreements. In 2022 some of the
bilateral financing agreements were annexed in order to introduce SOFR or CME Term SOFR rates. Negotiations
are underway with other financial institutions aimed at replacing LIBOR with an alternative benchmark.
On 7 July 2022, an Act on crowdfunding for business and support for borrowers, which is a basis to change the
WIBOR and WIBID rates applicable to instruments in PLN. As a result of legislative changes in September 2022,
the Steering Committee of the National Work Group for reform of the reference rates selected WIRON as the
target Risk-Free Rate (RFR) for the Polish financial market. Details on the replacement of current rates by an
alternative one will be published in 2023, and the publication of old WIBOR and WIBID rates will end in 2025.
Until 2025, the IBOR reform will not have an impact on the interest rate applied in the Group’s derivatives, because
the CIRS transactions entered into (open cross currency interest rate swaps) and bonds issued by the Group are
based on the WIBOR reference rate. In the case of this benchmark, until 2025 we are in the transitional period,
during which adjustments to transactions entered into before the reform will not be required. After 2025, the
IBOR reform may have an impact on cash flow hedging of variable interest of issued bonds (Tranche B) in the
amount of PLN 1.6 billion, based on WIBOR 6M, that is CIRS transactions (cross currency swap) with maturity
falling in 2029.
Detailed disclosure on the impact of the IBOR reform on the Group’s financial instruments may be found in Note
7.5.1.4 of the consolidated financial statements.
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the Company and the Group in 2022 – translation from the original Polish version
Price risk related
to the change in
share prices of
listed companies
Price risk related to the shares of listed companies held by the Group is understood as the change in their fair
value due to changes in their quoted share prices.
As at 31 December 2022, the carrying amount of shares of companies which were listed on the Warsaw Stock
Exchange and on the TSX Venture Exchange amounted to PLN 421 million.
Result on
derivatives and
hedging
transactions
The total impact of derivatives and hedging instruments (transactions on the copper, silver, currency and interest
rate markets as well as embedded derivatives and USD-denominated loans designated as a hedge against a
change in the exchange rate) on the Group’s profit or loss for 2021 amounted to -PLN 361 million, of which:
−
PLN 182 million decreased revenues from contracts with customers,
−
PLN 220 million decreased the result on other operating activities, and
−
PLN 41 million increased the result on financing activities (including: PLN 60 million as an adjustment of
interest on borrowings).
Moreover, in 2022 other comprehensive income increased by PLN 1 671 million (impact of hedging instruments).
As at 31 December 2022, the fair value of open positions in derivatives of the Group (on the metals, currency and
interest rate markets and in embedded derivatives) amounted to PLN 357 million.
Credit risk management
Credit risk is defined as the risk that counterparties will not be able to meet their contractual liabilities.
The Management Board is responsible for credit risk management in the Parent Entity and for compliance with policy in
this regard. The main body involved in actions in this area is the Credit Risk Committee.
In 2022, the KGHM Polska Miedź S.A. Group was exposed to this risk, mainly in four areas:
Table 25. Areas of credit risk in the Risk Model of the KGHM Polska Miedź S.A. Group
Credit risk related
to trade
receivables
The Group’s companies have been cooperating for many years with a large number of customers, which affects
the geographical diversification of trade receivables.
The Parent Entity limits its exposure to credit risk related to trade receivables by evaluating and monitoring the
financial standing of its customers, setting credit limits, using debtor security and non-recourse factoring. An
inseparable element of the credit risk management process realised by the Parent Entity is the on-going
monitoring of balance and aging of receivables and the internal reporting system.
Buyer’s credit is only provided to proven, long-term customers. In the case of new customers, an effort is made
to ensure that sales are based on prepayments or trade financing instruments which wholly transfer the credit
risk to financial institutions.
In 2022, the Parent Entity secured its receivables by promissory notes, registered pledges, bank guarantees,
corporate guarantees, mortgages and documentary collection. Moreover, the majority of customers who hold
buyer's credit on contracts have ownership rights confirmed by a date certain.
To reduce the risk of insolvency by its customers, the Parent Entity has a receivables insurance contract, which
covers receivables from entities with buyer’s credit which have not provided strong collateral or have provided
collateral which does not cover the total amount of the receivables. Taking into account the collateral held and
the credit limits received from the insurance company, as of 31 December 2022 the Parent Entity had secured
76% of its trade receivables (as of 31 December 2021: 84%).
The concentration of credit risk in the Group is related to the terms of payment granted to key clients.
Consequently, as of 31 December 2022 the balance of receivables from 7 of the Group’s largest customers, in
terms of trade receivables at the end of the reporting period, represented 58% of the trade receivables balance
(as of 31 December 2021: 49%). Despite the concentration of this type of risk, it is considered that due to the
availability of historical data and the many years of experience cooperating with clients, as well as above all due
to the security used, the level of credit risk is low.
Credit risk related
to cash and cash
equivalents and
bank deposits
The Group allocates periodically free cash in accordance with the requirements to maintain financial liquidity and
limit risk and in order to protect capital and maximise interest income.
Credit risk related to deposit transactions is continuously monitored by the on-going review of the credit ratings
of those financial institutions with which the Group cooperates, and by limitation of the level of concentration in
individual institutions. As at 31 December 2022, the maximum share of a single entity in terms of credit risk arising
from financial institutions in which the Group has deposited funds amounted to 30% (as of 31 December 2021:
41%).
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the Company and the Group in 2022 – translation from the original Polish version
Credit risk related
to derivatives
transactions
All of the entities with which the Group enters into derivative transactions (with the exception of embedded
derivatives) operate in the financial sector. These are mainly financial institutions, with a medium-high rating.
According to fair value as of 31 December 2022, the maximum share of a single entity with respect to credit risk
arising from open derivative transactions entered into by the Group and from net receivables due to settled
derivatives amounted to 17% (as of 31 December 2021: 26%). Due to diversification of risk in terms both of the
nature of individual entities and of their geographical location, as well as taking into consideration the ongoing
monitoring of the rating of financial institutions with which it cooperates, the Group is not materially exposed to
credit risk as a result of derivative transactions entered into.
Credit risk related
to loans granted
As at 31 December 2022, the balance of loans granted by the Parent Entity amounted to PLN 8 785 million. The
most important of these are long-term loans in the total amount of PLN 5 464 million granted to the company
Future 1 Sp. z o.o. and to the KGHM INTERNATIONAL LTD. Group. Detailed information on the loans granted by
KGHM Polska Miedź S.A. is presented in the Financial Statements, Note 6.2.
As at 31 December 2022, the balance of loans granted by the Group amounted to PLN 9 623 million. The most
important of these are short-term and long-term loans in the total amount of PLN 9 603 million, or USD 2 182
million, granted by the KGHM INTERNATIONAL LTD. Group for the financing of a mining joint venture in Chile.
The loans granted in connection with the financing of a mining joint venture in Chile are subordinated to liabilities
due to a loan in the amount of up to USD 700 million received by Sierra Gorda S.C.M. from Bank Gospodarstwa
Krajowego. In order to guarantee the subordinating of owner loans to the debt granted by the Bank, a
Subordination Agreement was entered into. Under this Agreement, there exists the possibility to repay the owner
loans through the joint venture Sierra Gorda S.C.M., which is contingent on the acceptance of the Bank following
the fulfilment of strictly-defined parameters in the Matching Agreement.
Credit risk related to the loans granted to the joint venture Sierra Gorda S.C.M. is dependent on the risk related
to mine project advancement and is assessed by the Management Board of the Parent Entity as moderate.
Management of financial liquidity risk
The management of capital in the Group aims at securing funds for development and at securing relevant liquidity.
Table 26. Risk category – Liquidity risk, in the Risk Model of the KGHM Polska Miedź S.A. Group
Financial liquidity
management
Management of the Group’s liquidity is conducted in accordance with the Financial Liquidity Management Policy
in the KGHM Group. This document describes the process of financial liquidity management in the Group, which
is realised by the Group’s companies, while its organisation and coordination as well as the supervision thereof
is performed in the Parent Entity.
The basic principles resulting from this document are:
− the need to ensure stable and effective financing for the Group’s operations,
− constant monitoring of the Group’s level of debt, and
− effective management of working capital.
External financing of the Group is based on the following pillars:
− an unsecured, revolving syndicated credit facility, obtained by the Parent Entity in the amount of USD 1 500
million with a 5-year tenor with the option of extending for another 2 years (5+1+1). In the years 2020-2021
the Parent Entity obtained the consent of the syndicate’s members to extend the tenor by another 2 years,
or to 20 December 2026. The available financing limit during the period of extension will be USD 1 438
million,
− two investment loans granted to the Parent Entity by the European Investment Bank in the amount of PLN
2 000 million and PLN 1 340 million with financing periods of up to 12 years from the date the instalments
are drawn. Instalments under these loans, with agreements signed in 2014 and 2017, were paid out in
accordance with the advancement of work on investment projects, co-financed by the Bank. As at 31
December 2022, the Parent Entity has drawn 6 loan instalments, which will be repaid in the years 2026-
2031.
− bilateral bank loans to the amount of PLN 3 255 million, supporting the management of liquidity of
companies and the financing of working capital as well as the financing of investments, with maturities
falling in 2029,
− the bond issue program of the Parent Entity on the Polish market, based on an issue agreement dated 27
May 2019. On 27 June 2019 the first issue was made in the nominal amount of PLN 2 000 million, under
which 5-year bonds were issued in the amount of PLN 400 million and 10-year bonds in the amount of PLN
1 600 million.
Detailed information regarding available sources of financing and their utilisation in 2022 may be found in Section
6.6 of this report.
The aforementioned sources of financing fully cover the liquidity needs of the Group. During 2022, the Group
made use of external financing which was available from all of the above categories, while borrowings of the
Group and bonds issued as of 31 December 2022 amounted to PLN 5 699 million.
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the Company and the Group in 2022 – translation from the original Polish version
2.7 ETHICS / ETHICAL FOUNDATIONS
GRI 3
-3 material topic: Ethics and transparency
GRI 3
-3 material topic: Respect for human rights
GRI 3
-3 material topic: Customer
satisfaction
GRI 2-25 GRI 2-26 GRI 406-1
VALUES OF KGHM POLSKA MIEDŹ S.A.
KGHM’s values bind all employees, regardless of their position in the organisation or nationality, and are a guidepost for all
decisions and actions taken.
KGHM operates on the basis of deeply rooted values and principles which its employees follow in their daily work. Zero
harm, teamwork, results driven, accountability and courage – these values connect all of KGHM’s employees, whether they
work in mines, processing plants or smelters, in Poland or in other parts of the world. KGHM builds its global position in
the world as a reliable producer, trusted business partner and a company pursuing a sustainable development policy. All
values must occur jointly.
Table 27. Values of KGHM Polska Miedź S.A.
Zero harm Zero harm is the top priority of the Company’s value hierarchy:
−
The life and health of our employees is our priority.
−
Respect for the natural environment, in particular the resources we mine in a responsible manner.
−
The Company cares for the local communities within which it operates and maintains a dialogue with.
− KGHM Polska Miedź S.A. puts emphasis on the continuity and stability of its operations.
Results driven Attainment of results while focusing on KGHM’s long-term success.
−
Ambitious targets and ongoing development.
−
Taking initiative and making extra efforts for the benefit of KGHM.
− Solid work using the right tools.
Accountability All Company Employees are jointly responsible for the actions taken for the benefit of our stakeholders:
−
Acting in a transparent and socially responsible manner, abiding by the standards of the Code of
Ethics.
−
Accountability for our decisions, obligations and constant, stable development.
− Building long-term relationships with our business and social partners.
Courage
The Company addresses new challenges:
−
Employees are brave and continually face new challenges.
−
Courageous decisions are made and new, innovative solutions are constantly sought for.
Teamwork
Teamwork is the basis for the Company’s success:
−
In KGHM, teamwork is performed.
−
Respect for the views of others in a discussion.
−
Using the talents and experience of employees.
−
Diversity, including a multi-cultural environment, are valued in the Company.
KEY ETHICAL STANDARDS IN THE KGHM POLSKA MIEDŹ S.A. GROUP
The main tool for building the corporate culture of the Group is the Code of Ethics of the KGHM Polska Miedź S.A. Group,
which helps define priorities and establish a set of principles applicable to all employees in their daily work.
The Code of Ethics aims to ensure that the employees follow the highest standards based on the above values. It defines
Key Ethical Standards which are implemented through the principles of ethical conduct.
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 84
the Company and the Group in 2022 – translation from the original Polish version
Diagram 16. Ethical standards of KGHM Polska Miedź S.A.
In order to implement the principles and values contained in the Code of Ethics effectively, other relevant policies and
procedures have been introduced in the whole Group. Their implementation satisfies global corporate governance
standards as well as the increasing expectations of our stakeholders, including mainly our clients and financial institutions.
Relying on the best corporate governance practices, in the KGHM Polska Miedź S.A. Group the following principles, policies
and instructions apply, which introduce global, unified standards adapted to the laws applicable in all jurisdictions in which
the KGHM Polska Miedź S.A. Group operates:
− Anti-corruption Policy in the KGHM Polska Miedź S.A. Group,
− Security Policy in the KGHM Polska Miedź S.A. Group,
− Both documents are described in section 2.2. Corporate Governance
.
Organisation of the security and loss prevention system
In order to ensure the correct implementation of the adopted Security Policy and Anti-corruption Policy in the KGHM Polska
Miedź S.A. Group, security and loss prevention units were established in the Divisions along with seven selected domestic
companies whose work is regulated by the Operating Instructions implemented in 2020. Ethics and Anti-corruption
Representatives have been appointed in all entities of the KGHM Polska Miedź S.A. Group, domestic and international; their
work is supervised and coordinated by the Ethics and Anti-corruption Representative in the KGHM Group. The appointed
units are obliged to report periodically in the area of safety and loss prevention to the and Head Office of KGHM Polska
Miedź S.A.
REPORTING IRREGULARITIES AND PROTECTION OF WHISTLEBLOWERS
In order to allow for effective detection of abuses, confidential channels for reporting of irregularities by so called
Whistleblowers have been created, both within the company, as well as from outside of its structures. Persons who report
irregularities, and who do so in good faith and non-anonymously (Whistleblowers) are protected under the KGHM Group
Procedure for Disclosing Improprieties and Protecting Whistleblowers. Anonymous reports are also accepted and followed
up. The channels launched allow reporting without disclosing one’s personal details. Reports are made both centrally, to
the Ethics and Anti-corruption Procedures Unit, and locally, in each of the entities from the KGHM Group, to Ethics and Anti-
corruption Representatives. All the reports are subject to central registration at KGHM Polska Miedź S.A., where they are
verified and sent to relevant units dealing with substantive issues to be reviewed there. The process is monitored by the
Ethics and Anti-corruption Representative in the KGHM Group.
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the Company and the Group in 2022 – translation from the original Polish version
Since 2019, a platform for whistleblowers has been made available on the corporate website – the “KGHM Ethics Line”
available for both employees and third parties, including contractors and customers, in four languages – Polish, English,
Spanish and Russian. The Platform supports anonymous reporting of irregularities and is an alternative channel for other
forms of contact – telephone lines, e-mail boxes and mailing addresses. According to the applicable internal regulations, all
reports are subject to verification and investigation. In 2022, an investment project was carried out concerning the
development of an IT tool to support handling and reviewing reports from Whistleblowers. The work is scheduled to end
and the production version of the tool to be made available in the first quarter of 2023. The development of the tool is
another step in enhancing the process and responding to changing legal requirements connected with the entry into force
of Directive (EU) 2019/1937 of the European Parliament and of the Council of 23 October 2019 on the protection of persons
who report breaches of Union law. It will be a comprehensive solution, covering the entire report handling process and it
will have built-in functionalities to ensure information security and personal data protection. Work is also being done on
updating internal normative acts concerning receipt of reports from Whistleblowers and their protection, aimed at ensuring
compliance with the EU Directive and domestic regulations on the protection of persons who report breaches of law (at
present, a draft bill).
Moreover, employees have the opportunity to report to the Ethics and Anti-corruption Representative, available at each
Group entity, in addition to the tool under development described above and the operating Ethics Line. Besides conducting
regular training and information campaigns, the Representative provides consultations for employees. Moreover,
mediation teams operate in some entities which enable resolving disputes and disagreements between employees before
they escalate and need to be reported through an official channel. It is also possible to raise concerns with a supervisor,
which employees are informed about, among others, through announcements published on the intranet and mandatory
e-learning training. However, these opportunities are dedicated exclusively to Group employees.
Chart 16. Number of reports of breaches of ethical principles in the KGHM Polska Miedź S.A. Group in the period 2018-2022
Diagram 17. Procedure followed in the event of a breach of ethical principles in the KGHM Polska Miedź S.A. Group
KGHM POLSKA MIEDŹ S.A. CODE OF CONDUCT
In keeping with current business practice, including in the mineral resource industry, our business partners, suppliers,
customers and Stakeholders expect companies to have clearly declared ethical regulations.
In 2018, the Management Board of KGHM Polska Miedź S.A. adopted the KGHM Polska Miedź S.A. Code of Conduct. By
doing this, the Company declared its commitment to sustainable development and respect for principles of ethics and
transparency and best industry practices of socially and environmentally responsible enterprises relying on the KGHM
Group Code of Ethics. Both documents regulate standards of conduct observed by the Company. The Codes are an integral,
mutually interconnected whole, based on consistent assumptions and values followed by the Company.
0
5
10
15
20
25
2018 2019 2020 2021 2022
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 86
the Company and the Group in 2022 – translation from the original Polish version
The Code of Conduct is a powerfully practical document. Its purpose is to be a guide and support for the employees,
showing where to look for answers and who to approach if in doubt about decisions taken in everyday situations. The Code
of Conduct provides an easy to understand presentation of the Company’s values for all employees, regardless of their
position.
The idea of adopting and pursuing the Code of Conduct and the Code of Ethics was presented in 2018 and is continuously
repeated to KGHM Polska Miedź S.A. employees via the company’s internal portal (Intranet: “KGHM to My” at
extranet.kghm.com). The Codes are distributed in the printed version during training sessions held by the Ethics and Anti-
corruption Representatives in all Divisions and Companies of the KGHM Polska Miedź S.A. Group. The Code of Conduct and
the Code of Ethics are published for the general public on www.kghm.com, in the Investors/Corporate Governance/Code
of Ethics and ESG Code of Conduct tab: Policies and Codes | KGHM Corporate Website
.
2.8 COUNTERACTING CORRUPTION
GRI 3-3 material topic: Ethics and transparency GRI 205-1 GRI 205-2 GRI 205-3
In order to comply with the key anti-corruption rules in the KGHM Polska Miedź S.A. Group and in the companies of the
KGHM Polska Miedź S.A. Group located in Poland and abroad, in 2020, the Management Board of KGHM Polska Miedź S.A.
adopted a resolution to implement the Anti-corruption Management System in the Divisions and Head Office of KGHM
Polska Miedź S.A. and in the Subsidiaries in accordance with the PN-ISO 37001:2017 standard. The decision was followed
by a series of training workshops for employees, including training for prospective internal auditors and Representatives
on the Anti-corruption Management System in accordance with PN-ISO 37001:2017. In connection with the implementation
of the ISO 37001:2017 standard, in 2021 the KGHM Polska Miedź S.A. Group adopted the new Anti-corruption Policy. The
implementation team supported by an external expert prepared, including updating of the existing and development of
new anti-corruption regulations consistent with the requirements of the standard and designed to ensure the
implementation of the existing Anti-corruption Policy. The new regulations have already been adopted by a resolution of
the Management Board of KGHM Polska Miedź S.A. and are currently being implemented in all Group entities.
The basis for the Anti-corruption Management System is Corruption Risk Management, which is based on identification and
assessment of corruption risks in individual processes pursued by Group entities. The accepted procedures regulate the
corruption risk management process in the Group, which includes management of corruption risk related to Supervised
Organisations and Business Partners. They define detailed standards of handling corruption activities, including conflict of
interest, giving and accepting business gifts, contacts with public officials or events that may constitute corrupt offers. They
also define the liability for violating the Anti-corruption Policy and anti-corruption regulations.
Following the principle “prevention is better than cure”, the KGHM Group manages corruption risk, identifying and
eliminating factors which increase it by implementing adequate supervisory measures. Within the implemented AMS, a
resolution adopted by the KGHM Polska Miedź S.A. Management Board introduced new procedures in the area of
corruption risk management, ensuring compliance of activities performed by the entities from the KGHM Group with the
adopted Anti-corruption Policy. The procedures define detailed standards of handling corruption activities, including giving
and accepting business gifts, contacts with public officials, situations of conflicts of interest and events that may constitute
corrupt offers. They also define the liability for violating the Anti-corruption Policy and anti-corruption regulations. Among
the corporate regulations relating to the Anti-corruption Management System, a Risk Management Procedure has been
implemented, which requires process owners to carry out a quarterly risk analysis for processes for which risks are assessed
as higher than average, countermeasures are introduced to mitigate them.
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 87
the Company and the Group in 2022 – translation from the original Polish version
SUBSTANTIVE PROCEDURES OF THE ANTI-CORRUPTION MANAGEMENT SYSTEM
KGHM/ZSZ/SZDA/P-10
CORRUPTION RISK
MANAGEMENT
The aim of the procedure is to ensure that the performance of all the business processes in the KGHM Group
complies with the adopted Anti-corruption Policy and to ensure that Corruption Risk Management is a
continuous process which guarantees an adequate level of monitoring and improvement of the efficacy of
the adopted and applied means of supervision. The Procedure defines the framework for Corruption Risk
Management.
In 2022, the procedure was amended as its scope was extended to include the rules of due diligence of
candidates and personnel in KGHM Polska Miedź S.A.
KGHM/ZSZ/SZDA/P-11
HANDLING ACTIONS OF
CORRUPTIVE NATURE
The aim of the procedure is to ensure compliance of activities and processes performed by persons working
for or on behalf of entities from the KGHM Group with the adopted Anti-corruption Policy. The regulations
are applicable to all employees and representatives of the entities from the KGHM Group.
KGHM/ZSZ/SZDA/P-12
CORRUPTION RISK
MANAGEMENT REFERRING
SUPERVISED
ORGANISATIONS AND
BUSINESS PARTNERS
The aim of the procedure is to ensure that within the Corruption Risk Management with reference to
obtained risk assessment results, means of supervision will be applied to give an effective response to
threats facing the Supervised Organisations and Business Partners.
The procedure defines how to ensure performance of the Anti-corruption Policy in the Supervised
Organisations and which regulations must be implemented and applied by these organisations. It also
defines Rules of Risk Management connected with Business Partners.
The AMS is implemented in an integrated manner, in connection with which the system documentation of
the Integrated Management System has been also updated. The system is monitored and improved by a
team established for this purpose in 2022 and chaired by the Representative of the Management Board for
the Integrated Management System.
BUSINESS GIFTS
Employees are prohibited from offering or accepting any material benefits in relation to the performance of professional
duties. The only exception is giving and accepting business gifts in line with the local norms and cultural customs, provided
that the giving and accepting of gifts cannot lead to a situation in which such behaviour could be considered as an attempt
to exert pressure or persuade the recipient to act against their duties. Detailed rules pertaining to giving and accepting
customary business gifts have been defined in the Procedure of Handling Actions of Corruptive Nature.
CONFLICTS OF INTEREST
Employees are required to avoid any actions or decisions in a situation of a conflict of interests. If a conflict of interest or
such a possibility arises, employees are obliged to disclose it by submitting a relevant statement. In the event that an
employee files a statement on the potential conflict of interest, the Ethics and Anti-corruption Representative of the Group
entity issues an opinion indicating potential risks and possible preventive barriers, which is communicated to the
employee's supervisor.
REVIEWING OF BUSINESS PARTNERS
Business transactions in the procurement, sales and investment processes, including an option of a third party audit, in
order to ensure that such transactions meet the highest standards of ethical and transparent business operations are
subject to special control (due diligence of business partners). The reviewing of business partners, including in terms of
corruption risk and possible conflicts of interest, is conducted in accordance with the “Procedure of review in procurement,
sales and investment proceedings” implemented in 2019 and pursued by the Security Department at KGHM Polska Miedź
S.A. An amendment to the aforementioned procedure was developed in 2022, which was positively reviewed by the KGHM
Group Council. Introduction of the amendment by Management Board decision is scheduled in the first quarter of 2023.
EDUCATION AND COMMUNICATION ACTIVITIES
Every year, educational and information campaigns and competitions are organized, and publications are prepared for
employees concerning ethics and corruption prevention.
Since 2018, regular security and loss prevention training has been organized, including the topics of corruption prevention
and conflicts of interest, for employees of all KGHM entities. The training covers all newly hired employees in KGHM entities.
In 2022, a total of 1 171 employees were trained during 199 meetings. Topical training is also organized. All materials and
instructions are readily available to Employees on the corporate Intranet site via a dedicated tab devoted to ethics and
corruption prevention.
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 88
the Company and the Group in 2022 – translation from the original Polish version
Regular meetings and training sessions are also organized for the Ethics and Anti-corruption Representatives (40 persons).
In 2022, 9 such training sessions were held in the KGHM Polska Miedź S.A. Group in the scope of implementation of the
AMS compliant with PN-ISO 37001. The objective was to improve the abilities of the Representatives and to share
knowledge. The Representatives are responsible for the organisation and performance of training sessions on ethics and
anti-corruption in KGHM’s companies.
In February 2022, due to the implementation of the Anti-corruption Management System and introduction of new
regulations, the e-learning courses on ethics, prevention of irregularities in the company (in particular corruption, abuse,
discrimination) and accepting reports from Whistleblowers, which had been in force until then, were suspended. In the
same year 2022, training courses were completed by 53 participants (this refers to those employed as of 31 December
2022). In 2022, activities aimed at creating a new online course, scheduled to be launched in the second quarter of 2023,
were carried out.
Table 28. Values of selected GRI Standards illustrating activities relating to corruption prevention in KGHM Polska Miedź
S.A. and in the KGHM Polska Miedź S.A. Group in 2022
GRI
indicator
Issue
KGHM
Polska
Miedź S.A.
KGHM
Polska
Miedź S.A.
Group
GRI 205-
1
Number of plants assessed for corruption risks
11
128
GRI 205-
2
Number of members of supervisory bodies informed about anti-corruption policies and
procedures
10
105
Management Board - number of persons informed about anti-corruption policies and procedures
5
64
Senior management - number of persons informed about anti-corruption policies and procedures
29
157
Management staff - number of persons informed about anti-corruption policies and procedures
683
1311
White-collar workers - number of persons informed about anti-corruption policies and procedures
4 426
8 287
Blue-collar workers - number of persons informed about anti-corruption policies and procedures
13 235
20 702
Number of members of supervisory bodies trained in the scope of corruption prevention
0
65
Management Board - number of persons trained in corruption prevention
0
46
Senior management - number of persons trained in corruption prevention
29
124
Management staff - number of persons trained in corruption prevention
683
1 172
White-collar workers - number of persons trained in corruption prevention
4 426
6 624
Blue-collar workers - number of persons trained in corruption prevention
13 235
18 300
Number of business partners (customers/counterparties) informed about anti-corruption policies
and procedures
2 334
16 925
GRI 205-
3
Number of corruption cases resulting in dismissal or disciplinary punishment
0
2
18
Number of corruption cases concluded with the refusal to renew contracts with business partners
due to breach of corruption rules
1
1
Number of corruption cases concluded with court proceedings regarding corrupt practices
0
0
2.9 HUMAN RIGHTS
GRI 2-25 GRI 2-26 GRI 3-3 material topic: Respect for human rights
KGHM Polska Miedź S.A. is a global organisation, aware of the role of respect of human rights in the modern world. As a
Company with a key impact on the Polish economy, KGHM assumes its responsibility for the protection and respect of all
internationally recognised human rights. On 27 April 2022, the Management Board of KGHM Polska Miedź S.A. adopted for
application the “Human Rights Policy in KGHM Polska Miedź S.A.”, which determined the Company's intentions in this area.
The Policy is publicly available and known by employees and other persons working for the Company, the text of the
document was also made available on corporate website: KGHM Human Rights Policy | KGHM Corporate website
.
18
Corruption cases reported in 2022 relate to KGHM INTERNATIONAL LTD. An investigation was carried out to determine
whether corruption had taken place. Upon the conclusion of the proceedings: one employee was subject to disciplinary
action, another employee was dismissed.
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 89
the Company and the Group in 2022 – translation from the original Polish version
HUMAN RIGHTS POLICY IN KGHM POLSKA MIEDŹ S.A.
In KGHM Polska Miedź S.A. we pledge to protect, promote and implement human rights wherever we carry out our activities
and towards all entities on which we have a direct or indirect impact.
KGHM Polska Miedź S.A. does much more to protect human rights than is required by domestic law. We pledge to conduct
our business in a manner consistent with the International Charter of Human Rights, the UN Guiding Principles on Business
and Human Rights, the OECD Guidelines for Multinational Enterprises, the UN Declaration on the Rights of Indigenous
Peoples and the OECD Due Diligence Guidance on Conflict-Affected and High-Risk Areas.
We declare that respect for human rights by other entities with which we cooperate is an important factor to be taken into
account when establishing mutual business relations.
In KGHM Polska Miedź S.A. we stand up against all unethical actions towards people providing work, both within the
Company and throughout the whole value chain. We are guided by the principle of protecting the dignity of work, including
in matters relating to fair pay, the right to rest and equal access to training.
In the Company, we do not accept any form of violation of personal dignity and gender equality, including: discrimination,
harassment, abuse and other actions that violate the rules of social coexistence.
We combat all forms of modern slavery, forced labour and torture. The Company rigorously respects the prohibition on
the employment of minors. Whilst protecting all rights relating to personal dignity, we also respect, protect and promote
family and parental values (the right to live with family).
We recognise that the protection of human rights is strategically important. In order to ensure that all human rights are
fully protected and that this Policy is up-to-date, continuous monitoring and analysis of the value chain is conducted.
KGHM's Human Rights Policy is compliant with the implemented Corporate Risk Management Policy and Procedure and
contains the identified risks regarding potential human rights violations in the Company’s operations along with their
mitigation, including measures to reduce or mitigate potential risks.
Despite the limitations specific for the mining, steel and metal refining industries, we strive for continuous improvement of
attitudes. This Policy is supported by the Company’s existing regulations and procedures which form part of this document.
As a result of the value chain analysis carried out, the most important human rights in the Company’s operations include:
− The right to benefit from just and favourable working conditions;
− The right to privacy;
− The right to working conditions that meet health and safety requirements.
Employees’ rights
The Company’s Management Board accepts ongoing dialogue with employees as an obligatory norm, including in terms of
the implementation of human rights protection, fully respecting activities protecting the rights of persons performing work,
in particular such activities as: organising speeches, associations, or the possibility to form and join trade unions in the
Company.
The employees of KGHM Polska Miedź S.A. are associated in several dozen trade unions. Trade unions, while fulfilling their
tasks, also have the right to report and investigate violations in the area of human rights protection with the Company’s
management.
At the same time, the commitment of the Company’s Management expressed in this Policy is fully realised by promoting
the same attitude among the Company’s employees.
The right to working conditions that meet health and safety requirements
Occupational health and safety, due to the nature of the Company’s activities, constitutes a priority of the adopted Human
Rights Policy.
The protection of the right to decent working conditions that comply with health and safety requirements (Occupational
Health and Safety Policy) is a specific action and a manifestation of concern for the health of all who are on the Company’s
premises.
In every Division of the Company there is a Social Labour Inspector who has the right to intervene in the event of risks or
violations. There are also departmental Labour Inspectors in the divisions with an extensive organisational structure.
Reported issues in the area of occupational health and safety are also resolved by the Occupational Health and Safety
Committee, which consists of representatives of the employer, the Social Labour Inspector of the company, the
occupational physician and trade union representatives.
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 90
the Company and the Group in 2022 – translation from the original Polish version
Human rights and the value chain
In KGHM Polska Miedź S.A. we do not undertake actions leading to obtaining business benefits while disregarding human
rights.
We avoid working with companies that practice forced labour, slave labour, child labour, companies that fail to ensure
safety conditions in the workplace and companies that fail to respond to other unethical activities.
In KGHM Polska Miedź S.A., through the implementation of relevant documents (Procurement Policy, Contracting Policy,
Responsible Supply Chain Policy, Anti-Corruption Policy), we verify entities with which we cooperate from the perspective
of human rights protection.
To that end, we use special clauses in contracts or the so-called Contractor’s Charter, in which the contractor declares to
respect human rights, in accordance with the standards adopted in this Policy.
In the event of violations of these rights, the Company maintains a consistent dialogue in accordance with its Human Rights
Policy in order to mitigate and prevent future violations.
Social dialogue and human rights
We are in constant dialogue with local governments and communities located in areas where KGHM’s activities may have
an impact. This dialogue also concerns the protection of human rights.
We prioritize the reduction of all risks to the community resulting from the Company’s activities (including the reduction of
the risk of compromising the right to health through consistent implementation of the Climate Policy and the Environmental
Policy).
We actively support the development of local communities and respect their culture by respecting the rights of indigenous
peoples (which is of great importance in the case of the international companies of the Group over which KGHM Polska
Miedź S.A. exercises ownership supervision).
TOOLS FOR IMPLEMENTATION
KGHM Polska Miedź S.A., expressing its highest concern for the protection of human rights within its organisation and
towards all stakeholders on which it has a direct or indirect impact (local communities, contractors, clients, shareholders),
enables the identification of irregularities in order to prevent violations, including the reporting of human rights violations,
through a Whistleblower Platform which is accessible to all.
KGHM Polska Miedź S.A. provides protection for whistleblowers.
The protection of human rights is also implemented through the verification of individual reports by the HR Department
units. The continuous dialogue with trade unions takes into account the possibility of working out joint solutions to
identified risks and possible violations arising in the area of human rights protection.
In KGHM Polska Miedź S.A. we exercise due diligence in reporting on our activities, including non-financial activities. The
status of implementation of this policy is reported on an annual basis. All employees of the Company are obliged to respect
human rights. The Company also provides training concerning the protection of human rights to its employees.
All claims involving a breach of human rights as well as improprieties and inconsistencies with the law are made through
the Whistleblower Platform as well as communicated to HR, undergo thorough analysis. If it is determined that a serious
breach has taken place or probably taken place, state institutions and bodies are informed, appropriate to the type of
breach. The Company also conducts internal explanatory investigations to identify the circumstances and causes of the
alleged improprieties and to determine adequate corrective measures, including disciplinary and organisational actions
towards those persons responsible for the breach. The purpose of the implemented methods is to continuously reduce the
risk of breaches of the law and internal regulations, including of the Human Rights Policy and the Code of Ethics of KGHM
Polska Miedź S.A.
Communication of the Human Rights Policy to personnel and external stakeholders
All employees of the Company have been familiarised with the adopted Human Rights Policy of KGHM. Over 7 000 members
of the KGHM staff underwent online training (internal e-learning platform) on human rights and the adopted Human Rights
Policy, as well as the tools for its observance in KGHM.
Moreover, numerous communication activities have been carried out, both addressed to employees (workshops, webinars,
publications in internal media, so that each employee who does not have the access to a computer at work can also learn
more as regards the implemented Policy) and external stakeholders (publications in nationwide media, participation in
initiatives promoting human rights in business).
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 91
the Company and the Group in 2022 – translation from the original Polish version
COUNTERACTING DISCRIMINATION
We create a workplace environment that is free of any discrimination. We do not tolerate any forms of discrimination,
particularly due to gender, race, age, ethnicity, religion, disability, beliefs, sexual orientation, social status, marital status,
impairment, membership in political parties and trade unions or employment status. We apply objective and fair employee
assessment criteria based on the primacy of knowledge, professional competencies, social skills and the quality of work
provided. Our remuneration and incentive criteria are clear.
At KGHM, we manage diversity to create an organisational culture based on mutual respect, equal treatment, access to
development opportunities and use of employee potential. Our approach to managing diversity is defined in the “KGHM
Declaration of Diversity”.
PREVENTING ABUSE
The entire KGHM Polska Miedź S.A. Group implemented an Anti-Abuse Procedure, enabling the effective prevention of
personal abuse in the workplace. The procedure describes a catalogue of actions designed to prevent abuse, actions to be
taken if abuse does occur, and defines obligations of the employer and employees in this respect. The Procedure applies
to all employees of the KGHM Polska Miedź S.A. Group, regardless of the type of contract or position held. Every employee
who believes they have experienced or have witnessed behaviour displaying features of abuse, has the right to lodge a
report. Such a report is lodged in a process defined in the Procedure for Disclosing Improprieties and Protecting
Whistleblowers, using dedicated channels, subject to the stipulation that in this case it is necessary to disclose personal
details of the reporting employee, the employee(s) who may been subjected to abuse and the employee(s) committing
actions or behaviour displaying the features of abuse. The case is examined by the Ethics Committee of the relevant entity
of the KGHM Group. Employees are familiarized with the content of the procedure at the time of hiring and periodically, as
part of classroom and e-learning training courses.
ETHICS COMMISSIONS
A tool supporting the Employer in counteracting abuse, discrimination and violation of employee rights and social co-
existence standards is the Ethics Commissions appointed in KGHM Polska Miedź S.A. Group entities examining suspected
non-compliance with ethical standards applicable in the KGHM Group. In this respect, no cases of discrimination on various
grounds were reported during the reporting period. The work to support and raise ethical and corporate governance
standards will continue in 2023.
2.10 SUSTAINABLE SUPPLY CHAIN
GRI 2-6 GRI 3-3 material topic: Responsible supply chains GRI 308-1
Relying on the guidelines concerning the sustainable supply chain, the following policies and procedures apply in the KGHM
Polska Miedź S.A. Group, which introduce global, harmonised standards adapted to legal regulations applicable in all
jurisdictions where the KGHM Polska Miedź S.A. Group operates. At the same time, the information contained in this section
is based on the guidelines of the GRI 2 (Global Reporting Initiative) reporting standard.
Individual documents in this area are addressed to specific stakeholder groups as part of establishing business
relationships. Certain assumptions, requirements and obligations are addressed to external recipients on the basis of
executive documents developed as part of individual processes addressed to them, while others are of an internal nature
addressed to persons directly implementing processes within the organisation of KGHM Polska Miedź S.A.
The introduction of the policies and procedures indicated below is a manifestation of care for maintaining a sustainable
supply chain in the entire activities of the KGHM Polska Miedź S.A. Group. The responsibility for the performance of
commitments and roles reflect the principles applicable in the organisation regarding the distribution of competence at
various operational and management levels and supports the achievement of defined business objectives. All key risks
associated with the performance of individual areas of the responsible supply chain are quantified in accordance with the
corporate risk management principles effective in the KGHM Polska Miedź S.A. Group, and where required, measures are
taken to reduce the probability and susceptibility of the organisation to the defined risks. The company publishes key
documents on its website https://kghm.com/en/investors/esg/policies-and-codes
, and those of an internal nature only are
published in internal IT systems accessible to employees.
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 92
the Company and the Group in 2022 – translation from the original Polish version
Table 29. Values of selected GRI Standards illustrating the sustainable supply chain of KGHM Polska Miedź S.A. Group
in 2022
19
GRI indicator
Issue
Result
GRI 2-6
Supply chain - number of suppliers
10 407
Supply chain - number of key suppliers
304
Supply chain - number of key customers
35
GRI 308-1
Total number of new suppliers
3 418
Number of new suppliers verified in terms of environmental criteria
1 515
RESPONSIBLE SUPPLY CHAIN POLICY IN THE KGHM POLSKA MIEDŹ S.A. GROUP
The Responsible Supply Chain Policy is aimed at securing the selection of only responsible suppliers and ensuring that the
products and services purchased by the KGHM Polska Miedź S.A. Group do not contribute to the financing of terrorism and
are manufactured or provided in compliance with basic human rights, labour standards, environmental protection and
anti-corruption principles. KGHM is fully aware that the selection of responsible suppliers is crucial for conducting activities
oriented towards sustainable development. At the same time, the KGHM Polska Miedź S.A. Group has undertaken to adhere
to the aforementioned standards and declared its commitment to activities of international organisations for corporate
social responsibility and the promotion of sustainable development.
The “KGHM Polska Miedź S.A. Group responsible supply chain policy” was updated in 2022 to reflect the adopted risk-based
approach, including the description of the internal responsible supply chain management system, which enables the
identification of high-risk business relationships based on criteria consistent with The OECD Due Diligence Guidance for
Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas, as well as the LBMA Responsible Gold
Guidance and LBMA Responsible Silver Guidance.
In 2022, a reassessment of the state of compliance with the Copper Mark standard was carried out by KGHM Polska Miedź
S.A., confirming that KGHM Polska Miedź S.A. had carried out improvement activities in respect of the responsible supply
chains of copper and lead. The fulfilment of the requirements enabled the validity of the certificates awarded to the Legnica
Copper Smelter and Refinery and the Głogów Copper Smelter and Refinery to continue until 2024. Obtaining the Copper
Mark was indispensable for KGHM Polska Miedź S.A. to continue its free commercial exchange, in particular to ensure easier
maintenance of its registration of cathodes on the London Metal Exchange (LME). Further work will be continued in 2023 in
terms of the possibility of Copper Mark certification for the Cedynia Wire Rod Plant as well, and further improvement in the
areas of the responsible supply chain defined by the standard.
PROCUREMENT POLICY OF THE KGHM POLSKA MIEDŹ S.A. GROUP
KGHM Polska Miedź S.A. is guided by high ethical standards across the procurement process. The main message is to
guarantee the professionalism and honesty of the persons responsible for the procurement processes and to prevent
potential conflicts of interest, as well as to treat suppliers equally in a way that does not restrict the principles of fair
competition.
The purpose of the Procurement Policy of KGHM Polska Miedź S.A. is to implement harmonised standards and to establish
general principles for procurement processes in the KGHM Polska Miedź S.A. Group. The overall objective of pursuing a
sustainable supply chain is achieved through the following values:
− coherence of the activities of entities in the KGHM Polska Miedź S.A. Group, both in relation to entities outside the
KGHM Polska Miedź S.A. Group and within the Group,
− transparency of procurement processes both within the KGHM Polska Miedź S.A. Group and in relation to external
counterparties,
19
The table above presents selected indicators illustrating the sustainable supply chain. The information for calculating the indicators was
acquired from SAP (Parent Entity) records and reports of key Group companies. It should be borne in mind that one supplier may appear
in the records of several different Group companies. The number of suppliers verified against the environmental criteria in the Parent
Entity was identified on the basis of a Contractor Card, which contains the contractor's commitments to observe ethical, human rights,
labour and compliance standards, including the commitment to apply environmental standards in order to mitigate the environmental
impact, minimise pollution and improve environmental protection standards. The Card is signed by each Contractor commencing
cooperation with KGHM Polska Miedź S.A. in the area of purchases covered by the Procurement Policy, and if any irregularities in this
respect are found or in the case of a justified risk of serious abuse in the areas indicated, KGHM Polska Miedź S.A. suspends or terminates
its cooperation with such contractor.
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 93
the Company and the Group in 2022 – translation from the original Polish version
− financial stability of activities of KGHM Polska Miedź S.A. Group entities,
− effective management and control of purchasing processes,
− work efficiency and exploitation of own potential,
− increasing the competitiveness of tendering procedures,
− increasing the quality and cost-effectiveness of procurement, while reducing the costs of global supply chain processes,
− building relations with business partners and strengthening the brand image of KGHM Polska Miedź S.A. as an honest
and reliable counterparty,
− defining surveillance measures to reduce the risk of irregularities in the procurement process.
The Procurement Policy also sets out the following specific objectives of the procurement process:
− ensure transparency of the decision-making process,
− monitor all procurement transactions by introducing a uniform management system for procurement processes,
− ensure effectiveness of cost optimisation, mainly by standardisation of the range of products, optimisation of technical
specifications, diversification of the market.
The uniform Procurement Policy is in effect in all the Divisions of KGHM Polska Miedź S.A. and all the major Group
production assets. The basic assumptions defined in the above document are put into practice with the use of IT tools. The
Procurement Policy provides for exclusions for which the Policy is not applicable and whose implementation is based on
separate internal normative acts or generally applicable laws.
PROCEDURE ON COUNTERACTING MONEY LAUNDERING AND PREVENTION OF FRAUD AND EXTORTION IN TRADING
TRANSACTIONS REGARDING THE SALE OF PRODUCTS AND THE PROCUREMENT OF ORE AND COPPER-BEARING
MATERIALS IN KGHM POLSKA MIEDŹ S.A.
KGHM Polska Miedź S.A. uses a diverse range of external counterparty verification in the procurement, sales and investment
processes, which are regulated by a number of consistent and uniform internal policies and procedures. The Procedure on
counteracting money laundering and prevention of fraud and extortion in trading transactions regarding the sale of
products and the procurement of ore and copper-bearing materials in KGHM Polska Miedź S.A. (the Procedure) addresses
the verification measures taken by the Company when it enters into trading transactions.
To protect its image and the Company’s security, KGHM Polska Miedź S.A. takes measures to prevent the Company from
being used by third parties for unlawful purposes, such as money laundering, financing of terrorism, or VAT extortion.
The security measures undertaken in this respect consist, among others, of:
- Client identification and verification of its identity based on the data provided by the Client, publicly available
information and/or reports of credit bureaus;
− undertaking, with due diligence, actions to determine the ownership as well as organisational structures or the Client’s
links to other entities, in order to identify the Beneficial Owner of the transaction and verify its identity, using publicly
available information and/or reports of credit bureaus;
− obtaining information on the Client’s objective and intended character of the business relationship, using publicly
available information;
− monitoring of the business relationship with the Client, including completed transactions, in order to check if they are
consistent with the Company’s knowledge of the Client and its business profile, and - if possible - examining the source
of funds.
PROCUREMENT PROCESS CONTROL INSTRUCTION OF THE SUPPLY CHAIN SECURITY DEPARTMENT IN KGHM POLSKA
MIEDŹ S.A. GROUP
The procurement process control instruction has been issued as Appendix no. 1 to the Internal Control Procedure of the
Security and Loss Prevention Section of the KGHM Polska Miedź S.A. Group.
The tasks of the Supply Chain Security Department include the control and monitoring of the procurement processes with
increased risk of abuse in terms of their compliance with the Procurement Policy in force at KGHM Polska Miedź S.A. The
procurement procedure may be subject to the control process on the basis of reports of potential irregularities received
(including by whistleblowers), due to their significant value or specific nature, as well as where, as a result of monitoring, it
has been determined that they may be exposed to actions contrary to the interest of the KGHM Polska Miedź S.A. Group,
actions of a corrupt nature or actions that exclude transparency in the selection of a supplier may occur. In order to carry
out the assigned tasks, the Supply Chain Security Department continuously analyses and monitors the process of
purchasing projects, uses personal sources of information, supporting activities with business intelligence activities and
market analysis. In 2022, control activities were carried out by employees of the Supply Chain Safety Department at the
Head Office of KGHM Polska Miedź S.A., proxies in the Divisions of KGHM Polska Miedź S.A. and selected Companies of the
KGHM Polska Miedź S.A. Group. During the year, control activities were also extended to the Companies that are part of
KGHM INTERNATIONAL LTD.
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 94
the Company and the Group in 2022 – translation from the original Polish version
Due to the scale of procurement carried out in the KGHM Polska Miedź S.A. Group, during the year approx. 10 thousand
procurement projects are carried out on average, conducted simultaneously by several entities of the KGHM Polska Miedź
S.A. Group, while their monitoring is possible only with the support of an adequately designed IT system. To this end,
improvement activities are carried out as part of a project enabling acquisition of information on events indicating the
likelihood of irregularities from the procurement system. Continuous monitoring of such incidents enables the selection of
procurement projects with an increased risk for review.
Where irregularities are found, the audit activities conclude with recommendations aimed at implementing corrective
measures. If significant irregularities of a fraudulent or corrupt nature are identified, the case is referred to the Internal
Control Department at KGHM Polska Miedź S.A. for in-depth verification.
In the last quarter of 2022, due to the extension of control activities to selected companies of the KGHM Polska Miedź S.A.
Group and KGHM INTERNATIONAL LTD., work was initiated on updating the Procurement Process Control Instruction. The
revised procedure will come into force in the first half of 2023.
2.11 INFORMATION ON SOURCES OF SUPPLY OF MATERIALS USED IN PRODUCTION, IN GOODS AND
SERVICES
GRI 3-3 material topic:
Economic impacts
In the area covered by the Procurement Policy in the Group, KGHM Polska Miedź S.A. cooperated with 4 468 suppliers in
2022 (the number of bidders participating actively in our proceedings), of which 3 202 suppliers were selected to perform
deliveries.
The percentage of non-Polish counterparties is relatively small. The number of foreign suppliers in 2022, in respect to the
aforementioned information, amounted respectively to 499 and 300, which makes up about 10% of all the Company’s
counterparties.
KGHM Polska Miedź S.A. cooperates with all types of counterparties, i.e. intermediaries, wholesalers, distributors and direct
suppliers. Moreover, within the Group, KGHM Polska Miedź S.A. uses Logistic Operator services – specialized companies
performing procurement functions (Mercus Logistyka sp. z o.o., KGHM Metraco S.A., Energetyka sp. z o.o.).
In 2022, there were no significant changes in sources of procurement of materials for production, commodities and services
for KGHM Polska Miedź S.A. There was no dependence on one or more suppliers.
Purchases from local counterparties represented 7.5% of the value of purchases by KGHM Polska Miedź S.A. in 2022.
KGHM Polska Miedź S.A. also reinforces its position as a reliable and ethical business partner by caring for the company’s
image in social issues. In the area of procurement to which the aforementioned Policy applies, the Company also strives to
ensure that the contractors cooperating with it satisfy the requirements of business ethics and are socially responsible
counterparties.
2.12 INFORMATION ABOUT SUPPLIERS / CUSTOMERS WHOSE SHARE EXCEEDS 10% OF TOTAL
REVENUES
The only entity whose turnover with the Parent Entity exceeded 10% of the sales revenues of KGHM Polska Miedź S.A. was
KGHM Metraco S.A. (pre-tax value of purchases: PLN 7 249 million).
The copper smelters and refineries of KGHM Polska Miedź S.A. produce electrolytic copper from their own concentrates as
well as from purchased copper-bearing material (concentrates, copper scrap and blister copper). In 2022, the production
of electrolytic copper from purchased copper-bearing material amounted to 204.5 thousand tonnes, and represented 35%
of total electrolytic copper production.
For the most part, this production came from copper scrap (131.0 thousand tonnes of copper; 22% of total electrolytic
copper production), which is supplied to KGHM’s metallurgical plants by KGHM Metraco S.A. – a 100%-owned subsidiary of
KGHM Polska Miedź S.A.
KGHM Metraco S.A., due to its specialisation and familiarity with the scrap market, as well as to its equity relationship with
KGHM Polska Miedź S.A., supplies scrap to the metallurgical plants of KGHM based on exclusivity and as a result revenues
of this company from sales to KGHM Polska Miedź S.A. are significant and represent 25% of KGHM Polska Miedź S.A.’s sales
revenue and 21% of sales revenue of the Group.
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 95
the Company and the Group in 2022 – translation from the original Polish version
2.13 DUE DILIGENCE POLICIES AND PROCEDURES
GRI 3-3
material topic: Ethics and transparency
GRI 2-27
PROCEDURE FOR VERIFICATION OF COMPLIANCE WITH THE ETHICAL PRINCIPLES OF KGHM POLSKA MIEDŹ S.A.
As a socially responsible company, KGHM Polska Miedź S.A. applies due diligence procedures and attaches importance to:
− adherence to ethical standards and responsible business activities expressed, among others, in the prohibition of
corruption, prevention of conflicts of interest, protection of the environment and responsibility for the product and its
quality, counteracting money laundering and terrorist financing;
− respecting human rights, employee rights and occupational standards including those related to health and safety at
work;
− compliance in terms of, among others, meeting its obligations to pay public tributes, refraining from entering into
business relationships with entities subject to or originating from sanctioned territories, and aiming to combat illegal
and unethical sourcing of raw materials from conflict and high-risk territories.
At the same time, KGHM Polska Miedź S.A. wants to cooperate with business partners who share the same values, and for
this reason expects customers and suppliers to declare in writing their compliance with the aforementioned principles, by
signing the so-called Customer Card and Supplier Card. The foregoing is an important part of the process based on the risk
analysis of a given business relationship and the consequent decision on undertaking cooperation with the given partner.
INTERNAL AUDIT RULES (FOR ETHICS) IN KGHM POLSKA MIEDŹ S.A.
The Internal Audit Department follows international internal audit standards. The standards cover 14 areas, with ethics
being one of them. When performing internal audit tasks, the risks of potential fraud, conflict of interests or other activities
which are not compliant with the Code of Ethics and other internal regulations are analysed. Any areas with increased risk
of unethical behaviour are consistently identified and taken into account in the development of the annual audit plan.
INTERNAL CONTROL PROCEDURE OF THE SECURITY AND LOSS PREVENTION SECTION OF KGHM POLSKA MIEDŹ S.A.
Entities of the KGHM Polska Miedź S.A. Group implemented the Internal Control Procedure for the Security and Loss
Prevention Section at KGHM Polska Miedź S.A. The Procedure defines how the Control Process is performed by the units of
the Security and Loss Prevention Section, defines and assigns roles in the control process, delineates the framework of
cooperation of its participants, and lists the scope of activities to be performed in the Process. Audits conducted by the
Security and Loss Prevention Section comprise the identification and uncovering of fraud, improprieties, abuse, corruption,
personal abuse and breaches of the Code of Ethics in the Group and allows for monitoring transparency of procurement
processes. An amendment to the aforementioned procedure was developed in December 2022, which was positively
reviewed by the KGHM Group Council. Introduction of the amendment by Management Board decision is scheduled in the
first quarter of 2023.
COMPLIANCE MANAGEMENT POLICY IN THE KGHM POLSKA MIEDŹ S.A. GROUP.
The Compliance Management Policy of the KGHM Polska Miedź S.A. Group sets forth the framework of the compliance
management system and the approach encompassing the whole organisation, based on recognised international
standards and best industry practices. The solution selected to build the compliance system has been adapted to the unique
nature of the Group’s operations and is an important business tool used to prevent occurrences that might result in
sanctions being imposed on the Group. It enables systematic identification, assessment and analysis of the risk of non-
compliance or possible illegality with generally applicable law, internal corporate regulations and voluntarily adopted legal
obligations and standards, including ethical norms, to ensure that the process produces a design and an implementation
of measures ensuring compliance.
In order to standardize the approach to ensuring the compliance defined as the compliance with the requirements arising
from the applicable legal (external and internal) regulations or voluntarily assumed legal obligations and standards, the
Compliance Management Policy in the KGHM Polska Miedź S.A. Group and the Compliance Management Procedure and
Methodology in KGHM Polska Miedź S.A., as adopted by the Management Board of KGHM Polska Miedź S.A., have been in
effect since 2020. A consistent compliance system in place in the KGHM Polska Miedź S.A. Group is an element of effective
management as part of corporate governance through, for example, a more efficient response and readiness for regulatory
changes, care for reputation and ethical culture building in the organisation as well as awareness raising and enhancement
of the sense of responsibility for compliance among employees. In 2022, activities related to improving the effectiveness of
the compliance system were carried out, among others, in the scope of implementing complementary IT solutions
necessary for the implementation of the process and building effective tools for prioritising applicable legal requirements.
The work to support and raise the standards of the compliance function will be continued in 2023.
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 96
the Company and the Group in 2022 – translation from the original Polish version
COMPETITION LAW POLICY IN THE KGHM POLSKA MIEDŹ S.A. GROUP
The Competition Law Policy creates a functional framework for a system that will enable continued conformity with the
competition laws which are applicable in all the countries in which the KGHM Polska Miedź S.A. Group operates. In this way,
the Group accepts the commitment to compete in the markets in a legal and ethical manner and to prevent, counteract
and detect any violations in accordance with the applicable law.
As part of the improvement of the standards of compliance with the competition law, since 2020 the Instructions to prevent
violations under competition law have been in force, adopted by the Management Board of KGHM Polska Miedź S.A., in
order to prevent violations arising from the competition law, extending and specifying the Competition Law Policy in the
KGHM Polska Miedź S.A. Group. In December 2022, training was conducted for Local Competition Law Representatives in
the KGHM Polska Miedź S.A. Group. The work supporting and raising the standards of compliance with the competition law
will continue in 2023.
A measurable effect of the implementation of the procedures and provisions adopted in individual Policies is the relatively
low number of cases of infringements of law and regulations. The GRI 2-27 indicator for this scope reflects the information
reported by individual companies and the results of the questionnaire surveys conducted among the top management of
Group companies, members of the Management Board and the Supervisory Board of KGHM Polska Miedź S.A., as well as
among representatives of key business areas at the Head Office of KGHM Polska Miedź S.A. The questionnaire surveys were
conducted as part of the survey on minimum safeguards for the needs of taxonomy compliance assessment and covered:
human rights, labour law, corruption and bribery, consumer protection, competition law, data protection, tax issues,
environmental protection and energy law. The results of the questionnaire in relation to the Parent Entity, including the
members of the Management Board and the Supervisory Board, indicate that there were no significant infringements in
the scope covered by the questionnaires.
Table 30. Values of selected GRI Standards illustrating activities relating to compliance with the law and regulations in the
KGHM Polska Miedź S.A. Group in 2022
GRI indicator
Issue
Result
GRI 2-27
Significant cases of non-compliance with the regulations
2
Financial penalties
8
Non-financial sanctions
0
Number of penalties paid related to violation of law or regulations during the reporting
period according to the time of incident
7
Financial value of penalties paid related to violation of law or regulations during the
reporting period according to the time of incident [PLN]
PLN 31 314.1
2.14 PERSONAL DATA PROTECTION POLICY IN KGHM POLSKA MIEDŹ S.A.
KGHM Polska Miedź S.A. has a Personal Data Protection Policy in place. The Policy lays down the rules of processing and
securing personal data, pursuant to Regulation (EU) 2016/679 of the European Parliament and of the Council of 27 April
2016 on the protection of natural persons with regard to the processing of personal data and on the free movement of
such data, and repealing Directive 95/46/EC (General Data Protection Regulation) (hereinafter referred to as “GDPR”).
The Policy has been adopted to ensure that data processing proceeds in compliance with the GDPR and other personal
data protection regulations and to be able to demonstrate this compliance. The Policy applies to all the personal data
processed in KGHM Polska Miedź S.A. for the purposes of the Company’s activities. The duty to protect personal data
processed by KGHM Polska Miedź S.A. and to apply the Policy covers all persons with access to personal data, regardless
of their position, place of work and type of employment relationship.
The Policy is consistent with other internal regulations regarding security of information and IT systems applicable in KGHM
Polska Miedź S.A.
In 2022, work was undertaken to update the Policy. The aim of these activities was to update the formal content of the
documents systemically in the context of the development of KGHM Polska Miedź S.A., the evolving interpretation of
regulations and the developed standards of approach to personal data protection in the context of market practices.
Moreover, their purpose was also to make the procedures and practices actually applied by KGHM Polska Miedź S.A. more
flexible and to facilitate the application of principles and the performance of duties related to personal data protection.
The DPO expert Team operates in KGHM Polska Miedź S.A. with the aim of providing support in the fulfilment of duties
imposed in the area of personal data protection.
The 15-member DPO Team consists of the Data Protection Officer and his/her co-workers as well as representatives of each
Division and the Head Office.
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 97
the Company and the Group in 2022 – translation from the original Polish version
The DPO Team continued to hold regular meetings every week at which the status of work was updated and issues were
discussed connected with personal data protection at the Head Office and in the Divisions of KGHM Polska Miedź S.A.
The DPO team, in cooperation with the relevant KGHM departments, carried out detailed verification and updating of the
processes within the Register of Processing Activities.
In 2022, activities were carried out to raise KGHM’s employees' awareness of personal data protection, including the
continuation of e-learning training in the scope of the GDPR. In addition, a number of awareness-raising activities were
carried out for employees, for example the publication of articles, newsletters and a podcast on data protection rules.
2.15 DECLARATION ON THE APPLICATION OF CORPORATE GOVERNANCE
GRI 2-9
GRI 2-10
GRI 2-11
GRI 2-12
GRI 2-13
GRI 2-14
GRI 2-15
GRI 2-17
GRI 2-18
GRI 2-19
INDICATION OF LEGAL BASIS AND COLLECTION OF CORPORATE GOVERNANCE PRINCIPLES WITH THE SCOPE OF ITS
APPLICATION
The following Statement on the application of Corporate Governance was prepared in accordance with § 70 sec. 6 point 5)
of the Decree of the Minister of Finance dated 29 March 2018 on current and periodic information published by issuers of
securities and conditions for recognising as equivalent information required by the laws of a non-member state.
KGHM Polska Miedź S.A., whose shares are listed on the Warsaw Stock Exchange, in the period from 1 January 2022 to 31
December 2022, was compliant with the corporate governance principles described in the document „Best Practice for GPW
Listed Companies 2021” (hereafter DPSN 2021), which was adopted by the Warsaw Stock Exchange Supervisory Board on
29 March 2021 by resolution No. 13/1834/2021. These principles are available on the official website of the Warsaw Stock
Exchange dedicated to this subject at https://www.gpw.pl/best-practice2021
, and on the corporate website of KGHM Polska
Miedź S.A. in the corporate governance section, https://kghm.com/en/investors/corporate-governance.
KGHM Polska Miedź S.A. is continually engaged in adapting to current trends in corporate governance and to market
expectations, such as those expressed in DPSN 2021. KGHM Polska Miedź S.A. strives at every stage of its operations to
apply the principles contained in DPSN 2021 to the greatest possible extent, taking into account the principles of
proportionality and adequacy as well as sector-specific aspects.
Chart 17. COMPLY ratio by KGHM Polska Miedź S.A.
To increase interest in the subject of corporate governance and the engagement of shareholders in the affairs of
companies, the Warsaw Stock Exchange created a benchmark for companies which, through the EBI system, provided
information about their current state of application of the principles of DPSN 2021. The COMPLY ratio used for this purpose
was defined as the relation of principles applied to the total number of principles applied and not applied (the response
„not applicable” are excluded from the calculation). KGHM Polska Miedź S.A. applies the principles of DPSN 2021 at a
comparable level to that declared by companies comprising the WSE’s index, or taking into consideration all of the
companies which published a report.
Company
77%
GPW index
79%
General
78%
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 98
the Company and the Group in 2022 – translation from the original Polish version
Diagram 18. Corporate governance structure in KGHM Polska Miedź S.A.
I – INFORMATION POLICY AND COMMUNICATION WITH INVESTORS
KGHM Polska Miedź S.A., under the principles indicated in section 1 of DPSN 2021, strives to achieve the goal of
ensuring quality investor communications and pursuing a transparent and fair disclosure policy In the interest of
all market participants and its own interest.
KGHM Polska Miedź S.A., as a listed Company, systematically uploads to its website www.kghm.com current and key
information of importance to investors as well as other questions related with corporate governance. The website’s
structure is clear and enables the rapid and intuitive location of all important information by separating the section on
corporate governance,
https://kghm.com/en/investors/corporate-governance.
KGHM Polska Miedź S.A. is aware of the importance of effective and efficient communication with current and potential
shareholders and other capital market participants (e.g. investors, market analysts, the Warsaw Stock Exchange, the Polish
Financial Supervision Authority), and consequently operates under a model of active communication to enable access to
complete, and the most important, data about the Company, planned events and all other questions of importance to
them. In advancing this goal, the Company has a separate section dedicated to investor relations
(https://kghm.com/pl/investors
). The Investor Relations section of the website is updated on an ongoing basis with vital
information and documents. The section "Investors" includes among others regulatory filings and periodic reports,
information on the shareholder structure, documents connected with general meetings, corporate governance,
macroeconomic bulletins and also presentations and video material. Another form of communication with the market is
the KGHM Investor Relations page on LinkedIn and the RSS (Really Simple Syndication) channel. The five subject channels
operating under RSS enables information to be received using mobile technology regarding the Company’s operations,
current market information, the type and scope of activities engaged in and product offers for the entire market.
To satisfy investor expectations, the Company provides the following information on its website, among others:
− basic corporate documents, in particular such as the Company’s statutes, bylaws of the general meeting, supervisory
board, management board, adopted policies and best practice principles;
− regulatory filings and periodic reports, as well as information on the application of corporate governance principles,
published based on the the Warsaw Stock Exchange Rules - the Company makes available its financial results
compiled in periodic reports as soon as possible;
− the composition of the management board, supervisory board and supervisory board committees, the CVs of
members of these bodies together with information on the meeting of independence criteria by supervisory board
members, knowledge or skills possessed in the fields of accounting or financial auditing, as well as knowledge of the
sector in which the Company operates;
− basic financial data of the Company for the period from 2014 (including among others statements of profit or loss,
statements of cash flow, statements of financial position) in a form enabling the processing of this data by its users
(xls);
− up-to-date investor presentations containing among others information on production, a description of the market
environment of the sector in which the Company operates, a description of individial production assets, a description
of sustainable development initiatives and the adopted strategy, as well as information on the dividend policy, the
shareholder structure and the number of shares issued, recent and future events for shareholders;
− informational material prepared for investors, the media or for promotional purposes, mainly with respect to the
strategy, activities and financial results;
− information on analyst recommendations regarding the Company in the categories „buy”, „hold”, „sell”, with contact
data for analysts covering the Company;
− information operations on the Company’s shares and changes in share capital;
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 99
the Company and the Group in 2022 – translation from the original Polish version
− an investor calendar containing among others the dates of publication of financial reports, meetings with investors
and press conferences as well as other events important for investors;
− cyclical online discussions with investors with an archive of chats and audio/visual material from Investor Day and
Analyst Day;
− a list of frequently asked questions in the area of investor relations with Company answers; if an investor raises a
question regarding the Company, the Company responds as soon as possible;
− in terms of the adopted business strategy, the Company provides information on the website on the elements of the
trategy, measureable goals, including especially long-term goals, planned actions and progress in this regard, defined
with the aid of financial and non-financial measures.
Taking into consideration the proper meeting or requirements set by the participants of the regulated market, KGHM Polska
Miedź S.A meets its informational obligations arising from laws in force and other requirements (e.g. the Warsaw Stock
Exchange Rules).
In accordance with the published statement on the Company’s compliance with the principles contained in chapter 1 of
DPSN 2021, the following principles regarding informational policy and communication with investors are partially applied:
Principle 1.3.1 involving
the integration of ESG
factors in the business strategy, in particular
environmental factors, including measures and
risks relating to climate change and sustainable
development.
The principle is partially applied.
In connection with the publication of the Climate
Policy of KGHM Polska Miedź S.A. as a directional document, whose chief goal is to
present the climate-related ambitions of the Company and to set forth the scope of
process and organisational changes needed to achieve them, the Company is currently
working on detailed solutions related among
others to the operationalisation of the
Strategy in this regard. The Climate Policy will be followed by the Decarbonisation
Program of the KGHM Group, which will provide details on how the planned reduction
goals will be attained, as well as total capital expenditures on the realisation of
activities aimed at reducing emissions of greenhouse gases.
Principle 1.3.2
involving the integration of ESG
factors in the business strategy, in particular
social
and employee factors, including among others
actions t
aken and planned to ensure equal
treatment of women and men, decent working
conditions, respect for employees’ rights, dialogue
with local communities, customer relations.
The principle is partially applied. The Company regularly publishes a broad range of
information on its actions as regards social and employee issues, proper working
conditions, respecting employee rights, dialogue with local communities and relations
with its customers and stakeholders. In accordance with upcoming regulations, such
as the SFDR, the Company will soon be providing information regarding employment
at senior management levels broken down by gender as well as information on current
and planned actions aimed at ensuring gender equality.
Principle 1.4.1 pursuant to
which a company shall
publish
on their website information concerning
the framework of the ESG strategy,
which should
among others explain how the decision-
making
processes of the company and its group members
integrate climate change, including the result
ing
risks.
The principle is partially applied.
In connection with the publication of the Climate
Policy of KGHM Polska Miedź S.A. as a directional document, whose chief goal is to
present the climate-related ambitions of the Company and to set forth the scope of
process and organisational changes needed to achieve them, the Company is currently
working on detailed solutions in this regard.
II - THE MANAGEMENT BOARD AND THE SUPERVISORY BOARD
KGHM Polska Miedź S.A., within the scope of the principles set forth in chapter II of the DPSN 2021, strives to achieve
the highest standards in the exercise of duties by the Management Board and Supervisory Board of the Company
and fulfilling them in an effective manner.
The Management Board of KGHM Polska Miedź S.A. (the Management Board)
The principles of appointing and dismissing the Members of the Management Board
According to the Company’s Statutes, the Management Board of the Company shall be composed of 1 to 7 persons,
appointed to a mutual term of office. The number of members of the Management Board shall be determined by the
Supervisory Board of KGHM Polska Miedź S.A., which appoints and dismisses the President of the Management Board and
the Vice Presidents.
The Supervisory Board appoints the members of the Management Board following the conduct of qualification
proceedings, the goal of which is to review and evaluate the qualifications of candidates and to select the best candidate
for a member of the Management Board. Members of the Management Board may be dismissed by the Supervisory Board
of KGHM Polska Miedź S.A prior to the expiration of their term, which no shall interfere with their rights arising from their
employment contract or other legal relationship relating to their functioning as a member of the Management Board.
The manner of operation of the Management Board
The Management Board acts on the basis of established law, the Statutes of the Company and the Bylaws of the
Management Board of KGHM Polska Miedź S.A. The Bylaws of the Management Board of KGHM Polska Miedź S.A. and
Statutes of the Company is publicly available at the corporate website at
https://kghm.com/en/investors/corporate-
governance.
The work of the Management Board shall be organized by its President. In the event of a vacancy in the position of the
President of the Management Board or during a break in his/her management operations, the powers of the President of
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 100
the Company and the Group in 2022 – translation from the original Polish version
the Management Board to convene and conduct meetings, as well as to pass resolutions of the Management Board outside
the meeting, shall be exercised by a Member of the Management Board authorized by the President of the Management
Board, or in the absence of an actual possibility of issuing or delegating authorization by the most senior Member of the
Management Board. Members of the Management Board are obliged to participate in meetings of the Management Board.
The presence of at least two-thirds of the Management Board at a meeting shall be required in order for resolutions to be
valid. Resolutions of the Management Board shall be adopted by an ordinary majority of votes of those present. In the case
of a tie, the President of the Management Board has the deciding vote. The Resolutions of the Management Board are
taken in open voting, unless the law provides otherwise or at least one of Members of the Management Board requests a
secret ballot. In justified circumstances, voting shall be permitted through written means, or through the use of long-
distance means of direct communication. A resolution passed in this manner shall be valid if all Members of the
Management Board were informed of the wording of the proposed resolution and at least two-thirds of the Management
Board participated in adopting the resolution.
Meetings of the management board and meetings and votes on resolutions adopted outside of the Management Board's
meeting shall be minuted. Motions to the Management Board and other information and attachments submitted to the
Members of the Management Board shall constitute appendices to the voting minutes. Submitting a dissenting opinion by
a Member of the Management Board requires stating it in the minutes of the meeting with a possible, concise statement
of motives.
The breakdown of duties within the Management Board
The scope of the Management Board’s responsibilities includes all aspects of the Company’s affairs, except for the instances
reserved in the Commercial Partnerships and Companies Code and the Statutes of the Company and other mandatory
provisions of law as regards the competences of the General Meeting of KGHM Polska Miedź S.A. or the Supervisory Board
of KGHM Polska Miedź S.A.
A detailed description of the Management Board’s scope of duties and obligations and the manner in which it functions as
well as the catalogue of matters requiring resolutions of the Management Board may be found in the Bylaws of the
Management Board of KGHM Polska Miedź S.A.
With the exception of matters exceeding the scope of ordinary management, Members of the Management Board shall
manage the areas of the Company's activities specified in the "Organizational Regulations of KGHM Polska Miedź S.A. in
Lubin" and in resolutions of the Supervisory Board on the assignment of responsibilities to a given Management Board
Member. Within the scope of the competencies and responsibilities thus defined, each Member of the Management Board
makes decisions independently regarding the area assigned to them. In case of doubt, a Member of the Management Board
is obliged to submit the matter in question to the Management Board for resolution. A member of the Management Board
should, in the performance of his/her duties, exercise due diligence required by the professional nature of their business
and maintain loyalty to the Company.
Diagram 19. Management Board structure and breakdown of responsibilities for running the Company's affairs as of 31
December 2022
Tomasz Zdzikot – President of the Management Board
− management of corporate risk, compliance and internal audit and control
− the Company’s Strategy and Sustainable Development Policy
− security and preventing losses
− corporate governance
− activities related to communications and corporate image-building and relations with
the external business environment
− human resources management
− development projects in the field of energy
− providing legal services to the Company’s bodies with the exception of the Supervisory
Board
Acting Vice President of the Management Board (Development)
20
− R&D policy, innovation and intellectual property
− investment and development processes
− managing projects and programs
− development of resources base in Poland
− purchasing processes
−
development of the mining and production structure
20
Acting Vice President of the Management Board (Development) – from 2 January 2023 function assigned to Mirosław Kidoń
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 101
the Company and the Group in 2022 – translation from the original Polish version
Mateusz Wodejko - Vice President of the Management Board (Finance)
− financial and taxation policy
− accounting services
− reporting and publishing obligations
− investor relations
− the activities of the Data Center (COPI)
Mirosław Kidoń – Vice President of the Management Board (International Assets)
− strategy for the international assets
− developing the international resource base
− international exploration and resource projects
− substantive oversight over the international production subsidiaries
− shaping of commercial and logistics policies
− identification of international development opportunities
Marek Świder – Vice President of the Management Board (Production)
− current production and the development of mine and metallurgical production
− occupational health and safety and control over the environmental risk
− the goals of the Energy Strategy
− management systems
− integrated supply chain management
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 102
the Company and the Group in 2022 – translation from the original Polish version
Marek Pietrzak – Vice President of the Management Board (Corporate Affairs)
− corporate oversight over subsidiaries in Poland and abroad
− the uniformity of internal regulations to maintain consistent operating principles
− ensuring legal services for the statutory bodies of the Company with regard to the
Supervisory Board
− supervision of the functioning of the KGHM Polska Miedź Foundation as well as other
organisations serving the public
Following the reporting date, or 31 December 2022, the Management Board of the Company adopted a new Organisational
Regulation of KGHM Polska Miedź S.A., while the Supervisory Board of the Company set forth the specific scope of duties
for the Vice President of the Management Board (Finance) and made changes to the specific scope of duties for the
President of the Management Board of KGHM Polska Miedź S.A. and for the Vice President of the Management Board
(Corporate Affairs).
With respect to the President of the Management Board, the changes made involved transferring the scope of energy
development projects to the Vice President of the Management Board (Finance), while activities involving the supply and
development of ICT systems and services vital to the proper functioning of the Company and of the companies of the KGHM
Polska Miedź S.A. Group was transferred to the area of competences of the President of the Management Board from the
scope of duties of the Vice President of the Management Board (Finance).
The scope of duties involving the coordination of purchasing processes in the Group was transferred from the scope of
duties of the Vice President of the Management Board (Development) to the duties of the Vice President of the Management
Board (Corporate Affairs), while duties in the area of shaping relations with the external business and regulatory
environment were transferred from the President of the Management Board to the Vice President of the Management
Board (Corporate Affairs).
Biograms of Members of the Management Board
Tomasz Zdzikot – President of the Management Board
From April 2020 he served as President of the Management Board of Poczta Polska S.A. He is also deputy chairman of the
supervisory board of EXATEL S.A. In the years 2020-2021 he was chairman of the supervisory board of Poczta Polska Usługi
Cyfrowe Sp. z o.o.
From November 2021 Chairman of the Social Advisory Team of the Minister of National Defence for Cyber Security. In
December 2021 he was appointed by the President of the Republic of Poland Andrzej Duda to the Council for Security and
Defence under the National Development Council.
Previously (2018-2020) he worked in the position of Secretary of State in the Ministry of National Defence. In these years
he also served in the function of Plenipotentiary to the Minister of National Defence for Cybersecurity. He was responsible
among others for developing, implementing and advancing the program to enhance the capabilities of the Polish Armed
Forces to operate in cyberspace.
From 2015 as a Deputy Minister he was associated with the Ministry of the Interior and Administration. He was also
Government Plenipotentiary for Preparing State Administration Bodies for Cooperation with the Schengen Information
System and Visa Information System. In the past, he also served as an advisor to the Deputy Mayor of Warsaw and advisor
to the Masovian Voivode. He was vice president of Centrum Bankowo-Finansowe „Nowy Świat” S.A. – a State Treasury
company, and of the University of Warsaw Foundation. For many years he worked in the Legal Department of the Office of
the National Broadcasting Council, including as deputy director of the department.
Attorney-at-law, member of the Warsaw Bar Association, graduate of the Faculty of Law at Cardinal Stefan Wyszyński
University in Warsaw and of doctoral studies at the Institute of Legal Sciences of the Polish Academy of Sciences. He has
also completed, among others, the Top Public Executive program organised by the IESE Business School in Barcelona and
Lech Kaczyński National School of Public Administration, as well as MBA studies in Cybersecurity at the Cybernetics faculty
of the Jarosław Dąbrowski Military University of Technology in Warsaw, as well as Post-Graduate Studies in Cybersecurity
at the faculty of Command and Naval Operations of the Heroes of Westerplatte Naval Academy in Gdynia.
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 103
the Company and the Group in 2022 – translation from the original Polish version
Mateusz Wodejko – Vice President of the Management Board (Finance)
From October 2022 served as Executive Director for Investments and Executive Director for Strategy in KGHM Polska
Miedź S.A.
From October 2020 to October 2022 he served as Vice President of the Management Board (Finance) in Poczta Polska S.A.
Also served as Vice President of the Management Board in the company PERN S.A. (2018-2020) and as a Member of the
Management Board (finance) in the company Operator Logistyczny Paliw Płynnych Sp. z o.o. (2016-2018). Previously he also
held management positions in the PGNiG and BOŚ groups as well as NBP.
He has been a member of the supervisory boards and management boards of many capital companies, where among
others he served as Chairman and Deputy Chairman.
A graduate of the Warsaw School of Economics with a major in Finance and Banking, as well as of the University of Warsaw’s
Institute of International Relations. He also completed postgraduate studies in Accounting and Corporate Finance at the
Warsaw School of Economics. He expanded his professional competence during courses, amongst others in International
Financial Reporting Standards, financial audit and internal control, as well as financial risk management as well as valuation
and accounting principles of derivatives.
Mirosław Kidoń – Vice President of the Management Board (International Assets)
A graduate of the Faculty of Law and Administration at the University of Warsaw.
Associated with the Group since the beginning of 2000. Until the date of appointment to the Management Board of KGHM
Polska Miedź S.A. he worked among others as a shift foreman, Senior foreman for Production and head of production in
the Concentrators Division. In the years 2017-2018 he was Executive Director of the Concentrators Division of KGHM Polska
Miedź S.A. and subsequently from 2018 he served as General Manager (CEO) in Sierra Gorda S.C.M. in Chile.
He was responsible for planning the development of the main production line and for managing organisational structures
in the divisions of KGHM Polska Miedź S.A. as well as in companies of the KGHM Polska Miedź S.A. Group.
A graduate of Politechnika Zielonogórska (Technical University of Zielona Góra), an engineer of the Primary Technical
Problems Faculty (Wydział Podstawowych Problemów Techniki) specialising in Management and Marketing. He completed
post-graduate studies in „Minerals processing – Mineral engineering” at Wrocław University of Science and Technology as
well as „Lean Six Sigma Transformation” at the Wroclaw University of Economics and Business.
He has many years of professional experience in production management and planning as well as in the area of mining
technology. He perfected his skills in companies of the KGHM Polska Miedź S.A. Group in Poland and abroad.
Marek Świder - Vice President of the Management Board (Production)
Since the start of his professional career, i.e. since 1996, he has been connected with KGHM Polska Miedź S.A., where he
has held positions such as Executive Director of the Rudna mine, Executive Director for Mining in the International Assets,
Chief Mining Engineer and Director of the Projects Management Department. In the years 2015-2016 he was responsible
for production in the position of Vice President, Production Control in KGHM INTERNATIONAL LTD.
Until 14 March 2022 he served as Executive Director of the Polkowice-Sieroszowice Mine Division of KGHM Polska Miedź
S.A., where he managed the production structure.
He has mainly been responsible for planning the development of the core production line, searching for and implementing
new technology and methods for managing organisational structures in the copper company.
He is a graduate of Wrocław University of Science and Technology and has a Master’s Degree in Mine Engineering with
specialisation in techniques for mining underground deposits. He has completed post-graduate studies in costs
management as well as MBA studies – Master of Business Administration.
He has many years of professional experience in strategic planning, management and mining technology which he acquired
during work both in Poland and in the international production assets of the KGHM Polska Miedź S.A. Group.
Marek Pietrzak – Vice President of the Management Board (Corporate Affairs)
Until October 2021 he served as President of the Management Board of Orlen Asfalt Sp. z o.o. Currently, he serves as
Chairman of the Supervisory Board of Polskie Radio Regionalna Rozgłośnia w Warszawie, Radio dla Ciebie S.A.
and as a member of the Supervisory Board of Alior Bank S.A. From December 2016 until October 2021 he served as a
Member of the Supervisory Board of KGHM Polska Miedź S.A.
A graduate of the Department of Law and Administration of Łazarski University in Warsaw and the Private Higher School
of Business and Administration in Warsaw. In 2013, he finished his legal adviser apprenticeship in the District Chamber
of Legal Advisers in Warsaw and was licensed to perform the profession. He also finished management and business
studies (MBA) at the Warsaw Management University, accredited by the Apsley Business School of London and was granted
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 104
the Company and the Group in 2022 – translation from the original Polish version
the title of Executive Master of Business Administration. A graduate of post-graduate studies in Accounting and Corporate
Finance of the SGH Warsaw School of Economics.
He has professional experience in public administration and practical experience in the supervision and management of
commercial law companies, including those where the State Treasury is one of the shareholders.
Changes in the Management Board
Diagram 20. Composition of the Management Board of KGHM Polska Miedź S.A. in 2022
1.01-
21.02
22.02-
14.03
15.03–
9.08
10.08-
31.08
1.09-
11.10
12.10-
3.11
4.11-
6.12
7.12-
9.12
10.12-
20.12
21.12-
31.12
Tomasz
Zdzikot
21
Vice President
of the
Management
Board
(Development)
Acting
President of the
Management
Board
President of the Management Board
Marek
Pietrzak
Vice President of the Management Board (Corporate Affairs)
Mirosław
Kidoń
Acting Vice
President of the
Management
Board
(International
Assets)
Vice President
of the
Management
Board
(International
Assets)
Mateusz
Wodejko
Vice President
of the
Management
Board
(Finance)
Marcin
Chludziński
President of the Management Board
Adam
Bugajczuk
Vice President of the Management Board (Development)
Paweł
Gruza
Vice President of the Management Board
(International Assets)
Andrzej
Kensbok
Vice President of the Management Board (Finance)
Dariusz
Świderski
Vice President of
the Management
Board (Production)
Powers of the Management Board to issue or buy back shares of the Company
The authority of the Management Board to pass decisions on the issuance or redemption of shares is statutorily limited.
The shares of the Company may be redeemed given shareholder consent through their acquisition by the Company
(voluntary redemption). Redemption may not be carried out more than once per financial year. A resolution of the General
Meeting of KGHM Polska Miedź S.A on the redemption of shares may be preceded by an agreement entered into with a
shareholder whose shares are to be redeemed. In accordance with §29 sec. 1 point 6 of the Statutes of the Company, any
increase in share capital or issuance of shares requires the approval of the General Meeting of KGHM Polska Miedź S.A. The
same holds true for the issuance of bonds (§29 sec. 1 point 10 of the Statutes of the Company). The Management Board of
the Company does not have the authority to increase the share capital or issue the shares of the Company under conditions
specified in art. 444-446 of the Commercial Partnerships and Companies Code.
The Supervisory Board of KGHM Polska Miedź S.A. (the Supervisory Board)
The principles of appointing and dismissing the Members of the Supervisory Board
According to the Company’s Statutes the Supervisory Board shall be composed of 7 to 10 persons appointed by the General
Meeting, including at least 3 Company employee-elected members. The Supervisory Board Members are appointed for a
mutual term of office, which lasts three years. Before the end of term of office the mandate of the Supervisory Board
Members expires in case of resignation, death or dismissing the Member by the General Meeting.
The manner of operation of the Supervisory Board
The Supervisory Board acts on the basis of established law, the Statutes of the Company and the Bylaws of the Supervisory
Board of KGHM Polska Miedź S.A. The Bylaws of the Supervisory Board of KGHM Polska Miedź S.A. and Statutes of the
Company is publicly available at the corporate website at www.kghm.com
.
The Supervisory Board shall select from among its members a Chairman of the Supervisory Board, his deputy and, if
necessary, a Secretary.
For the validity of the Supervisory Board it is required to invite all Members of the Supervisory Board, to the meeting and
adopt resolutions by an absolute majority of votes in the presence of at least one-half of the members of the Supervisory
21
Tomasz Zdzikot also served as the Acting Vice President of the Management Board (Development) (from 4 November 2022 to 31 December
2022) and as Vice President of the Management Board (Finance) (from 6 December 2022 to 20 December 2022).
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 105
the Company and the Group in 2022 – translation from the original Polish version
Board. The voting is open, unless the law provides otherwise or any Members of the Supervisory Board requests a secret
ballot.
In justified instances the Supervisory Board may also pass resolutions in written form or through the use of long-distance
means of direct communication. A resolution passed in this manner shall be valid if all Members of the Supervisory Board
were informed of the wording of the proposed resolution and in the presence of at least one-half of the Members of the
Supervisory Board.
Meetings of the Supervisory Board, meetings and votes on resolutions adopted outside of the Supervisory Board's meeting
shall be minuted. Motions to the Supervisory Board, information and other attachments submitted to the Supervisory
Board shall constitute appendices to the minutes of the meeting. Submitting a dissenting opinion by a Member of the
Supervisory Board requires stating it in the minutes of the meeting.
During its meetings the Supervisory Board may also adopt resolutions in matters not included in the proposed agenda, if
none of the Members of the Supervisory Board participating in the meeting express disagreement in this regard.
The Supervisory Board should be convened at least once a quarter. In 2022, 14 meetings of the Supervisory Board were
held. The absence of Members of the Supervisory Board was incidental and did not affect its work. In 2022, the Supervisory
Board adopted five resolutions to justify the absence of a Member of the Supervisory Board at the meeting.
Qualifications and independence of the Members of the Supervisory Board
The Supervisory Board of KGHM Polska Miedź S.A. is the permanent supervisory authority of KGHM Polska Miedź S.A., in
all of the Company’s functional areas. This function is exercised among others through the right to receive cyclical or
advisory information from the Company concerning its assets, as well as important circumstances involving the Company’s
affairs, in particular in terms of the operations, investments and staff.
The detailed scope of duties of the Supervisory Board and the manner of its proceedings is described in the Statutes of the
Company and the Bylaws of the Supervisory Board of KGHM Polska Miedź S.A. (
https://kghm.com/en/investors/corporate-
governance). The Members of the Supervisory Board Rady should, in performing his/her duties, exercise the due diligence
arising from the professional nature of his/her activities as well as loyalty towards the Company.
As at 31 December 2022 the Members of the Supervisory Board: Agnieszka Winnik-Kalemba, Wojciech Zarzycki, Andrzej
Kisielewicz, Piotr Ziubroniewicz, Radosław Zimroz, Marek Wojtków submitted declarations, according to which they meet
the criteria of independence, referred to in the Act of 11 May 2017 on Auditors, Audit Firms and Public Supervision, and
have no actual and material relations with any shareholder who holds at least 5% of the total vote in the company (Principle
2.3. of DPSN 2021).
The Supervisory Board evaluated the submitted declarations regarding the fulfilment of independence criteria and adopted
appropriate resolutions regarding verification of the declarations of members of the Supervisory Board’s Audit Committee,
which in the end determined that 6 of the 10 members of the Supervisory Board fulfil independence criteria.
Diagram 21. The composition of the Supervisory Board of KGHM Polska Miedź S.A. in 2022
1.01-21.06 22.06-6.10 7.10–23.11 24.11-31.12
Agnieszka Winnik-Kalemba
Chairwoman
Andrzej Kisielewicz
Katarzyna Krupa
Wojciech Zarzycki
Marek Wojtków
Radosław Zimroz
Piotr Ziubroniewicz
Józef Czyczerski
Bogusław Szarek
Przemysław Darowski
Bartosz Piechota
Jarosław Janas
Robert Kaleta
Piotr Dydko
Biograms of Members of the Supervisory Board
Agnieszka Winnik-Kalemba – Chairwoman of the Supervisory Board
Attorney, graduate of the Department of Law of Wrocław University. She completed postgraduate studies Public
Administration at Georgetown University in Washington D.C.; and of the faculty of Public Administration and Business Law
at the University of Kentucky.
She passed her bar exam in 2003 under the District Bar Council in Wrocław and was licensed to work in the profession.
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 106
the Company and the Group in 2022 – translation from the original Polish version
Since 2003 owner of a Law Office. In the years 2006 - 2010 served as an advisor and regular associate of the late Member
of Parliament Aleksandra Natalli – Świat. In the years 1999 - 2003 gained experience as an apprentice attorney-at-law at
Kazimierz Cyrklewicz’s Law Office in Wrocław. In addition, was previously Manager of the Legal Services Office of the Lower
Silesia Marshal’s Office in Wrocław and was Legal Assistant to the Chairman of the Chamber of Regions of the European
Council in Strasbourg, the Local Government Assembly of the Wrocław Province. Also gained experience as Legal Assistant
in the Law Offices of Bowles, Keating, Matuszewicz & Fiordalisi Chicago – Milan – Rome, a Partnership of Professional
Corporation, Chicago USA. In the years of 2006-2008 was the Member of the Supervisory Board of PKO Bank Polski S.A.,
and in 2016 was Deputy Chairwoman of the Supervisory Board of PKO Bank Polski S.A. Currently, she is a Member of the
Supervisory Board of PKO Bank Polski S.A.
Katarzyna Krupa – Deputy Chairwoman of the Supervisory Board
Graduate of the Faculty of Management at the University of Warsaw. Employee of the Ministry of State Assets, where she
is involved in supervisory work in the section responsible for the supervision of companies with a majority interest held by
the State Treasury. In the years 1998-2017 she was an employee of the Ministry of the State Treasury, subsequently of the
Ministry of Development, engaged in tasks involving ownership transformation and ownership supervision. She gained
professional skills by working in corporate bodies. She was a member among others in supervisory boards of companies:
Zakłady Azotowe Puławy S.A., Kopex SA, Warmińsko – Mazurska Specjalna Strefa Ekonomiczna S.A.
Has many years of experience in conducting ownership supervision of companies with a majority interest held by the State
Treasury and in transactions on the capital market.
Wojciech Zarzycki – Secretary of the Supervisory Board
In 2004 he obtained his master’s degree from the Faculty of Economics at Poznań University of Economics and Business.
He has been a statutory auditor since 2008 and he is a Member of the Polish Chamber of Statutory Auditors. He is a Member
of the Association of Chartered Certified Accountants (ACCA), and since 2002 he has held the title of Chartered Financial
Analyst (CFA) in the United States, and is a member of the CFA Institute and CFA Society Poland.
Since 2011 employed as a Manager, and subsequently as a Financial Director of companies of the Allianz Group in Poland
(prior to the merger of Aviva Group companies). From 2016 to 2022 he was a Member of the Supervisory Board of KGHM
TFI S.A.
From 2005 to 2011 he worked as an Auditor in the company KPMG Audyt, conducting audits of the financial statements of
insurance companies. From 2003 to 2005 he worked as an Accountant in the company Morison Finansista-Finlex.
Józef Czyczerski
Secondary technical education. Since 1979 employed in the Rudna mine of KGHM Polska Miedź S.A. as an underground
electromechanic. Chairman of the trade union Krajowa Sekcja Górnictwa Rud Miedzi NSZZ Solidarność. Employee-elected
member of the Supervisory Board of KGHM Polska Miedź S.A. in the years 1999-2011, and then from 2014.
Przemysław Darowski
Has higher technical education. Professional work commenced in 1997 as a metallurgist, next as a railways rolling stock
Specialist in Pol- Miedź Trans Sp. z o.o. From 2003 Head of the Unit responsible for maintenance planning and settlement
as well as Maintenance Control, subsequently Head of the Railways Operations Unit in Głogów. From 2006 Senior Specialist
/ Commissioner of the Railway Cars Maintenance Handover Unit. Cooperated with the Gmina (municipality) of Legnica, on
behalf of which Zespół Szkół Technicznych i Ogólnokształcących im. Henryka Pobożnego (Henryk Pobożny Technical and
General School Complex) in Legnica acts as regards the operation of a training and examinations center for train drivers
and candidates for train drivers.
Former member of the railways commissions in Pol-Miedź Trans which review railway accidents and incidents. Moreover,
in the years 2017-2019 served as an Employee Labour Inspector. Currently Chairman of the Interdivisional Commission of
the NSSZ „Solidarność” trade union in Pol-Miedź Trans. Member of the trade union Sekcja Krajowa Górnictwa Rud Miedzi
NSSZ „Solidarność”. Member of the Management Board of Region Zagłębie Miedziowe of the trade union NSSZ
„Solidarność”.
Andrzej Kisielewicz
Graduate of the Faculty of Mathematics and Computer Science, University of Wrocław. He received his doctorate in
mathematics at the Polish Academy of Science in Warsaw. He habilitated at the University of Wrocław and was awarded the
title of Professor of Mathematics in 2001. He is currently a professor at the Wrocław University of Technology.
He gained his professional experience in foreign research centres: University of Manitoba (Winnipeg, Canada,1989-1990),
Technische Hochschule Darmstadt (Germany, 1990-1992), Vanderbilt University (Nashville, USA, 2001-2002). In addition, he
has held a number of short-term internships abroad, among others in France, Italy, Austria and Israel. He is the recipient
of two of the world's most prestigious academic scholarships: the Alexander von Humboldt Scholarship and the Fulbright
Scholarship.
He also has many years of experience in supervisory boards. Among others, he was a member and chairman of the
supervisory boards of such companies as "Spedtrans" sp. z o.o., "Teta" S.A. and PKO BP S.A.
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 107
the Company and the Group in 2022 – translation from the original Polish version
He is the author of more than eighty scientific publications on mathematics, logic and computer science in foreign journals,
as well as three books in Polish: "Logika i argumentacja" (Logic and argumentation), "Sztuczna inteligentencja i logika"
(Artificial intelligence and logic), "Wprowadzenie do informatyki" (Introduction to computer science). At present he is a
Member of the Supervisory Board of PKO Bank Polski S.A.
Bogusław Szarek
Since 1982 employed at the Sieroszowice Mine of KGHM Polska Miedź S.A. as a mining machinery and tools mechanic.
Secondary technical education.
Since 1992 - Chairman of the Plant Committee of the trade union NSZZ „Solidarność” in the Sieroszowice Mine. Following
the merger of the Polkowice mine with the Sieroszowice mine, since 1996 - Chairman of the Plant Committee of the trade
union NSZZ „Solidarność” in the Polkowice – Sieroszowice mine. Since 2012 - employee-elected Member of the Supervisory
Board of KGHM Polska Miedź S.A.
Deputy Chairman of the Board of the trade union Krajowa Sekcja Górnictwa Rud Miedzi NSZZ „Solidarność”. Treasurer of
the Board of the Secretariat for Mining and Energy of the trade union NSZZ „Solidarność”. Member of the National
Committee of the trade union NSZZ „Solidarność”.
Marek Wojtków
Graduate of the University of Economics in Wrocław, specialty: economic cybernetics and information technology as well
as data processing and accounting. Completed postgraduate studies in occupational health and safety in the Witelon State
Higher Vocational School in Legnica. He also holds the title of Executive Master of Business Administration (MBA) Collegium
Humanum – Warsaw Management University.
Since 2016 he has worked in the Agency for Restructuring and Modernisation of Agriculture, and since 2019 he has served
as deputy director of the regional unit in Wrocław. He is involved in among others managing and supervising the activities
of county offices. He has previously held managerial positions in the areas of finance, logistics and management (ADEO
Polska Group, DOMEX/AVANS/ELEKTRODOM, Jaworskie Zakłady Chemii Gospodarczej „Pollena”).
Radosław Zimroz
Graduate of Wrocław University of Science and Technology, professor of technical sciences in the discipline mining and
geology. From 2017 he served as deputy dean, and since 2019 he has served as Dean of the faculty of Geoengineering,
Mining and Geology of Wrocław University of Science and Technology. He is Chairman of the Underground Copper Deposit
Mining Section of the Committee on Mining of the Polish Academy of Sciences.
In the years 2004-2005 he held a post-doctoral fellowship at Cranfield University (Applied Math and Computing Group), and
in the years 2012-2018 he worked in KGHM Cuprum CBR in Wrocław, where he established the Systems Analytics Unit. He
is the author of numerous scientific publications, and has promoted many PhDs. He participated in, or was the head of
projects for Turów Brown Coal Mine (KWB Turów) and for KGHM Polska Miedź S.A., as well as for State Committee for
Scientific Research (KBN), Ministry of Science and Higher Education (MNiSW), National Centre for Research and
Development (NCBiR), National Science Centre (NCN). He also carried out international projects under FP7, H2020, EIT Kic
Raw Materials.
He is a member of the Polish Association of Technical Diagnostics (Vice President of the Management Board, second term),
the Society of Mining Professors, the Society of Mine Engineers and Technicians, the Mining Committee of the Polish
Academy of Sciences (second term, currently in the presidium). Amongst the awards he has received are „Zasłużony
honorowy pracownik KWB Turów” (Award for honorary employee of Turów Brown Coal Mine), „Zasłużony dla górnictwa RP”
(Award of the mining industry of the Republic of Poland), an honorary award of the State Mining Authority „Zasłużony dla
bezpieczeństwa w górnictwie” (Award for safety in mining). He holds the title „generał górniczy” (mining general), second
degree.
Piotr Ziubroniewicz
Manager with experience in government administration as well as in non-governmental organisations. For nearly 4 years
he directed the work of the Office of the Minister in the Ministry of Development and Technology, where he served as
Deputy Director and Director of the Office. His previous experience was gained as an employee in local government.
He is a graduate of the Faculty of Law and Administration at the University of Opole. He also graduated from Master of
Business Administration.
In January 2022 he was appointed to the position of Deputy President of National Property Resources. He served as an
advisor to the Minister of the Economy. In the years 2021-2022 he was a Member of the Supervisory Board of Mesko S.A.
He currently sits on the Supervisory Board of Invest -Park Development sp. z o.o.
Supervisory Board Committees
Within the structure of the Supervisory Board are three committees which serve in an auxiliary role to the Supervisory
Board in the preparation of assessments, opinions and other actions aimed at reaching decisions which must be made by
the Supervisory Board. After the end of the year, the committees submit reports on their activities to the Supervisory Board.
The Committees elect a Chairman from among themselves. Internal regulations on the basis of which the following
Committees organize their work and their changes are adopted by the Supervisory Board.
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 108
the Company and the Group in 2022 – translation from the original Polish version
Diagram 22. Committees of the Supervisory Board of KGHM Polska Miedź S.A. in 2022
Audit Committee
Responsible for supervision in the areas of financial reporting, the internal control system, risk management and internal
and external audits.
Diagram 23. The composition of the Audit Committee of KGHM Polska Miedź S.A. in 2022
1.01-21.06 22.06-6.10 7.10–23.11 24.11-31.12
Agnieszka Winnik-Kalemba
Andrzej Kisielewicz
Katarzyna Krupa
Wojciech Zarzycki Chairman
Marek Wojtków
Bogusław Szarek
Przemysław Darowski
Bartosz Piechota
Jarosław Janas Chairman
Robert Kaleta
In the scope of financial reporting the major tasks of the Audit Committee are as follows:
− monitoring of the financial reporting process,
− the conduct of financial review,
− conducting reviews of transactions carried out by the Company, which the Audit Committee considers as significant for
the Company,
− submitting recommendations aimed at ensuring the transparency of the Company’s financial reporting process.
In the scope of internal and external audit the major tasks of the Audit Committee are as follows:
− providing an opinion on the Company’s internal audit plan and the internal audit bylaws, as well as changes in the
position of internal audit director who reports directly to the President or other Member of the Management Board,
− analysis of the conclusions and recommendations of the Company's internal audit from monitoring the degree of
implementation of recommendations made by the Management Board,
− auditing and monitoring the independence of the certified auditor and the auditing firm, in particular if the auditing
firm provides other services to the Company apart from auditing,
− assessing the independence of the certified auditor and expressing consent for the certified auditor to provide
permitted non-auditing services in the Company,
− developing a policy for selecting an auditing firm to conduct the audit, developing a policy for the auditing firm
conducting audits, through entities related to the said auditing firm and by a member of the auditing firm’s network, to
provide permitted non-auditing services and setting forth the Company’s procedures for selecting an auditing firm,
− making a recommendation to the Supervisory Board on the appointment of an independent auditor to review the
internal audit function.
As at 31 December 2022 the majority of the Members of the Audit Committee, including its Chairman, met the
independence criteria referred to in art. 129 sec. 3 of the Act of 11 May 2017 on Auditors, Audit Firms and Public Supervision.
The Members of the Audit Committee that meet the criteria of independence are Agnieszka Winnik-Kalemba, Andrzej
Kisielewicz, Marek Wojtków, Wojciech Zarzycki.
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 109
the Company and the Group in 2022 – translation from the original Polish version
The qualifications of the Audit Committee’s Members in the areas of accounting or the auditing of financial statements, as
well as knowledge and skills in the sector in which KGHM Polska Miedź S.A. operates, resulted from the education,
experience and professional practice of the Audit Committee’s Members. Following is detailed information on their
qualifications in the areas of accounting or the auditing of financial statements as well as their knowledge and skills in the
sector in which KGHM Polska Miedź S.A. operates.
Wojciech Zarzycki was selected as a Member of Audit Committee possessing qualifications in the field of accounting or the
auditing of financial statements. In 2004 he obtained his master’s degree from the Faculty of Economics at Poznań
University of Economics and Business. He has been a statutory auditor since 2008 and he is a Member of the Polish
Chamber of Statutory Auditors. He is a Member of the Association of Chartered Certified Accountants (ACCA), and since
2002 he has held the title of Chartered Financial Analyst (CFA) in the United States, and is a member of the CFA Institute
and CFA Society Poland. Since 2011 employed as a Manager, and subsequently as a Financial Director of companies of the
Allianz Group in Poland (prior to the merger of Aviva companies). From 2016 to 2022 he was a Member of the Supervisory
Board of KGHM TFI S.A. From 2005 to 2011 he worked as an Auditor in the company KPMG Audyt, conducting audits of the
financial statements of insurance companies. From 2003 to 2005 he worked as an Accountant in the company Morison
Finansista-Finlex.
Bogusław Szarek was selected as a member possessing knowledge and skills in the sector in which KGHM Polska Miedź S.A.
operates resulting from many years of employment (since 1982) in KGHM Polska Miedź S.A. as well as being a member of
the Supervisory Board of KGHM Polska Miedź S.A. since 2012, as a Member of the Supervisory Board of KGHM Polska Miedź
S.A. elected by employees.
In 2022, there were 6 meetings of the Audit Committee. The absence of Audit Committee Members was incidental and did
not affect its work. In 2022, the Audit Committee adopted one resolution to justify the absence of a Member of the Audit
Committee at the meeting.
In 2022, the Audit Committee, during its meetings, became acquainted with information on, among others:
− market and corporate risk management in the KGHM Polska Miedź S.A. Group, including in detail in matters relating to
key risk;
− financial and production results in the KGHM Polska Miedź S.A. Group;
− expenses related to consulting services, auditing financial and legal statements, marketing and advertising, cultivating
traditions, representation and sponsorship;
− anti-corruption management system based on the international PN-ISO 37001 standard;
− assessment of the independence of the auditing firm in the provision of permitted non-auditing services;
− implementation of the audit plan for 2021 and the first half of 2022.
Remuneration Committee
Responsible for supervising the realisation of contracts signed with the Management Board, the remuneration system and
benefits paid out in the Company and Group, training and other benefits provided by the Company, as well as audits
performed by the Supervisory Board in this regard.
Diagram 24. Composition of the Remuneration Committee of KGHM Polska Miedź S.A. in 2022
1.01-21.06 22.06-6.10 7.10–23.11 24.11-31.12
Agnieszka Winnik-Kalemba
Andrzej Kisielewicz
Chairman
Katarzyna Krupa Chairwoman
Wojciech Zarzycki
Marek Wojtków
Radosław Zimroz
Józef Czyczerski
Bogusław Szarek
Przemysław Darowski
Bartosz Piechota
Jarosław Janas
Robert Kaleta Chairman
The tasks of the Remuneration Committee are as follows:
− the management of issues related to the recruitment and employment of members of the Management Board by
preparing and arranging draft documents and processes to be submitted for the acceptance of the Supervisory Board;
− the preparation of draft contracts/agreements and other sample documents related to the establishment of an
employment relationship with a Member/Members of the Management Board and oversight of the execution of the
contractual obligations by the parties;
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 110
the Company and the Group in 2022 – translation from the original Polish version
− oversight of the execution of the Management Board remuneration system, in particular the preparation of settlement
documents with respect to variable/exchangeable bonus elements of the remuneration in order to submit
recommendations to the Supervisory Board and development of a draft report of the Supervisory Board on the
remuneration of Members of the Management Board and Supervisory Board;
− monitoring and periodic assessment of the remuneration system for the Company’s senior management and, if
necessary, the preparation of recommendations for the Supervisory Board;
− oversight of the proper execution of additional benefits for Members of the Management Board arising from
agreements binding Members of the Management Board with the Company;
− other tasks ordered by the Supervisory Board.
Strategy Committee
Supervises the realisation of company strategy, the company's annual and long-term operating plans, supervising the
coherence of these documents, and also provides its opinion to the Supervisory Board on the strategic projects presented
by the Management Board of the Company and any changes thereto, as well as on the company's annual and long-term
operating plans.
Diagram 25. Composition of the Strategy Committee of KGHM Polska Miedź S.A. in 2022
1.01-21.06 22.06-6.10 7.10–23.11 24.11-31.12
Agnieszka Winnik-Kalemba
Andrzej Kisielewicz Chairman
Katarzyna Krupa
Wojciech Zarzycki
Marek Wojtków
Radosław Zimroz
Piotr Ziubroniewicz
Józef Czyczerski
Bogusław Szarek
Przemysław Darowski
Bartosz Piechota Chairman
Robert Kaleta
Piotr Dydko
The tasks of the Strategy Committee are as follows:
− execution on behalf of the Company's Supervisory Board of tasks in the area of oversight of issues associated with the
Company's strategy and the annual and long-term operating plans of the Company;
− monitoring execution of the Company's strategy by the Management Board and issuing opinions on the degree to which
the existing strategy is able to deal with changes in the actual situation;
− monitoring execution of the annual and long-term operating plans of the Company by the Management Board, and
assessment of whether these plans need to be modified;
− assessment of the consistency of the annual and long-term operating plans of the Company with the Company's
strategy as executed by the Management Board, and the presentation of any proposed changes in all such Company’s
documents;
− submission to the Company's Supervisory Board of its opinions regarding the draft strategies of the Company and any
changes thereto and of the annual and multi-year operating plans of the Company, as presented by the Company's
Management Board, including budget;
− other tasks ordered by the Supervisory Board.
FIRM AUDITING THE FINANCIAL STATEMENTS
The following are applicable in KGHM Polska Miedź S.A.:
− Policy of KGHM Polska Miedź S.A. for the selection of the auditing firm to conduct audits of the financial statements,
adopted by Resolution No. 151/X/21 of the Supervisory Board of KGHM Polska Miedź S.A., dated 22 October 2021
(hereafter: “Selection policy”)
− Policy for permitted non-auditing services to be provided by the auditing firm conducting audits of the KGHM Polska
Miedź S.A. Group through entities associated with the auditing firm and through members of the auditing firm’s
network, adopted by the Resolution No. 152/X/21 of the Supervisory Board of KGHM Polska Miedź S.A. dated 22 October
2021 (hereafter: “Services policy”).
− Procedure of KGHM Polska Miedź S.A. concerning the selection of the audit firm auditing the financial statements
adopted by the Resolution No. 25/X/21 of the Supervisory Board’s Audit Committee of KGHM Polska Miedź S.A. dated 4
October 2021 r. (hereafter: „Selection procedure”).
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 111
the Company and the Group in 2022 – translation from the original Polish version
Main tenets of the Selection policy/ Selection procedure:
− maximum uninterrupted period of providing services by a given auditing firm of audits of the financial statements
amounting to 10 years, followed by a grace period of at least 4 years, with the provision that the key certified auditor
may not carry out the statutory audit for more than 5 years;
− transparency, accuracy and honesty in all procedures involving the selection of the auditing firm;
− equal opportunity for all of the auditing firms meeting the Company’s requirements to be selected;
− appropriate substantive preparation and due diligence of persons selected within the Company to carry out the
Selection policy/ Selection procedure;
− documentation of selection procedures performed and evaluation of offers in a manner which ensures the
transparency of the actions taken.
Main assumptions of the Services Policy:
− limitation of the scope of permitted non-auditing services ordered from the auditing firm or a related entity thereof;
maximum total remuneration for the services provided in this regard is limited to 70% of the average remuneration
paid out during the last three financial years due to providing statutory auditing services;
− need to review the purpose and necessity for purchasing permitted non-auditing services from the auditing firm or a
related entity thereof on an individual basis;
− active participation of the Audit Committee in the process of evaluating threats to and the security of the independence
of the auditing firm in providing permitted non-auditing services;
− signing of an agreement and the providing of services, as well as any change in the scope of the services or
remuneration thereof, will be possible only after the Audit Committee has provided the requisite consent.
The entity authorised to audit the financial statements of KGHM Polska Miedź S.A. for the years 2019-2024 is
PricewaterhouseCoopers Polska Spółka z ograniczoną odpowiedzialnością Audyt sp.k. The selection of the auditing firm
was made as a result of an organised procedure of selection, which met the existing criteria. The procedure was developed
by the Audit Committee and complies with the requirements of:
− Regulation of the European Parliament and of the Council (EU) No. 537/2014 on detailed requirements for statutory
audits of financial statements of public-interest entities;
− Act dated 11 May 2017 on certified auditors, auditing firms and public oversight;
− the Accounting Act of 29 September 1994.
In 2022, the following permitted non-audit services were provided to the Company by the audit firm examining its financial
statements:
− an independent attestation service for managing the responsible gold and silver supply chain to confirm compliance
with the requirements of the London Bullion Market Association ("LBMA");
− confirmation of the correctness of data calculation in order to meet the requirements of art. 52 sec. 3 of the Act dated
20 February 2015 on renewable energy sources;
− issuing an opinion for the purposes of exemption from excise duty on electricity in energy-intensive plants in
accordance with art. 31d sec. 8 of the Act dated 6 December 2008 on excise tax;
− evaluation of the Remuneration Report of the Management Board and Supervisory Board of KGHM Polska Miedź S.A.,
− verification of selected loan agreements signed between KGHM Polska Miedź S.A. and the European Investment Bank;
− review of the financial statements for the first half of 2022.
In each case the Audit Committee evaluated the independence of the auditing firm and expressed its consent to the
provision of these services.
Detailed information on remuneration of the entity entitled to audit the financial statements for the review and audit of
financial statements and other remuneration is presented in note 12.10 of the separate and consolidated financial
statements.
DIVERSITY POLICY
GRI 3-3 material topic: Diversity and equal opportunities
KGHM Polska Miedź S.A. applies best practice in promoting diversity with respect to its employees. As a global company,
active on global markets, labour and employee relations standards are applied which are consistent with local laws in force,
as well as with those defined by international institutions. Existing regulations and policies reflect the good of employees
and mutual relations, based on best practice, regardless of the jurisdiction in which KGHM Polska Miedź S.A. operates.
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 112
the Company and the Group in 2022 – translation from the original Polish version
KGHM Polska Miedź S.A. creates a non-discriminatory environment and workplace, and consequently no form of
discrimination is tolerated, especially as regards gender, age, origin, nationality, citizenship, religion, political opinion and
trade union membership.
KGHM Polska Miedź S.A. manages diversity by aiming at creating an organisational culture based on mutual respect, equal
treatment, access to development opportunities and the utilisation of employee potential. The approach to management
of diversity is defined by the „Declaration of Diversity of KGHM Polska Miedź S.A.”
Moreover, in KGHM Polska Miedź S.A. the process of recruitment is conducted with full respect to the principles of diversity
and equal access to employment. All candidates meeting the criteria set forth for a given recruitment process are treated
equally. The participants in this process adhere to the ban on discrimination. They endeavour to ensure a rational degree
of diversity in the process of selecting employees, while maintaining the primacy of knowledge, substantive skills and social
ability.
The management of diversity also applies to members of the Supervisory Board and the Management Board of KGHM
Polska Miedź S.A. The management and supervisory board members are diverse in terms of gender, age and experience:
Table 31. Principles in chapter 2 of DPSN 2021 partially applied or not applied in KGHM Polska Miedź S.A. in 2022
Structure of gender diversity
Women
Men
Supervisory Board of KGHM Polska Miedź S.A.
2
8
Management Board of KGHM Polska Miedź S.A.
-
5
Structure of age diversity
< 40 years
40-50 years
51-60 years
> 60 years
Supervisory Board of KGHM Polska Miedź S.A.
1
4
1
4
Management Board of KGHM Polska Miedź S.A. - 3 2 -
Employment in KGHM Polska Miedź S.A. < 5 years 5-10 years 11-20 years > 20 years
Supervisory Board of KGHM Polska Miedź S.A. 7 1 - 2
Management Board of KGHM Polska Miedź S.A. 2 1 - 2
In accordance with the Statement on the Company's compliance with the corporate governance principles contained II
Chapter of the DPSN 2021, the following principles regarding the management board and the supervisory board are
partially applied or not applied:
Table 32. Principles in chapter 2 of DPSN 2021 partially applied or not applied
Principle 2.1.
according to which, a company
should have in place a diversity policy applicable to
the management board and the supervisory board,
approved by the supervisory board and the
general meeting, respectively. The diversity policy
defines diversity goals and c
riteria, among others
including gender, education, expertise, age,
professional experience, and specifies the target
dates and the monitoring systems for such goals.
With regard to gender diversity of corporate
bodies, the participation of the minority gro
up in
each body should be at least 30%
The principle is partially applied. While the Company does not have a Diversity Policy
as regards the Management Board and Supervisory Board, due to the international
scope of its operations, cultural differences and the nature of the sector in which the
Group operates, the "Declaration of Diversity of KGHM Polska Miedź S.A." has been
implemented. In its operations the Company complies with discrimination
prohibitions and undertakes actions aimed at respecting diversity in the workplace. An
organisational culture is nurtured based on mutual respect, equality, access to
development opportunities and optimal use of employee talent regardless of, among
others: ethnic origin, age, gender, sexual orientation, nationality, citizenship, religious
orientation, political convictions or trade union membership. The Company aims at
ensuring reasonable diversity in the selection of persons to the Management Board
and Supervisory Board. The practical application of the „Declaration of Diversity”
results in fully respecting gender equality and sufficient selection in terms of expected
skills, knowledge, experience and education. The management and supervisory teams
are consequently composed of persons of various genders, ages and experiences.
More information on the Company’s approach to diversity in the supervisory bodies is
presented in the further part of the said Corporate Governance Statement.
Principle 2.2. according to which, d
ecisions to elect
members of the management board or
the
supervisory board of companies should ensure
that the composition of those bodies is diverse by
appointing persons ensuring diversity, among
others in order to achieve the target minimum
participation of the minority group of at least 30%
according to
the goals of the established diversity
policy referred to in principle 2.1.
The principle is partially applied. As described in reference to principle 2.1, the
Company does not currently have a Diversity Policy. Nonetheless the Company aims
at ensuring reasonable diversity in terms of the members of the Supervisory Board
and Management Board. The management and supervisory teams are composed of
persons of various genders, ages and experiences. More information on the
Company’s approach to diversity in the supervisory bodies is presented in the further
part of the said Corporate Governance Statement.
Principle 2.4. according to which, t
he supervisory
board and the management board vote in an open
ballot unless otherwise required by law.
The principle is partially applied. KGHM Polska Miedź S.A. strives at every stage of its
operations to apply this principle and for full transparency in the process of the
adopting of resolutions by these bodies. The Bylaws of the Supervisory Board and
Man
agement Board stipulate as a principle that voting shall be conducted in open
ballot, which does not preclude the right of any Member of these bodies to request
voting by secret ballot. The Company anticipates that, in a small number of situations
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 113
the Company and the Group in 2022 – translation from the original Polish version
involving the adoption of resolutions by the Supervisory Board regarding personal
matters, there may occur cases of voting by secret ballot at the request of Members
of the Supervisory Board or the Management Board.
Principle 2.11.6. according to which, informati
on
regarding the degree of implementation of the
diversity policy applicable to the management
board and the supervisory board, including the
achievement of goals referred to in principle 2.1.
The principle is not applied at present, as discussed in the explanation regarding the
non-application of Best Practice principle 2.1. – lack of a Diversity Policy.
III – SYSTEMS AND FUNCTIONS
KGHM Polska Miedź S.A., under the principles indicated in chapter III of DPSN 2021, strives to maintain effective
systems and functions as essential tools for supervising the Company in all of its operating activities.
The Company maintains effective internal control and risk management systems and oversight of compliance activities, as
well as effective internal auditing, appropriate for the size and nature of the KGHM Polska Miedź S.A. Group. The Company’s
structure separates entities responsible for the tasks of individual systems and functions.
The Supervisory Board prepares and presents to the Ordinary General Meeting for its approval the annual financial
statements, which among others contain an assessment of the standing of the Company on a consolidated basis, including
an evaluation of the internal control, risk management and compliance systems and the internal audit function, with
information on the actions taken by the Supervisory Board of KGHM Polska Miedź S.A. in performing this assessment.
This assessment comprises all of the important control mechanisms, including in particular those involving reporting and
the operations, and is prepared among others based on documents received from the Management Board and from
persons managing risk and compliance and also managing internal audit regarding information on the effectiveness of
these functions, discussions held with the participation of the Management Board and other individuals invited to attend
meetings of the Supervisory Board, and also takes into account the financial statements and the reports of the Management
Board on the activities of KGHM Polska Miedź S.A. and of the KGHM Polska Miedź S.A. Group, and based on the conclusions
from the audit of the Company’s accounts by a Certified Auditor and other audits.
In terms of corporate risk management systems, compliance activities and internal audit (including in terms of financial
reporting) the Audit Committee engages in regular monitoring of these functions. Responsibility for the realisation of these
obligations and their role in these systems reflects the principles existing in the organization for the breakdown of duties
at various operational and management levels and support the achievement of defined business goals. As shown in the
following diagram 26, the Company applies the model of three lines of defence (3LoD), assigning to the first line
management risk through business units and risk owners, as well as control mechanisms in the Company’s operational
processes, to the second the function of support of risk management, and to the third – internal audit controlling the other
lines.
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 114
the Company and the Group in 2022 – translation from the original Polish version
Diagram 26. Three lines of defence of KGHM Polska Miedź S.A.’s risk management system
Table 33. Main characteristics of internal control and risk management systems as applied by KGHM Polska Miedź S.A. in
the process of preparing separate and consolidated financial statements
Supervision of the application of
uniform accounting principles by the
Parent Entity and the companies of
the KGHM Polska Miedź S.A. Group
during the process of preparing
reporting packets to prepare the
consolidated financial statements of
the KGHM Polska Miedź S.A. Group
In order to ensure truthfulness and accuracy in the keeping of the accounting records of the
Parent Entity and the
uniformity of the accounting principles applied when preparing the
financial statements of Group subsidiaries, the Management Board of the Parent Entity has
introduced for continuous use an Accounting Policy for the Group in accordance with
International Financial Reporting Standards approved by the European Union which is regularly
updated in compliance with new regulations.
Control over the accounting policies applied in the process of preparing the financial
statements of KGHM Polska Miedź S.A. and of the Group subsidiaries is based on the control
mechanisms embedded in the functioning of the reporting systems.
The reporting packets of subsidiaries are also reviewed by appropriate services in the Parent
Entity.
Centralised financial and accounting
services
KGHM Polska Miedź S.A.
performs its accounting activities within a centralised financial and
accounting services structure. Bookkeeping in the Parent Entity is performed by the Accounting
Services Center under the Head Office of KGHM Polska Miedź S.A. The centralisation of
accounting services under a process model which provides for the transparent breakdown of
duties and responsibilities ensures minimisation of the risk of bookkeeping errors and high-
quality of financial statements. Actions are systematically being taken aimed at optimising the
functioning of the accounting services structures and enhancing the security of the process of
bookkeeping accounting services.
Finance and accounting systems KGHM Polska Miedź S.A. keeps accounting records in an integrated IT system. The modular
structure of this system ensures a transparent segregation of processes and duties, coherence
of accounting records and control over ledgers: special purpose ledger, general ledger and sub-
ledgers. Access to this data at various levels and in various units is available via a well-developed
reporting system. The Parent Entity continuously adapts the IT information system to changing
accounting principles or other legal standards. The Parent Entity’s solutions are implemented
in the IT systems of the Group’s entities.
To ensure the legitimate utilisation and protection of systems, data, secure access to data and
computer equipment, appropriate organisational and systemic solutions have been
introduced. Access to the resources of the financial and accounting system, as well as financial
reporting, is limited by a system of authorisations that are granted to authorised employees
solely with respect to the duties which they carry out. These entitlements are subject to regular
review and audits. Control over this access is carried out at each stage of financial statements
preparation, beginning with the entering of source data, through the processing of data, to the
generation of output information.
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 115
the Company and the Group in 2022 – translation from the original Polish version
A key
element in limiting the risk of errors and misstatements in accounting for economic
activities are the actions taken which are aimed at increasing the use of IT tools to automate
control over and the settlement of purchases by the Company. These actions include:
- the Workflow system of electronic document settlement and approval,
- the system for transmitting data between the system in the Parent Entity and IT systems in
Group companies, and
- customer settlement based on e-invoices for procurement and sales.
Corporate risk management Under the Corporate Risk Management Policy and Procedures and the Corporate Risk and
Compliance Committee Rules, corporate risk management is an on-going process in the Group.
Risks associated with the Group’s various operations are continuously identified, assessed and
analysed in terms of their possible limitation.
The Department of Corporate Risk Management and Compliance is responsible for
coordination of the entire corporate risk management process and for developing the methods
and tools used by managers in the Parent Entity, its subsidiaries and projects, as well as for risk
monitoring and escalation, and for reporting incidents.
These activities also comprise risk management with respect to the process of preparing the
consolidated financial statements of the Group.
The process of corporate risk management is annually subjected to an effectiveness audit (in
compliance with the guidelines of “Best Practice for GPW Listed Companies 2021”).
Detailed information regarding the risk management system applied in the KGHM Polska Miedź
S.A. Group together with an indication of the key risk is presented in
subsection 2.6 of this
report.
Internal audit A
fundamental element of risk management with respect to the functioning of control
mechanisms and the existence of risks in the operations of KGHM Polska Miedź S.A. is the work
carried out by the Internal Audit Department. This work also indirectly strengthens the process
of preparing financial statements as well as their accuracy.
The Internal Audit Department carries out its tasks based on the ”Audit Plan” for the given
calendar year approved by the Management Board of KGHM Polska Miedź S.A. and assessed
by the Audit Committee of KGHM Polska Miedź S.A.
The goal of an audit is to provide the Management Board and the Audit Committee of the
Supervisory Board of KGHM Polska Miedź S.A. with independent and objective information on
internal control and risk management systems as well as with analyses of business processes
within KGHM Polska Miedź S.A. and in the Group’s companies. Independently from internal
audit and institutional control, the obligation fully remains in KGHM Polska Miedź S.A. for each
employee to exercise self-control in respect of their duties and for all levels of management to
exercise their control as part of their coordination and supervision duties.
External audit
In accordance with prevailing law, consolidated financial statements of the KGHM Polska Miedź
S.A. Group are submitted for half-year review and annual auditing by a certified auditor. The
Supervisory Board selects the certified auditor through a tender process, based on the
recommendations of the Supervisory Board’s Audit Committee and the report on the tender
conducted by the Committee.
The appropriate entity to audit the financial statements of KGHM Polska Miedź S.A. for the years
2019-2024 is PricewaterhouseCoopers Polska spółka z ograniczoną odpowiedzialnością Audyt
sp.k. As part of the audit work performed the certified auditor performs, on the basis of
prevailing audit methodology, an independent evaluation of the accounting principles applied
by Parent Entity in preparing the financial statements and the accuracy and reliability of the
separate and consolidated financial statements.
The effectiveness of the internal control system and the risk management system in the process
of preparing the financial statements is confirmed by the unqualified report on the audit issued
by the certified auditor from its audit of the separate and consolidated financial statements of
KGHM Polska Miedź S.A.
Supervision over the process of
financial reporting
The body which supervises the process of financial reporting in KGHM Polska Miedź S.A. and
which cooperates with the independent auditor is the Supervisory Board’s Audit Committee,
which is appointed by the Supervisory Board of the Parent Entity. The Audit Committee, in
accordance with its duties as set forth in the Act dated 11 May 2017 on certified auditors,
auditing firms and public oversight, in particular:
- monitors the process of financial reporting in terms of compliance with the Accounting
Policy approved by the KGHM Polska Miedź S.A. Group and prevailing laws;
- monitors the effectiveness of internal control systems, internal audit and risk management;
-
monitors the independence of the certified auditor and of the entity entitled to audit
financial statements, and
- conducts the process of selecting the entity entitled to audit financial statements of the
Parent Entity to provide a recommendation to the Supervisory Board.
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 116
the Company and the Group in 2022 – translation from the original Polish version
Monitoring of the process of financial reporting and assessment of the financial statements by
the Supervisory Board is the final step of the review and control carried out by this body,
ensuring the reliability and accuracy of the data presented in the separate and consolidated
financial statements of the KGHM Polska Miedź S.A. Group.
Proper management of the process of keeping records and preparing
financial statements
ensures the security and the high quality of the information.
In accordance with the published Statement on the Company's compliance with the principles in section III of DPSN 2021,
the following principles regarding systems and functions are partially applied or not applied:
Table 34. Principles in chapter 3 of DPSN 2021 partially applied or not applied in KGHM Polska Miedź S.A. in 2022
Principle 3.3.
according to which a company
participating in the WIG20, mWIG40 or sWIG80
index
appoints an internal auditor to head the
internal audit function in compliance with
generally accepted international standards for the
professional practice of internal auditing. In other
companies which do not appoint an internal
auditor who meets such r
equirements, the audit
committee (or the supervisory board if it performs
the functions of the audit committee) assesses on
an annual basis whether such person should be
appointed.
The principle is partially applied. The Company has an Executive Director for Audit. As
not all of the criteria for independence as understood in generally-recognised
international internal audit standards are complied with, the Company partially
applies the principle.
Principle 3.4.
concerning the remuneration of
persons
responsible for risk and compliance
management and of the head of internal audit
should depend on the performance of delegated
tasks rather than short-
term results of the
company.
The principle is partially applied. The remuneration of persons responsible for risk and
compliance management and of the head of internal audit in the Company results
from the Company’s internal rules and from the Collective Labour Agreement, which
links a part of the remuneration to the Company’s profit for a given year as well as to
EBITDA. At present, remuneration is partially linked to the achievement of specific
tasks.
Principle 3.5.
which states that persons
responsible for risk and compliance management
report directly to the president or other member of
the management board.
The person responsible for risk and compliance management reports organisationally
to the Executive Director for Audit, but in accordance with the Company’s
Organisational Regulations this person is ensured autonomy which is expressed
among others by directly reporting to the Management Board and the Supervisory
Board’s Audit Committee.
In accordance with the published Statement on the Company's compliance with the principles in section III of DPSN 2021,
the following principles regarding systems and functions are not applicable to the Company:
Principle 3.7. which states that principles 3.4 –
3.6
apply also to members of the company’s group which
are material to its activity if they appoint persons to
perform such tasks.
− (see principle 3.4. -
The remuneration of persons
responsible for risk and compliance management
and of the head of internal audit should depend on
the performance of delegated tasks rather than
short-term results of the company.
− Principle 3.5. - persons respon
sible for risk and
compliance management report directly to the
president or other member of the management
board.
− Principle 3.6. -
The head of internal audit reports
organisationally to the president of the
management board and functionally to the chair o
f
the audit committee or the chair of the supervisory
board if the supervisory board performs the
functions of the audit committee.)
The principle is not applicable to the Company. In entities of the Company’s group,
persons have not been designated to fulfil the tasks indicated in principles 3.4-3.6,
but in entities of the Company’s group persons have been designated to function
as risk coordinators, who report directly to persons responsible for risk
management and compliance in the Parent Entity (i.e. the Company). Moreover,
following the completion of building an IT tool for the compliance function,
it is
planned that compliance coordinators will be appointed in the aforementioned
companies. The Company is also considering, in the case of
entities of the
Company’s group, the building of a structure to comply with principles 3.4.-3.6.
with respect to the functions of risk management and compliance. In terms of the
audit function, tasks in entities of the Company’s group are performed by the
Internal Audit Department of the Parent Entity (the Company).
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 117
the Company and the Group in 2022 – translation from the original Polish version
IV - GENERAL MEETINGS AND RELATIONS WITH SHAREHOLDERS
KGHM Polska Miedź S.A., under the principles indicated in chapter IV of DPSN 2021, strives to activate stakeholders
and their engagement in the Company’s affairs, mainly expressed in their active, personal or through a proxy,
participation in general meetings.
General Meetings of KGHM Polska Miedź S.A. (General Meeting)
The General Meeting of KGHM Polska Miedź S.A. is the Company’s highest authority. It meets in either ordinary or
extraordinary form, based on generally prevailing law, the Statutes of the Company and the “Bylaws of the General Meeting
of KGHM Polska Miedź S.A. with its registered head office in Lubin”. Ordinary General Meeting is convened within six months
of the end of each financial year. General Meetings are convened by the Company’s Management Board. In situations
defined by the Commercial Partnerships and Companies Code, General Meetings may be convened by the Supervisory
Board or by shareholders. The Statutes of the Company also authorise the Polish State Treasury to convene a General
Meeting. The General Meeting is convened by an announcement published on the Company website and in the manner set
forth in the Act dated 29 July 2005 on public offerings and conditions governing the introduction of financial instruments to
organised trading, and on public companies. A General Meeting may adopt resolutions if at least one-fourth of the share
capital is represented. Resolutions are adopted by a simple majority of votes cast, unless the law or the Company’s Statutes
state otherwise. Additional issues related to the functioning of the General Meeting are regulated by the “Bylaws of the
General Meeting of KGHM Polska Miedź S.A. with its registered head office in Lubin” adopted by the General Meeting on 17
May 2010, which are available on the Company’s website, www.kghm.com.
The duties of the General Meeting include in particular:
− examining and approving the report of the Management Board on the Company's activity and the financial statements;
including the financial statements of the Group, for the past financial year;
− adopting resolutions on the appropriation of profits or coverage of losses;
− acknowledging the fulfilment of duties performed by members of the bodies of the Company;
− changing the subject of the Company's activity;
− changes in the Company Statutes;
− increasing or decreasing the share capital;
− the manner and conditions for retiring shares;
− merging, splitting and transforming the Company;
− dissolving and liquidating the Company;
− issuing convertible bonds or senior bonds;
− consenting to the disposal and lease of an enterprise or of an organised part thereof, as well as the attachment
of limited property rights to same;
− all decisions relating to claims for redress of damage suffered during the foundation of the Company, or from
management or supervisory activities;
− purchase of the Company's own shares, which are to be offered to employees or persons who were employed by the
company or by related companies for a period of at least three years;
− establishing principles of the remuneration of members of the Supervisory Board, and
− establishing principles of the remuneration of members of the Management Board.
The schedule of work on organising the General Meetings of the Company is planned in such a way as to ensure that
the obligations towards shareholders are properly met and to enable them to exercise their rights.
Amongst the regulations of the Commercial Partnerships and Companies Code, in respect of the organisation of general
meetings and shareholder rights, the Company applies only those regulations which are obligatory, i.e. those which require
the publication of announcements and relevant materials for the general meeting on the website and the use of electronic
forms of contact with shareholders. Regulations enabling shareholders to participate in general meetings using electronic
means of communication are not applied.
Changes in the Company’s statutes
The introduction of changes in the Company’s Statutes requires resolutions of the General Meeting and the insertion of
an entry in the National Court Register. Changes in the Company’s Statutes are made through the General Meeting in
accordance with laws in force, in a manner and form described by the Commercial Partnerships and Companies Code, i.e.
a majority three-fourths of votes cast in the presence of persons representing at least half of the share capital.
Shareholders and their rights
Shareholders of the Company exercise their rights in a manner and within the limits prescribed by prevailing law,
the Statutes of the Company and the Bylaws of the General Meeting of KGHM Polska Miedź S.A.
Shareholders are entitled to exercise their voting rights either personally or through a proxy. The authority to participate
in a General Meeting and to exercise voting rights should be granted in writing or in electronic form. Shareholders shall
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 118
the Company and the Group in 2022 – translation from the original Polish version
inform the Company of the granting of proxy authority in electronic form by filling out and sending to the Company the
form placed on the website of the Company, or other information containing analogous data, no later than 24 hours prior
to the planned date of the General Meeting.
Pursuant to the Company’s Statutes, all of the shares are bearer shares, and their transformation into registered shares is
not allowed. Each share represents one vote. The shares of the Company may be redeemed with the permission of the
shareholder through their purchase by the Company (voluntary redemption). Redemption may not be carried out more
than once per financial year. The resolution of the General Meeting on the redemption of shares should especially describe
the legal basis for redemption, the amount of compensation to be paid to the shareholder for the redeemed shares or the
justification for redeeming shares without compensation, and the way in which the share capital will be decreased. The
resolution on the redemption of shares may be preceded by an agreement with the shareholder whose shares are to be
redeemed. The agreement shall set forth the number of shares to be redeemed and the price for which the shares are to
be purchased. The validity of the agreement shall depend on the passage of a resolution by the General Meeting.
Moreover, in a situation where the Supervisory Board conducts qualification proceedings in the case of the existence of
circumstances justifying the appointment of a Member of the Management Board, it shall inform shareholders of the results
of such proceedings and shall provide the minutes of the qualification proceedings. The Supervisory Board is also obliged
to annually present to the Ordinary General Meeting a concise assessment of the standing of the Company, which should
be included in the Company’s annual report, made available to shareholders within such a time period as to allow them to
review the report prior to the Ordinary General Meeting.
There is no limitation to the transfer of ownership rights to the shares of the Company or with respect to the execution
of voting rights on the shares of the Company, other than those generally prescribed by laws in force.
The Company has not issued securities which would grant special control rights in respect of the Company.
Special rights held by the State Treasury as a shareholder may result however from laws generally in force, among others:
− The Act of 16 December 2016 on the principles of state property management,
− The Act of 24 July 2015 on audits of certain investments.
Independent of the above, the rights shareholders of KGHM include among others:
− to request to convene a General Meeting - in cases described by the Commercial Partnerships and Companies Code, a
General Meeting may be convened by shareholders representing at least half of the share capital or shareholders
authorised by a court of registration to represent at least one-twentieth of the share capital;
− to announce draft resolutions and their justification - Shareholders may utilise electronic contact with the Company
through the Company’s website, in particular to enable the submission of motions to include specific issues in the
agenda of the General Meeting, to announce draft resolutions and their justification. Towards this end it is necessary
to carry out the prior authentication of a shareholders for their identification, in the manner indicated by the Company
on its website. The Company shall also provide on its website the proxy form and the form to facilitate voting through
a proxy;
− to convene a General Meetings - the Polish State Treasury as a shareholder may convene an Ordinary General Meeting
if the Management Board does not do so in the statutory timeframe as well as an Extraordinary General Meeting if it
considers its convening as warranted;
− to request that a matter included in the agenda of the General Meeting be removed or not considered - removal of an
issue from the agenda, or not considering an issue placed on the agenda at the request of the shareholders, requires
the adoption of a resolution by the General Meeting, following the earlier-expressed approval of all shareholders
present who had put forward such a proposal, and supported by at least 75% of the votes cast;
− to request the inclusion of specified matters on the agenda of the next General Meeting - shareholders representing
at least one-twentieth of the share capital may order the inclusion of specified matters on the agenda of the next
General Meeting.
− to announce candidates for Chairperson of the General Meeting – the General Meeting shall carry out an election of
the Chairperson from amongst any number of persons entitled to participate in the General Meeting who are put
forward by shareholders as a candidate for Chairperson;
− participation in dividends – the General Meeting may designate part of the profit for a shareholders' dividend if the
General Meeting of the Company had adopted a decision to designate part of the profit for a shareholders' dividend.
The Management Board of the Company is authorised, with the consent of the Supervisory Board, to adopt resolutions
in the matter of an interim payment to shareholders on the anticipated dividend at the end of the financial year, if the
Company is in the possession of sufficient funds for said payment. The rights date for dividends and the date for
payment of dividends shall be set by the General Meeting and announced by the Management Board of the Company.
Payment of dividends should commence within two months of the date the resolution on appropriation of profits is
adopted. The payment of an interim dividend requires the approval of the Supervisory Board. The Company may make
an interim payment on the anticipated dividend, if its approved financial statements for the prior financial year show a
profit. The interim dividend may represent at most half of the profit earned since the end of the prior financial year, as
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 119
the Company and the Group in 2022 – translation from the original Polish version
shown in the financial statements audited by a certified auditor, and increased by the reserve capitals created from
profit, which, for the purpose of payment of the interim dividend, may be used by the Management Board, and
decreased by uncovered losses and treasury shares;
− upon the motion of a shareholder representing at least one-fifth of the share capital, group elections for the Supervisory
Board shall be carried out at the nearest General Meeting. A motion to hold group elections for members of the
Supervisory Board should be submitted to the Management Board of the Company, in sufficient time to include it in
the agenda of the General Meeting;
− at the request of a shareholder representing at least one-twentieth of the share capital, the General Meeting may carry
out elections for a three-person Voting Committee, from among those candidates put forward by the participants of
the General Meeting. Should a Voting Committee be elected, its responsibilities shall include supervision to ensure that
all voting is properly carried out, supervision of the electronic voting system, and checking and transmitting to the
Chairman of the General Meeting the results of voting. The Voting Committee shall have the right to review the results
of voting which was held prior to the election of the Voting Committee;
− at the request of a shareholder, the Management Board shall be required to provide the shareholder with a copy of the
Bylaws of the General Meeting.
Ownership structure
The Company’s shareholder structure as at 31 December 2022 was as follows:
Table 35. Shareholder structure of KGHM Polska Miedź S.A. as at 31 December 2022
Shareholder
Number of
shares/votes
Interest in the share capital
/total number of votes
State Treasury
63 589 900
31.79%
Nationale-Nederlanden Otwarty Fundusz Emerytalny
10 104 354
5.05%
Aviva Otwarty Fundusz Emerytalny Aviva Santander
10 039 684
5.02%
Other shareholders
116 266 062
58.14%
Total
200 000 000
100.00%
The Company’s shareholder structure as of 6 January 2023 and at the date of publication of this Report on the application
of corporate governance principles was as follows:
Table 36. Shareholder structure of KGHM Polska Miedź S.A. as of 6 January 2023 and at the date of publication of this
Report
Shareholder
Number of
shares/votes
Interest in the share capital
/total number of votes
State Treasury
63 589 900
31.79%
Powszechne Towarzystwo Emerytalne Allianz Polska S.A.
12 241 453
6.12%
Nationale-Nederlanden Otwarty Fundusz Emerytalny
10 104 354
5.05%
Other shareholders
114 064 293
57.04%
Total
200 000 000
100.00%
Detailed information on the ownership structure may be found in subsection 1.12 Shareholders and the capital market.
In accordance with the published Statement on the Company's compliance with the principles in section IV of DPSN 2021,
the following principle regarding general meetings is partially applied:
Table 37. Principles in section 4 of DPSN 2021 applied partially or not applied in KGHM Polska Miedź S.A. in 2022
Principle 6.4.
according to which as the
supervisory board performs its responsibilities on
a continuous basis, the remuneration of
supervisory board members cannot depend on the
number of meetings
held. The remuneration of
members of committees, in particular the audit
committee, should take into account additional
workload on the committee.
The Company partially applies the principle. The members of the Supervisory Board
are remunerated regardless of the number of meetings officially convened and held
in a given calendar month. The Members of the Supervisory Board do not however
receive remuneration if, for unjustified reasons, they do not take part in any of the
meetings of the Supervisory Board officially convened and held in a given month. The
members of the Committees do not receive additional remuneration. The partial lack
of application of the principle is also due to implementation of the act dated 9 June
2016 on the principles of setting the
remuneration of individuals managing certain
companies.
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 120
the Company and the Group in 2022 – translation from the original Polish version
V - CONFLICTS OF INTEREST AND TRANSACTIONS WITH RELATED PARTIES
KGHM Polska Miedź S.A., under the principles indicated in chapter V of DPSN 2021, strives to maintain best
standards of due diligence in the management of conflicts of interest and in concluding transactions with related
entities under conditions of the potential arising of conflicts of interest.
The Company applies a model of verifying data on significant transactions entered into between KGHM Polska Miedź S.A.
and subsidiaries of the KGHM Polska Miedź S.A. Group with entities related with KGHM Polska Miedź S.A.
The Supervisory Board shall prepare an opinion on whether a transaction with a related entity is justified, if the signing of
the said transaction requires the consent of the General Meeting. In such a case the Supervisory Board evaluates the need
for the prior opinion of an external entity, the task of which would be the valuation of the transaction and an analysis of its
economic affects.
With respect to management and supervisory staff, a Member of the Supervisory Board or of the Management Board
should immediately, but no later than at the next meeting of the Supervisory Board or of the Management Board, informs
the other Members of the Supervisory Board/Management Board of an existing conflict of interest with the Company or
the possibility of its arising, and should refrain from participating in matters which, in respect of his/her person, there may
arise a conflict of interest, including taking part in discussions and in voting on the adoption of resolutions in this regard.
In accordance with the published Statement on the Company's compliance with the principles in section V of DPSN 2021,
the Company applies all principles regarding conflicts of interest and transactions with related entities.
VI - REMUNERATION
KGHM Polska Miedź S.A., under the principles indicated in chapter VI of DPSN 2021, strives for stability in its
management staff, among others by the transparent, fair, consistent and non-discriminatory principles for its
remuneration, manifested among others in wage equality between women and men.
The manner of remuneration of Members of the Supervisory Board and the Management Board of KGHM Polska Miedź
S.A. were set forth in the Remuneration Policy adopted on 19 June 2020 by the Ordinary General Meeting, with respect for
the principles of transparency, fairness, consistency and non-discrimination. In setting the remuneration of the Members
of the Supervisory Board and the Management Board, the Remuneration Policy is aimed at achievement of the business
strategy of KGHM, as well as the long-term interests and stability of the Company. Moreover, does not foresee the possibility
of temporarily refraining from the application of the Remuneration Policy.
In accordance with the adopted principles, remuneration of Members of the Supervisory Board is fixed and does not
foresee the payment of variable remuneration, bonuses or other cash benefits due to serving on the Supervisory Board of
KGHM Polska Miedź S.A. It is likewise not dependent on the number of meetings held.
To determine the level of remuneration matched to the tasks and duties of the Management Board and to maintain a high
level of motivation, total remuneration of Members of the Management Board consists of a fixed part and a variable part.
The fixed remuneration is the basic monthly remuneration, which is supplemented by variable remuneration, whose
amount may not exceed 100% of the annual fixed remuneration for the prior financial year. The management goals set for
each financial year and the criteria (KPIs) for meeting these goals with respect to financial and non-financial results,
representing the basis for setting variable remuneration, are set forth by the Supervisory Board for individual Members of
the Management Board in a way which is consistent with the short- and long-term strategic goals of KGHM Polska Miedź
S.A. and the KGHM Polska Miedź S.A. Group.
The KPIs adopted in the Remuneration Policy have a positive impact on the commitment to serving in the Company, provide
motivation to achieve the business strategy and interests of the Company and affects the objective assessment of risk.
In accordance with the published Statement on the Company's compliance with the principles in section VI of DPSN 2021,
the following principle involves remuneration and is partially applied:
Principle 6.4.
according to which as the
supervisory board performs its responsibilities on
a continuous basis, the remuneration of
supervisory board members cannot depend on the
number of meetings held. The
remuneration of
members of committees, in particular the audit
committee, should take into account additional
workload on the committee.
The Company partially applies the principle. The members of the Supervisory Board
are remunerated regardless of the number of meetings officially convened and held
in a given calendar month. The Members of the Supervisory Board do not however
receive remuneration if, for unjustified reasons, they do not take part in any of the
meetings of the Supervisory Board officially convened and held in a given month. The
members of the Committees do not receive additional remuneration. The partial lack
of application of the principle is also due to implementation of the act dated 9 June
2016 on the principles of setting the remunerati
on of individuals managing certain
companies.
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 121
the Company and the Group in 2022 – translation from the original Polish version
3 CARE FOR THE ENVIRONMENT
Climate policy
Importance
of copper
Environmental
investments
Energy
transformation
Environmental
impact
Taxonomy
disclosures
3.1 APPROACH TO THE MANAGEMENT OF ENVIRONMENTAL IMPACTS AND CLIMATE PROTECTION
CLIMATE POLICY OF KGHM POLSKA MIEDŹ S.A.
GRI 3-3 material topic: Counteracting climate change GRI 305-1 GRI 305-2 GRI 305-3
Being an ambitious participant in the green transformation, KGHM Polska Miedź S.A. undertakes obligations not only with
respect to further development of the core business, but also to carry out a number of changes in the functioning of the
Company aimed at demonstrating awareness of climate change and deepening communication in this respect with all
stakeholders.
The expression of the above commitment is the adoption of the Climate Policy of KGHM Polska Miedź S.A. – a directional
document, addressed to both external and internal stakeholders, whose overriding purpose is to present the climate
ambitions of KGHM Polska Miedź S.A. and to specify the necessary scope of process and organisational changes for their
implementation and continuous improvement.
Main assumptions of the Climate Policy of KGHM Polska Miedź S.A.
The overarching goal of the Climate Policy of KGHM Polska Miedź S.A. is for the Parent Entity of the KGHM Group to achieve
climate neutrality by 2050 with respect to Scope 1 greenhouse gas emissions – direct emissions related primarily to the
Company’s production activities, and Scope 2 – indirect emissions related to the use of electricity and heat purchased on
the market, with the maximum possible reduction. In contrast, the interim target is to reduce combined Scope 1 and Scope
2 emissions by 30% by 2030 compared to 2020 emissions.
These objectives and the means of achieving them are shown in the figure below:
Diagram 27. Greenhouse gas emissions reduction goals in KGHM Polska Miedź S.A. and main decarbonisation directions
Information on Scope 1 and Scope 2 greenhouse gas emissions for 2022 for KGHM Polska Miedź S.A. and the entire KGHM
Group will be published in the second quarter of 2023.
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 122
the Company and the Group in 2022 – translation from the original Polish version
Information on Scope 3 greenhouse gas emissions for 2022 for KGHM Polska Miedź S.A. and the entire KGHM Group will
be published in the fourth quarter of 2023.
In 2021, total Scope 1 and 2 greenhouse gas emissions reached approximately 3 million tonnes of eCO2 (tonnes of carbon
dioxide equivalent) in KGHM Polska Miedź S.A. of which approximately 47% are Scope 1 emissions and 53% are Scope 2
emissions. Scope 1 emissions are direct emissions primarily related to the Company’s production activities – in particular,
emissions from smelting processes, emissions related to the use of motor fuels by mining vehicles and machinery in mines,
and emissions related to the generation of energy from our own sources using natural gas. Scope 2 emissions are indirect
emissions associated with the use of electricity and heat purchased on the market.
Due to the full implementation of the GHG Protocol, a recalculation of emissions was performed for 2020, which is also the
base year for the reduction targets set in the Climate Policy.
Comparing the emissions for 2021 to the base year, a slight increase in emissions in Scopes 1 and 2 can be observed. The
total emissions in Scopes 1 and 2 increased by 2.62%. The slight increase in Scope 1 and 2 emissions results from an
increase in electrolytic copper production. However, when comparing the GHG emission factor, a slight reduction in
emission intensity can be seen despite an increase in electrolytic copper production.
Table 38. Greenhouse gas emissions in KGHM Polska Miedź S.A. [t eCO
2
]
2021
2020
Change
Change %
Scope 1
1 457 899
1 413 129
+44 770
+3.2%
Scope 2
1 651 717
1 617 217
+34 500
+2.2%
Total emissions (Scope 1 + 2)
3 109 616
3 030 346
+79 270
+2.6%
Chart 18. Change in the total volume of Scope 1 and Scope 2 emissions at KGHM Polska Miedź S.A. in the years 2020-2021
[Mg eCO
2
]
Chart 19. Greenhouse gas emission indicator in KGHM Polska Miedź S.A. in the years 2020-2021 [Mg eCO2/Mg electrolytic
copper]
3 030 346
3 109 616
2020 2021
5.41
5.38
2020 2021
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 123
the Company and the Group in 2022 – translation from the original Polish version
Greenhouse gas emissions in the KGHM Polska Miedź S.A. Group
In 2021, Scope 1 and 2 greenhouse gas emissions in the KGHM Polska Miedź S.A. Group amounted to a total of 5.22 million
tonnes of eCO
2
, of which approximately 60% were attributable to the Parent Entity. Emission calculations for the KGHM
Polska Miedź S.A. Group were performed for the first time, therefore 2021 was considered the base year in monitoring
emission changes in the Group.
Table 39. Greenhouse gas emissions in the 2021 in KGHM Polska Miedź S.A. Group in 2021 [Mg eCO
2
]
KGHM Polska
Miedź S.A.
Domestic
companies
Companies
abroad
Group
TOTAL EMISSIONS (Scope 1 + 2)
3 109 616
862 797
1 249 542
5 221 955
SCOPE 1 - Direct emissions
1 457 899
623 757
504 932
2 586 588
SCOPE 2 - Indirect emissions
1 651 717
239 040
744 610
2 635 367
Including indirect equivalent emission related to heat consumption:
0
4 917
0
4 917
Including indirect equivalent emission related to electricity consumption:
1 651 717
234 123
744 610
2 630 450
Direct eCO
2
emission of biomass origin:
2 984
31 064
0
34 047
Scope 3 greenhouse gas emissions
In accordance with the GHG Protocol A Corporate Accounting and Reporting Standard, Scope 3 includes other indirect
emissions arising along the value chain, e.g. from the manufacture of raw materials or intermediate products, waste
management, transport of raw materials and products, employee business travel or use of products by end users.
The GHG Protocol distinguishes more than a dozen categories of GHG emissions within Scope 3, i.e. those arising in the
company value chain:
SCOPE 3 - UPSTREAM − Purchased raw materials and services (emissions related to the extraction and production of raw
materials and services)
− Capital goods (issues related to the production of capital goods)
− Energy and fuel-related emissions not included in Scope 1 and 2
− Upstream - transport and distribution (transport and distribution of products purchased by the reporting
company during the reporting period between the supplier and the reporting company by vehicles or
equipment not owned or controlled by the reporting company)
− Waste generated as a result of operations (disposal and treatment of waste during the reporting period
in facilities that are not owned and controlled by the reporting company)
− Business travel (business-related transport of employees during the reporting period by vehicles that
are not owned or managed by the reporting company)
− Employees’ commuting (transportation of employees between their homes and their workplaces during
the reporting year by vehicles not owned or operated by the reporting company)
− Upstream - leased assets (issues related to the operation of assets leased by the reporting company
(lessee) during the reporting year and not covered by scope 1 and 2).
SCOPE 3 - DOWNSTREAM − Downstream - transport and distribution
− Processing of products sold (Processing of intermediate products sold in the reporting year to customers
(e.g. manufacturers) - this calculation would require close cooperation with customers in collecting
information on their emissions in Scope 1 and 2.
− Use of products sold
− End-of-life treatment of products sold
− Downstream - leased assets (handling of assets owned by the reporting company (lessor) and leased to
others during the reporting year, not included in Scope 1 and 2)
− Franchises
− Investments (investment activities (including equity and long-term investments and project financing)
during the reporting year, not covered by Scope 1 or 2).
A calculation of Scope 3 emissions for KGHM Polska Miedź S.A. and the entire KGHM Group was performed in 2021. The
following emission categories are included in the Scope 3 emissions balance:
− upstream activities:
goods and services purchased,
investment goods,
activities related to the use of fuels and energy not included in Scopes 1 or 2 of the balance,
transport and distribution of input streams,
business trips,
employees’ commuting to and from work,
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 124
the Company and the Group in 2022 – translation from the original Polish version
− downstream activities:
transport of output streams.
Emissions for the category of waste generated in production processes, related to their transport and treatment, have been
included as emissions related to purchased services, including waste collection and transport.
Emissions associated with both the lease of assets from external companies and the lease of assets to external companies,
due to their limited extent, are insignificant in the balance of greenhouse gases under analysis.
The franchise category for output streams does not apply to companies of the KGHM Polska Miedź S.A. Group.
Chart 20. Scope 3 greenhouse gas emissions by KGHM Polska Miedź S.A. in 2021 [t eCO
2
]
Table 40. Scope 3 greenhouse gas emissions in the KGHM Polska Miedź S.A. Group in 2021 [t eCO
2
]
KGHM Polska Miedź S.A.
Domestic
companies
Companies
abroad
Group
SCOPE 3 - Total
995 799
359 319
692 121
2 047 238
Goods and services purchased
632 348
149 269
399 586
1 181 203
Investment goods
105 403
76 986
78 105
260 494
Fuel and energy not included in Scope 1 and 2
119 399
84 735
113 997
318 131
Transport and distribution - upstream
105 232
25 120
12 230
142 582
Business trips
231
143
-
374
Commuting to work
18 637
15 508
14 053
48 198
Transport of output streams - downstream
14 549
7 558
74 149
96 256
In Regulatory filing 5/2023 of 8 March 2023, the Management Board of KGHM Polska Miedź S.A. announced the adoption
of a resolution on the adoption of the updated content of the “Climate Policy of KGHM Polska Miedź S.A.”. The deadline for
the preparation of the full Decarbonisation Program of the KGHM Group, and consequently the deadline for setting climate
targets for the KGHM Group, was postponed from mid-2023 to the end of 2024. The decision to postpone the deadline was
taken due to the unstable situation in the energy markets, the unpredictable global economic situation and the overall
impact of Russia's aggression against Ukraine on the international situation.
ENERGY POLICY OF KGHM POLSKA MIEDŹ S.A.
GRI 3-3 material topic: Counteracting climate change GRI 302-1
The primary objective of KGHM Polska Miedź S.A. in respect to energy management, as well as with respect to pro-climate
activity, is to engage in rational energy management while ensuring the security of energy supply to facilities and
installations within the Company's production line. It has been and is implemented on the basis of the best European and
global standards and within this framework, primarily in accordance with the ISO 50001 standard. The process of
implementing the international standard of energy utility management in accordance with ISO 50001 began with the
adoption of the Energy Policy of KGHM Polska Miedź S.A. by the President of the Management Board on 28 November 2016.
At present, the second edition of the policy, approved on 28 February 2019, is in effect.
It is the ambition of KGHM Polska Miedź S.A. to continually grow the share of renewable energy sources and in-house
energy production in covering energy demand. KGHM has its own low-emission generation sources powered by gas.
Currently KGHM Polska Miedź S.A. has two Gas-Steam Blocks in Polkowice and in Głogów with the capacity of 39.55 MWe
each and a Surface-based Central Air Conditioning Station located next to shaft R-XI in Grodowiec and at the GG-1 shaft in
Kwielice, where natural gas-powered engines with the total capacity of 8.8 MWe were installed at each of the Stations.
632 348
105 403
119 399
105 232
231
18 637
14 549
995 799
Goods and
services
purchased
Investment
goods
Fuels and
energy
Upstream
transport
Business trips
Employees’
commuting
Downstream
transport
Total
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 125
the Company and the Group in 2022 – translation from the original Polish version
The Company is in the process of advancing further investments to increase electricity generation, with nitrogen-rich
natural gas used as fuel. By 2030, two more Stations will be built with the total capacity of 17.6 MWe.
One of the important projects which will bring the Company closer to achieving energy independence is the implementation
of small nuclear power reactor technology (SMR - Small Modular Reactor). KGHM plans to build a small modular light water
nuclear unit with a capacity of up to 500 MW by 2030. In 2021, KGHM Polska Miedź S.A. established a Nuclear Energy
Department and in February 2022 a contract was signed with NuScale Power, LLC (“NuScale”) to commence work on
implementing the SMR technology in Poland. NuScale’ s design of the reactor is based on the well-known concept of small
high-pressure light water reactors, whereas its modular, integrated form enables the structure to be simplified and
construction costs reduced. At present, NuScale's technology is undergoing formal assessment for compliance with the
Polish nuclear safety and radiological protection requirements by the President of the State Atomic Energy Agency as part
of the so-called General Opinion procedure. The General Opinion procedure was initiated by the Company in July 2022 and
the outcome will be known in July 2023.
The Company is also developing renewable energy sources. Currently, photovoltaic power plant projects are being carried
out in the areas owned by KGHM, i.e. at the Głogów Copper Smelter and Refinery and at the Cedynia Copper Wire Rod
plant, next to the Tailings Plant and in the Obora Sandpit area. Other projects are also being prepared on KGHM’s own land.
The Company is also active on the M&A market for renewable energy sources and is engaged in several due diligence and
valuation processes for assets that are available for purchase. KGHM has also taken steps leading to the construction of
offshore wind farms.
The Energy Policy contains the most important principles of energy management in KGHM Polska Miedź S.A. By observing
these principles, the Company’s management undertakes to:
− ensure resources necessary to achieve the planned energy objectives and outcomes,
− operate in accordance with the law and other energy requirements relating to energy use,
− create desirable attitudes, build awareness and continually improve the skills of the Company’s employees and partners
performing tasks for KGHM Polska Miedź S.A.,
− prevent waste in the area of energy consumption, and
− cooperate with partners and suppliers in the procurement of material goods and services having regard to energy
efficiency as an important selection criterion.
The principles adopted in the Energy Policy of KGHM Polska Miedź S.A. are complied with by all employees of the Company,
as well as other persons and entities performing tasks needed for its operation. As a result of the Energy Policy adopted,
the Company is pursuing activities designed to manage the energy used by KGHM rationally and in compliance with the
law, including:
− specification of procedures for the investment and procurement process,
− energy overhauls in KGHM’s Divisions and the Head Office, performed in accordance with the approved methodology,
− actions to achieve the approved energy objectives,
− implementation of the regulations: Legal and other requirements in the field of power generation and evaluation of
their conformity for the purposes of the Energy Management System at KGHM Polska Miedź S.A.
Table 41. GRI 302-1 Energy consumption in the years 2021-2022 in KGHM Polska Miedź S.A. [GJ]
2022
2021
+ Consumed non-renewable fuel
5 440 058
7 811 422
+ Consumed renewable fuel
0
0
+ Electricity, heating, cooling and steam purchased for consumption
11 225 471
10 403 786
+ Electricity produced in-house, heating, cooling and steam that are not consumed
2 888 368
3 883 984
- Sales of electricity, heating, cooling and steam
1 709 688
2 952 244
Total energy consumption within the organisation
17 844 209
19 146 948
Table 42. Total energy consumption by KGHM Polska Miedź S.A. in the years 2021-2022
2022
2021
Electricity consumption [kWH]
3 063 596 728
3 014 585 000
Consumption of thermal, cooling energy and steam [GJ]
3 084 890
3 435 264
ENERGY MANAGEMENT SYSTEM (EMS) IN KGHM POLSKA MIEDŹ S.A. AND ENERGETYKA SP. Z O.O.
In 2017, the Parent Entity and Energetyka Sp. z o.o. implemented an Energy Management System (EMS), in conformity with
PN-EN ISO 50001:2012. The re-certification audit conducted in KGHM Polska Miedź S.A. and in Energetyka Sp. z o.o. in
September 2020 confirmed that KGHM had adapted its Energy Management System to comply with the requirements of
the new edition of the standard: PN-EN ISO 50001:2018. The second Supervision Audit in KGHM Polska Miedź S.A. and in
Energetyka Sp. z o.o. conducted in June 2022 confirmed that the system is undergoing continual improvement, as are the
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 126
the Company and the Group in 2022 – translation from the original Polish version
energy results. Based on the findings of the UDT CERT Certification Unit’s auditor team, it was concluded that the Energy
Management System in KGHM Polska Miedź S.A. and in Energetyka Sp. z o.o. is fit to achieve the planned objectives, and its
certificate has been maintained.
As a result of the EMS implementation, the costs of energy audits are avoided, which must be performed pursuant to the
Energy Efficiency Act if no certified Energy Management System is in place. Another result of the EMS operation is the
possibility to implement a comprehensive improvement of the energy management process and improve KGHM’s energy
result, which in 2021 generated energy savings of 10 GWh.
The EMS also reduces the costs of purchase and consumption of power utilities, including the cost of CO₂ emission
allowances, as a result of lower greenhouse gas emissions. We intend to raise the skills of our human resources, achieve
further savings in future years and, most importantly, improve occupational safety for all of KGHM Polska Miedź S.A.’s
employees through the implementation of standards and improvement of procedures.
ENVIRONMENTAL POLICY OF KGHM POLSKA MIEDŹ S.A.
Preventing and minimizing the environmental and climate impact and rational management of natural resources is of
fundamental importance for KGHM Polska Miedź S.A. with respect to sustainable development, the satisfaction of
stakeholder expectations and accountability to future generations. The activities of KGHM Polska Miedź S.A., including
exploration and mining, processing and metallurgy, are accompanied by technical and organisational activities based on
best available techniques, which mitigate our impact on the environment and climate.
Compliance with high environmental standards is critically important for maintaining the Company’s position on the
competitive market of copper producers.
In its Strategy, KGHM Polska Miedź S.A. has placed special emphasis on the sustainability of production, protection of the
environment and climate, as well as adoption of Circular Economy concepts, which include increasing the share of materials
originating from the secondary market.
By improving the Environmental Management Systems (EMS), which have been in place for many years and are certified in
the Metallurgical Divisions, Ore Enrichment Plants and the Tailings Plant, based on the PN-EN ISO 14001 standard, on 6
October 2021 the Environmental Policy of KGHM Polska Miedź S.A., approved by the President of the Management Board,
was adopted in the Company. The adoption of a single policy started the process of implementing an Environmental
Management System at the Head Office and in the Mining Divisions also in accordance with the ISO 14001 standard to
ensure the operation of the EMS in the entire Company. In accordance with the official order of the Vice President of the
Management Board (Production) in KGHM Polska Miedź S.A. of 27 December 2021, a team was appointed for the
implementation of the Environmental Management System at the Head Office and in the Mines of KGHM Polska Miedź S.A.
in compliance with the requirements of the PN-EN ISO 14001:2015 standard.
Completion of the implementation process in these entities is scheduled at the end of 2023, which will be confirmed by
performing a group Certification by an external certification body.
When implementing the approved Environmental Management Policy, the senior management of the Company undertakes
to:
− ensure continuous prevention and mitigation of adverse impact on the environment and climate, through improvement
and technological development of processes, modernization and replacement of machinery and prevention of pollution
and breakdowns,
− ensure rational use of natural resources, such as land, water, forests,
− ensure rational management of natural resources,
− reduce the volume of produced waste and continuously develop waste management techniques,
− reduce pollution of air, water and soil,
− reduce greenhouse gas emissions, considering the necessary economic aspects,
− recultivate land that has been adversely affected by our activities,
− apply new solutions and innovations prudently, considering the impact on the environment and climate in their design
and implementation,
− satisfy accepted and justified requirements and expectations of the stakeholders,
− comply with the requirements of applicable law while respecting ethical principles,
− take active measures to preserve biodiversity or, where it is not possible, take appropriate compensatory measures,
− ensure responsible management of land and green areas,
− conduct an open and respectful dialogue with the local community and relevant authorities for the benefit of the
environment and the climate,
− ensure responsible management of chemical substances,
− raise professional qualifications and awareness of employees with respect to the environment and climate,
− foster environmentally-friendly attitudes among staff, contractors and the local community.
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 127
the Company and the Group in 2022 – translation from the original Polish version
The principles adopted in the Environmental Policy of KGHM Polska Miedź S.A. are complied with by all employees of the
Company, as well as other persons and entities performing tasks needed for its operation. The result of applying the
adopted Environmental Policy is the implementation of measures aimed at meeting high environmental standards, in
compliance with legal requirements, through:
− identification and assessment of significant environmental aspects across the Company,
− undertaking actions to achieve the approved energy objectives,
− implementation of legal and other environmental law regulations and requirements and assessment of their
compliance for the purposes of EMS operation at KGHM Polska Miedź S.A.
The top management declares its support for actions arising from the adopted Environmental Policy and to provide
adequate resources and means to achieve the objectives and actions set out therein.
3.2 IMPORTANCE OF COPPER FOR THE ENERGY TRANSITION
GRI 3-3 material topic: Economic impacts
In 2011, under work to determine demand for non-ferrous metals, the Minerals Education Coalition calculated
22
that during
their lifetime, each person consumes more than 460 tonnes of copper. It is precisely this demand which serves the
European non-ferrous metals industry. It is a complex ecosystem of mining, smelting, processing, refining and recycling
operations spread across the continent. In more than 900 plants producing and processing base, precious and specialty
metals, half a million people are employed. The industry’s annual turnover is estimated at EUR 120 billion.
It is the output of the European non-ferrous metals industry that makes energy transformation and the vision of a climate-
neutral Europe possible.
Copper therefore holds an exceptionally important place in this process. It is one of the rare resources of the European
Union, which was analysed in 2020 during the process of selecting critical rare resources. Using the methodology of the
time developed by the Directorate-General for Internal Market, Industry, Entrepreneurship and SMEs),
23
the economic
weight of copper in the energy transformation process was determined as very high.
The copper mined and produced by KGHM plays a key role in technical solutions used in renewable energy – solar, wind,
water and tidal energy, as well as geothermal and biomass energy. For example, a single 3 MW wind turbine contains as
much as 4.7 tonnes of copper and the construction of a 1 MW solar power plant requires from 3.1 to 4.5 tonnes of copper.
Because of its properties, copper has always been the material of choice for efficient generation of electricity from
photovoltaic cells. Copper is a relatively thick but soft metal, commonly used in silicon cells to reduce their brittleness while
increasing throughput.
After silver, which is expensive and found in much smaller quantities, copper has the highest electrical conductivity of any
metal. Consequently, devices containing copper (such as motors) are much more efficient than equivalents using other
metals, with the typical energy consumption usually 20-30% lower if copper is used.
Copper cabling offers an even greater advantage, with approximately 60% more current-carrying capacity than aluminium
cables of the same size. Also, the thermal conductivity of copper is more than half that of aluminium. The small cross-
section area and lack of reaction with water is also of importance. All this makes copper cables easier to transport, handle,
store outdoors, and much less susceptible to accidental damage or connection failures. This is complemented by the high
specific weight of copper, which makes it much easier to lay submarine cables for offshore wind energy purposes.
Outside the energy sector, copper is also a key component in electric vehicles, where it is used in batteries, steering systems
and in the charging infrastructure. Electric cars, which are increasingly common, contain on average nearly four times more
copper than their internal combustion engine counterparts (83 kg compared to 23 kg).
Overall, 22 million tonnes of copper will be needed by 2050 for the technologies facilitating a 75% reduction of EU
greenhouse gas emissions
24
.
22
https://mineralseducationcoalition.org/
23
https://op.europa.eu/en/publication-detail/-/publication/2d43b7e2-66ac-11e7-b2f2-01aa75ed71a1/language-en/format-PDF/source-
32064602
24
Estimate based on, among others, the EU’s “High-RES” scenario to 2050 and the EU Energy Roadmap 2050,
https://ec.europa.eu/energy/sites/ener/files/documents/2012_energy_roadmap_2050_en_0.pdf
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 128
the Company and the Group in 2022 – translation from the original Polish version
This amount is roughly the same as the current level of global metallurgical production of copper (which is slightly over 21
million tonnes
25
) and more than ten times greater than the current production capacity of the European Union. An analysis
by the International Energy Agency (IEA)
26
indicates moreover that advancement of the Paris Accords on the reduction of
greenhouse gases by 2030 will alone lead in the next several years to increased demand for copper by more than 40%.
Clearly, the scale of demand is enormous and this situation will not be changed by the expected increase in the production
capacity of mines (estimated on average at 4.9% annually) or by the continuing increase in the share of scrap metal in
copper production (which becomes increasingly difficult due to the shrinking secondary resources and increasing longevity
of products).
In this situation, Europe should focus on supporting its own capacities and creating mechanisms supporting the
development of copper production on the Old Continent. This will make it possible not only to reduce the continent’s record
dependence on imports from other regions of the world, but will also contribute to the reduction of emissions, since the
carbon footprint of domestic production is much lower than that of Asian competitors.
The products offered by the KGHM Polska Miedź S.A. Group and the transformation which is made possible by them are
the main contribution of the copper industry to the struggle against climate change. KGHM also continues its efforts to
reduce its own environmental footprint. Compared to the 1990 levels, the European copper industry has reduced unit
energy consumption by 60%, while emissions from copper production in Europe currently represent just 0.4% of all EU
greenhouse gas emissions.
Our efforts to counteract climate change, as well as the significance of copper in the energy transformation, are attested to
by being awarded a place in the Carbon Clean 200
TM
ranking. KGHM Polska Miedź S.A. was the only company from Poland
to be so honoured amongst 6 thousand entities from around the world.
3.3 APPROACH TO CLIMATE RISK MANAGEMENT
GRI 3
-3 material topic: Counteracting climate change
GRI 3-3
material topic: Management of sustainable
development and ESG risks
GRI 2-25 GRI 201-2
Managing climate risk and adapting to climate change is crucial for KGHM Polska Miedź S.A. as an informed and responsible
participant in the green transition. Preventing and minimizing the environmental and climate impact and rational
management of natural resources is of fundamental importance for KGHM Polska Miedź S.A. in respect to sustainable
development, the satisfaction of stakeholder expectations and accountability to future generations.
At the same time, KGHM Polska Miedź S.A., as an organisation aware of the impact of climate change on business activity,
has fully integrated the Climate Risk Management process with the Corporate Risk Management Process of the KGHM
Polska Miedź S.A. Group, as described in section 2.6. Risk management
. These measures reflected the Company’s pursuit
of operational excellence and the mission to act in accordance with the principles of sustainable business. As a result of
these measures, KGHM identified a new category: climate risk, with importance equivalent to other main risk categories in
the Company, i.e. value chain, technological, external, internal and market risk.
The corporate risk management process in the KGHM Polska Miedź S.A. Group consists of four stages: (I) Defining the
context, (II) Identification and Evaluation, (III) Monitoring and communication, (IV) Analysis and response. The critical stages
in the recognition of climate risks include the first stage (scenario analyses as part of Defining the context) and the second
stage (taxonomy of climate risk as part of Identification and Evaluation). The remaining stages are consistent with the
general corporate risk management process in the KGHM Polska Miedź S.A. Group. As part of the applicable approach to
climate risk management, roles and responsibilities for individual stages of the process have been indicated and indicators
to measure and manage climate risk have been developed.
The goals of Corporate Risk Management in the KGHM Polska Miedź S.A. Group are consistent with the adopted Strategy
of the KGHM Polska Miedź S.A. Group. They are shaped by global megatrends and determine the environmental challenges
faced by the KGHM Polska Miedź S.A. Group. The Strategy of the KGHM Polska Miedź S.A. Group to the year 2030 with an
outlook to 2040 identifies, among others, the climate objectives related to KGHM Polska Miedź S.A.’s emissions reduction,
which are consistent with the Climate Policy of KGHM Polska Miedź S.A., i.e:
− the overarching goal: to achieve climate neutrality by 2050 by the Company, as the Parent Entity of the KGHM
Group, with respect to Scope 1 and Scope 2 greenhouse gas emissions, with their maximum possible reduction
(supplemented by potential offsetting of other emissions);
− the interim target: to reduce combined Scope 1 and Scope 2 emissions by 30% by 2030 compared to 2020
emissions.
25
https://icsg.org/wp-content/uploads/2021/11/ICSG-Factbook-2021.pdf
26
https://www.iea.org/reports/the-role-of-critical-minerals-in-clean-energy-transitions
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 129
the Company and the Group in 2022 – translation from the original Polish version
In the course of operationalization of the Business Strategy and taking into account ESG elements and climate-related
factors, each of the strategic initiatives was further assessed. Impacts were examined in the negative, neutral or positive
category: on Scope 1 and 2 greenhouse gas (GHG) emissions, on ESG image divided into three categories: environment,
society and corporate governance and impact on mitigating risks and supporting climate opportunities according to the
TCFD (Task Force on Climate-Related Financial Disclosures) Recommendations. Moreover, KGHM Polska Miedź S.A. is
implementing a number of other organisational and process changes in line with the TCFD Recommendations, inter alia, in
areas related to corporate governance.
SCENARIO ANALYSES IN CLIMATE RISKS
In the first step of the risk management process (Defining the context), KGHM considered climate change by performing a
scenario analysis, based on recognized reports of the Intergovernmental Panel on Climate Change (IPCC) and the
International Energy Agency (IEA). The above analysis is currently conducted on the basis of 5 baseline scenarios: Stated
Policies Scenario (STEPS), Sustainable Development Scenario (SDS), Net Zero Emissions by 2050 (NZE2050), RCP4.5 and
RCP8.5. In the scenario analysis, the assumptions are considered in three time horizons: short term (2023-2025), medium
term (2030), and long term (2050), under a number of assumptions:
- for scenarios examining transition-related risks, in terms of the implementation of the adopted climate policy and the
resulting changes in parameters relevant from KGHM’s perspective: e.g. prices of emission allowances, energy
consumption, changes in demand for copper,
- for physical risk scenarios, the starting point for the analysis are the levels of greenhouse gas concentrations in the
atmosphere and the resulting changes in the Earth’s temperature and their consequences.
KGHM Polska Miedź S.A. has also started work associated with the preparation of its own scenarios to serve as a basis for
analysing the impact of climate change on the organisation. This way it will obtain the most suitable, tailored approach,
which will constitute the basis for making business decisions regarding the assessment of the organisation’s resilience to
potential climate change.
The above analysis lays down the critical foundation for the identification and assessment of climate risks in the second
stage of the process. According to the accepted classification of the climate risk category, the risks are divided into the
following subcategories:
Diagram 28. Climate risk categories
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 130
the Company and the Group in 2022 – translation from the original Polish version
IMPACT OF CLIMATE CHANGE ON KGHM POLSKA MIEDŹ S.A.
Below we present a description of the identified key risks in the climate risk category associated with the adverse impact of
climate change on the activities of KGHM Polska Miedź S.A. The table presents detailed information such as the description
of the risks and factors, mitigation and the indicator used for risk assessment.
PHYSICAL CLIMATE RISK
Acute physical risk related to sudden weather events resulting from climate change.
Description
of risks and
risk factors
In the corporate risk management process (which includes analysis of physical scenarios – medium and high emission),
the following key factors have been identified that may cause materialisation of acute physical risk:
− accumulated dry days (draught),
− heatwaves,
− heavy daily rainfall,
− very frosty days,
− thick snow cover,
− strong/fierce winds,
− lightning.
Materialisation of this risk may have an adverse impact on both the infrastructure and on working conditions and
employee safety. Acute weather events as a consequence of climate change may result in restrictions in operations
both as a result of damage to infrastructure and the occurrence of temporary hindrances and interruptions in individual
elements of the KGHM Polska Miedź S.A. value chain (e.g. utility supply, logistics disruption). With regard to days without
precipitation (droughts), relevant factors include a) restrictions on the availability of water for the needs of the Core
Production Business processes, b) the level of the Odra river, which affects the quantity and management of process
water. The potential materialisation of the risk in question may involve increased costs relating to the remedying of the
adverse consequences of risk materialisation in the form of increased operating costs, maintenance work, energy
consumption and other losses, e.g. associated with the suspension of production. The consequences of such
materialisation are examined on a case by case basis for the individual elements of the value chain of KGHM Polska
Miedź S.A.
Mitigation
−
Appointment of task forces and expert teams in the area of counteracting the effects of the materialised extreme
weather events on business continuity and development of instructions on the procedure in case of emergency
situations.
− Ongoing communication and cooperation with utility suppliers concerning potential supply interruptions.
− Periodic overhauls of key infrastructure equipment on the basis of predetermined schedules.
− Preventive management of key infrastructure elements affecting production continuity and application of crisis
response procedures.
− Actively seeking technical and technological solutions that would limit the adverse impact of operations on climate.
Conducting and planning investments affecting the infrastructure, among others, to enable remote control and
reduce response time
− .Application of solutions counteracting the effects of climate hazards using neutral measures and by using modern
technology.
− Ongoing monitoring of the microclimate parameters and introduction of remote control and visualisation and
surveillance systems in workplaces with particularly adverse climate parameters.
− Division of KGHM Polska Miedź S.A. The Mine and Metallurgical Rescue Unit (JRGH) ensures the safety of employees
and provides comprehensive assistance in dealing with the effects of natural hazards and acute physical events
associated with climate change, while ensuring the safety of people and facilities.
Indicator
used for risk
assessment
Acute events associated with climate change that had a negative impact on infrastructure and/or working conditions
(including the timing and impact of these events):
- throughout 2022, and up to the date of signing of this report, KGHM Polska Miedź S.A. did not record any events
according to the criteria defined.
Chronic physical risk related to permanent changes in weather patterns resulting from climate change.
Description
of risks and
risk factors
In the corporate risk management process (which includes analysis of physical scenarios – medium and high emission),
the following key factors have been identified that may cause materialisation of acute physical risk:
− change in average daily temperature,
− change in total precipitation,
− change of wind intensity,
− change of cooling/heating degree days (hot/cool - temperature above/below 18°C),
− change in the number of days with snow cover.
Materialisation of this risk may lead, among other things, to changes in the conditions in which the operations must be
conducted, interruption of business continuity of the Core Production Business, including higher and faster
depreciation of infrastructure components than before. Permanent changes in weather patterns as a consequence of
climate change can also increase the onerousness of work (e.g. as a result of changes in the average daily temperature,
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 131
the Company and the Group in 2022 – translation from the original Polish version
changes in wind intensity, changes in the number of days with snow cover) and consequently necessitate the provision
of additional personal protective equipment and reorganisation of work. The potential materialisation of this risk may
involve increased costs relating to the upgrading or replacement of individual infrastructure components and increased
costs of higher consumption of energy used, for example, for cooling processes. The consequences of such
materialisation may be presented for the individual elements of the Parent Entity’s value chain.
Taking the above factors into account, KGHM Polska Miedź S.A. also recognises the opportunity associated with
investments in its own renewable energy sources, which may reduce production costs and ensure business continuity
while reducing greenhouse gas emissions.
Mitigation
− Periodic overhauls and comprehensive modernisation of key infrastructure equipment on the basis of
predetermined schedules and/or investment plans.
− Maintaining the required level of supporting/alternative facilities and infrastructure elements (e.g. power
generators, photovoltaic infrastructure, retention infrastructure).
− Systematic limitation of energy consumption under the implemented, ISO 50001:2018-compliant Energy
Management System and Energy Savings Program. Planned increase in the efficiency and flexibility of the KGHM
Polska Miedź S.A. Group in terms of its Polish and international assets, among others by partially satisfying the
needs for electricity from its own sources as well as from renewable energy sources (“RES”) by the end of 2030.
− Development of own zero- and low-emission sources in the short and medium term including construction and
acquisition of photovoltaic and wind power plants, supplemented in the long term by the use of small modular
reactors (SMRs).
− Diversification and efforts towards sustainable development through building own power capacity from low-
emission sources is one of the main Pillars of the newly-adopted Strategy of the KGHM Polska Miedź S.A. Group to
the year 2030 with an outlook to 2040, and one of its elements is for KGHM Polska Miedź S.A. to achieve the position
of one of the leading producers of environmentally-friendly electricity supporting Poland’s energy transition.
− Efficient risk management system for long-term/strategic risk, encompassing also climate risk management
allowing for risk categorisation, identification, assessment and management as well as plans for its mitigation.
Indicator
used for risk
assessment
Identified significant change in business conditions due to a change in weather patterns resulting in a change in revenue
and/or operating costs:
- throughout 2022, and up to the date of signing of this report, KGHM Polska Miedź S.A. did not record any events
according to the criteria defined.
TRANSITION-RELATED RISK
Regulatory risk related to changes in legal requirements concerning climate change and adaptation to its
effects.
Description
of risks and
risk factors
The existing and increasing climate-related legal requirements may have direct and indirect impact on KGHM Polska
Miedź S.A. This pertains to both European regulations as well as requirements at the domestic level, which will be
effectively enforced. This may be materially impacted by the planned full implementation of the European Green Deal
in domestic documents and climate/energy frameworks till 2030 and fulfilment of the EU’s climate neutrality objective
by 2050. An incorrect interpretation or a failure to observe new regulations may potentially result in non-compliance
with the law, exposure to court disputes or sanctions. New legal regulations may also cause interruptions in operations
or the necessity to reorganize work and consequently may substantially impact the operations of the KGHM Polska
Miedź S.A. Group (among others, transition to the low-carbon economy, circular economy).
Mitigation
−
As part of the Corporate Risk Management process in the KGHM Polska Miedź S.A. Group, each identified risk is
assessed in terms of impact on Laws and Regulations (assessment of the compliance of occurrences with the
applicable laws, the necessity to participate in proceedings before public administration authorities responsible for
supervision and regulation and potential sanctions resulting from such proceedings).
− A consistent compliance system in place in the KGHM Polska Miedź S.A. Group is an element of effective management
as part of corporate governance through, for example, a more efficient response and readiness for regulatory
changes, care for reputation and ethical culture building in the organisation as well as awareness raising and
enhancement of the sense of responsibility for compliance among employees.
− Active cooperation with the academic environment, which issues opinions on changes to legal acts, and the on-going
providing of positions and opinions with respect to numerous areas subject to legislative change (including as part
of membership of national and international organisations). Taking pre-emptive actions to adapt to organisational,
infrastructural and technological changes.
Indicator
used for risk
assessment
Number of lawsuits filed, penalties imposed related to non-compliance with applicable legal requirements in the scope
of climate:
- throughout 2022, and up to the date of signing of this report, KGHM Polska Miedź S.A. did not record any events
according to the criteria defined.
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 132
the Company and the Group in 2022 – translation from the original Polish version
Reputation risk related to perception of clients and other stakeholders – how they view the activity of the KGHM
Polska Miedź S.A. Group in the context of climate change.
Description
of risks and
risk factors
The KGHM Polska Miedź S.A. Group is exposed to the risk of increasing expectations of stakeholders (e.g. investors,
customers, ESG rating agencies) towards the Company with respect to reduction of its impact on climate resulting in a
deterioration of the Company's image and/or loss of stakeholder confidence.
Potential difficulties in attracting customers, employees, business partners and investors if the KGHM Polska Miedź S.A.
Group’s activity is considered to be harmful to the climate. In extreme cases, the materialisation of this risk may lead to
the blocking of development plans.
The opportunity (positive risk) identified in this area is associated with investments in renewable energy, which support
combating greenhouse gas emissions – an image-and market-related opportunity with respect to the industry, i.e. the
image of a company caring for the natural environment and striving to limit global climate change (green energy / green
copper / green KGHM); a change in the customer’s approach but also legislative changes in favour of KGHM Polska
Miedź S.A.’s attitude.
Mitigation
− Care and due diligence in identification of expectations and requirements of external stakeholders concerning the
climate and environmental issues.
− Establishment of trade and business relationships with entities that declare that they care about environmental
protection and comply with the regulations applicable in this regard.
− Increased awareness of climate change in the organisation and improvement of communication with all stakeholders
in this respect, among others through the improvement in the quality of reporting on climate-related information
after climate reporting was launched based on the 2017 Recommendations of the Task Force on Climate-Related
Financial Disclosures.
− Implemented and improved effective system for resolving sustainable development themes (ESG) in the form of
regular meetings of the Sustainable Development Council.
Indicator
used for risk
assessment
Number of key customers lost due to negative perception of the business in the face of climate change:
- throughout 2022, and up to the date of signing of this report, KGHM Polska Miedź S.A. did not record any events
according to the criteria defined.
Technological risk related to the technological progress towards a low-emission economy.
Description
of risks and
risk factors
The EU’s ambitious climate targets and the existing pressure on the implementation of new low-carbon solutions and
the search for reduction of CO₂ emissions in order to achieve the approved emission goals may have a direct impact
on KGHM Polska Miedź S.A.’s activities. The need to make the necessary investments and/or a potentially sudden
reduction in carbon dioxide emissions in a relatively short period of time may generate considerable costs and
difficulties in adapting new solutions to the technology that is used currently. As a result of the necessary changes, the
level of complexity of production activities in the new conditions and the increased technical, economic or legal
requirements for the Company will rise at the same time, resulting in the need for KGHM Polska Miedź S.A. staff to
continuously and dynamically increase their qualifications. Due to the rise in popularity of topics related to the progress
towards a low-carbon economy, an increase is seen in the importance of decarbonisation technology providers and a
significant increase in demand for their services. In the case of a decision to use solutions offered on the market, the
availability of suppliers within the required timeframe may be limited and the need to wait a long time for the
procurement of services or goods necessary for the implementation of new technologies may arise, thus extending the
project implementation period.
In the technology area an opportunity has been identified arising from increased consumption and capability to process
a volume of copper scrap and copper-bearing materials by the smelters and refineries of KGHM Polska Miedź S.A.,
which results in improved efficiency of waste management in global terms in the context of resource use and longer
copper life cycle – a change in the customer’s and the Regulator’s approach in favour of a circular economy and low-
carbon economy.
Mitigation − Ongoing monitoring of policy changes intended to reduce CO₂ emissions and the potential tightening of regulations,
analysis of market standards, technological innovations, opportunities for using alternative energy sources (RES).
Taking pre-emptive actions to adapt to changes in the technological area. Monitoring the activities of competitors
and related industry players (e.g. steel industry). Research market observation, technology scouting. Continuous
monitoring of ongoing calls for projects financed from national and European funds, which could be used to finance
research or investment projects of KGHM Polska Miedź S.A. in the area of climate transformation.
− Since most of the technology is in early advancement stage, it is assumed that by 2030 KGHM Polska Miedź S.A. will
focus its efforts primarily on the continuation or launch of research and development work in selected areas, as well
as on launching pilot projects. Full implementation of new innovative solutions, leading to achievement of the
expected decarbonisation effects in the direct emissions area, will be effected in 2030-2050.
− A Transformation Projects Department dedicated to this risk has been operating since 2022.
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 133
the Company and the Group in 2022 – translation from the original Polish version
Indicator
used for risk
assessment
Number of key customers lost due to excessive carbon footprint of products offered by KGHM Polska Miedź S.A.,
excessive level of greenhouse gas emissions of KGHM Polska Miedź S.A. as an organisation or emission reduction target
too low:
- throughout 2022, and up to the date of signing of this report, KGHM Polska Miedź S.A. did not record any events
according to the criteria defined.
Market risk associated with changes in demand for and supply of certain products and services.
Description
of risks and
risk factors
Heightened expectations and awareness of stakeholders as regards climate issues may lead to increased operating and
investment costs and, in extreme cases, to limitation of the business activity. The changing consumer requirements
involve also a focus on the production method rather than merely the quality and price of the final product.
At the same time, KGHM Polska Miedź S.A. points to the opportunity coming from increased demand for copper arising
from the necessity to supply it to meet the needs of the low-carbon economy as a result of a higher level of electrification
(through increased copper consumption for purposes related to manufacturing components for electrical vehicles and
development of electromobility) and increased consumption of copper in power networks. A stable growth of the global
demand for copper is expected by 2040. The forecast growth will be an effect of, among others, the dynamically
increasing demand from industries associated with renewable energy sources.
Mitigation − Care and due diligence in monitoring and identification of expectations and requirements of business partners
concerning the climate and environmental issues and consideration given to these issues in the long-term, strategic
perspective.
− Ongoing analysis of technical and technological solutions, which satisfy stakeholder requirements concerning climate
issues affecting changes in supply and demand.
Indicator
used for risk
assessment
Significant change in the structure and source of revenue related to changes in the demand and supply of products
and services due to increased stakeholder expectations and awareness of climate issues:
- throughout 2022, and up to the date of signing of this report, KGHM Polska Miedź S.A. did not record any events
according to the criteria defined.
3.4 ENVIRONMENTALLY-FRIENDLY INVESTMENT AND DESCRIPTION OF MEASURES TAKEN
GRI 3-3 material topic: Development and innovation
Compliance with rigorous environmental standards laid down by the law is possible thanks to the consistent modernization
of our existing installations to protect the environment, as well as new investments in this area. In 2022, the Company spent
more than PLN 250 million on environmentally-friendly investments, of which the largest expenditures, in the amount of
over PLN 195 million, were incurred on maintenance, modernisation and development of the Żelazny Most Tailings Storage
Facility, including its infrastructure. The expenditure incurred by the Tailings Division in 2022 includes, respectively: 99% of
the value of outlays earmarked in KGHM for environmentally-friendly investment related to waste water management, 98%
- to water management and 88% - to waste management. Significant expenditure, approximately PLN 30 million, was
incurred at KGHM on investments aimed at protecting the air, 90% of which were for investments carried out at the Legnica
and Głogów copper smelters by modernising or expanding dust removal installations. In 2022, more than PLN 21 million
was allocated for investments under the BATAs Program, belonging to this group. On the other hand, in 2022, in KGHM's
investments related to climate protection, the Concentrators Division had the largest share (46% - over PLN 5 million),
carrying out systematic replacement of electrical equipment with energy-saving equipment, reducing indirect CO
2
emissions.
Chart 21. Value of expenditures incurred on environmentally-friendly activities by KGHM Polska Miedź S.A. in 2022 [in
million PLN]
Waste/tailings management
93
Water management
80
Effluents management
33
Protection of atmospheric air
31
Climate protection
12
Environmental monitoring
3
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 134
the Company and the Group in 2022 – translation from the original Polish version
3.5 ENERGY TRANSITION - PROJECTS IMPLEMENTED BY KGHM
GRI 3-3 material topic: Development and
innovation
Own indicator: Innovation improving energy efficiency or limiting
environmental impact
Construction of a
photovoltaic power
plant Obora Sandpit I
The Lubin Municipality carried out work on amending the Local Spatial Development Plan for the Obora
Sandpit site pursuant to Resolution of the Lubin Municipality Council No. XXXI/316/2021 of 26 July 2021. As a
result of the urban planning work, a draft Local Spatial Development Plan (MPZP) was created, including an
environmental impact forecast. In order to allow for the energy infrastructure at the Obora sandpit site in
the draft MPZP, cartographic and surveying work was completed, consisting of a relevant change of land use
in the Land and Building Register of the Lubin District Authority. The draft MPZP was agreed by the parties
to the proceedings.
Construction of the
HMG I-III photovoltaic
power plant complex
In May 2022, the MPZP of the Głogów Municipality for the Huta precinct came into force, admitting
photovoltaic installations. In the third quarter of 2022, KGHM, as DSO, issued the Technical Connection
Conditions for all three locations of the PV power plant HMG I-III. In the fourth quarter of 2022, a legally
binding environmental decision was obtained and work began on preparing the project documentation
(maps for design purposes and trade-specific arrangements). The provisions of the connection agreement
are currently negotiated.
Development of wind
energy, including
Offshore
With regard to offshore wind farms, in 2022 Q1 a Memorandum of Understanding (“MoU”) was concluded
with Total Energies Renewables SAS (“Total Energies”). On the basis of the concluded MoU, joint participation
in the procedure for obtaining location decisions for the construction of Offshore Wind Farms (PSzW) was
agreed. If a PSzW is obtained at the site, KGHM together with Total Energies will implement offshore projects
within the so-called joint venture. By the end of Q2, 7 applications for PSzW had been submitted. By the end
of 2022, all adjudication proceedings for the sites covered by KGHM and Total Energies' applications had
been initiated. A set of documentation was submitted for the needs of the proceedings conducted by the
Ministry of Infrastructure. Issuing of the decision concerning PSzW for the sites covered by the KGHM and
Partner applications is expected in Q1 and Q2 of 2023. In terms of onshore wind farms, analyses were
initiated concerning a possibility of building wind farms on own real estate and discussions continued with
entities with interesting projects for sale.
Solar energy
development
In 2022, three new projects were set up for the preparatory phase of the construction of the “Tarnówek” and
“Kalinówka” photovoltaic power plants for the Tailings Plant and the “Polkowice” photovoltaic power plant on
the premises of the Tailings Plant. By the end of the year, proceedings were initiated to select a designer for
these three projects. Moreover, a multi-variant expert report was received with the aim to indicate a
possibility of connecting new generation sources to KGHM's power grids in the area of the Lubin Mine
Division. Preparations are therefore in progress in order to establish another photovoltaic power plant
project on the site of the decommissioned shafts of the Lubin mine. Another project was also set up to launch
the preparatory phase for the construction of a photovoltaic power plant on the premises of the Cedynia
Division. In addition, analytical work continues concerning the use of other KGHM sites for the development
of renewable energy sources. In parallel, analyses of the market environment are carried out with a view to
acquiring companies with projects to build photovoltaic farms or with operating installations.
Development of
hydrogen technologies
In January 2022, KGHM Polska Miedź S.A. became a signatory to the “Sectoral agreement for the development
of the hydrogen economy in Poland” carried out under the auspices of the Minister of Climate and
Environment of the Republic of Poland. At the end of February, KGHM became one of the initiators of the
newly founded Lower Silesian Hydrogen Valley Association. In the third quarter of 2022, the formation of the
Transformation Projects Department was completed, which carries out projects related to the generation
and use of hydrogen in the Company's core production business.
Development of CO
2
capture technology
In 2022, internal analyses were carried out on the feasibility of applying the technology of carbon capture
and sequestration (CCS) from exhaust gases emitted at the smelters/refineries of KGHM Polska Miedź S.A.
The company has established numerous contacts with the world's leading technology suppliers and CCS
installation contractors as well as with Research Institutes and Scientific Entities.
Nuclear energy
development
On 14 February 2022, KGHM signed the Early Works Agreement with NuScale Power, LLC (the nuclear
technology provider), representing the first step in the implementation of SMR technology within the KGHM
Group's business operations. On 20 April 2022, KGHM and TAURON Polska Energia S.A. signed a letter of
intent on cooperation in the scope of construction of low-emission energy sources, including using small
modular nuclear reactors (SMRs). On 8 July 2022, the Company submitted the first application concerning
the safety assessment of the small modular reactor technology considered by the Company to the State
Atomic Agency. On 6 September 2022, KGHM Polska Miedź S.A. and SN Nuclearelectrica SA signed a
memorandum on cooperation on the development of SMR. A preliminary site assessment report for the SMR
reactor is currently being developed.
Power Purchase
Agreements (PPAs)
On 30 November 2021, KGHM announced an open tender for the purchase of electricity generated from
Renewable Energy Sources (RES). In the first quarter of 2022, bids were received for the sale of RES energy
under a PPA. The Standing Committee on Energy Purchasing decided to select one of the bids. The
Agreement with Solartechnik (Invest PV 7 Spółka z o.o.) was bilaterally signed in the third quarter of 2022.
The sale of electricity to KGHM generated by the Żuki PV Farm in the Turek Municipality will commence on
1 April 2023. The planned sales volume is 5 300 MWh/year.
Self-generation of
electricity
The share of energy from own sources including RES in 2022 in KGHM amounted to 9.46%.
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 135
the Company and the Group in 2022 – translation from the original Polish version
3.6 ENVIRONMENTAL IMPACT OF OPERATIONS
PROTECTION OF THE AIR
KGHM Polska Miedź S.A. conducts its core business being aware of its responsibility for the environment, including for air
quality. Many years of investments in this area are reflected in the reduction of air emissions that are critical for the
Company’s operations, which is shown on the chart and descriptions below:
Chart 22. Dust emissions from mining production of KGHM Polska Miedź S.A. in 2022 [g/t of ore]
Dust emissions from mining production continue to decrease in spite of the growing output. The continuous reduction of
emissions from underground mining production is made possible by a proper organisation of the mining process and
replacement of mining machinery and equipment driven by combustion engines with low-emission or electric machinery.
Dust emissions from the ore enrichment process were effectively reduced in the 20th century. The current projects are
aimed at sealing the process even further and reducing fugitive emissions. All these efforts led to a 73% decrease of dust
emissions from mining production in 2022 as compared to those in 2010.
Chart 23. Dust emissions from metallurgical production of KGHM Polska Miedź S.A. in 2022 [g/t of electrolytic copper]
Dust emissions from metallurgical production of copper may contain metals and metal compounds. The consistent
application of the Best Available Techniques (BAT) led to a 88% decrease of dust emissions from electrolytic copper
production in 2022 as compared to 2010. The main focus for reducing emissions to the environment, which started in the
1990s, was on the use of modern treatment technology for most organized emissions. The current projects are aimed at
improving dust suppression techniques, further sealing of the processes and reducing fugitive emissions. In terms of
reduction of dust emissions, the Company has already achieved a great deal through continuous improvement of dust
suppression techniques and has practically exhausted the technical possibilities to reduce emissions. Further progress in
reducing emissions will be a particular challenge for the near future. It will require new technologies to be developed and
new technical barriers to be overcome.
Chart 24. Emission of SO₂ of KGHM Polska Miedź S.A. in 2022 in kg/t of electrolytic copper
9,5
7,9
6,5
7,2
6,3
5,2
3,8
2,7
2,4
2,6
2,7
2,8
2,6
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
-73%
279,9
212,6
332,1
252,3
238,7
199,5
135,0
48,3
48,6
58,1
51,9
59,4
33,3
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
-88%
8,3
8,5
8,5
8,9
8,4
8,0
6,0
2,0
1,8
1,6
1,9
2,3
1,8
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
-78%
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 136
the Company and the Group in 2022 – translation from the original Polish version
Besides copper, sulphur is one of the main ingredients of copper concentrates. The gaseous sulphur dioxide produced
during the smelting of concentrates is converted to sulphuric acid in sulphuric acid installations. In international
benchmarks, KGHM is a pioneer in reduction of sulphur dioxide emissions: emissions per tonne of copper produced has
been reduced to approximately 2 grams per tonne of electrolytic copper, i.e. by about 78% vs. 2010.
BATAs PROGRAM
Environmental activities of KGHM Polska Miedź S.A. are driven by three letters: BAT. This abbreviation stands for Best
Available Technology. In June 2016, the European Commission issued an executive decision establishing BAT conclusions
(guidelines) for the non-ferrous metals industry. The conclusions were introduced in order to improve the quality of air, soil
and water in the territory of the European Union. For KGHM Polska Miedź S.A. this means the necessity to modernize the
infrastructure that minimizes its environmental impact. To address this need, the Company launched the BAT-As Program
(“Program to adapt the technological installations of KGHM Polska Miedź S.A. to the requirements of BAT Conclusions for
the non-ferrous metals industry and to restrict emissions of arsenic”). Under the Program, the construction of new
installations and modernization of existing ones was commenced in KGHM Polska Miedź S.A.’s metallurgical plants. The
Program was launched in 2017 and its completion is planned in 2023. In the Głogów Copper Smelter and Refinery and in
the Legnica Copper Smelter and Refinery, the program is implemented by building new and adapting the existing
technological installations. The goal of the Program is to reduce dust and gas emissions, including arsenic compounds,
through the installation of modern filters and further sealing of technological processes. Under the Program, by the end of
2022:
− at the Głogów Copper Smelter and Refinery:
an installation feeding milled de-leaded slag into the flash furnace at the Głogów II Smelter and Refinery was built,
a warehouse and storage area for lead-bearing materials at the Głogów II Smelter and Refinery was built,
a gas desulphurization installation from the Kaldo furnace at the Precious Metals Unit at the Głogów Smelter and
Refinery was built,
bypass gas pipelines for flash furnaces at the Głogów Smelter and Refinery were constructed - the installations will
ensure treatment of gases in the Sulphuric Acid Plant installations in case of a failure of the flash furnaces,
an installation for removal of dust from gases from flash furnace slag and copper outfall at the Głogów II smelter
was built,
a desulphurization and dust removal installation for technological gases from converters at the Głogów II Smelter
and Refinery was modernized.
the installation to remove mercury- and arsenic-containing dust from gases from the raw lead production furnace
was upgraded,
− at the Legnica Copper Smelter and Refinery:
the dust removal system for the bag filter of shaft furnace 1 and for cassette filters of shaft furnaces 2 and 3 was
modernized,
stage 2 of the wet dust removal on the drying plant’s dust removal installation was built in order to reduce arsenic
and mercury emissions,
installations to eliminate arsenic from gases above the TM-16 casting machines were designed and constructed,
a desulphurization and dust removal installation for gases from the granulation process was developed,
the installation to remove arsenic and mercury from gases at the Solinox installation was commissioned for the
start-up.
Further work is planned in 2023, including, among others:
− completion of the development of a dust reduction unit at the P-21 concentrate unloading facility at the Głogów Smelter
and Refinery,
− completion of the start-up of the installation to remove arsenic and mercury from gases at the Solinox installation at
the Legnica Smelter and Refinery.
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 137
the Company and the Group in 2022 – translation from the original Polish version
Table 43. Results of investment projects completed by 2022 in KGHM Polska Miedź S.A. in the area of unit adaptation to
meet the requirements of the BAT Conclusions for the non-ferrous metals industry.
Name of task/initiative
Expected adaptation to BAT
associated emission levels (BAT-
AEL)
Task completion date
Parameters achieved (in guaranteed
parameter tests)
Change in
hourly dust emissions
hourly arsenic in dust
emissions
HML- Modernisation of the
Psz.1 bag filter dedusting
system and PSZ2 and Psz3
cassette filters in the Shaft
Furnaces
BAT 39:
Dust - 2-5 (mg/Nm
3
)
As - 0.05 (mg/Nm
3
)
December 2019
Dust - below 1 (mg/Nm
3
),
As – below 0.05 (mg/Nm3), average
0.02 (mg/Nm3)
Dust
– decrease by 97%
As
– decrease by 84%
HML - Construction of 2nd-
stage wet dedusting
system on the dryer
dedusting units to reduce
As and Hg emissions down
to the BAT Conclusion
levels
BAT 38:
Dust - 3-5 (mg/Nm
3
)
As - 0.05 (mg/Nm
3
)
BAT 11:
Hg - 0.01-0.05 (mg/Nm
3
)
December 2020
Dust - below 1 (mg/Nm
3
),
As - below 0.02 (mg/Nm
3
), average 0.01
(mg/Nm
3
)
Hg - below 0.004 (mg/Nm
3
), average
0.002 (mg/Nm
3
)
As
– decrease by 84%
HML - Design and
construction of
installation to eliminate
arsenic from gases above
the TM-16 casting
machines
BAT 44:
Dust - below 15 (mg/Nm
3
)
December 2020
Dust - below 2 (mg/Nm
3
), average 1.6
(mg/Nm
3
)
Dust
– decrease by 68 %
As
– decrease by 75%
HMG - P-1 Sealing of
conveyor belt tightening
stations for carrying
copper concentrate and
ore blending warehouse
BAT 8 and BAT 25:
Specify the required means of
adaptation to prevent fugitive
emissions from preliminary
processing of natural, primary
and secondary materials and
their transport, or to reduce
such emissions.
October 2019
Sealed conveyor systems were applied
for transport and handling of dust
generating concentrates, as well as
fluxes and fine materials; mounting of
roofs over conveyors for handling non-
dust emitting solids (compliance with
BAT8a, BAT8b, BAT25)
PG Installation of ground
de-leaded slag feeding into
flash furnace
BAT54:
Specifies methods to reduce the
amount of copper production
primary and secondary waste
materials to be stored
BAT90:
Specifies the required
adaptation method to prevent
diffuse emissions from pre-
treatment of raw materials,
primary and secondary
materials or to reduce the
emissions (for lead production).
December 2020
The installation enables air-sealed
transport of the waste material, i.e. de-
leaded slag, to flash furnace for metal
recovery (compliance with BAT54).
A pneumatic transport system applied
for dust-generating materials
(compliance with BAT90a).
P-31 Building a warehouse
and storage area for lead-
bearing materials
BAT 90
Specifies the required
adaptation method to prevent
diffuse emissions from pre-
treatment of raw materials,
primary and secondary
materials or to reduce the
emissions (for lead production).
March 2021
An enclosed feed preparation building
was built and the Feed Preparation
Yard was equipped with water showers
and an enclosed leachate collection
system to reduce dust from feed
preparation operations for the Lead
Production Facility.
P-30 Building a gas
desulphurization
installation from the Kaldo
furnace at the Precious
Metals Plant
BAT 140:
Dust - 2-5 (mg/Nm
3
)
BAT 142:
SO₂ - 50-480 (mg/Nm3),
May 2021
Dust – average of 0.6 (mg/Nm
3
),
SO₂ – below 470 (mg/Nm
3
),
P-22 Building an
installation for removing
dust from gases from flash
furnace slag and copper
BAT 39:
Dust - 2-5 (mg/Nm
3
)
As - 0.007 (kg/h)
December 2021
Dust – average of 0.054 (mg/Nm
3
),
As – average of 0.0019 (kg/h)
Dust
– decrease by 88%
As
– decrease by 88%
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 138
the Company and the Group in 2022 – translation from the original Polish version
Name of task/initiative
Expected adaptation to BAT
associated emission levels (BAT-
AEL)
Task completion date
Parameters achieved (in guaranteed
parameter tests)
Change in
hourly dust emissions
hourly arsenic in dust
emissions
outlets at the Głogów II
Smelter
P-23 Building an
installation for removing
dust from converter gases
BAT 39:
Dust - 2-5 (mg/Nm
3
)
As - 0.002 (kg/h)
December 2021
Dust – average of 0.067 (mg/Nm
3
)
As – average of 0.00098 (kg/h)
Dust
– decrease by 94%
As – decrease by 92%
HML - Building a
desulphurization and dust
removal installation for
gases from the
granulation process
BAT 45:
Dust - 2-5 (mg/Nm
3
)
BAT 49:
SO₂ - 50-480 (mg/Nm3),
June 2022
Dust – average of 3 (mg/Nm
3
)
SO₂ - average of 380 (mg/Nm3),
Dust
– decrease by 94%
SO
2
– decrease by 98%
P-31 Modernisation of the
installation reducing
pollutants in air emissions
of process gases from
Dörschel furnaces – stage
2
BAT 11:
Hg - 0.01-0.05 (mg/Nm
3
)
BAT 96:
Dust - 2-4 (mg/Nm
3
)
As - 0.05 (mg/Nm
3
)
December 2022
Dust - below 1 (mg/Nm
3
), average 0.118
(mg/Nm
3
)
As - below 0.01 (mg/Nm
3
), average
0.006 (mg/Nm
3
)
Hg - below 0.001 (mg/Nm
3
), average
0.0005 (mg/Nm
3
)
Dust
– decrease by 91%
As
– decrease by 98%
Hg
– decrease by 99%
Following the implementation of the BAT-As Program, the emission of arsenic from metallurgical production by KGHM
Polska Miedź S.A. into the air continues to decline. The arsenic emission ratio from metallurgical production decreased by
77% in 2022 vs. 2018.
Chart 25. Arsenic emissions from metallurgical production, in g/t of electrolytic copper
Installation to remove arsenic and mercury from gases at the SOLINOX installation
The aim of the project was to adapt arsenic and mercury emissions to the new, increasingly stringent European standards
in the scope of air emissions contained in the BAT (Best Available Techniques) conclusions for the non-ferrous metals
industry. To achieve the desired results, innovative dedicated solutions have been designed. The commissioning of
additional elements in the existing SOLINOX desulphurisation process line allows the process gas treatment to be carried
out at the highest level. Two new gas treatment units were added to the SOLINOX plant. The first unit is used for arsenic
removal and the second unit - for mercury removal. Arsenic removal takes place in a high-efficiency electrostatic
precipitator system. Gases discharged from the cooling tower are routed to the first stage wet electrostatic precipitator
unit, before being transferred to the plant's absorption tower, which operates using the calomel technique, where the gases
are cleaned of mercury compounds. The final, dedusting and cleaning of gas is carried out in a second stage wet
electrostatic precipitator unit. It is worth noting that the Legnica Copper Smelter and Refinery has the first installation in
the country that purifies gases based on the internationally tested calomel technique. One of the advantages of this
mercury capture technique is the generation of a limited quantity of waste.
The level of capital expenditure amounted to approximately PLN 115 million.
The aim of the installation is to reduce the concentration of arsenic and mercury in process gases entering the SOLINOX
gas desulphurisation plant to 0.05 mg/Nm3. The new plant thus meets the highest environmental protection standards.
The installation uses limited amounts of water, as the main source of process water is pre-treated effluents from another
plant. Consequently, the amount of effluents generated has also been reduced.
5.6
3.7
4.3
2.8
1.3
2018 2019 2020 2021 2022
-77%
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 139
the Company and the Group in 2022 – translation from the original Polish version
“Green Laurel” - National competition of the Polish Economic Chamber of Eco-development
The construction of the installation for arsenic and mercury removal from gas upstream of the SOLINOX plant was
recognised by the Polish Economic Chamber of Eco-development in the nationwide “Green Laurel” competition for the
implementation of environmentally friendly investments.
WATER AND EFFLUENTS MANAGEMENT
GRI 3-3 material topic: Management of water resources GRI 303-1 GRI 303-2 GRI 303-3 GRI 303-4 GRI 303-5
Water is one of the most valuable natural resources. KGHM Polska Miedź S.A. regularly monitors the quality of ground and
surface water in the vicinity of its plants to ensure that the company’s activities comply with strict environmental standards.
Water is necessary for the production of copper. It is used, among others, for enrichment (flotation) of ore, hydrotransport
of waste, and also in the core production line in the smelters. This is shown in the diagram below.
Diagram 29 Water in the ore enrichment process (flotation) in KGHM Polska Miedź S.A.
KGHM Polska Miedź S.A. has three operational underground copper mines, which mine the ore at depths of 400-1350 m.
These are: the Lubin Mine Division, the Rudna Mine Division and the Polkowice-Sieroszowice Mine Division. Due to the
constant inflow of water from the rock mass into the mines, saline mine water is pumped to the surface. Mine water
extracted from deeper parts of the deposit are more salinated, but the volumes are smaller.
On the surface, retention reservoirs are located next to every mine and every ore enrichment plant. They collect rainwater,
overflows of cooling water as well as extracted mine water. Water from the reservoirs is pumped into the flotation tailings
ponds (in some cases mine water is pumped directly into flotation tailings ponds). As a result, neither mine water nor
effluents is discharged directly into local rivers. At the ore enrichment plants, all water is stored in closed systems and used
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 140
the Company and the Group in 2022 – translation from the original Polish version
for hydrotransporting flotation tailings to the Żelazny Most Tailings Storage Facility, where suspended solid particles are
sedimented. Water from the Żelazny Most Tailings Storage Facility returns, through a system of decantation towers, to the
ore enrichment plants.
Copper ore processing in ore enrichment plants and, in particular, grinding and flotation require the supply of significant
quantities of process water. Water from mine drainage accounts for only part of this demand. The remaining water is
supplied by the Tailings Plant from the “Żelazny Most” Tailings Storage Facility through pipelines on the surface, which form
a mine-process water circulation network.
In 2022, the average monthly consumption of process flowback water at O/ZWR was approximately 12 821 520 m
3
of which:
− approx. 3 448 092 m
3
in the Lubin Concentrator;
− approx. 2 602 711 m
3
in the Polkowice Concentrator;
− approx. 6 770 717 m
3
in the Rudna Concentrator.
In KGHM Polska Miedź S.A., approximately 150 million m
3
of water per year is recycled to the ore enrichment process. Only
water from mine drainage and recycled water from the Żelazny Most Tailings Storage Facility is used in the enrichment
process. This enables surface and ground water, one of the most valuable natural resources, to be saved.
Since there is a constant inflow of mine water and rainwater into the system, excess water must be removed. Water from
the Żelazny Most Tailings Storage Facility is discharged by gravity through a 20 km long pipeline to the Odra river. The
volume and quality of discharged water is closely monitored. The general rule is to maintain the concentration of the sum
of Cl- and SO
4
2-
below 1 g/l in the mixed water of the Odra river below the point of discharge. In practice, the discharged
water volume is controlled based on a formal table, which takes into account the current flow and salinity of the Odra river.
The discharge permit also contains other provisions concerning the concentration of dissolved substances and the water
flow rate. Water may be discharged only if the flow of the Odra river is greater than 17.5 m
3
/s and the flow of the discharged
decanted water is less than 2 m
3
/s. The total level of suspended solids in the discharged water must be maintained under
35 mg/dm
3
. The size of the flotation tailings pond, especially its surface area, makes the sedimentation of tailings very
effective and the overall level of suspended solids is usually kept below 35 mg/dm
3
. However, during windy weather, higher
concentrations of suspended solids can be observed, which requires additional treatment. This situation is kept under
control through continuous measurements of turbidity of the discharged water. If it is too high then the decanted water is
transferred to a nearby effluents treatment plant to reduce the volume of suspended solids. After this treatment, the water
is pumped into a pipeline which discharges it into the Odra river.
The Legnica Copper Smelter and Refinery and the Głogów Copper Smelter and Refinery consume significant quantities of
water (approximately 11 million m
3
per year), which is supplied by Energetyka Sp. z o.o. The company supplies water drawn
from the Kaczawa river to the Legnica Copper Smelter and Refinery and from the Odra river to the Głogów Copper Smelter
and Refinery.
The water used in production processes is routed back to Energetyka for treatment. Industrial effluents treatment plants
operating to meet the needs of the smelters specialise in the removal of heavy metals, including arsenic, mercury and
cadmium compounds, which are especially problematic. The effluents treatment technology relies mainly on neutralisation
processes supported by coagulants and flocculants. Because of the high quality of effluents, approximately 30% of the
global stream is reused for production processes in the technological processes of the smelters. Approximately 8 million
m
3
of the remaining treated effluents is discharged to the Odra river (in the case of the Głogów Smelter and Refinery) and
to the Pawłówka stream, which feeds the Kaczawa river (in the case of the Legnica Smelter and Refinery). The process is
shown in the diagram below. The table presented under the diagram shows the measures linked to water management in
KGHM Polska Miedź S.A. in 2022:
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 141
the Company and the Group in 2022 – translation from the original Polish version
Diagram 30. Water in the electrolytic copper production process in KGHM Polska Miedź S.A.
The Cedynia copper wire rod plant division is supplied with water for human consumption and for technological purposes
from groundwater intakes in Orsk and Chełm. The Orsk intake is a source of water for drinking purposes. Two wells – 1z
and 2z – are currently in operation. The Chełm intake wells supply the plant with water for technological purposes.
The Cedynia copper wire rod plant has separate sewerage systems capturing the following types of effluents:
− sanitary,
− rainwater-industrial,
− oily.
Wastewater from the area of the copper wire rod plant hall (including used process emulsions) is directed to the oily
effluents tanks located in the vicinity of the Power Station building. The effluents collected in the tanks are processed
entirely in a VACUDEST vacuum demulsifier.
The sanitary and rainwater-industrial effluents captured are directed to the effluents treatment plant, where it is treated in
the sanitary effluents treatment line and the rainwater-industrial effluents treatment line. Treated sanitary and rainwater-
industrial effluents is mixed and discharged via a common discharge collector into the Odra River. Since 2021, part of the
stream of treated rainwater and effluents from filter flushing at the Water Treatment Plant has been returned for reuse in
the cooling circuits. In 2022, the volume reached 8 433 m
3
.
Table 44. Water management in the KGHM Polska Miedź S.A. Group [m3]
WATER WITHDRAWAL GRI 303-3
2022
2021
Water withdrawal
by source
Surface water (total)
11 001 154
10 421 313
Groundwater (total)
27 352 385
25 987 286
Seawater (total)
0
0
Water withdrawn as a result of operations, e.g. mine water (total)
35 745 659
30 851 894
−
Fresh water (≤1 000 mg/l of total dissolved substances)
337 449
170 262
−
Other water (>1 000 mg/L of total dissolved substances)
35 408 210
30 681 632
Water from third parties (total)
3 821 445
462 936
− Fresh water (≤1 000 mg/l of total dissolved substances)
3 819 317
456 485
−
Other water (>1 000 mg/L of total dissolved substances)
2 127
6 451
Total water
withdrawal
Surface water (total) + groundwater (total) + seawater (total) + post-
production water (total) + water from other sources (total)
77 920 643
67 721 429
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 142
the Company and the Group in 2022 – translation from the original Polish version
WATER (EFFLUENTS) DISCHARGE GRI 303-4
2022
2021
Water (effluents)
discharge by
destination
Surface water
46 881 676
45 241 415
Ground and soil
9 125
15 341
Sea
0
0
Water provided to third parties
715 402
494 864
Total water
(effluents)
discharge
Surface water + groundwater + seawater + third party water (total)
47 606 203
45 751 620
Effluents (water)
discharge – fresh
and other water
−
Fresh water (≤1 000 mg/l of total dissolved substances)
17 116 661
18 021 202
− Other water (>1,000 mg/L of total dissolved substances)
30 486 161
27 730 418
WATER CONSUMPTIONGRI 305-5
2022
2021
Water consumption
Total water consumption
30 314 440
21 971 809
Table 45. Water management in KGHM Polska Miedź S.A. [m3]
WATER WITHDRAWAL GRI 303-3
2022
2021
Water withdrawal
by source
Surface water (total)
0
0
Groundwater (total)
193 343
176 815
Seawater (total)
0
0
Water withdrawn as a result of operations, e.g. mine water (total)
35 395 555
29 599 160
−
Fresh water (≤1 000 mg/l of total dissolved substances)
0
0
− Other water (>1,000 mg/L of total dissolved substances)
35 395 555
29 599 160
Water from third parties (total)
13 125 254
12 117 706
−
Fresh water (≤1 000 mg/l of total dissolved substances)
13
125 254
12 117 706
−
Other water (>1,000 mg/L of total dissolved substances)
0
0
Total water
withdrawal
Surface water (total) + groundwater (total) + seawater (total) + post-
production water (total) + water from other sources (total)
48 714 152
41 893 681
WATER (EFFLUENTS) DISCHARGE GRI 303-4
2022
2021
Water (effluents)
discharge by
destination
Surface water
30 559 952
27 815 093
Ground and soil
0
0
Sea
0
0
Water provided to third parties
10 575 545
9 530 140
Total water
(effluents)
discharge
Surface water + groundwater + seawater + third party water (total)
41 135 497
37 345 232
Wastewater (water)
discharge – fresh
and other water
− Fresh water (≤1 000 mg/l of total dissolved substances)
10 653 427
9 614 815
− Other water (>1,000 mg/L of total dissolved substances)
30 482 070
27 730 418
WATER CONSUMPTION GRI 305-5
2022
2021
Water consumption
Total water consumption
7 578 655
4 548 449
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 143
the Company and the Group in 2022 – translation from the original Polish version
CIRCULAR ECONOMY, INCLUDING WASTE MANAGEMENT
GRI 3-3 material topic: Striving towards a circular economy GRI 306-1 GRI 306-2 GRI 306-3
Striving towards a circular economy (CE) is one of the priorities of the KGHM Polska Miedź Group. The KGHM Polska Miedź
S.A. Group implements the roadmap published on 24 September 2019 for the development of the circular economy in
Poland, in the form as presented in the diagram below:
Diagram 31. Water in the electrolytic copper production process
Key elements of building the circular economy in KGHM Polska Miedź S.A. include:
− innovation, strengthening of cooperation between the Company and academic sector, and consequently
implementation of innovative solutions related to a circular economy,
− participating in the growth of the market for secondary metallic raw materials and increasing the share of such materials
in production,
− minimising the volume of post-production waste to residual waste levels,
− seeking and implementing solutions that allow utilisation of waste storage sites as secondary deposits.
Waste management in KGHM Polska Miedź S.A.
Waste is generated as a side effect of almost every industrial activity. The copper industry also generates huge amounts of
post-industrial waste, since it requires multi-stage processing of ores to obtain useful final products.
The largest stream of waste is flotation tailings, which represent approximately 94% of the mining output, or approx. 28
million tonnes annually. This waste is created in the flotation process, in which the main volume of waste rock extracted
together with the ore is removed. The next stage of the core production line creating the second largest volume of waste is
the pyrometallurgical process, which produces approx. 1.1 million tonnes of smelter slag. The third largest stream of waste
from the Company’s activity is sludge from the Energetyka Sp. z o.o. effluents treatment plant: approx. 100 000 t/year. Other
large waste streams include dust and sludge from flue gas dust removal systems – up to 50 000 t/year. The amount of waste
generated in technological processes makes waste management one of the key issues associated with copper production,
with impacts that are not just environmental, but also economic, technical and organisational.
Management of waste generated at KGHM Polska Miedź S.A. is carried out in accordance with the principles set out in the
Waste Act of 14 December 2012 (Journal of Laws of 2013, item 21, as amended), according to which all activities should be
planned, designed and carried out in a way that prevents or minimises the volume of waste generated. Waste, whose
generation cannot be avoided, is first subject to recovery and, if that is impossible for technological, economic or
environmental reasons, it is disposed of. Waste is stored only if other means of disposal are not available.
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 144
the Company and the Group in 2022 – translation from the original Polish version
Żelazny Most Tailings Storage Facility
The Rudna Tailings Plant Division, within the structure of KGHM Polska Miedź S.A., operates in particular the Żelazny Most
Tailings Storage Facility together with the Southern Quarter.
Location of the Żelazny Most Tailings Storage Facility including the Southern Quarter
Geographically, the Żelazny Most Tailings Storage Facility is located in a valley between the Dalkowskie Hills in the upper
catchment area of the Rudna River, which form a natural boundary on the west, south and west. The location of the
Southern Quarter means that it is bounded by the Main Facility on the north and limited on the other sides by hills.
The Żelazny Most Tailings Storage Facility is located in the Lower Silesian Voivodship, on the territory of three municipalities:
Rudna, Polkowice and Grębocice. It covers an area of approximately 2 100 hectares, including the Southern Quarter.
Facility qualification
In accordance with Article 6(1)(1a) of the Act on Mining Waste of 10 July 2008 (uniform text: Journal of Laws of 2021, item
1972), the Żelazny Most Tailings Storage Facility, including the Southern Quarter, is classified as a Category A facility, since
the failure to operate or inadequate operation could cause a serious accident. In addition, pursuant to §3(1) of the
Regulation of the Minister of Environment of 5 April 2011 on the detailed criteria for the classification of mining waste
facilities (Journal of Laws of 2011 No 86, item 477), in the case of the facility in question, one of the criteria listed in point 1
is also fulfilled, i.e.:
“The predicted short-term or long-term consequences of failure as a result of the loss of stability of a mining waste
treatment facility, which includes any possible failure of mechanisms associated with the construction of a given mining
waste treatment facility, or as a result of the inadequate operation of a mining waste treatment facility, could lead to:
− significant risk of loss of life,
− serious threat to human health,
− serious threat to the environment.”
The Żelazny Most TSF together with the Southern Quarter is qualified as a project that may always have a significant impact
on the environment, listed in § 2(1)(48) of Regulation of the Council of Ministers of 10 September 2019 on projects that may
have a significant impact on the environment (Journal of Laws of 2019, item 1839), i.e. category “A” mining waste treatment
facilities referred to in the Act on mining waste.
In accordance with Regulation of the Minister of Environment of 20 April 2007 concerning technical conditions to be met
by hydro-engineering construction and their location (Journal of Laws No. 86 of 2007, item 579), the Żelazny Most Tailings
Storage Facility together with the Southern Quarter corresponds to Class I of hydro-engineering structures. It is a hydro-
engineering structure permanently damming water, founded on a non-rocky substrate, which has a damming height of
more than 20 m and a capacity of more than 50 million m
3
.
The Żelazny Most Tailings Storage Facility, together with the Southern Quarter, is used for management of waste from the
flotation enrichment of copper ores with the code 01 03 81 Waste from the flotation enrichment of non-ferrous metal ores,
other than listed in 01 03 80, generated in three areas of the Ore Enrichment Plant Division in Polkowice, belonging to
KGHM Polska Miedź S.A. in Lubin. Such waste is used to build the dams of the subsequent floors and to seal the bottom of
the facility, while the remainder is disposed of in the sedimentation process.
In 2022, the facility received 28 717 443.565 tonnes of code 01 03 81 waste, of which:
− 18 379 946.565 Mg was recovered through the R5 process (for the construction of the facility dams - 6 893 953.565 Mg
and sealing of its bottom - 11 485 993 Mg)
− 10 337 397.00 Mg was disposed of in the D5 landfill process.
The Żelazny Most TSF is a sublevel-superlevel facility consisting of two parts: the existing Main Facility and the new Southern
Quarter, surrounded by embankments (dams), where waste is deposited inside the canopy using the “wet” method. The
expansion of the Main Facility is carried out using the “inward” method (i.e. without the need to occupy new land), using
waste recovered from the flotation waste stream for dam superstructure and sealing the reservoir bottom. The Southern
Quarter dams are constructed using the “outward” (downstream) method.
In 2022, construction of the Southern Quarter was completed for three phases, the Waste Segregation and Concentration
Station was commissioned in the scope of hydro-cyclone technology and depositing at the Southern Quarter began.
The area of the Southern Quarter is designed exclusively for depositing of compacted waste coming mainly from the Tailings
Segregation and Compacting Station (TSCS), which is part of the expansion and reconstruction of the Żelazny Most Tailings
Storage Facility.
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 145
the Company and the Group in 2022 – translation from the original Polish version
The supernatant water collected at the Żelazny Most TSF is returned to the Ore Enrichment Plants and used in the flotation
process, while the excess water is discharged into the Odra River on the basis of a water service permit granted by the
decision of the Regional Director of the Water Management Board in Wrocław State Water Management, dated 5 May 2021,
mark WR.RUZ.421.71.2019.ER, a water permit for a water service covering the discharge of waste water into waters by
means of the old infiltration installation, i.e. discharge into the Odra River, by means of a discharge device, which is a new
infiltration installation in the form of a φ1420 mm distribution pipe (laid in the bottom of the Odra River on plot no. 58/8,
precinct 0003 Wyspa Katedralna (“Cathedral Island”), Głogów - town) together with two river bank chambers. The decision
has been in force since 25 May 2021.
The system of drainage of excess water from the facility consists of, among others, intake towers founded within the Main
Facility (on the basin), from which water is discharged through inflow lines to two pumping stations located on the eastern
side (KALINÓWKA PUMPING STATION) and on the western side (TARNÓWEK PUMPING STATION) of the facility.
Description of the actual status - administrative decisions required by law
In connection with the requirements of Article 28, Article 33(1), Article 34(4) of the Act of 7 July 1994 - Construction Law
(consolidated text, Journal of Laws of 2021, item 2351, as amended), the construction/ extension of a facility that is a tailings
facility requires a building permit.
Also, the construction of e.g. new pipelines or new facilities, such as the pumping station, the Southern Quarter (built in
stages), requires a notice of completion or an occupancy permit, pursuant to Article 54 or Article 55 of the Act - Construction
Law.
It should also be indicated that the Main Facility, due to the nature of the ongoing construction of the facility in operation,
does not require an operating permit.
In connection with the requirements of Article 71(2) and Article 72 of the Act on the availability of information about the
environment and its protection, participation of the public in environmental protection and on environmental impact
assessments, it is necessary to obtain a decision on environmental conditions before obtaining, inter alia, a decision on a
building permit, a permit to operate a facility, a permit for mining waste treatment, a decision on a permit to operate a
mining waste facility, a permit to process waste. In the current factual and legal situation, in accordance with Article 75(1)(4)
of the Act on the availability of information about the environment and its protection, participation of the public in
environmental protection and on environmental impact assessments , the authority competent to issue a decision on
environmental conditions is the governor of the municipality. The requirement in this scope is fulfilled.
The condition of the environment around the Żelazny Most TSF is systematically monitored. In 2022, the scope and type of
measurements performed in the TSF monitoring network was compliant with:
− the decision of the Marshal of the Lower Silesian Voivodeship No. PGOW 163/2018 approving the Mining Waste
Management Program at KGHM Polska Miedź S.A. The Tailings Plant Division, in connection with the operation of the
Żelazny Most Tailings Storage Facility, including the Southern Quarter to a dam elevation of 195 m above sea level,
− effective as of 25 May 2021, pursuant to the decision of the Regional Director of the Wrocław Water Management
Authority of the State Water Holding Company of 5 May 2021, reference no. WR.RUZ.421.71.2019.ER, granting a water
permit for the water service comprising the introduction of sewage into water by the old infiltration installation, i.e. the
introduction into the Odra River, by means of discharge equipment, which is a new infiltration installation in the form
of a 1420 mm φdistribution pipe (laid on the bottom of the Odra River at plot no. 58/8, precinct 0003 Wyspa Katedralna,
Głogów - town) including two bank chambers, with a possibility of discharging effluents through the existing installation
until the new one is commissioned. In this decision, the water permit of 11 February 2020, reference no.:
WR.RUZ.421.143.2019.ER, was waived as of the date of the decision of 5 May 2021 reference no.:
WR.RUZ.421.71.2019.ER, became final,
− decisions on environmental conditions for the expansion of the Żelazny Most TSF and the construction of the Southern
Quarter,
as well as in accordance with Article 27(1) of the Act on Mining Waste of 10 July 2008 (consolidated text: Journal of Laws of
2021, item 1972) and Regulation of the Minister of Environment of 29 May 2014 on conducting the monitoring of the mining
waste treatment facility (Journal of Laws of 2014, item 875).
In accordance with the applicable legal regulations arising, in particular, from the Act on Mining Waste, the monitoring
comprises:
− a precipitation survey at a meteorological station representative of the OUOW location,
− testing of indicator substances and parameters in surface, effluent and groundwater from the list set out in the water
qualification regulations,
− measurement of groundwater levels in observation wells,
− control of the OUOW surface settlement based on established benchmarks,
− measurement of effluent water volume.
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 146
the Company and the Group in 2022 – translation from the original Polish version
In accordance with the applicable regulations and the provisions of the environmental decisions, the monitoring of the
following parameters is also carried out for the Żelazny Most Tailings Storage Facility:
− ambient air,
− soil and plants,
− health status of livestock,
− health of children up to the age of 18,
− seismic monitoring.
Due to the need to discharge effluents from the Żelazny Most TSF into the Odra River, discharge water monitoring is
conducted in the scope of:
− the volume of effluents discharged
− the quality of effluents discharged
− the quality of the Odra River water.
In 2022, 30 482 070 m3 of supernatant water was discharged from the Żelazny Most TSF into the Odra River.
Testing of the Odra River water is carried out at four measurement points:
− above the discharge at 1L point
− below the discharge in points: 2L, 2N, 2P.
Waste recovery
The possible directions and methods of recovery of waste generated by the Company’s installations depend on its material
properties and environmental aspects of its use.
In the material recovery of waste, waste is used in whole or partially in mining technologies, as a structural or building
material, material for reclamation and for filling in post-mining voids, or as raw material for the production of abrasives.
Metal-bearing waste is subject to processes to recover and recycle the metals and metal compounds it contains.
The following post-processing waste produced by the Company is recovered as structural and building materials:
− shaft slag from the Legnica Copper Smelter and Refinery and poured slag from the Głogów Copper Smelter and Refinery
(with the addition of granulated slag) - used as high quality aggregates in road construction. This way, all the shaft slag
and poured slag produced at KGHM is used. In 2022, aggregate production was based on: 496.1 thousand tonnes of
poured slag, 128.5 thousand tonnes of granulated slag for batching and 184.2 thousand tonnes of shaft slag,
− coarse-grained copper ore flotation tailings are used to build the embankments of the Żelazny Most Tailings Storage
Facility and the Southern Quarter (in 2022: 6.89 million tonnes),
− fine-grained flotation tailings are used to seal the bottom of the Żelazny Most Tailings Storage Facility (in 2022: 11.48
million tonnes),
− granulated slag from the Głogów Copper Smelter and Refinery is used at the Żelazny Most TSF for the construction of
drainage layers in the waste mass and piers and embankments at the marina (in 2022: 37.4 thousand tonnes).
In the mines of KGHM Polska Miedź S.A., hydraulic backfill is used to fill mined voids (goafs). The main material used for this
purpose is sand, but also granulated slag from the Głogów Copper Smelter and Refinery (in 2022, the Rudna Mine used
nearly 6.1 thousand tonnes of slag for this purpose). Also, granulated slag of the appropriate fraction after drying is an
excellent material for the production of abrasive materials used for blast cleaning of metal or concrete surfaces. In 2022,
the Głogów Copper Smelter and Refinery supplied 110.65 thousand tonnes of slag for the production of abrasives.
The process of aggregate production based on the material supplied by KGHM’s smelters also permits a reduction of dust
and gas emissions that would be released during the traditional process of aggregate creation. Over the past 10 years,
KGHM Metraco S.A., a subsidiary of KGHM Polska Miedź S.A., has utilised approx. 10 million tonnes of slag, which means
that it was not necessary to obtain this amount of raw material from natural deposits, and at the same time such a huge
waste volume did not have to be stored. The aggregate produced by the KGHM Group was used for the execution of projects
such as the construction of the S3, S5, S6 express roads, or the S11 express road, which is currently being built. Considerable
volumes of material of this type are also used by local buyers executing infrastructure projects commissioned by local
authorities. The primary consumers are the largest construction companies specializing in road construction.
The waste generated during copper production is a valuable metal-bearing raw material and therefore large volumes are
either fully utilized or stored with a view to recovery in the future. Utilisation of waste materials containing useful metals at
levels justifying their recovery is an ordinary and obvious practice in the Company. They include waste from own
installations (dust and sludge from waste gas dust removal installations) and metal scrap.
A high quality copper scrap processing unit was installed within the core production line of the Legnica Copper Smelter and
Refinery, which is the first stage for the Hybrid Smelter being designed in Legnica. Ultimately, it will be supplemented with
the Scrap Trading Base, where the feedstock will be prepared for remelting at the Legnica Copper Smelter and Refinery and
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 147
the Company and the Group in 2022 – translation from the original Polish version
the Głogów Copper Smelter and Refinery. As part of the first stage of the Hybrid Smelter in Legnica, the copper scrap
processing technology with the use of a Revolving Casting-Refining (RCR) furnace was applied. The applied RCR furnace
permits remelting copper scrap with an average 95% Cu content with the optimum efficiency up to 90 thousand tonnes of
anode copper per year. The total anode copper production at Legnica Copper Smelter and Refinery was 168.55 thousand
tonnes, of which 60.13 thousand tonnes, was the production from the RCR furnace. In 2022, nearly 100 thousand tonnes
of scrap was processed at the Legnica Copper Smelter and Refinery (including 24.28 thousand tonnes in the RCR furnace),
which was recycled for use, not representing waste that would require disposal by landfilling.
The goal of the waste management function carried out by KGHM Polska Miedź S.A. is to further utilize waste from its own
and third party core production lines in order to maximize the recovery of copper and associated metals without impacting
the natural environment. This approach suits the Circular Economy idea, in which one of the priorities is to reduce the mass
of waste by using it as a raw material.
To sum-up, we shall conclude that the circular economy concept is implemented in the KGHM Group in the following groups
of actions:
− commercialisation of flotation waste towards recovering metal from such waste, as well as economic utilisation of rock-
forming minerals, as sealing material for the Żelazny Most Tailings Storage Facility, as filling in post-mining goafs, and
material for applications in construction, road building and agriculture,
− the development of copper recycling technology via processing in the RCR furnace,
− closing the circulation of water in ore processing,
− full reclamation of post-production areas,
− utilisation of heat energy contained in the mined deposit,
− development of the Company’s own research and development activity towards a circular economy,
− research and development within the Horizon Europe program towards a circular economy,
− development of the Company’s own investments towards a circular economy.
KGHM Polska Miedź S.A. has for many years conducted and will conduct a series of its own activities, not forced by legal
regulations, aimed at the implementation of a circular economy.
By-product - diluted sulphuric acid
Pursuant to decisions of the Marshal of the Lower Silesian Voivodeship No. PU 92/2022 and PU 93/2022 of 5 August 2022,
sulphuric acid produced at the Legnica Copper Smelter and Refinery, and the Głogów Copper Smelter and Refinery was
recognised as a by-product to be used at the Polkowice Concentrator Division in the enrichment process as an agent for
decarbonisation of one of the process’ intermediate products.
In order to improve the efficiency of the first phase of the ore enrichment process, the ore enrichment flotation line
belonging to the processing plant was equipped with a unit for decarbonisation one of the intermediate products - product
1 of concentrate cleaning. The decarbonisation process involves the chemical dissolution of carbonate components of the
waste rock, mainly limestone CaCO
3
and dolomite CaMg(CO
3
)
2
, using sulphuric acid. The aim of the process is to release the
sulphide grains of ore-bearing minerals from the carbonate envelope, improving the efficiency of flotation enrichment. The
reaction of carbonates with sulphuric acid produces carbon dioxide gas (CO2), solid gypsum (CaSO4-2H2O) and water-
soluble magnesium sulphate (MgSO
4
).
The decarbonisation unit was commissioned in October 2022. It allows all dilute acids generated at KGHM Polska Miedź
S.A. to be managed in an environmentally friendly manner.
Table 46. Waste management in KGHM Polska Miedź S.A. and in the KGHM Polska Miedź S.A. Group in 2022 [t]
GRI 306-3
KGHM Polska Miedź S.A. – WASTE GENERATED GRI 306-3
2022
Waste generated by group and
treatment method
Group „01” – waste resulting from
exploration, mining, physical and
chemical processing of ores and other
minerals
waste for recovery
18 379 947
waste for disposal
10 337 397
Group „10” – waste from
thermal
processes
waste for recovery
1 129 846
waste for disposal
26 893
Other waste
waste for recovery
75 738
waste for disposal
15 392
Total waste generated
Group „1” (total) + Group „10” (total) +
Other waste (total)
29 965 213
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 148
the Company and the Group in 2022 – translation from the original Polish version
KGHM Polska Miedź S.A. Group – WASTE GENERATED GRI 306-3
2022
Waste generated by group and
treatment method
Group „01” – waste resulting from
exploration, mining,
physical and
chemical processing of ores and other
minerals
waste for recovery
18 395 218
waste for disposal
103 632 558
Group „10” – waste from thermal
processes
waste for recovery
1 190 284
waste for disposal
26 896
Group „19" – waste from installations
and devices used for waste
management, from effluents
treatment plants and from the
treatment of drinking water and water
for industrial purposes
waste for recovery
89 576
waste for disposal
73 372
Other waste
waste for recovery
172 992
waste for disposal
417 432
Total waste generated
Group „1” (total) + Group „10” (total) +
Group „19” (total) + Other waste (total)
123 998 328
ACTIVITIES TO PRESERVE BIODIVERSITY
GRI 3-3 material topic: Preserving biodiversity GRI 304-1 GRI 304-2 GRI 304-3
KGHM Polska Miedź S.A. takes active measures to preserve and – where it is not possible – to compensate for lost
biodiversity, and to ensure responsible management of our land and forests.
KGHM Polska Miedź S.A. does not operate in, or in the direct vicinity of, areas of outstanding natural heritage (defined as
national parks, nature reserves or Nature 2000 areas). Areas of high natural habitat or landscape value, covered by various
forms of protection schemes, are located from a few to over a dozen kilometres away from the Company’s operating sites,
amongst which it is worth noting the following:
− Nature 2000 Special Bird Protection Areas:
“Łęgi Odrzańskie” PLB020008 (11 km - Tailings Division, 2 km - Cedynia Wire Rod Plant, 7 km - Głogów Copper
Smelter and Refinery).
− Nature 2000 Special Habitat Conservation Areas:
Kozioróg in Czerna PLH020100 (2.7 km - Głogów Copper Smelter and Refinery),
“Łęgi Odrzańskie” PLH020018 (11 km - Tailings Division, 2 km - Cedynia Wire Rod Plant, 7 km - Głogów Copper
Smelter and Refinery),
“Pątnów Legnicki” PLH020052 (9 km - Legnica Copper Smelter and Refinery),
− Nature reserves:
Buczyna Jakubowska (within the licensed area of the Polkowice-Sieroszowice Mine),
Uroczysko Obiszów (within the licensed area of the Polkowice-Sieroszowice Mine),
Żukowskie Śnieżyce (within the licensed area of the Rudna Mine),
Skarpa storczyków (approx. 1 km - the Cedynia Wire Rod Plant),
Dalkowskie jary (6 km - Głogów Copper Smelter and Refinery).
− Nature and landscape conservation areas:
Grodowiec (within the licensed area of the Rudna Mine),
Guzicki Potok (within the licensed area of the Rudna Mine),
Trzebcz (within the licensed area of the Rudna Mine).
− Ecological sites:
Łęgi głogowskie (former protection zone of the Głogów Copper Smelter and Refinery),
Glinki in Lasek Złotoryjski (1 km - Legnica Copper Smelter and Refinery),
Lena (in the vicinity of areas managed by the Tailings Division).
− Animate and inanimate nature monuments (all divisions).
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 149
the Company and the Group in 2022 – translation from the original Polish version
For all investment projects executed by KGHM Polska Miedź S.A. which require an environmental impact assessment,
pursuant to the Act of 3 October 2008 on the availability of information about the environment and its protection,
participation of the public in environmental protection and on environmental impact assessments (consolidated text:
Journal of Laws of 2021, item 247), include detailed documents which describe the impact of the project on the natural
environment. This work involves experts from many fields (including ornithology, zoology, botany), who highlight potential
risks and present recommendations for actions ensuring the maximum extent of mitigation of the impact of a given project.
Forested areas
Forests have been created in the areas of former protective zones currently managed by the metallurgical facilities. Near
the Legnica Copper Smelter and Refinery, forested areas cover about 385 ha, and near the Głogów Copper Smelter and
Refinery - 872 ha. At present, this area is a unique “ecological niche”, being a habitat to birds, small amphibians and lush
vegetation. Moreover, the Tailings Division manages forests over an area of about 212 ha in the municipalities of: Lubin
(approx. 58 ha), Polkowice (approx. 6 ha), Rudna (approx. 38 ha) and Warta Bolesławiecka (approx. 110 ha).
Afforestation
KGHM Polska Miedź S.A. actively supports afforestation efforts in the areas in which conducts its activities.
In 2022, 23 350 trees were planted at the Legnica Copper Smelter and Refinery, including:
− European beech: 11 550 trees
− English oak: 6 001 trees
− European hornbeam: 2 550 trees
− Tilia cordata: 1 589 trees
− Black alder: 1 660 trees
In 2022, the following were planted at the Głogów Copper Smelter and Refinery:
− a total of 3 328 bushes and 90 trees were planted in industrial areas as part of the ongoing green areas revitalisation
project,
− 13 500 trees, including 11 500 English oak trees and 2 000 black alder trees, were planted at the ecological site on forest
land. In addition, 650 old varieties of fruit trees were planted at the ecological site, mainly in the vicinity of Wróblin
Głogowski.
− A total of 123 810 trees and bushes were planted on forest land of the Głogów Copper Smelter and Refinery, including:
English oak: 73 500 trees
European beech: 7 000 trees
Scots pine: 10 000 trees
Black pine: 3 000 trees
Common spruce: 4 000 trees
European larch: 4 000 trees
Red oak: 1 000 trees
Silver birch: 5 000 trees
Tilia cordata: 6 700 trees
Sycamore maple: 2 000 trees
European hornbeam: 1 500 trees
Mountain ash: 2 000 trees
Biocenotic bushes: 3 500 pcs
Wild varieties of fruit trees: 610 trees
At the Tailings Storage Facility, in 2022 trees were planted on forest and non-forest land. The trees were planted on forest
land in the following forest districts:
− Lubin Forest District: 18.38 ha (101 090 beech seedlings); 31.09 ha (170 990 beech seedlings); 17.28 ha (120 670
seedlings, tree species: birch, sessile oak, English oak, hornbeam, pear tree, fir, Norway maple, lime, larch, alder, pine,
spruce),
− Przemków Forest District: 25.7 ha (54 000 beech seedlings and 23 120 spruce seedlings).
The following were planted at the Żelazny Most Tailings Storage Facility:
− Tilia cordata: 115 trees,
− common beech: 8 trees.
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 150
the Company and the Group in 2022 – translation from the original Polish version
“Forest Carbon Farms” project
Since 2018, KGHM Polska Miedź S.A. has been participating in the so-called “Forest Carbon Farms” project, developed and
conducted by the General Directorate of The State Forests with the idea of rebuilding forests and afforesting new areas in
order to reduce the presence of carbon dioxide in the atmosphere through increased CO₂ absorption by forest complexes.
The Forest Carbon Farms project was implemented in 2017 by the State Forests. It is a pilot program, with its
implementation scheduled until 2026 and sustainability assured for a period of thirty years. Currently, the Forest Carbon
Farm project is carried out in twenty-three forest districts in thirteen regional directorates of the State Forests. The project
is supervised by the General Directorate of The State Forests and is fully funded by the Forest Fund. The clearly defined
objective of the pilot project is to increase existing forest carbon stocks and the carbon dioxide storage capacity of these
ecosystems. Reducing CO
2
emissions from soils and mitigating the risk of uncontrolled emissions of this gas due to disasters
is also important.
Foresters' activities include afforestation of land, expansion of the vertical structure of the forest, e.g. the introduction of
the new generation under the cover of old trees, the use of different methods of forest regeneration and maintenance
work reducing carbon emissions from the soil, the use of species with a higher natural capacity to absorb carbon dioxide.
Peregrine falcon
In 2008, the Głogów Copper Smelter and Refinery recorded an unsuccessful nesting attempt of a peregrine falcon. To allow
falcons to breed safely, a decision was taken to mount a breeding box on one of the smelter’s stacks. In autumn 2008, the
breeding box was mounted on the stack of the Głogów II Copper Smelter and Refinery, the so-called “little clover”. The
felicitous nature of this location was confirmed on 31 March 2009, when 3 peregrine falcon eggs were found in the mounted
nest. Three nestlings hatched after a month. They were ringed in mid-May, and left their home for good in August.
In 2011, the Company took actions to allow the falcon family to be watched on-line. Since 2012, the life of the Głogów
falcons can be viewed online on the “Sokół” Association website. Every year, the names for the birds are chosen in a contest
held on the “Sokół” Association website. KGHM is a co-organizer of the contest and funds awards for the winners. In 2022,
another three falcons hatched. Two male and one female. Since the breeding box was mounted in the Głogów II Copper
Smelter and Refinery, 43 falcons have successfully hatched, and 42 of them have been leg-banded.
Ecological site - “Łęgi Głogowskie”
On 28 October 2005, at the request of the Głogów Copper Smelter and Refinery, the Lower Silesia Voivode formally
established the “Łęgi Głogowskie” ecological site, to protect the important natural features of, among others, the old Odra
riverbed, vegetation clusters, from water plants and reedbeds to rich deciduous forests with a multitude of protected flora
and fauna species. The site covers a terrace area of 605.6 ha between the Odra River’s embankments, and stretches over
land to which KGHM Polska Miedź S.A. holds a legal title.
Every year, the Głogów Copper Smelter and Refinery undertakes treatment measures to maintain the area, restore habitats
and protect the species living in the “Łęgi Głogowskie” ecological site. In 2022, these measures included: mowing meadows
in a way that leaves patches of late-ripening vegetation (Cnidion dubii communities - celery meadows) and mowing reed
rushes in meadow habitats, removing self-seeding trees and shrubs growing expansively into valuable tree and meadow
habitats, planting shrubs of native species compatible with the forest habitat type in places where plantations of foreign
trees have been removed, setting up shelters for birds, hanging day shelters for bats and nesting boxes for birds,
constructing clay and wooden structures, i.e. substitute habitats for insects nesting in clay, cleaning works - systematic
removal of illegal waste by third parties.
“Copper Bees”
In 2022, KGHM Polska Miedź S.A., together with the Polish Spa Group [Polska Grupa Uzdrowisk], carried out the “Copper
Bees” project related to the protection of bees. As part of the project, additional apiaries were created at facilities belonging
to the Polish Spa Group and KGHM Polska Miedź S.A., in which southern European bees started to live. 10 beehives were
located at the Staropolanka water bottling plant in Uzdrowisko Kłodzkie, 3 beehives at the mud mine in Uzdrowisko Połczyn
Zdrój and 3 beehives at the LVI mine shaft at the Lubin Mining Plant. Each hive housed around 70 000 individuals. The
beehives were painted by young inhabitants of the Copper Belt during beekeeping workshops organised by KGHM.
The aim is to inspire Group employees and inhabitants of the Copper Belt to engage in environmental and climate
protection campaigns. This can be done, for example, by setting up apiaries, building houses for wild pollinators or flower
meadows.
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 151
the Company and the Group in 2022 – translation from the original Polish version
Table 47. KGHM Polska Miedź S.A. sites adjacent to protected areas and areas of high biodiversity value in the years 2021-
2022
2022
2021
Sites of the Organisation adjacent to
protected areas and areas of high biodiversity value
15 15
MANAGEMENT OF CHEMICAL SUBSTANCES
As one of the leading European non-ferrous metals producers, KGHM POLSKA MIEDŹ S.A. follows principles of responsible
chemical substance management introduced by the EU Regulations REACH and CLP.
KGHM Polska Miedź S.A. has successfully implemented the REACH system into its operations to ensure compliance with
the REACH Regulation and continuity of KGHM’s product supply to its customers. At present, REACH is bread and butter of
our everyday operations. Under the REACH system, the Company has registered all the substances introduced into trade
with the European Chemicals Agency. Pursuing its REACH implementation strategy, KGHM Polska Miedź S.A. has become a
member of a number of REACH consortia which manage the registration process for the substances and semi-finished
products introduced by the consortium members. At present, KGHM Polska Miedź S.A. is a member of six REACH substance
consortia:
− REACH Copper Consortium,
− European Precious Metals Federation
− Lead REACH Consortium,
− Nickel REACH Consortium,
− REACH Selenium and Tellurium Consortium,
− REACH Copper Compounds Consortium.
In 2022, the consortia worked on the revised edition of the registration dossiers for substances and semi-finished products,
taking account of the newest research results and the most recent guidelines of the European Chemicals Agency.
In view of the changing requirements of the REACH Regulation, the Company updated its safety data sheets, which were
subsequently provided to customers on an on-going basis.
INCREASED / HIGH RISK ESTABLISHMENTS
In accordance with the provisions of the Environmental Protection Law and the criteria set out in the regulation of the
Minister of Development of 29 January 2016 on the types and quantities of hazardous substances present in an
establishment, determining its classification as an establishment with an increased or high risk of a major industrial
accident, the Głogów Copper Smelter and Refinery, the Legnica Copper Smelter and Refinery and the area of the Ore
Enrichment Plants in Rudna and Polkowice were included in the group of establishments with a high risk of a major
industrial accident. Any substance classified as a hazardous substance used in the production process has a valid Safety
Data Sheet. In accordance with the manufacturer's recommendations, the substances are transported, used and stored
according to the recommendations indicated in the aforementioned sheets.
In accordance with the provisions of the Act of 27 April 2001 Environmental Protection Law, the following documents, which
are updated on an ongoing basis, were prepared for high-risk establishments and then submitted to the relevant state
authorities:
− Notification of the establishment
− Failure prevention program
− Safety Report
− Internal operational and rescue plan
ENVIRONMENTAL PROTECTION - DOMESTIC COMPANIES OF THE KGHM GROUP
The domestic companies of the KGHM Polska Miedź S.A. Group in Poland operate in compliance with environmental
regulations. The companies that are obliged to do so have valid environmental permits.
Among the Group's domestic companies, the activities carried out by “Energetyka” sp. z o.o. have the greatest impact on
the environment, mainly due to water intake and discharge of sewage and effluents.
In 2022, the following investments were implemented in the company, reducing the entity's impact on individual
environmental components:
− Construction of a photovoltaic installation,
− Renewable Energy Sources - Photovoltaic power plant,
− Boiler modernisation (from coal to steam),
− Wastewater treatment plant,
− Industrial effluents retention tank,
− Treated effluents outlet channel,
− Feed reservoir,
− Lime column (Solinox).
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 152
the Company and the Group in 2022 – translation from the original Polish version
Activities of KGHM ZANAM S.A. had an impact on the environment mainly due to waste management. The company did not
implement any significant environmental investments in 2022, but recorded a reduction in the impact on emissions of dust,
sulphur oxide, nitrogen, carbon monoxide and carbon dioxide, as a result of commissioning the photovoltaic power plant
in 2021.
NITROERG S.A. is a Group company, the operations of which may have a significant environmental impact due to the risk
of industrial breakdowns. Its line of business includes production of explosives, fuel additives and initiating systems. The
plant complies with all requirements concerning the operation of hazardous facilities. No penalties were imposed on the
company for non-compliance with the environmental regulations in 2022.
ENVIRONMENTAL PROTECTION IN KGHM INTERNATIONAL LTD.
In 2022, the mines operating within KGHM INTERNATIONAL LTD. met all the legal requirements and cooperated with
regulators in order to achieve the best possible outcomes for the environment as well as for their operations. No
irregularities occurred in connection with the mining activity that would lead to severe environmental consequences.
In the past year, the activity of the international assets focused mainly on ongoing environmental monitoring and obtaining
or renewing necessary permits.
The Robinson Nevada Mining Company (RNMC; Nevada, USA) mine spent approximately USD 4.1 million (approximately
PLN 18 million) on environmental protection - waste management, environmental fees, cooperation with consultants, as
well as for mitigation measures which accompanied plans to expand the flotation tailings storage facility and measures
linked to the Liberty open pit. In addition, the closure and reclamation of the “D-Pad” heap for leaching with cyanide oxide
ore, which was a remnant from the early 1990s operations of the previous plant operator, was carried out at RNMC.
In 2022, Carlota Copper Company (Carlota; Arizona, USA) allocated USD 1.4 million, or nearly PLN 6 million, for
environmental protection. The actions were focused on environmental monitoring and renewal of permits. Work was also
conducted to prepare the restoration process, which included testing of evapotranspiration covers and the collection of
necessary data for the proper design of the containment and copper leaching heap; activities on the hydrogeological model
of the leaching heap were also carried out.
In the Sudbury Basin mines (Ontario, Canada) activities focused on environmental monitoring, water and waste
management, and obtaining of permits. Slightly over USD 256 000 (i.e. approximately PLN 1.1 million) was allocated for
these purposes.
In the case of the Victoria Project (Ontario, Canada), USD 3.5 million, or more than PLN 15 million, has been allocated for
the needs related to environmental protection. In addition to ongoing environmental monitoring, activities focusing on
obtaining the relevant permits were also carried out and the necessary infrastructure was built to limit the environmental
impact (effluents treatment plant, a possible acid generating (PAG) rock repository, mining water tank).
KGHM Chile, which was the operator of the Franke plant until April 2022, focused its activities on environmental monitoring,
water and waste management and acquisition of permits. Work was also carried out concerning the analysis of the
environmental impact of developing the Carrizalillo project.
Examples of environmental measures taken by KGHM INTERNATIONAL LTD.
Protection of the air
Since 2009, SCM Franke has been monitoring PM10 emissions across the entire plant, even though it is not obligated to
track these pollutants. Air quality records are not reported to any authority – PM10 monitoring is not part of any
environmental commitment, but an additional internal initiative supporting the fulfilment of the requirement stipulated by
the Regulation on Basic Workplace Sanitation.
These activities were continued by KGHM Chile until April 2022, when the Franke mine was sold. In the first months of 2022,
the average monthly concentration of PM10 never exceeded the level of 150 μ g/m
3
, or the threshold for regulating air
quality for places of human habitation (formally, this limit does not apply at the site, as it is located in the middle of the
Atacama desert).
Such good air quality can be achieved thanks to continuous dust limitation efforts: wetting mine roads, spraying water over
crushers and conveyors, sealing the conveyors, performing ongoing maintenance of vehicles and machines, etc.
Another example of a good approach to air protection is the Carlota mine, located in the desert areas of the state of Arizona,
where concentrations of PM10 or H
2
SO
4
have never been exceeded since the beginning of the plant operation. This is made
possible among others by imposing speed limits for low-emission delivery trucks, wetting of roads, conveyors and crushers,
and using surfactants and mist balls whenever the SX-EW installation is in operation.
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 153
the Company and the Group in 2022 – translation from the original Polish version
Also, Carlota is equipped with an advanced air quality monitoring network with six weather stations operating 24/7/365
and featuring beta attenuation monitoring enabling PM10 dust monitoring.
Water protection
KGHM INTERNATIONAL LTD. mines also undertake numerous measures to protect water. Two of the mines, SCM Franke
and Carlota Copper Company, do not release water to the environment at all. In the case of the Chilean mine, the SX-EW
installation operates in a closed loop, using small amounts of water to compensate for losses. Domestic effluents are
treated through reverse osmosis and treated water is used to control road dust emissions.
In the case of Carlota, engineering solutions ensure separation of contaminated water from clean water. Rainwater that
has been in contact with the mine is captured and then used in technological processes.
The Canadian operations provide more examples of the correct approach to the protection of water. The Podolsky mine,
which has been in temporary suspension since 2013, continues to treat rainwater and groundwater from the site through
metal precipitation and ion exchange in order to meet strict water quality requirements. The treated water is discharged
into the Norman North marsh.
A temporary reverse osmosis effluents treatment plant operated at the Victoria project site. Currently, work is underway to
build a full-scale permanent effluents treatment plant. The installation will include, among others, metal precipitation, ion
exchange, and a moving bed biofilm reactor (MBBR).
Biodiversity
The international assets also focus their activities on biodiversity. The Carlota mine oversees 1.21 ha of marshlands through
annual tests and introduction of improvements necessary for further development of these areas. One of the marshes
keeps water year round, which is rare in the desert climate of the southwestern United States.
Moreover, Carlota has grown and takes care of about 100 specimens of hedgehog cactuses, which initially grew in the
windows of its office building and are currently overgrowing the buttress wall of the pit. The care provided to the plants has
ensured their survival rate comparable to the natural one.
Throughout 2022, Carlota employees have been looking after the endangered hedgehog cactus species by watering them
during the dry months, collecting seeds and looking after the site where the plants are growing.
The Victoria Project, as required by the Canadian Endangered Species Act, protects the whooping cottontail (Antrostomus
vociferus) habitat, among other things by limiting plant development activities outside its existing boundaries during the
nesting season and by providing endangered species training to all new employees. The Victoria Project also protects turtles
based on its Turtle Protection and Mitigation Plan.
Another example of support for biodiversity is the fact that the Sudbury mines have joined the “Grow with Kivi” initiative. In
2022, within this campaign, KGHM employees and their families planted 1 000 trees in the Kivi Park.
3.7 DISCLOSURES IN ACCORDANCE WITH THE EUROPEAN UNION TAXONOMY FOR SUSTAINABLE
ACTIVITIES IN 2022
Regulation of the European Parliament and of the Council (EU) no 2020/852 of 18 June 2020 on the establishment of a
framework to facilitate sustainable investment, and amending Regulation (EU) 2019/2088 (hereinafter: the “EU Taxonomy”),
obligates companies to disclose whether and to what extent their business activity is consistent with the assumptions of
the Taxonomy, which classifies and describes environmentally sustainable economic activities.
From 1 January 2022 to 31 December 2022 (i.e. for the year 2021), the mandatory disclosures of non-financial companies
involve a percentage share of the economic activity that is taxonomy-eligible, and of the economic activity that is taxonomy-
non-eligible, in terms of the total:
− turnover,
− capital expenditure (CAPEX),
− and operating expenditure (OPEX),
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 154
the Company and the Group in 2022 – translation from the original Polish version
as well as the related qualitative (explanatory) information - specified pursuant to the Commission Delegated Regulation
27
,
taking into account Commission Delegated Regulation (EU) 2022/1214, amending the above regulation
28
.
The first annual reporting period covered 2021, for which eligibility indicators were reported. In the second reporting year
(i.e. for 2022), indicators are reported in the scope of both eligibility and compliance with the Taxonomy.
Pursuant to Delegated Regulation (EU) 2021/2178, economic activity that is taxonomy-eligible means the economic activity
as set out in Commission Delegated Regulation (UE) 2021/2139
29
, taking into account Commission Delegated Regulation
(EU) 2022/1214, amending the above regulation. Activities compliant with the Taxonomy (hereafter: “Taxonomy-compliant
activity”) is the activity contributing substantially to the implementation of one or more of the environmental objectives,
causes no significant harm to any of the environmental objectives of the Taxonomy, and is carried out in accordance with
the minimum safeguards set out in Article 18 of Regulation 2020/852 as well as meets the technical compliance criteria that
have been established by the European Commission.
In accordance with the regulatory obligation, an assessment against the first two environmental objectives was carried out
as part of the compliance verification for 2022:
− Climate change mitigation,
− Climate change adaptation.
For the purposes of the disclosures for 2022, all companies of the KGHM Polska Miedź S.A. Group conducted a thorough
analysis of their economic activities. As a result, taxonomy- compliant activities have been identified, i.e. the activities
compliant with the description of activities included in the regulation. NACE codes were only used as a support. The financial
data for compliant activities presented in the disclosures below include both the revenues (turnover) from the taxonomy-
compliant economic activities, the related capital expenditure or operating expenditure, as well as purchases from the
compliant activities. An activity has been classified as taxonomy- compliant based on a comparison of a given actual activity
with the description of the activity provided in Annex I or Annex II of Commission Delegated Regulation (EU) 2021/2139.
The indicators of turnover, capital expenditure and operating expenditure included the definitions set out in Annex I of
Commission Delegated Regulation (EU) 2021/2178. The calculation of the indicators for the Group takes account of the
relevant consolidation exclusions based on the methods used in the financial statements.
The individual types of the conducted activities have been assigned to only one taxonomy- compliant activity. No part of
the revenues, CAPEX and OPEX has been double-counted. If an activity that generated revenue (turnover) in 2022 has been
qualified as taxonomy- compliant , the CAPEX and OPEX related to this activity have been assigned thereto as well, and they
have not been further assessed in terms of compliance for the purposes of other activities. The remaining values of CAPEX
and OPEX (i.e. not related to the revenue-generating compliant activity) were assessed for their possible classification in the
category of purchases from taxonomy- compliant activities. Individual CAPEX and OPEX expenses were assigned to only
one activity. The Parent Entity of the Group oversaw the disclosure process, also verifying the financial data to be attributed
to the individual activities, in order to avoid double-counting.
27
Commission Delegated Regulation (EU) 2021/2178 of 6 July 2021 supplementing Regulation (EU) 2020/852 of the European Parliament and
of the Council by specifying the content and presentation of information to be disclosed by undertakings subject to Articles 19a or 29a of
Directive 2013/34/EU concerning environmentally sustainable economic activities, and specifying the methodology to comply with that
disclosure obligation. (hereafter: “Delegated Regulation 2021/2178”).
28
Commission Delegated Regulation (EU) 2022/1214 of 9 March 2022 amending Delegated Regulation (EU) 2021/2139 as
regards economic activities in certain energy sectors and Delegated Regulation (EU) 2021/2178 as regards specific public
disclosures for those economic activities. (hereafter: “Delegated Regulation 2022/1214”).
29
Commission Delegated Regulation (EU) 2021/2139 of 4 June 2021 supplementing Regulation (EU) 2020/852 of the European Parliament
and of the Council by establishing the technical screening criteria for determining the conditions under which an economic activity qualifies
as contributing substantially to climate change mitigation or climate change adaptation and for determining whether that economic activity
causes no significant harm to any of the other environmental objectives. (hereafter: “Delegated Regulation 2021/2139”). For the first two
environmental objectives (climate change mitigation and climate change adaptation), the technical eligibility criteria are published,
respectively, in Annex I and Annex II to this Delegated Regulation.
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 155
the Company and the Group in 2022 – translation from the original Polish version
The KGHM Polska Miedź S.A. Group conducts its business activity outside of the European Union as well. These activities
were assessed for taxonomy-compliance in the same manner as all the activities conducted in the EU.
CHANGES IN THE GROUP STRUCTURE
As further described in section 1.3. Organisational structure of the KGHM Polska Miedź S.A. Group, in the first quarter of
2022 the Group disposed of its shares in INTERFERIE S.A. and Interferie Medical SPA Sp. z o.o.. These entities were not taken
into account in the assessment of eligibility and compliance with the Taxonomy, which has no material impact on the
indicators disclosed, due to the low share of the turnover, CAPEX and OPEX of INTERFERIE S.A. and Interferie Medical SPA
Sp. z o.o. in the consolidation.
ASSESSMENT OF COMPLIANCE WITH THE TAXONOMY
Eligible activity that simultaneously:
− contributes materially to the implementation of one or more environmental objectives identified within the Taxonomy,
− does not cause serious harm to any of the other environmental objectives,
− is carried out in accordance with the minimum safeguards set out in Article 18 of Regulation 2020/852,
− meets the technical eligibility criteria,
can be considered an environmentally sustainable activity, i.e. compliant with the Taxonomy.
As part of the preparation of the taxonomic disclosures, an analysis of the compatibility of eligible activities in terms of
meeting the technical eligibility criteria for individual activities included in Delegated Regulation 2021/2139 was carried out.
The compliance of the economic activity pursued with the minimum social safeguards was verified by the KGHM Polska
Miedź S.A. Group through performing the due diligence. To this end, cooperation was established with an external
consultant.
The due diligence performed included analysing the compliance of the economic activity carried out by the KGHM Polska
Miedź S.A. Group with the minimum safeguards set out in Article 3(c) in conjunction with Article 18 of Regulation 2020/852
of 18 June 2020 on the establishment of a framework to facilitate sustainable investment. Article 18 of Regulation 2020/852
defines minimum safeguards as the procedures implemented by an undertaking that is carrying out an economic activity
to ensure the alignment with the OECD Guidelines for Multinational Enterprises and the UN Guiding Principles on Business
and Human Rights, including the principles and rights set out in the eight fundamental conventions identified in the
Declaration of the International Labour Organisation on Fundamental Principles and Rights at Work and the International
Bill of Human Rights. On the basis of the indicated acts and the report of the Sustainable Finance Platform on minimum
social safeguards
30
, the methodology of the survey was defined and its main areas were identified.
The survey covered the following areas: disclosures of strategic and internal affairs, human rights, labour rights, anti-
corruption and anti-bribery, consumer protection, competition, tax policy, environmental protection and other areas.
The methodology of the survey was divided into four main stages:
- I. Procedure-based test, i.e. examination of the KGHM Polska Miedź S.A. Group's internal regulations and procedures in
the context of compliance with the applicable regulations and guidelines in each area. The survey in this respect was carried
out based on the documentation provided by the KGHM S.A. Polska Miedź S.A. Group.
- II. Outcome-based test, i.e. the survey based on final convictions/ administrative sanctions against Group Companies or
management staff in relation to each of the areas examined, taking into account their materiality. This stage was carried
out on the basis of statements by the KGHM S.A. Polska Miedź S.A. Group.
- III. An analysis of the databases of the Business and Human Rights Resource Center and the National Contact Point
established in accordance with the OECD Guidelines for Multinational Enterprises, which was carried out on the basis of
publicly available records of the designated organisations.
- IV. General survey of publicly available press information on the activities of the KGHM S.A. Polska Miedź S.A. Group.
30
Final Report on Minimum Safeguards, Platform on Sustainable Finance; https://finance.ec.europa.eu/system/files/2022-10/221011-
sustainable-finance-platform-finance-report-minimum-safeguards_en.pdf [accessed on 01.02.2023]
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 156
the Company and the Group in 2022 – translation from the original Polish version
The examination of each of the stages presented showed that the KGHM Polska Miedź S.A. Group had adopted the policies
and procedures necessary to fulfil the minimum social safeguards. The survey also excluded the existence of indications of
a failure to provide minimum safeguards in any of the areas identified.
CORE BUSINESS OF THE KGHM POLSKA MIEDŹ S.A. GROUP AS A CONDITION FOR THE SUCCESS OF THE CLIMATE
TRANSITION
Copper and other minerals produced by KGHM are necessary for successful energy transition and achieving climate
neutrality by the European Union. More information is given in the subsection 3.2. “
Importance of copper for energy
transition” of this Non-Financial Statement.
However, the scopes of Annex I and Annex II of Delegated Regulation 2021/2139 do not cover copper production, including
both primary and the secondary sources. As a result, it is not possible to include in the taxonomy disclosures for 2022 the
core economic activity conducted by KGHM Polska Miedź S.A. Group - which, as a type of activity directly determines the
success of the energy transition in the European Union.
Consequently, it is only to a limited extent that the key performance indicators of the KGHM Polska Miedź S.A. Group
correspond to taxonomy-eligible activities under the first two environmental objectives: climate change mitigation and
climate change adaptation. It should however be noted that the list of Taxonomy-eligible activities will be growing as the
European Commission publishes technical screening criteria for the four remaining environmental objectives: sustainable
use and protection of water and marine resources, transition to a circular economy, pollution prevention and control,
protection and restoration of biodiversity and ecosystems.
At the same time, since 2022, together with other representatives of the sector we have been undertaking actions in support
of including copper production in various types of the EU Taxonomy-eligible activities, which will reflect the actual role of
the sector in the transition of the economy towards sustainability, especially in comparison with the other metal production
industries already included in the Taxonomy. KGHM participates directly in the work of the sector team (ST2B) for mining
at the Sustainable Finance Platform and also collaborates with the International Copper Association, Euromines,
Eurometaux and BSP (Business & Science Poland) in the preparation of materials, data and opinions submitted to the
Sustainable Finance Platform. One indication of the validity of the actions taken is the inclusion of Manufacture of copper
activities in the report “Platform on Sustainable Finance: Technical Working Group. Supplementary: Methodology and
Technical Screening Criteria”, published in October 2022 by the European Commission's advisory body.
CONSOLIDATED DISCLOSURES OF THE KGHM POLSKA MIEDŹ S.A. GROUP
Characteristics of the KGHM Polska Miedź S.A. Group’s Taxonomy-eligible activities, based on the description of activities
identified in Delegated Regulation 2022/2139 in Annex I and II, taking into account Delegated Regulation 2022/1214:
− 3.1 Manufacture of renewable energy technologies:
Purchases from the economic activity (CAPEX and OPEX),
− 3.3 Manufacture of low carbon technologies for transport:
The revenue achieved from economic activity - the item discloses turnover and the related CAPEX and OPE, as well
as purchases form the economic activity (OPEX),
− 3.6 Manufacture of other low carbon technologies:
Purchases from the economic activity (CAPEX and OPEX),
− 3.7 Manufacture of cement:
Purchases from the economic activity (CAPEX and OPEX),
− 3.9 Manufacture of iron and steel
Purchases from the economic activity (CAPEX and OPEX),
− 4.9 Transmission and distribution of electricity
The revenue achieved from the economic activity - the item discloses turnover and the related CAPEX and OPEX, as
well as purchases form the economic activity (CAPEX and OPEX),
− 4.15 District heating/cooling distribution
The revenue achieved from the economic activity - the item discloses turnover and the related CAPEX and OPEX, as
well as purchases form the economic activity (CAPEX and OPEX),
− 4.25 Production of heat/cool using waste heat:
The revenue achieved from the economic activity - the item discloses turnover and the related OPEX,
− 4.30 High-efficiency co-generation of heat/cooling and electricity from gaseous fossil fuels:
Purchases from the economic activity (CAPEX and OPEX),
− 5.1 Construction, extension and operation of water collection, treatment and supply systems:
The revenue achieved from the economic activity - the item discloses turnover and the related CAPEX and OPEX, as
well as purchases form the economic activity (CAPEX and OPEX),
− 5.3 Construction, extension and operation of waste water collection and treatment:
The revenue achieved from the economic activity - the item discloses turnover and the related CAPEX and OPEX, as
well as purchases form the economic activity (CAPEX and OPEX),
− 5.5 Collection and transport of non-hazardous waste in source segregated fractions:
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 157
the Company and the Group in 2022 – translation from the original Polish version
The revenue achieved from the economic activity - the item discloses turnover and the related CAPEX and OPEX,
− 5.9 Material recovery from non-hazardous waste:
The revenue achieved from the economic activity - the item discloses turnover and the related CAPEX and OPEX,
− 6.2 Freight rail transport:
The revenue achieved from the economic activity - the item discloses turnover and the related CAPEX and OPEX, as
well as purchases form the economic activity (CAPEX and OPEX),
− 6.3 Urban and suburban transport, road passenger transport:
The revenue achieved from the economic activity - the item discloses turnover and the related OPEX,
− 6.5 Transport by motorbikes, passenger cars and light commercial vehicles:
Purchases from the economic activity (CAPEX and OPEX),
− 6.6 Freight transport services by road:
Purchases from the economic activity (CAPEX and OPEX),
− 6.14 Infrastructure for rail transport:
The revenue achieved from economic activity - the item discloses turnover and the related CAPEX and OPEX, as well
as purchases form the economic activity (OPEX),
− 7.1 Construction of new buildings:
Purchases from the economic activity (CAPEX and OPEX),
− 7.2 Renovation of existing buildings:
Purchases from the economic activity (CAPEX and OPEX),
− 7.3 Installation, maintenance and repair of energy efficiency equipment:
Purchases from the economic activity (CAPEX and OPEX),
− 7.5 Installation, maintenance and repair of instruments and devices for measuring, regulation and controlling energy
performance of buildings:
Purchases from the economic activity (OPEX),
− 7.7 Acquisition and ownership of buildings:
The revenue achieved from the economic activity - the item discloses turnover,
− 8.1 Data processing, hosting and related activities:
The revenue achieved from the economic activity - the item discloses turnover and the related CAPEX and OPEX, as
well as purchases form the economic activity (CAPEX and OPEX).
The disclosures aligned with the Taxonomy of the KGHM Polska Miedź S.A. Group for 2022, prepared in accordance with
the methodology discussed at the beginning of this chapter of the Report and in compliance with Annex II to Delegated
Regulation 2021/2178, are presented in the following tables as well as in the descriptions below them.
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 158
the Company and the Group in 2022 – translation from the original Polish version
Table 48. Percentage share of turnover in products or services related to Taxonomy-eligible economic activity in 2022
Criteria concerning material
contribution
Criteria concerning the
“does not cause serious
harm” principle
Economic activity (1)
Code or codes (2)
Turnover (absolute value) (3)
Turnover share (4)
Climate change mitigation (5)
Climate change adaptation (6)
Water and marine resources (7)
Circular economy (8)
Pollution (9)
Biodiversity and ecosystems (10)
Climate change mitigation (11)
Climate change adaptation (12)
Water and marine resources (13)
Circular economy (14)
Pollution (15)
Biodiversity and ecosystems (16)
Minimum safeguards (17)
Percentage share of Taxonomy-
compliant turnover, year N (18)
Percentage share of Taxonomy-
compliant turnover, year N-1 (19)
Category (supporting activities) (20)
Category (“ transition activities” ) (21)
PLN
million
% % % % % % %
Yes/
No
Yes/
No
Yes/
No
Yes/
No
Yes/
No
Yes/
No
Yes/
No
Percentage
Percentage
E T
A. TAXONOMY
-ELIGIBLE ACTIVITY
A.1 Types of environmentally sustainable activities (Taxonomy
-compliant)
4.25 Generation of heat/cool using waste heat
4.25 0.9 0.00% 0.00%
Yes
Yes Yes Yes Yes 0.00% no data
5.1 Construction, extension and operation of water collection, treatment and
supply systems
5.1 3.2 0.01% 0.01%
Yes
Yes
Yes Yes 0.01% no data
5.5 Collection and transport of non-hazardous waste in source segregated
fractions
5.5 311.8 0.92% 0.92%
Yes
Yes
Yes 0.92% no data
5.9 Recovering materials from non-hazardous waste
5.9 24.6 0.07% 0.07%
Yes
Yes Yes 0.07% no data
Turnover from environmentally sustainable activities
(Taxonomy-compliant) (A.1)
340.5 1.01% 1.01%
1.01% no data
A.2 Taxonomy
-eligible but not environmentally sustainable activity (activities non-compliant with the Taxonomy)
3.3 Manufacture of low carbon technologies for transport
3.3 19.1 0.06%
4.9 Transmission and distribution of electricity
4.9 23.5 0.07%
4.15 District heating/cooling systems
4.15 70.5 0.21%
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 159
the Company and the Group in 2022 – translation from the original Polish version
5.3 Construction, extension and operation of waste water collection and
treatment
5.3 0.7 0.00%
6.2 Freight rail transport
6.2 50.6 0.15%
6.3 Urban and suburban transport, road passenger transport
6.3 2.4 0.01%
6.14 Infrastructure for rail transport
6.14 1.1 0.00%
7.7 Acquisition and ownership of buildings
7.7 2.9 0.01%
8.1 Data processing, hosting and related activities
8.1 14.9 0.04%
Turnover from Taxonomy
-eligible but not environmentally
sustainable activity (activities non
-compliant with the
Taxonomy) (A.2)
185.5 0.55%
0.00%
Total (A.1 + A.2)
526.0 1.55%
1.01%
B. TAXONOMY NON
-ELIGIBLE ACTIVITY
Turnover from Taxonomy non
-eligible activities (B)
33 321.3
98.45%
TOTAL (A + B)
33 847.3
100%
The total value of eligible turnover was PLN 526.0 million, of which activities with the turnover value of PLN 340.5 million were defined as the turnover of Taxonomy-eligible activities.
For the activities listed in the table, all of the assigned eligible turnover pertains to revenue from contracts with customers.
For the calculation of the indicators, the denominator value is the turnover value consistent with the value given in the Consolidated annual financial statements of the KGHM Polska Miedź
S.A. Group, in Part 2 “Activity segments and revenue information”.
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 160
the Company and the Group in 2022 – translation from the original Polish version
Table 49. Percentage share of capital expenditure in products or services related to a Taxonomy-eligible economic activity in 2022
Criteria concerning material
contribution
Criteria concerning the
“does not cause serious
harm” principle
Economic activity (1)
Code or codes (2)
Turnover (absolute value) (3)
Turnover share (%) (4)
Climate change mitigation (5)
Climate change adaptation (6)
Water and marine resources (7)
Circular economy (8)
Pollution (9)
Biodiversity and ecosystems (10)
Climate change mitigation (11)
Climate change adaptation (12)
Water and marine resources (13)
Circular economy (14)
Pollution (15)
Biodiversity and ecosystems (16)
Minimum safeguards (17)
Percentage share of Taxonomy-
compliant turnover, year N (18)
Percentage share of Taxonomy-
compliant turnover, year N-1 (19)
Category (supporting activities) (20)
Category ("transition activities” )
(21)
PLN million
% % % % % % %
Yes/
No
Yes/
No
Yes/
No
Yes/
No
Yes/
No
Yes/
No
Yes/
No
Percentage
Percentage
E T
A. TAXONOMY
-ELIGIBLE ACTIVITY
A.1 Types of environmentally sustainable activities (Taxonomy
-compliant)
5.1 Construction, extension and operation of water collection, treatment and
supply systems
5.1 3.1 0.08% 0.08%
Yes
Yes
Yes Yes 0.08% no data
5.5 Collection and transport of non-hazardous waste in source segregated
fractions
5.5 3.0 0.07% 0.07%
Yes
Yes Yes 0.07% no data
5.9
Recovering materials from non-hazardous waste 5.9 2.7 0.07% 0.07%
Yes
Yes Yes 0.07% no data
Capital expenditure for environmentally sustainable activities
(Taxonomy-compliant) (A.1)
8.8 0.22% 0.22%
0.22% no data
A.2 Taxonomy-eligible but not environmentally sustainable activity (activities non-compliant with the Taxonomy)
3.1
Manufacture of renewable energy technologies 3.1 2.9 0.07%
3.3 Manufacture of low carbon technologies for transport
3.3 0.3 0.01%
3.6 Manufacture of other low carbon technologies
3.6 7.1 0.17%
3.7 Manufacture of cement
3.7 0.1 0.00%
3.9 Manufacture of iron and steel
3.9 0.2 0.00%
4.9 Transmission and distribution of electricity
4.9 14.2 0.35%
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 161
the Company and the Group in 2022 – translation from the original Polish version
4.15 District heating/cooling distribution
4.15 28.6 0.70%
4.30 High
-efficiency co-
generation of heat/cooling and electricity from gaseous
fossil fuels
4.30 15.9 0.39%
5.1 Construction, extension and operation of water collection, treatment and
supply systems
5.1 11.7 0.28%
5.3 Construction, extension and operation of waste water collection and
treatment
5.3 8.1 0.20%
6.2 Freight rail transport
6.2 43.9 1.07%
6.5 Transport by motorbikes, passenger cars and light commercial vehicles
6.5 0.4 0.01%
6.6 Freight transport services by road
6.6 0.3 0.01%
6.14 Infrastructure for rail transport
6.14 3.2 0.08%
7.1 Construction of new buildings
7.1 7.3 0.18%
7.2 Renovation of existing buildings
7.2 36.7 0.89%
7.3 Installation, maintenance and repair of energy efficiency equipment
7.3 22.5 0.55%
8.1 Data processing, hosting and related activities
8.1 2.4 0.06%
Turnover from Taxonomy
-eligible but not environmentally
sustainable activity (activities non
-compliant with the
Taxonomy) (A.2)
205.5 5.01%
0.00%
Total (A.1 + A.2)
214.3 5.23%
0.22%
B. TAXONOMY NON
-ELIGIBLE ACTIVITY
Capital expenditure from Taxonomy non
-eligible activities (B)
3 887.5 94.77%
TOTAL (A + B)
4 101.8 100%
The total value of eligible turnover was PLN 214.3 million, of which activities with the turnover value of PLN 8.8 million were defined as the capital expenditure of Taxonomy-eligible activities.
The values recognised as CAPEX pertain only to direct expenditure on property, plant and equipment and intangible assets, i.e. expenditure in the area of purchases, internally generated
assets, capitalisation of stripping costs, receiving of assets under new leasing agreements and amendment of the existing leasing agreements (in 2022, there are no increases resulting from
acquisition of subsidiaries).
The CAPEX denominator comprises the items disclosed and described in the 2022 Consolidated financial statements of the KGHM Polska Miedź S.A. Group, in Part 9 “Non-current assets and
related liabilities”, in note 9.1 “Mining and metallurgical property, plant and equipment and intangible assets”, and in note 9.2 “Other property, plant and equipment and intangible assets”.
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 162
the Company and the Group in 2022 – translation from the original Polish version
Table 50. Percentage share of capital expenditure in products or services related to Taxonomy-eligible economic activity in 2022.
Criteria concerning material
contribution
Criteria concerning the
“does not cause serious
harm” principle
Economic activity (1)
Code or codes (2)
Turnover (absolute value) (3)
Turnover share (4)
Climate change mitigation (5)
Climate change adaptation (6)
Water and marine resources (7)
Circular economy (8)
Pollution (9)
Biodiversity and ecosystems (10)
Climate change mitigation (11)
Climate change adaptation (12)
Water and marine resources (13)
Circular economy (14)
Pollution (15)
Biodiversity and ecosystems (16)
Minimum safeguards (17)
Percentage share of Taxonomy-
compliant turnover, year N (18)
Percentage share of Taxonomy-
compliant turnover, year N-1 (19)
Category (supporting activities) (20)
Category (“ transition activities” ) (21)
PLN
million
% % % % % % %
Yes/
No
Yes/
No
Yes/
No
Yes/
No
Yes/
No
Yes/
No
Yes/
No
Percentage
Percentage
E T
A. TAXONOMY
-ELIGIBLE ACTIVITY
A.1 Types of environmentally sustainable activities (Taxonomy
-compliant)
4.25 Production of heat/cool using waste heat
4.25 10.0 0.54% 0.54%
Yes
Yes Yes
Yes Yes 0.54% no data
5.1 Construction, extension and operation of water collection, treatment and
supply systems
5.1 9.4 0.51% 0.51%
Yes
Yes Yes Yes 0.51% no data
5.5 Collection and transport of non-hazardous waste in source segregated
fractions
5.5 8.8 0.48% 0.48%
Yes
Yes Yes 0.48% no data.
5.9 Material recovery from non
-hazardous waste: 5.9 2.4 0.13% 0.13%
Yes
Yes Yes 0.13% no data
6.2 Freight rail transport
6.2 4.8 0.26% 0.26%
Yes
Yes Yes
Yes 0.26% no data
Capital expenditure for environmentally sustainable activities
(Taxonomy-compliant) (A.1)
35.4 1.91% 1.91%
1.91% no data.
A.2 Taxonomy
-eligible but not environmentally sustainable activity (activities non-compliant with the Taxonomy)
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 163
the Company and the Group in 2022 – translation from the original Polish version
3.1 Manufacture of renewable energy
technologies 3.1 0.2 0.01%
3.3 Manufacture of low carbon technologies for transport
3.3 0.8 0.04%
3.6 Manufacture of other low carbon technologies
3.6 0.2 0.01%
3.7 Manufacture of cement
3.7 0.1 0.00%
3.9 Manufacture of iron and steel
3.9 1.4 0.08%
4.9 Transmission and distribution of electricity
4.9 11.7 0.63%
4.15 District heating/cooling distribution
4.15 10.2 0.55%
4.30 High-efficiency co-generation of heat/cooling and electricity from gaseous
fossil fuels
4.30 20.4 1.10%
5.1 Construction, extension and operation of water collection, treatment and
supply systems
5.1 3.0 0.16%
5.3 Construction, extension and operation of waste water collection and
treatment
5.3 1.9 0.10%
6.2 Freight rail transport
6.2 37.0 2.00%
6.3 Urban and suburban transport, road passenger transport
6.3 0.5 0.03%
6.5 Transport by motorbikes, passenger cars and light commercial vehicles
6.5 0.1 0.01%
6.6 Freight transport services by road
6.6 1.0 0.06%
6.14 Infrastructure for rail transport
6.14 12.1 0.65%
7.1 Construction of new buildings
7.1 0.1 0.00%
7.2 Renovation of existing buildings
7.2 29.0 1.56%
7.3 Installation, maintenance and repair of energy efficiency equipment
7.3 1.9 0.10%
7.5 Installation, maintenance and repair of instruments and devices for
measuring, regulation and controlling energy performance of buildings
7.5 0.0 0.00%
8.1 Data processing, hosting and related activities
8.1 10.5 0.57%
Operating expenditure from taxonomy
-
eligible but not environmentally
sustainable activity (activities non
-compliant with the Taxonomy) (A.2)
142.0 7.67%
0.00%
Total (A.1 + A.2)
177.4 9.58%
1.91%
B. TAXONOMY NON
-ELIGIBLE ACTIVITY
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 164
the Company and the Group in 2022 – translation from the original Polish version
Operating expenditure from Taxonomy non
-eligible activities (B)
1 673.5 90.42%
TOTAL (A + B)
1 850.9 100%
The total value of eligible operating expenditure was PLN 177.4 million, of which activities related to operating expenditure with the value of PLN 35.4 million were defined as the expenditure
of Taxonomy-eligible activities.
The OPEX indicator includes expenditure on on-going operation of property, plant and equipment, i.e. the expenditure incurred on renovations and maintenance of the individual items of
property, plant and equipment. In accordance with the definition of OPEX, the indicator also incorporates possible costs in the category of research and development and short-term leasing
excluded from CAPEX.
Annex No. 4 to this Report presents the disclosure in accordance with Annex III of Delegated Regulation 2022/1214, supplementing Delegated Regulation 2021/2178 with Annex XII, concerning
standard templates for the disclosure of information referred to in Article 8(6) and (7) - i.e. for activities related to nuclear power and natural gas.
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 165
the Company and the Group in 2022 – translation from the original Polish version
4 EMPLOYEES AND SOCIETY
Employees
Organisational
culture
Communication
with employees
Trade unions CSR Foundation
4.1 KGHM AS A RESPONSIBLE EMPLOYER – RESPONSIBILITY IN THE WORKPLACE (APPROACH TO
MANAGING EMPLOYEE ISSUES)
GRI 3-3 material topic: Good workplaces
KGHM Polska Miedź S.A. builds its business potential and competitive advantage by focusing on people. The employees of
KGHM are the foundation without which the Company would not be able to operate successfully. In KGHM, equal attention
is paid to the local environment, in terms of climate and social aspects, based on order and balanced activity with other
elements which constitute the world order.
Main regulations underlying the management of employee issues at KGHM Polska Miedź S.A.:
Work Regulations in KGHM POLSKA MIEDŹ S.A.
The Work Regulations define the organisation and management of the labour process as well as the related rights and
obligations of the employer and employees. They define the manner and rules of accounting for working time, and granting
of holidays, as well as the time and manner of remuneration They define rules of occupational health and safety. Moreover,
they describe the adopted practice with regard to rewards and distinctions, as well as punishments used for infringements
of order and work discipline.
International mobility Policy in the KGHM POLSKA MIEDŹ S.A. Group
Following the acquisition of assets outside Poland, since 2015 KGHM Polska Miedź S.A. has implemented an employee
mobility program. In order to unify the rules for the international delegation of employees and improve the functioning of
the mobility process, the International Mobility Policy in the KGHM Polska Miedź S.A. Group was introduced on 27 April
2020, which is in force together with the Procedure for Implementing the International Mobility Policy in the KGHM Polska
Miedź S.A. Group.
In June 2022, the Employee Secondment Agreement between the KGHM Polska Miedź S.A. Group and Sierra Gorda Sociedad
Contractual Minera was updated due to changing business needs, in terms of the support of Sierra Gorda SCM by
employees delegated from the KGHM Group and the need to protect companies of the Group against a permanent staff
outflow.
The delegation of employees to companies in Chile, Canada and the US represents an investment of major significance for
the KGHM Polska Miedź S.A. Group. Thanks to this, not only is the local requirement for personnel satisfied, but the
employee’s professional potential is also developed, which increases the Company’s competitive edge.
In 2022, the international mobility process covered 10 employees of the KGHM Polska Miedź S.A. Group.
Key initiatives
As a global company, KGHM provides a unique opportunity for people who want to gain access to cutting-edge technology
and solutions. KGHM offers the opportunity to work in specialised project teams, giving employees the opportunity to share
knowledge and experience within the company's structures.
Table 51. Key HR projects implemented by KGHM Polska Miedź S.A. in 2022.
“Competent in the
sector” program
Under the Program, since 2018 KGHM has been supporting education in the professions which are most
important for Lower Silesia and which are also of key significance for the company. The Program covers 9
schools from such towns as: Legnica, Bolesławiec, Lubin, Chojnów, Polkowice and Głogów. In the 2021/2022
school year, more than 1 900 students attended educational classes and 250 students carried out practical
vocational training in nine of the Divisions of KGHM Polska Miedź S.A.
Since the inception of the Program, educational grants have been paid to the best students in the amount of
PLN 603 000, funds in the amount of PLN 693 533 have been donated to purchase additional equipment and
furnishings for school workshops and classrooms for teaching professional subjects, while 312 graduates were
employed in Divisions of KGHM Polska Miedź S.A.
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 166
the Company and the Group in 2022 – translation from the original Polish version
As part of the “Competent in the sector” Program, conferences, workshops and travel events were organised
and materials were developed to promote, among others, learning and the professional and physical activity
of young people.
Digitisation of HR
processes
In 2022, while increasing the effectiveness of HR activities, many improvements were introduced, with the main
aim of speeding up and simplifying the processes related to handling workstation work cards, secondments
and recruitment processes:
Moreover, in 2022:
− a new working environment based on IT tools was implemented and an extensive development program
dedicated to KGHM employees and managers was initiated. The activities are aimed at developing the
skills of effective use of available applications.
− work was launched on an electronic process for the adaptation of newly-recruited staff through the
delivery of courses, hosted on the Learning Management System 365 entitled Onboarding.
Newsletter for
Leaders
Mailing of the newsletter initiated in 2020 was continued in key topics dedicated to the management staff. The
main target group of the newsletter are people in line management positions in the production area.
Engagement survey In 2022, an engagement survey was carried out in KGHM for the second time, covering the
Head Office and Divisions of the Company. Participation was at the level of 71.6%. The project's slogan, Let's
talk about the company as copper connects us, invited employees to a dialogue on the working environment. The
survey was combined with a charity action, i.e. the completed questionnaire was a brick that KGHM donated
for charity purposes. The strategic partner of the survey was again the University of Warsaw.
Psychological
support for
employees
The project launched in response to employee needs reported in the Company's 2021 engagement survey. The
psychological support is a benefit dedicated to all employees and their relatives comprising: psychological
support for an employee in the form of 1:1 sessions, couples and family therapy, parenting consultations and
supervisions for managers.
InvestCUp The project, dedicated to approximately 500 KGHM employees involved in the implementation of investment
projects in the Company, was launched in October 2022. The aim of the InvestCUp initiative is to increase and
consolidate existing competence, exchange experience and good practices in the area of investment project
implementation.
Executive MBA in
Innovation
Management
Development
Program
The implementation of the Executive MBA in Innovation Management Development Program was completed,
as one of the elements of the idea of building and developing the professional competence of KGHM's
management staff. It was an original program of the exclusive partner – IESE Business School.
Post-graduate
studies - Copper
Leaders
The second edition of the postgraduate management studies - Copper Leaders II - was launched. Like the first
edition, the project was addressed to middle-level management staff.
Leader Academy -
KGHM Giants
Following a pilot project carried out in 2021/2022, the first edition of the program dedicated to the lowest-level
managers from the KGHM Head Office and Divisions was launched. Development of leadership competence
has a direct impact on employee performance, and translates into organisational climate and business results
of the Company.
Onboarding training
program for new
employees
The onboarding training program launched in 2020 was continued, consisting of periodic training courses (also
online) for newly-hired employees for them to get to know the company, integrate quickly into the organisation
and proceed smoothly to perform tasks. The training addresses topics related to the Mission, Vision and
Strategy of the Company, the object of activity and the production process, the rules of movement
around the organisation, HR matters.
Management of
career paths and
recruitment in
KGHM Polska Miedź
S.A.
KGHM Polska Miedź S.A. secures highly qualified personnel through the process of internal and external
recruitment. It protects the brand of the first choice employer for current and prospective employees.
In a dialogue with the labour market, the image of a good employer is strengthened by emphasising in the job
offers the organisational culture based on values and benefits for employees.
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 167
the Company and the Group in 2022 – translation from the original Polish version
4.2 STRUCTURE OF EMPLOYMENT
GRI 2-7
GRI 2-8
GRI 401-1
THE KGHM GROUP
In 2022, the Group employed 34 478 people, which means an increase of 0.6% compared to the previous year. The
employment structure is shown in the table below:
Table 52. Average employment in the KGHM Polska Miedź S.A. Group in the years 2021-2022
2022
2021
Change (%)
KGHM Polska Miedź S.A.
18 680
18 519
+0.9
KGHM INTERNATIONAL LTD.
2 161
2 236
(-3.4)
Sierra Gorda S.C.M.
31
824
785
+5
Domestic Group companies
12 804
12 737
+0.5
Other Group companies
9
9
-
Total
34 478
34 286
+0.6
Chart 26. Employment structure in the KGHM Polska Miedź S.A. Group in 2022
32
KGHM Polska Miedź S.A.
In 2022, employment in KGHM Polska Miedź S.A. was higher than in the previous year. Employment at the end of 2022
amounted to 18 909 people, and was 1.7% higher than at the end of the prior year. Average annual employment in KGHM
Polska Miedź S.A. was 18 680.
Table 53. Average employment in KGHM Polska Miedź S.A. in the years 2021-2022
2022
2021
Change (%)
Mines
12 521
12 453
+0.5
Metallurgical plants
3 616
3 607
+0.3
Other divisions
2 543
2 459
+3.4
KGHM Polska Miedź S.A.
18 680
18 519
+0.9
Domestic companies
In 2022, the average employment in the companies of the KGHM Polska Miedź S.A. Group in Poland increased slightly as
compared to 2021 by 67 FTEs (i.e. 0.5%). The change mainly affected white-collar positions.
31
Sierra Gorda S.C.M. - employment proportional to share in the company (55%)
32
As above
KGHM Polska Miedź S.A.
54%
KGHM INTERNATIONAL
LTD.
6%
Sierra Gorda S.C.M.
2%
Domestic Group companies
37%
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 168
the Company and the Group in 2022 – translation from the original Polish version
International companies
In 2022, average employment in the international companies of the KGHM Polska Miedź S.A. Group decreased by 36 FTEs
(or by 1.2%) as compared to 2021, while a decrease of 3.4% was recorded in the KGHM INTERNATIONAL LTD. Group
companies and an increase of 5% in the joint venture Sierra Gorda S.C.M.
GRI 2-7
Table 54. Total number of employees of the KGHM Polska Miedź S.A. Group by type of employment contract and by
gender (as at 31 December 2022)
for indefinite period
for defined period
COMPANY
F
M
F
M
Total
KGHM Polska Miedź S.A.
1 280
16 219
98
1 312
18 909
KGHM INTERNATIONAL LTD.
250
1 500
16
468
2 234
Other Companies
3 736
7 016
670
1 195
12 617
KGHM Polska Miedź S.A. Group
5 266
24 735
784
2 975
33 760
Table 55. Total number of employees of the KGHM Polska Miedź S.A. Group by employment type (full-time or part-time)
and gender (as at 31 December 2022)
full-time
part-time
COMPANY
F
M
F
M
Total
KGHM Polska Miedź S.A.
1 365 17 514 13 17 18 909
KGHM International LTD.
264
1 961
2
7
2 234
Other Companies
4 345 8 170 61 41 12 617
KGHM Polska Miedź S.A. Group
5 974 27 645 76 65 33 760
GRI 2-8
Table 56. Total number of persons performing work for KGHM Polska Miedź S.A. and the KGHM Polska Miedź S.A. Group
who are not their employees (as at 31 December 2022)
Company 2022
KGHM Polska Miedź S.A.
241
KGHM INTERNATIONAL LTD.
328
Other Companies
2 138
KGHM Polska Miedź S.A. Group
2 707
Persons who performed work for the Group without being employed under an employment contract, provided services,
among others, in the scope of management, cleaning, renovation, design and construction, health and safety or equipment
maintenance services (management service contracts, civil law contracts, business activities). More than 1 500 people
perform work for the spa companies and the Zagłębie Lubin sports club. This is mainly medical staff, persons offering legal,
IT and cleaning services and professional athletes.
Table 57. Total number of people working for the KGHM Polska Miedź S.A. Group (GRI indicators 2-8 and 2-7 combined)
(as at 31 December 2022)
Company
Employees
Other persons
performing work
for KGHM
Total
KGHM Polska Miedź S.A.
18 909
241
19 150
KGHM INTERNATIONAL LTD.
2 234
328
2 562
Other Companies
12 617
2 138
14 755
KGHM Polska Miedź S.A. Group
33 760
2 707
36 467
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 169
the Company and the Group in 2022 – translation from the original Polish version
GRI 401-1
Table 58. New employee hires and employee turnover by gender in the KGHM Polska Miedź S.A. Group in the years 2021-
2022
Number of employees (headcount) Number of new employee hires
Percentage of
new employee hires
Group
KGHM Polska
Miedź S.A.
Group
KGHM Polska
Miedź S.A.
Group
KGHM Polska
Miedź S.A.
2022
F
6 050
1 378
737
93
12.2%
6.8%
M
27 710
17 531
2 743
1 028
9.9%
5.9%
Total
33 760
18 909
3 480
1 121
10.3%
5.9%
2021
F
6 208
1 333
774
96
12.5%
7.2%
M
27 757
17 268
2 776
945
10%
5.5%
Total
33 965
18 601
3 550
1 041
10.5%
5.6%
Table 59. Number of employee departures by gender in the KGHM Polska Miedź S.A. Group in the years 2021-2022
Number of employees (headcount)
Number of employee departures
Percentage of employee departures
Group
KGHM Polska
Miedź S.A.
Group
KGHM Polska
Miedź S.A.
Group
KGHM Polska
Miedź S.A.
2022
F
6 050
1 378
641
48
10.6%
3.5%
M
27 710
17 531
2 520
768
9.1%
4.4%
Total
33 760
18 909
3 161
816
9.4%
4.3%
2021
F
6 208
1 333
656
80
10.6%
6%
M
27 757
17 268
2 520
891
9.1%
5.2%
Total
33 965
18 601
3 176
971
9.4%
5.2%
Table 60. Number of new employee hires by age in the KGHM Polska Miedź S.A. Group in the years 2021-2022
Number of employees
(per person)
Number of new employee hires Percentage of new employee hires
age Group
KGHM Polska
Miedź S.A.
Group
KGHM Polska
Miedź S.A.
Group
KGHM Polska
Miedź S.A.
2022
<30
4 404
2 525
1 220
477
27.7%
18.9%
30-50
21 849
13 312
1 881
599
8.6%
4.5%
50+
7 507
3 072
381
45
5.1%
1.5%
2021
<30
4 594
2 537
1 282
458
27.9%
18.1%
30-51
21 725
13 049
1 806
541
8.3%
4.1%
50+
7 646
3 015
449
42
5.9%
1.4%
Table 61. Number of employee departures by age
Number of employees
(per person)
Number of employee departures Percentage of employee departures
age
Group
KGHM Polska
Miedź S.A.
Group
KGHM Polska
Miedź S.A.
Group
KGHM Polska
Miedź S.A.
2022
<30
4 404
2 525
502
66
11.4%
2.6%
30-50
21 849
13 312
1 366
343
6.3%
2.6%
50+
7 507
3 072
1 078
407
14.4%
13.2%
2021
<30
4 594
2 537
551
74
12%
2.9%
30-51
21 725
13 049
1 425
431
6.6%
3.3%
50+
7 646
3 015
1 184
466
15.5%
15.5%
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 170
the Company and the Group in 2022 – translation from the original Polish version
4.3 ORGANISATIONAL CULTURE
GRI 2-26
KGHM VALUES
Zero-harm, teamwork, accountability, courage and result-driven are values that build company cohesion and set
behavioural patterns. KGHM’s values bind all employees, regardless of their position in the organisation or nationality, and
are a guidepost for all decisions and actions we take.
The description of individual values underpinning the Company's organisational culture is presented in Chapter 2.
Corporate governance in subsection 2.7. Ethics / ethical foundation
.
Values, such as zero harm, teamwork and accountability, have always been important in our company, one with over 60
years of traditions. Today, KGHM is a results-driven global company, and with courage looks towards the future. Our values
form the organisation's DNA, facilitate the decision making process of today and build long-term strategies of the future.
MANAGEMENT OF RISKS IN THIS AREA (REGULATIONS, RULES OF SUBMITTING COMPLAINTS AND REQUESTS)
The corporate risk management process aims to ensure that key risks have been identified, assessed and analysed and
based on their assessment, appropriate Risk Response Plans have been prepared and Corrective Actions are implemented.
Corporate Risk Management Policy
The Corporate Risk Management Policy in the KGHM Polska Miedź S.A. Group is a document describing the approach,
defining the basic principles and establishing the corporate risk management process in the KGHM Polska Miedź S.A. Group.
The holistic approach to risk management is consistent with the growth strategy, continuous aspiration for operational
excellence and with the principles of sustainable and responsible business. It has been designed to support the Company
in building a resilient corporate structure.
Risk management objectives:
− ensuring the creation and protection of shareholder value by establishing a consistent approach to the identification,
assessment, analysis of risks and implementation of responses to key risks,
− protecting the life and health of employees, the environment and the reputation of the brand,
− supporting the achievement of business goals through the implementation of early warning tools for opportunities and
threats
− ensuring strong support for decision-making at all levels of the organisation,
− building an organisation that is aware of the risks it takes and strives for continuous improvement.
4.4 COMMUNICATION WITH EMPLOYEES
GRI 2-29
INTERNAL COMMUNICATION OF KGHM POLSKA MIEDŹ S.A.
The main channels of internal communication in KGHM Polska Miedź S.A. include: KGHM's Intranet and Extranet, the
internal KGHM TV and the biweekly CUrier. All kinds of traditional media, such as billboards, posters, rollups, etc., also
support communication activities.
Intranet/Extranet
The internal portal for employees of KGHM Polska Miedź S.A. and certain companies of the KGHM Polska Miedź S.A. Group
serves as a collection of the most important information, announcements, but also as a portal directing to all necessary
business applications, business areas or internal normative acts. Available to all employees of KGHM Polska Miedź S.A.,
with a distinction made between the Intranet - intended for office employees holding company e-mail accounts and the
Extranet - intended for production employees without company e-mail accounts.
Owing to access to the Intra/Extranet, employees can, among others, develop their salaries, have access to electronic PIT-
11 tax information, in some Divisions they can request days off, check their days off or take advantage of possible benefits.
In addition, the portals are the source of a great deal of information divided into sections.
KGHM TV
KGHM TV - or in-house television - is a combined system of media/TV screens on which various types of information relating
to KGHM are displayed, including announcements on company life, industry information, through company news,
management announcements, information on health and recreation programs, awards for employees, profiles and
achievements of Division employees and finally company events.
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 171
the Company and the Group in 2022 – translation from the original Polish version
KGHM TV reaches a large group of employees who do not have access to the Intranet/Extranet. TV monitors are installed
in common spaces such as canteens, lamp rooms and changing rooms.
„CUrier”
The internal newspaper of KGHM Polska Miedź S.A. is published every two weeks, with a circulation of 15 thousand copies.
It is distributed in all Divisions of KGHM.
In 2022, 22 issues were published, including a special supplement on Human Rights Policy at KGHM. An electronic version
of the magazine is published on the Intranet and Extranet. Moreover, magazines are distributed at the entrances to KGHM
plants.
Due to the specific nature of the company, i.e. the dispersion of the plants that make up the Company and the lack of
computer workstations/email addresses of a large group of employees, the magazine is an additional and effective tool to
reach out to the workforce with information and campaigns, particularly in the smelters, mines and ore enrichment plants.
Most important internal information and education campaigns carried out in 2022
− Keeping KGHM employees informed of the strategic activities of the Management Board.
− Activities to develop employees' identification with the company by providing information on production results,
additional cash payments or benefits offered to them.
− Zero accidents at work - articles and educational materials on safe behaviour, adherence to the OHS Golden Rules
and demonstrating measures and mechanisms in place to improve occupational safety.
− Promotion of vaccination against COVID-19 - organisation of mobile vaccination points in KGHM Divisions in
cooperation with MCZ S.A., educational actions, articles and materials presenting profiles of medical specialists
and interviews with them, publication of stories of KGHM employees who suffered from COVID-19. For promotion
purposes, walls and rollups with the slogan: “I am vaccinated” and log-in screens encouraging vaccination were
also used.
− Education and promotion of the program implemented in KGHM/Digital Place. Activities increasing employees'
knowledge of the new tool were carried out with a group of Ambassadors from KGHM Divisions dedicated to the
project (approximately 300 employees).
− Awareness campaigns on cyber-security, alcohol and drug prevention, promoting labour force participation,
Climate Policy and others of relevance to KGHM employees.
ENGAGEMENT SURVEY
The slogan “Let's talk about the company because copper connects us” invited employees to a dialogue about the working
environment in the second edition of the engagement survey. The organisational discourse running from 15 November to
16 December 2022 made it possible to diagnose areas requiring change and those that represent the strengths of the
Company's organisational culture. The 71.6% share of respondents provided a clearer picture of employees' perceptions
of the company, the prevailing atmosphere within the company and an opportunity to suggest future actions in areas that
need more attention.
We invited employees to a dialogue through a questionnaire at the launch of the project in 2021, which allowed us to focus
on key areas in KGHM. A number of activities have been launched based on the results of the first edition of the survey.
In addition, in both editions, the survey was combined with a charity event to provide financial support to the local
community. Thanks to the high turnout - 13 448 employees in the second edition of the survey - the amount of PLN 105
033.00 was collected for charity purposes.
The project was once again carried out in collaboration with the research team from the University of Warsaw led by
Professor Grażyna Wieczorkowska - Wierzbińska, PhD Hab., Head of the Chair of Psychology and Sociology of Management
at the Faculty of Management, University of Warsaw. The implementation of the project was also supported by the Quality
Watch Ltd. company dealing with research projects.
4.5 RELATIONS WITH TRADE UNIONS
GRI 2-30
KGHM POLSKA MIEDŹ S.A.
In 2022, the most important event in the scope of relations with trade union was:
− the concluding of an agreement in January 2022 on shaping employee salaries and wages and benefits. The agreement
stipulated a 10% increase in basic wage rates from 1 January and an increase in employee wage categories covering
15% of the workforce.
− An Agreement on the payment of a one-off pre-tax bonus of PLN 2000 per employee, provided that the planned
production volume for the first half of the year is achieved and the average copper price is maintained at a level not
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 172
the Company and the Group in 2022 – translation from the original Polish version
lower than that assumed in the budget. Due to materialisation of the above-mentioned conditions, the financial bonus
in the agreed amount was paid in July 2022.
From 24 to 26 January 2023, wage negotiations with the trade unions were conducted, as a result of which a wage
agreement on wage structuring and employee benefits and an additional protocol to the Collective Bargaining Agreement
were agreed and signed, introducing the following elements of wage structuring in the current year:
− a 13.2% increase in monthly basic wage rates,
− an increase in employee wage categories covering 20% of the workforce,
− payment of a one-time pre-tax bonus in the amount of PLN 2 000 per employee, on the condition that the planned
production volume for the first half of the year is achieved and the average copper price is maintained at a level not
lower than assumed in the budget.
In accordance with the requirements of the Best Practice for GPW Listed Companies, KGHM Polska Miedź S.A. discloses
expenses related to the functioning of trade unions in the Company. In 2022, they amounted to the total of PLN 14 334 146,
including wages with overheads paid to trade union activists exempted from the obligation to work in the amount of PLN
13 526 463
33
.
DOMESTIC GROUP COMPANIES
With few exceptions, trade unions operate in the Group's domestic companies. In 2022, the companies held discussions
with the trade unions on wage issues, bonus rules, employment and working conditions and social issues. In most cases,
they resulted in the conclusion of agreements, signing of additional protocols to Collective Bargaining Agreements and the
amendment to remuneration regulations.
In 2022, one industrial dispute was initiated, but also concluded, at CENTROZŁOM WROCŁAW S.A.
However, the industrial dispute initiated in previous years at MERCUS Logistyka sp. z o.o. could not be concluded.
CENTROZŁOM WROCŁAW S.A.
The trade unions raised demands under the threat of an industrial dispute under the procedure set out in the Act on the
Resolution of Collective Disputes. A meeting was held as part of the negotiations, which did not lead to a consensus. The
negotiations ended by signing a record of divergence. The company requested the appointment of a mediator by the
Minister of Family and Social Policy. The mediation was held from 29 June to 12 July 2022. On 12 July 2022, the “Agreement
on the termination of the industrial dispute” was concluded.
MERCUS Logistyka sp. z o.o.
The dispute initiated in 2019, the reason for which was the employer's failure to take into account the wage demands raised
by the "Solidarity 80" Trade Union, has not been concluded. Talks within the framework of this dispute did not continue in
2022. Instead, the company concluded agreements on new wage and non-wage issues raised throughout the year.
INTERNATIONAL COMPANIES OF THE GROUP
KGHM INTERNATIONAL LTD.
In the Group companies of KGHM INTERNATIONAL LTD., the interests of the employees are represented by the United
Steelworkers Local 2020 trade union which gathers employees of FNX Mining Inc. in the Sudbury Basin, Canada.
Cooperation with the trade union continued in 2022 to ensure the compliance with the provisions of the Collective
Bargaining Agreement. The Company conducts discussions with the trade union to maintain health and safety conditions
for employees, including under the COVID-19 pandemic conditions (final phase). In the relations between the Company and
the trade union, both parties make every effort to ensure that the communication runs smoothly.
Over the years, the Company and the trade union have developed a strong and mutually respectful relationship that
underpinned all negotiations, resulting in the successful ratification of the existing Collective Bargaining Agreements,
without any work stoppages. The current Collective Bargaining Agreement expires on 30 June 2023, so negotiations with
the trade union are scheduled to start in the first half of 2023.
The other subsidiaries of the KGHM INTERNATIONAL LTD. Group located in the United States, South America and the
companies operating under the DMC Mining Services brand do not have any trade union representation.
33
Which is compliant with the Act of 23 May 1991 on trade unions (DZ.U.2022.854, consolidated text dated 2022.04.20).
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 173
the Company and the Group in 2022 – translation from the original Polish version
SIERRA GORDA S.C.M.
Sierra Gorda S.C.M. has three trade unions. The relations between the Company and its three trade union organisations
are developing in a respectful, constructive and cooperative atmosphere. This is fostered both by weekly meetings to
discuss various organisational issues and by ad hoc meetings organised to discuss current issues, which are attended not
only by HR representatives, but also by the company's management (vice-presidents, mine or processing plant managers).
In 2022, Sierra Gorda S.C.M. maintained and built good labour relations and effective communication with the trade unions
also through joint participation in various activities (ecumenical meeting, meetings with individual departments, Christmas
party and others).
Despite differences of position and opinion on particular topics, it was always possible to reach a reasonable compromise.
Throughout the previous year, Sierra Gorda did not receive any complaints concerning the anti-union practices.
4.6 WORKING CONDITIONS AND STAFF DEVELOPMENT
GRI 3-3 material topic: Good workplaces GRI 3-3 material topic: Employee development
GRI 401-2 GRI 403-6 GRI 404-1 GRI 404-2
RECRUITMENT PROCESSES IN KGHM POLSKA MIEDŹ S.A.
KGHM Polska Miedź S.A. secures highly qualified personnel through the process of internal and external recruitment based
on the “Principles for recruitment of candidates for employment in KGHM Polska Miedź S.A.” in force in the Company.
The Company operates on a due diligence basis, provides electronic registration of job applicants based on advertisements
posted on www.rekrutacja.kghm.com. The website contains job offers reported by all Divisions of KGHM Polska Miedź S.A.
The Company conducts its recruitment processes in accordance with applicable legislation and internal policies. All activities
required by law in relation to the processing of personal data obtained during the recruitment process are reliably
performed. The Company ensures full discretion to candidates submitting offers. The applications of successful candidates
may, with their consent, be entered in the Central Base of Candidates for a period of 12 months.
In 2022, links to the Careers Tab and social media (FB, LinkedIn, Twitter, Youtube) were included in job offers to enhance
the employer's image in communication with candidates. In addition, a guide on “How to prepare a CV” was made available
from the application form and a link to the “Candidate Guide” with tips on how to prepare for a recruitment interview was
included in invitations to recruitment meetings.
In connection with the extension of the scope of the Corruption Risk Management procedure to include the “Principles of
due diligence of candidates and personnel in KGHM Polska Miedź S.A.”, in 2022 the information clause for job candidates
was updated to include information on the possibility of conducting due diligence analysis in the case of applying for a
position associated with a corruption risk higher than low. In addition, the application form was supplemented with
information on ethical and anti-corruption standards in the KGHM Polska Miedź S.A. Group.
APPROACH TO EMPLOYEE DEVELOPMENT - TRAINING POLICY, TRAINING PROCESSES IN THE GROUP AND IN KGHM
KGHM, as a modern and socially responsible organisation, has perfectly adjusted to the current market requirements
shaped by the impact of the pandemic situation. Human capital management departments have fulfilled the need to adapt
quickly to sudden and unpredictable changes, accelerated digitalization and automation of management and
administrative processes for the sake of employee health, the introduction of remote or hybrid working and transformation
of on-site training into e-learning courses.
KGHM is a workplace where the factors of managing variability and diversity, the development of key employee competence
and the careful and efficient coordination of training and development activities are observed.
A horizontal HR model has been fully accepted and applied management system in which care has been taken to speed up
digital training processes based on the Company’s long-term values and using cost effectiveness of training.
The HR Policy is constantly being transformed. Unified processes and tools are implemented to support long-term
development of skills, new solutions for employee performance and assessment management, as well as modern project,
program and portfolio systems. In view of the swift development, it has become a priority to identify the best employees
efficiently, and then systemically prepare them to assume key roles and functions in all business operations.
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 174
the Company and the Group in 2022 – translation from the original Polish version
In 2022, KGHM’s employees were provided with:
− the possibility of pursuing educational programs to develop professional, managerial and specialist skills,
− the opportunity to improve their qualifications through co-financing of university education, as described in detail below
− improvement of language skills of all Company employees thanks to access to e-learning tools,
− implementation of the performance management process for managers and development of an employee assessment
system.
TRAINING PROCESSES IN THE KGHM POLSKA MIEDŹ S.A. GROUP
The KGHM Polska Miedź S.A. Group does not have a defined common Training Policy. Due to the international scope of
activities, cultural differences and the specific nature of the industries in which the KGHM Polska Miedź S.A. Group operates,
each of the companies conducts a number of activities related to employee training.
TRAINING PROCESSES IN W KGHM POLSKA MIEDŹ S.A.
Training programs in KGHM are adapted to business objectives. Systemic competence development activities are
performed by a centralised unit specialised in this area. The basis for the construction of the training plan and the
calculation of the resources needed for its implementation is the regular collection of development needs. These actions
are performed on the basis of the procedures existing in the Company. Both the skills development activity and the
utilisation of the allocated budget are regularly monitored and the results are reported.
The purpose of employee development activities in KGHM in 2022 was to retain and improve human capital and to manage
the Company’s intellectual capital taking into account the strategic directions in this process: 5E (Elasticity (flexibility),
Efficiency, Ecology - safety and sustainable development, E-industry, Energy) as well as its long-term development plans
through:
− securing fulfilment of the training requirements defined in regulations (among others, training courses on occupational
health and safety, courses and examinations entitling to take up jobs which require specialist actions);
− improving employee skills, with particular focus on linguistic, managerial and interpersonal skills, as well as participation
in training on business process orientation in management;
− improving the qualifications of the Company’s employees and changing their education structure by continuing to co-
fund graduate and post-graduate studies.
Main activities performed in 2022
The thematic scope of training and conferences in which KGHM employees participated was extended. They were provided
with opportunities to acquire knowledge and competencies in the area of climate policy, sustainable development,
corporate governance, compliance management, in accordance with the conducted mining and production activity in the
international entities belonging to the Company.
In 2022,
− 38 631 employees attended a single training event, while
− 163 persons benefited from co-funding of the courses of higher study, postgraduate studies.
The development of skills through the co-funding of higher courses of study comprised mainly:
− MBA studies
− conducting the second edition of group postgraduate management studies under the name “Copper Leaders” in
cooperation with the University of Warsaw and individual post-graduate studies. The KGHM Doctorates Program
occupies an important place in the training process. In the course of their research, PhD students from the KGHM
Program successfully disseminated partial results of their research by speaking at both national and international
scientific and industry conferences. Publications by participants in the KGHM DW Program frequently appeared in
prestigious international scientific journals, confirming their real contribution to the development of their respective
disciplines. In addition, doctoral students delivered lectures at universities, sharing with students not only their
theoretical knowledge, but also their practical knowledge built up over many years of work at KGHM Polska Miedź.
E-LEARNING LANGUAGE COURSES
Online language courses, introduced on a pilot basis in 2019, became firmly established in the following years of accelerated
digitalisation and in 2022 became an indispensable part of employee competence development.
In 2022, foreign language courses were provided by e-learning, and gradually, as the risk of infection diminished, the
individual classroom sessions organised for senior staff (English and Spanish classes, as needed for the job) were reinstated.
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 175
the Company and the Group in 2022 – translation from the original Polish version
Due to the good reputation of online language courses among employees, the possibility of access to e-learning courses
for all Company employees, both in white-collar and blue-collar positions, was maintained.
Language e-learning provided the opportunity to personalise the course according to preferences and needs, including
customisation of time, place and pace of learning. Widespread access to English, Spanish and German has facilitated the
development of communication skills, not only in the professional area but also in personal life. The option available to
every employee to grant free access to family members has contributed to strengthening the sense of belonging to the
KGHM community.
As part of a nationwide campaign to support Ukrainian citizens following the outbreak of the armed conflict and forced
emigration, the Company provided access free-of-charge to Polish language courses for families and guests from Ukraine
staying in employees' homes.
E-LEARNING COURSES
In 2022, training and professional courses as well as courses in the areas defined by internal normative acts were offered
in the form of e-learning. The following e-learning courses were provided:
− training for employees in managerial jobs on ethics, prevention of irregularities in the company (in particular,
corruption, abuse and discrimination) and handling whistleblower reports;
− training for employees in white-collar and blue-collar positions (people with computer access) on ethics and submitting
whistleblower reports concerning irregularities utilizing the channels in place in the company;
− training on Information Security Policy based on the ISO 27000 standard;
− GDPR training;
− training on recognising and preventing conflicts of interest;
− training in mine rescue for managers and supervisors of underground mines who are not members of rescue teams;
− periodic OHS training addressed to employers and individuals supervising employees, administration and office staff
and engineering and technical staff.
In 2022, 7 582 employees of the Company attended e-learning courses.
KEY FIGURES
GRI 404-1
GRI 404-2
Table 62. Average hours of training per employee in the KGHM Group, by position categories in the years 2021-2022
2022
2021
Position category Group
KGHM
Polska Miedź S.A.
Group
KGHM
Polska Miedź S.A.
Management Board
15.7
36.8
18.1
52.2
Senior management
27.3
54.5
22.3
47.9
Management staff
27.9
46.1
23.2
27.8
White-collar positions
14.8
23.1
11.4
16.5
Blue-collar positions
21.7
25.7
22.1
26.6
Table 63. Average hours of training per employee in the KGHM Group, by gender in the years 2021-2022
2022
2021
Group
KGHM
Polska Miedź
S.A.
Group
KGHM
Polska Miedź
S.A.
Average number of training hours per employee, including:
20.3
25.9
19.7
24.8
Women
12.8
27.2
11.5
17.7
Men
21.9
25.8
21.5
25.3
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 176
the Company and the Group in 2022 – translation from the original Polish version
BENEFITS
GRI 401-2 GRI 403-6
The offer of benefits at KGHM consists of material and social support for employees financed from the Company Social
Benefits Fund and benefits acting as non-wage employee incentive factors.
The Company Social Benefits Fund is intended to subsidise:
− holiday trips for children and youth organised by the employer and individually in the form of summer and winter
holidays, camps, winter camps, green schools, excursions, holidays, sanatoriums and other forms of recreation,
− cultural and educational activities (tickets for concerts, cinema, theatre, joint cultural and educational events),
− sports and leisure activities, including, among others, joint sports and leisure events, tourist trips, sports cards for
employees and their family members, enabling them to take advantage of a wide range of sports and leisure activities
all over Poland. The offer to hire sports halls and other recreational facilities for team games also enables the integration
of employees,
− payments for the stay of a child in a nursery, children's club, kindergarten and other forms of pre-school education.
Moreover, the provisions of the regulations of the Company Social Benefits Fund make it possible to grant to eligible
persons:
− non-refundable financial assistance such as allowances in the event of individual accidents, natural disasters, long-term
illness or death. Similar assistance is organised for former employees, pensioners and heirs,
− moreover, during the period of increased expenses associated with the Christmas period, employees have the
opportunity to receive financial support in the form of allowances - with additional support for those who have children,
− financial assistance in the form of prepaid cards,
− refundable housing aid (loans for the construction of a house, purchase of a house or dwelling, renovation and
modernisation of a house or dwelling).
The company implements extensive financial support based on the provisions of the Company Collective
Bargaining Agreement:
− holiday trips benefits.
− cash allowance to cover school expenses.
− holiday travel allowance payable to employees working underground.
− annual 21-day preventive health care trips for 445 employees meeting the criteria of the Company Collective Bargaining
Agreement.
Medical care subscription
All employees of the Company and members of their families have the opportunity to use medical care subscription
provided by Miedziowe Centrum Zdrowia S.A. (Copper Health Centre) - a company that is a pioneer in offering access to
medical benefits to its beneficiaries on extremely favourable terms.
Employee Retirement Program
KGHM employees participate in the Employee Retirement Program. The Program is organised in the form of employee
contributions to investment funds. The basic contribution funded by the employer amounts to 7% of the remuneration.
4.7 DIVERSITY IN THE WORKPLACE
GRI 3-3 material topic: Diversity and equal opportunities GRI 405-1 GRI 405-2
KGHM Polska Miedź S.A. – equal opportunities for all | KGHM Corporate Website
The Company’s culture has created a work environment and venue free from discrimination. No form of discrimination is
tolerated, in particular due to gender, race, age, origin, religion, handicap, world view, sexual orientation, social status,
marital status, disability, political party and trade union membership and the form of employment. In addition, activities
are conducted to respect diversity at a workplace.
The principles of mutual respect, equal treatment, ensuring access to development opportunities and exploitation of the
potential of all employees are applicable. The Company strives to ensure reasonable diversity in the selection of personal
composition of its workforce within its operations (including recruitment processes), maintaining the supremacy of
knowledge, professional competence and social skills.
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 177
the Company and the Group in 2022 – translation from the original Polish version
The Parent Entity is a guarantor of the implementation of diversity principles in the KGHM Polska Miedź S.A. Group and the
promotion and dissemination of these principles among stakeholders and business partners.
Diversity management also applies to the members of the Supervisory Board and the Management Board of KGHM Polska
Miedź S.A. The management and supervisory staff is composed of people of different genders, ages and experience.
The guiding principles by which the Company operates every day are as follows:
− compliance with the labour laws of the jurisdictions in which the KGHM Polska Miedź S.A. Group operates, as well as
with the standards of adopted internal labour regulations,
− compliance with the regulations concerning working time and minimum wage,
− respect for employees’ rights to associate in employee organizations and trade unions, and to engage in collective
bargaining,
− fostering employee development and supporting them in improving their skills through a variety of training forms and
possibility to participate in new projects,
− respect for human rights and impermissibility of any forms of illegal or forced labour, including child labour.
Human rights
KGHM Polska Miedź S.A. recognizes, respects and observes human rights - including employee rights. Policies and actions
related to human rights issues are described in subsection 2.9 Human Rights
.
FIGURES SHOWING DIVERSITY. DIVERSITY IN TERMS OF GENDER, AGE AND POSITION CATEGORIES
GRI 405-1
Table 64. Percentage share of women and men in individual position categories by gender in the KGHM Polska Miedź S.A.
Group in the years 2021-2022
2022
2021
Group
KGHM Polska
Miedź S.A.
Group
KGHM Polska
Miedź S.A.
Position category
gender
Management Board
F
3.9%
0%
3.4%
0%
M
96.1%
100%
96.6%
100%
Senior management
F
27.2%
13.6%
25.9%
12.7%
M
72.8%
86.4%
74.1%
87.3%
Management staff
F
30.7%
17.1%
24.5%
10.9%
M
69.3%
82.9%
75.5%
89.1%
White-collar positions
F
42.4%
27.6%
45%
30.7%
M
57.7%
72.4%
55.1%
69.3%
Blue-collar positions
F
8.1%
0.6%
8.9%
0.6%
M
91.9%
99.4%
91.1%
99.4%
Table 65. Percentage of women and men in individual job categories by age in the KGHM Polska Miedź S.A. Group in the
years 2021-2022
2022
2021
Position category age Group
KGHM Polska
Miedź S.A.
Group
KGHM Polska
Miedź S.A.
Management Board
<30
0%
0%
1.7%
0%
30-50
41.2%
60%
50%
66.7%
50+
58.8%
40%
48.3%
33.3%
Senior management
<30
0%
0%
0.4%
0%
30-51
62.4%
57.6%
58.3%
63.6%
50+
37.6%
42.4%
41.3%
36.4%
Management staff
<30
1.4%
0.3%
1%
0.8%
30-52
65.4%
69.9%
66.6%
69.1%
50+
33.2%
29.8%
32.4%
30.2%
White-collar positions
<30
7.6%
4.8%
7.9%
5.3%
30-53
67.9%
72.9%
66.7%
73.7%
50+
25.2%
22.3%
25.4%
20.9%
Blue-collar positions
<30
15.9%
16.7%
16.6%
17%
30-54
63.8%
69.7%
62.9%
69.3%
50+
20.3%
13.6%
20.6%
13.7%
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 178
the Company and the Group in 2022 – translation from the original Polish version
GRI 405-2
Table 66. Ratio of basic salary and total remuneration of women to the remuneration of men by position category in the
KGHM Polska Miedź S.A. Group in the years 2021-2022
2022
2021
Position category
Ratio of remuneration of
women to the
remuneration of men
Group
KGHM Polska
Miedź S.A.
Group
KGHM Polska
Miedź S.A.
Management Board
Basic
80%
-
80%
100%
Total
80%
-
80%
316.4%
Senior management
Basic
104.2%
106%
101.4%
118.4%
Total
104.1%
129.4%
109.9%
113.9%
Management staff
Basic
89.9%
98%
90%
99.9%
Total
86.8%
90.4%
89.3%
90.3%
White-collar positions
Basic
89.1%
74%
84.1%
77.3%
Total
84.2%
70.1%
81.4%
73.7%
Blue-collar positions
Basic
87%
72.9%
85.7%
69.7%
Total
88.4%
73.1%
83%
73.6%
The relationship of remuneration for women to remuneration for men in the Group was calculated as the average of all of the companies which
provided data. Those companies which did not provide data due to lack of women in a given category (management board; blue-collar position) were
not reflected. Employment data are shown as at the last day of the year, and so table 64 shows a lack of employment of women on the Management
Board. However, remuneration for 2021 includes remuneration of a Vice President of the Management Board employed from 1 January to 15 April
2021.
DIVERSITY POLICY APPLIED TO THE COMPANY'S ADMINISTRATIVE, MANAGEMENT AND SUPERVISORY BODIES
KGHM Polska Miedź S.A. applies good practices promoting diversity in relation to employees. As a global company operating
across the world’s markets, KGHM applies standards of work and employee relations as stipulated by local law, as well as
by international institutions, Regulations and policies take account of the welfare of employees and mutual relationships,
based on best practice, irrespective of the jurisdiction of the place of operation of KGHM Polska Miedź S.A.
KGHM Polska Miedź S.A. creates an environment and a workplace free of discrimination, therefore no forms of
discrimination are tolerated, in particular on the grounds of gender, age, ethnic origin, nationality, citizenship, religion,
political beliefs and trade union membership. KGHM Polska Miedź S.A. manages diversity by striving to create an
organisational culture based on mutual respect, equal treatment, access to development opportunities and exploitation of
staff potential. The approach to diversity management is defined by the “Diversity Declaration of KGHM Polska Miedź S.A.”.
Moreover, the recruitment process at KGHM Polska Miedź S.A. is carried out fully respecting the principle of diversity and
the principle of equal access to employment. All candidates meeting specific criteria of a given recruitment process
procedure are treated equally. Participants in the process respect the non-discrimination rule. They strive to ensure
reasonable diversity in the selection of personal composition of its workforce while maintaining the supremacy of
knowledge, professional competence and social skills. Diversity management also applies to the members of the
Supervisory Board and the Management Board of KGHM Polska Miedź S.A. The management and supervisory staff is
composed of people of different genders, ages and experience.
4.8 OCCUPATIONAL HEALTH AND SAFETY
GRI 3-3 material topic: Occupational health and safety GRI 403-1 GRI 403-2 GRI 403-3 GRI 403-4 GRI 403-5
GRI 403-6 GRI 403-7 GRI 403-8 GRI 403-9
The life and health of employees and workplace safety in general is the top priority in the hierarchy of values of the KGHM
Polska Miedź S.A. Group. For several years the Company has advanced its vision of “Zero accidents due to human and
technical errors, zero occupational illnesses among our employees and contractors”.
In 2022, the implementation of the Employee Safety Improvement Program – “Think About Consequences” was continued
as well as a Program to mitigate the most common hazards to workplace safety by utilizing innovative technologies in
accordance with the Company’s updated strategy till 2030 with an outlook to 2040.
The Company has high occupational safety and health standards confirmed by ISO 45001:2018 certificate that apply equally
to its employees and the employees of other service providers operating on the premises of KGHM Polska Miedź S.A.
All work stations have identified threats. The Company has assessed the professional risk and updates it on an ongoing
basis. All employees are introduced to the risk assessment for their workplaces. Working environments are continually
monitored and periodic reviews and potential threat assessments are conducted, as well as reviews of equipment and
required technical checks and approvals. Employees undergo systematic training and continually enhance their
qualifications. The company has procedures in place for identifying incidents and mitigating hazardous situations. The
company promptly implements new legal requirements and regulations in the area of occupational health and safety. It
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 179
the Company and the Group in 2022 – translation from the original Polish version
also actively participates in the work of agendas of various entities with the aim of development of best available practices
and behaviours in the area of occupational health and safety in the mining and processing industry.
OHS Policy
Since 2014, the Company has had a uniform Occupational Health and Safety Policy in place, which was redefined in 2020.
All work stations have identified threats. The Company has assessed the professional risk and updates it on an ongoing
basis. Working environments are continually monitored and periodic reviews and potential threat assessments are
conducted, as well as reviews of equipment and required technical checks and approvals. All employees are introduced to
the risk assessment for their workplaces and undergo systematic training and continually enhance their qualifications. The
company has procedures in place for identifying incidents and mitigating hazardous situations. The company promptly
implements new regulations and legal requirements in the area of occupational health and safety. The company also
actively participates in the work of agendas of various entities with the aim of development of best practices and behaviours
in the area of occupational health and safety in the mining and processing industry.
Prevention of natural hazards
Mining activities of KGHM Polska Miedź S.A. are inherently accompanied by natural hazards, therefore numerous technical
and organisational solutions of preventive nature are introduced to counteract these risks. In the case of natural hazards
inherent in the rock mass, they relate to mining tremors and their potential consequences in the form of rock bursts, roof
collapses and rock mass destressing. These factors are essential in terms of safety of employees, as their occurrence can
lead to serious or even fatal injuries as well as damage to underground machinery, equipment and infrastructure, along
with production downtimes. For many years, the Company has been undertaking numerous preventive actions in its mines,
including systematic seismological observations, ongoing assessment of the rock mass and identification of areas of
elevated roof collapse hazard. The sizes, shapes and numbers of chambers and intra-chamber pillars are selected, as well
as the most favourable direction of advancing mine work and the optimum order of extracting ore from deposits is designed
to minimize local concentrations of stress in the rock mass. The so-called pro-active methods of preventing uncontrolled
roof collapses and rock falls are also applied, which involve provoking dynamic events through mass blasting of mining
faces and through blasting to release stress in the orebody or its roof.
OHS golden rules
In KGHM Polska Miedź S.A., the so-called Golden Rules of OHS are in place.
Diagram 32. Golden Rules of OHS in KGHM Polska Miedź S.A.
I think before I act
I use appropriate
protective equipment
I come to work rested and
sober and not under the
influence of intoxicants
I work with properly
functioning tools,
machinery and equipment
I am aware of the
occupational hazards and
risks
I react when I see unsafe
behaviour or situations
I think of my family
I maintain harmony and
order at my workplace
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 180
the Company and the Group in 2022 – translation from the original Polish version
Labour Safety Council of KGHM Polska Miedź S.A.
The Occupational Safety Council in KGHM Polska Miedź S.A. was established at the initiative of the KGHM Polska Miedź
Management Board and representatives of trade unions on 13 March 2013. The Council operates on the basis of principles
of mutual trust and cooperation. The Occupational Safety Council is an opinion-making and advisory authority with respect
to matters of occupational safety and health.
The Council consists of 40 persons, including representatives of the employers (approx. 20 members), and approx. 20
representatives of social side, i.e. the trade unions operating in KGHM Polska Miedź S.A. and the Company Voluntary Labour
Inspectors in KGHM Polska Miedź S.A.’s Divisions.
The scope of the Council's operation covers:
− periodic assessment of occupational safety and health (not less frequently than once a year).
− presenting an opinion on prevention activities taken up in KGHM Polska Miedź S.A., following from an analysis of
potential accidents, workplace accidents and preventing workplace accidence and occupational diseases.
− presenting conclusions on improving working conditions and cooperating with the employers to discharge their duties
relating to occupational safety and health,
− presenting conclusions on cooperation between the Employer and representatives of employees to prevent
occupational risks and improve occupational safety and health,
− presenting an opinion on the actions taken by all the participants of the occupational safety process for active
participation of employees in the creation of proper conditions for occupational safety and health and their observance.
The Council meetings are held at least once a year. The Council is informed once a year of the current OHS situation in
KGHM Polska Miedź S.A.
EVALUATION OF OCCUPATIONAL SAFETY
An ongoing assessment of occupational safety in the Company is made at weekly meetings of the Vice President of the
Management Board (Production) and at monthly meetings of the Management Board with the management of all the
Divisions. The company also organises regular meetings with the mining supervisory authorities and representatives of the
National Labour Inspectorate, which are attended by social labour inspectors representing employees from individual
Divisions. Company Occupational Health and Safety Commissions operate in each plant of the company.
In numerous operational, periodic and specialised training courses, as well as using many communication channels
operating in the Company, information on occupational risks at workplaces, occupational safety and industrial hygiene is
presented on an ongoing basis.
INITIATIVES IN THE AREA OF OCCUPATIONAL SAFETY
In 2022, the implementation of the Employee Safety Improvement Program – “Think About The Consequences” was
continued as well as a Program to mitigate the most common hazards to workplace safety by utilizing innovative
technologies.
The “Think About The Consequences” program is gradually being developed by adding new initiatives. The most important
initiatives include:
− a system to prevent the machine-to-man and machine-to-machine collisions in mines,
− machinery design changes aimed at reducing the exposure of operators to harmful agents in the working environment,
improving visibility or eliminating the number of workers directly present in high risk areas,
− construction of modern monitoring systems for seismic activity, rock mass condition or water hazards,
− introducing new solutions in the scope of personal protective equipment of employees,
− technical and organisational solutions ensuring adequate working conditions in relation to climate risk,
− changing the habits of employees using different communication channels and forms of communication, including:
OHS Vortal,
social profiles in which KGHM participates,
CCTV,
educational emails,
traditional publications (articles, posters, information fiches).
The company also uses other methods to involve employees in changes in the area of occupational health and safety, such
as:
− cyclical training - “minutes for OHS”,
− ad hoc training courses,
− behavioural audits,
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 181
the Company and the Group in 2022 – translation from the original Polish version
− cross audits,
− system of employee initiatives,
− OHS alert - contact boxes.
In 2021, at the Company's Head Office, jointly with JRGH and the research and development unit, KGHM Cuprum Sp. z o.o.,
Research and Development Centre, the first training course on working at height with the use of VR 360
o
technology was
prepared and is successively implemented in individual divisions. In 2022, on the basis of training videos prepared by KGHM
Cuprum Sp. z o.o. Research and Development Center, training courses using the VR technology were developed for the
Głogów Copper Smelter and Refinery. Based on the idea of Industry 4.0, the Head Office of the Company, together with
KGHM Cuprum Sp. z o.o. Research and Development Center, designed and developed an interactive instruction in VR
technology in the field of CPR for all employees of the Company, as well as a training course checking the acquired
knowledge with the use of situational distractors.
Accident rate in KGHM Polska Miedź S.A.
In 2022, the Company once again recorded a significant reduction in the number of accidents at work
34
, calculated on a
year-on-year basis, from 165 to 149 people injured (a decrease of 16 accidents). In 2021, the number of accidents at work
in KGHM Polska Miedź S.A., excluding accidents due to natural causes (rock bursts, destressings, tremors, roof collapses)
was lower by 44 (a drop from 194 to 150). The vast majority of recorded workplace accidents (about 98.7%) qualified as
light injuries, whose major causes were, in order of frequency, loss of balance by employees, contact with (being hit by)
moveable/ immoveable objects as well as rock falls.
A total of 7 workplace accidents were recorded in the mines of KGHM Polska Miedź S.A., which were caused by natural
hazards inherent in the rock mass. These incidents represented 6.4% of all workplace accidents in the mines during this
period. The company is continuously improving its safety record in the mining of the copper ore deposit.
The LTIFR
KGHM
ratio (Lost Time Injury Frequency Rate KGHM) in 2022, which is the total number of workplace accidents
35
in
the Company, which is the number of accidents per million hours worked by KGHM Polska Miedź S.A. employees, was at
5.05 and at the same time it was 72.8% less than the 2010 figure and 10.3% less than the 2021 figure (5.63). So far, this has
been the best result in the Company’s history, achieved as a result of the attitude and commitment of all company
employees.
Chart 27. LTIFR
KGHM
rate in the Parent Entity in the years 2010-2022
Accident rate in the Group's international assets
In Chile, KGHM Polska Miedź S.A. conducts mining operations through two entities, which have separate occupational health
and safety management systems adjusted to the legal requirements and mining conditions in that country. These systems
encompass both the employees in these entities as well as sub-contractors, and are aimed at achieving the long-term vision
“Zero harm”. KGHM Chile SpA, which oversaw the Franke mine until April 2022 and also engages in its own exploration and
other undertakings, recorded 1 workplace accident in 2022 (vs. 1 recorded in 2020) with a TRIR of 0.27.
The Sierra Gorda SCM joint venture recorded 9 workplace accidents in 2022 (compared to 9 registered in 2021), with a TRIR
of 0.17.
In 2022, the entities in which KGHM Polska Miedź S.A. conducts mining operations in Canada, the United States and Chile,
recorded altogether 2 more workplace accidents (up from 21 in 2021 to 23 workplace accidents). The consolidated TRIR
(Total Recordable Incident Rate) for these operations was 0.34. It was 0.20 higher than in 2021 and 89% lower than the
figure recorded in 2010.
34
Accident at work within the meaning of the Act of 30 October 2002 on social security due to accidents at work and occupational diseases
(DZ.U.2022.199, item 1673, as amended)
35
see above
18,6
15,4
12,1
12,9
10,4
10,2
12,7
10,4
10,3
10,3
7,3
5,6
5,1
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
-73%
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 182
the Company and the Group in 2022 – translation from the original Polish version
Chart 28. TRIR
36
rate in the Group's international assets in the years 2010–2022
Table 67. Number of work-related accidents by gender, position type and severity of accidents in the KGHM Polska Miedź
S.A. Group in the years 2021-2022
2022
2021
KGHM Group
KGHM
Polska Miedź S.A.
KGHM Group
KGHM
Polska Miedź S.A.
Position type
Type of
accident
M F M F M F M F
White-collar
positions
Light
20
20
15
1
3
21
0
1
Severe
1
0
0
0
0
0
0
0
Fatal
0
0
0
0
0
0
0
0
Blue-collar
positions
Light
354
30
131
0
304
28
158
0
Severe
9
2
0
0
11
2
4
0
Fatal
4
0
2
0
3
0
2
0
Total number of accidents
440
149
372
165
Table 68. Accident rate according to the GRI 403-9 indicator in the KGHM Polska Miedź S.A. Group in the years 2021-2022
2022
2021
KGHM Group
KGHM
Polska Miedź S.A.
KGHM Group
KGHM
Polska Miedź S.A.
Accident rate
7.2
5.1
6.1
5.6
Methodology: Indicator calculated according to the formula: number of accidents * 1 000 000/ number of hours
4.9 RESPONSIBILITY TOWARDS SOCIETY / SOCIETY AS A PILLAR OF THE KGHM GROUP'S
SUSTAINABLE DEVELOPMENT ACTIVITIES
GRI 3-3 material topic: Relations with local communities GRI 413-1
APPROACH TO THE SOCIAL AREA
The approach of KGHM Polska Miedź S.A. to the social area is defined, among others, by the provisions of the Human Rights
Policy. The company continues its dialogue with local governments and communities located in areas where KGHM’s
activities may have an impact. This dialogue also concerns the protection of human rights.
The reduction of all risks to local communities resulting from the Company’s activities is a priority (including the reduction
of the risk of compromising the right to health through consistent implementation of the Climate Policy and the
Environmental Policy).
KGHM actively supports the development of local communities and respects their culture by respecting the rights of
indigenous peoples (which is of great importance in the case of the international companies of the Group over which KGHM
Polska Miedź S.A. exercises ownership supervision).
SOCIAL DIALOGUE
KGHM is a company firmly rooted in the Copper Basin and Lower Silesia, not only for natural reasons (taking into account
the mineral deposits concentrated locally), but mainly through the strength of its economic relations and social
36
TRIR (Total Recordable Incident Rate) calculated using accepted methodology as the number of accidents at work meeting the conditions
of registration as defined in the ICMM (International Council on Mining & Metals) standard, in total for the employees of KGHM
INTERNATIONAL LTD., KGHM Chile SpA and Sierra Gorda S.C.M. and sub-contractors for these entities, per 200,000 worked hours.
3,1
2,4
1,8
0,8 0,8 0,8
0,9
0,8
1,0
0,8
0,5
0,3
0,3
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
-89%
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 183
the Company and the Group in 2022 – translation from the original Polish version
commitment. The company has been an active participant in the life of local communities for many years. Key social
stakeholders for KGHM include:
− inhabitants of the Copper Basin,
− local government authorities,
− business representatives,
− representatives of science,
− representatives of associations and local organisations serving the public.
KGHM is a key employer in the region, but it is also an active driver of social life. Among other things, the company
implements programs promoting health, sports, culture, education or environmental hazards prevention projects.
In 2022, KGHM organised four conferences for local governments in cooperation with the Employers’ Organization of Polish
Copper: The first conference was dedicated to the aid for refugees from Ukraine. The meeting summarised the cooperation
between the Company and local governments and NGOs in the scope of provided support and aid actions. Another
conference on “Financial management strategies in local government units” focused on the principles of financing tasks or
raising funds from external sources and the adaptation of KGHM and local governments to the challenges related to the
implementation of the so-called European Green Deal. The third meeting, “KGHM for local governments” referred to the
cooperation with the municipalities and districts of the Copper Basin. During the recent conference on “Energy efficiency in
local government units”, the focus was on knowledge of organisational and technical solutions for local governments, with
particular emphasis on the ESCO model related to the financial support for investment. During the meeting, KGHM experts
presented the assumptions and goals of the Company's Climate Policy.
In 2022, cyclical business breakfasts with local governments were organised, during which an intersectoral dialogue was
held with representatives of local government authorities and non-governmental organisations, discussing, among others:
proposals for joint initiatives in socially important areas, e.g. prevention activities in such areas of support as: mental health
of the region's residents, risky behaviour of children and young people or family foster care.
In 2022, the local governments of the Copper Basin received once again the financial support from KGHM. In total, PLN 3.5
million has been allocated for, among others, the modernisation of village community centres, the retrofitting of
playgrounds or projects related to the implementation of preventive healthcare. In the municipality of Rudna, financial
support from KGHM enabled the purchase of a transport ambulance. A number of health checks in endocrinology,
nephrology or eye examinations were successfully carried out in Glogów. The Kotla municipality purchased equipment for
playgrounds and sports and recreation areas for inhabitants. In Legnica, on the other hand, the “My Seventh Heaven”
campaign was conducted, supporting a healthy lifestyle and promoting outdoor activity. In the municipality of Lubin, chess
classes for children and environmental protection education lessons were continued. In the municipality of Jerzmanowa,
swimming pool trips for primary school children were subsidised.
4.10 COOPERATION WITH LOCAL COMMUNITIES IN THE KGHM POLSKA MIEDŹ S.A. GROUP
GRI 413-1
In 2022, the KGHM Polska Miedź S.A. Group undertook a number of family-friendly initiatives targeting employees and the
local community.
On the occasion of the birth of a child, written congratulations were given to the employees in a personalised letter, as well
as an inspirational book on parenting matters and some small gifts. The “CUdowni rodzice KGHM” (Wonderful parents of
KGHM) program was launched in 2020, while in 2022 457 KGHM employees benefited from this form of appreciation of the
role of a parent. This initiative was also continued in one of the Copper Basin towns (Głogów). Training was made available
for parents through Tato.Net workshops, as well as the opportunity to participate in the annual fathers’ forum organised
by the same foundation.
18.5 thousand employees of KGHM Polska Miedź S.A. and 18 companies of the KGHM Group took part in the Dwie Godziny
dla Rodziny (Two Hours for the Family) campaign on the occasion of International Family Day. Activities included the launch
of the second edition of the Depression Prevention and Mental Health Promotion Program and the support for mental
health projects - their beneficiaries were the inhabitants of the Copper Basin (over 8 thousand people).
Cooperation with institutions responsible for family foster care was deepened and a number of activities aimed at
promoting foster parenthood were carried out. Co-financing of training courses for partner NGOs was also continued as
part of the Copper Basin NGO Academy.
The naMIEDZI application launched two years earlier was also being developed in 2022. This is a unique tourist guide to the
Copper Basin with suggestions for tourist routes and more than 270 sites on the map to visit. It was set up in cooperation
with local authorities. The aim of the application is to promote active lifestyles and expand the knowledge of Copper Basin
residents on local tourist attractions. Among other things, new routes were added in 2022, some of which were created by
employees of KGHM Polska Miedź S.A. as part of a holiday competition. The application currently contains 33 routes, and
more than 380 points on the map, including places directly related to Polish Copper.
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 184
the Company and the Group in 2022 – translation from the original Polish version
In November and December 2022, an engagement survey was conducted among the employees of KGHM Polska Miedź
S.A. For each questionnaire completed, the Company provided support for an orphanage designated by the employee. As
a result, more than PLN 105 033 was donated to the most needy in the Copper Basin region.
In 2022, as part of the pro publico bono activities of KGHM Polska Miedź S.A., subsidies were provided for diagnosing the
problems and potential of young people from schools in the region, as well as for the implementation of recommended
programs, in which a total of more than 8 000 students, 5 000 parents and around 1 000 teachers participated.
KGHM also offered local governments and their subordinate institutions participation in the CLICK program, which provided
free e-subscriptions of selected magazines for libraries and schools in the Copper Basin.
A number of activities under the mental health support have also been undertaken. In fact, the second edition of the
Depression Prevention Program was launched and in addition nine projects carried out in this area by non-governmental
organisations in the Copper Basin were subsidised. A benefit of psychological support for KGHM employees and their
families has also been introduced.
Programs to improve parenting skills were also subsidised. 12 editions of parenting workshops were conducted among
KGHM Group employees, while parents from the Copper Belt participated in 25 editions of the School for Parents and
Educators and other family-friendly initiatives.
KGHM also subsidised training courses for NGOs as part of the Copper Basin NGO Academy.
Activities to promote foster parenthood were also continued as part of the Mie(dź) Rodzinę (Have a Family) social campaign.
In 2022, pro publico bono activities were carried out by all Group companies. Most of them carried out both activities as an
exercise of responsibility towards the society and projects within the framework of building cooperation with local
communities in the locations where the Group's companies operate.
Table 69. Selected examples of pro publico bono activities in the companies of the KGHM Polska Miedź S.A. Group in 2022
Social activity in terms of responsibility towards society and cooperation with local communities
Company
Collections, donations, charity events for Ukrainian refugees
Majority of KGHM Group companies
Collections, donations, charity events for the local community
Majority of KGHM Group companies
Initiatives for families and children
Majority of KGHM Group companies
Initiatives to promote science, technology, sport and recreation, including:
− Apprenticeships
− Cooperation with higher education institutions
− Education classes for children and youth
Majority of KGHM Group companies
Participation in local opinion-making and advisory bodies in the scope of sustainable development
and others
In particular, Nitroerg S.A.
− Professional activation programs and promotion of mining knowledge among the local
community
− Initiatives promoting the protection of the heritage and culture of local communities
− Supporting indigenous peoples
− Supporting local schools and childcare facilities, including study grants and donations and
educational programs
The international companies of
KGHM INTERNATIONAL LTD. and
Sierra Gorda S.C.M.
4.11 EMPLOYEE VOLUNTARY WORK
GRI 2-29
GRI 403-6
EMPLOYEE VOLUNTEERISM PROGRAM
The “Copper Heart” employee volunteerism program has been operating in KGHM Polska Miedź S.A. since 2014. Employees
engaging in organising or participating in charity actions become ambassadors of the KGHM Polska Miedź S.A. brand and
they are the best evidence of the effectiveness and appropriate implementation of the corporate social responsibility policy.
In-kind and financial collections
In 2022, with the continuing pandemic threat, six official peer collections were carried out for the benefit of those in need:
4 campaigns related to the promotion of active lifestyles combined with charitable actions, 3 educational projects, 2 peer
financial collections for the benefit of colleagues in need.
In the interest of employee safety, the annual “Pączek ze Szlachetnym Nadzieniem” (Doughnut with Noble Filling) campaign
was held for the first time in the form of an online collection, and the doughnuts were not distributed at KGHM divisions.
Despite this revised formula, 160% of the target was achieved.
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 185
the Company and the Group in 2022 – translation from the original Polish version
Supporting runners
For safety reasons, it was only after the pandemic restrictions had eased that volunteers were able to engage in the
traditional action of supporting athletes along the route of the Summer run called “Bieg Piastów”.
Aid for refugees from Ukraine
Following the outbreak of war in Ukraine, KGHM employees rushed to help refugees by organising countless collections,
while many of them accommodated the newcomers from Ukraine at their homes.
Actions for children
KGHM volunteers visited orphanages and local educational and care institutions at Christmas time, offering prepared
parcels to children. The wards of the orphanage in Wilków were invited to a Christmas Eve meeting at KGHM, during which
they received the speaker of their dreams.
Volunteers from the ore enrichment plant with dedicated original educational programs - “Children of Copper” and “St.
Barbara” visited 44 establishments reaching almost 4 000 children and educational staff with knowledge about copper
mining and processing, as well as mining traditions.
Promoting cancer prevention
In 2022, KGHM once again became involved in activities promoting breast cancer prevention. As part of the traditional pink
October, most of the Company’s Divisions were illuminated in pink and the ladies working in the company received a small
gift and a commemorative card to remind them of the importance of preventive examinations. The card contained practical
information, including telephone numbers to register for preventive screening for early detection of breast cancer. To
emphasise solidarity with the idea behind the campaign, on 22 October 2022, employees of KGHM Divisions added pink
elements to their clothing.
KGHM also reminded the male part of the staff about screening for early detection of testicular cancer. The handball players
of Zagłębie Lubin, for example, or the outstanding ski-alpinist and KGHM Ambassador, Andrzej Bargiel, helped to encourage
them to perform the tests.
Volunteer’s Day
The company recognised active volunteers by organising Volunteer’s Day and Santa Claus celebrations in sporting style. A
special training session for the children of volunteers and people with a special involvement in the life of the Company was
conducted by Marcin Gortat. In this way, the Company thanked its employees for their help and cooperation within the
framework of the KGHM Volunteer Service.
SUPPORT FOR SPORT
KGHM Polska Miedź supports the development of both local and national sport and undertakes initiatives to promote a
healthy and active lifestyle.
Since 2019, the CSR program called “Copper Rivalry” has been implemented, which provides annual scholarships to athletes
for exemplary sporting achievements and orientation towards increasingly better results in their sports disciplines. In 2022,
such support was provided to as many as 27 athletes from all over Poland, including 14 from the Copper Basin itself.
For years, the company has also been supporting local sporting events, such as the regional cross-country skiing and
sporting events for the people of the Copper Basin, such as the “Cross Straceńców” (Cross-Country Race of Desperados),
“Biegi Wilczym Tropem” (Wolf’s Trail Run), etc.
The promotion of the healthy lifestyle through sport and the commitment to promote it among KGHM employees and
inhabitants of the Copper Basin was also pursued in the second edition of the program: “Prepare together with us”. Its
participants were able to take advantage of free running training and, under the guidance of professional athletics coaches,
prepare to take part in the “Bieg o Lampkę Górniczą” (Street Run for the Miner’s Lamp). Participants were also provided
with advice from a physiotherapist, nutritionist and training programs.
The company promotes active leisure. One example of such activities is the Eco-Health program existing since 2014.
CSR PROGRAMS OF KGHM POLSKA MIEDŹ S.A. FOR EMPLOYEES AND THE COMMUNITY
ECO-Health
The ECO-Health program was launched in 2014. According to its assumptions, the program undertakes projects and
initiatives promoting preventive health care among inhabitants of the Copper Basin, an active lifestyle, physical activity and
recreation, in order to care for the health of the children, adults and the elderly.
The program’s efforts to advance include regular activities: Nordic Walking for adults, recreational gymnastics for elderly
citizens, and swimming lessons for children.
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 186
the Company and the Group in 2022 – translation from the original Polish version
So far, more than 250 people aged 55 to 80 have participated in three editions of the project.
The program also comprises medical examination projects. One of them is the screening project for KGHM employees
carried out by the Group company, Miedziowe Centrum Zdrowia. CT scans include:
− early detection of lung cancer
− diagnosis of emphysema
− and assessment of calcifications in the coronary arteries.
So far, approximately 4 000 employees have benefited from the tests.
4.12 EXPENDITURES INCURRED BY THE COMPANY AND THE GROUP TO SUPPORT CULTURE, SPORTS,
CHARITIES, MEDIA, SOCIAL ORGANISATIONS, TRADE UNIONS, ETC.
GRI 203-1
KGHM is a “good neighbour and trustworthy investor”. It supports local communities, social organizations and institutions
related to science, culture and sport. It promotes an active lifestyle and helps people in need. One of the pillars of our
efforts in the area of corporate social responsibility is the KGHM Polska Miedź Foundation which is engaged in pro publico
bono and charitable activities. It helps in performance of socially useful projects, and it supports the people who are
experiencing hardships.
The expenditure incurred by the Company to support culture in 2022 amounted to PLN 10 504 491.20. The Company
supported sports initiatives in the amount of PLN 37 086 234.62.
In 2022, KGHM Polska Miedź S.A. made a financial donation to the KGHM Polska Miedź Foundation for statutory purposes
in the amount of PLN 42 000 000, and to Group companies in the total amount of PLN 253 000. Supporting the Foundation
is one of the priorities of the cooperation with social organisations. However, it is worth mentioning that the Company also
supports numerous industry organisations by being their member. The amount of contributions paid by KGHM in 2022 to
organisations where the membership is optional was: PLN 14 792 997.33
KGHM pursues cooperation with the media as part of its communication strategy. While operating in the global market, the
company is subject to the volatility of this market, the unrest resulting from trade wars and is subject to increasingly
stringent legal requirements and stakeholder expectations regarding corporate social responsibility. Therefore, it
establishes and maintains an ongoing dialogue with the Company's key stakeholders to build understanding and
acceptance for the strategic projects implemented by KGHM Polska Miedź S.A.
Stakeholder relations, channels and forms of contact with stakeholders are described in subsection
1.11 Stakeholders and
external relations.
Expenditure on trade unions
In compliance with Best Practice of companies listed on the Warsaw Stock Exchange, KGHM Polska Miedź S.A. discloses
expenditures related to the functioning of the trade unions in the Company. In 2022, they amounted in total to PLN 14 334
146, including remuneration plus overhead of trade union activists released from the obligation to work of PLN 13 526 463,
resulting from the Act dated 23 May 1991 on trade unions (Journal of Laws 2022.854, consolidated text dated 2022.04.20).
4.13 PUBLIC ENGAGEMENT DURING THE WAR IN UKRAINE
GRI 203-1
ACTIVITIES OF KGHM GROUP COMPANIES
The company is committed to helping those in need by balancing its business mission with a sense of social responsibility,
and acts with determination and efficiency in moments of unexpected crises. Such was the case in the situation of Russian
aggression against Ukraine. KGHM Polska Miedź S.A. and the companies of the KGHM Group have demonstrated huge
involvement in aid activities from the very beginning of the war conflict in Ukraine. Having witnessed the atrocities against
the Ukrainian population and the great wave of refugees seeking refuge in Poland, the Group companies decided to do
everything to provide them with shelter and basic living conditions in this difficult situation.
Aid very quickly reached those who had to stay in the war zones heroically defending their homeland. KGHM Polska Miedź
and KGHM ZANAM S.A. organised the transport of life-saving medical supplies to Ukrainian hospitals. Three lorries delivered
several tonnes of medicines and medical supplies to besieged cities, worth as much as one million PLN.
From the very first days, employees and volunteers from the KGHM Group began serving meals to Ukrainian refugees in a
catering tent built by PHU Lubinpex Sp. z o.o. near the Central Railway Station in Warsaw. This place has become the most
important point on the map of Warsaw for Ukrainian refugees, who were able to have at least a hot meal in decent
conditions. For five months, every day, up to 10 thousand meals were served to Ukrainians arriving in Warsaw. Over the
entire period of the tent's operation, a total of more than 500 thousand meals were served.
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 187
the Company and the Group in 2022 – translation from the original Polish version
Aware of how important safe shelter is for every refugee, the KGHM Group provided buildings and accommodation for
those forced by war to leave their own homes. More than 300 refugees were placed in temporary accommodation centres
in Lower Silesia, Lubuskie and Podlaskie. 150 refugees were also accommodated in spa resorts owned by a KGHM Group
company. Also noteworthy is the fact that many KGHM Polska Miedź employees offered shelter to refugees gratuitously, in
their own homes. In addition, more than 750 beds/mattresses with sets of duvets and bedding were donated to the
accommodation points existing in 25 local governments.
In response to the needs of refugees from Ukraine, the "We Together" Assistance Centre was launched in Lubin, whose
tasks included assistance in finding accommodation, support in translation and legal and medical issues, and coordinating
contacts with local governments, Caritas and other NGOs in the region. At subsequent stages of its assistance activities,
KGHM Polska Miedź S.A. also supported the Polish language courses and the promotion of vaccination campaigns against
communicable diseases among Ukrainian refugees.
All KGHM Group companies have become involved in providing support to refugees from Ukraine or organising assistance
to residents in Ukraine The above-mentioned activities represent only a small part of the assistance initiatives undertaken
by the companies.
ACTIVITIES OF KGHM INTERNATIONAL
In March 2022, The KGHM INTERNATIONAL LTD. Corporate Office Sponsorship Committee ("the Committee") decided to
support the Ukraine Relief Fund program promoted by UNICEF. The action consisted of the company doubling the amounts
donated by employees.
Upon receipt of the amount collected, UNICEF also doubled it. In this way, KGHM INTERNATIONAL LTD.’s action generated
the total amount of CAD 94,924.76, which was donated by UNICEF to cover the urgent needs of refugees.
In June 2022, USD 10 000.00 supported the work of Feed My Starving Children (FMSC), an organisation that feeds hungry
children worldwide by providing them with food parcels. The organisation also helps children affected by the war in Ukraine.
The KGHM Polska Miedź Foundation also provided the support by making a number of financial donations, which are
described in detail in the List of Donations on the Foundation website http://fundacjakghm.pl
.
4.14 THE KGHM POLSKA MIEDŹ S.A. FOUNDATION AND SPONSORSHIP ACTIVITIES
GRI 203-1
KGHM POLSKA MIEDŹ FOUNDATION
The KGHM Polska Miedź Foundation was established in 2003 to continue long traditions of pro publico bono activities
conducted by its Founder – KGHM Polska Miedź S.A., and to implement local and regional initiatives and projects of national
and global reach. The basis for the operation of the KGHM Polska Miedź Foundation are financial and material donations
granted to:
− individuals in the field of health care and natural disaster relief;
− institutions for the execution of projects, in four areas.
The projects pursued in 2022 were a natural continuation of the activities carried out by the Foundation to date and a result
of program changes agreed in the course of consultations between the Management Board and the Supervisory Board of
the Foundation and the corporate bodies of the Founder, KGHM Polska Miedź S.A.
In 2022, the activity of KGHM Polska Miedź Foundation was focused on granting donations and overseeing how they are
spent as well as on running the program. The commitments undertaken by the Foundation were carried out with the utmost
care, thorough analysis of the submitted requests and with a detailed consideration of the capacity to help. In 2022, the
Foundation continued to develop its operations, pursuing its statutory goals in four areas:
− health and safety,
− science and education,
− sports and recreation,
− culture and tradition.
In 2022, the KGHM Polska Miedź Foundation made every effort to identify various social needs and address them in line
with the assumptions of its articles of association and within its capabilities. Support was granted in the form of cash
donations in a total amount of PLN 36 684 034.56, including PLN 35 185 924.53 for the performance of 430 projects and
PLN 1 498 110.03 for 158 private individuals.
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 188
the Company and the Group in 2022 – translation from the original Polish version
Table 70. Donations contributed by the KGHM Polska Miedź Foundation in 2022, by individual areas of support.
Amount awarded (PLN)
Number of
projects/individuals
Donations for institutions
35 185 924.53 430
Health and safety
13 663 221.13
118
Science and Education
3 093 729.24
49
Sports and Recreation
4 991 041.00
89
Health Promotion and Environmental Hazards Prevention Program
1 107 451.00
5
Culture and Tradition
13 437 933.16
174
Donations to individuals
1 498 110.03 158
Health protection
1 498 110.03
158
Total donation amount
36 684 034.56
The statutory objectives, the lines of action in individual areas of activities of the Foundation and descriptions of projects
and initiatives, including the identification of beneficiaries, are described in detail on the Foundation website
www.fundacjakghm.pl
and can be found in the Activity Report for 2022, also posted on the website indicated.
Sponsorship activity
KGHM’s sponsorship strategy is closely associated with the activity pursued in the area of Corporate Social Responsibility
(CSR) and assumes that most funds will be allocated to the performance of the actions for promoting the Company and its
products on the one hand and for supporting valuable initiatives and undertakings on the other hand.
The areas of sponsoring activities of KGHM Polska Miedź S.A. are culture and social affairs, science and sport.
The most important functions of sponsorship in the company include support in the implementation of strategic
investments, communication with local and regional authorities, reaching target groups with the desired image and building
positive associations with the corporate brand. 2022 was a continuation of the implementation of the above assumptions.
As part of its support for culture, since 2019 KGHM has assumed patronage of the Royal Castle in Warsaw. It has also
supported the Wrocław Opera for many years. KGHM also continued its patronage of the Warsaw Rising Museum. The
company is also keen to support valuable film productions. In 2022, the sensational drama about Stefan Wyszyński, “The
Prophet”, sponsored by KGHM was screened in cinemas across Poland. As part of its commitment to engaging with families,
the company is a partner in the Epiphany procession event.
As regards science, KGHM Polska Miedź S.A. supports higher education institutions and scientific institutions, thus
tightening cooperation and building a bridge between the industry and academia. The company provides financial and
subject-matter aid to projects thematically related to the problems solved to meet the needs of KGHM and the region. In
2022, particular emphasis was placed on engaging in industry events related to mining, but also, for example, the energy
transition. Moreover, KGHM was involved in major economic events, including the Economic Forum, the Vision
Development Forum and the 590 Congress.
The company supports both top-class professional sport and amateur sport. The Parent Entity is the major sponsor
and at the same time the owner of Zagłębie Lubin S.A., a football team playing in the top Polish football league. At the
same time, KGHM is a sponsor of two clubs based in Lubin: Cuprum Lubin (volleyball) and Zagłębie Lubin (handball).
KGHM Polska Miedź S.A. has been one of the sponsors of “Bieg Piastów”, a cross-country skiing marathon, in Jakuszyce. The
company also supports other running events, such as “Cross Straceńców” (Cross-Country Race of Desperados), the New
Year running and walking event in Głogów, the Wolf’s Trail Run to commemorate Polish “Disowned Soldiers”, as well as local
sports organisations whose members include employees of the KGHM Group.
Principles of sponsorship
To ensure transparent rules of taking decisions to support a given project, offers are analysed by the Sponsorship
Committee. The decisions of the Committee are documented in the form of minutes in each case, which are approved by
the President and CEO of KGHM Polska Miedź S.A. The sponsorship activity of the KGHM Group is subject to regulations
given in the Sponsorship Policy of KGHM Polska Miedź S.A. and the procedure of obtaining an opinion from the Sponsorship
Committee.
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 189
the Company and the Group in 2022 – translation from the original Polish version
Table 71. Amounts granted by KGHM Polska Miedź S.A. through its sponsorship function in 2022, by area.
Area
Granted amount in PLN
Sports
37 086 234.62
Culture and social issues
10 504 491.20
Science
4 001 000.00
Total
51 591 725.82
Table 72. The amount spent by the KGHM Group companies (excluding the Parent Entity) as part of its sponsorship and
donations activity in 2022.
Amounts in PLN
Domestic
companies
International
companies
Total
Sponsorship
PLN 255 280
PLN 92 867
PLN 348 147
Donations
PLN 1 568 439
PLN 937 104
PLN 2 505 543
5 OTHER NON-FINANCIAL INFORMATION
5.1 LITIGATION AND CLAIMS
Proceedings
regarding royalties
for use of
invention project
no. 1/97/KGHM
„Method for
increasing the
production
capacity of the
electrorefining
sections of the
Metallurgical
Plants”
In the claim dated 26 September 2007, Plaintiffs (14 natural persons) filed a claim against KGHM Polska Miedź S.A.
with the Regional Court in Legnica for the payment of royalties for the use by the
Company of invention project no.
1/97/KGHM called „Sposób zwiększenia zdolności produkcyjnej wydziałów elektrorafinacji Huty Miedzi” (Method for
increasing the production capacity of the electrorefining sections of the Metallurgical Plants) for the 8th cal
culation
period, together with interest due. The amount of the claim (principal amount) was set by the Plaintiffs in the claim in
the amount of approx. PLN 42 million (principal amount without interest and court costs). Interest as of
31 March 2019
amounte
d to approx. PLN 55 million. On 21 January 2008, in the response to the claim, KGHM Polska Miedź S.A.
requested the dismissal of the claim in its entirety and filed a counter claim for the repayment of undue royalties paid
for the 6th and 7th year of appli
cation of invention project no. 1/97/KGHM, together with interest due, also invoking
the right of mutual set-
off of claims. The amount of the claim (principal amount) in the counter claim was set by the
Company in the amount of approx. PLN 25 million.
In
a judgment dated 25 September 2018, the Regional Court in Legnica dismissed the counter claim and partially
upheld the principal claim to the total amount of approx. PLN 24 million, and at the same time ordered the payment
of interest in the amount of appr
ox. PLN 30 million, totalling to PLN 54 million. Both parties to the proceedings
appealed against this judgment.
In a judgment dated 12 June 2019, the Court of Appeal in Wroclaw dismissed the appeals of both sides, altering the
judgment of the court of f
irst instance solely in the matter of the resolution of court costs from the hearings at the
court of first instance and charging them to KGHM Polska Miedź S.A. The judgment is binding and was executed by
KGHM on 18-19 June 2019. KGHM Polska Miedź S.A. fil
ed a cassation appeal against the judgment of the court of
second instance, i.e. with respect to the partially upheld principal claim in the amount of approx. PLN 24 million as
well as with respect to the dismissed counter-claim in the amount of approx. PLN 25 million.
The plaintiffs did not file
a cassation appeal. The cassation appeal was registered. In a judgment dated 24 November 2022
the Supreme Court
overturned the disputed judgment and ordered the case to be reheard. We are awaiting the court signatu
re and the
selection of judges at the Court of Appeal in Wroclaw.
In accordance with the Company’s position, the plaintiffs’ claim should be dismissed in its entirety and the counter
claim is justified. The Company in this regard paid the authors of the pr
oject royalties for a longer period of application
of the project than anticipated in the initial contract entered into by the parties on advancing the invention project,
based on an annex to the contract, extending the period of payment of royalties, whos
e validity is questioned by the
Company.
Moreover, the Company is questioning the „rationalisation” nature of the solutions, as well as whether they
were in fact used in their entirety, and also their completeness and suitability for use in the form suppli
ed by the
plaintiffs as well as the means of calculating the economic effects of this solution, which were the basis for paying the
royalties. The argumentation of KGHM Polska Miedź S.A. is additionally supported by
the wording of the judgment of
the Supreme Court dated 24 November 2022, which indicates the lack of cause to to enter into an appendix
enabling
the payment of additional remuneration to the Plaintiffs.
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 190
the Company and the Group in 2022 – translation from the original Polish version
5.2 SIGNIFICANT CONTRACTS FOR THE COMPANY AND GROUP
In 2022, the Company and the Group entered into the following significant contracts:
20 April 2022 A Letter of Intent was signed with Tauron Polska Energia S.A. („Tauron”),
in which the parties are considering
undertaking
strategic cooperation involving research and development and future investment projects with respect
to the construction of energy generation sources utilising small nuclear reactors (SMR) technology.
The objective of the cooperation between the Parties t
o the Letter of Intent is to set forth the possibilities, nature and
particulars of potential joint involvement in the advancement of SMR-related investment projects.
The subject of the cooperation will include, among others, an analysis of available tech
nology and the possibility of
placing generating installations in neighbouring receiving infrastructure, as well as the possibility of utilising the
existing infrastructure of existing power blocks along with identification of the possibility of obtaining
optimum
technology, investing in a different manner or engaging in other forms of cooperation with third parties which are
already advancing or planning to advance SMR-related investment projects.
The Company sees a significant potential and possibility t
o achieve the effect of synergy by engaging in joint actions
with Tauron aimed at investing in SMR technology. These actions are in line with the Company’s strategic goals, in
particular those involving Energy – the new 5E development direction. According
to it, the Company will implement
low-
emission energy sources in the Core Production Business, and in future could sell energy to third parties, at the
same time generating new revenue sources.
The Letter of Intent is solely an expression of the intention
s of the Parties to establish cooperation, and that the
resolutions of the Letter of Intent are not in any way binding for the Parties. The Letter of Intent is in force until such
time as one of the Parties expresses a desire to withdraw from further cooperation.
5.3 INFORMATION ON TRANSACTIONS ENTERED INTO BETWEEN RELATED PARTIES, UNDER OTHER
THAN ARM’S LENGTH CONDITIONS
In 2022, neither the Parent Entity nor its subsidiaries entered into related party transactions under other than arm’s length
conditions.
6 ABOUT THE STATEMENT ON NON-FINANCIAL INFORMATION
6.1 ABOUT THE STATEMENT ON NON-FINANCIAL INFORMATION
GRI 2-2 GRI 2-3 GRI 2-4
The presented Statement on non-financial information for 2022 (also referred to as the Statement) includes data and
indicators related to the KGHM Polska Miedź S.A. Group (hereinafter also referred to as the KGHM Polska Miedź S.A. Group
or the Group) and KGHM Polska Miedź S.A. (hereinafter also referred to as the Parent Entity or the Company).
It has been prepared in accordance with the provisions of the Accounting Act of 29 September 1994 with regard to
disclosure of non-financial information and the Polish implementing Act of 15 December 2016 amending the Accounting
Act (Journal of Laws of 2017, item 61; consolidated text: Journal of Laws of 2017, item 2342, as amended) and also on the
basis of the Directive of the European Parliament and of the Council no. 2013/34/EU subsequently amended by the Directive
of the European Parliament and of the Council no. 2014/95/EU, as well as pursuant to Regulation (EU) 2020/852 of the
European Parliament and of the Council of 18 June 2020 on the establishment of a framework to facilitate sustainable
investment, and amending Regulation (EU) 2019/2088 (“EU Taxonomy”) obligating enterprises to disclose whether and to
what extent their business activity is consistent with the assumptions of the Taxonomy classifying and describing
environmentally sustainable activity.
The international non-financial reporting standard, GRI Standards 2021 - incorporating the 2018, 2020 and 2021 updates
to the standard for specific area indicators - has been used to prepare this Statement.
The Statement has also applied all elements of the TCFD guidelines (Task Force on Climate-related Financial Disclosures) to
report environmental issues and European Union Communication no. 2019/C 209/01: Supplement on climate-related
reporting and the objectives of the European Union's 2050 development program, called the European Green Deal.
The reporting process in the KGHM Polska Miedź S.A. Group and in the Parent Entity KGHM Polska Miedź S.A. is carried out
on an annual basis. The information presented herein refers to the reporting period from 1 January to 31 December 2022,
unless otherwise indicated in the text of the Statement. This document does not contain any corrections of the content of
previous reports, with the exception of calculations of the carbon footprint in 2021, which were updated as mentioned in
section 3 of this Statement. The Non-Financial Report of KGHM Polska Miedź S.A. and the Group for 2021 was published on
21 March 2022.
This year, for the first time, the Statement on non-financial information for 2022 was prepared as an integral part of the
Report of the Management Board on the Activities of KGHM Polska Miedź S.A. and the KGHM Polska Miedź S.A. Group in
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 191
the Company and the Group in 2022 – translation from the original Polish version
2022. In accordance with the previous practice, the Report on Non-Financial Information was published as a separate report
and, in addition, the Integrated Report was published by the end of June.
The process of preparation of this Statement on non-financial information was supported by an independent educational
and consulting company, CSRinfo Sp. z o.o.. The publication was externally verified by the independent auditor, Paweł
Bogacz, Ph.D. Hab. Eng. (Stanisław Staszic AGH University of Science and Technology in Kraków) – an expert of the Institute
of Accountancy and Taxes.
REPORTING PROCESS
In the process of preparing the Statement, the documents, policies, due diligence procedures, risk management principles
and other informational materials related to the activities of the KGHM Polska Miedź S.A. Group and the Parent Entity KGHM
Polska Miedź S.A. and the mining and metallurgical industry in general, were taken into account. The values of qualitative
and quantitative indicators describing the Parent Entity and the Group were calculated with due diligence and in accordance
with the principles of comprehensiveness.
The preparation of the content of this Statement on non-financial information comprised the following stages:
− conducting a materiality analysis applying the guidelines of the standard: “GRI 3: Material Topics 2021”. In addition, the
principle of so-called double materiality recommended by the CSRD was taken into account.
− collection of metrics, using the IT tool to collect non-financial data, depicting the implementation of policies, strategies
and sustainable development goals as well as due diligence and risk management principles and their conducting in
the KGHM Group and the Parent Entity in 2022.
− preparation of the Statement on Non-Financial Information of the KGHM Group and Parent Entity for 2022 based on
the data collected and in accordance with the regulations mentioned above in this chapter.
− conducting a third party audit evaluating the correctness of data and content included in the Statement on Non-
Financial Information of KGHM Polska Miedź S.A. and the KGHM Polska Miedź S.A. Group for 2022.
6.2 LIST / MATRIX OF MATERIAL REPORTING TOPICS FOR 2022
GRI 3-1
GRI 3-2
The materiality analysis of ESG topics was carried out in December 2022 as part of the process of preparing the Statement
on Non-Financial Information of KGHM Polska Miedź S.A. and the KGHM Polska Miedź S.A. Group for 2022. The materiality
analysis process was conducted in accordance with the standard “GRI 3: Material Topics 2021”. In addition, the principle of
so-called double materiality recommended by the CSRD was applied.
The process of identifying material topics was based on:
− analysis of the matrix of material topics for 2021,
− analysis of topics arising from industry guidelines/ratings (S&P, SASB),
− identification of material topics identified by sustainability leaders in the industry,
− including material topics identified in the draft future EU ESRS reporting standard,
− taking into account the weight of topics provided by stakeholders in the previous materiality analysis process,
− assessment of the materiality of KGHM's impact on people and the environment in the context of the topics identified,
− assessment of the financial materiality of the topics identified,
− expert assessment of the materiality matrix performed by the CSRinfo Sp. z o.o. team.
As a result of the above analysis, it was determined that the material reporting topics of KGHM Polska Miedź S.A. and the
KGHM Polska Miedź S.A. Group adopted in 2021 were still valid in 2022. However, the perspective of assessment of these
topics changed: instead of materiality for the Company and stakeholders, the materiality of the impact of KGHM Polska
Miedź S.A. and the KGHM Polska Miedź S.A. Group on people and the environment and financial materiality was assessed.
In the process of assessing the social and environmental impact in the context of the reporting aspect evaluated and the
financial impact assessment, the results of the Company's risk analysis were taken into account: identified related risks
were assigned to each topic.
In assessing the social and environmental impact, the probability of the occurrence of risks of negative impact of KGHM
Polska Miedź S.A. and the KGHM Polska Miedź S.A. Group on people and/or the environment (on a scale from 0 to 5) and
the severity of the effects for people and/or the environment of the materialisation of risks of negative impact of KGHM
Polska Miedź S.A. and the KGHM Polska Miedź S.A. Group were taken into account (on a scale from 0 to 5). The financial
impact was rated on a scale from 0 to 5.
Chart 29 shows the identified topics that are material for stakeholders and have material social, environmental and
economic impacts.
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 192
the Company and the Group in 2022 – translation from the original Polish version
Chart 29. ESG materiality matrix of KGHM Polska Miedź S.A.
ENVIRONMENTAL AND SOCIAL IMPACT
9-10
7-8
12 6 8
1,2,
3,4
5-6
14
9,11,
10,13
7,5
3-4
15,16
0-2
<2
mn PLN
2-11
mn PLN
11-110
mn PLN
110-120
mn PLN
>220
mn PLN
FINANCIAL IMPACT
No.
Topic
Environmental
and social
impact
Financial
impact
1
Striving for a circular economy
8
5
2
Counteracting climate change
8
5
3
Management of water
resources
7 5
4
Economic impact
7
5
5
Responsible supply chain
6
5
6
Occupational health and safety
8
2
7
Ethics and transparency
6
4
8
Preservation of biodiversity
7
3
9
Good workplace
6
3
10
Management of sustainable
development and ESG
6 3
11
Relations with local
communities
5 3
12
Respecting human rights
7
1
13
Development of innovation
5
3
14
Diversity and equal
opportunities
6 1
15
Employee development
4
2
16
Customer satisfaction
4
2
6.3 INDEX OF GRI CONTENT
Table 73. Index of GRI content
Statement of
application
KGHM Polska Miedź S.A. and the KGHM Polska Miedź S.A. Group prepared a report for the
period from 1 January 2022 to 31 December 2022 in accordance with the 2021 GRI
Standards.
GRI 1 standard used
GRI 1: Foundation 2021
Applicable GRI sectoral
standard
An updated sectoral standard for the mining and metallurgical industry has not yet been
published.
Indicator
number
Title of the GRI
Standard
Name of indicator Place of disclosure
Comments and
explanations
I. PROFILE DISCLOSURES [General Disclosures 2021]
Organisation and its reporting practices
GRI 2-1
GRI 2. Profile
disclosures 2021
Details of the organisation
1.1. Who we are
GRI 2-2
GRI 2. Profile
disclosures 2021
Entities subject to the reporting of
the organisation’s sustainable
development
1.2. Organisational structure
of KGHM Polska Miedź S.A.
1.3. Organisational structure
of the KGHM Polska Miedź
S.A. Group
6.1. About the Statement on
non-financial information
GRI 2-3
GRI 2. Profile
disclosures 2021
Reporting cycle and contact details 6.1. About the Statement on
non-financial information
GRI 2-4
GRI 2. Profile
disclosures 2021
Corrections to information
6.1. About the Statement on
non-financial information
GRI 2-5
GRI 2. Profile
disclosures 2021
External verification
6.4. Information on external
auditing
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 193
the Company and the Group in 2022 – translation from the original Polish version
Indicator
number
Title of the GRI
Standard
Name of indicator Place of disclosure
Comments and
explanations
Activity and employees
GRI 2-6
GRI 2. Profile
disclosures 2021
Business types, value chain and
other business relations
1.1. Who we are
1.3. Organisational structure
of the KGHM Polska Miedź
S.A. Group
1.4. Business model of the
KGHM Polska Miedź S.A.
Group
1.5. Production Process
2.10. Sustainable supply
chain
GRI 2-7
GRI 2. Profile
disclosures 2021
Employees
4.2. Structure of
employment
GRI 2-8
GRI 2. Profile
disclosures 2021
Other persons performing work for
the organisation
4.2. Structure of
employment
Governance
GRI 2-9
GRI 2. Profile
disclosures 2021
Management structure
2.1. Management Structure
of KGHM S.A. and the KGHM
S.A. Group
2.15. Declaration on the
application of corporate
governance
GRI 2-10
GRI 2. Profile
disclosures 2021
Nomination and election of the
senior governing body
2.15. Declaration on the
application of corporate
governance
GRI 2-11
GRI 2. Profile
disclosures 2021
Chairperson of the senior governing
body
2.15. Declaration on the
application of corporate
governance
GRI 2-12
GRI 2. Profile
disclosures 2021
Role of the senior governing body in
supervising the impact management
2.6. Risk management
2.15. Declaration on the
application of corporate
governance
GRI 2-13
GRI 2. Profile
disclosures 2021
Delegating responsibility for impact
management
2.6. Risk management
2.15. Declaration on the
application of corporate
governance
GRI 2-14
GRI 2. Profile
disclosures 2021
Role of the senior governing body in
reporting on sustainable
development
2.15. Declaration on the
application of corporate
governance
GRI 2-15
GRI 2. Profile
disclosures 2021
Conflict of interest
2.15. Declaration on the
application of corporate
governance
GRI 2-16
GRI 2. Profile
disclosures 2021
Communication of critical issues 2.6. Risk management
GRI 2-17
GRI 2. Profile
disclosures 2021
Collective knowledge of the senior
governing body on sustainable
development
2.15. Declaration on the
application of corporate
governance
GRI 2-18
GRI 2. Profile
disclosures 2021
Assessment of activities of the senior
governing body
2.15. Declaration on the
application of corporate
governance
GRI 2-19
GRI 2. Profile
disclosures 2021
Remuneration policy
2.1. Management Structure
of KGHM S.A. and the KGHM
S.A. Group
2.15. Declaration on the
application of corporate
governance
GRI 2-20
GRI 2. Profile
disclosures 2021
Remuneration determination
process
2.1. Management Structure
of KGHM S.A. and the KGHM
S.A. Group
GRI 2-21
GRI 2. Profile
disclosures 2021
Index of total annual remuneration
2.1. Management Structure
of KGHM S.A. and the KGHM
S.A. Group
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 194
the Company and the Group in 2022 – translation from the original Polish version
Indicator
number
Title of the GRI
Standard
Name of indicator Place of disclosure
Comments and
explanations
Strategy, policies and activities
GRI 2-22
GRI 2. Profile
disclosures 2021
Statement on the sustainable
development strategy
2.4. Management of ESG
issues
GRI 2-23
GRI 2. Profile
disclosures 2021
Commitments related to sustainable
development
2.4. Management of ESG
issues
GRI 2-24
GRI 2. Profile
disclosures 2021
Fulfilment of the commitments
included in the Policies
2.2. Corporate governance
GRI 2-25
GRI 2. Profile
disclosures 2021
Adverse impact mitigation processes
2.7. Ethics / Ethical
foundations
2.9. Human rights
3.3. Approach to climate risk
management
GRI 2-26
GRI 2. Profile
disclosures 2021
Mechanisms for seeking advice and
raising concerns
2.7. Ethics / Ethical
foundations
2.9. Human rights
4.3. Organisational culture
GRI 2-27
GRI 2. Profile
disclosures 2021
Compliance with law and regulations
2.13. Due diligence policies
and procedures
GRI 2-28
GRI 2. Profile
disclosures 2021
Membership in organisations
1.13. Key partnerships and
supported initiatives
Stakeholder involvement
GRI 2-29
GRI 2. Profile
disclosures 2021
Approach to stakeholder
involvement
1.11. Stakeholders and
external relations
4.4. Communication with
employees
4.11. Employee voluntary
work
GRI 2-30
GRI 2. Profile
disclosures 2021
Collective labour agreements
4.5. Relations with trade
unions
II. MATERIAL TOPICS
GRI 3-1
GRI 3. Material topics
2021
Process for identifying material
topics
6.2. List / Matrix of material
reporting topics for 2022
GRI 3-2
GRI 3. Material topics
2021
List of material topics
6.2. List / Matrix of material
reporting topics for 2022
Striving for a circular economy
GRI 3-3
GRI 3. Material topics
2021
Management of material topics
3.6. Environmental impact
of operations
GRI 306-1
306: Waste 2020
Waste generation and its significant
impact
3.6. Environmental impact
of operations
GRI 306-2
306: Waste 2020
Managing the significant impact of
waste
3.6. Environmental impact
of operations
GRI 306-3
306: Waste 2020
Waste generated by waste category
3.6. Environmental impact
of operations
Prevention of climate change
GRI 3-3
GRI 3. Material topics
2021
Management of material topics
3.1. Approach to the
management of
environmental impacts and
climate protection
3.3. Approach to climate risk
management
GRI 302-1
302: Energy 2016
Energy consumption of the
organisation by type of raw materials
3.1. Approach to the
management of
environmental impacts and
climate protection
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 195
the Company and the Group in 2022 – translation from the original Polish version
Indicator
number
Title of the GRI
Standard
Name of indicator Place of disclosure
Comments and
explanations
GRI 305-1
305: 2016 emissions
Direct greenhouse gas emissions
(scope 1)
3.1. Approach to the
management of
environmental impacts and
climate protection
GRI 305-2
305: 2016 emissions
Indirect greenhouse gas emissions
(scope 2)
3.1. Approach to the
management of
environmental impacts and
climate protection
GRI 305-3
305: 2016 emissions
Other indirect greenhouse gas
emissions (scope 3)
3.1. Approach to the
management of
environmental impacts and
climate protection
Management of water resources
GRI 3-3
GRI 3. Material topics
2021
Management of material topics
3.6. Environmental impact
of operations
GRI 303-1
303: Water and
effluents 2018
Interaction with water as a shared
resource
3.6. Environmental impact
of operations
GRI 303-2
303: Water and
effluents 2018
Management of impacts associated
with water discharges
3.6. Environmental impact
of operations
GRI 303-3
303: Water and
effluents 2018
Water withdrawal
3.6. Environmental impact
of operations
GRI 303-4
303: Water and
effluents 2018
Water discharges
3.6. Environmental impact
of operations
GRI 303-5
303: Water and
effluents 2018
Water consumption
3.6. Environmental impact
of operations
Economic impact
GRI 3-3
GRI 3. Material topics
2021
Management of material topics
2.11. Information on
sources of supply of
materials used in
production, in goods and
services
3.2. Importance of copper
for the energy transition
GRI 201-1
201: Economic results
2016
Direct economic value generated and
distributed
Aggregated data of the
Company and Group for the
years 2015-2022
GRI 203-1
203: Indirect economic
impact 2016
Contribution to the development of
infrastructure and the provision of
services to the public through
commercial activities, the donation
of goods and pro bono activities. The
impact of these activities on the
society
4.12. Expenditures incurred
by the Company and the
Group to support culture,
sports, charities, media,
social organisations, trade
unions etc
4.13. Public engagement
during the war in Ukrainie
4.14. The KGHM Polska
Miedź S.A. Foundation and
sponsorship activities
The indicator also refers
to the topic: Relations
with local communities
Responsible supply chain
GRI 3-3
GRI 3. Material topics
2021
Management of material topics
2.10. Sustainable supply
chain
GRI 308-1
308: Environmental
assessment of suppliers
New suppliers that have undergone
an environmental impact
assessment
2.10. Sustainable supply
chain
The indicator also relates
to the topic of
Management of
sustainable development
and ESG risks
Occupational Health and Safety
GRI 3-3
GRI 3. Material topics
2021
Management of material topics
4.8. Occupational health and
safety
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 196
the Company and the Group in 2022 – translation from the original Polish version
Indicator
number
Title of the GRI
Standard
Name of indicator Place of disclosure
Comments and
explanations
GRI 403-1
403: Occupational
Health and Safety 2018
System of occupational health and
safety management
4.8. Occupational health and
safety
GRI 403-2
403: Occupational
Health and Safety 2018
Hazard identification, risk
assessment and incident
investigation
4.8. Occupational health and
safety
GRI 403-3
403: Occupational
Health and Safety 2018
The entity (and description of its
activities) responsible for the health
and safety of workers
4.8. Occupational health and
safety
GRI 403-4
403: Occupational
Health and Safety 2018
Employee participation, consultation
and communication on occupational
health and safety
4.8. Occupational health and
safety
GRI 403-5
403: Occupational
Health and Safety 2018
Training of employees in the scope
of occupational health and safety
4.8. Occupational health and
safety
GRI 403-6
403: Occupational
Health and Safety 2018
Care for health of employees
4.6. Working conditions and
staff development
4.8.
Occupational health and
safety
4.11. Employee voluntary
work
GRI 403-7
403: Occupational
Health and Safety 2018
Preventing and mitigating workplace
health and safety impacts in the
organisation's value chain
4.8.
Occupational health and
safety
GRI 403-8
403: Occupational
Health and Safety 2018
Employees covered by the
occupational health and safety
management system
4.8. Occupational health and
safety
GRI 403-9
403: Occupational
Health and Safety 2018
Accidents at work
4.8. Occupational health and
safety
Ethics and transparency
GRI 3-3
GRI 3. Material topics
2021
Management of material topics
2.7. Ethics / Ethical
foundations
2.8. Counteracting
corruption
2.13. Due diligence policies
and procedures
GRI 205-1
205: Counteracting
corruption 2016
Percentage and total number of
business units analysed for
corruption risks and risks identified
2.8. Counteracting
corruption
GRI 205-2
205: Counteracting
corruption 2016
Communication and training on anti-
corruption policies and procedures
2.8. Counteracting
corruption
GRI 205-3
205: Counteracting
corruption 2016
Confirmed cases of corruption and
action taken
2.8. Counteracting
corruption
GRI 415-1
415: Public commitment
2016
Total financial and in-kind donations
to political parties, politicians and
institutions of a similar nature
The KGHM Polska Miedź
S.A. Group does not
financially support
political parties, politicians
or other institutions of a
similar character.
Preservation of biodiversity
GRI 3-3
GRI 3. Material topics
2021
Management of material topics
3.6. Environmental impact
of operations
GRI 304-1
304: Biodiversity 2016
“Owned, leased, managed or
adjacent to
3.6. Environmental impact
of operations
GRI 304-2
304: Biodiversity 2016
protected areas and areas of high
biodiversity value outside protected
areas”
3.6. Environmental impact
of operations
GRI 304-3
304: Biodiversity 2016
Significant impact of activities,
products and services
3.6. Environmental impact
of operations
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 197
the Company and the Group in 2022 – translation from the original Polish version
Indicator
number
Title of the GRI
Standard
Name of indicator Place of disclosure
Comments and
explanations
Good workplace
GRI 3-3
GRI 3. Material topics
2021
Management of material topics
4.1. KGHM as a responsible
employer – responsibility in
the workplace (approach to
managing employee issues)
4.6. Working conditions and
staff development
GRI 401-1
401: Employment 2016 Newly recruited staff and staff
turnover
4.2. Structure of
employment
GRI 401-2
401: Employment 2016
Fringe benefits provided to full-time
employees that are not available to
temporary or part-time employees,
by major business unit
4.6. Working conditions and
staff development
GRI 405-1
405: Diversity and equal
opportunities 2016
Diversity of supervisory and
management bodies and employees
4.7. Diversity in the
workplace
The indicator also relates
to the topic of Diversity
and equal opportunities
GRI 405-2
405: Diversity and equal
opportunities 2016
Ratio of basic and total wage for
women to men
4.7. Diversity in the
workplace
The indicator also relates
to the topic of Diversity
and equal opportunities
GRI 404-1
404: Training and
education 2016
Average annual number of training
hours per employee
4.6. Working conditions and
staff development
The indicator also relates
to the topic of Employee
development
GRI 404-2
404: Training and
education 2016
Skills development and change
facilitation programs
4.6. Working conditions and
staff development
The indicator also relates
to the topic of Employee
development
Management of sustainable development and ESG
GRI 3-3
GRI 3. Material topics
2021
Management of material topics
2.4. Management of ESG
issues
2.6. Risk management
3.3. Approach to climate risk
management
GRI 201-2
201: Economic results
2016
Financial implications and other risks
and opportunities associated with
climate change
3.3. Approach to climate risk
management
This disclosure relates to
KGHM Polska Miedź S.A.
The disclosure contains a
description of risks and
their classification,
methods applied in risk
and opportunity
management. However,
the consequences of
financial risks or
opportunities prior to
taking action were not
added.
GRI 308-1
308: Environmental
assessment of suppliers
New suppliers that have undergone
an environmental impact
assessment
2.10. Sustainable supply
chain
The indicator also relates
to the topic of
Responsible Supply Chain
Relations with local communities
GRI 3-3
GRI 3. Material topics
2021
Management of material topics
4.9. Responsibility towards
society / society as a pillar of
the KGHM Group’s
sustainable development
activities
GRI 413-1
413: Local communities
2016
The organisation's business units,
incorporating community
engagement, impact assessment and
development programs.
4.9. Responsibility towards
society / society as a pillar of
the KGHM Group’s
sustainable development
activities
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 198
the Company and the Group in 2022 – translation from the original Polish version
Indicator
number
Title of the GRI
Standard
Name of indicator Place of disclosure
Comments and
explanations
4.10. Cooperation with local
communities in the KGHM
Polska Miedź S.A. Group
GRI 203-1
203: Indirect economic
impact 2016
Contribution to the development of
infrastructure and the provision of
services to the public through
commercial activities, the donation
of goods and pro bono activities. The
impact of these activities on the
society
4.12. Expenditures incurred
by the Company and the
Group to support culture,
sports, charities, media,
social organisations, trade
unions etc
4.13. Public engagement
during the war in Ukrainie
4.14. The KGHM Polska
Miedź S.A. Foundation and
sponsorship activities
The indicator also relates
to the topic of Economic
impact
Respecting human rights
GRI 3-3
GRI 3. Material topics
2021
Management of material topics
2.7. Ethics / Ethical
foundations
2.9. Human rights
GRI 406-1
406: Counteracting
discrimination 2016
Number of incidents of
discrimination and corrective action
taken on this issue
2.7. Ethics / Ethical
foundations
Development of innovation
GRI 3-3
GRI 3. Material topics
2021
Management of material topics
3.4. Environmentally-
friendly investment and
description of measures
taken
3.5. Energy transition -
projects implemented by
KGHM
Own
indicator
Innovations improving energy
efficiency or mitigating adverse
environmental impacts
3.5. Energy transition -
projects implemented by
KGHM
Diversity and equal opportunities
GRI 3-3
GRI 3. Material topics
2021
Management of material topics
2.15. Declaration on the
application of corporate
governance
4.7. Diversity in the
workplace
GRI 405-1
405: Diversity and equal
opportunities 2016
Diversity of supervisory and
management bodies and employees
4.7. Diversity in the
workplace
The indicator also relates
to the topic of Good
workplace
GRI 405-2
405: Diversity and equal
opportunities 2016
Ratio of basic and total wage for
women to men
4.7. Diversity in the
workplace
The indicator also relates
to the topic of Good
workplace
GRI 406-1
406: Counteracting
discrimination 2016
Number of incidents of
discrimination and corrective action
taken on this issue
2.7. Ethics / Ethical
foundations
The indicator also relates
to the topic of Respecting
human rights
Employee development
GRI 3-3
GRI 3. Material topics
2021
Management of material topics
4.6. Working conditions and
staff development
GRI 404-1
404: Training and
education 2016
Average annual number of training
hours per employee
4.6. Working conditions and
staff development
The indicator also relates
to the topic of Good
workplace
GRI 404-2
404: Training and
education 2016
Skills development and change
facilitation programs
4.6. Working conditions and
staff development
The indicator also relates
to the topic of Good
workplace
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 199
the Company and the Group in 2022 – translation from the original Polish version
Indicator
number
Title of the GRI
Standard
Name of indicator Place of disclosure
Comments and
explanations
Customer satisfaction
GRI 3-3
GRI 3. Material topics
2021
Management of material topics
2.7. Ethics / Ethical
foundations
GRI 417-1
417: Marketing and
labelling of products
and services 2016
Product and service information
requirements and labelling
100% - percentage of
material categories of
products and services of
the KGHM Polska Miedź
S.A. Group that were
tested for compliance
with labelling procedures
6.4 INFORMATION ON EXTERNAL AUDITING
GRI 2-5
The contract for the audit and review of the financial statements of KGHM Polska Miedź S.A. and of the KGHM Polska Miedź
S.A. Group for the years 2019-2021 with the company PricewaterhouseCoopers Polska Spółka z ograniczoną
odpowiedzialnością Audyt Sp.k. was entered into on 27 February 2019. Following a positive evaluation of the services
performed by the existing auditor and of the offer submitted by the auditor to provide services comprised of the audit and
review of the financial statements of KGHM Polska Miedź S.A., the Supervisory Board of KGHM Polska Miedź S.A. resolved
to extend the life of the aforementioned agreement for the review and audit of the financial statements of KGHM Polska
Miedź S.A. and of the KGHM Polska Miedź S.A. Group for the years 2022-2024.
Detailed information on the policies and procedures involved in the selection and providing of auditing services may be
found in subsection 2.15 Declaration on the application of corporate governance
.
KGHM Polska Miedź S.A. made use of the services of the auditing firm for the audit and review of the financial statements
of KGHM Polska Miedź S.A. and of the KGHM Polska Miedź S.A. Group for the years 2010-2015, and in the years 2016-2018
with respect to tax advising and financial-accounting services.
The Supervisory Board of the Company selected the auditing firm based on the recommendation of the Supervisory Board’s
Audit Committee in compliance with laws in force.
Information on the remuneration of the entity entitled to audit the financial statements for the review and audit of financial
statements and other remuneration is presented in note 12.10 of the separate financial statements and note 12.10 of the
consolidated financial statements.
Moreover, the Statement on non-financial information, as a separate part of this report, was subjected to voluntary expert
verification in terms of its methodological propriety and accuracy. The opinion of the external auditor Paweł Bogacz, Ph.D.
Hab. Eng. (Stanisław Staszic AGH University of Science and Technology in Kraków) on the conducted evaluation and
verification is included in the introduction to the Declaration on non-financial information.
6.5 CONTACT
For information, questions and concerns regarding the Statement on Non-Financial Information, please contact the Investor
Relations Department of KGHM Polska Miedź S.A., ir@kghm.com
+48 76 74 78 280.
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 200
the Company and the Group in 2022 – translation from the original Polish version
Economic results
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 201
the Company and the Group in 2022 – translation from the original Polish version
7 ECONOMIC PERFORMANCE OF THE GROUP
Copper production C1 cost Revenues Adjusted EBITDA Profit for the period
733
kt
2.20
USD/lb
33 778
PLN mn
8 865
PLN mn
4 774
PLN mn
7.1 PRODUCTION
In 2022, copper production by the Group was lower by 3%, or by 20.6 thousand tonnes compared to 2021. The decrease
was in respect of KGHM INTERNATIONAL LTD. (-15.5 thousand tonnes) and Sierra Gorda SCM (-13.6 thousand tonnes on a
55% basis) and was not offset by higher production by KGHM Polska Miedź S.A. (+ 8.4 thousand tonnes).
The increase in copper production by KGHM Polska Miedź S.A. in 2022 was due to higher consumption of purchased copper-
bearing materials and higher availability of production lines.
The decrease in copper production by Sierra Gorda SCM was mainly due to the extraction of ore with lower copper content
and lower recovery.
The decrease in production by the segment KGHM INTERNATIONAL LTD. was mainly due to the lack of production from the
Franke mine from April 2022 (-8.0 thousand tonnes) and lower production by the Robinson mine (-6.8 thousand tonnes).
Higher copper production versus the prior year was recorded by the Sudbury Basin mines (+0.6 thousand tonnes).
Detailed information on production results may be found in the sections dedicated to individual segments. The Group’s
production is shown below.
Table 74. Production by the Group
37
2022 2021
Change
(%)
IVQ'22 IIIQ'22 IIQ'22 IQ'22
Payable copper (kt)
Group
733.1
753.7
(2.7)
175.6
179.8
184.5
193.2
- KGHM Polska Miedź S.A.
586.0 577.6 1.5 143.5 146.2 145.2 151.1
- KGHM INTERNATIONAL LTD.
56.2
71.7
(21.6)
8.9
10.4
18.7
18.2
- Sierra Gorda S.C.M.
90.8 104.4 (13.0) 23.2 23.2 20.6 23.9
TPM (koz t)
Group
177.5
163.5
8.6
45.3
41.0
48.4
42.8
- KGHM Polska Miedź S.A.
87.3 81.3 7.4 25.5 20.9 19.8 21.1
- KGHM INTERNATIONAL LTD.
55.9
51.3
9.0
10.7
10.5
19.6
15.1
- Sierra Gorda S.C.M.
34.3 30.9 11.0 9.1 9.6 9.0 6.6
Silver (t)
Group
1 327.1
1 366.1
(2.9)
305.1
338.7
335.6
347.7
- KGHM Polska Miedź S.A.
1 298.4 1 332.2 (2.5) 298.6 331.3 328.7 339.8
- KGHM INTERNATIONAL LTD.
2.0
2.0
-
0.6
0.6
0.5
0.3
- Sierra Gorda S.C.M.
26.7 31.9 (16.3) 5.9 6.8 6.4 7.6
Molybdenum (mn lbs)
Group
3.0
8.4
(64.3)
0.5
0.5
0.7
1.3
- KGHM Polska Miedź S.A.
- - × - - - -
- KGHM INTERNATIONAL LTD.
0.1
0.2
(50.0)
-
-
-
0.1
- Sierra Gorda S.C.M.
2.9 8.2 (64.6) 0.5 0.5 0.7 1.2
37
Sierra Gorda – 55% share of the Group
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 202
the Company and the Group in 2022 – translation from the original Polish version
7.2 SALES STRUCTURE – GEOGRAPHIC AND PRODUCT
The geographic and product structure of the consolidated sales revenue of the Group is presented in the following charts.
In accordance with the adopted principle of consolidation by the equity method, sales revenue do not include revenues of
the segment Sierra Gorda S.C.M. Detailed information on segment sales is presented in the sections devoted to the results
of individual segments.
Chart 30. Geographic structure of Group sales
Chart 31. Product structure of Group sales
7.3 C1 COST OF PRODUCING PAYABLE COPPER IN THE GROUP
Unit costs by Group segments are presented in the table below. Detailed descriptions of individual items are presented in
the sections devoted to individual segments.
Table 75. C1 cost of producing payable copper in the Group (USD/lb)
2022 2021
Change
(%)
IVQ'22 IIIQ'22 IIQ'22 IQ'22
Group
2.20 1.96 +12.2 2.21 2.23 2.18 2.19
- KGHM Polska Miedź S.A.
2.38
2.26
+5.3
2.34
2.38
2.42
2.40
- KGHM INTERNATIONAL LTD.
2.14
2.01
+6.5
2.47
2.07
1.77
2.23
- Sierra Gorda S.C.M.
1.50
0.78
+92.3
1.55
1.68
1.41
1.35
Poland
27%
Germany
17%
China
11%
Italy
7%
Czechia
7%
United Kingdom
5%
Other
26%
Copper
68%
Silver
12%
Gold
3%
Services
4%
Other
13%
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 203
the Company and the Group in 2022 – translation from the original Polish version
7.4 FINANCIAL RESULTS
STATEMENT OF PROFIT OR LOSS
Table 76. Financial results of the Group (in million PLN)
2022 2021
Change
(%)
IVQ'22 IIIQ'22 IIQ'22 IQ'22
Revenues from contracts with customers
33 847
29 803
+13.6
8 151
7 770
8 933
8 993
Cost of sales, selling costs and administrative expenses
(29 503)
(25 093)
+17.6
(7 493)
(7 115)
(7 703)
(7 192)
Profit on sales
4 344
4 710
(7.8)
658
655
1 230
1 801
Profit or loss on involvement in a joint venture
1 455
2 874
(49.4)
195
158
855
247
Other operating income and (costs)
962
711
+35.3
(1 652)
1 075
972
567
Finance income / (costs)
(272)
(471)
(42.3)
423
(337)
(251)
(107)
Profit before income tax
6 489
7 824
(17.1)
(376)
1 551
2 806
2 508
Income tax expense
(1 715)
(1 669)
+2.8
(117)
(464)
(525)
(609)
Profit for the period
4 774
6 155
(22.4)
(493)
1 087
2 281
1 899
Adjusted EBITDA
38
8 865
10 327
(14.2)
1 920
1 636
2 176
3 133
Table 77. Main factors impacting the change in profit or loss of the Group
Item
Impact on
change of
profit or loss
(in million
PLN)
Description
Revenues from
contracts with
customers
+4 044
An increase in revenues mainly due to revenues from sales of copper +PLN 2 801 million,
silver +PLN 373 million, services +PLN 254 million and gold +PLN 171 million. Detailed
reasons for the changes in revenues in the segments KGHM Polska Miedź S.A. and KGHM
INTERNATIONAL LTD. are described in parts 7 and 8 of this report.
Cost of sales,
selling costs
and
administrative
expenses
(4 410)
− an increase in cost of sales, selling costs and administrative expenses due to:
− an increase in expenses by nature by PLN 4 851 million, mainly due to an increase in
costs of materials and energy by PLN 3 914 million, including a higher volume of
purchased metal-bearing materials by PLN 1 727 million, higher employee benefits
costs by PLN 890 million, higher external services by PLN 404 million, higher
depreciation/amortisation by PLN 144 million, higher costs of other taxation and
fees by PLN 125 million. Compared to 2021, the minerals extraction tax charge was
lower by PLN 502 million and the impairment losses on property, plant and
equipment and intangible assets by PLN 257 million.
− an adjustment to inventories of finished products and work in progress by PLN
464 million (in 2022: -PLN 2 008 million; in 2021: -PLN 1 544 million),
Profit or loss on
involvement in
a joint venture
(1 419)
A decrease in the result on involvement in a joint venture, from PLN 2 874 million to PLN
1 455 million, comprised of:
− a decrease in gains due to the reversal of allowances for impairment of loans granted
to a joint venture, PLN 1 507 million,
−
an increase in interest income on loans granted by PLN 88 million.
Other operating
income and
(costs)
+251
An increase in the result on other operating activities, from PLN 711 million to PLN
962 million, comprised mainly of:
− an increase by PLN 165 million in the result from the measurement and realisation of
derivatives,
− gain on disposal of subsidiaries, PLN 180 million,
− an increase by PLN 50 million in profit/(loss) from the sale of intangible assets and
property, plant and equipment,
− financial support granted to municipalities, PLN 100 million,
− a decrease by PLN 45 million in the result on exchange differences.
Finance income
and (costs)
+199
An increase in the result on finance income and costs, from -PLN 471 million to -PLN
272 million, mainly comprised of:
−
a decrease by PLN 120 million in foreign exchange losses on measurement and
realisation of borrowings,
− a decrease by PLN 76 million in interest costs on borrowings.
Income tax
(46)
An increase in income tax mainly due to:
− lower current income tax by PLN 195 million,
− higher deferred income tax by PLN 191 million.
38
Adjusted EBITDA = profit on sales + depreciation/amortisation (recognised in profit or loss) + impairment loss (-reversal of impairment
losses) on non-current assets recognised in cost of sales, selling costs and administrative expenses) according to part 2 of the consolidated
financial statements – together with Sierra Gorda S.C.M.
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 204
the Company and the Group in 2022 – translation from the original Polish version
Chart 32. Change in profit/loss of the Group for 2022 (in million PLN)
CASH FLOW
Table 78. Cash flow of the Group (in million PLN)
2022 2021
Change
(%)
4Q'22 3Q'22 2Q'22 1Q'22
Profit before income tax
6 489
7 824
(17.1)
(376)
1 551
2 806
2 508
Exclusions of income and costs, total
(12)
(51)
(76.5)
1 688
(706)
(1 039)
45
Income tax paid
(1 696)
(740)
×2.3
(205)
(192)
(652)
(647)
Change in working capital
(2 317)
(2 767)
(16.3)
(801)
(85)
(1 250)
(181)
Net cash generated from operating activities
2 464
4 266
(42.2)
306
568
(135)
1 725
Expenditures on property, plant and equipment and intangible
assets
(4 118) (3 890) +5.9 (1 162) (988) (884) (1 084)
Repayment of loans granted to a joint venture
789
1 259
(37.3)
-
-
358
431
Proceeds from disposal of property, plant and equipment and
intangible assets
394 98 ×4.0 18 3 43 330
Proceeds from the sale of subsidiaries
243
-
×
-
-
92
151
Other cash flow from investing activities
(3)
7
×
(18)
62
(24)
(23)
Net cash used in investing activities
(2 695)
(2 526)
+6.7
(1 162)
(923)
(415)
(195)
Proceeds from / repayments of borrowings
252
(1 720)
×
(110)
503
(98)
(43)
Interest paid
(92)
(94)
(2.1)
(47)
(5)
(9)
(31)
Repayment of lease liabilities
(59)
(67)
(11.9)
(8)
(9)
(33)
(9)
Dividends paid to shareholders of the Parent Entity
(600)
(300)
×2.0
-
(600)
-
-
Other cash flow from financing activities
53
(19)
×
45
2
(1)
7
Net cash used in financing activities
(446)
(2 200)
(79.7)
(120)
(109)
(141)
(76)
NET CASH FLOW
(677)
(460)
47.2
(976)
(464)
(691)
1 454
Exchange differences
(27)
(158)
(82.9)
44
(39)
(29)
(3)
Cash and cash equivalents at beginning of the period
1 904
2 522
(24.5)
2 132
2 635
3 355
1 904
Cash and cash equivalents at end of the period
1 200
1 904
(37.0)
1 200
2 132
2 635
3 355
Net cash generated from operating activities in 2022 amounted to +PLN 2 464 million and was comprised of profit before
income tax of +PLN 6 489 million, increased mainly by adjusted depreciation/amortisation in the amount of +PLN 2 239
million, the reclassification of other comprehensive income to profit or loss due to the realisation of hedging derivatives in
the amount of +PLN 492 million and an impairment loss on non-current assets of +PLN 147 million.
The decrease in cash generated from operating activities in 2022 was mainly due to the change in working capital of -PLN
2 317 million, income tax paid of -PLN 1 696 million, an adjustment of gains due to the reversal of allowances for impairment
of loans granted to a joint venture of -PLN 873 million, an adjustment due to exchange differences of -PLN 661 million, an
adjustment of interest on loans granted to a joint venture of -PLN 582 million, change in assets and liabilities due to
derivatives of -PLN 353 million, an adjustment of gains on disposal subsidiaries of -PLN 180 million and gains on disposal
of property, plant and equipment and intangible assets in the amount of -PLN 108 million.
Net cash used in investing activities in 2022 amounted to -PLN 2 695 million and mainly comprised expenditures on
property, plant and equipment and intangible assets in the amount of PLN 4 118 million, proceeds from the repayment of
loans granted to a joint venture together with interest in the amount of PLN 789 million, proceeds from the disposal of
subsidiaries of PLN 243 million and proceeds from the disposal of property, plant and equipment and intangible assets of
PLN 394 million.
Net cash used in financing activities in 2022 amounted to -PLN 446 million and mainly comprised the balance of proceeds
and repayment of borrowings in the amount of PLN 252 million, dividends paid to shareholders of the Parent Entity in the
amount of PLN 600 million and interest paid in the amount of PLN 92 million.
After reflecting exchange differences on cash and cash equivalents, cash and cash equivalents decreased by PLN 704 million
and at the end of 2022 amounted to PLN 1 200 million.
6 155
4 774
+4 044
+251
+199
-4 410
-1 419
-46
Profit for
2021
Revenues from
contracts with
customers
Cost of sales,
selling costs and
administrative
expenses
Profit or loss on
involvement in
joint ventures
Other operating
income
and (costs)
Finance income
and
(costs)
Income
tax
Profit for
2022
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 205
the Company and the Group in 2022 – translation from the original Polish version
Chart 33. Cash flow of the Group in 2022 (in million PLN)
ASSETS, EQUITY AND LIABILITIES
Table 79.Consolidated assets (in million PLN)
31.12.2022 31.12.2021
Change
(%)
30.09.2022 30.06.2022 31.03.2022
Property, plant and equipment and intangible
assets
28 630 26 723 +7.1 28 674 27 679 26 707
Joint ventures – loans granted
9 603
7 867
+22.1
10 591
9 438
8 348
Financial instruments
1 789
1 728
+3.5
1 953
2 200
1 763
Deferred tax assets
137
185
(25.9)
156
205
191
Other non-financial assets
220
161
+36.6
160
157
158
Non-current assets
40 379
36 664
+10.1
41 534
39 679
37 167
Inventories
8 902
6 337
+40.5
8 160
7 810
6 892
Trade receivables
1 177
1 009
+16.7
1 252
1 524
1 405
Tax assets
367
364
+0.8
271
290
246
Derivatives
796
254
×3.1
826
587
192
Joint ventures – loans granted
-
447
×
-
-
-
Other financial assets
337
172
+95.9
380
245
180
Other non-financial assets
286
162
+76.5
284
336
281
Cash and cash equivalents
1 200
1 884
(36.3)
2 132
2 635
3 337
Assets held for sale
-
734
×
-
-
341
Current assets
13 065
11 363
+15.0
13 305
13 427
12 874
TOTAL ASSETS
53 444
48 027
+11.3
54 839
53 106
50 041
At the end of 2022, total assets in the consolidated statement of financial position amounted to PLN 53 444 million and
were higher as compared to 31 December 2021 by PLN 5 417 million.
Non-current assets as at 31 December 2022 amounted to PLN 40 379 million and compared to the end of 2021 were higher
by PLN 3 715 million. The increase in non-current assets was mainly with respect to loans granted to joint ventures by PLN
1 736 million and property, plant and equipment and intangible assets by PLN 1 907 million.
Current assets increased by PLN 1 702 million, mainly due to inventories by PLN 2 565 million, trade receivables by PLN 168
million, derivatives by PLN 542 million and other financial and non-financial assets by PLN 289 million. The decrease in
current assets was mainly with respect to assets held for sale by PLN 734 million, cash and cash equivalents by PLN 684
million and loans granted to a joint venture by PLN 447 million.
Chart 34. Change in assets of the Group in 2022 (in million PLN)
1 904
1 200
+2 464
+252
-2 695
-600
-92
-33
Cash as at 1
January 2022
Net cash
generated from
operating activities
Net cash used in
investing activities
Proceeds from /
repayments of
borrowings
Dividend paid Interest paid Other Cash as at 31
December 2022
48 027
53 444
+3 715
+1 702
Assets as at 31 December 2021 Change in non-current assets Change in current assets Assets as at 31 December 2022
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 206
the Company and the Group in 2022 – translation from the original Polish version
EQUITY AND LIABILITIES
Table 80. Consolidated equity and liabilities (in million PLN)
31.12.2022 31.12.2021 Change (%) 30.09.2022 30.06.2022 31.03.2022
Share capital
2 000
2 000
-
2 000
2 000
2 000
Other reserves from measurement of financial instruments
(427)
(1 705)
(75.0)
(1 085)
(670)
(1 949)
Accumulated other comprehensive income
1 812
2 219
(18.3)
2 093
2 145
2 123
Retained earnings
28 704
24 532
+17.0
29 198
28 112
26 432
Equity attributable to shareholders of the Parent Entity
32 089
27 046
+18.6
32 206
31 587
28 606
Equity attributable to non-controlling interest
57
92
(38.0)
58
57
55
Equity
32 146
27 138
+18.5
32 264
31 644
28 661
Borrowings, leases and debt securities
5 220
5 409
(3.5)
5 549
4 786
4 809
Derivatives
719
1 134
(36.6)
1 544
1 079
1 163
Employee benefits liabilities
2 621
2 306
+13.7
2 553
2 292
2 353
Provisions for decommissioning costs of mines and other
facilities
1 859 1 242 +49.7 1 539 1 508 884
Deferred tax liabilities
1 151
643
+79.0
911
978
577
Other liabilities
543
617
(12.0)
704
629
632
Non-current liabilities
12 113
11 351
+6.7
12 800
11 272
10 418
Borrowings, leases and debt securities
1 223
455
×2.7
1 369
1 250
1 145
Derivatives
434
889
(51.2)
521
371
1 149
Trade and similar payables
3 094
2 974
+4.0
3 081
3 138
2 858
Employee benefits liabilities
1 699
1 437
+18.2
1 512
1 681
1 536
Tax liabilities
1 233
1 453
(15.1)
1 287
1 212
1 904
Provisions for liabilities and other charges
173
207
(16.4)
251
205
203
Other liabilities
1 329
1 661
(20.0)
1 754
2 333
1 781
Liabilities associated with assets held for sale
-
462
×
-
-
386
Current liabilities
9 185
9 538
(3.7)
9 775
10 190
10 962
Non-current and current liabilities
21 298
20 889
+2.0
22 575
21 462
21 380
TOTAL EQUITY AND LIABILITIES
53 444
48 027
+11.3
54 839
53 106
50 041
Equity as of the end of 2022 amounted to PLN 32 146 million and were higher by PLN 5 008 million than at the end of
2021, mainly due to an increase in retained earnings by PLN 4 172 million.
Non-current liabilities of the KGHM Polska Miedź S.A. Group as of 31 December 2022 amounted to PLN 12 113 million and
were higher by PLN 762 million compared to the end of 2021, mainly due to an increase in employee benefits liabilities by
PLN 315 million, provisions for decommissioning costs of mines and other facilities by PLN 617 million and deferred tax
liabilities by PLN 508 million alongside a decrease in borrowings by PLN 189 million and derivatives by PLN 415 million.
Current liabilities of the KGHM Polska Miedź S.A. Group as at 31 December 2022 amounted to PLN 9 185 million and were
lower by PLN 353 million compared to the end of 2021, mainly due to a decrease in derivatives by PLN 455 million, tax
liabilities by PLN 220 million, other liabilities by PLN 332 million and liabilities associated with assets held for sale by PLN
462 million. Increases in current liabilities were mainly in respect of borrowings and leases by PLN 262 million, employee
benefits liabilities by PLN 211 million and trade and similar payables by PLN 120 million.
Chart 35. Change in equity and liabilities of the Group in 2022 (in million PLN)
+5 008
+762
-353
48 027
53 444
Equity and liabilities
as at 31 December
2021
Equity Non-current
liabilities
Current
liabilities
Equity and liabilities
as at
31 December 2022
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 207
the Company and the Group in 2022 – translation from the original Polish version
CONTINGENT ASSETS AND LIABILITIES DUE TO GUARANTEES GRANTED
As at 31 December 2022, contingent assets amounted to PLN 366 million and mainly comprised promissory note
receivables in the amount of PLN 147 million and guarantees received in the amount of PLN 195 million.
As at 31 December 2022, the liabilities of the Group due to guarantees and letters of credit granted amounted to a total of
PLN 1 156 million (as at 31 December 2021: PLN 849 million) and due to promissory note payables amounted to PLN 170
million (as at 31 December 2021: PLN 173 million).
The most significant items are liabilities of the Parent Entity aimed at securing the following obligations:
− Sierra Gorda S.C.M. – a corporate guarantee in the amount of PLN 969 million (USD 220 million) set as security on the
repayment of a bank loan drawn by Sierra Gorda S.C.M. (as at 31 December 2021 in the amount of PLN 670 million, or
USD 165 million). The guarantee’s validity period falls on September 2024. The carrying amount of the liability due to a
financial guarantee granted was recognised in the amount of PLN 57 million (as at 31 December 2021, PLN 58 million)
39
,
other entities, including the Parent Entity:
− PLN 126 million - securing the proper execution by the Parent Entity of future environmental obligations related
to the obligation to restore terrain, following the conclusion of operations of the Żelazny Most tailings storage facility
(as at 31 December 2021 in the amount of PLN 124 million), the guarantee is valid for up to 1 year,
− PLN 14 million - securing claims on behalf of the Marshal of the Voivodeship of Lower Silesia to cover costs related to
collecting and processing waste, the guarantee is valid up to 1 year,
− PLN 37 million (PLN 30 million and CAD 2 million) securing the obligations related to proper execution of agreements
concluded by the Group (as at 31 December 2021 in the amount of PLN 39 million, or PLN 32 million and CAD 2
million), the guarantee is valid for up to 3 years,
− PLN 2 million - securing obligations related to tax and customs duties, the guarantee is valid indefinitely.
Based on the knowledge held, at the end of the reporting period the Group assessed the probability of payments resulting
from liabilities due to guarantees and letters of credit granted as low.
7.5 FINANCING IN THE GROUP
The KGHM Polska Miedź S.A. Group manages its financial resources based on the approved Financial Liquidity Management
Policy in the Group. Its primary goal is to ensure continuous operations by securing the availability of funds required to
achieve the Group’s business goals, while optimising incurred costs. Moreover, the Policy regulates the Group’s borrowing
principles, the principles of managing debt and monitoring the level of the Group’s debt. Financial liquidity management
involves securing an appropriate amount of cash and available debt financing in the short, medium and long term.
NET DEBT IN THE GROUP
Borrowings of the Group at the end of 2022 amounted to PLN 6 441 million. The debt structure is based on diversified and
long-term financing sources, ensuring financial stability over the long term.
The Group’s free cash and cash equivalents, which as at 31 December 2022 amounted to PLN 1 179 million, are of a short
term nature.
Table 81. Net debt structure of the Group (in million PLN)
31.12.2022
31.12.2021
Change (%)
30.09.2022
30.06.2022
31.03.2022
Liabilities due to:
6 443
5 949
+8.3
6 018
6 036
5 956
Bank loans
1 263
735
+71.8
1 393
736
692
Other loans
2 434
2 568
(5.2)
2 845
2 675
2 593
Debt securities
2 002
2 001
-
2 046
2 001
2 022
Leases
744
645
+15.3
634
624
649
Free cash and cash equivalents
1 179
1 880
(37.3)
2 115
2 619
3 329
Net debt
5 264
4 069
+29.4
4 803
3 417
2 627
39
The financial guarantee was recognised pursuant to par. 4.2.1. point c of IFRS 9.
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 208
the Company and the Group in 2022 – translation from the original Polish version
Table 82. Net debt structure of the Parent Entity (in million PLN)
31.12.2022
31.12.2021
Change (%)
30.09.2022
30.06.2022
31.03.2022
Liabilities due to:
6 445
5 922
+8.8
6 906
5 980
5 958
Bank loans
1 194
593
×2.0
1 324
658
612
Other loans
2 241
2 387
(6.1)
2 627
2 473
2 385
Debt securities
2 002
2 001
-
2 046
2 001
2 022
Cash pooling
321
360
(10.8)
329
267
340
Leases
687
581
+18.2
581
580
599
Free cash and cash equivalents
971
1 318
(26.3)
1 693
2 020
2 633
Net debt
5 474
4 604
+18.9
5 213
3 960
3 325
SOURCES OF FINANCING IN THE GROUP
As at 31 December 2022, the Group held open lines of credit, loans and debt securities with a total available amount of PLN
15 386 million, out of which PLN 5 699 million had been drawn.
Table 83. Sources of financing in the Group
40
Unsecured,
revolving
syndicated credit
facility in the
amount of USD 1.5
billion
A credit facility in the amount of USD 1 500 million (PLN 6 603 million), acquired on the basis of a
financing agreement entered into by the Parent Entity with a syndicate banks group in 2019, with
maturity falling on 19 December 2024 and the option of extending for a further 2 years (5+1+1). In
the years 2020-2021 the Parent Entity received a consent of the Syndicate Members to extend the
term of the agreement by 2 years, that is to 20 December 2026. The amount of available financing
during the extension period will amount to USD 1 438 million (PLN 6 330 million). Interest is based
on LIBOR plus a margin, which depends on the net debt/EBITDA ratio.
The funds acquired under this credit facility are used to finance general corporate purposes.
Investment loans,
including from the
European
Investment Bank in
the total amount of
PLN 3.5 billion with
financing periods of
up to 12 years
Financing agreements signed by the Parent Entity with the European Investment Bank:
−
in August 2014 in the amount of PLN 2 000 million, which was drawn in the form of three
instalments with maturities falling on 30 October 2026, 30 August 2028 and 23 May 2029 and
used to the full available amount. The funds acquired through this loan were used to finance
selected investment projects related to modernisation of metallurgy and development of the
“Żelazny Most” tailings storage facility,
− in December 2017 in the amount of PLN 1 340 million, under which three instalments were
drawn with the payback period expiring on 28 June 2030, 23 April 2031 and 11 September 2031.
The deadline for accessing the unused amount of PLN 440 million expires in April 2023. The
funds acquired through this loan are
used to finance the Parent Entity’s development and
replacement projects at various stages of the production line.
Interest on the instalments drawn is based on a fixed interest rate.
Debt securities in
the amount of PLN
2.0 billion
The program to issue bonds on the Polish market was established under an issue agreement dated
27 May 2019. The issue had a nominal value of PLN 2 000 million, under which 5-year bonds were
issued in the amount of PLN 400 million with maturity falling on 27 June 2024 and 10-year bonds
in the amount of PLN 1 600 million with maturity falling on 27 June 2029.
Interest is based on
WIBOR plus a margin.
The funds obtained from the bond issue were used to finance general corporate goals.
Bilateral bank
loans in the
amount of up to
PLN 3.3 billion
The Group holds lines of credit in the form of short-term and long-term bilateral agreements in the
total amount of PLN 3 255 million. Interest is based on a fixed interest rate or on the variable
interest rates WIBOR, LIBOR, SOFR, EURIBOR plus a margin.
The funds obtained under the aforementioned bank loan agreements are a tool supporting the
management of current financial liquidity and support the financing of investments.
Another source supporting the Group’s liquidity is reverse factoring. The main goal of implementation of the reverse
factoring program was to guarantee the effective management of working capital while ensuring the timely execution of
trade payables towards the Group. It should be assumed that reverse factoring is a tool used by the Group as reasonably
needed. Agreements with factors were entered into for an unspecified period of time and remain active with the possibility
of immediately utilising the offered limits. Reverse factoring is one of the elements available for debt financing which the
Group does not plan on withdrawing from, and treats the available program as an effective tool to manage working capital
in a situation of negative changes in the economic environment or other factors.
The aforementioned sources fully cover the current, medium- and long-term liquidity needs of the Group.
40
Detailed information on the aforementioned borrowings and debt securities may be found in notes 8.4.3 of the financial statements
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 209
the Company and the Group in 2022 – translation from the original Polish version
DEBT POSITION AS AT 31 DECEMBER 2022
The following table presents the Group’s borrowing structure and the extent to which borrowing was utilised.
Table 84. Amount available and drawn by the Group (in million PLN)
Amount drawn
as of 31.12.22
Amount drawn
as of 31.12.21
Change (%)
Amount available
as of 31.12.22
Amount drawn
(%) as of 31.12.22
Unsecured, revolving syndicated credit facility
528
(14)
41
×
6 603
+8.0
Loans
2 434
2 568
(5.2)
3 528
+69.0
Bilateral bank loans
735
749
(1.9)
3 255
+22.6
Debt securities
2 002
2 001
+0.0
2 000
+100.1
Total
5 699
5 304
+7.4
15 386
+37.0
As at 31 December 2022, 61% of the Group’s debt came from loans drawn in USD, 38% in PLN and 1% in EUR.
EVALUATION OF FINANCIAL RESOURCES MANAGEMENT
In 2022, the KGHM Polska Miedź S.A. Group was fully capable of meeting its obligations with respect to liabilities drawn.
The cash and cash equivalents held by the Group along with the external financing obtained ensure that liquidity will be
maintained and will enable the achievement of investment goals.
As at 31 December 2022, the Group held PLN 1 179 million of free cash and cash equivalents and had open credit lines for
total available financing in the amount of PLN 15 386 million, out of which PLN 5 699 million had been drawn.
In 2022, the Group continued activities aimed at ensuring long-term financial stability and optimising short-term sources of
financing.
Under the unsecured, syndicated credit facility, the two bilateral bank loans and the investment loans from the European
Investment Bank, the Group is obliged to maintain financial covenants at specified levels. At the reporting date, during the
financial year and following the reporting date, up to the date of publication of this report, the level of reportable financial
covenants as of 30 June 2022 and 31 December 2022, met the conditions specified in agreements.
Table 85. Net debt / EBITDA of the Group
31.12.22 31.12.21 Change (%) 30.09.22 30.06.22 31.03.22
Net debt / EBITDA
42
0.8 0.6 33.3 0.7 0.5 0.3
41
Preparatory fee decreases liabilities due to bank loan drawn
42
adjusted EBITDA for the 12 month period, ending on the last day of the reporting period, excluding EBITDA of the joint venture Sierra
Gorda S.C.M.
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 210
the Company and the Group in 2022 – translation from the original Polish version
LOANS GRANTED BY GROUP COMPANIES
As at 31 December 2022, the balance of receivables due to loans granted by the Parent Entity, in accordance with the
measurement pursuant to IFRS 9, amounted to PLN 8 785 million, while the balance of receivables due to loans granted by
the Group, in accordance with the measurement pursuant to IFRS 9, amounted to PLN 9 623 million.
Table 86. The most significant43 loans granted by companies of the Group as of 31 December 2022
Lender
Borrower
Year
granted
Total amount of
loans
Total balance of receivables due to
loans granted
44
Maturity
Loans granted within the Group
KGHM Polska Miedź S.A.
KGHM INTERNATIONAL
LTD.
2015
USD 9 mn
USD 13 mn
PLN 55 mn
31.12.2027
KGHM Polska Miedź S.A. Future 1 Sp. z o.o.
2013-2016
USD 874 mn
USD 1 135 mn
PLN 4 998 mn
31.12.2024
2017
PLN 7 mn
PLN 9 mn
31.12.2024
KGHM Polska
Miedź S.A.
Quadra FNX Holdings
Chile Limitada
2015-2017
USD 442 mn
USD 203 mn
PLN 895 mn
31.12.2024
KGHM Polska
Miedź S.A.
Quadra FNX FFI S.à r.l. 2017-2020
USD 511 mn
USD 622 mn
PLN 2 739 mn
15.12.2024
31.12.2024
Future 1 Sp. z o.o.
KGHM INTERNATIONAL
LTD.
2012
USD 453 mn
USD 450 mn
PLN 1 981 mn
31.12.2027
Future 1 Sp. z o.o.
Quadra FNX FFI S.à r.l. 2017
USD 1 419 mn
USD 1 428 mn
PLN 6 288 mn
15.12.2024
KGHM INTERNATIONAL
LTD.
FNX Mining Company Inc.
2015
USD 140 mn
USD 54 mn
PLN 239 mn
on demand
KGHM INTERNATIONAL
LTD.
Robinson Holdings USA
Ltd.
2018
USD 161 mn
USD 161 mn
PLN 709 mn
on demand, no
later than
30.06.2025
Quadra FNX FFI S.à r.l.
Quadra FNX Holdings
Chile Limitada
2018-2020
USD 347 mn
USD 436 mn
PLN 1 919 mn
31.12.2024
Quadra FNX FFI S.à r.l
KGHM Chile SpA
2021
USD 7 mn
USD 7 mn
PLN 30 mn
31.12.2024
DMC Mining Services Ltd.
DMC Mining Services
Chile SpA
2019-2021
USD 22 mn
USD 24 mn
PLN 105 mn
on demand
FNX Mining Company
Inc./ DMC Branch
DMC Mining Services Ltd. 2019-2021
CAD 57 mn
CAD 57 mn
PLN 185 mn
on demand
Loans granted to other entities
Quadra FNX FFI S.à r.l. Sierra Gorda S.C.M. 2012
USD 1
700 mn
2 182 USD
mn
PLN 9 603
mn
on demand, no
later than
15.12.2024
CASH POOLING IN THE GROUP
In managing its financial liquidity, the Group utilises tools which support its efficiency. One of the basic instruments used
by the Group is the cash pooling management system - domestically in PLN, USD and EUR and abroad in USD, and
additionally in CAD in the KGHM INTERNATIONAL LTD. Group. The cash pooling system is aimed at optimising cash
management, limiting interest costs, the effective financing of current needs in terms of working capital and supporting
short term financial liquidity in the Group.
43
the balance of receivables over PLN 25 million
44
Including accrued, unpaid interest as at 31 December 2022
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 211
the Company and the Group in 2022 – translation from the original Polish version
7.6 ECONOMIC OUTLOOK FOR 2023 AND ACHIEVEMENTS OF 2022 TARGETS
KGHM Polska Miedź S.A. does not publish forecasts of financial results. However, in regulatory filings dated 14 January
2022 and 21 December 2022 the Company published its main Budget assumptions respectively for 2022 and 2023, which
are presented in the table below.
Table 87. 2022 targets versus achievements and targets for 2023
2022
Budget
2022
Execution
(%)
Budget
2023
Change (%)
KGHM Polska Miedź S.A.
Production of copper in concentrate
kt
392.5
392.1
100.1
389.7
(0.7)
Production of silver in concentrate
t
1 315.8
1 279,6
102.8
1 261.5
(4.1)
Electrolytic copper production, including:
kt
586.0
585.1
100.2
582.1
(0.7)
- from own concentrate
kt
381.5
393.6
96.9
385.3
+1.0
Metallic silver production
t
1 298.4
1 221.8
106.3
1 300.9
+0.2
Copper products sales volume
kt
565.0
583.0
96.9
606.8
+7.4
Silver products sales volume
t
1 338.3
1 278.1
104.7
1 303.0
(2.6)
Total unit cost of electrolytic copper production
from own concentrate
45
PLN/t 27 775 26 455 105.0 36 340 +30.8
Capital expenditures on property, plant and
equipment
46
PLN mn 2 604 2 835 91.9 3 250 +24.8
Other investments, including loans
47
PLN mn
31
202
15.3
2 129
×68.7
KGHM INTERNATIONAL LTD.
Payable copper production
kt
56.2
54.1
103.9
56.0
(0.4)
TPM production
koz t
55.9
53.1
105.3
59.2
+5.9
Sierra Gorda (55%)
Payable copper production
kt
90.8
90.8
100.0
80.3
(11.6)
Molybdenum production
mn lbs
2.9
2.9
100.0
5.7
+96.6
ACHIEVEMENT OF TARGETS IN 2022
In 2022, production of electrolytic copper by the Company was in line with the target in the Budget, with lower production
from own concentrate by 12.1 thousand tonnes and higher production from purchased metal-bearing materials by 13.0
thousand tonnes. Silver production was higher by 76 tonnes (+6%). As a result, sales of silver were also higher than planned
(+60 tonnes, or 5%).
Sales of copper were lower than assumed in the Budget by 18 thousand tonnes (-3%) as a result of matching customers’
ongoing needs.
Production of payable copper and precious metals by KGHM INTERNATIONAL LTD. was higher than assumed in the Budget
respectively by 2.1 thousand tonnes (+4%) and 2.8 thousand troy ounces (+5%).
Sierra Gorda ended 2022 with payable copper production at the target level, 90.8 thousand tonnes.
The total unit cost of electrolytic copper production from own concentrate in KGHM Polska Miedź S.A. was higher than
planned by 5%, mainly due to the higher costs of materials, technological fuels and energy carriers and 3% lower
production from own concentrate (-12.1 thousand tonnes).
Capital expenditures on property, plant and equipment were realised at the level of PLN 2 604 million, or 9% lower than
assumed in the Budget. Other investments however, including increases in share capital of subsidiaries and other equity
investments, amounted to PLN 31 million versus the target of PLN 202 million. Pursuant to the methodology applied in the
presentation of budgetary expenses, the amount of equity investments realised in 2022 was adjusted by proceeds resulting
from restructuring of FIZAN.
45
The sum of costs of mining, flotation, smelter processing per electrolytic copper, together with support functions and cathode selling costs,
adjusted by the value of inventories of half-finished products and work in progress, less anode slimes and divided by the volume of
electrolytic copper production from own concentrate.
46
Excluding costs of borrowing, leases per IFRS 16 unrelated to an investment project as well as expenditures on development work -
uncompleted
47
Acquisition of shares and investment certificates as well as loans, adjusted by proceeds resulting from the restructuring of FIZAN.
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 212
the Company and the Group in 2022 – translation from the original Polish version
TARGETS FOR 2023
Production – lower copper production by the Group in 2023 by 14.6 thousand tonnes (-2%) compared to the amount
recorded in 2022:
− KGHM Polska Miedź S.A. -3.9 thousand tonnes (-1%) with higher production from own concentrate by 3.8 thousand
tonnes,
− KGHM INTERNATIONAL LTD. LTD. -0.2 thousand tonnes (0%),
− Sierra Gorda -10.5 thousand tonnes (-12%) - the main reason for the lower production is operating in regions with lower
metal content.
The targeted level of sales of KGHM Polska Miedź S.A. is higher than by 41.8 thousand tonnes (+7%)
Total unit cost of electrolytic copper production from own concentrate (KGHM Polska Miedź S.A) will increase by 31% due
to the adopted assumptions regarding higher prices of materials and technological fuels as well as energy-related factors.
Capital expenditures on property, plant and equipment (excluding costs of borrowing, leases per IFRS 16 unrelated to
an investment project and expenditures on uncompleted development work) - an expected increase by 25% as compared
to the amount achieved in 2022 due to the greater scope of work and the expected price increases. A significant increase
in expenditures is expected with respect to other investments as a result of planned investments in renewable energy
sources.
8 ECONOMIC RESULTS OF THE SEGMENT KGHM POLSKA MIEDŹ S.A.
Copper production C1 cost Revenues Adjusted EBITDA Profit for the period
586
kt
2.38
USD/lb
28 429
PLN mn
5 400
PLN mn
3 533
PLN mn
8.1 PRODUCTION
The main goals set by the Management Board in terms of production and occupational health and safety for 2022 were :
− optimal utilisation of the resource base and of the production capacity of the Company, and
− optimisation of copper content in ore and concentrate.
The goals set required advancement of the following actions:
in mining − expanding mining operations within the Deep Głogów (Głogów Głęboki-Przemysłowy) area,
− continuation of work related to exploration of the „Radwanice” and „Retków” copper ore deposits,
− improvement of the ore extraction technology, greater mining efficiency and improved occupational health
and safety, by:
adapting the geometry of mining systems to local geological and mining conditions,
improving the efficiency of technological and active methods of limiting the threat of rock bursts and of
other associated natural threats, and
proper barren rock management in mining areas (selective extraction, siting of rock, mechanical ore
mining),
− a greater scope of work with respect to identifying gas-related threats and the use of new technical solutions
and means of prevention to counteract this threat,
− sinking the GG-1 shaft to the target depth of 1 351 m (in the breach),
− continued construction of the Surface-based Air Conditioning Station at the GG-1 Shaft with target capacity of
40 MW,
− expansion of the mine dewatering system,
− maintaining the efficiency of mining vehicles in an assortment required to execute production tasks along with
successive replacement of the machine park,
− realisation of the planned scope of mine development and access work using the commissioning system at
the level of 56.6 thousand meters,
in ore processing − maintaining the production capacity of individual areas of the Concentrators Division Areas to the amount and
quality of ore supplied,
− maintaining the production of concentrates in an amount and quality necessary for optimal use of the
production capacity of the fire phases of the smelters and refineries,
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 213
the Company and the Group in 2022 – translation from the original Polish version
−
tests were conducted on flotation machinery of new construction under 1/4th technical scale conditions,
dedicated to the recovery of small grains,
− the continuity of concentrate deliveries to the Rudna Region concentrator continued despite the simultaneous
advancement of investment tasks and breakdowns of a technical-construction nature (limited amount of
thickeners, modernisation of press filters, driers, modernisation of concentrate loading and haulage),
− an installation for the removal of carbonates from the product of flotation and treatment of concentrates was
brought online in the Polkowice Region concentrator,
− 8.53 million tonnes of ore were processed versus the planned amount of 8.3 million tonnes in the Lubin Region
concentrator – the coordination of maintenance work requiring a shutdown and in the logistics of transport
and storage was improved,
in metallurgy − the share of imported concentrates and copper scrap was increased in order to carry out the planned high
level of electrolytic copper production,
− planned maintenance of the flash furnace complex at the Głogów II Copper Smelter and Refinery was carried
out,
− environmental impact was minimised by improving the efficiency of the dedusting and hermetic sealing of
processes and the optimisation of water and effluents management,
− optimal utilisation of infrastructure enabled the full execution of production tasks in terms of the main
products,
− an increase in the share of recycling in copper production as a result of an increase in the processing of scrap
in the furnaces of the Głogów Copper Smelter and Refinery and maximisation of scrap processing in all fire
phases in the Legnica Copper Smelter and Refinery,
in occupational
health and safety
− the activisation and moderation of the engagement of all Company employees in the question of occupational
health and safety,
− consistent implementation of the Employee Safety Improvement Program – „Think About the Consequences”,
− the implementation of agreed elements of the Program to eliminate the most frequent threats to workplace
safety through utilisation of innovative technology,
− constant monitoring of threats occurring in the workplace and and the realisation of organisational and
technical goals aimed at limiting professional risks and accident rates,
− the commencement of additional organisational and technical initiatives aimed at improving workplace safety,
in particular with respect to the Company’s mines,
− continuous improvement of the occupational safety and hygiene management system implemented by the
Company pursuant to the PN ISO 45000:2018 standard.
MINE PRODUCTION
In 2022 extraction of ore (dry weight) amounted to 30.5 million tonnes and was higher by 0.5 million tonnes than in 2021.
Average copper content in extracted ore amounted to 1.45% and was lower than the level achieved in 2021. In the case of
silver in ore, content was lower and amounted to 50.4 g/t.
As a result the amount of copper in extracted ore was higher than in 2021 by 0.1 thousand tonnes of copper and amounted
to 442.7 thousand tonnes. The volume of silver in ore increased by 12 tonnes and amounted to 1 533 tonnes.
In 2022, 30.5 million tonnes of ore (dry weight) were processed (or 535 thousand tonnes more compared to 2021). The
higher amount of ore extracted by the Mining Divisions, of a lower copper content, directly led to obtaining a higher amount
of copper in concentrate, which amounted to 392.5 thousand tonnes.
The production of concentrate (dry weight) increased by 14 thousand tonnes compared to 2021.
The amount of silver in concentrate was higher than in 2021 by 1%.
Table 88. Mine production of KGHM Polska Miedź S.A.
Unit 2022 2021
Change
(%)
4Q'22 3Q'22 2Q'22 1Q'22
Mined ore (wet weight)
mn t
32.1
31.6
+1.6
7.9
8.1
8.0
8.2
Mined ore (dry weight)
mn t
30.5
30.0
+1.7
7.5
7.6
7.6
7.7
Copper grade
%
1.45
1.48
(2.0)
1.44
1.43
1.47
1.48
Copper in ore
kt
442.7
442.6
+0.0
108.2
108.8
111.2
114.4
Silver grade
g/t
50.4
50.7
(0.6)
50.4
49.9
51.0
50.1
Silver in ore
t
1 533.3
1 521.7
+0.8
377.7
380.8
386.8
388.0
Production of concentrate (dry weight)
kt
1 755
1 741
+0.8
434
435
442
443
Copper in concentrate
kt
392.5
391.3
+0.3
97.1
96.4
98.9
100.0
Silver in concentrate
t
1 315.8
1 302.9
+1.0
326.9
326.6
331.9
330.3
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 214
the Company and the Group in 2022 – translation from the original Polish version
METALLURGICAL PRODUCTION
The production of electrolytic copper as compared to 2021 increased by 8.4 thousand tonnes, or by 1.5%. The higher
production of electrolytic copper was the result of an increase in the supply of purchased metal-bearing materials. By
supplementing own concentrate with purchased metal-bearing materials in the form of scrap, copper blister and imported
concentrate, existing technological capacity was effectively used.
The production of other metallurgical products (silver, wire rod and OFE rod) derives from the level of electrolytic copper
production and depends on the type of raw material used, and above all on market demand.
In comparison to 2021, the production of metallic gold increased by 187 kg, or by 7.4%, while metallic silver production was
lower by 33.8 tonnes, closing the year at 1 298 tonnes.
Table 89. Metallurgical production of KGHM Polska Miedź S.A.
Unit 2022 2021
Change
(%)
4Q'22 3Q'22 2Q'22 1Q'22
Electrolytic copper, including:
kt
586.0
577.6
+1.5
143.5
146.2
145.2
151.1
- production from own concentrates
kt
381.5
381.4
+0.0
107.6
96.3
81.1
96.6
- production from purchased metal-
bearing materials
kt 204.5 196.2 +4.2 35.9 50.0 64.1 54.5
Wire rod, OFE and CuAg rod
kt
277.8
281.9
(1.5)
60.0
73.8
71.7
72.3
Metallic silver
t
1 298.4
1 332.2
(2.5)
298.6
331.3
328.7
339.8
Metallic gold
koz t
87.3
81.3
+7.4
25.5
20.9
19.8
21.1
Refined lead
kt
28.8
30.1
(4.3)
7.2
5.9
7.9
7.8
Chart 36. Production of electrolytic copper (thousand tonnes) and metallic silver (t)
MAIN PRODUCTION GOALS
The main goals set by the Management Board in terms of production and occupational health and safety for 2023 are a
continuation of actions taken in 2022, i.e.:
− optimal utilisation of the resource base and of the production capacity of the Company, and
− optimisation of copper content in ore and concentrate.
Key tasks in 2023:
in mining
−
access and development work to intersect the deposit in the Deep Głogów (Głogów Głęboki-Przemysłowy) and
Gaworzyce mining areas,
− continuation of work related to exploration of the copper ore deposit in the areas of „Radwanice” and „Retków”,
− continuation of work related to prevention of gas-related threats (hydrogen sulphide and methane) and the use
of new technical solutions and means of prevention to counteract this threat,
− continuation of work related to utilising the capacity of the input and output ventilation shafts in the
interconnected mine ventilation system,
− maintaining the efficiency of mining vehicles in an assortment required to execute production tasks,
− realisation of the planned scope of mine development and access work using the commissioning system in 2023
at the level of 55.3 thousand meters,
in ore
processing
− optimising the work of the drum driers by new-generation control systems,
− maintaining the availability of the machine park and the production capacity of individual Concentrators Division
Areas to the amount of ore supplied and to simultaneously-advanced investments,
− maintaining the production of concentrates in an amount and quality necessary for optimal use of the production
capacity of the smelters and refineries,
− modernisation of the compressed air installation at the Lubin Region Concentrator – limitation of power
consumption,
− monitoring and assessing the impact of technological water to the technological parameters and state of
technical infrastructure,
− optimisation of water management,
− conducting tests at an industrial scale of RFC (Reflux Flotation Cell) flotation machinery,
in metallurgy
−
the execution of a planned production line maintenance shutdown at the Legnica Copper Smelter and Refinery,
− increasing the share of recycling in copper production as a result of an increase in the processing of scrap in the
furnaces of the Głogów Copper Smelter and Refinery and maximisation of scrap processing in all fire phases at
the Legnica Copper Smelter and Refinery,
− maintaining the high level of electrolytic copper production by the Legnica Copper Smelter and Refinery and the
Głogów Copper Smelter and Refinery,
381,4 381,5
196,2
204,5
577,6
586,0
2021 2022
Electrolitic copper production (kt)
from
purchased
metal-bearing
materials
from own
concentrate
1 332.2
1 298.4
2021 2022
Metallic silver production (t)
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 215
the Company and the Group in 2022 – translation from the original Polish version
− further minimisation of environmental impact by actions directed towards improving the effectiveness of the
dedusting and hermetic sealing processes and optimisation of water-effluents management,
− optimum management of materials between the metallurgical facilities,
in occupational
health and
safety
− permanent improvement of actions to shape the attitudes of employees, education and mitigation of situations
which could potentially result in accidents,
− introduction of further technical and organisational solutions decreasing the risk of workplace accidents in the
Company’s facilities,
− implementation of technical solutions to balance changes in workplace conditions, in particular in mining,
− continuous improvements in the monitoring of workplace hazards and the advancement of organisational and
technical goals aimed at further limitation of professional risks and accident rates,
− preparation for changes in higienic and biological standards for the workplace environment,
− preparation for generational changes in and the introduction of active solutions in age management,
− improvement of the occupational safety and hygiene management system implemented by the Company in 2020
pursuant to the OHS ISO 45001:2018 standard,
− implementation of IT solutions in the area of workplace safety, in particular workplace data and information
analytics.
8.2 SALES
In 2022, the level of sales of copper products by the Company was higher than that achieved in 2021 and amounted to
565.0 thousand tonnes, versus 561.5 thousand tonnes in the prior year. In 2022, sales of copper cathodes amounted to
279.7 thousand tonnes, meaning an increase by 0.1% compared to 2021. Sales of copper wire rod and OFE rod increased
however by 2%, amounting to 282.3 thousand tonnes in 2022. The structure of sales of copper products results from the
year-long high demand for higher-margin products compared to processed copper cathodes.
Sales of metallic silver in 2022 amounted to 1 338 t, meaning an increase by 7% compared to 2021, alongside a decrease in
production by 3%. Silver inventory at the end of 2022 was designated to meet the sales schedule in 2023. Sales of gold in
2022 amounted to 77.8 thousand troy ounces.
Table 90. Sales volume of basic products of KGHM Polska Miedź S.A.
Unit 2022 2021
Change
(%)
4Q'22 3Q'22 2Q'22 1Q'22
Cathodes and cathodes parts
kt
279.7
279.3
+0.1
69.6
69.9
74.2
66.1
Copper wire rod and OFE rod
kt
282.3
278.0
+1.5
64.8
66.6
74.5
76.4
Other copper products
kt
3.0
4.2
(28.6)
0.8
0.7
0.8
0.7
Total copper and copper products
kt
565.0
561.5
+0.6
135.1
137.2
149.5
143.2
Metallic silver
t
1 338.3
1 248.9
+7.2
300.9
323.8
333.1
380.5
Metallic gold
koz t
80.5
78.0
+3.2
16.5
22.2
17.5
24.3
Refined lead
kt
29.3
30.7
(4.6)
7.5
6.7
8.1
7.0
Total revenues from sales by KGHM Polska Miedź S.A. in 2022 amounted to PLN 28 429 million, representing an increase
by 15% versus 2021, when revenues amounted to PLN 24 618 million.
Revenues from sales of copper products in 2022 increased by 16% and amounted to PLN 22 207 million (compared to
revenues in 2021 of PLN 19 079 million).
Revenues from metallic silver sales in 2022 also increased (+9%) to PLN 4 341 million compared to PLN 3 990 million in
2021. Revenues from sales of metallic gold in 2022 increased to PLN 649 million, versus PLN 548 million in 2021 (+18%).
The increase in revenues from contracts with customers compared to 2021 by PLN 3 811 million was mainly due to higher
prices of copper, silver and gold (+PLN 1 683 million) and higher volume (+PLN 427 million), with a lower negative
adjustment of revenues due to hedging transactions (+PLN 1 469 million) than in the prior year.
Table 91. Revenues from contracts with customers of KGHM Polska Miedź S.A. (in million PLN)
2022 2021
Change
(%)
4Q'22 3Q'22 2Q'22 1Q'22
Cathodes and cathodes parts
10 803
9 462
+14.2
2 658
2 521
2 946
2 678
Copper wire rod and OFE rod
11 283
9 461
+19.3
2 518
2 542
3 107
3 115
Other copper products
122
156
(21.8)
29
26
36
31
Total copper and copper products
22 207
19 079
+16.4
5 205
5 089
6 089
5 824
Metallic silver
4 341
3 990
+8.8
980
1 030
1 117
1 214
Metallic gold
649
548
+18.4
133
184
142
190
Refined lead
294
271
+8.5
76
67
82
70
Other goods and services
570
452
+26.1
138
121
147
164
Merchandise and materials
367
278
+32.0
114
82
79
92
Total revenues from contracts with customers
28 429
24 618
+15.5
6 646
6 572
7 656
7 555
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 216
the Company and the Group in 2022 – translation from the original Polish version
GEOGRAPHICAL BREAKDOWN OF SALES
In 2022, KGHM Polska Miedź S.A. earned most of its revenues from domestic sales, which amounted to 25% of total
revenues. The remaining major customers of KGHM came from Germany (19%), Italy (8%), Czechia (8 %), China (8%) and
the United Kingdom (6%).
The following chart shows the geographic structure of revenues in 2022. Sales revenue includes the result from the
settlement of hedging instruments.
Chart 37. Sales revenue of KGHM Polska Miedź S.A. by market (in million PLN)
8.3 COSTS
The Company’s cost of sales, selling costs and administrative expenses (cost of products, merchandise and materials sold
plus selling costs and administrative expenses) in 2022 amounted to PLN 24 463 million and was 19% higher as compared
to the corresponding period of 2021. The Company’s cost of sales, selling costs and administrative expenses was
substantially affected by the increase in production of copper electrolytic by 8.4 thousand tonnes of copper and a
substantial increase in the purchase prices of technological materials, fuels and energy, due to the current market situation.
Total expenses by nature in 2022 as compared to 2021 were higher by 18%, despite higher consumption of purchased
metal-bearing materials by PLN 1 727 million (a higher amount by 15 thousand tonnes and a higher price by 16%).
The minerals extraction tax charge was lower by PLN 502 million (-14%) despite higher copper prices expressed in PLN/t,
as during the period January-November 2022 the Company took advantage of a statutory reduction in the tax rate by 30%.
Table 92. Expenses by nature of KGHM Polska Miedź S.A. (in million PLN)
2022
2021
Change (%)
4Q'22
3Q'22
2Q'22
1Q'22
Depreciation of property, plant and
equipment and amortisation of intangible
assets
1 504
1 435 +4.8 387 376 377 364
Employee benefits expenses
4 832
4 249
+13.7
1 344
1 168
1 332
988
Materials and energy, including:
13 687
10 242
+33.6
3 446
3 291
3 640
3 310
- purchased metal-bearing materials
8 859
7 132
+24.2
2 158
2 077
2 420
2 204
- electrical and other energy
1 921
1 230
+56.2
415
574
450
482
External services
2 238
1 884
+18.8
684
548
530
476
Minerals extraction tax
3 046
3 548
(14.1)
746
647
809
844
Other taxes and charges
487
398
+22.4
140
112
22
213
Other costs
101
145
(30.3)
43
13
33
12
Total expenses by nature
25 895
21 901
+18.2
6 790
6 155
6 743
6 207
Expenses by nature, excluding purchased metal-bearing materials and the minerals extraction tax, amounted to PLN 13
990 million and were higher as compared to the corresponding period of 2021 by PLN 2 769 million, mainly due to an
increase in the following costs:
− consumption of materials and energy (+PLN 1 718 million) – mainly due to higher prices for natural gas, electricity, coke
and technological materials,
− labour costs (+PLN 583 million) – due to an increase in remuneration rates,
− external services (+PLN 354 million) – mainly due to an increase in transportation services, repairs and maintenance
and mine development work,
− depreciation/amortisation (+PLN 69 million) - an increase due to investments advanced in prior periods.
The structure of expenses by nature in 2022 is presented below. As compared to the prior year, they were at a very similar
level.
Poland
7 157
25%
Germany
5 502
19%
Italy
2 319
8%
Czechia
2 250
8%
China
2 146
8%
United Kingdom
1 676
6%
Other countries
7 379
26%
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 217
the Company and the Group in 2022 – translation from the original Polish version
Chart 38. Structure of expenses by nature in 2022
The Company’s operating costs are decisively impacted by the costs of electrolytic copper production (prior to decrease by
the value of by-products), whose share is around 96%.
Chart 39. Cost of producing copper in concentrate – C1 (USD/lb)
Cost of producing copper in concentrate - C1 (unit cash cost of producing payable copper in concentrate, reflecting costs of
ore extraction and processing, transport costs, the minerals extraction tax, administrative costs during the mining stage, and
smelter treatment and refining charges (TC/RC), less the value of by-products) amounted to respectively: in 2021: 2.26 USD/lb
and in 2022: 2.38 USD/lb. The increase in this cost by 5% was mainly due to the higher costs of materials, external services
and labour described above, but also to a lower valuation of by-products due to a decrease in silver prices. Positive impact
on this cost came from a strengthening in the USD as compared to the PLN and to a lower minerals extraction tax charge.
Chart 40. Pre-precious metals credit unit cost of electrolytic copper production – from own concentrate (PLN/t)
The pre-precious metals credit unit cost of copper production from own concentrate (unit cost prior to decrease by the
value of anode slimes containing among others silver and gold) was higher than that recorded in 2021 by 5 520 PLN/t (16.6%),
alongside similar production from own concentrate. The increase in the unit cost was mainly due to an increase in prices
of energy, fuels and technological materials, external services and higher labour costs. The total unit cost of copper
production from own concentrate was higher compared to 2021 by 5 565 PLN/t (25%) with a slightly lower valuation of
anode slimes due to lower silver prices.
Purchased metal-bearing
materials
34%
Employee benefits
expenses
19%
Minerals extraction tax
12%
External services
9%
Materials and fuels
11%
Depreciation/amortisation
6%
Electrical and other energy
7%
Other taxes and charges
2%
1,17
1,45
1,50
1,75
1,57 1,57
1,09
0,95
0,91
0,63
0,77
0,81
2,26
2,40
2,42
2,38
2,34
2,38
2021 IQ'22 IIQ'22 IIIQ'22 IVQ'22 2022
including the minerals
extraction tax
22 210
21 977
28 372
30 747
29 888
27 775
10 988
11 515
13 455
9 144
10 143
10 942
33 197
33 492
41 827
39 891
40 031
38 717
2021 IQ'22 IIQ'22 IIIQ'22 IVQ'22 2022
value of anode slimes
total unit cost of copper
production from own
concentrate
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 218
the Company and the Group in 2022 – translation from the original Polish version
8.4 FINANCIAL RESULTS OF THE SEGMENT KGHM POLSKA MIEDŹ S.A.
STATEMENT OF PROFIT OR LOSS
In 2022, the Company recorded profit for the period in the amount of PLN 3 533 million, or by PLN 1 636 million (32%) lower
than in the prior year.
Table 93. Basic items of the statement of profit or loss of KGHM Polska Miedź S.A. (in million PLN)
2022 2021
Change
(%)
4Q'22 3Q'22 2Q'22 1Q'22
Revenues from contracts with customers
28 429
24 618
+15.5
6 646
6 572
7 656
7 555
- adjustment to revenues due to hedging transactions
(182)
(1 651)
(89.0)
71
124
(161)
(216)
Cost of sales, selling costs and administrative expenses
(24 463)
(20 514)
+19.3
(6 053)
(5 943)
(6 514)
(5 953)
Profit or loss on sales
3 966
4 104
(3.4)
593
629
1 142
1 602
Other operating income and (costs)
1 299
3 088
(57.9)
(901)
807
1 052
341
- exchange differences on assets and liabilities other than borrowings
500
511
(2.2)
(796)
600
477
219
- measurement and realisation of derivatives
(222)
(445)
(50.1)
(127)
(102)
64
(57)
- interest on loans granted and other financial receivables
348
304
+14.5
94
97
103
54
-
fair value gains on financial assets measured at fair value through
profit or loss
631 1 070 (41.0) (175) 337 409 60
- fair value losses on financial assets measured at fair value through
profit or loss
(87) (63) +38.1 (6) 55 (96) (40)
- reversal of impairment losses on shares in subsidiaries
-
1 010
×
-
-
-
-
- impairment losses on shares and investment certificates in
subsidiaries
- (182) × - - - -
- reversal of impairment losses on financial instruments measured
at amortised cost
213 807 (73.6) 31 (10) 139 53
- other
(84)
76
×
78
(170)
(44)
52
Finance income and (costs)
(269)
(476)
(43.5)
447
(355)
(256)
(105)
- exchange differences on borrowings
(179)
(338)
(47.0)
436
(315)
(223)
(78)
- interest on borrowings
(48)
(92)
(47.8)
17
(30)
(20)
(15)
- other
(42)
(46)
(8.7)
(6)
(10)
(13)
(12)
Profit/(loss) before income tax
4 996
6 716
(25.6)
139
1 081
1 938
1 838
Income tax expense
(1 463)
(1 547)
(5.4)
(144)
(351)
(455)
(513)
PROFIT FOR THE PERIOD
3 533
5 169
(31.7)
(5)
730
1 483
1 325
Depreciation/amortisation recognised in profit or loss
(1 434)
(1 363)
+5.2
(370)
(369)
(373)
(322)
Adjusted EBITDA
48
5 400
5 474
(1.4)
963
998
1 515
1 924
Table 94. Main factors impacting the change in profit or loss of KGHM Polska Miedź S.A.
Item
Impact on
change in
result (in
million PLN)
Description
An increase in revenues from
contracts with customers
(+PLN 3 811 million)
+3 963
An increase in revenues from sales of basic products (copper, silver, gold) due to a more
favourable average USD/PLN exchange rate (a change from 3.86 to 4.46 USD/PLN)
(2 279)
A decrease in revenues due to lower prices of copper (-520 USD/t, -6%) and silver (-3.41
USD/oz t, -14%) with unchanged gold prices
+1 469
A change in the adjustment of revenues due to hedging transactions from -PLN 1 651
million to -PLN 182 million
+427
An increase in revenues due to higher volume of sales of copper (+3.5 kt, +1%), silver
(+89 t, +7%) and gold (+2.4 koz t, +3%)
+231
An increase in other revenues from sales, including revenues from the sale of
merchandise, waste and production materials (+PLN 87 million), sulphuric acid (+PLN
59 million), refined lead (+PLN 24 million), copper sulphate (+PLN 19 million) and nickel
sulphate (+PLN 18 million)
An increase in cost of sales,
selling costs and
administrative expenses
49
(3 949)
Mainly an increase in expenses by nature by PLN 3 994 million, mainly due to higher
costs: consumption of purchased metal-bearing materials (+PLN 1 727 million), other
materials and energy (+PLN 1 718 million), employee benefits (+PLN 583 million) and a
higher minerals extraction tax charge (+PLN 502 million).
48
Adjusted EBITDA = profit on sales + depreciation/amortisation (recognised in profit or loss) + impairment loss (-reversal of impairment
losses) on non-current assets, recognised in cost of sales, selling costs and administrative expenses
49
Costs of products, merchandise and materials sold plus selling costs and administrative expenses
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 219
the Company and the Group in 2022 – translation from the original Polish version
Reversal of impairment losses
on shares in subsidiaries
(1 010)
The total amount is in respect of 2021 and shares of the holding company Future 1 Sp. z
o.o. which holds indirectly 100% of the shares of KGHM INTERNATIONAL LTD.
Reversal of impairment losses
on financial instruments
measured at amortised cost
(594)
A lower level of reversals of impairment losses on financial instruments measured at
amortised cost, from PLN 807 million to PLN 213 million. This change is mainly (+PLN 539
million) in respect of loans granted to Future 1 sp. z o.o. and the KGHM INTERNATIONAL
LTD. Group (a decrease from PLN 752 million to PLN 213 million).
Impact of derivatives and
hedging transactions
+214
An increase by PLN 223 million in the result due to the measurement and realisation of
derivatives in other operating activities
A decrease by PLN 9 million
in the result due to the measurement and realisation of
derivatives in financing activities
Impairment losses on shares
and investment certificates in
subsidiaries
+182
No losses in 2022 versus -PLN 182 million in the prior year, entirely in respect of
impairment of the shares in "Energetyka" sp. z o.o.
Fair value gains on financial
assets measured at fair value
through profit or loss
(439)
A decrease in fair value gains on financial assets measured at fair value through profit
or loss, from PLN 1 070 million to PLN 631 million. This change is mainly (-PLN 455
million) in respect of loans (a decrease from PLN 1 056 million to PLN 601 million).
Impact of exchange
differences
+148
A decrease by PLN 11 million in the result due to exchange differences on
assets and
liabilities other than borrowings – in other operating activities
An increase by PLN 159 million in the result due to exchange differences on borrowings
(presented in finance costs)
Decrease in income tax +84
The decrease in income tax resulted from a decrease in current income tax by PLN 186
million, with an increase in deferred income tax by PLN 51 million and a change in the
adjustment of current tax for prior periods by PLN 51 million
Chart 41. Change in profit for the period of KGHM Polska Miedź S.A. (in million PLN)
CASH FLOWS
Table 95. Statement of cash flows of KGHM Polska Miedź S.A. (in million PLN)
2022 2021
Change
(%)
IVQ'22 IIIQ'22 IIQ'22 IQ'22
Profit before income tax
4 996
6 716
×0.7
139
1 081
1 938
1 838
Exclusions of income and costs, total
247
(1 216)
×
848
(516)
(850)
765
Income tax paid
(1 575)
(707)
×2.2
(192)
(194)
(1 020)
(169)
Changes in working capital
(1 877)
(2 830)
×0.7
(725)
(65)
(492)
(595)
Net cash generated from/(used in) operating activities
1 791
1 963
×0.9
70
306
(424)
1 839
Expenditures on property, plant and equipment and intangible
assets
(2 731) (2 407) ×1.1 (735) (647) (568) (781)
Proceeds/expenditures due to loans granted
1 043
1 655
×0.6
52
(11)
576
426
Other
59
145
×0.4
7
84
(6)
(26)
Net cash generated from/(used in) investing activities
(1 629)
(607)
×2.7
(676)
(574)
2
(381)
Proceeds/expenditures due to borrowings drawn
253
(1 684)
×
(99)
507
(65)
(90)
Expenditures due to dividends paid to shareholders of the
Company
(600) (300) ×2.0 - (600) - -
Other
(159)
(107)
×1.5
(10)
36
(153)
(32)
Net cash used in financing activities
(506)
(2 091)
×0.2
(109)
(57)
(218)
(122)
NET CASH FLOW
(344)
(735)
×0.5
(715)
(325)
(640)
1 336
Exchange differences on cash and cash equivalents
(3)
(68)
×0.0
(3)
(1)
15
(14)
Cash and cash equivalents at beginning of the period
1 332
2 135
×0.6
1 332
2 029
2 654
1 332
Cash and cash equivalents at end of the period
985
1 332
×0.7
985
1 703
2 029
2 654
5 169
3 533
+3 811
+214
+182
+148
+84
-3 949
-1 010
-594
-439
-83
Profit for
2021
Increase in
sales revenue
Cost of sales,
selling costs
and
administrative
expenses
Reversal of
impairment
losses
on shares and
investment
certificates
in subsidiaries
Reversal of
impairment
losses
on financial
instruments
measured at
amortised
cost
Impact of
derivatives
and hedging
transactions
Impairment
losses
on shares and
investment
certificates
in subsidiaries
Fair value
gains
on financial
assets
measured at
fair value
through profit
or loss
Impact of
exchange
differences
Decrease in
income tax
Other Profit for
2022
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 220
the Company and the Group in 2022 – translation from the original Polish version
Net cash generated from operating activities in 2022 amounted to +PLN 1 791 million and mainly comprised profit before
income tax in the amount of PLN 4 996 million, adjusted by the exclusion of income and costs in the amount of +PLN 247
million, less income tax paid in the amount of PLN 1 575 million and a decrease in working capital by PLN 1 877 million. The
change in working capital was mainly due to the following: a decrease in inventories (-PLN 2 027 million) with an increase
in trade payables by PLN 225 million.
Net cash used in investing activities in 2022 amounted to -PLN 1 629 million and mainly comprised expenditures on
property, plant and equipment and intangible assets in the amount of -PLN 2 731 million and the balance of proceeds and
expenditures due to loans granted, +PLN 1 043 million.
Net cash used in financing activities during the same period amounted to -PLN 506 million and mainly comprised dividends
paid to shareholders in the amount of PLN 600 million.
After reflecting exchange differences on cash and cash equivalents, in 2022 cash and cash equivalents decreased by PLN
347 million and amounted to PLN 985 million.
Chart 42. Cash flow of KGHM Polska Miedź S.A. (in million PLN)
ASSETS, EQUITY AND LIABILITIES
Table 96. Assets of KGHM Polska Miedź S.A. (in million PLN)
31.12.2022 31.12.2021
Change
(%)
30.09.2022 30.06.2022 31.03.2022
Property, plant and equipment and intangible
assets
22 497 20 995 +7.2 21 855 21 511 20 789
Investments in subsidiaries, other than loans
granted
3 701 3 691 +0.3 3 701 3 698 3 691
Financial instruments, including:
10 392
9 931
+4.6
11 419
10 684
9 898
- loans granted
8 763
8 249
+6.2
9 590
8 605
8 190
Other non-financial assets
117
54
×2.2
-12 927
-35 841
-34 327
Non-current assets
36 707
34 671
+5.9
24 048
52
51
Inventories
7 523
5 436
+38.4
6 673
-
-
Trade receivables
620
600
+3.3
740
6 534
5 838
Tax assets
312
301
+3.7
227
873
837
Derivatives
796
254
×3.1
826
249
193
Cash pooling receivables
588
498
+18.1
489
587
192
Other financial assets
322
289
+11.4
432
351
106
Other non-financial assets
142
77
+84.4
170
248
178
Cash and cash equivalents
985
1 332
(26.1)
1 703
245
144
Non-current assets held for sale
-
-
×
-
2 029
2 654
Current assets
11 288
8 787
+28.5
11 260
11 261
10 142
TOTAL ASSETS
47 995
43 458
+10.4
35 308
47 206
10 193
As at 31 December 2022, total assets amounted to PLN 47 995 million, or an increase as compared to the end of 2021
by PLN 4 537 million, or by 10%, mainly due to increases in the following items:
− inventories by PLN 2 087 million, including half-finished products and work in progress (+PLN 1 235 million, finished
goods (+PLN 479 million) and materials (+PLN 379 million),
− property, plant and equipment and intangible assets by PLN 1 502 million, resulting from advancement of investments
– cash expenditures on property, plant and equipment and intangible assets in 2021 amounted to PLN 2 741 million,
− long-term financial instruments by PLN 461 million, including loans granted (+PLN 514 million),
− short-term financial instruments by PLN 542 million,
alongside a decrease in the value of cash and cash equivalents by -PLN 347 million.
1 332
985
+1 791
+1 043
+150
-2 731
-600
Cash and cash
equivalents as at 1
January 2022
Cash generated from
operating activities
Expenditures on
property,
plant and equipment
and intangible assets
Proceeds /
expenditures
due to loans granted
Dividends paid
to shareholders
Other Cash and cash
equivalents
as at 31 December
2022
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 221
the Company and the Group in 2022 – translation from the original Polish version
Chart 43. Change in assets of KGHM Polska Miedź S.A. in 2022 (in million PLN)
The carrying amounts of equity and liabilities as of 31 December 2022 are presented below.
Table 97. Equity and liabilities of KGHM Polska Miedź S.A. (in million PLN)
31.12.2022
31.12.2021
Change (%)
30.09.2022
30.06.2022
31.03.2022
Share capital
2 000
2 000
-
2 000
2 000
2 000
Other reserves from measurement of financial instruments
(395)
(1 670)
(76.3)
(1 049)
(643)
(1 921)
Accumulated other comprehensive income
(702)
(329)
×2.1
(602)
(428)
(440)
Retained earnings
28 772
25 839
+11.4
28 777
28 047
27 164
Equity
29 675
25 840
+14.8
29 126
26 976
26 803
Borrowings, lease and debt securities
5 000
5 180
(3.5)
5 298
4 590
4 559
Derivatives
719
1 133
(36.5)
1 543
1 078
1 163
Employee benefits liabilities
2 394
2 040
+17.4
2 323
2 062
2 104
Provisions for decommissioning costs of mines
and other technological facilities
1 233 811 +52.0 896 888 460
Other non-current liabilities
965
543
+77.7
(9 757)
(8 368)
(8 027)
Non-current liabilities
10 311
9 707
+6.2
303
250
259
Borrowings, lease and debt securities
1 124
382
×2.9
1 279
1 122
1 059
Cash pooling liabilities
321
360
(10.8)
329
267
340
Derivatives
434
888
(51.1)
519
369
1 147
Trade and similar payables
2 819
2 613
+7.9
2 503
2 732
2 438
Employee benefits liabilities
1 365
1 130
+20.8
1 162
1 329
1 244
Tax liabilities
1 061
1 291
(17.8)
1 152
1 072
1 660
Provisions for liabilities and other charges
110
98
+12.2
169
94
96
Other current liabilities
775
1 149
(32.6)
1 218
1 833
1 202
Current liabilities
8 009
7 911
+1.2
8 331
8 818
9 186
Non-current and current liabilities
18 320
17 618
+4.0
19 165
18 230
17 926
TOTAL EQUITY AND LIABILITIES
47 995
43 458
+10.4
48 291
45 206
44 729
There was an increase in equity and liabilities, mainly due to increases in the following items:
− equity by PLN 3 835 million, mainly with respect to the profit for 2022 in the amount of PLN 3 533 million,
− employee benefits liabilities (+PLN 589 million),
− borrowings, lease and debt securities (+PLN 562 million),
− provisions for decommissioning costs of mines and other technological facilities (+PLN 422 million),
− deferred tax liabilities (+PLN 415 million),
− trade and similar payables (+PLN 206 million)
alongside a decrease in:
− derivatives (-PLN 868 million),
− tax liabilities (-PLN 230 million).
43 458
47 995
+1 502
+514
+2 087
+542
+239
-347
Assets as at 31
December 2021
Property, plant and
equipment
and intangible
assets
Loans granted Inventories Short-term
derivatives
Cash and cash
equivalents
Other Assets as at 31
December 2022
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 222
the Company and the Group in 2022 – translation from the original Polish version
Chart 44. Change in equity and liabilities of KGHM Polska Miedź S.A. in 2022 (in million PLN)
CONTINGENT ASSETS AND LIABILITIES DUE TO GUARANTEES GRANTED
As at 31 December 2022, contingent assets amounted to PLN 373 million and related mainly to promissory notes
receivables in the amount of PLN 253 million and guarantees received by the Company in the amount of PLN 115 million.
As at 31 December 2022, the Company held liabilities due to guarantees granted and letters of credit in the total amount
of PLN 1 609 million. Following are the most important liabilities representing securities:
Sierra Gorda S.C.M. – security for the realisation of signed agreements in the amount of PLN 969 million (as at 31
December 2021: PLN 670 million);
− PLN 969 million (USD 220 million) – a corporate (financial) guarantee securing repayment of a Revolving Credit Facility,
the guarantee is in force to September 2024. The carrying amount of the liabilities due to financial guarantees granted
and recognised in the accounts is PLN 57 million (as at 31 December 2021: PLN 58 million).
other entities:
− PLN 126 million - a security for the proper execution by the Company of future environmental obligations related to the
obligation to restore terrain, following the conclusion of operations of the Żelazny Most tailings storage facility (as of 31
December 2021 in the amount of PLN 124 million), the guarantee is in force for up to 1 year,
− PLN 461 million (USD 90 million, CAD 18 million) - a security for the restoration costs of the Robinson mine, Podolsky
mine and the Victoria project (as at 31 December 2021 in the amount of PLN 402 million, or USD 90 million, CAD 12
million), the guarantee is in force for up to 1 year,
− PLN 14 million - a security on claims by the Marshal of the Voivideship of Lower Silesia to cover costs related to the
collection and processing of waste, the guarantee is in force until 6 March 2023,
− PLN 2 million - a security to cover obligations related to customs-tax duties, the guarantee is in force indefinitely,
− PLN 7 million (PLN 2 million and CAD 2 million) - a security to cover liabilities related to the proper execution of
agreements entered into by KGHM Polska Miedź S.A. and Group companies (as at 31 December 2021 in the amount of
PLN 10 million, or PLN 3 million and CAD 2 million), the guarantee is in force for up to 3 years,
− PLN 30 million - a security to cover liabilities incurred by a Brokerage due to the settlement of transactions on markets
operated by the energy trading market Towarowa Giełda Energii S.A, the guarantee is in force until 31 December 2022.
As far as the Company is aware, at the end of the reporting period the Company determined the probability of paying the
amounts related to the contingent liabilities as low.
8.5 CAPITAL EXPENDITURES
In 2022, capital expenditures on property, plant and equipment amounted to PLN 2 868 million. Together with expenditures
incurred on uncompleted development work, capital expenditures amounted to PLN 2 877 million and were higher than in
the prior year by 11.3%.
Table 98. Structure of expenditures on property, plant and equipment and intangible assets of KGHM Polska Miedź S.A.
(in million PLN)
2022 2021
Change
(%)
4Q'22 3Q'22 2Q'22 1Q'22
Mining
2 116
1 747
+21.1
801
511
420
384
Metallurgy
621
664
(6.5)
218
142
177
84
Other activities
57
91
(37.4)
18
23
11
5
Development work - uncompleted
9
7
+28.6
2
2
1
4
Leases per IFRS 16
74
77
(3.9)
10
21
34
9
Total
2 877
2 586
+11.3
1 049
699
643
486
including borrowing costs
182
119
+52.9
59
52
25
46
Investment activities comprised projects related to the replacement of equipment and maintaining mine production, as
well as development projects:
43 458
47 995
+3 835
+562
+589
+422
+415
+206
-868
-230
-394
Equity and
liabilities as at
31 December
2021
Equity Borrowings and
debt securities
Employee
benefits liabilities
Provisions for
decommissioning
costs of mines
and other
technological
facilities
Deferred tax
liabilities
Trade payables Derivatives Tax liabilities Other Equity and
liabilities as at
31 December
2022
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 223
the Company and the Group in 2022 – translation from the original Polish version
Projects related to the replacement of equipment aimed at maintaining production equipment in an undeteriorated
condition, represent 43% of total expenditures incurred.
Chart 45. Structure of expenditures on the replacement of equipment of KGHM Polska Miedź S.A.
Projects related to maintaining mine production aimed at maintaining mine production on the level set in approved
Production Plan (development of infrastructure to match mine advancement) represent 32% of total expenditures incurred.
Chart 46. Structure of expenditures on maintaining mine production of KGHM Polska Miedź S.A.
Development projects aimed at increasing production volume of the core business, implementation of technical and
technological activities optimising use of existing infrastructure, maintaining production costs and adaptation of the
company’s operations to changes in standards, laws and regulations (confirmatory projects and those related to
environmental protection) represent 23% of total expenditures incurred.
Chart 47. Structure of expenditures on development of KGHM Polska Miedź S.A.
Adaptation projects aimed at adapting the company’s operations to changes in laws, existing standards or other
regulations, especially as regards occupational health and safety, securing property, cybersecurity, ethical and anti-
corruption standards, environmental impact, quality standards and management systems, represent 2% of expenditures
incurred.
Replacement of the machine
park in the mines 28%
Significant components and
substantial maintenance
27%
Other replacement of
infrastructure 45%
Outfitting of the mines 60%
Development of the Żelazny
Most Tailings Storage
Facility 9%
Mine dewatering (of which
deposit access program
84%) 24%
Construction of SW-4 shaft
3%
Other 4%
Deposit Access Program
77%
BAT-As program 2%
Exploration of the resource
base 12%
Other 9%
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 224
the Company and the Group in 2022 – translation from the original Polish version
Detailed information on the advancement of key investment projects may be found in part 5 of this Report in the section
on advancement of the Strategy in 2022.
9 ECONOMIC RESULTS OF THE SEGMENT KGHM INTERNATIONAL LTD.
Copper production C1 cost Revenues Adjusted EBITDA Profit
56.2
kt
2.14
USD/lb
3 217
PLN mn
1 001
PLN mn
900
PLN mn
9.1 PRODUCTION
Table 99. Production of KGHM INTERNATIONAL LTD.
Unit 2022 2021
Change
(%)
4Q’22 3Q’22 2Q’22 1Q’22
Payable copper, including:
kt
56.2
71.7
(21.6)
8.9
10.4
18.7
18.2
- Robinson mine (USA)
kt
46.8
53.6
(12.7)
7.2
8.8
16.5
14.3
- Sudbury Basin mines (Canada)
50
kt
2.5
1.9
+31.6
1.0
0.6
0.5
0.4
Payable nickel
kt
0.4
0.5
(20.0)
0.1
0.1
0.1
0.1
Precious metals (TPM), including:
koz t
55.9
51.3
+9.0
10.7
10.5
19.6
15.1
- Robinson mine (USA)
koz t
38.6
38.1
+1.3
4.9
6.7
14.7
12.3
- Sudbury Basin mines (Canada)
51
koz t
17.3
13.2
+31.1
5.8
3.8
4.9
2.8
In 2022, copper production in the segment KGHM INTERNATIONAL LTD. amounted to 56.2 thousand tonnes, or a decrease
by 15.5 thousand tonnes (-22%) compared to 2021. The deciding factors in the decrease in copper production were the
quality of the ore processed by the Robinson mine (lower content and recovery compared to 2021), as well as the sale of
the Franke mine finalised on 26 April 2022.
The increase in precious metals production by 4.6 thousand troy ounces (+9%) was mainly due to the higher extraction of
platinum and palladium in Sudbury.
9.2 REVENUES
Table 100. Volume and sales revenue of KGHM INTERNATIONAL LTD. (in million USD)
Unit 2022 2021
Change
(%)
4Q’22 3Q’22 2Q’22 1Q’22
Revenues from contracts with
customers
52
, including:
USD mn
720
806
(10.7)
210
132
168
210
- copper
USD mn
451
600
(24.8)
124
75
107
145
- nickel
USD mn
12
8
+50.0
3
3
2
4
- TPM – precious metals
USD mn
100
82
+22.2
28
21
25
26
Copper sales volume
kt
54.8
66.2
(17.2)
15.3
11.3
14.2
14.0
Nickel sales volume
kt
0.4
0.5
(20.0)
0.1
0.1
0.1
0.1
TPM sales volume
koz t
55.2
46.7
+18.2
16.8
11.5
15.9
11.0
50
McCreedy West mine in the Sudbury Basin
51
As above
52
Reflects processing premium
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 225
the Company and the Group in 2022 – translation from the original Polish version
Table 101. Sales revenue of KGHM INTERNATIONAL LTD. (in million PLN)
Unit 2022 2021
Change
(%)
4Q’22 3Q’22 2Q’22 1Q’22
Revenues from contracts with
customers
53
, including:
PLN mn
3 217
3 125
+2.9
953
648
740
876
- copper
PLN mn
2 015
2 325
(13.3)
561
379
470
605
- nickel
PLN mn
55
31
+77.4
17
11
12
15
- TPM – precious metals
PLN mn
448
318
+40.9
127
103
110
108
The sales revenue of the segment KGHM INTERNATIONAL LTD. in 2022 amounted to USD 720 million, or a decrease by USD
86 million (-11%) mainly due to a lower volume of copper sales (lower production, the sale of the Franke mine and delays
in railway transport servicing the sale of concentrate from the Robinson mine).
Moreover, from the point of view of revenues, achieved prices of copper sold were unfavourable, which were lower than in
2021. There was however a 19% increase in the revenues of DMC Mining Services Ltd. due to a higher scope of mining
services performed. The main factors responsible for the change in revenues compared to 2021 are discussed in the section
on the financial results of the segment KGHM INTERNATIONAL LTD.
Due to weakening of the PLN versus the USD, the revenues of segment in PLN were 3% higher than those achieved in 2021.
9.3 COSTS
Table 102. C1 payable copper production cost of KGHM INTERNATIONAL LTD.
Unit 2022 2021
Change
(%)
4Q’22 3Q’22 2Q’22 1Q’22
C1 payable copper production cost
54
USD/lb
2.14 2.01 +6.5 2.47 2.07 1.77 2.23
The average weighted unit cash cost of copper production for all mines in the segment KGHM INTERNATIONAL LTD. in 2022
amounted to 2.14 USD/lb, or an increase by 7% compared to the corresponding period of 2021. The increase in C1 was due
to a lower copper sales volume by 17% compared to 2021 as well as higher mining and processing costs per unit sale of
copper. A positive factor limiting the increase in C1 was the increase in revenues from sales of precious metals, which
decrease C1.
9.4 FINANCIAL RESULTS
Table 103. Financial results of KGHM INTERNATIONAL LTD. (in million USD)
2022 2021
Change
(%)
4Q’22 3Q’22 2Q’22 1Q’22
Revenues from contracts with customers
720
806
(10.7)
210
132
168
210
Cost of sales, selling costs and administrative expenses,
including:
55
(631)
(633)
(0.3)
(200)
(134)
(147)
(150)
recognition/reversal of impairment losses on non-
current assets
(8)
(40)
(80.0)
(8)
-
-
-
Profit/(loss) on sales
89
173
(48.6)
10
(2)
21
60
Profit/(loss) before taxation, including:
229
679
(66.3)
(23)
(21)
167
106
Income tax
(27)
0
x
(4)
(1)
(10)
(12)
PROFIT/LOSS FOR THE PERIOD
202
679
(70.3)
(28)
(21)
157
94
Depreciation/amortisation recognised in profit or loss
(127)
(133)
(4.5)
(46)
(28)
(27)
(26)
Adjusted EBITDA
56
224
346
(35.2)
64
26
47
87
53
reflects processing premium
54
C1 unit production cost of copper - cash cost of payable copper production, reflecting costs of ore extraction and processing, the minerals
extraction tax, transport costs, administrative expenses during the mining phase and smelter treatment and refining charges (TC/RC) less
by-product value
55
Cost of products, merchandise and materials sold, selling costs and administrative expenses
56
Adjusted EBITDA = profit on sales + depreciation/amortisation (recognised in profit or loss) + impairment losses (-reversal of impairment
losses) on non-current assets, recognised in cost of sales, selling costs and administrative expenses
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 226
the Company and the Group in 2022 – translation from the original Polish version
Table 104. Financial results of KGHM INTERNATIONAL LTD. (in million PLN)
2022 2021
Change
(%)
4Q’22 3Q’22 2Q’22 1Q’22
Revenues from contracts with customers
3 217
3 125
+2.9
953
648
740
876
Cost of sales, selling costs and administrative expenses,
including:
57
(2 820)
(2 463)
+14.5
(905)
(645)
(645)
(625)
recognition/reversal of impairment losses on non-
current assets
(36)
(162)
(77.8)
(36)
-
-
-
Profit/(loss) on sales
397
662
(40.0)
48
3
95
251
Profit/(loss) before taxation, including:
1 022
2 631
(61.2)
(98)
(44)
724
440
Income tax
(122)
1
x
(22)
(7)
(43)
(50)
PROFIT/LOSS FOR THE PERIOD
900
2 632
(65.8)
(120)
(51)
681
390
Depreciation/amortisation recognised in profit or loss
(568)
(516)
+10.1
(207)
(133)
(118)
(110)
Adjusted EBITDA
58
1 001
1 340
(25.3)
291
136
213
361
Table 105. Key factors impacting the change in financial result of KGHM INTERNATIONAL LTD.
Item
Description
Lower revenues – impact
on results -USD 86
million
Lower revenues due to a change in the metal sales volume - USD 97 million, of which:
− copper (-11 kt; - USD 113 million),
− precious metals (+8.5 koz t; + USD 15 million)
− other (+USD 1 million)
Lower revenues due to a change in the metal sales prices -USD 34 million, of which:
− copper (-USD 35 million)
− precious metals (-USD 4 million)
− other, mainly nickel (+USD 5 million)
Higher revenues realised by DMC Mining Services Ltd. +USD 20 million
Other factors +USD 25 million, mainly with respect to deferred revenues due to precious
metals sales contracts
Lower cost of sales,
selling costs and
administrative expenses
- impact on results
+USD 2 million
Higher costs of expenses by nature prior to the change in inventories and costs of
manufacturing products for own needs -USD 11 million (mainly higher costs of labour and
external services). Costs were higher despite the sale of the Franke mine (on 26 April 2022)
Change in products and work in progress as well as costs of manufacturing products for own
needs – impact on results +USD 13 million (lower costs: -USD 144 million versus -USD 131
million in 2021)
Recognition/reversal of impairment losses on property, plant and equipment – impact on
results +USD 32 million (-USD 8 million due to impairment losses on non-current assets of
the Carlota mine versus -USD 40 million in 2021 (Robinson: reversal of impairment loss +USD
10 million, impairment losses on non-current assets of Sudbury, Franke and Carlota
combined -USD 50 million).
Recognition/reversal of write-down of inventories – impact on results -USD 27 million
(recognised write-down of -USD 10 million in 2022 versus reversal of write-down
in the
amount of +USD 17 million in 2021)
Other factors -USD 4 million
Impact of other
operating and financing
activities
-USD 366 million
Reversal of allowance for impairment of loans granted for the construction of the Sierra
Gorda mine -USD 418 million (reversal of allowance +USD 196 million versus +USD 614
million in 2021).
Other factors +USD 52 million, including +USD 35 million due to the sale of the Oxide project
to Sierra Gorda S.C.M., and +USD 18 million result on the sale of assets of the Franke mine.
Taxation – impact on
results (-USD 28 million)
An increase in income tax, comprised of:
− lower current tax by USD 7 million (as a result of lower profit before tax after deduction
of gains from the reversal of impairment losses),
− higher deferred tax by USD 35 million (due to higher deferred tax liabilities).
57
Cost of products, merchandise and materials sold, selling costs and administrative expenses
58
Adjusted EBITDA = profit on sales + depreciation/amortisation (recognised in profit or loss) + impairment losses (-reversal of impairment
losses) on non-current assets, recognised in cost of sales, selling costs and administrative expenses
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 227
the Company and the Group in 2022 – translation from the original Polish version
Chart 48. Change in profit or loss of KGHM INTERNATIONAL LTD. (in million USD)
59
9.5 CASH EXPENDITURES
Table 106. Cash expenditures of KGHM INTERNATIONAL LTD. (in million USD)
2022 2021
Change
(%)
4Q’22 3Q’22 2Q’22 1Q’22
Victoria project
49
38
+28.9
12
12
15
10
Stripping and other
155
224
(30.8)
22
42
38
53
Total
204
262
(22.1)
34
54
53
63
Table 107. Cash expenditures of KGHM INTERNATIONAL LTD. (in million PLN)
2022 2021
Change
(%)
4Q’22 3Q’22 2Q’22 1Q’22
Victoria project
221
147
+50.3
57
57
63
44
Stripping and other
692
867
(20.2)
103
202
168
219
Total
913
1 014
(10.0)
160
259
231
263
Cash expenditures by the segment KGHM INTERNATIONAL LTD. in 2022 amounted to USD 204 million, and were lower
by USD 58 million (-22%) compared to 2021. Expenditures on the Victoria project were higher, while the decrease in other
expenditures was mainly due to lower expenditures on stripping aimed at future extraction by the Robinson mine.
10 ECONOMIC RESULTS OF THE SEGMENT SIERRA GORDA S.C.M.
Copper production C1 cost Revenues Adjusted EBITDA Profit for the period
90.8
kt (55%)
1.50
USD/lb
3 974
PLN mn (55%)
2 190
PLN mn (55%)
239
PLN mn (55%)
The segment Sierra Gorda S.C.M. is a joint venture (under the JV company JV Sierra Gorda S.C.M.), whose owners are KGHM
INTERNATIONAL LTD. (55%) and the Australian mining group South32 (45%).
The following production and financial data are presented on a 100% basis for the joint venture and proportionally to the
interest in the company Sierra Gorda S.C.M. (55%), pursuant to the methodology of presentation of data in note 2 of the
consolidated financial statements.
59
Cost of sales, selling costs and administrative expenses excluding recognition/reversal of impairment losses on property, plant and
equipment, and costs of other operating activities excluding recognition/reversal of allowances for impairment of loans granted for the
construction of the Sierra Gorda mine
679
202
+52
-86
-30
-385
-28
Profit for
2021
Lower revenues from
contracts with customers
Higher costs of sales,
selling costs and
administrative expenses
Other operating and
financing activities
Recognition/reversal of
impairment losses
Taxation Profit for
2022
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 228
the Company and the Group in 2022 – translation from the original Polish version
10.1 PRODUCTION
In 2022, Sierra Gorda S.C.M. produced copper and molybdenum at a lower level than in 2021, which was directly attributable
to mining in areas with lower content of these metals.
Table 108. Production of copper, molybdenum and precious metals by Sierra Gorda S.C.M.
60
Unit 2022 2021
Change
(%)
4Q'22 3Q'22 2Q'22 1Q'22
Copper production
kt
165.1
189.8
(13.0)
42.1
42.1
37.5
43.4
Copper production – segment (55%)
kt
90.8
104.4
(13.0)
23.1
23.2
20.6
23.9
Molybdenum production
mn lbs
5.3
14.9
(64.4)
0.9
0.9
1.4
2.1
Molybdenum production – segment (55%)
mn lbs
2.9
8.2
(64.4)
0.5
0.5
0.7
1.2
TPM production – gold
koz t
62.4
56.1
+11.2
16.6
17.4
16.3
12.1
TPM production – gold -segment (55%)
koz t
34.3
30.9
+11.2
9.1
9.6
9.0
6.6
2021 was exceptional in terms of copper content in extracted ore, which was substantially higher than the level achieved
in previous years since the commencement of commercial production in 2015. Extraction of deposits with lower copper
content was the main reason for the decrease in payable copper production in 2022 (-13%), despite maintaining the volume
of processed ore at a comparable level to that recorded in 2021.
In terms of molybdenum production, the decrease versus the level recorded in 2021 amounted to 64% and is also the result
of the planned mining in areas with a substantially lower content of this metal, as well as the deterioration in the recovery
of molybdenum during the processing phase.
10.2 SALES
Revenues from sales in 2022 amounted to USD 1 617 million (on a 100% basis), or PLN 3 974 million respectively to the 55%
interest held by KGHM Polska Miedź S.A.
Table 109. Sales volume and revenues of Sierra Gorda S.C.M.
Unit 2022 2021
Change
(%)
4Q'22 3Q'22 2Q'22
1Q'22
Revenues from contracts with
customers
61
, including from the sale of:
USD mn
1 617
2 151
(24.8)
458
335
303
521
- copper
USD mn
1 322
1 762
(25.0)
365
275
223
459
- molybdenum
USD mn
153
244
(37.3)
58
23
42
30
- TPM (gold)
USD mn
109
100
+9.0
28
29
29
23
Copper sales volume
kt
165.6
185.9
(10.9)
42.6
42.6
37.0
43.4
Molybdenum sales volume
mn lbs
7.8
14.7
(46.9)
2.4
1.5
2.3
1.6
TPM (gold) sales volume
koz t
61.4
55.9
+9.8
17.0
17.2
15.2
12.0
Revenues from contracts with
customers
62
- segment (55%)
PLN mn
3 974
4 585
(13.3)
1 143
893
744
1 194
Revenues decreased by 25% compared to the levels recorded in 2021. Such a significant drop is the direct result of
extracting ore with lower copper and molybdenum content, which led to lower sales respectively by 11% (copper) and 47%
(molybdenum). This change in the sales volume is responsible for approximately half of the USD 534 million fall in revenues.
Other reasons for the decrease in revenues include primarily factors related to selling prices and the refining premium,
which were higher due to the market situation in 2022.
The decrease in the segment’s revenues (in PLN) was not as substantial as in the case of revenues presented in the financial
statements of Sierra Gorda S.C.M. (in USD) due to the exchange rates applied in converting the statements (3.88 USD/PLN
in 2021 versus 4.47 USD/PLN in 2022).
The detailed impact of individual factors on changes in revenues is presented in the subsection discussing the financial
results of Sierra Gorda S.C.M.
60
Payable metal in concentrate
61
reflecting treatment/refining and other charges
62
reflecting treatment/refining and other charges
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 229
the Company and the Group in 2022 – translation from the original Polish version
10.3 COSTS
The cost of sales, selling costs and administrative expenses incurred by Sierra Gorda S.C.M. amounted to USD 1 107 million,
of which USD 964 million were costs of products sold, and USD 143 million total selling costs and administrative expenses.
Proportionally to the interest held (55%) the costs of the segment Sierra Gorda amounted to PLN 2 721 million.
Table 110. Cost of sales, selling costs and administrative expenses and production cost of payable copper (C1) of Sierra
Gorda S.C.M.
Unit 2022 2021
Change
(%)
4Q'22 3Q'22 2Q'22 1Q'22
Cost of sales, selling costs and administrative
expenses (prior to the reversal of the
impairment loss in 2021)
USD mn
(1 107)
(1 030)
+7.5
(281)
(286)
(267)
(273)
Reversal of impairment loss on non-current
assets
USD mn
-
1 182
(100.0)
-
-
-
-
Cost of sales, selling costs and administrative
expenses (prior to the reversal of the
impairment loss in 2021) – segment 55%
PLN mn
(2 721)
(2 196)
(23.9)
(705)
(748)
(642)
(626)
C1 unit cost
63
USD/lb
1.50
0.78
+92.3
1.55
1.68
1.41
1.35
The increase in operating costs and in the C1 cash cost of producing copper by Sierra Gorda S.C.M. in 2022 reflected the
rate of changes on the market for energy, materials and fuels. Compared to 2021, prices were higher mainly in respect of:
− diesel fuel (+79%)
− electricity (+78%)
− explosives (+49%)
− external services, milling materials and other direct materials.
The aforementioned factors were the main cause for the increase in cost of sales, selling costs and administrative expenses
by USD 77 million (+8%) in comparison to 2021 and the increase in C1 unit cost of producing copper by 0.72 USD/lb (+92%).
In the case of C1, an additional negative factor was the decrease in sales of molybdenum, which directly translates into a
lower deduction due to associated metals. Also important was the lower level of copper sales, and thus the unfavourable
impact of fixed costs on a unit of copper sales.
10.4 FINANCIAL RESULTS
STATEMENT OF PROFIT OR LOSS
In 2022, adjusted EBITDA amounted to USD 891 million, of which proportionally to the interest held (55%) PLN 2 190 million
is attributable to the KGHM Group.
Table 111. Results of Sierra Gorda S.C.M. in USD million (on a 100% basis)
2022 2021
Change
(%)
4Q'22 3Q'22 2Q'22 1Q'22
Revenues from contracts with customers
1 617
2 151
(24.8)
458
335
303
521
Cost of sales, selling costs and administrative expenses
(prior to the reversal of the impairment loss)
(1 107)
(1 030)
+7.5
(281)
(285)
(267)
(273)
Reversal of the impairment loss on non-current assets
-
1 182
(100.0)
-
-
-
-
Profit/(loss) on sales
510
2 303
(77.9)
176
50
36
248
PROFIT/LOSS FOR THE PERIOD
97
1 435
(93.2)
47
(26)
(28)
104
Depreciation/amortisation recognised in profit or loss
(381)
(365)
+4.4
(77)
(98)
(96)
(110)
Adjusted EBITDA
64
891
1 485
(40.0)
254
146
133
358
63
C1 unit production cost of copper - cash cost of payable copper production, reflecting costs of ore extraction and processing, the minerals
extraction tax, transport costs, administrative expenses during the mining phase and smelter treatment and refining charges (TC/RC) less by-
product value
64
Adjusted EBITDA = profit on sales + depreciation/amortisation (recognised in profit or loss) + impairment loss (-reversal of impairment
losses) on non-current assets recognised in cost of sales, selling costs and administrative expenses
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 230
the Company and the Group in 2022 – translation from the original Polish version
Table 112. Results of the segment Sierra Gorda S.C.M. proportionally to the interest held (55%) in million PLN
2022 2021
Change
(%)
4Q'22 3Q'22 2Q'22 1Q'22
Revenues from contracts with customers
3 974
4 585
(13.3)
1 143
893
744
1 194
Cost of sales, selling costs and administrative expenses
(prior to the reversal of the impairment loss)
(2 721)
(2 196)
+23.9
(705)
(748)
(642)
(626)
Reversal of the impairment loss on non-current assets
-
2 639
(100.0)
2 639
-
-
-
Profit/(loss) on sales
1 253
5 029
(75.1)
438
145
102
568
PROFIT/LOSS FOR THE PERIOD
239
3 178
(92.5)
117
(57)
(60)
239
Depreciation/amortisation recognised in profit or loss
(937)
(777)
+20.6
(196)
(257)
(231)
(253)
Adjusted EBITDA
65
2 190
3 167
(30.8)
634
402
333
821
A summary of the major factors affecting revenues and costs, and therefore EBITDA, is presented in the following list of the
major factors responsible for the decrease in profit for the period of Sierra Gorda S.C.M. by USD 1 338 million.
Table 113. Main factors impacting the change in the financial result of the segment Sierra Gorda S.C.M.
65
As above
Item Description
Lower sales revenue –
impact on result
-USD 534 million
Lower revenues from copper sales (-USD 440 million), mainly due to :
− less favourable price factors (-USD 248 million),
− lower sales volume by 20 kt (-USD 180 million),
−
higher transport and refining premiums (-USD 13 million)
Lower revenues from molybdenum sales (-USD 91 million), mainly due to:
− less favourable price factors (-USD 39 million)
− lower sales volume (-USD 54 million)
Impact of other factors:
−
lower revenues from sales of silver and gold (-USD 2 million),
Change in cost of sales,
selling costs and
administrative expenses –
impact on result
-USD 1 259 million
Higher cost of sales, selling costs and administrative expenses prior to reflecting
the
reversal of the impairment losses in 2021) mainly due to pri
ces of materials, fuels and
energy, which in 2022 were significantly higher (-USD 77 million)
In 2021 the result included the reversal of the impairment losses on non-current assets
from prior years (+USD 1 182 million). At the end of 2022, Sierra Gorda did not recognise
any impairment losses or reversals of impairment losses on non-current assets)
Impact of other operating
and financing activities
+USD 31 million
− an increase in other operating costs (-USD 3 million),
− lower finance costs (+USD 34 million), mainly due to lower interest due to repayment
of the loan to build the mine, drawn from the Owners of Sierra Gorda S.C.M. (
repayment of USD 560 million in 2021 and USD 350 million in 2022)
Taxation
+USD 425 million
− income tax +USD 394 million (profit before income tax USD 169 million versus USD
1 931 million in 2021)
−
other, including the mining tax +USD 31 million
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 231
the Company and the Group in 2022 – translation from the original Polish version
Chart 49. Change in profit/loss for the period of Sierra Gorda S.C.M.
66
(in USD million)
10.5 CASH EXPENDITURES
In 2022, cash expenditures on property, plant and equipment and intangible assets, reflected in the statement of cash flows
of Sierra Gorda S.C.M. amounted to USD 420 million, of which the majority, or USD 166 million (40%) were cash expenditures
incurred on stripping to gain access to further areas of the deposit, with the rest related to development work and the
replacement of property, plant and equipment.
Table 114. Cash expenditures of Sierra Gorda S.C.M.
Unit 2022 2021
Change
(%)
4Q'22 3Q'22 2Q'22 1Q'22
Cash expenditures on property, plant and
equipment
USD mn
420
284
+47.9
119
78
74
149
Cash expenditures on property, plant and
Equipment – segment (55% share)
PLN mn
1 031
605
+70.4
296
211
182
342
The increase in cash expenditures by 48% compared to 2021 was mainly due to the takeover in 2022 of the Oxide project
from KGHM INTERNATIONAL LTD.
In 2022 cash generated from operating activities was higher than cash expenditures, and moreover Sierra Gorda
transferred USD 350 million to the partners in order to repay the loan granted by the Owners for the construction of the
mine, of which USD 193 million is attributable to the KGHM Polska Miedź S.A. Group, proportionally to its share in the
company (in 2021, USD 560 million was repaid, or USD 308 million proportionally to the 55% share).
11 ECONOMIC RESULTS OF OTHER SEGMENTS
Companies in the remaining segments are very diversified in their operations. They include companies supporting the core
business and others of a non-operating nature or playing an important role in fulfilling the policy of corporate social
responsibility.
Table 115. Financial results of other segments (prior to consolidation adjustments)
2022 2021
Change
(%)
4Q'22 3Q'22 2Q'22 1Q'22
Sales revenue
12 889
10 329
+24.8
3 304
3 061
3 469
3 055
- including from external clients
2 766
2 468
+12.1
715
664
672
715
Profit/loss on sales
2
(39)
×
(36)
33
46
(41)
PROFIT/LOSS FOR THE PERIOD
(51)
(140)
(63.6)
(51)
28
25
(53)
Depreciation/amortisation recognised in profit or loss
(273)
(258)
+5.8
(70)
(67)
(68)
(68)
Adjusted EBITDA
67
274
346
(20.8)
32
100
115
27
In 2022, other segments recorded a loss on sales, prior to recognition of consolidation adjustments, in the amount of PLN
51 million, or an improvement as compared to 2021 by PLN 89 million (the loss for 2021 amounted to PLN 140 million). The
profit for the period is comprised of individual companies of the KGHM Group after eliminating turnover between
companies within the same segment.
66
Cost of sales, selling costs and administrative expenses – excluding recognition/reversals of impairment losses on property, plant and
equipment
67
Adjusted EBITDA = profit on sales + depreciation/amortisation (recognised in profit or loss) + impairment loss (-reversal of impairment
losses) on non-current assets recognised in cost of sales, selling costs and administrative expenses
1 435
97
+31
+425
-534
-77
-1 182
Profit for
2021
Change in sales
revenue
Impact of costs of
sales, selling costs
and administrative
expenses
Impact of other
operating and
financing activities
Reversal of
impairment loss on
non-current assets
Taxation Profit for
2022
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 232
the Company and the Group in 2022 – translation from the original Polish version
Table 116. Revenues earned by companies of the KGHM Group (excluding inter-segment revenues)
Revenues from sales in 2022
From external
customers
From KGHM
Polska Miedź SA
TOTAL
Metraco S.A.
222
5 892
6 114
Mercus Logistyka Sp. z o.o.
70
1 121
1 190
PeBeKa S.A.
52
883
935
Energetyka Sp. z o.o.
128
732
860
Centrozłom Wrocław S.A.
812
2
814
KGHM ZANAM S.A.
63
683
746
NITROERG S.A.
319
216
535
WPEC S.A. w Legnicy
251
7
258
Miedziowe Centrum Zdrowia S.A.
225
31
256
POL - MIEDŹ TRANS Sp. z o.o.
51
173
224
Other
573
383
956
TOTAL
2 766
10 123
12 889
Metraco S.A. is the largest buyer of copper scrap in Poland and in Central-Eastern Europe, specialising in the comprehensive
servicing of KGHM Polska Miedź S.A. with respect to the supply of scrap used in the metallurgical facilities for production.
Mercus Logistyka Sp. z o.o. serves as a logistical operator for KGHM Polska Miedź S.A. with respect to the supply of necessary
materials and merchandise.
PeBeKa S.A. carries out construction projects for KGHM Polska Miedź S.A., specialising in mining, drilling, tunnelling and
infrastructure projects.
Energetyka Sp. z o.o. is involved in supplying KGHM Polska Miedź S.A. with oil-based fuels and the generation, transmission
and distribution of heat.
Centrozłom Wrocław S.A. does not operate on behalf of KGHM Polska Miedź S.A., and is involved in such areas as the
purchase, processing and sale of scrap: steel, iron and non-ferrous metals (copper, bronze, brass, aluminium and zinc).
The following companies earned the best profit on sales: KGHM ZANAM S.A. (PLN 36 million), Metraco S.A. (PLN 31 million),
PeBeKa S.A. (PLN 21 million) and NITROERG S.A. (PLN 16 million). The weakest results were recorded by Zagłębie Lubin
(-PLN 18 million). The adjustment to profit on sales due to the segment’s internal turnover (i.e. between subsidiaries)
amounts to PLN 122 million, which means a surplus of inter-segment revenues over costs, including manufacturing costs.
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 233
the Company and the Group in 2022 – translation from the original Polish version
APPENDIX 1 – KGHM POLSKA MIEDŹ S.A. GROUP STRUCTURE
As at 31 December 2022
Percentages represent the total share of the Group.
1/ joint venture accounted for using the equity method
2/ unconsolidated subsidiary
3/ previous name Cuprum Nieruchomości sp. z o.o.
100%
Zagłębie Lubin S.A.
100%
„MCZ” S.A.
INOVA Spółka z o.o.
KGHM TFI S.A.
CUPRUM Zdrowie sp. z o.o.
/3
100%
PeBeKa S.A.
100%
BIPROMET S.A.
100%
100%
KGHM (SHANGHAI) COPPER
TRADING CO., LTD.
100%
PHU „Lubinpex”
Sp. z o.o.
100%
NITROERG SERWIS
Sp. z o.o.
100%
Future 3 Sp. z o.o.
100%
NITROERG S.A.
100%
Future 4 Sp. z o.o.
87%
100%
WPEC w Legnicy S.A.
100%
NANO CARBON Sp. z o.o.
in liquidation
/1
OOO ZANAM VOSTOK
100%
100%
MERCUS Logistyka
sp. z o.o.
„Energetyka” sp. z o.o.
49%
Uzdrowisko Świeradów
-Czerniawa Sp. z o.o.
- Grupa PGU
99%
CENTROZŁOM
WROCŁAW S.A.
100%
87%
KGHM Centrum Analityki
sp. z o.o.
100%
Walcownia Metali
Nieżelaznych „ŁABĘDY”
S.A.
Cuprum Development
sp. z o.o.
Uzdrowisko Cieplice
Sp. z o.o. - Grupa PGU
Fundusz Hotele 01
Sp. z o.o. S.K.A.
KGHM Metraco S.A.
100%
100%
99%
100%
KGHM CUPRUM
sp. z o.o. – CBR,
100%
100%
POL-MIEDŹ TRANS
Sp. z o.o.
KGHM ZANAM S.A.
100%
99%
100%
Uzdrowisko Połczyn
Grupa PGU S.A.
100%
Polska Grupa Uzdrowisk
Sp. z o.o.
100%
Future 5 Sp. z o.o.
100%
Uzdrowiska Kłodzkie S.A.
- Grupa PGU
100%
KGHM Polska Miedź S.A.
CBJ sp. z o.o.
100%
Fundusz Hotele 01
Sp. z o.o.
100%
KGHM INTERNATIONAL LTD.
Group
KGHM Kupfer AG
100%
85%
100%
PMT Linie Kolejowe
Sp. z o.o.
100%
TUW-CUPRUM
/2
Future 1 Sp. z o.o.
Group structure presented in Appendix 2
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 234
the Company and the Group in 2022 – translation from the original Polish version
APPENDIX 2 – KGHM INTERNATIONAL LTD. GROUP STRUCTURE
As at 31 December 2022
Percentages represent the total share of the Group.
3/ name changed from 11.02.2022, formerly Raise Boring Mining Services S.A. de C.V.
100%
Carlota Copper Company
100%
KGHMI HOLDINGS LTD.
100%
Quadra FNX FFI S.à r.l
100%
Carlota Holdings Company
100%
100%
Aguas de la Sierra Limitada
DMC Mining Services (UK) Ltd.
100%
DMC Mining Services Colombia
SAS
100%
FRANKE HOLDINGS LTD.
/4
100%
2/ actual Group interest 80%
1/ joint venture accounted for using the equity method
4/ shares in FRANKE HOLDINGS LTD. are held respectively by: Centenario Holdings Ltd. 66.2%,
KGHM International Ltd. 30.3% and FNX Mining Company Inc. 3.5%
Wendover Bulk Transhipment
Company
100%
100%
KGHM AJAX
MINING INC.
Robinson Nevada Mining
Company
Sugarloaf
Ranches Ltd.
/2
80%
80%
KGHM INTERNATIONAL LTD
FNX Mining Company Inc.
100%
0899196 B.C. Ltd.
100%
100%
Robinson Holdings (USA) Ltd.
KGHM Chile SpA
100%
55%
Sierra Gorda
S.C.M.
/1
Centenario Holdings Ltd.
100%
Minera Carrizalillo SpA
100%
DMC Mining Services Ltd.
100%
DMC Mining Services
Corporation
100%
Quadra FNX Holdings Chile
Limitada
FNX Mining Company USA
Inc.
100%
DMC Mining Services Chile
SpA
100%
DMC Mining Services
Mexico, S.A. de C.V.
/3
100%
Quadra FNX Holdings
Partnership
100%
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 235
the Company and the Group in 2022 – translation from the original Polish version
APPENDIX 3 – ACTIVITIES OF SUBSIDIARIES AND JOINT VENTURES OF KGHM POLSKA MIEDŹ
S.A.
COMPANIES IN POLAND
Entity
Head Office
Activities
KGHM Polska Miedź S.A.
Poland mining of copper ore, excavation of salt, production of copper and precious metals
„Energetyka” sp. z o.o.
Poland
generation, transmission and distribution of electrical and heating energy; water-
effluents management; trade in oil-based products
PeBeKa S.A.
Poland
mine construction (construction of shafts and drifts), construction of roadway/railway
tunnels; specialist construction, drilling services (geological/exploration drilling)
KGHM ZANAM S.A.
Poland
production of mining machinery and equipment, construction machinery; machinery
repairs; production maintenance se
rvices; advancement of investments; steel
construction services; roadway cargo transport
KGHM CUPRUM
sp. z o.o. - CBR
Poland design and R&D activities
CBJ sp. z o.o.
Poland
research and chemical-physical analysis; measurement of imissions and emissions;
industrial research
INOVA Spółka z o.o.
Poland
design and production – innovative solutions in electrical engineering, automated
equipment and communication systems; certification and attestation of machinery and
equipment
KGHM Metraco S.A.
Poland
trade and processing of non-ferrous metals scrap; rhenium recovery from acidic
industrial waste; processing of shaft slag into road-
building material and sale of such;
trading in salt; recovery of copper and silver from smelter tiles; trading in chemical
factors
POL-MIEDŹ TRANS Sp. z o.o.
Poland railway cargo transport
NITROERG S.A.
Poland production of explosives, fuel additives and initiating systems
MERCUS Logistyka sp. z o.o.
Poland
materials logistics; trade in consumer goods; production of bundled electrical cables and
hydraulic cables; passenger roadway transport
NITROERG SERWIS Sp. z o.o.
Poland
comprehensive drilling and blasting work for mines, sales of explosives and initiating
systems
CENTROZŁOM WROCŁAW S.A.
Poland
recovery of raw materials from segregated materials – purchase and sale of metal scrap,
waste recycling, sale of metallurgical products and production of reinforcing building
materials
Walcownia Metali Nieżelaznych
„ŁABĘDY” S.A.
Poland production of pressed goods from copper and its alloys; rolling services
PHU „Lubinpex” Sp. z o.o.
Poland gastronomic, commercial and catering services
PMT Linie Kolejowe Sp. z o.o.
Poland authorized management of railway infrastructure
KGHM TFI S.A.
Poland creation and management of investment funds
WPEC w Legnicy S.A.
Poland production of heat from its own sources, transmission and distribution of heat, servicing
Uzdrowiska Kłodzkie S.A.
- Grupa PGU
Poland
Poland
Poland
services in the following areas: spa-healing, sanatorium, preventative medicine,
rehabilitation, biological renewal, recreation based on natural healing materials and
bioclimatic conditions
Uzdrowisko Połczyn Grupa PGU
S.A.
Uzdrowisko Cieplice sp. z o.o. –
Grupa PGU
Uzdrowisko
Świeradów-Czerniawa
Sp. z o.o. - Grupa PGU
Fundusz Hotele 01 Sp. z o.o.
Poland special-purpose companies not involved in operating activities
Fundusz Hotele 01 Sp. z o.o.
S.K.A.
Polska Grupa Uzdrowisk Sp. z
o.o.
Poland centre of common services for spa companies
„MCZ” S.A.
Poland
hospital services; medical practice; activities related to protecting human health;
occupational medicine
Zagłębie Lubin S.A.
Poland management of a football club, organisation of professional sporting events
BIPROMET S.A.
Poland
design services, consulting, technical conceptual work, general realisation of
investments, rental of real estate
Cuprum Development
sp. z o.o.
Poland
activities related to real estate market services, construction services, design work and
financing; this company is not involved in operating activities
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 236
the Company and the Group in 2022 – translation from the original Polish version
Entity
Head Office
Activities
CUPRUM Zdrowie
sp. z o.o.
Poland holding activities (a parent entity for e.g. spa companies)
KGHM Centrum Analityki
sp. z o.o.
Poland support of data analysis in the Group, including BigData creation
Future 3 Sp. z o.o.
Poland companies not engaged in operations
Future 4 Sp. z o.o.
Future 5 Sp. z o.o.
NANO CARBON Sp. z o.o. in
liquidation
Poland production of graphene and research into its properties
INTERNATIONAL COMPANIES (AND FUTURE 1 SP. Z O.O.)
Entity
Head Office
Activities
DIRECT SUBSIDIARIES
Future 1 Sp. z o.o.
Poland
management and control of other companies, including the KGHM INTERNATIONAL LTD.
Group
KGHM (SHANGHAI) COPPER
TRADING CO. LTD.
China Service and coordination activities involving copper/rhenium sales and procurement
support
INDIRECT SUBSIDIARIES
COMPANIES BELONGING TO Future 1 Sp. z o.o.
KGHM INTERNATIONAL LTD.
Canada
the founding, development, management or control of companies in the KGHM
INTERNATIONAL LTD. Group
KGHM Kupfer AG
Germany
in 2022 did not engage in operations
COMPANIES BELONGING TO KGHM INTERNATIONAL LTD.
KGHM Ajax Mining Inc.
Canada
development of copper mining projects
Sugarloaf Ranches Ltd.
Canada
agricultural activities (this company owns assets in the form of land designated for future
mining activities related to the Ajax project)
Robinson Nevada Mining
Company
USA
copper ore mining, production and sale of copper
Carlota Copper Company
USA
copper ore leaching, production and sale of copper
FNX Mining Company Inc.
Canada
mining of copper and nickel ore, production and sale of copper and nickel
Aguas de la Sierra Limitada
Chile
the ownership and exercise of water rights in Chile
Robinson Holdings (USA) Ltd.
USA
technical and management services
DMC Mining Services
Corporation
USA
contract mining services
KGHM Chile SpA
Chile management and exploration services on behalf of third parties
Minera Carrizalillo SpA
Chile
the ownership of water and deposits rights
Wendover Bulk Transhipment
Company
USA
shipment services
DMC Mining Services Mexico,
S.A. de C.V.
Mexico
mine drilling services
KGHMI Holdings Ltd.
Canada
the management and control of other companies
Carlota Holdings Company
USA
the management and control of other companies
Quadra FNX FFI S.à r.l.
Luxembourg
financial services
Centenario Holdings Ltd.
Canada
the management and control of other companies
Franke Holdings Ltd.
Canada
the management and control of other companies
Quadra FNX Holdings Chile
Limitada
Chile
the management and control of other companies
FNX Mining Company USA Inc.
USA
the management and control of other companies
Quadra FNX Holdings
Partnership
Canada the management and control of other companies
0899196 B.C. Ltd.
Canada
the management and control of other companies
DMC Mining Services Ltd.
Canada
contract mining services
DMC Mining Services Chile SpA
Chile
contract mining services
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 237
the Company and the Group in 2022 – translation from the original Polish version
Entity
Head Office
Activities
Sierra Gorda S.C.M.
Chile
the operation of an open-pit copper and molybdenum mine
DMC Mining Services Colombia
SAS
Columbia
contract mining services
DMC Mining Services (UK) Ltd.
United
Kingdom
contract mining services
COMPANY BELONGING TO KGHM ZANAM S.A. (99%) and Przedsiębiorstwo Budowy Kopalń PeBeKa S.A. (1%)
Obszczestwo s ograniczennoj
otwietstwiennostju ZANAM
VOSTOK
Russian
Federation
sale and after-sales service of mining machinery
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 238
the Company and the Group in 2022 – translation from the original Polish version
APPENDIX 4 - DISCLOSURE IN ACCORDANCE WITH ANNEX III OF DELEGATED REGULATION
2022/1214, SUPPLEMENTING DELEGATED REGULATION 2021/2178 WITH ANNEX XII,
CONCERNING STANDARD TEMPLATES FOR THE DISCLOSURE OF INFORMATION REFERRED TO
IN ARTICLE 8(6) AND (7) - I.E. FOR ACTIVITIES RELATED TO NUCLEAR POWER AND NATURAL
GAS
Table 117. Activities related to nuclear power and natural gas
Template 1 Activities related to nuclear power and natural gas.
Row
Activities related to nuclear power
1.
The company conducts research, development, demonstration and deployment of innovative electricity
generation facilities that produce energy through nuclear processes with minimum fuel cycle waste, finances
or has exposure to such activity.
NO
2.
The company conducts the
construction and safe operation of new nuclear power facilities to generate
electricity or process heat, including for district heating or industrial processes such as hydrogen production,
as well as their modernisation in terms of safety using the best available technology, finances or has
exposure to such activity.
NO
68
3.
The company conducts safe operation of existing nuclear power facilities generating electricity or process
heat, including for district heating or industrial processes such as hydrogen production, as well as their
modernisation in terms of safety, finances or has exposure to such activity.
NO
Activities related to natural gas
4.
The company conducts the construction or operates facilities for generation of
electricity using gaseous
fossil fuels, finances or has exposure to such activity.
NO
5.
The company conducts the construction, modernisation or operates facilities for combines generation of
heat/cooling and electricity using gaseous fossil fuels, finances or has exposure to such activity.
YES
6.
The company conducts the construction, modernisation or operates facilities for heat generation producing
heat/cooling energy using gaseous fossil fuels, finances or has exposure to such activity.
NO
68
On 22 December 2021 the Management Board of KGHM Polska Miedź S.A. (hereafter: "the Company") adopted Resolution No. 312/XI/2021
regarding the adoption for realisation of the Strategic Program called "Energy Development Program" (hereafter: "Program"). One of the
main operational goals of the Program is to develop nuclear power sources for generating electricity. In order to implement the Program,
on 14 February 2022 the Company entered into an Early Works Agreement with the company NuScale Power, LLC (a supplier of nuclear
technology; hereafter "NuScale") under which, among others, a feasibility study is to be prepared for the construction of a nuclear power
plant using small modular nuclear reactor (SMR) technology. Moreover, the Company is engaged in actions aimed at selecting the optimal
siting for the planned SMR-technology nuclear power plant. Due to the long-term nature of the design work underway, the Company may
incur the first expenditures in this regard possibly in 2023.
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 239
the Company and the Group in 2022 – translation from the original Polish version
Table 118. Turnover - Taxonomy-compliant economic activity (denominator)
Template 2 Taxonomy-compliant economic activity (denominator)
Row Types of economic activity
Amount and share (information to be provided in monetary amounts and
percentages)
CCM + CCA
Climate change mitigation
(CCM)
Climate change
adaptation (CCA)
Amount
(in million PLN)
%
Amount
(in million PLN)
%
Amount
(in million
PLN)
%
1.
The amount and share of taxonomy-
compliant economic activity referred to
in Section 4.26 of Annexes I and II of
Delegated Regulation (EU) 2021/2139
in the denominator of the applicable
key performance indicator
0.0 0.00% 0.0 0.00% 0.0 0.00%
2.
The amount and share of taxonomy-
compliant economic activity referred to
in Section 4.27 of Annexes I and II of
Delegated Regulation (EU) 2021/2139
in the denominator of the applicable
key performance indicator
0.0 0.00% 0.0 0.00% 0.0 0.00%
3.
The amount and share of taxonomy-
compliant economic activity referred to
in Section 4.28 of Annexes I and II of
Delegated Regulation (EU) 2021/2139
in the denominator of the applicable
key performance indicator
0.0 0.00% 0.0 0.00% 0.0 0.00%
4.
The amount and share of taxonomy-
compliant economic activity referred to
in Section 4.29 of Annexes I and II of
Delegated Regulation (EU) 2021/2139
in the denominator of the applicable
key performance indicator
0.0 0.00% 0.0 0.00% 0.0 0.00%
5.
The amount and share of taxonomy-
compliant economic activity referred to
in Section 4.30 of Annexes I and II of
Delegated Regulation (EU) 2021/2139
in the denominator of the applicable
key performance indicator
0.0 0.00% 0.0 0.00% 0.0 0.00%
6.
The amount and share of taxonomy-
compliant economic activity referred to
in Section 4.31 of Annexes I and II of
Delegated Regulation (EU) 2021/2139
in the denominator of the applicable
key performance indicator
0.0 0.00% 0.0 0.00% 0.0 0.00%
7.
Amount and share of other
taxonomy-
compliant economic
activities not listed in rows 1-6 above
in the denominator of the applicable
key performance indicator
340.5 1.01% 340.5 1.01% 0.0 0.00%
8.
Total applicable key performance
indicator
33 847.3
33 847.3
0.0
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 240
the Company and the Group in 2022 – translation from the original Polish version
Table 119. Turnover - Taxonomy-compliant economic activity (numerator)
Template 3 Taxonomy-compliant economic activity (numerator)
Row Types of economic activity
Amount and share (information to be provided in monetary amounts and
percentages)
CCM + CCA
Climate change
mitigation (CCM)
Climate change
adaptation (CCA)
Amount
(in million
PLN)
%
Amount
(in million
PLN)
%
Amount
(in million
PLN)
%
1.
The amount and share of taxonomy-
compliant economic activity referred to
in Section 4.26 of Annexes I and II of
Delegated Regulation (EU) 2021/2139 in
the denominator of the applicable key
performance indicator
0.0 0.00% 0.0 0.00% 0.0 0.00%
2.
The amount and share of taxonomy-
compliant economic activity referred to
in Section 4.27 of Annexes I and II of
Delegated Regulation (EU) 2021/2139 in
the denominator of the applicable key
performance indicator
0.0 0.00% 0.0 0.00% 0.0 0.00%
3.
The amount and share of taxonomy-
compliant economic activity referred to
in Section 4.28 of Annexes I and II of
Delegated Regulation (EU) 2021/2139 in
the denominator of the applicable key
performance indicator
0.0 0.00% 0.0 0.00% 0.0 0.00%
4.
The amount and share of taxonomy-
compliant economic activity referred to
in Section 4.29 of Annexes I and II of
Delegated Regulation (EU) 2021/2139 in
the denominator of the applicable key
performance indicator
0.0 0.00% 0.0 0.00% 0.0 0.00%
5.
The amount and share of taxonomy-
compliant economic activity referred to
in Section 4.30 of Annexes I and II of
Delegated Regulation (EU) 2021/2139 in
the denominator of the applicable key
performance indicator
0.0 0.00% 0.0 0.00% 0.0 0.00%
6.
The amount and share of taxonomy-
compliant economic activity referred to
in Section 4.31 of Annexes I and II of
Delegated Regulation (EU) 2021/2139 in
the denominator of the applicable key
performance indicator
0.0 0.00% 0.0 0.00% 0.0 0.00%
7.
Amount and share of other
taxonomy-
compliant economic
activities not listed in rows 1-6 above
in the denominator of the applicable
key performance indicator
340.5 100.00% 340.5 100.00% 0.0 100.00%
8.
Total amount and total share of other
taxonomy-
compliant economic
activities in the denominator of the
applicable key performance indicator
340.5 100.00% 340.5 100.00% 0.0 100.00%
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 241
the Company and the Group in 2022 – translation from the original Polish version
Table 120. Turnover - Taxonomy-eligible but taxonomy non-compliant economic activity
Template 4 Taxonomy-eligible but taxonomy non-compliant economic activity
Row Types of economic activity
Amount and share (information to be provided in monetary amounts and
percentages)
CCM + CCA
Climate change
mitigation (CCM)
Climate change
adaptation (CCA)
Amount
(in million PLN)
%
Amount
(in million
PLN)
%
Amount
(in million
PLN)
%
1.
The amount and share of taxonomy-
eligible but taxonomy non-compliant
economic activity referred to in Section 4.26
of Annexes I and II of Delegated Regulation
(EU) 2021/2139 in the denominator of the
applicable key performance indicator
0.0 0.00% 0.0 0.00% 0.0 0.00%
2.
The amount and share of taxonomy-
eligible but taxonomy non-compliant
economic activity referred to in Section 4.27
of Annexes I and II of Delegated Regulation
(EU) 2021/2139 in the denominator of the
applicable key performance indicator
0.0 0.00% 0.0 0.00% 0.0 0.00%
3.
The amount and share of taxonomy-eligible
but taxonomy non-
compliant economic
activity referred to in Section 4.28 of
Annexes I and II of Delegated Regulation
(EU) 2021/2139 in the denominator of the
applicable key performance indicator
0.0 0.00% 0.0 0.00% 0.0 0.00%
4.
The amount and share of taxonomy-eligible
but taxonomy non-
compliant economic
activity referred to in Section 4.29 of
Annexes I and II of Delegated Regulation
(EU) 2021/2139 in the denominator of the
applicable key performance indicator
0.0 0.00% 0.0 0.00% 0.0 0.00%
5.
The amount and share of taxonomy-
eligible but taxonomy non-compliant
economic activity referred to in Section 4.30
of Annexes I and II of Delegated Regulation
(EU) 2021/2139 in the denominator of the
applicable key performance indicator
0.0 0.00% 0.0 0.00% 0.0 0.00%
6.
The amount and share of taxonomy-eligible
but taxonomy non-
compliant economic
activity referred to in Section 4.31 of
Annexes I and II of Delegated Regulation
(EU) 2021/2139 in the denominator of the
applicable key performance indicator
0.0 0.00% 0.0 0.00% 0.0 0.00%
7.
Amount and share of other taxonomy-
eligible but taxonomy non-compliant
economic activities not listed in rows 1-6
above in the denominator of the
applicable key performance indicator
185.5 0.55% 185.5 0.55% 0.0 0.00%
8.
Total amount and total share of
taxonomy-eligible but taxonomy non-
compliant economic activities in the
denominator of the applicable key
performance indicator
185.5 0.55% 185.5 0.55% 0.0 0.00%
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 242
the Company and the Group in 2022 – translation from the original Polish version
Table 121. Turnover - Taxonomy-non-eligible activity
Template 5 Taxonomy-non-eligible activity
Row Types of economic activity
Amount
(in million PLN)
%
1.
The amount and share of taxonomy non-eligible economic
activity referred to in Section 4.26 of Annexes I and II of
Delegated Regulation (EU) 2021/2139 in the denominator of the
applicable key performance indicator
0.0 0.00%
2.
The amount and share of taxonomy non-eligible economic
activity referred to in Section 4.27 of Annexes I and II of
Delegated Regulation (EU) 2021/2139 in the denominator of the
applicable key performance indicator
0.0 0.00%
3.
The amount and share of taxonomy non-eligible economic
activity referred to in Section 4.28 of Annexes I and II of
Delegated Regulation (EU) 2021/2139 in the denominator of the
applicable key performance indicator
0.0 0.00%
4.
The amount and share of taxonomy non-eligible economic
activity referred to in Section 4.29 of Annexes I and II of
Delegated Regulation (EU) 2021/2139 in the denominator of the
applicable key performance indicator
0.0 0.00%
5.
The amount and share of taxonomy non-eligible economic
acti
vity referred to in Section 4.30 of Annexes I and II of
Delegated Regulation (EU) 2021/2139 in the denominator of the
applicable key performance indicator
0.0 0.00%
6.
The amount and share of taxonomy non-eligible economic
activity referred to in
Section 4.31 of Annexes I and II of
Delegated Regulation (EU) 2021/2139 in the denominator of the
applicable key performance indicator
0.0 0.00%
7.
Amount and share of other taxonomy non-eligible
economic activities not listed in rows 1-
6 above in the
denominator of the applicable key performance indicator
33 321.3 98.45%
8.
Total amount and total share of taxonomy non-eligible
economic activities in the denominator of the applicable
key performance indicator
33 321.3 98.45%
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 243
the Company and the Group in 2022 – translation from the original Polish version
Table 122. Capital expenditure - Taxonomy-compliant economic activity (denominator)
Template 2 Taxonomy-compliant economic activity (denominator)
Row Types of economic activity
Amount and share (information to be provided in monetary amounts and
percentages)
CCM + CCA
Climate change
mitigation (CCM)
Climate change
adaptation (CCA)
Amount
(in million PLN)
%
Amount
(in million PLN)
%
Amount
(in million
PLN)
%
1.
The amount and share of taxonomy-
compliant economic activity referred to in
Section 4.26 of Annexes I and II of
Delegated Regulation (EU) 2021/2139 in
the denominator of the applicable key
performance indicator
0.0 0.00% 0.0 0.00% 0.0 0.00%
2.
The amount and share of taxonomy-
compliant economic activity referred to in
Section 4.27 of Annexes I and II of
Delegated Regulation (EU) 2021/2139 in
the denominator of the applicable key
performance indicator
0.0 0.00% 0.0 0.00% 0.0 0.00%
3.
The amount and share of taxonomy-
compliant economic activity referred to in
Section 4.28 of Annexes I and II of
Delegated Regulation (EU) 2021/2139 in
the denominator of the applicable key
performance indicator
0.0 0.00% 0.0 0.00% 0.0 0.00%
4.
The amount and share of taxonomy-
compliant economic activity referred to in
Section 4.29 of Annexes I and II of
Delegated Regulation (EU) 2021/2139 in
the denominator of the applicable key
performance indicator
0.0 0.00% 0.0 0.00% 0.0 0.00%
5.
The amount and share of taxonomy-
compliant economic activity referred to in
Section 4.30 of Annexes I and II of
Delegated Regulation (EU) 2021/2139 in
the denominator of the applicable key
performance indicator
0.0 0.00% 0.0 0.00% 0.0 0.00%
6.
The amount and share of taxonomy-
compliant economic activity referred to in
Section 4.31 of Annexes I and II of
Delegated Regulation (EU) 2021/2139 in
the denominator of the applicable key
performance indicator
0.0 0.00% 0.0 0.00% 0.0 0.00%
7.
Amount and share of other taxonomy-
compliant economic activities not
listed in rows 1-
6 above in the
denominator of the applicable key
performance indicator
8.8 0.22% 8.8 0.22% 0.0 0.00%
8.
Total applicable key performance
indicator
4 101.8
4 101.8
0.0
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 244
the Company and the Group in 2022 – translation from the original Polish version
Table 123. Capital expenditure - Taxonomy-compliant economic activity (numerator)
Template 3 Taxonomy-compliant economic activity (numerator)
Row Types of economic activity
Amount and share (information to be provided in monetary amounts and percentages)
CCM + CCA
Climate change mitigation
(CCM)
Climate change
adaptation (CCA)
Amount
(in million
PLN)
%
Amount
(in million PLN)
%
Amount
(in million
PLN)
%
1.
The amount and share of
taxonomy-
compliant economic
activity referred to in Section 4.26
of Annexes I and II of Delegated
Regulation (EU) 2021/2139 in the
denominator of the applicable
key performance indicator
0.0 0.00% 0.0 0.00% 0.0 0.00%
2.
The amount and share of
taxonomy-
compliant economic
activity referred to in Section 4.27
of Annexes I and II of Delegated
Regulation (EU) 2021/2139 in the
denominator of the applicable
key performance indicator
0.0 0.00% 0.0 0.00% 0.0 0.00%
3.
The amount and share of
taxonomy-
compliant economic
activity referred to in Section 4.28
of Annexes I and II of Delegated
Regulation (EU) 2021/2139 in the
denominator of the applicable
key performance indicator
0.0 0.00% 0.0 0.00% 0.0 0.00%
4.
The amount and share of
taxonomy-
compliant economic
activity referred to in Section 4.29
of Annexes I and II of Delegated
Regulation (EU) 2021/2139 in the
denominator of the applicable
key performance indicator
0.0 0.00% 0.0 0.00% 0.0 0.00%
5.
The amount and share of
taxonomy-
compliant economic
activity referred to in Section 4.30
of Annexes I and II of Delegated
Regulation (EU) 2021/2139 in the
denominator of the applicable
key performance indicator
0.0 0.00% 0.0 0.00% 0.0 0.00%
6.
The amount and share of
taxonomy-
compliant economic
activity referred to in Section 4.31
of Annexes I and II of Delegated
Regulation (EU) 2021/2139 in the
denominator of the applicable
key performance indicator
0.0 0.00% 0.0 0.00% 0.0 0.00%
7.
The amount and share of other
taxonomy-compliant economic
activities not listed in rows 1-6
above in the denominator of
the applicable key
performance indicator
8.8 100.00% 8.8 100.00% 0.00 0.00%
8.
Total amount and total share of
other taxonomy-compliant
economic activities in the
denominator of the applicable
key performance indicator
8.8 100.00% 8.8 100.00% 0.00 0.00%
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 245
the Company and the Group in 2022 – translation from the original Polish version
Table 124. Capital expenditure - Taxonomy-eligible but taxonomy non-compliant economic activity
Template 4 Taxonomy-eligible but taxonomy non-compliant economic activity
Row Types of economic activity
Amount and share (information to be provided in monetary amounts and
percentages)
CCM + CCA
Climate change mitigation
(CCM)
Climate change
adaptation (CCA)
Amount
(in million
PLN)
%
Amount
(in million PLN)
%
Amount
(in million
PLN)
%
1.
The amount and share of taxonomy-
eligible but taxonomy non-compliant
economic activity referred to in Section
4.26 of Annexes I and II of Delegated
Regulation (EU) 2021/2139 in the
denominator of the applicable key
performance indicator
0.0 0.00% 0.0 0.00% 0.0 0.00%
2.
The amount and share of taxonomy-
eligible but taxonomy non-compliant
economic activity referred to in Section
4.27 of Annexes I and II of Delegated
Regulation (EU) 2021/2139 in the
denominator of the applicable key
performance indicator
0.0 0.00% 0.0 0.00% 0.0 0.00%
3.
The amount and share of taxonomy-
eligible but taxonomy non-compliant
economic activity referred to in Section
4.28 of Annexes I and II of Delegated
Regulation (EU) 2021/2139 in the
denominator of the applicable key
performance indicator
0.0 0.00% 0.0 0.00% 0.0 0.00%
4.
The amount and share of taxonomy-
eligible but taxonomy non-compliant
economic activity referred to in Section
4.29 of Annexes I and II of Delegated
Regulation (EU) 2021/2139 in the
denominator of the applicable key
performance indicator
0.0 0.00% 0.0 0.00% 0.0 0.00%
5.
The amount and share of taxonomy-
eligible but taxonomy non-compliant
economic activity referred to in Section
4.30 of Annexes I and II of Delegated
Regulation (EU) 2021/2139 in the
denominator of the applicable key
performance indicator
15.9 0.39% 15.9 0.39% 0.00 0.00%
6.
The amount and share of taxonomy-
eligible but taxonomy non-compliant
economic activity referred to in Section
4.31 of Annexes I and II of Delegated
Regulation (EU) 2021/2139 in the
denominator of the applicable key
performance indicator
0.0 0.00% 0.0 0.00% 0.0 0.00%
7.
Amount and share of other
taxonomy-
eligible but taxonomy
non-
compliant economic activities
not listed in rows 1-
6 above in the
denominator of the applicable key
performance indicator
189.6 4.62% 189.6 4.62% 0.0 0.00%
8.
Total amount and total share of
taxonomy-
eligible but taxonomy
non-
compliant economic activities
in the denominator of the
applicable key performance
indicator
205.5 5.01% 205.5 5.01% 0.0 0.00%
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 246
the Company and the Group in 2022 – translation from the original Polish version
Table 125. Capital expenditure - Taxonomy-non-eligible activity
Template 5 Taxonomy-non-eligible activity
Row Types of economic activity
Amount
(in million PLN)
%
1.
The amount and share of taxonomy non-
eligible economic activity
referred to in Section 4.26 of Annexes I and II of Delegated Regulation (EU)
2021/2139 in the denominator of the applicable key performance
indicator
0.0 0.00%
2.
The amount and share of taxonomy non-eligible economic activity
referred to in Section 4.27 of Annexes I and II of Delegated Regulation (EU)
2021/2139 in the denominator of the applicable key performance
indicator
0.0 0.00%
3.
The amount and share of taxonomy non-eligible economic activity
referred to in Section 4.28 of Annexes I and II of Delegated Regulation (EU)
2021/2139 in the denominator of the applicable key performance
indicator
0.0 0.00%
4.
The amount and share of taxonomy non-eligible economic activity
referred to in Section 4.29 of Annexes I and II of Delegated Regulation (EU)
2021/2139 in the denominator of the applicable key performance
indicator
0.0 0.00%
5.
The amount and share of taxonomy non-eligible economic activity
referred to in Section 4.30 of Annexes I and II of Delegated Regulation (EU)
2021/2139 in the denominator of the applicable key performance
indicator
0.0 0.00%
6.
The amount and share of taxonomy non-eligible economic activity
referred to in Section 4.31 of Annexes I and II of Delegated Regulation (EU)
2021/2139 in the denominator of the applicable key performance
indicator
0.0 0.00%
7.
Amount and share of other taxonomy non-
eligible economic
activities not listed in rows 1-6 above in the
denominator of the
applicable key performance indicator
3 887.5 94.77%
8.
Total amount and total share of taxonomy non-eligible economic
activities in the denominator of the applicable key performance
indicator
3 887.5 94.77%
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 247
the Company and the Group in 2022 – translation from the original Polish version
Table 126. Operating expenditure - Taxonomy-compliant economic activity (denominator)
Template 2 Taxonomy-compliant economic activity (denominator)
Row Types of economic activity
Amount and share (information to be provided in monetary amounts and
percentages)
CCM + CCA
Climate change mitigation
(CCM)
Climate change
adaptation (CCA)
Amount
(in million PLN)
%
Amount
(in million PLN)
%
Amount
(in million
PLN)
%
1.
The amount and share of taxonomy-
compliant economic activity referred to
in
Section 4.26 of Annexes I and II of
Delegated Regulation (EU) 2021/2139 in
the denominator of the applicable key
performance indicator
0.0 0.00% 0.0 0.00% 0.0 0.00%
2.
The amount and share of taxonomy-
compliant economic activity referred to
in
Section 4.27 of Annexes I and II of
Delegated Regulation (EU) 2021/2139 in
the denominator of the applicable key
performance indicator
0.0 0.00% 0.0 0.00% 0.0 0.00%
3.
The amount and share of taxonomy-
compliant economic activity referred to
in
Section 4.28 of Annexes I and II of
Delegated Regulation (EU) 2021/2139 in
the denominator of the applicable key
performance indicator
0.0 0.00% 0.0 0.00% 0.0 0.00%
4.
The amount and share of taxonomy-
compliant economic activity referred to
in
Section 4.29 of Annexes I and II of
Delegated Regulation (EU) 2021/2139 in
the denominator of the applicable key
performance indicator
0.0 0.00% 0.0 0.00% 0.0 0.00%
5.
The amount and share of taxonomy-
compliant economic activity referred to
in
Section 4.30 of Annexes I and II of
Delegated Regulation (EU) 2021/2139 in
the denominator of the applicable key
performance indicator
0.0 0.00% 0.0 0.00% 0.0 0.00%
6.
The amount and share of taxonomy-
compliant economic activity referred to
in
Section 4.31 of Annexes I and II of
Delegated Regulation (EU) 2021/2139 in
the denominator of the applicable key
performance indicator
0.0 0.00% 0.0 0.00% 0.0 0.00%
7.
Amount and share of other
taxonomy-
compliant economic
activities not listed in rows 1-6 above
in the denominator of the applicable
key performance indicator
35.4 1.91% 35.4 1.91% 0.0 0.00%
8.
Total applicable key performance
indicator
1 850.9
1 850.9
0.0
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 248
the Company and the Group in 2022 – translation from the original Polish version
Table 127. Operating expenditure - Taxonomy-compliant economic activity (numerator)
Template 3 Taxonomy-compliant economic activity (numerator)
Row Types of economic activity
Amount and share (information to be provided in monetary amounts and
percentages)
CCM + CCA
Climate change mitigation
(CCM)
Climate change
adaptation (CCA)
Amount
(in million
PLN)
%
Amount
(in million PLN)
%
Amount
(in million
PLN)
%
1.
The amount and share of taxonomy-
compliant economic activity
referred to in Section 4.26 of
Annexes I and II of Delegated
Regulation (EU) 2021/2139 in the
denominator of the applicable key
performance indicator
0.0 0.00% 0.0 0.00% 0.0 0.00%
2.
The amount and share of taxonomy-
compliant economic activity
referred to in Section 4.27 of
Annexes I and II of Delegated
Regulation (EU) 2021/2139 in the
denominator of the applicable key
performance indicator
0.0 0.00% 0.0 0.00% 0.0 0.00%
3.
The amount and share of taxonomy-
compliant economic activity
referred to in Section 4.28 of
Annexes I and II of Delegated
Regulation (EU) 2021/2139 in the
denominator of the applicable key
performance indicator
0.0 0.00% 0.0 0.00% 0.0 0.00%
4.
The amount and share of taxonomy-
compliant economic activity
referred to in Section 4.29 of
Annexes I and II of Delegated
Regulation (EU) 2021/2139 in the
denominator of the applicable key
performance indicator
0.0 0.00% 0.0 0.00% 0.0 0.00%
5.
The amount and share of taxonomy-
compliant economic activity
referred to in Section 4.30 of
Annexes I and II of Delegated
Regulation (EU) 2021/2139 in the
denominator of the applicable key
performance indicator
0.0 0.00% 0.0 0.00% 0.0 0.00%
6.
The amount and share of taxonomy-
compliant economic activity
referred to in Section 4.31 of
Annexes I and II of Delegated
Regulation (EU) 2021/2139 in the
denominator of the applicable key
performance indicator
0.0 0.00% 0.0 0.00% 0.0 0.00%
7.
The amount and share of other
taxonomy-
compliant economic
activities not listed in rows 1-6
above in the denominator of the
applicable key performance
indicator
35.4 100.00% 35.4 100.00% 0.0 0.00%
8.
Total amount and total share of
other taxonomy-compliant
economic activities in the
denominator of the applicable
key performance indicator
35.4 100.00% 35.4 100.00% 0.0 0.00%
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 249
the Company and the Group in 2022 – translation from the original Polish version
Table 128. Operating expenditure - Taxonomy-eligible but taxonomy non-compliant economic activity
Template 4 Taxonomy-eligible but taxonomy non-compliant economic activity
Row Types of economic activity
Amount and share (information to be provided in monetary amounts and
percentages)
CCM + CCA
Climate change
mitigation (CCM)
Climate change
adaptation (CCA)
Amount
(in million PLN)
%
Amount
(in million
PLN)
%
Amount
(
in million
PLN)
%
1.
The amount and share of taxonomy-
eligible but taxonomy non-compliant
economic activity referred to in Section
4.26 of Annexes I and II of Delegated
Regulation (EU) 2021/2139 in the
denominator of the applicable key
performance indicator
0.0 0.00% 0.0 0.00% 0.0 0.00%
2.
The amount and share of taxonomy-
eligible but taxonomy non-compliant
economic activity referred to in Section
4.27 of Annexes I and II of Delegated
Regulation (EU) 2021/2139 in the
denominator of the applicable key
performance indicator
0.0 0.00% 0.0 0.00% 0.0 0.00%
3.
The amount and share of taxonomy-
eligible but taxonomy non-compliant
economic activity referred to in Section
4.28 of Annexes I and II of Delegated
Regulation (EU) 2021/2139 in the
denominator of the applicable key
performance indicator
0.0 0.00% 0.0 0.00% 0.0 0.00%
4.
The amount and share of taxonomy-
eligible but taxonomy non-compliant
economic activity referred to in Section
4.29 of Annexes I and II of Delegated
Regulation (EU) 2021/2139 in the
denominator of the applicable key
performance indicator
0.0 0.00% 0.0 0.00% 0.0 0.00%
5.
The amount and share of taxonomy-
eligible but taxonomy non-compliant
economic activity referred to in Section
4.30 of Annexes I and II of Delegated
Regulation (EU) 2021/2139 in the
denominator of the applicable key
performance indicator
20.4 1.10% 20.4 1.10% 0.0 0.00%
6.
The amount and share of taxonomy-
eligible but taxonomy non-compliant
economic activity referred to in Section
4.31 of Annexes I and II of Delegated
Regulation (EU) 2021/2139 in the
denominator of the applicable key
performance indicator
0.0 0.00% 0.0 0.00% 0.0 0.00%
7.
Amount and share of other taxonomy-
eligible but taxonomy non-compliant
economic activities not listed in rows
1-
6 above in the denominator of the
applicable key performance indicator
121.6 6.57% 121.6 6.57% 0.0 0.00%
8.
Total amount and total share of
taxonomy-eligible but taxonomy non-
compliant economic activities in the
denominator of the applicable key
performance indicator
142.0 7.67% 142.0 7.67% 0.00 0.00%
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 250
the Company and the Group in 2022 – translation from the original Polish version
Table 129. Operating expenditure - Taxonomy-non-eligible activity
Template 5 Taxonomy-non-eligible activity
Row Types of economic activity
Amount
(in million PLN)
%
1.
The amount and share of taxonomy non-eligible economic activity
referred to in Section 4.26 of Annexes I and II of Delegated Regulation
(EU) 2021/2139 in the denominator of the applicable key performance
indicator
0.0 0.00%
2.
The amount and share of taxonomy non-eligible economic activity
referred to in Section 4.27 of Annexes I and II of Delegated Regulation
(EU) 2021/2139 in the denominator of the applicable key performance
indicator
0.0 0.00%
3.
The amount and share of taxonomy non-eligible economic activity
referred to in Section 4.28 of Annexes I and II of Delegated Regulation
(EU) 2021/2139 in the denominator of the applicable key performance
indicator
0.0 0.00%
4.
The amount and share of taxonomy non-eligible economic activity
referred to in Section 4.29 of Annexes I and II of Delegated Regulation
(EU) 2021/2139 in the denominator of the applicable key performance
indicator
0.0 0.00%
5.
The amount and share of taxonomy non-eligible economic activity
referred to in Section 4.30 of Annexes I and II of Delegated Regulation
(EU) 2021/2139 in the denominator of the applicable key performance
indicator
0.0 0.00%
6.
The amount and share of taxonomy non-eligible economic activity
referred to in Section 4.31 of Annexes I and II of Delegated Regulation
(EU) 2021/2139 in the denominator of the applicable key performance
indicator
0.0 0.00%
7.
Amount and share of other taxonomy non-
eligible economic
activities not listed in rows 1-6 above in the denominator of the
applicable key performance indicator
1 673.5 90.42%
8.
Total amount and total share of taxonomy non-eligible economic
activities in the denominator of the applicable key performance
indicator
1 673.5 90.42%
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 251
the Company and the Group in 2022 – translation from the original Polish version
APPENDIX 5 – LIST OF TABLES, CHARTS AND DIAGRAMS
LIST OF TABLES
Table 1. Basic products of the KGHM Polska Miedź S.A. Group 15
Table 2. Changes in the Group’s structure and organisation (Polish assets) in 2022 18
Table 3. Subsequent events in the KGHM Polska Miedź S.A. Group’s structure and organisation (assets in Poland) 19
Table 4. Changes in the KGHM Polska Miedź S.A. Group’s structure and organisation (international assets) in 2022. 19
Table 5. Key non-financial indicators of KGHM Polska Miedź S.A. for the years 2021-2022 28
Table 6. Market conditions significant for the operations of the KGHM Polska Miedź S.A. Group in the years 2021-2022 – average prices 32
Table 7. Map of Key Stakeholders of the KGHM Polska Miedź S.A. Group in 2022 39
Table 8. Examples of actions by the KGHM Polska Miedź S.A. Group towards selected key stakeholder groups in 2022 40
Table 9. Shareholder structure of KGHM Polska Miedź S.A. as of 31 December 2022 41
Table 10. Shareholder structure of KGHM Polska Miedź S.A. as of the date this report was signed 41
Table 11. Key share price data of the Company on the Warsaw Stock Exchange in the years 2021-2022 (Source: own work, WSE Statistic
Bulletin for 2021 and 2022, Bloomberg) 43
Table 12. Brokerages which prepare analytical reports on KGHM Polska Miedź S.A. 44
Table 13. National organisations of which KGHM Polska Miedź S.A. is a member 45
Table 14. International organisations of which KGHM Polska Miedź S.A. is a member 45
Table 15. Potentially-due remuneration of Members of the Management Board of KGHM Polska Miedź S.A. for 2022 48
Table 16. Selected Policies in force within KGHM Polska Miedź S.A. and the KGHM Polska Miedź S.A. Group 50
Table 17. Key achievements of the KGHM Polska Miedź S.A. Group in advancing the strategic activities in individual strategic directions of
development in 2022 54
Table 18. Risk category – Technology, in the Risk Model of KGHM Polska Miedź S.A. 67
Table 19. Risk category – Value Chain, in the Risk Model of KGHM Polska Miedź S.A. 67
Table 20. Risk category – Market, in the Risk Model of KGHM Polska Miedź S.A. 69
Table 21. Risk category – External Risk, in the Risk Model of KGHM Polska Miedź S.A. 70
Table 22. Risk category – Internal Risk, in the Risk Model of KGHM Polska Miedź S.A. 73
Table 23. Risk category – Climate, in the Risk Model of KGHM Polska Miedź S.A. 75
Table 24. Risk category – Market, in the Risk Model of the KGHM Polska Miedź S.A. Group 79
Table 25. Areas of credit risk in the Risk Model of the KGHM Polska Miedź S.A. Group 81
Table 26. Risk category – Liquidity risk, in the Risk Model of the KGHM Polska Miedź S.A. Group 82
Table 27. Values of KGHM Polska Miedź S.A. 83
Table 28. Values of selected GRI Standards illustrating activities relating to corruption prevention in KGHM Polska Miedź S.A. and in the
KGHM Polska Miedź S.A. Group in 2022 88
Table 29. Values of selected GRI Standards illustrating the sustainable supply chain of KGHM Polska Miedź S.A. Group in 2022 92
Table 30. Values of selected GRI Standards illustrating activities relating to compliance with the law and regulations in the KGHM Polska
Miedź S.A. Group in 2022 96
Table 31. Principles in chapter 2 of DPSN 2021 partially applied or not applied in KGHM Polska Miedź S.A. in 2022 112
Table 32. Principles in chapter 2 of DPSN 2021 partially applied or not applied 112
Table 33. Main characteristics of internal control and risk management systems as applied by KGHM Polska Miedź S.A. in the process of
preparing separate and consolidated financial statements 114
Table 34. Principles in chapter 3 of DPSN 2021 partially applied or not applied in KGHM Polska Miedź S.A. in 2022 116
Table 35. Shareholder structure of KGHM Polska Miedź S.A. as at 31 December 2022 119
Table 36. Shareholder structure of KGHM Polska Miedź S.A. as of 6 January 2023 and at the date of publication of this Report 119
Table 37. Principles in section 4 of DPSN 2021 applied partially or not applied in KGHM Polska Miedź S.A. in 2022 119
Table 38. Greenhouse gas emissions in KGHM Polska Miedź S.A. [t eCO
2
] 122
Table 39. Greenhouse gas emissions in the 2021 in KGHM Polska Miedź S.A. Group in 2021 [Mg eCO
2
] 123
Table 40. Scope 3 greenhouse gas emissions in the KGHM Polska Miedź S.A. Group in 2021 [t eCO
2
] 124
Table 41. GRI 302-1 Energy consumption in the years 2021-2022 in KGHM Polska Miedź S.A. [GJ] 125
Table 42. Total energy consumption by KGHM Polska Miedź S.A. in the years 2021-2022 125
Table 43. Results of investment projects completed by 2022 in KGHM Polska Miedź S.A. in the area of unit adaptation to meet the
requirements of the BAT Conclusions for the non-ferrous metals industry. 137
Table 44. Water management in the KGHM Polska Miedź S.A. Group [m3] 141
Table 45. Water management in KGHM Polska Miedź S.A. [m3] 142
Table 46. Waste management in KGHM Polska Miedź S.A. and in the KGHM Polska Miedź S.A. Group in 2022 [t] 147
Table 47. KGHM Polska Miedź S.A. sites adjacent to protected areas and areas of high biodiversity value in the years 2021-2022 151
Table 48. Percentage share of turnover in products or services related to Taxonomy-eligible economic activity in 2022 158
Table 49. Percentage share of capital expenditure in products or services related to a Taxonomy-eligible economic activity in 2022 160
Table 50. Percentage share of capital expenditure in products or services related to Taxonomy-eligible economic activity in 2022. 162
Table 51. Key HR projects implemented by KGHM Polska Miedź S.A. in 2022. 165
Table 52. Average employment in the KGHM Polska Miedź S.A. Group in the years 2021-2022 167
Table 53. Average employment in KGHM Polska Miedź S.A. in the years 2021-2022 167
Table 54. Total number of employees of the KGHM Polska Miedź S.A. Group by type of employment contract and by gender (as at 31
December 2022) 168
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 252
the Company and the Group in 2022 – translation from the original Polish version
Table 55. Total number of employees of the KGHM Polska Miedź S.A. Group by employment type (full-time or part-time) and gender (as at
31 December 2022) 168
Table 56. Total number of persons performing work for KGHM Polska Miedź S.A. and the KGHM Polska Miedź S.A. Group who are not their
employees (as at 31 December 2022) 168
Table 57. Total number of people working for the KGHM Polska Miedź S.A. Group (GRI indicators 2-8 and 2-7 combined) (as at 31 December
2022) 168
Table 58. New employee hires and employee turnover by gender in the KGHM Polska Miedź S.A. Group in the years 2021-2022 169
Table 59. Number of employee departures by gender in the KGHM Polska Miedź S.A. Group in the years 2021-2022 169
Table 60. Number of new employee hires by age in the KGHM Polska Miedź S.A. Group in the years 2021-2022 169
Table 61. Number of employee departures by age 169
Table 62. Average hours of training per employee in the KGHM Group, by position categories in the years 2021-2022 175
Table 63. Average hours of training per employee in the KGHM Group, by gender in the years 2021-2022 175
Table 64. Percentage share of women and men in individual position categories by gender in the KGHM Polska Miedź S.A. Group in the
years 2021-2022 177
Table 65. Percentage of women and men in individual job categories by age in the KGHM Polska Miedź S.A. Group in the years 2021-2022
177
Table 66. Ratio of basic salary and total remuneration of women to the remuneration of men by position category in the KGHM Polska
Miedź S.A. Group in the years 2021-2022 178
Table 67. Number of work-related accidents by gender, position type and severity of accidents in the KGHM Polska Miedź S.A. Group in the
years 2021-2022 182
Table 68. Accident rate according to the GRI 403-9 indicator in the KGHM Polska Miedź S.A. Group in the years 2021-2022 182
Table 69. Selected examples of pro publico bono activities in the companies of the KGHM Polska Miedź S.A. Group in 2022 184
Table 70. Donations contributed by the KGHM Polska Miedź Foundation in 2022, by individual areas of support. 188
Table 71. Amounts granted by KGHM Polska Miedź S.A. through its sponsorship function in 2022, by area. 189
Table 72. The amount spent by the KGHM Group companies (excluding the Parent Entity) as part of its sponsorship and donations activity
in 2022. 189
Table 73. Index of GRI content 192
Table 74. Production by the Group 201
Table 75. C1 cost of producing payable copper in the Group (USD/lb) 202
Table 76. Financial results of the Group (in million PLN) 203
Table 77. Main factors impacting the change in profit or loss of the Group 203
Table 78. Cash flow of the Group (in million PLN) 204
Table 79.Consolidated assets (in million PLN) 205
Table 80. Consolidated equity and liabilities (in million PLN) 206
Table 81. Net debt structure of the Group (in million PLN) 207
Table 82. Net debt structure of the Parent Entity (in million PLN) 208
Table 83. Sources of financing in the Group 208
Table 84. Amount available and drawn by the Group (in million PLN) 209
Table 85. Net debt / EBITDA of the Group 209
Table 86. The most significant loans granted by companies of the Group as of 31 December 2022 210
Table 87. 2022 targets versus achievements and targets for 2023 211
Table 88. Mine production of KGHM Polska Miedź S.A. 213
Table 89. Metallurgical production of KGHM Polska Miedź S.A. 214
Table 90. Sales volume of basic products of KGHM Polska Miedź S.A. 215
Table 91. Revenues from contracts with customers of KGHM Polska Miedź S.A. (in million PLN) 215
Table 92. Expenses by nature of KGHM Polska Miedź S.A. (in million PLN) 216
Table 93. Basic items of the statement of profit or loss of KGHM Polska Miedź S.A. (in million PLN) 218
Table 94. Main factors impacting the change in profit or loss of KGHM Polska Miedź S.A. 218
Table 95. Statement of cash flows of KGHM Polska Miedź S.A. (in million PLN) 219
Table 96. Assets of KGHM Polska Miedź S.A. (in million PLN) 220
Table 97. Equity and liabilities of KGHM Polska Miedź S.A. (in million PLN) 221
Table 98. Structure of expenditures on property, plant and equipment and intangible assets of KGHM Polska Miedź S.A. (in million PLN) 222
Table 99. Production of KGHM INTERNATIONAL LTD. 224
Table 100. Volume and sales revenue of KGHM INTERNATIONAL LTD. (in million USD) 224
Table 101. Sales revenue of KGHM INTERNATIONAL LTD. (in million PLN) 225
Table 102. C1 payable copper production cost of KGHM INTERNATIONAL LTD. 225
Table 103. Financial results of KGHM INTERNATIONAL LTD. (in million USD) 225
Table 104. Financial results of KGHM INTERNATIONAL LTD. (in million PLN) 226
Table 105. Key factors impacting the change in financial result of KGHM INTERNATIONAL LTD. 226
Table 106. Cash expenditures of KGHM INTERNATIONAL LTD. (in million USD) 227
Table 107. Cash expenditures of KGHM INTERNATIONAL LTD. (in million PLN) 227
Table 108. Production of copper, molybdenum and precious metals by Sierra Gorda S.C.M. 228
Table 109. Sales volume and revenues of Sierra Gorda S.C.M. 228
Table 110. Cost of sales, selling costs and administrative expenses and production cost of payable copper (C1) of Sierra Gorda S.C.M. 229
Table 111. Results of Sierra Gorda S.C.M. in USD million (on a 100% basis) 229
Table 112. Results of the segment Sierra Gorda S.C.M. proportionally to the interest held (55%) in million PLN 230
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 253
the Company and the Group in 2022 – translation from the original Polish version
Table 113. Main factors impacting the change in the financial result of the segment Sierra Gorda S.C.M. 230
Table 114. Cash expenditures of Sierra Gorda S.C.M. 231
Table 115. Financial results of other segments (prior to consolidation adjustments) 231
Table 116. Revenues earned by companies of the KGHM Group (excluding inter-segment revenues) 232
Table 117. Activities related to nuclear power and natural gas 238
Table 118. Turnover - Taxonomy-compliant economic activity (denominator) 239
Table 119. Turnover - Taxonomy-compliant economic activity (numerator) 240
Table 120. Turnover - Taxonomy-eligible but taxonomy non-compliant economic activity 241
Table 121. Turnover - Taxonomy-non-eligible activity 242
Table 122. Capital expenditure - Taxonomy-compliant economic activity (denominator) 243
Table 123. Capital expenditure - Taxonomy-compliant economic activity (numerator) 244
Table 124. Capital expenditure - Taxonomy-eligible but taxonomy non-compliant economic activity 245
Table 125. Capital expenditure - Taxonomy-non-eligible activity 246
Table 126. Operating expenditure - Taxonomy-compliant economic activity (denominator) 247
Table 127. Operating expenditure - Taxonomy-compliant economic activity (numerator) 248
Table 128. Operating expenditure - Taxonomy-eligible but taxonomy non-compliant economic activity 249
Table 129. Operating expenditure - Taxonomy-non-eligible activity 250
LIST OF DIAGRAMS
Diagram 1. Organisational structure of KGHM Polska Miedź S.A. 16
Diagram 2. Reporting segments of the KGHM Polska Miedź S.A. Group 17
Diagram 3. Business model of the KGHM Polska Miedź S.A. Group 20
Diagram 4. Integrated geological, mining and metallurgical activities in KGHM Polska Miedź S.A. 22
Diagram 5. Simplified flowchart of the core business of the KGHM INTERNATIONAL LTD. Group 22
Diagram 6. Location of the production assets of the KGHM Polska Miedź S.A. Group 23
Diagram 7. Forecasts of real GDP growth per the International Monetary Fund from January 2023 versus previous forecasts (source: World
Economic Outlook) 29
Diagram 8. Mission, Vision and Development Directions of the Strategy of KGHM Polska Miedź S.A. 51
Diagram 9. 5 Pillars based on 5 updated development directions in the Strategy of KGHM Polska Miedź S.A. 51
Diagram 10. Sustainable Development Areas of KGHM Polska Miedź S.A. 59
Diagram 11. UN sustainable development goals for the years 2015-2030 pursued by KGHM Polska Miedź S.A. 61
Diagram 12. KGHM Polska Miedź S.A.’s sustainable value chain 62
Diagram 13. Corporate risk management process in the KGHM Polska Miedź S.A. Group 64
Diagram 14. Organisational structure of risk management in KGHM Polska Miedź S.A 65
Diagram 15. Risk categories in the Risk Model of KGHM Polska Miedź S.A. and their definitions 66
Diagram 16. Ethical standards of KGHM Polska Miedź S.A. 84
Diagram 17. Procedure followed in the event of a breach of ethical principles in the KGHM Polska Miedź S.A. Group 85
Diagram 18. Corporate governance structure in KGHM Polska Miedź S.A. 98
Diagram 19. Management Board structure and breakdown of responsibilities for running the Company's affairs as of 31 December 2022
100
Diagram 20. Composition of the Management Board of KGHM Polska Miedź S.A. in 2022 104
Diagram 21. The composition of the Supervisory Board of KGHM Polska Miedź S.A. in 2022 105
Diagram 22. Committees of the Supervisory Board of KGHM Polska Miedź S.A. in 2022 108
Diagram 23. The composition of the Audit Committee of KGHM Polska Miedź S.A. in 2022 108
Diagram 24. Composition of the Remuneration Committee of KGHM Polska Miedź S.A. in 2022 109
Diagram 25. Composition of the Strategy Committee of KGHM Polska Miedź S.A. in 2022 110
Diagram 26. Three lines of defence of KGHM Polska Miedź S.A.’s risk management system 114
Diagram 27. Greenhouse gas emissions reduction goals in KGHM Polska Miedź S.A. and main decarbonisation directions 121
Diagram 28. Climate risk categories 129
Diagram 29 Water in the ore enrichment process (flotation) in KGHM Polska Miedź S.A. 139
Diagram 30. Water in the electrolytic copper production process in KGHM Polska Miedź S.A. 141
Diagram 31. Water in the electrolytic copper production process 143
Diagram 32. Golden Rules of OHS in KGHM Polska Miedź S.A. 179
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 254
the Company and the Group in 2022 – translation from the original Polish version
TABLE OF CHARTS
Chart 1. Change in commodities prices in 2022 (first vs last day of the year) 29
Chart 2. Copper price (average monthly) per the London Metal Exchange in the years 2018-2022 (in USD/t) 30
Chart 3. Silver price (average monthly) per the London Bullion Market Association in the years 2018-2022 30
Chart 4. Molybdenum price (average monthly) per Platts (in USD/lb) in the years 2019-2022 (in USD/lb) 30
Chart 5. USD/PLN exchange rate (average monthly) per the National Bank of Poland in the years 2018-2022 31
Chart 6. USD/CAD exchange rate (average monthly) per the Bank of Canada in the years 2018-2022 31
Chart 7. USD/CLP exchange rate (average monthly) per the Bank of Chile in the years 2018-2022 31
Chart 8. Geographical breakdown of global copper concentrates production in 2022 33
Chart 9. Geographical breakdown of global refined copper production in 2022 34
Chart 10. Geographical breakdown of global refined copper consumption in 2022 34
Chart 11. Geographical breakdown of global copper wire rod production in 2022 35
Chart 12. Geographical breakdown of global wire rod consumption in 2022 35
Chart 13. Geographical breakdown of global mined silver production in 2022 36
Chart 14. Geographic shareholder structure of KGHM Polska Miedź S.A. as of the date this report was signed (%) 42
Chart 15. Percentage change in the share price of KGHM Polska Miedź S.A. versus the WIG index and FTSE 350 mining indices (compared
to the price from the last trading day in 2021) 43
Chart 16. Number of reports of breaches of ethical principles in the KGHM Polska Miedź S.A. Group in the period 2018-2022 85
Chart 17. COMPLY ratio by KGHM Polska Miedź S.A. 97
Chart 18. Change in the total volume of Scope 1 and Scope 2 emissions at KGHM Polska Miedź S.A. in the years 2020-2021 [Mg eCO
2
] 122
Chart 19. Greenhouse gas emission indicator in KGHM Polska Miedź S.A. in the years 2020-2021 [Mg eCO2/Mg electrolytic copper] 122
Chart 20. Scope 3 greenhouse gas emissions by KGHM Polska Miedź S.A. in 2021 [t eCO
2
] 124
Chart 21. Value of expenditures incurred on environmentally-friendly activities by KGHM Polska Miedź S.A. in 2022 [in million PLN] 133
Chart 22. Dust emissions from mining production of KGHM Polska Miedź S.A. in 2022 [g/t of ore] 135
Chart 23. Dust emissions from metallurgical production of KGHM Polska Miedź S.A. in 2022 [g/t of electrolytic copper] 135
Chart 24. Emission of SO₂ of KGHM Polska Miedź S.A. in 2022 in kg/t of electrolytic copper 135
Chart 25. Arsenic emissions from metallurgical production, in g/t of electrolytic copper 138
Chart 26. Employment structure in the KGHM Polska Miedź S.A. Group in 2022 167
Chart 27. LTIFR
KGHM
rate in the Parent Entity in the years 2010-2022 181
Chart 28. TRIR rate in the Group's international assets in the years 2010–2022 182
Chart 29. ESG materiality matrix of KGHM Polska Miedź S.A. 192
Chart 30. Geographic structure of Group sales 202
Chart 31. Product structure of Group sales 202
Chart 32. Change in profit/loss of the Group for 2022 (in million PLN) 204
Chart 33. Cash flow of the Group in 2022 (in million PLN) 205
Chart 34. Change in assets of the Group in 2022 (in million PLN) 205
Chart 35. Change in equity and liabilities of the Group in 2022 (in million PLN) 206
Chart 36. Production of electrolytic copper (thousand tonnes) and metallic silver (t) 214
Chart 37. Sales revenue of KGHM Polska Miedź S.A. by market (in million PLN) 216
Chart 38. Structure of expenses by nature in 2022 217
Chart 39. Cost of producing copper in concentrate – C1 (USD/lb) 217
Chart 40. Pre-precious metals credit unit cost of electrolytic copper production – from own concentrate (PLN/t) 217
Chart 41. Change in profit for the period of KGHM Polska Miedź S.A. (in million PLN) 219
Chart 42. Cash flow of KGHM Polska Miedź S.A. (in million PLN) 220
Chart 43. Change in assets of KGHM Polska Miedź S.A. in 2022 (in million PLN) 221
Chart 44. Change in equity and liabilities of KGHM Polska Miedź S.A. in 2022 (in million PLN) 222
Chart 45. Structure of expenditures on the replacement of equipment of KGHM Polska Miedź S.A. 223
Chart 46. Structure of expenditures on maintaining mine production of KGHM Polska Miedź S.A. 223
Chart 47. Structure of expenditures on development of KGHM Polska Miedź S.A. 223
Chart 48. Change in profit or loss of KGHM INTERNATIONAL LTD. (in million USD)
227
Chart 49. Change in profit/loss for the period of Sierra Gorda S.C.M. (in USD million) 231
KGHM Polska Miedź S.A., The Management Board’s Report on the activities of 255
the Company and the Group in 2022 – translation from the original Polish version
SIGNATURES OF ALL MEMBERS OF THE MANAGEMENT BOARD
This report was authorised for issue on 21 March 2023
President
of the Management Board
Tomasz Zdzikot
Vice President
of the Management Board
Mateusz Wodejko
Vice President
of the Management Board
Marek Pietrzak
Vice President
of the Management Board
Mirosław Kidoń
Vice President
of the Management Board
Marek Świder