THE MANAGEMENT BOARD’S REPORT ON THE
ACTIVITIES OF KGHM POLSKA MIEDŹ S.A.
AND OF THE KGHM POLSKA MIEDŹ S.A.
GROUP IN 2023
Lubin, April 2024
Lubin, March 2023
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 2
Translation from the original Polish version
TABLE OF CONTENTS
Significant events in 2023 and to the date of signing of this report ................................................................................. 4
Aggregated data of the Company and the Group for the years 2016-2023 ...................................................................... 5
Statement on non-financial information ..................................................................................... 6
1 About us .......................................................................................................................................................................... 7
1.1 Strategy, business model and value chain ....................................................................................................................... 7
1.2 Strategy of the KGHM Polska Miedź S.A. Group ............................................................................................................ 33
1.3 Our contribution to the Sustainable Development Goals (SDGs) ................................................................................ 36
1.4 Interests and views of stakeholders................................................................................................................................ 37
1.5 Shareholders and the capital market ............................................................................................................................. 40
2 Governance and ethics ................................................................................................................................................ 43
2.1 Management structure of the Company and the KGHM Polska Miedź S.A. Group,
taking into account Sustainable Development Management ...................................................................................... 43
2.2 Management of sustainable development and ESG risks ............................................................................................ 44
2.3 Risk management ............................................................................................................................................................. 53
2.4 Due diligence policies and procedures ........................................................................................................................... 69
2.5 Ethics in business conduct and responsible business conduct ................................................................................... 70
2.6 Information on sources of supply of materials used in production, in goods and services ..................................... 82
2.7 Information about suppliers / customers whose share exceeds 10% of total revenues .......................................... 82
2.8 Significant contracts for the Company and Group ........................................................................................................ 83
2.9 Information on transactions entered into between related parties, under other than arm’s length conditions ... 83
2.10 Litigation and claims ......................................................................................................................................................... 84
3 Corporate governance statement .............................................................................................................................. 85
3.1 Indication of legal basis and collection of corporate governance principles and the scope of their application ... 85
3.2 Information policy and communication with investors ................................................................................................ 86
3.3 The Management Board and the Supervisory Board .................................................................................................... 89
3.4 Systems and functions ................................................................................................................................................... 106
3.5 General Meeting and relations with shareholders ...................................................................................................... 110
3.6 Conflicts of interest and transactions with related parties ......................................................................................... 113
3.7 Remuneration.................................................................................................................................................................. 113
4 Care for the environment ......................................................................................................................................... 115
4.1 Environmental impact management ............................................................................................................................ 115
4.2 Climate impact management ........................................................................................................................................ 115
4.3 Environmental pollution management ......................................................................................................................... 129
4.4 Management of water resources .................................................................................................................................. 137
4.5 Biodiversity impact management ................................................................................................................................. 142
4.6 Use of resources and circular economy ....................................................................................................................... 146
4.7 Environmental investments ........................................................................................................................................... 151
4.8 Disclosures in accordance with the European Union taxonomy for sustainable activities in 2023 ....................... 152
5 Employees and society .............................................................................................................................................. 167
5.1 Respecting human rights ............................................................................................................................................... 167
5.2 Responsible employer .................................................................................................................................................... 167
5.3 Our employees ................................................................................................................................................................ 176
5.4 Diversity and equal opportunities ................................................................................................................................. 182
5.5 Occupational Health and Safety .................................................................................................................................... 189
5.6 Managing the impact on employees in the value chain ............................................................................................. 193
5.7 Managing the impact on local communities ................................................................................................................ 197
5.8 Expenditures incurred by the Company and the Group to support culture,
sports, charities, media, social organisations, trade unions etc. ............................................................................... 202
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 3
Translation from the original Polish version
6 About the Report ........................................................................................................................................................ 204
6.1 General basis for the preparation of the statement on non-financial information ................................................. 204
6.2 Disclosure in relation to special circumstances ........................................................................................................... 204
6.3 Matrix of material reporting topics for 2023 ................................................................................................................ 204
6.4 Description of the process aimed to identify and assess significant impacts, risks and opportunities ................ 205
6.5 Risk management and internal controls over sustainability reporting ..................................................................... 205
6.6 ESRS disclosure requirements covered by the entity's sustainability statement ..................................................... 206
Economic results ........................................................................................................................ 210
7 Economic performance of the Group ....................................................................................................................... 211
7.1 Production ....................................................................................................................................................................... 211
7.2 Sales structure – geographic and product.................................................................................................................... 212
7.3 C1 cost of producing payable copper in the Group .................................................................................................... 212
7.4 Financial results............................................................................................................................................................... 213
7.5 Financing in the Group ................................................................................................................................................... 218
7.6 Economic outlook for 2024 and achievements of targets in 2023............................................................................. 222
8 Economic results of the segment KGHM Polska Miedź S.A. .................................................................................. 224
8.1 Production ....................................................................................................................................................................... 224
8.2 Sales ................................................................................................................................................................................. 227
8.3 Costs ................................................................................................................................................................................. 228
8.4 Financial results of the segment KGHM Polska Miedź S.A. ......................................................................................... 230
8.5 Capital expenditures ....................................................................................................................................................... 235
9 Economic results of the segment KGHM INTERNATIONAL LTD. ........................................................................... 237
9.1 Production ....................................................................................................................................................................... 237
9.2 Revenues .......................................................................................................................................................................... 237
9.3 Costs ................................................................................................................................................................................. 238
9.4 Financial results............................................................................................................................................................... 238
9.5 Cash expenditures .......................................................................................................................................................... 240
10 Economic results of the segment Sierra Gorda S.C.M. ........................................................................................... 241
10.1 Production ....................................................................................................................................................................... 241
10.2 Sales ................................................................................................................................................................................. 242
10.3 Costs ................................................................................................................................................................................. 242
10.4 Financial results............................................................................................................................................................... 243
10.5 Cash expenditures .......................................................................................................................................................... 245
11 Economic results of other segments........................................................................................................................ 246
11.1 Revenues .......................................................................................................................................................................... 246
11.2 Financial results............................................................................................................................................................... 246
11.3 Cash expenditures .......................................................................................................................................................... 247
Disclosure in accordance with Annex III of Commission Delegated Regulation (EU) 2022/1214,
supplementing Commission Delegated Regulation (EU) 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 [for consolidated data] .................................................. 248
Useful terms and abbreviations ........................................................................................................................................ 263
List of diagrams ................................................................................................................................................................... 266
Table of charts ..................................................................................................................................................................... 266
List of tables ......................................................................................................................................................................... 267
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 4
Translation from the original Polish version
Significant events in 2023 and to the date of signing of this report
Date
Event
Section
Change in macroeconomic conditions
2023
A 4% decrease in average annual copper prices with a 7% increase in silver prices
1.1.6
2023
A decrease in average annual USD/PLN exchange rate: by 6%
1.1.6
KGHM Polska Miedź S.A. on the Warsaw Stock Exchange
2023
A decrease in the share price of KGHM Polska Miedź S.A. by 3% from PLN 126.75 to PLN 122.70
1.5.3
Changes in the composition of KGHM Polska Miedź S.A.’s bodies
9 January 2024
Information on the resignation of Marek Świder from the function of Vice President of the
Management Board (Production) of the Company
3.3
12 February 2024
Information on the announcement of candidates to the Supervisory Board of the Company by a
shareholder
3.3
13 February 2024
Information on changes in the composition of the Supervisory Board and the Management Board of
the Company
3.3
6 March 2024
Information on the resignation of Zbigniew Bryja from his function in the Supervisory Board and on
changes in the composition of the Management Board of KGHM Polska Miedź S.A.
3.3
29 March 2024
Information on the resignation of Mirosław Kidoń from the function in the Management Board of
KGHM Polska Miedź S.A.
3.3
Impairment of assets
10 January 2024
Information on the occurrence of indications of possible impairment or indications that the
impairment loss recognised in prior periods was reduced for the domestic and international assets of
the KGHM Polska Miedź S.A. Group.
7.4, 8.4
22 March 2024
Information on the results of the conducted tests for impairment
7.4, 8.4
Allocation of profit
11 May 2023
Proposal of the Management Board regarding the allocation of profit for 2022 (recommended
dividend payout of PLN 200 million)
1.5.4
21 June 2023
Decision of the Ordinary General Meeting of KGHM Polska Miedź S.A. to pay a dividend in the amount
of PLN 200 million, representing PLN 1.00 per share
1.5.4
Significant agreements
3 January 2023
Agreement with Nexans France - contract for the delivery of copper cathodes in the years 2023-2027
2.6
28 February 2023
Agreement with Vale International SA for the purchase of Salobo copper concentrates in the years
2023-2027
2.6
7 August 2023
Agreement with the NKT Group for the sale of copper wire rod in the years 2023-2027
2.6
6 November 2023
5-year framework agreement for the sale of copper cathodes to China Minmetals in the years 2024-
2028
2.6
Changes in the structure of the Group
13 March 2023
Concluding of an agreement for the sale of 100% of the shares of KGHM TOWARZYSTWO FUNDUSZY
INWESTYCYJNYCH SPÓŁKA AKCYJNA
1.1.3
10 October 2023
Acquisition of shares in INVEST PV7 sp. z o.o., as part of a preliminary contingent agreement for the
purchase of shares in four special purpose vehicles from Projekt Solartechnik Fund Fundusz
Inwestycyjny Zamknięty
1.1.3
Other
6 January 2023
Notification dated 5 January 2023 on an increase of the share in the number of votes of Allianz OFE,
Allianz DFE and Drugi Allianz OFE to a level above 5%
1.5.1
8 March 2023
Update of the Climate Policy by the Management Board of KGHM Polska Miedź S.A.
16 May 2023
Notification dated 15 May 2023 on an increase of the share in the total number of votes of Allianz OFE,
Allianz DFE and Drugi Allianz OFE to a level above 5%
1.5.1
19 June 2023
Adoption of a decision regarding the development of a feasibility study on the evaporated salt plant
4.3.2
28 December 2023
Approval by the Supervisory Board of the Budget of KGHM Polska Miedź S.A. and of the Budget of the
KGHM Group for 2024
6.6
7 February 2024
Information on the consent of the Management Board of KGHM Polska Miedź S.A. to conclude with
Bank Gospodarstwa Krajowego a revolving credit agreement in the amount of USD 450 million for a
financing period of up to 60 months, with an option to extend it by a subsequent 24 months
7.5
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 5
Translation from the original Polish version
Aggregated data of the Company and the Group for the years 2016-2023
Basic items of the consolidated financial statements
2023
2022
2021
2020
2019
2018
2017
2016
Revenues from contracts with customers
PLN mn
33 467
33 847
29 803
23 632
22 723
20 526
20 358
19 156
Profit/(loss) for the period
PLN mn
(3 691)
4 774
6 155
1 797
1 421
1 658
1 525
(4 449)
Adjusted EBITDA
1
PLN mn
5 362
9 024
10 327
6 623
5 229
4 972
5 753
4 666
Total assets
PLN mn
51 383
53 444
48 027
42 780
39 409
37 237
34 122
33 442
Liabilities
PLN mn
22 753
21 298
20 889
21 699
19 207
18 012
16 337
17 531
Earnings per share (EPS)
2
PLN
(18.49)
23.86
30.78
9.00
7.11
8.29
7.84
(21.86)
Share price of the Company at the end of the
period
PLN
122.70
126.75
139.40
183.00
95.58
88.88
111.20
92.48
Net debt/EBITDA
3
1.1
0.8
0.6
0.9
1.5
1.6
1.3
1.6
Payable copper production
4
kt
710.9
733.1
753.7
709.1
701.6
633.9
656.4
676.9
Payable silver production
5
t
1 428
1 327
1 366
1 353
1 417
1 205
1 234
1 207
C1 payable copper production cost
6
USD/lb
2.87
2.20
1.96
1.59
1.70
1.81
1.59
1.41
Cash expenditures on property, plant and
equipment and intangible assets
PLN mn
4 776
4 118
3 890
3 457
3 232
2 875
2 796
3 251
Basic items of the separate financial statements
2023
2022
2021
2020
2019
2018
2017
2016
Revenues from contracts with customers
PLN mn
29 084
28 429
24 618
19 326
17 683
15 757
16 024
15 112
Profit/(loss) for the period
PLN mn
(1 153)
3 533
5 169
1 779
1 264
2 025
1 323
(4 085)
Adjusted EBITDA
PLN mn
3 563
5 470
5 474
4 458
3 619
3 416
4 160
3 551
Total assets
PLN mn
48 896
47 995
43 458
39 342
35 989
34 250
30 947
30 100
Liabilities
PLN mn
20 078
18 320
17 618
18 616
16 100
15 205
13 691
14 200
Earnings per share (EPS)
7
PLN
(5.77)
17.67
25.85
8.90
6.32
10.13
6.62
(20.42)
Electrolytic copper production
kt
592.4
586.0
577.6
560.4
565.6
501.8
522.0
535.6
Metallic silver production
t
1 403
1 298
1 332
1 323
1 400
1 189
1 218
1 191
C1 payable copper production cost
USD/lb
2.98
2.38
2.26
1.62
1.74
1.85
1.52
1.3
Cash expenditures on property, plant and
equipment and intangible assets
PLN mn
3 074
2 731
2 407
2 422
2 366
1 907
1 991
2 604
Macroeconomic data (average annual)
2023
2022
2021
2020
2019
2018
2017
2016
Copper prices per the LME
USD/t
8 478
8 797
9 317
6 181
6 000
6 523
6 166
4 863
Silver prices per the LBMA
USD/oz t
23.35
21.73
25.14
20.54
16.21
15.71
17.05
17.14
Exchange rate
USD/PLN
4.20
4.46
3.86
3.90
3.84
3.61
3.78
3.94
1
Comprises Sierra Gorda S.C.M. proportionally to the 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 the 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 the Company and the Group in 2023 6
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 the Company and the Group in 2023 7
Translation from the original Polish version
1 ABOUT US
1.1 STRATEGY, BUSINESS MODEL AND VALUE CHAIN
[ESRS 2 SBM-1]
1.1.1 INFORMATION ABOUT KGHM
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 in the commodities sector. For more than 60 years KGHM has been mining
and processing the Earth’s precious natural resources, supplying the world with products required for its functioning. Some
of these products enable the sustainable development of economies and societies. 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, holding eighth 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”.
In 2023, KGHM Polska Miedź S.A. celebrated important jubilees:
70th anniversary of the
Legnica Copper Smelter and
Refinery
55th anniversary of the
Lubin Mine
25th anniversary of the
Polkowice-Sieroszowice
Mine Division
20th anniversary of the
KGHM Foundation
1.1.2 Our comparative advantages
The KGHM Group offers products and services that satisfy the expectations of even the most demanding customers. This
is possible thanks to the wide range of the KGHM Polska Miedź S.A. Group's operations, the integrity of its mining and
production processes, unique on a global scale, its innovation and financial stability, as well as its long-standing experience.
8
Kitco 2023.
9
World Silver Survey 2023.
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 8
Translation from the original Polish version
Diagram 1. Competitive advantages of the KGHM Polska Miedź S.A. Group
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, being part of the elite group of companies which can claim a full value chain, including mining, smelting/refining and
processing.
The copper ore resources controlled by KGHM guarantee it an important position in the global mining sector. The Company
continues its exploration and evaluation work in many locations in Poland and worldwide. A broad range of exploration
work is conducted, i.e. greenfield exploration and geological appraisal (exploring new deposits), brownfield exploration areas
(appraisal of resources which have been partially surveyed and documented) as well as in-mine and near-mine exploration
(appraisal of areas adjacent to the currently worked assets in order to extend their operational life).
A unique competitive advantage is the fact that the KGHM Group has a fully-integrated process - from ore exploration,
mining, ore enrichment, smelting, refining and processing, to the sale of finished products. Fully-integrated subsidiaries,
providing complementary services and extending the core business in areas such as mining machinery production,
explosives or metal recycling, also add value.
KGHM Polska Miedź S.A. has developed extraordinary human capital, experience, knowledge and skills that will remain one
of the fundamental assets for winning a competitive edge in the industry and for creating a strong international position of
Poland as an industrial centre. KGHM has unique competence associated with the work carried out at great depths,
extracting copper ores and other precious metals from underground mines. The deepest mine object in Poland (owned by
KGHM) – the GG-1 shaft in Kwielice – has a depth of 1 348 meters. Consequently, it is the largest underground project in
the non-ferrous metals industry in Europe.
KGHM is one of the global top producers of copper (eighth on the list of the world's largest copper producers) and silver
(first in the ranking of "the largest silver mines in the world" in the World Silver Survey 2023, second in the category of "the
largest silver producers"). Other products are also derived from the processing of copper ore, including crude and refined
lead, sulphuric acid, nickel sulphate and selenium. Moreover, the Company 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. not only has an extensive product portfolio, but also considerable potential for extending the value
chain, which it is gradually tapping into. In cooperation with the Group companies, KGHM implements 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, which is consequently
returned for use, in accordance 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.
Global reach of operations and access to rich deposits
Integrated production process
Unique know-how and rich experience
A rich portfolio of products / minerals
Extension of the value chain
Innovation
Partnership with companies and institutions
Integration and sustainable development within the KGHM Group
Financial stability
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 9
Translation from the original Polish version
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 the level of work safety.
KGHM builds permanent partnerships with renowned domestic and international companies and institutions. The
Company is a member of numerous domestic and international organisations, including employer organisations, economic
associations, sector societies, foundations and other entities representing the European mining industry. It 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.
The transformation towards sustainable development, which means the commitment to actions for the climate and natural
environment, social responsibility and corporate governance, plays an important role in the operations of the KGHM Group.
Thanks to its transparent and comprehensive activities and the building of stakeholder relations in these areas, its
responsibility and commitment make the Company the winner of many prestigious awards and prizes, granted among
others for activities related to its presence on the capital market, communication with investors and CSR initiatives
10
.
One of the pillars of growth of the KGHM Group is to ensure the KGHM Group’s financial stability and implement systemic
solutions aimed at increasing its value. As part of enhancing its competitive advantage in this respect, KGHM strives to base
its financing structure on long-term instruments, shorten the cash conversion cycle and manage the KGHM Group’s market
and credit risk effectively.
The material impacts, risks and opportunities in our operations and their potential links with the business model and the
value chain are presented in sections 2.2.7 Material impacts, risks and opportunities and their interaction with strategy and
business model and 1.1.8 How we create value.
1.1.3 Organisational structure of the Company and the Group
Structure of the Group
As at 31 December 2023, the Group was composed of the parent entity – KGHM Polska Miedź S.A. – and 63 subsidiaries,
located on four continents: Europe, North and 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 day 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 diagrams below present detailed structure of the KGHM Polska Miedź S.A. Group, together with the relationships
between entities.
10
https://media.kghm.com/en/awards
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 10
Translation from the original Polish version
Diagram 2. KGHM Polska Miedź S.A. Group Structure as at 31 December 2023
Percentages represent the total share of the Group.
1/ joint venture accounted for using the equity method
2/ unconsolidated subsidiary
Future 3 Sp. z o.o.
100%
100%
KGHM CUPRUM
sp. z o.o. – CBR
Polska Grupa Uzdrowisk
Sp. z o.o.
100%
INOVA sp. z o.o.
100%
Fundusz Hotele 01
Sp. z o.o.
KGHM Centrum Analityki
sp. z o.o.
100%
KGHM ZANAM S.A.
100%
PMT Linie Kolejowe
Sp. z o.o.
100%
100%
100%
Zagłębie Lubin S.A.
100%
„MCZ” S.A.
100%
KGHM (SHANGHAI) COPPER
TRADING CO., LTD.
TUW-CUPRUM
/2
KGHM Polska Miedź S.A.
POL-MIEDŹ TRANS
Sp. z o.o.
PeBeKa S.A.
100%
BIPROMET S.A.
100%
99%
100%
100%
PHU „Lubinpex”
Sp. z o.o.
100%
100%
87%
NITROERG S.A.
NITROERG SERWIS
Sp. z o.o.
100%
Future 4 Sp. z o.o.
100%
100%
WPEC w Legnicy S.A.
87%
KGHM Kupfer AG
100%
85%
100%
MERCUS Logistyka
sp. z o.o.
KGHM Metraco S.A.
100%
CENTROZŁOM
WROCŁAW S.A.
Walcownia Metali
Nieżelaznych „ŁABĘDY”
100%
99%
100%
100%
Future 1 Sp. z o.o.
100%
Future 5 Sp. z o.o.
100%
CBJ sp. z o.o.
100%
OOO ZANAM VOSTOK
100%
INVEST PV7 Sp. z o.o.
Fundusz Hotele 01
Sp. z o.o. S.K.A.
Cuprum Development
sp. z o.o.
Uzdrowisko Połczyn
Grupa PGU S.A.
Uzdrowiska Kłodzkie S.A.
- Grupa PGU
„Energetyka” sp. z o.o.
100%
Uzdrowisko Świeradów
-Czerniawa Sp. z o.o. - Grupa PGU
Uzdrowisko Cieplice
Sp. z o.o. - Grupa PGU
NANO CARBON Sp. z o.o.
in liquidation
/1
KGHM INTERNATIONAL
LTD. Group
100%
49%
99%
Group structure presented in a
separate diagram
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 11
Translation from the original Polish version
Diagram 3. KGHM INTERNATIONAL LTD. Group Structure as at 31 December 2023
Percentages represent the total share of the Group.
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.,
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.
1/ joint venture accounted for using the equity method
FNX Mining Company Inc.
100%
100%
100%
100%
100%
100%
KGHM Chile SpA
100%
100%
100%
100%
DMC Mining Services
Corporation
FNX Mining Company USA
Inc.
Centenario Holdings Ltd.
Minera Carrizalillo SpA
100%
DMC Mining Services
Colombia SAS
100%
DMC Mining Services (UK) Ltd.
100%
FRANKE HOLDINGS LTD.
0899196 B.C. Ltd.
100%
KGHM AJAX MINING INC.
80%
80%
Sugarloaf Ranches Ltd.
Sierra Gorda
S.C.M. /1
KGHMI HOLDINGS LTD.
100%
Quadra FNX FFI S.à r.l
100%
100%
Aguas de la Sierra
Limitada
Quadra FNX Holdings
Chile Limitada
100%
55%
KGHM INTERNATIONAL LTD
DMC Mining Services Ltd.
Wendover Bulk
Transhipment Company
100%
Robinson Holdings (USA) Ltd.
100%
100%
100%
100%
Robinson Nevada Mining
Company
Carlota Holdings Company
Carlota Copper
Company
DMC Mining Services Chile
SpA
Quadra FNX Holdings
Partnership
DMC Mining Services
Mexico, S.A. de C.V.
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 12
Translation from the original Polish version
Diagram 4. 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,
including 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.
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
In 2023, as part of the integration of key international assets with domestic operations, 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 relation to domestic companies, no changes in
the management rules in this area occurred in 2023.
Changes in the Group structure, equity investments
In 2023, PLN 269 million was incurred on domestic equity investments (acquisition of shares and newly-issued shares),
including PLN 261 million as part of the acquisition of newly-issued shares in the increased share capital of Group
companies. The equity investments were financed from own funds, including the amount of approximately PLN 50 million
from the return of payments to the capital of Group companies and inflows from the disposal of shares.
In addition, PLN 19 million in owners loans were granted to the Group’s companies. The amounts incurred were covered
by inflows from the repayment of loans granted in previous years.
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 13
Translation from the original Polish version
In 2023, the following changes in the structure of the Group occurred:
Sale of 100% of the
shares of KGHM TFI
S.A.
On 13 March 2023, KGHM Polska Miedź S.A. entered into an agreement with Agencja Rozwoju Przemysłu S.A. for the
sale of 100% of the shares of KGHM TOWARZYSTWO FUNDUSZY INWESTYCYJNYCH SPÓŁKA AKCYJNA. The sale of the
shares was contingent on meeting the conditions precedent, among others no objections raised by the Polish
Financial Supervision Authority (KNF).
Based on the KNF’s raising no objections to the acquisition of shares by the buyer, the transaction was closed on
27 July 2023 and the buyer was entered in the register of shareholders on 3 August 2023.
The sale of these 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 the KGHM VII FIZAN.
KGHM Polska Miedź S.A. was the owner of 100% of the shares of KGHM TFI S.A.
Merger of
companies:
CUPRUM Zdrowie
sp. z o.o. and PGU
sp. z o.o.
On 14 July 2023, the Shareholders Meetings of the merged companies approved the merger of CUPRUM Zdrowie
sp. z o.o. (the Acquiring Company) with Polska Grupa Uzdrowisk sp. z o.o. (the Acquired Company) by transferring
all the assets of the Acquired Company to the Acquiring Company (merger of Companies by acquisition). Due to the
fact that the Acquiring Company held 100% of the shares in the Acquired Company, the merger was carried out with
no increase in the share capital.
On 1 August 2023, the merger was registered with the National Court Register and the Acquired Company ceased
to exist as a legal entity. As part of the merger, the name of the Acquiring Company was changed to that of the
Acquired Company, i.e. from CUPRUM Zdrowie sp. z o.o. to Polska Grupa Uzdrowisk sp. z o.o.
Acquisition of 100%
of the shares of
INVEST PV7 sp. z
o.o.
(and, after the
balance sheet date,
INVEST PV 40 Sp. z
o.o., INVEST PV 58
Sp. z o.o. and
INVEST PV 59 Sp. z
o.o.)
On 12 September 2023, KGHM Polska Miedź S.A. signed a preliminary contingent agreement with Projekt
Solartechnik Fund Fundusz Inwestycyjny Zamknięty for the purchase of shares in four special purpose companies
owning photovoltaic farms with a total capacity of approximately 47 MW. The farms are located in the Dolnośląskie,
Łódzkie, Pomorskie and Wielkopolskie voivodeships.
On 10 October 2023, KGHM Polska Miedź S.A. acquired shares in the first company, INVEST PV7 sp. z o.o., which is
the operator of the 5.2 MW PV Żuki photovoltaic farm located in the Turek municipality in the Wielkopolskie
voivodeship.
On 29 February 2024, KGHM Polska Miedź S.A., continuing the performance of the agreement, acquired shares in
three further companies, i.e. INVEST PV 40 Sp. z o.o., INVEST PV 58 Sp. z o.o. and INVEST PV 59 Sp. z o.o., which are
operators of photovoltaic farms, successively - PV Głogów 1, PV Głogów 2 with a total power of 10 MW, located in
the Głogów municipality, Dolnośląskie Voivodeship, PV Gniewino 1, PV Gniewino 2 with a total capacity of 14 MW,
located in the Gniewino municipality, Pomorskie Voivodeship, and PV Koryta I, PV Koryta II, PV Koryta III with a total
capacity of 17.9 MW, located in the Daszyna municipality, Łódzkie Voivodeship.
The changes in the group of other companies (share in capital below 20%) included the following events that took place in
2023:
Acquisition of 5%
of shares in GPW
Logistics S.A.
In March 2023, KGHM Polska Miedź S.A. accepted an offer from GPW Logistics S.A. to acquire newly-issued shares
in the company representing 5% of the share capital. The shares were acquired on 24 March 2023 and covered with
a cash contribution of PLN 10.5 thousand on 31 March 2023. The main shareholder of the company is the Warsaw
Stock Exchange (Giełda Papierów Wartościowych w Warszawie S.A.) - 95% share in the share capital. The company
GPW Logistics S.A. is a logistics operator.
Decrease of share
in LSSE S.A.
In October 2023, the Extraordinary General Meeting of Legnicka Specjalna Strefa Ekonomiczna S.A. adopted a
resolution on increasing the company's share capital by PLN 59.3 million. All shares in the increased share capital
were acquired by Agencja Rozwoju Przemysłu S.A. KGHM Polska Miedź S.A. did not participate in the acquisition of
the shares. As a result of the foregoing, the share of KGHM Polska Miedź S.A. in the share capital fell from 12.24%
to 4.62%. The National Court Register registered the capital increase on 26 October 2023.
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 14
Translation from the original Polish version
As part of actions other than resulting in a change in the structure, but increasing the capital exposure of KGHM Polska
Miedź S.A., newly-issued shares in the increased share capital of the following subsidiaries were acquired.
Acquisition of
newly-issued
shares of
“Energetyka”
sp. z o.o.
On 12 January 2023, the Extraordinary Shareholders Meeting of “Energetyka” sp. z o.o. adopted a resolution to
increase the share capital of the company by PLN 115 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 115 million. The increase
was registered with the National Court Register in February 2023.
The funds raised from the increase were used to increase the share capital in the subsidiary WPEC w Legnicy S.A.,
in which “Energetyka” sp. z o.o. owns 100% of the shares. On 2 February 2023, the Extraordinary General Meeting
of WPEC w Legnicy S.A. adopted a resolution on increasing the company's share capital by PLN 115 million. All of the
newly-issued shares in the increased share capital were acquired by “Energetyka” sp. z o.o. and paid for in cash in
the amount of PLN 115 million. The share capital of WPEC w Legnicy S.A. following the increase amounts to PLN
233 million. The increase was registered with the National Court Register in April 2023.
On 28 December 2023, the Extraordinary Shareholders Meeting of “Energetyka” sp. z o.o. adopted a resolution to
increase the share capital of the company by the amount of PLN 44.5 million. All newly-issued shares were acquired
by KGHM Polska Miedź S.A., and covered by a contribution in kind in the form of KGHM Polska Miedź S.A.'s claims
against “Energetyka” sp. z o.o. for reimbursement of subsidies granted to the company in the years 2000-2002.
The share capital of “Energetyka” sp. z o.o. following the aforementioned increases amounts to PLN 629.4 million.
KGHM Polska Miedź S.A. owns 100% of the shares of “Energetyka” sp. z o.o.
Acquisition of
newly-issued
shares of non-
operating
companies
On 7 March 2023, the Extraordinary Shareholders Meeting of three non-operating companies – Future 3 spółka z
o.o., Future 4 spółka z o.o. and Future 5 spółka z o.o. – adopted resolutions on increasing the share capital of these
entities, by the total amount of PLN 242 thousand in order to ensure financing of current operations of the
companies. All shares in the increased share capital were acquired by the sole shareholder - KGHM Polska Miedź
S.A.
Acquisition of
newly-issued
shares of Zagłębie
Lubin S.A.
On 11 July 2023, the Extraordinary General Meeting of Zagłębie Lubin S.A. adopted a resolution on increasing the
company's share capital by PLN 30 million. The share capital following the increase amounts to PLN 191.7 million.
All newly-issued shares in the increased share capital were acquired by KGHM Polska Miedź S.A. In July 2023, a cash
contribution was made to cover the first instalment of the increase in the amount of PLN 15 million. The payment
date of the second instalment in the amount of PLN 15 million was 31 March 2024.
KGHM Polska Miedź S.A. owns 100% of the shares of the company.
Acquisition of
newly-issued
shares of PMT Linie
Kolejowe sp. z o.o.
On 11 July 2023, the Extraordinary Shareholders Meeting of PMT Linie Kolejowe sp. z o.o. adopted a resolution to
increase the share capital of the company by PLN 17.2 million. All of the newly-issued shares in the increased share
capital were acquired by KGHM Polska Miedź S.A. and fully paid for in cash on 31 July 2023. The share capital of the
Company following the increase amounts to PLN 34.5 million. The increase was registered in the National Court
Register on 10 October 2023.
KGHM Polska Miedź S.A. owns 100% of the shares of the company.
Acquisition of
newly-issued
shares of POL-
MIEDŹ TRANS
sp. z o.o.
On 19 September 2023, the Extraordinary Shareholders Meeting of POL-MIEDŹ TRANS sp. z o.o. adopted a resolution
to increase the share capital of the company by PLN 56.8 million. All of the newly-issued shares in the increased
share capital were acquired by KGHM Polska Miedź S.A. and fully paid for in cash on 29 September 2023. The share
capital of the company following the increase amounts to PLN 119.7 million. The increase was registered in the
National Court Register on 18 October 2023.
KGHM Polska Miedź S.A. owns 100% of the shares of the company.
Acquisition of
newly-issued
shares of KGHM TFI
S.A.
On 16 May 2023, the Extraordinary General Meeting of KGHM TFI S.A. adopted a resolution on increasing the
company's share capital by PLN 1.6 million, i.e. to the amount of PLN 4.4 million. All newly-issued shares in the
increased share capital were acquired by KGHM Polska Miedź S.A. and paid for in cash on 5 June 2023. On 20 June
2023, the increase in share capital was registered in the National Court Register.
Despite the intention to dispose of shares in KGHM TFI S.A. (which was finally completed in August 2023), the
aforementioned capital increase was necessary for the company to comply with the statutory capital requirement
(a condition for operating as an investment fund company).
Acquisition of
newly-issued
shares of KGHM
ZANAM S.A.
On 28 December 2023, the Extraordinary General Meeting of KGHM ZANAM S.A. adopted a resolution on increasing
the company's share capital by PLN 10.7 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 on 29 December 2023.
KGHM Polska Miedź S.A. owns 100% of the shares of the company.
As part of the changes in the share capital of subsidiaries, the share capital in one of the companies - WMN “Łabędy” S.A. -
was reduced.
Decrease in the
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 Register. The share capital was decreased by PLN 11 million, from PLN 24 million to PLN 13 million,
through a decrease in the nominal value of the shares. The decrease in the share capital results from the coverage
of loss recognised in the company’s financial statements for prior years.
The KGHM Group owns 85% of the company's shares.
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 15
Translation from the original Polish version
Amongst the group of indirect subsidiaries, the entity Polska Grupa Uzdrowisk sp. z o.o. (hereafter: PGU), in which KGHM
Polska Miedź S.A. holds 100% of the shares, increased the share capital of subsidiaries – spas.
Acquisition of
newly-issued
shares of
Uzdrowiska
Kłodzkie S.A. –
Grupa PGU
On 20 October 2023 the Extraordinary General Meeting adopted a resolution on increasing the company's share
capital by PLN 1.4 million. All of the newly-issued shares in the increased share capital were acquired by PGU and
paid for in cash in the amount of the issue, i.e. PLN 3 million. The share capital following the increase amounts to
PLN 47.7 million. The increase was registered in the National Court Register on 7 December 2023.
Acquisition of
newly-issued
shares of
Uzdrowisko
Świeradów-
Czerniawa Sp. z o.o.
– Grupa PGU
On 28 December 2023 the Extraordinary Shareholders Meeting adopted a resolution on increasing the company's
share capital by PLN 0.15 million. All of the newly-issued shares in the increased share capital were acquired by PGU
and paid for in cash in the amount of PLN 1.95 million. The share capital following the increase amounts to PLN 7.82
million. PGU owns 99.48% of the shares of the company.
Acquisition of
newly-issued
shares of
Uzdrowisko
Cieplice Sp z o.o. –
Grupa PGU
On 28 December 2023 the Extraordinary Shareholders Meeting adopted a resolution on increasing the company's
share capital by PLN 2.69 million. All of the newly-issued shares in the increased share capital were acquired by PGU
and paid for in cash in the amount of PLN 8.9 million. The share capital of the company following the increase
amounts to PLN 7.82 million. PGU owns 98.85% of the shares of the company.
Equity investments in international assets
Capital increase
KGHM Ajax Mining
Inc.
In 2023, KGHM INTERNATIONAL LTD. and the JV partner, Abacus Mining and Exploration Corporation, increased the
share capital of KGHM Ajax Mining Inc. by a total amount of CAD 3.64 million (equivalent to PLN 10.81 million
11
), i.e.
KGHM INTERNATIONAL LTD. by CAD 2.91 million and Abacus Mining and Exploration Corporation by CAD 0.73
million.
1.1.4 Business model
Diagram 5. Business model of KGHM Polska Miedź S.A.
11
as of the average NBP exchange rate of 29 December 2023
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 16
Translation from the original Polish version
Table 1. Description of the business model of KGHM Polska Miedź S.A.
EXPLORATION AND EVALUATION
ORE MINING
ORE ENRICHMENT
What does it involve?
The stage of geological work associated
with the evaluation of new areas of
potential mineralisation, known as
exploration. This stage aims to document
new, economically viable deposits and ends
with the preparation of geological
documentation for the particular
concession area.
What does it involve?
Mining of deposits is performed with the
use of the open-pit method or, as in the
case of the Parent Entity, the underground
method using blasting technology and
battery-powered mining machinery.
What does it involve?
Copper ore enrichment is the mechanical
processing resulting in the production of a
concentrate with copper content enabling
its metallurgical processing.
Why is it important?
Safeguarding the perspective of continued
mining of documented ore resources is one
of the cornerstones of KGHM's
development and the growth of the
company's value.
Why is it important?
Ore mining is the basic element of KGHM's
business which enables the production of
metals and sales on the market.
Why is it important?
The enrichment process is necessary as the
copper ore deposits mined by KGHM in
Poland have an average copper content of
approximately 1.5%. The technology used
allows for the effective recovery of copper
and silver and other elements from the
excavated ore, up to 90%.
SMELTING AND REFINING
PROCESSING
SALES AND TRADING
What does it involve?
Production in the smelters and refineries of
KGHM Polska Miedź S.A. is based mainly on
the processing of own copper concentrates,
but it also uses purchased raw materials.
Among other things, electrolytic copper as
well as silver and gold bars are produced at
this stage.
What does it involve?
Copper cathodes produced in KGHM's
smelters and refineries are processed into
copper wire rod, oxygen-free wire and low-
alloy wire (Cedynia Wire Rod Division).
What does it involve?
Sales are carried out while ensuring the
safety of trading, taking into account the
principles contained in the sales, credit risk
management and market risk policies. One
of the solutions aimed at providing the
security of trading is the appropriate
diversification of sales - both product and
geographic - or diversification of
customers.
Why is it important?
Thanks to the production capacity of its
Polish copper smelters and refineries, the
KGHM Polska Miedź S.A. Group is one of the
world's leaders in the metallurgical
industry.
Why is it important?
Processed products of a consistent high
quality respond to market needs and find
buyers worldwide.
Why is it important?
Ensuring the sale of manufactured
products guarantees a sustainable and
stable income.
The basic products of the KGHM Polska Miedź S.A. Group are presented in section 1.1.5 Analysis of the global market for
the Group’s core products
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 17
Translation from the original Polish version
Production process of KGHM Polska Miedź S.A.
Diagram 6. Integrated geological, mining and metallurgical activities in KGHM Polska Miedź S.A.
Production process of KGHM INTERNATIONAL LTD.
The core business of the companies of the KGHM INTERNATIONAL LTD. Group 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 7. Simplified flowchart of the core business of the KGHM INTERNATIONAL LTD. Group
A detailed description of the production process in KGHM Polska Miedź S.A. and in international assets can be found on
the corporate website under the section Production processes.
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 18
Translation from the original Polish version
1.1.5 Analysis of the global market for the Group’s basic products
Basic products of the KGHM Polska Miedź S.A. Group
Copper cathodes
Copper wire rod
Silver
Copper concentrate
Molybdenum oxides
Molybdenum
concentrate
Gold
Ore containing
copper, nickel and
TPM
Oxygen-free
copper rod
ETP/OFE nuggets
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 highly-processed products like copper wire
rod), market participants have developed a premium and discount system, which adjusts stock quotations. This allows the
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 concentrate
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 2023, the total global
production of copper in copper concentrate is estimated at 18.1 million tonnes (according to CRU).
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 19
Translation from the original Polish version
Chart 1. Geographical breakdown of global copper concentrates production in 2023
(source: CRU, KGHM Polska Miedź S.A.)
Copper concentrates require processing into refined copper, which involves incurring processing costs and incomplete metal
recovery at various stages of production. Therefore, the transaction price should include a number of discounts from the quotes
set by the commodity exchange for refined copper. The benchmark of these discounts on the market (for TC/RC) is determined
during negotiations with the main producers of concentrates (Freeport-McMoRan, Codelco, BHP; source: Wood-MacKenzie, 2022)
and their customers (mainly Chinese and Japanese smelters and refineries).
KGHM Group companies participate in the copper concentrate market mainly through the sale of the Sierra Gorda concentrate
from Chile and the Robinson concentrate from the US. Occasionally, KGHM Polska Miedź S.A. also sells copper concentrate
originating from the Lubin, Rudna, and Polkowice-Sieroszowice mines. 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
Primary commodities exchanges (including the LME and SHFE) 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 (Shanghai
International Energy Exchange) 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 required 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 2023, CRU estimated total global production of refined copper at 25.6 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 the Carlota mine
in the United States. Production of refined copper by companies of the KGHM Group amounted to 711 thousand tonnes in 2023,
which represents 2.78% of global production.
Chart 2. Geographical breakdown of global refined copper production in 2023 (source: CRU, KGHM Polska Miedź S.A.)
Asia 25%
South and Central
America 41%
Other Europe 9%
Poland 2%
North America 9%
Africa 9%
Oceania 5%
Asia 61%
South and Central
America 10%
Europe 14%
North America 6%
Africa 8%
Other 1%
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 20
Translation from the original Polish version
Chart 3. Geographical breakdown of global refined copper consumption in 2023 (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 the 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 2023, total global production of copper in the form of wire rod is estimated by CRU at 20.3
million tonnes.
Chart 4. Geographical breakdown of global copper wire rod production in 2023
(source: CRU, KGHM Polska Miedź S.A.)
Chart 5. Geographical breakdown of global wire rod consumption in 2023
(source: CRU, KGHM Polska Miedź S.A.)
The wire rod price structure, apart from the copper quotation on the London Metal Exchange, also includes a producer’s
fee (added to the price of 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.
Asia 77%
South and Central America 2%
Europe 12%
North America 8%
Other 1%
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 the Company and the Group in 2023 21
Translation from the original Polish version
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 approximately 60% of world copper consumption (source: CRU). The vast majority
of wire rod and wire (estimated at more than 10 million tonnes per year; source: CRU) is used in the construction and
infrastructure sectors. 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 approximately 70%; source: CRU). In 2023,
production of wire rod and wire by KGHM Polska Miedź S.A. reached 275.8 thousand tonnes.
Silver
Approximately 72% of global metallic silver production is a by-product of mining ores of other metals (source: Metal Focus
- Silver Five-Year Forecasting Quarterly). 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
approximately 50% of global silver production (source: Metal Focus - Silver Five-Year Forecasting Quarterly). It is also a
valued investment metal. According to Metals Focus preliminary estimates, in 2023 global production of mined silver
amounted to 25.1 thousand tonnes.
Chart 6. Geographical breakdown of global mined silver production in 2023
(source: Metal Focus – preliminary data, KGHM Polska Miedź S.A.)
The participants in the silver market typically rely on quotes from the London Bullion Market Association, which, when
adjusted for current market conditions, represent the price of silver in physical transactions.
KGHM sells silver in the form of bars and grains (production takes place at the Głogów Copper Smelter and Refinery) and
is one of the largest producers of metallic silver. In 2023, KGHM Polska Miedź S.A. produced 1 403 tonnes of silver, making
the Company one of the world’s leading producers of silver (according to World Silver Survey 2023). This metal in the form
of bars is registered under the brand KGHM HG and has a registered certificate on the COMEX (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.
1.1.6 Macroeconomic environment in 2023
2023 was another period of increased uncertainty in the global economy in recent years. On the one hand, the
consequences of the actions of the governments and central banks of many countries during the pandemic period were
increasingly noticeable, while the effects of the energy crisis continued to take their toll. The highest inflation readings for
several decades led to interest rate rises and significantly increased the cost of financing the economic and investment
activities. The outlook for the growth prospects of the global economy materially declined and the threat of recession
increased in many countries. 2023 was also the first year when the negative consequences of global climate changes began
to have a significant impact on the international economy.
Measures taken in the European Union to become independent of Russian energy resources, mainly gas, as soon as
possible mitigated the situation on the energy markets in the second half of the year. Deliveries of LNG supported the filling
of storage facilities across the European Union, while favourable weather helped to reduce consumption of this raw
material. The continuing high energy prices in the first half of the year translated into a decline in industrial production.
PMI indicators fell to their lowest levels since the COVID-19 pandemic. The economic downturn reduced industrial demand
for energy resources and, combined with a warmer-than-average winter in recent years, allowed the situation on the
European natural gas market to ease. Shield programs in individual economies helped to limit the social impact of the crisis.
Falling energy and natural gas prices helped to stabilise the prices of goods and services, consequently consolidating the
disinflationary trends in the economy.
Mexico 24%
China 13%
Peru 11%
Chile 5%
Bolivia 5%
Poland 5%
Russia 5%
Australia 5%
Other 27%
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 22
Translation from the original Polish version
After peaking in 2022, inflation rates in successive economies started to record a downward trend in 2023, while still
remaining above the acceptable range of deviations from inflation targets assumed by central banks. From the point of
view of the vision of the end of monetary tightening, a disturbing trend was the slow decline in core inflation, which
prompted central bank representatives to be cautious in their statements and forecasts regarding further developments
in monetary policy. In addition, decision-making was hampered by rising tensions in the banking sector and geopolitical
uncertainty, which could result in a return of the upward trend in energy commodity prices. In the first quarter of 2023, a
threat to the stability of the banking system emerged. As a result of the rapid rise in interest rates and inadequate risk
management, several medium-sized banks were declared bankrupt in the USA. Additionally, in Europe, as a result of many
years marked by problems, the Swiss giant, Credit Suisse, had to be taken over by UBS on an emergency basis, in order to
prevent the potential consequences of bankruptcy of a bank of systemic importance to the global financial system.
The Hamas attack on Israel on 7 October 2023 and the subsequent war in Gaza significantly increased the risk of an
escalation of the conflict in the Middle East. There is a potential to involve major oil producers in the conflict which in turn
could drive up prices of this commodity. Moreover, the risk of transit of goods across the Red Sea has increased. The carriers
are exposed to attacks by armed rebel groups supported by international players such as Iran and Russia.
In the fourth quarter of 2023, continuing disinflation influenced investors' expectations regarding the end of the monetary
tightening cycle, which were confirmed towards the end of the year by more dovish statements by members of the Fed and
other central banks. The initial speculation about the possibility of a cut in interest rates in 2024 has translated into a halt
to the US dollar mid-year upward trend against other major world currencies and, consequently, a rise in precious and base
metal prices.
Copper prices in 2023 responded to changes in the value of the dollar, which in turn was highly sensitive to Fed monetary
policy and in particular to fluctuations in the interpretation of central bank measures and plans by financial market
participants. For the price of copper, after reaching the annual peak above USD 9 400/t already in mid-January, the decisive
factor was the May sell-off driven by weaker macroeconomic data from the USA and China. From June, the copper price on
the London Metal Exchange failed to break through the USD 8 500/t level for an extended period of time, nor to fall
significantly below USD 8 000/t, despite the publication of numerous economic data and geopolitical news that caused price
fluctuations. Copper market sentiment improved slightly in the fourth quarter of the year, however, this did not lead to a
breakout from the aforementioned sideways trend. Nevertheless, the depreciation of the dollar, the expected start of a
cycle of interest rate cuts in the world's major economies in 2024 and the influx of information concerning a reduction in
the expected supply of copper (in particular the closure of the Cobre Panama mine) triggered investors' hopes for an
increase in copper prices, which ended the year slightly above USD 8 500/t.
One of the major disappointments of 2023 were the unfulfilled hopes of an imminent economic recovery in China emerging
from pandemic restrictions. In the second quarter, it became clear that the expected recovery was not approaching and
the Chinese authorities had not implemented significant packages stimulating the economy. One of the reasons for the
Chinese government's cautious economic policy was the concern of the collapsing financial sector which has significant
exposure to China's real estate sector. The Chinese government, on the other hand, entered a deep crisis manifested by a
low number of new construction launches and difficulties in completing the projects started.
The demand (apparent demand) for refined copper, despite subdued economic growth, increased by 6% in China in 2023,
while it fell by nearly 2% in the rest of the world. India, with a 27% increase in copper demand, became a notable exception.
Demand for refined copper in China accounted for 60% of global copper consumption in 2023 and it increased, despite the
aforementioned problems of the real estate sector, due to strong momentum in investments in renewable energy sources
and electric car capacity. An important trend highlighted in the copper market in 2023 was the increase in copper
production capacity from concentrate in China. More smelters opened by the Chinese authorities have reduced the demand
for refined copper imports from outside China and increased the demand for copper concentrate.
Copper stocks in LME warehouses rose in Europe and in the USA, mainly due to weaker demand, and fell in China. Metal
stocks in SHFE warehouses, after rising above the seasonal average at the beginning of the year, were at a minimum level
at the end of the year. The decline was supported by the opening of the arbitrage window between the SHFE and the LME.
On a global scale, stock levels remained relatively stable through 2023, but low in historic terms.
According to the latest data of the analytical company CRU, annual production of the red metal in concentrate in 2023
exceeded 18 million tonnes, increasing by more than 2% compared to the previous year. Only North America and Oceania
recorded a decrease in copper mining production, while mining production increased in other regions. Despite a slight
increase in mining, copper production in Chile did not meet the expectations. 2023 was anticipated as a time in which
Chile's copper problems would come to an end, recovering from a period overshadowed by the COVID-19 pandemic in
2022. However, problems of major copper producers hindered output growth in this country as well. Peru, on the other
hand, has seen an increase in copper production of nearly 9% to over 2.5 million tonnes, with the increase in production
originating mainly from the Quellaveco mine, opened in 2022 and already operating in 2023.
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 23
Translation from the original Polish version
Diagram 8. Forecasts of real GDP growth per the International Monetary Fund from April 2024 versus previous forecasts.
(Source: KGHM Polska Miedź, International Monetary Fund)
Update of the forecasts (F) of real GDP growth - the International Monetary Fund - World Economic Outlook Update from April
2024 compared to January 2024
Chart 7. Change in commodities prices in 2023 - first vs last day of the year
(Source: Refinitiv, KGHM Polska Miedź S.A.)
-100%
-60%
-20%
20%
Base metal Energy resources Precious metal
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 24
Translation from the original Polish version
Copper
The average annual price of copper (cash settlement on the LME) in 2023 amounted to 8 478 USD/t. The highest cash
settlement price was recorded on 18 January amounting to 9 436 USD/t. The lowest level was recorded on 5 October, when
the price of the red metal was 7 812 USD/t. The range of volatility in copper prices last year was much lower than in 2022.
Considering cash settlement prices, copper increased by only 1% last year (first vs last day of the year). Due to the
appreciation of the Polish currency in 2023, the average price expressed in PLN fell by 9% in 2023 in relation to 2022 and
amounted to 35 647 PLN/t (daily LME prices converted according to NBP fixings).
Chart 8. Copper price (average monthly) per the London Metal Exchange - in USD/t
(Source: Bloomberg, KGHM Polska Miedź S.A.)
Silver
Silver prices in 2023 followed investors’ expectations regarding interest rate changes by the US FOMC. The beginning of the
year brought more hawkish rhetoric of the Fed and, as a result, the price fell to an annual low reached at a level of 20.09
USD/oz t in early March. On the other hand, a few weeks later, in mid-April it reached its annual maximum of 26.02 USD/oz
t, rising rapidly, driven by solvency problems of US banks and the depreciation of the US dollar. During the second half of
the year, the price of silver remained within the corridor of fluctuation set at the end of the first and the beginning of the
second quarter, failing to break through the 25 USD/oz t level for a longer time and only briefly falling below 22 USD/oz t.
In the last quarter of 2023, the decline of inflation in the USA became so pronounced that announcements from the head
of the Fed increasingly signalled the end of the hike cycle. As the market speculated on the first possible date for interest
rate cuts in the USA, US Treasury bond yields began to fall, along with the USD index, pushing precious metals prices
upwards. Silver briefly broke through 25 USD/oz t again, but unlike gold, which remained at levels above 2 000 USD/oz t
after reaching record highs, silver was unable to sustain high price levels. There was also disappointment amongst
investors, who withdrew money from silver-based ETFs throughout the year, with assets expressed in troy ounces of silver
falling to 2020 levels. As a result of the weaker trends of silver prices relative to gold, the gold/silver ratio rose to 87 in 2023.
Silver prices ended 2023 at a level of 23.79 USD/oz t. The average price of the metal on the London Bullion Market
Association (LBMA) recorded an increase of 7.5% in 2023, amounting to 23.35 USD/oz t compared to 21.73 USD/oz t in 2022.
Chart 9. Silver price (average monthly) per the London Bullion Market Association - in USD/oz t
(Source: Bloomberg, KGHM Polska Miedź S.A.)
3000
5000
7000
9000
11000
2019 2020 2021 2022 2023
2019
2020
2021
2022
2023
10
15
20
25
30
2019 2020 2021 2022 2023
2019
2020
2021
2022
2023
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 25
Translation from the original Polish version
Molybdenum
The molybdenum price peaked at 38.28 USD/lb in the first quarter of 2023 in early February, before following a downward
trend, stabilising around 20 USD/lb in May. The year ended with a price of 18.53 USD/lb. The initial increase in molybdenum
prices resulted from concerns related to limited supply from ageing South American mines and a lack of new projects.
However, investors curbed demand as a result of such a strong price increase. The average metal price for 2023 was 24.39
USD/lb, and was 32% higher than the average for 2022 (18.51 USD/lb).
Chart 10. Price of molybdenum (monthly average) per Platts - in USD/lb
(Source: Platts, KGHM Polska Miedź S.A.)
USD/PLN exchange rate
The Polish zloty quotations against both the euro and the US dollar in the first half of 2023 continued to be affected by
events related to the Russian invasion of Ukraine. After a significant weakening of the Polish currency in 2022, the zloty
gradually strengthened over the first two quarters of 2023, falling below 4.00 per dollar in early July. At the beginning of
September, the Monetary Policy Council surprised the markets by starting a cycle of interest rate cuts with a move of 75
bp. instead of the expected 25 bp., with the strong response of investors weakening the Polish zloty exchange rate to over
4.40 against the dollar and 4.60 against the euro. Nevertheless, a combination of falling inflation, reduced political
uncertainty following the parliamentary elections in Poland and the MPC's declaration to focus efforts on continuing the
efforts aimed at reducing consumer inflation, led to the appreciation of the Polish currency in the fourth quarter of the
year. The maximum exchange rate of the zloty against the euro at a level of 4.79 and 4.49 to the USD was recorded on
13 February. The PLN ended 2023 around 3.9350 to the USD (NBP fixing of 29 December 2023). The average USD/PLN (NBP)
exchange rate in 2023 was 4.2030, nearly 6% lower than the exchange rate for 2022 (4.4615 USD/PLN).
Chart 11. USD/PLN exchange rate (average monthly) per the National Bank of Poland
(Source: Bloomberg, KGHM Polska Miedź S.A.)
Table 2. Market conditions significant for the operations of the KGHM Polska Miedź S.A. Group - average prices
unit
2023
2022
Change
(%)
IVQ'23
IIIQ'23
IIQ'23
IQ'23
Copper price on the LME
USD/t
8 478
8 797
(3.6)
8 159
8 356
8 464
8 927
Copper price on the LME in PLN
PLN/t
35 647
39 037
(8.7)
33 523
34 536
35 306
39 167
Copper price per the LBMA
USD/oz t
23.35
21.73
+7.5
23.20
23.57
24.13
22.55
Molybdenum price per Platts
USD/lb
24.39
18.51
+31.8
18.83
23.79
21.26
33.41
USD/PLN exchange rate per the NBP
4.20
4.46
(5.83)
4.11
4.14
4.17
4.39
0
10
20
30
40
2019 2020 2021 2022 2023
2019
2020
2021
2022
2023
3,00
3,50
4,00
4,50
5,00
2019 2020 2021 2022 2023
2019
2020
2021
2022
2023
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 26
Translation from the original Polish version
1.1.7 Our 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 copper smelters 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 9. 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. Division
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 2023
198.6 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. Division
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 2023
174.5 kt
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 deposit is currently mined at a depth from 844 meters to
1 250 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
approximately 11.5 million tonnes of ore per year.
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 27
Translation from the original Polish version
Lubin mine
Location
Lower Silesia, Poland
Ownership
KGHM Polska Miedź S.A. Division
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 2023
72.3 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. Division
Type of metallurgical
plant
smelter/refinery
End product
electrolytic copper
Electrolytic copper
production in 2023
470.1 kt
A complex of metallurgical plants located in Głogów comprising
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 1 400 tonnes), gold (around
3 tonnes), sulphuric acid (over 550 thousand tonnes), technical
selenium and nickel sulphate
Legnica Copper Smelter and Refinery
Location
Lower Silesia, Poland
Ownership
KGHM Polska Miedź S.A. Division
Type of metallurgical
plant
smelter/refinery
End product
electrolytic copper
Electrolytic copper
production in 2023
122.3 kt
The copper smelter and refinery located in Legnica with 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. Division
Type of metallurgical
plant
processing
End product
copper wire rod and Cu-OFE rod
Production in 2023
258.6 kt of copper wire rod and 17.2
kt of Cu-OFE oxygen-free copper rod
Production at the Cedynia Wire Rod Plant, located in the vicinity of
Orsk, Lubin district, 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 and
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 the Company and the Group in 2023 28
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 2023
31.5 kt
Life of mine
13 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 2 130 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 2023
3.9 kt
Life of mine
4 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 2023, access
to the Cactus open pit - Phase III was launched, enabling the
extension of the mine life to 2027.
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.
As part of the 2023 process, the disposal of the Carlota mine was not finalised. As at 31 December 2023, the Carlota mine remains in
KGHM's portfolio, conducts regular operations and is currently not classified as an asset 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 2023
4.5 kt
Life of mine
5 years
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 performed 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 and the
separation of sub-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.
In 2023, the disposal of part of KGHM's assets in the Sudbury
Basin was continued. The potential finalisation of the transaction
is still at a relatively early stage and it is not possible to recognise
explicitly that the sale of part of KGHM's assets in the Sudbury
Basin is highly probable.
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 29
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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
14 kt of nickel, 17 kt of copper
Life of mine
16 years
This project is located in the province of Ontario, around 35 km
west of the town of Sudbury. In 2002, rights were acquired to the
mineral deposit in the Victoria area 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 2023, work continued on project terrain connected with
preparing selected elements of the infrastructure for further
development of the project.
The construction of a shaft headframe, the lifting machinery shaft tower system, the social facilities buildings and the water treatment
station were completed, and the sinking of the exploration shaft began as part of the so-called Advanced Exploration phase, aimed at
specifying the level of assessment of mineral resources. Surface work is also carried out, associated, among others, with earthworks and
the construction of workshop and warehouse facilities. Engineering work also continued, as well as actions related to 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
Forecast annual
production
53 kt of copper, 114 thousand troy
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 (EA
Certificate) for the project. In 2018, the Government of Canada,
through the Governor-in-Council (federal authorities), issued a
negative decision regarding the implementation of the Ajax
project.
In connection with the decision not to grant an Environmental
Assessment Certificate, in 2023 work continued which was mainly
related to monitoring and securing of the project terrain in
accordance with the regulatory requirements.
Chile
Sierra Gorda mine and Sierra Gorda Oxide project
Location
Region II, Chile
Ownership
12
55% KGHM INTERNATIONAL LTD.,
45% South32
Type of mine
open pit
Main ore type
copper ore
Associated metals
molybdenum, gold
Life of mine
24 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
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
on operations). The ore extraction comprises its extraction using
explosives, loading and hauling away in trucks to the processing
plant, where it is subsequently crushed and milled.
The end product of Sierra Gorda’s processing plant is copper
concentrate and molybdenum concentrate.
Since January 2023, the Sierra Gorda mine has been using 100%
electricity from renewable sources - green energy is one of Sierra
Gorda's strategic objectives. In 2023, the construction of the 3
rd
tailings thickener to improve waste compaction parameters was
12
On 22 February 2022 the transaction of sale of 45% of the shares in 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
was conducted 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 the Company and the Group in 2023 30
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End product
copper concentrate, molybdenum
concentrate
Payable production in
2023
143.0 kt of copper in concentrate, 6.3
million pounds of molybdenum in
concentrate – on a 100% basis, share
of KGHM Polska Miedź S.A. is 55%
Life of mine
24 years
completed. Design studies were continued on the project
involving the construction of a 4
th
production line of the
processing plant, and they are on the advanced stage of preparing
the feasibility study. The expected, potential increase in ore
processing (on a 100% basis) is approx. 18% up to 57-58 million
tonnes per year.
Moreover, last year Sierra Gorda continued to focus on
implementing optimisation programs to streamline the
operations of the mine, the processing plant, the infrastructure
and the tailings storage facility, as well as cost optimisation.
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 approximately
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.
Other assets
Over the last few years, there have been no significant changes in the structure of the main assets in the group of domestic
companies. In terms of assuring the operations of the core business of KGHM Polska Miedź S.A. the domestic companies
operating mainly on its behalf remain significant, including among others:
− PeBeKa S.A. - mining work contractor,
− KGHM ZANAM S.A. – a supplier and service provider for mining machinery, also providing production
maintenance services in selected areas and participating in investment tasks;
− KGHM Metraco S.A. - a supplier of copper scrap,
− “Energetyka” sp. z o.o. – a company securing part of the energy needs of KGHM Polska Miedź S.A.,
− POL-MIEDŹ TRANS sp. z o.o. - a company providing rail freight services.
In terms of other entities - non-core companies - a significant portion of assets are investments in the area of broadly defined
healthcare, including Polska Grupa Uzdrowisk sp. z o.o. and companies pursuing the corporate social responsibility policy,
such as “Miedziowe Centrum Zdrowia” S.A.
Moreover, amongst the international companies, the following group of companies operates under the DMC Mining
Services brand: DMC Mining Services Ltd., FNX Mining Company Inc. (a branch of DMC), 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, underground excavation and development of mine infrastructure tunnel drilling
for general construction purposes and engineering services.
Table 3. Activities of subsidiaries and joint ventures of KGHM Polska Miedź S.A.
Entity
Head Office
Activities
Domestic companies
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 services; 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 sp. 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
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 31
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Entity
Head Office
Activities
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
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
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
holding activity (parent entity for, among others, spa companies), shared service
centre
“MIEDZIOWE CENTRUM
ZDROWIA” 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
TUW-CUPRUM
Poland
mutual insurance services, personal and property insurance activities
KGHM Centrum Analityki sp. z o.o.
Poland
support of data analysis in the Group, including Big Data 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.
Invest PV7 sp. z o.o.
Poland
generation, transmission, distribution and trading of electricity from renewable energy
sources (RES)
NANO CARBON sp. z o.o. in
liquidation
Poland
production of graphene and research into its properties; the company is currently not
engaged in operations
International companies - direct subsidiaries (and Future 1 sp. z o.o.)
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
International companies - indirect subsidiaries of 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 2023 did not engage in operations
International companies - indirect subsidiaries of 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 concentrate
Carlota Copper Company
USA
copper ore mining, production and sale of copper cathodes
FNX Mining Company Inc.
Canada
mining of copper, nickel and precious metal ores, sale of copper, nickel and precious
metal ores
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
provision of management and exploration services on behalf of third parties
Minera Carrizalillo SpA
Chile
the ownership of water and deposits rights, conducting exploration works
Wendover Bulk Transhipment
Company
USA
transhipment services of copper concentrate from Robinson mine
DMC Mining Services Mexico, S.A.
de C.V.
Mexico
contract mining services
KGHMI Holdings Ltd.
Canada
the management and control of other companies
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 32
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Entity
Head Office
Activities
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
Sierra Gorda S.C.M.
Chile
operation of an open pit copper and molybdenum ore mine, production and sale of
copper-molybdenum concentrates
DMC Mining Services Colombia
SAS
Columbia
contract mining services
DMC Mining Services (UK) Ltd.
United
Kingdom
contract mining services
International companies - indirect subsidiaries - KGHM ZANAM S.A. (99%) and Przedsiębiorstwo Budowy Kopalń PeBeKa S.A. (1%)
Obszczestwo s ograniczennoj
otwietstwiennostju ZANAM
VOSTOK
Russian
Federation
sale of spare parts and after-sales service of mining machinery
1.1.8 How we create value
KGHM Polska Miedź S.A. strives to implement the idea of sustainable development at every stage of its value chain, which
is unique and rare among other mineral resource companies. The company has a highly integrated technological chain
within which it performs tasks ranging from exploration, evaluation and sourcing of raw materials, through mining,
production, transport, reaching consumers and stakeholders, ending with responsible waste management in order to
reduce its adverse impact on the environment as much as possible.
Diagram 10. KGHM Polska Miedź S.A.’s sustainable value chain
Managing processes in diverse areas of extremely varying characteristics requires an integrated and sustainable approach
at all stages.
KGHM Polska Miedź S.A.’s values
KGHM operates on the basis of deeply rooted principles which its employees follow in their daily work. Zero harm,
teamwork, results driven, accountability and courage – these values connect all employees, irrespective of their position in
the organisation or their nationality, and serve as a signpost for decisions and actions taken. 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 are complementary.
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.
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 33
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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 honest 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.
1.2 STRATEGY OF THE KGHM POLSKA MIEDŹ S.A. GROUP
The 5E Strategy: Strategy description and basic elements
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. A special place in the Strategy is occupied by
the green transformation based on renewable energy and modern technologies. 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 11. Mission, Vision and Development Directions of the Strategy of KGHM Polska Miedź S.A.
The Strategy of the Group is comprised of 5 pillars (1. Core business, 2. New activities, 3. Supporting activities, 4. Health and
5. Prosociality), based on 5 updated development directions.
Diagram 12. 5 Pillars based on 5 development directions in the Strategy of KGHM Polska Miedź S.A.
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 34
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The Group’s Strategy also identifies climate objectives related to the reduction of emissions by KGHM, which are consistent
with the “Climate Policy of KGHM Polska Miedź S.A.”, a document complementary to the Strategy and its climate targets set
for 2030 and 2050. Detailed information in this area can be found in section 4.2.6 Targets related to climate change
mitigation and adaptation.
1.2.1 Advancement of the Strategy in 2023 - best practice and key achievements
The Strategy forms the basis of the coherent and effective operations of the Company. In the Strategy implementation
process, KGHM takes advantage of the best practices developed over years of experience. It is crucial that the Strategy is
comprehensive and complementary as it covers all of the Company’s areas of activity. For many years now, it has broadly
addressed sustainable development topics that allow for keeping the balance of business activity between economic factors
and social and environmental needs.
Based on the adopted internal strategic management procedure, KGHM has been regularly monitoring and analysing the
environment and megatrends in terms of their impact on the Strategy and its possible modifications or changes. Strategic
goals are achieved through the advancement of dedicated strategic programs and initiatives, the progress of which is
periodically monitored and reported within the organisation.
The business strategy of the Company is a public document published on KGHM’s website. The Company reports on the
progress in implementation, relevant indicators and achievements of the various areas of the Strategy on a regular basis -
quarterly as part of periodic reports and as part of integrated reports – once a year. In addition, the Strategy is discussed
at stakeholder meetings, which serves to maintain the transparency of actions.
In 2023, 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”. 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 has
also advanced a variety of initiatives and strategic programs which are crucial to ensuring the continuity of the core business
and development.
The key achievements in advancing the strategic activities in individual strategic directions of development in 2023 are
presented below:
Table 4. Key achievements of the KGHM Polska Miedź S.A. Group in advancing the strategic activities in individual
strategic directions of development in 2023
Efficiency
− Mined production in domestic assets amounted to 445 kt of copper in ore. Production of electrolytic copper
and metallic silver in KGHM Polska Miedź S.A. was the highest in recent years, amounting to 592.4 kt of
electrolytic copper and 1 403 t of silver, respectively. The Company exceeded its production volume targets
for 2023 in all major product lines.
− Copper production in the international assets in 2023 was lower than the budgeted targets. Achievement of
the production results is presented in more detail in the section on operating segment results.
− The advancement of the Deposit Access Program was continued (the GG-1 shaft reached a depth of 1 348 m).
− The development of the Żelazny Most Tailings Storage Facility was continued (the development project of the
Southern Quarter and the Tailings Segregation and Compacting Station was advanced on an ongoing basis).
Depositing and building up the dams in the Southern Quarter was carried out.
− R&D initiatives to enhance the efficiency of the core production business of the Company were conducted.
− Activities regarding the intellectual property of the Company were carried out.
− Use of external sources to finance R&D&I projects continued.
Elasticity
/flexibility
− The Hybrid Legnica Smelter and Refinery Strategic Program was continued (including the implementation of
the "digital twin" concept and the acquisition of a building permit for the construction of the Scrap Turnover
Base at the Legnica Copper Smelter and Refinery).
− Activities involving the extension of the Company's value chain continued, including those related to the
delivery and commissioning of the infrastructure necessary for the production of cast gold and silver bars in
the Głogów Copper Smelter and Refinery.
− Exploration projects with respect to exploring for and evaluating copper ore deposits in Poland and other
concessions for exploration and evaluation, including the Puck project, continued.
− Development projects in the international assets were continued.
− Financial stability was ensured by basing the financing structure of the KGHM Group on long-term
instruments, shortening the cash conversion cycle and managing market and credit risk in the KGHM Group.
Ecology, safety
and sustainable
development
− The Program to adapt the technological installations of the Company to the requirements of BAT conclusions
for the non-ferrous metals industry and to restrict emissions of arsenic (BATAs) was concluded at the Głogów
Copper Smelter and Refinery and Legnica Copper Smelter and Refinery. The objectives of the Program were
achieved: cutting-edge technologies were applied, modern infrastructure was built as well as arsenic and
mercury emissions were reduced.
− The Cedynia Wire Rod Plant was granted the prestigious certificate, the Copper Mark.
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 35
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− The implementation work of the environmental management system at the Head Office of KGHM Polska
Miedź S.A. based on the ISO 14001 standard was completed.
− Environmental declarations for KGHM Polska Miedź S.A. products were prepared and verified, presenting the
results of environmental and carbon footprint analyses.
− Allocations of free CO
2
emission allowances for 2023 for KGHM Polska Miedź S.A. were acquired.
− A number of pro-environmental activities were carried out, including: the balance of greenhouse gas
emissions in all scopes for 2022 for the KGHM Group was prepared, work on the Decarbonisation Program of
KGHM Polska Miedź S.A. was launched and a feasibility study was commenced on the construction of an
Evaporated Salt Plant at the Głogów Copper Smelter and Refinery in order to reduce the salinity of
technological water.
− The Occupational Health and Safety Improvement Program was continued (LTIFR: 5.98, TRIR: 0.37).
E-industry
− The advancement of projects to automate the production lines of the Mining Divisions of the Company
continued (including, among others, the implementation of initiatives connected with testing electric and
battery-powered mining machinery).
− The system for locating and identifying machinery and people in the underground mines was integrated and
extended.
− Activities were continued in the area of digital transformation, ICT security and cybersecurity as part of the
KGHM 4.0 Program.
Energy
− Projects aimed at increasing production of energy from own sources were continued, using photovoltaic
farms, wind farms and nuclear energy.
− RES projects on own land - grid connection consent and the building permit for the Głogów Copper Smelter
and Refinery Photovoltaic Power Plant (7.5 MW) were obtained, and the procedure for issuing grid connection
consent was initiated for a number of Photovoltaic power plant projects: Warta-Bolesławiecka (88 MW),
Piaskownia Obora (50 MW), Tarnówek (3 MW), Kalinówka (2 MW) and Polkowice (3.5 MW), design work was
resumed and activities were initiated for obtaining grid connection consent for 4 wind power plant locations
as part of the Radwanice-Żukowice project (30-40 MW).
− RES acquisition projects - the acquisition of the Żuki photovoltaic farm (5.2 MW) was completed, a preliminary
contingent agreement was signed for the acquisition of 100% of the shares in the company owning the
Jerzmanowa photovoltaic power plant project (20 MW), final negotiations were conducted on the acquisition
of shares in special purpose companies owned by Projekt Solartechnik, which has photovoltaic power plant
projects with a total capacity of 47 MW.
− Development of SMR technology - a fundamental decision for the construction of a power plant with SMR
reactors was obtained from the Minister of Climate and the Environment, a contractor for a pre-feasibility
study for the implementation of the investment was selected, work on a detailed site analysis for the power
plant was completed as part of the preparation of the preliminary site assessment report, and a general
opinion on selected technical assumptions for the NuScale NPM-20 reactor technology was obtained from
the President of the National Atomic Energy Agency.
− Off-shore projects - the necessary qualifying minima were not achieved in the adjudication proceedings
conducted by the Ministry of Infrastructure for the off-shore sites applied for jointly with Total Energies.
− In 2023, 18% of the need of KGHM's Divisions for electricity was supplied by its own sources.
1.2.2 Development directions of the KGHM Polska Miedź S.A. Group
In the short-term perspective, the existing policy aimed at adapting the functioning of the organisation to the business
model and the market environment as well as at cooperation between the Group’s entities will be continued. The
implementation of investments with a view to ensuring cost effectiveness and development scenarios for the individual
international assets in the Company's portfolio will be an equally important task.
The KGHM Group will continue its exploratory work, the strategic objective of which is to develop the resource base and,
as a consequence, to maintain optimum production levels and maximise the value of KGHM's assets in the long term.
As part of the implementation of the climate policy and the energy transition, we anticipate an increase in terms of
investments in renewable energy sources, projects aimed at protecting the environment and adapting to increasing
regulatory requirements in this regard.
The aforementioned projects will be carried out by continuing projects commenced or bringing into operation new
investments, including 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,
− 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.
− Hybrid Legnica Smelter and Refinery,
− construction of an installation and acquisitions in terms of photovoltaic energy.
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 36
Translation from the original Polish version
1.3 OUR CONTRIBUTION TO THE SUSTAINABLE DEVELOPMENT GOALS (SDGS)
KGHM Polska Miedź S.A. is actively working towards the implementation of Agenda 2030 adopted by the United Nations
(UN) in 2015 and the Sustainable Development Goals contained therein. Due to the wide range of its operations, activities
undertaken by KGHM in 2023 supported most of 17 Sustainable Development Goals. The Company was mostly involved in
the implementation of the following 12 goals:
Goal
KGHM actions
Goal
KGHM actions
− Access to high quality subscriber healthcare
− Health promotion campaigns
− Promotion of sport activities and a healthy lifestyle
− Addressing discriminatory practices - Diversity
Declaration, Human Rights Policy, Code of Ethics,
Line of Ethics (anonymous whistleblower platform)
− Financial transparency
− Patronage classes - “Competent in the industry”
− Access to the e-learning platform and subsidies for
employee education
− Sponsorship and promotion of scientific and
educational events
− Promoting the idea of sustainable development
among local communities through the organisation
and sponsorship of sport activities, integration and
educational workshops
− Cooperation with the municipalities of the Copper
Basin
− Sponsorship of local projects - cultural and sporting
events
− Pro-social campaigns and actions promoting gender
equality and respect for human rights
− Efficient use of raw materials and abandoning fossil
fuels
− Investment in recycling and other CE projects
− Investment in renewable energy sources - 100%
solar energy at Sierra Gorda
− Gradual electrification of the underground fleet and
surface charging stations for electric vehicles
− Sponsorship of conferences on green energy,
nuclear energy, hydrogen
− Collaboration with the nuclear energy SMR
technology provider
− Investment in alternative and renewable energy
sources
− Improving energy efficiency of infrastructure and
machinery
− Optimisation of transport and logistics
− Ensuring stable, attractive working conditions
− Cooperation with local businesses
− Fringe benefit programs for employees
− Environmental programs promoting nature
conservation and expansion of green areas
− Assessment of planned investment in terms of the
risk of biodiversity loss, deforestation and land
degradation
− Implementation of research and development work
and other projects in terms of increasing production
efficiency, occupational safety and sustainable
development
− Engaging employees in development and innovation
- “Invention Exchange”
− Business activities respecting the law and
international standards within the supply chain and
with business partners
− No tolerance for forced labour, child labour and
unethical behaviour
− Zero tolerance towards corruption, anti-corruption
policy
− Transparent policies and solutions in the areas of
HR, procurement and corporate processes
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 37
Translation from the original Polish version
1.4 INTERESTS AND VIEWS OF STAKEHOLDERS
[ESRS 2 SBM-2, ESRS 2 SBM-3]
Caring for the interests and opinions of stakeholders is one of the priorities for conducting business by KGHM.
Stakeholder groups of particular relevance in terms of shaping the business model and Strategy planning include:
− the environment - The Strategy of the Company has included environmental issues for many years and each
update of the strategy results in an increasing number of environmental and climate protection projects and
activities,
− local communities and representatives of local authorities - as a Company aware of the importance of the license
to operate
13
, KGHM has been taking into account the social good and contributing to the well-being of the region
for many years. Major investments are always preceded by extensive public consultations, while the voice of local
authorities and the region's residents often determines the final course of actions. For years, projects aimed at
improving the quality of life of the region's inhabitants have also been included in the design of the Strategy. Their
nature is pro-environmental, pro-health or, among others, related to the development of education, culture and
sport,
− legislators and authorities at the national and European level - in KGHM not only regulations and laws are strictly
observed, but also the directions of change are taken into account, the goals of which can be accomplished
through the involvement of KGHM, such as green transformation, where the Company participates in several
roles, both as a supplier of the metal necessary for the transformation, but also as an entity which is transforming
intensively in the direction of developing renewable energy sources, using recycling and promoting the CE
14
concept. Each of these elements is reflected in the KGHM Strategy, gradually translating into the evolution of the
business model,
− shareholders - KGHM has also been a guarantor of safe capital investment for years. When creating the Strategy,
projects are always selected to deliver the best possible economic effects, from the perspective of the overall
business model, while respecting the principles of sustainable development,
− employees - the well-being and opinion of employees have an important input into the construction of the
Strategy. In KGHM, a number of measures have been taken to ensure that the Strategy is developed taking into
account a bottom-up initiative and following a series of consultations. Employees also play a very significant role
in the future of the Company, through their strongly established trade unions and staff representatives in the
Supervisory Board.
The areas of the Strategy that result directly from considering the interests, opinions and expectations of stakeholders
include primarily: environmental protection, energy transformation, local community activities, striving to improve
efficiency, safety and working conditions, automation and digitalisation of the process line.
KGHM is a keen observer of changes in its environment and global trends, diagnosing stakeholder sentiment and
expectations. Key projects are accompanied by extensive analysis and public opinion surveys, often with the support of
specialised stakeholders. The Company listens to the needs of many parties in the dialogue and seeks to bring together
often conflicting interests of many stakeholders.
1.4.1 Stakeholders and relations with the environment
Table 5. Map of key stakeholders of the KGHM Polska Miedź S.A. Group in 2023
Stakeholder type
Specification
Key stakeholders
Employees, including trade union
members
Including former and potential employees.
Owners
Shareholders, the Parent Entity - KGHM Polska Miedź S.A. and Group companies
Representatives of local and
national government
Local governments of the municipalities where the company operates; State Treasury
Local community members
Social groups that are not non-government organisations, or e.g. social assistance centres
Suppliers
Suppliers of the entire value chain, including JV partners in which KGHM has shares
Clients
Domestic and international
13
License to operate (LTO) is a term used in the context of business and organisations in sectors that operate in regulated or socially
sensitive environments. The term refers to the permits issued by the relevant regulatory authorities, local communities and other
stakeholders that a company must have in order to carry out a certain type of business or professional activity legally.
14
CE – Circular Economy
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 38
Translation from the original Polish version
Regulators
Including, among others, the legislator, standardization/metrological units
Stock exchange environment
Shareholders, bondholders, rating agencies
Supervisory authorities
For example KNF
15
, PIP
16
, certification entities, entities granting sector rights (e.g. PSSE
17
, PIWET
18
)
Exchanges in Warsaw and London
London Metal Exchange and the Warsaw Stock Exchange (GPW)
Financial markets
Including, among others, banks and insurers
Other Stakeholders
Media
All types, domestic and international
Competitors
Domestic and international
Indigenous people
This refers to the KGHM Group, mainly the First Nations of North America
Trade organisations
Domestic and international, e.g. chambers of commerce, International Copper Association (ICA)
International organisations
Among others, the United Nations (UN)
Academic and research
institutions, universities
Running their operations in Poland and abroad
Non-governmental organisations
Non-governmental organisations (NGOs) with a social and environmental profile
Table 6. Channels of communication with selected key stakeholders
Stakeholders
Examples of communication channels
Employees
KGHM’s priority is the health and safety of
employees, their professional development and
the constant improvement of working
conditions.
− meetings and consultations with employee representatives regarding important
decisions or events
− the Intranet, internal publications and television, newsletters, electronic
communication
− company events, competitions, employee volunteering, training, engagement
research
− publications in local and national media regarding activities and projects
implemented by the Company
Government representatives
The Company cooperates with all levels of
government 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.
− meetings and consultations
− traditional correspondence and e-mail
− the Internet
Members of local communities
KGHM conducts an extensive dialogue with local
communities. It carries out activities as regards
infrastructure development by: supporting local
social organisations as well as science, culture
and sports organisations. Out of concern for the
health of employees and residents of the region,
campaigns promoting an active lifestyle are
organized.
− publications in local media and social media (in 2023: 831 publications on the
KGHMtoMy (We are KGHM) page on Facebook, 481 publications on LinkedIn),
− the naMiedzi mobile phone app,
− meetings, conferences and seminars, events (sports, cultural) 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, national and
international level. It organizes meetings and
study visits for individual investors, analysts and
fund managers.
− General Meetings,
− regulatory filings and periodic reports, newsletter,
− conferences, including international, meetings and study visits (Investor Days,
Analyst Days), cyclical results conferences
− e-mail correspondence, telephone contact, investor chats
− the Internet and social media (LinkedIn), information posted on www.kghm.com
15
KNF - Polish Financial Supervision Authority
16
PIP - National Labour Inspectorate
17
PSSE - District Sanitary and Epidemiological Station
18
PIWet - National Veterinary Institute
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 39
Translation from the original Polish version
Media
KGHM builds good relations with the media by
providing them with precise, comprehensive
information on the Company’s current situation
and actions taken.
− press conferences, teleconferences
− meetings between journalists and company representatives and study visits
− press releases and information (in 2023, 154 press releases were issued)
− the Internet and corporate website www.kghm.com
− direct contact between KGHM representatives and media representatives
Business partners
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.
− conferences and trade fairs
− meetings, traditional and electronic correspondence
− the corporate website www.kghm.com
1.4.2 Key partnerships and supported initiatives
KGHM Polska Miedź S.A. is affiliated with numerous organisations. The principles of KGHM’s participation in national and
international economic and industry organisations are regulated by the Organisational Arrangement of the Vice President
of the Management Board (Corporate Affairs) of KGHM Polska Miedź S.A. In 2023, the representatives of the Company took
part in the work of 41 such entities, 23 operating nationally and 18 operating internationally.
National organisations
Name of organisation
Year of accession
Professional organisations
Association of Accountants in Poland
1975
Association of Non-Ferrous Metals Engineers and Technicians
2005
Sector organisations
Institute of Logistics and Warehousing
2002
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
Polish ISO 14000 Forum Association (environmental management)
2022
Organisations operating on the energy market
Chamber of Industrial Power Engineering and Energy Recipients
2006
Economic organisations
Polish Copper Employers’ Association
1996
Polish Association of Listed Companies
1997
Polish-Canadian Chamber of Commerce
2012
Polish OHS Management Forum Association ISO 45000
2018
Polish Committee for Standardization
2018
Association of Entrepreneurs and Employers
2019
American Chamber of Commerce
2019
Polish ISO 14000 Forum Association (environmental management)
2022
Environmental organisations
Polish Chamber of Ecology in Katowice
2002
Polish Eco Development Chamber of Commerce
2011
Consortia
Economic Security of Poland Consortium
2014
MACROKLASTER – Technologies in Public Security
2022
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 40
Translation from the original Polish version
International organisations
Name of organisation
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
European Precious Metals Federation
2009
Minor Metals Trade Association
2013
CEFIC- ESA (European Sulphuric Acid Association)
2013
Employers’ Association Business & Science Poland
2019
International Lead Association
2020
Nucleareurope
2022
GDMB Gesellschaft der Metallurgen und Bergleute Association
2023
Mining organisations
Euromines
2005
Consejo Minero Chile
2014
Agreements, Alliances, Academia
European Innovation Partnership
2014
EIT on Raw Materials – European Institute of Innovation and Technology
2018
European Raw Material Alliance
2020
1.5 SHAREHOLDERS AND THE CAPITAL MARKET
1.5.1 Shareholder structure of KGHM Polska Miedź S.A.
As at 31 December 2023 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 to 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 the years ended on 31 December 2023 and 31 December 2022, there was no change in either
registered share capital or in the number of shares issued.
In 2023, the following changes in the ownership of significant blocks of shares in KGHM Polska Miedź S.A. took place:
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 balance in the accounts of the funds managed by PTE Allianz Polska
S.A.: Allianz Otwarty Fundusz Emerytalny, Allianz Polska Dobrowolny Fundusz Emerytalny and Drugi Allianz Polska
Otwarty Fundusz Emerytalny (Drugi Allianz OFE) amounted to 12 241 453 shares of KGHM Polska Miedź S.A.,
representing 6.12% of the share capital of the Company.
16 May 2023
The Company received information from PTE Allianz Polska S.A. that as a result of the liquidation of Drugi Allianz
OFE by way of the transfer of its assets to Allianz Polska Otwarty Fundusz Emerytalny (Allianz OFE), the share in the
total number of votes of KGHM Polska Miedź S.A. in the accounts of Allianz OFE was above 5%, i.e. 11 961 453
shares, representing 5.98% of the Company share capital, were recorded on the account of Allianz OFE.
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 41
Translation from the original Polish version
Accordingly, the shareholder structure of the Company as at 31 December 2023 and as at the date of signing this report,
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 7. Shareholder structure of the Company as at 31 December 2023 and as at the date of signing of this report
Shareholder
Number of shares/
number of votes
Total nominal value of
shares
(PLN)
Interest in the share
capital/total number of
votes
State Treasury
19
63 589 900
635 899 000
31.79%
Allianz Polska Otwarty Fundusz Emerytalny
20
11 961 453
119 614 530
5.98%
Nationale-Nederlanden Otwarty Fundusz Emerytalny
21
10 104 354
101 043 540
5.05%
Other shareholders
114 344 293
1 143 442 930
57.18%
Total
200 000 000
2 000 000 000
100.00%
Other shareholders, whose combined interest in the share capital and in the total number of votes amounts to 57.18%, 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 2024.
Chart 12. Geographic shareholder structure
The Management Board of the Company is unaware of any agreements which could result in changes in the future in the
proportion of the Company’s shares held by present shareholders and bondholders.
According to the information held by KGHM Polska Miedź S.A., as at 31 December 2023 and at the date of signing this
report, none of the Members of the Management Board or the Supervisory Board of the Company held shares of KGHM
Polska Miedź S.A. or rights to shares.
Based on information held by the Company, as of 31 December 2023 and as of the date this report was signed,
neither the Members of the Management Board nor of the Supervisory Board held shares of related entities of
KGHM Polska Miedź S.A. or rights to them.
In 2023, the Company did not have an employee share incentive program.
1.5.2 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 of up to 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.
Detailed information is available on the Company’s website in the section Bonds.
19
Based on a notification received by the Company dated 12 January 2010
20
Based on a notification received by the Company dated 16 May 2023
21
Based on a notification received by the Company dated 18 August 2016
Poland
63%
USA
13%
United Kingdom
8%
Unidentified
10%
Other
6%
Other
37%
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 42
Translation from the original Polish version
1.5.3 KGHM Polska Miedź S.A. on the Warsaw Stock Exchange
Shares of KGHM Polska Miedź S.A. are traded on the primary market of the GPW 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
published by FTSE Russell, a company included in the London Stock Exchange Group. The FTSE4Good Index Series is part
of the group of ethical investment indicators, reflecting criteria of corporate social responsibility and ESG risk management.
In 2023, the share price of KGHM Polska Miedź S.A. fell by 3.2% y/y and amounted to PLN 122.70 at the close of trading on
29 December 2023. In the same period, the price of copper - the Company's main product - increased by 1.1%, with the
average USD/PLN exchange rate falling by 10.6%. At the same time, the WSE main indices rose: WIG by 36.5%, WIG20 by
30.7% and WIG30 by 32.9%. However, the FTSE
22
350 Mining index - which includes companies in the mining sector listed
on the London Stock Exchange - fell by 11.2%. The Company's shares reached an annual maximum closing price of PLN
153.80 on 13 January 2023. The minimum closing price was recorded on 31 May 2023 - the closing price then stood at PLN
104.60.
Chart 13. 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 2022 (Source: KGHM, Bloomberg)
The table below presents key share price data of KGHM Polska Miedź S.A. on the WSE in 2022-2023:
Table 8. Key share price data of the Company on the Warsaw Stock Exchange (Source: KGHM, GPW Statistic Bulletin,
Bloomberg)
Symbol: KGH ISIN: PLKGHM000017
unit
2023
2022
Number of shares issued
million
200
200
Market capitalisation of the Company at year’s end
PLN bn
24.5
25.4
Average trading volume per session
shares
591 229
727 127
Turnover
PLN mn
17 762
23 190
Change in share price from the end of the prior year
%
-3.2
-9.1
Highest closing price during the year
PLN
153.80
182.20
Lowest closing price during the year
PLN
104.60
84.22
Closing price from the last day of trading in the year
PLN
122.70
126.75
1.5.4 Dividend
In accordance with Resolution No. 7/2023 of the Ordinary General Meeting of KGHM Polska Miedź S.A. dated 21 June 2023
regarding the appropriation of the Company’s profit for the year 2022 as well as setting of the dividend date and the
dividend payment date, the earned profit was appropriated as follows: as a shareholders dividend in the amount of
PLN 200 million (1.00 PLN/share) while the amount of PLN 3 333 million was transferred to the Company’s reserve capital.
The Ordinary General Meeting of KGHM Polska Miedź S.A. set the dividend date for 2022 at 27 July 2023, and the dividend
payment date for 2022 at 10 August 2023. All of the Company’s shares are ordinary shares.
22
FTSE – Financial Times Stock Exchange, is an acronym referring to the various stock market indices, a joint venture of Financial Times
and the London Stock Exchange.
-60%
-40%
-20%
0%
20%
40%
12/22 01/23 02/23 03/23 04/23 05/23 06/23 07/23 08/23 09/23 10/23 11/23 12/23
KGHM
-3%
WIG
+36%
FTSE
mining
-11%
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 43
Translation from the original Polish version
2 GOVERNANCE AND ETHICS
2.1 MANAGEMENT STRUCTURE OF THE COMPANY AND THE KGHM POLSKA MIEDŹ S.A. GROUP,
TAKING INTO ACCOUNT SUSTAINABLE DEVELOPMENT MANAGEMENT
[ESRS 2 GOV-1]
Diagram 13. Distribution of duties between Members of the Management Board, taking into account sustainable
development areas
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 44
Translation from the original Polish version
Detailed information concerning the composition, distribution of duties and functions fulfilled, as well as biographical notes
of members of the governing bodies of the Company, are included in section 3.3 The Management Board and the
Supervisory Board.
2.2 MANAGEMENT OF SUSTAINABLE DEVELOPMENT AND ESG RISKS
[ESRS 2 SBM-3]
The management structure of KGHM Polska Miedź S.A., including management of sustainable development and ESG risks,
is presented in Diagram 13.
2.2.1 Supervisory Board and Management Board
The roles of the management and supervisory bodies are described in terms of duties of the Members of the Management
Board, and in the case of the Supervisory Board and its Committees, in the Statutes of KGHM Polska Miedź S.A. and the
Bylaws of the Supervisory Board of the Company. The documents are available on the Company's corporate website in
section Governing bodies of the Company. At the same time, in accordance with the provisions of the agreements on the
provision of management services, the Supervisory Board of KGHM Polska Miedź S.A. defines the detailed scope of
responsibilities of Members of the Management Board of KGHM Polska Miedź S.A.
By Resolution No. 174/XI/23 dated 28 December 2023, the Supervisory Board of the Company approved the amendments
to the Bylaws of the Management Board adopted in Resolution No. 512/XI/2023 of the Management Board of KGHM Polska
Miedź S.A. dated 17 November 2023. The amendments to the Bylaws of the Management Board of KGHM Polska Miedź S.A.
result from reviewing and adjusting them to the current needs of the Company, including, among others, activities
exceeding the scope of ordinary management defined in the content of the previously effective Bylaws of the Management
Board of KGHM Polska Miedź S.A.
The Supervisory Board and its committees (Audit Committee, Strategy Committee, Remuneration Committee) supervise
the activities of the Management Board. The detailed scope of responsibilities of individual committees of the Supervisory
Board is described in Section 3.3.2. Description of the application – the Supervisory Board of KGHM Polska Miedź S.A.
2.2.2 Sustainable Development Council
The Management Board’s responsibilities relate to all aspects of the Company's activities, including those related to
sustainable development management.
The advisory body of the Management Board issuing opinions and coordinating sustainable development activities is the
Sustainable Development Council, which comprises representatives of the Company's top management indicated by the
President of the Management Board. The Council's main tasks include:
− consultation and coordination of key activities related to the implementation of sustainable development principles
and regulations in the KGHM Polska Miedź S.A. Group.
− 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, being essential parts of documents published outside the
Company,
− identifying potential elements of improvements in the entire value chain of KGHM Polska Miedź S.A. based on the
sustainable development concept.
The key topics addressed by the Sustainable Development Council in 2023 involved initiatives aimed at starting to prepare
the organisation for sustainability reporting requirements in line with the CSRD and the European Sustainability Reporting
Standards (ESRS), including:
− the approach to the methodology of examining topics of importance in the KGHM Group,
− the organisation of management of ESG issues in the KGHM Group, including the course of the process of reporting
non-financial information, the roles and responsibilities of the management staff and the substantive units, as well as
guidelines for the creation of dedicated organisational structures to support the Management Board at the operational
level, and
− the adoption of the ESRS-based reporting standard in the KGHM Group's statement on non-financial information for
2023.
2.2.3 ESG Unit - ESG Operating Unit
In 2023, organisational work was continued to formally establish internal organisational structures dedicated to
coordinating and standardising sustainable development management issues in the KGHM Group. On 1 October 2023, the
Company established in its operational structure an organisational unit responsible for coordinating the implementation
of the idea of sustainable development in the KGHM Group (ESG Unit), reporting to the Executive Director for Head Office
and Strategy in the division of the President of the Management Board of KGHM Polska Miedź S.A. The ESG Unit is
responsible for, among others:
− developing and improving sustainable development management processes in the KGHM Group, including using IT
systems and tools,
− development of the ESG Strategy, plans for its implementation and monitoring of the advancement of its
implementation,
− coordination of non-financial reporting in the KGHM Group,
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 45
Translation from the original Polish version
− cooperation with organisational units in KGHM and ESG coordinators in KGHM Group companies,
− coordination of the work and administrative support of the Sustainable Development Council,
− reporting of ESG information for the needs of Company's bodies,
− cooperation with external stakeholders supporting the realisation of sustainable development goals.
Moreover, ESG coordinators were appointed in November 2023 in the KGHM Polska Miedź S.A. Group’s subsidiaries,
cooperating with the ESG unit at the KGHM Head Office. The coordinators' tasks include, among others, acquiring data and
information related to sustainable development from companies for the purposes of non-financial reporting. In 2024, it is
planned that internal system solutions and procedures describing the details of the sustainable development management
process in the KGHM Group will be developed and established, including its participants, roles and responsibilities and a
comprehensive reporting system inside and outside the organisation.
2.2.4 Information on skills and professional knowledge required to oversee sustainable
development issues
In connection with the scope of the Company's activities and the objectives and tasks it pursues, as well as in view of the
management's obligations under the contract for provision of management services, including the obligation to act with
the utmost care and professionalism, Members of the Management Board are required to attend conferences, seminars
or meetings of a business nature related to the scope of the Company's activities as well as individual training courses. No
dedicated ESG training for Members of the Supervisory Board and Members of the Management Board of KGHM Polska
Miedź S.A. was provided in 2023. Members of the Management Board of KGHM Polska Miedź S.A. represented the Company
at national and international conferences and forums on the subject and on the KGHM's contribution to the global challenge
of sustainable development and non-financial reporting:
− CESCO Week 2023 (Santiago, 17-21 April 2023),
− 32nd Economic Forum (Karpacz, 5-7 September 2023),
− LME Week (London, 9-11 October 2023),
− International Mining and Resources Conference IMARC (Sydney, 30 October - 2 November 2023).
Members of the management boards of Polish companies of the KGHM Polska Miedź S.A. Group - as part of one of the
meetings of the KGHM Group Council - participated in an ESG presentation dedicated to them, entitled “Sustainability
reporting - the perspective of the Management Board. New requirements of the EU regulations and the reporting process”.
2.2.5 Information provided to the entity's administrative, management and supervisory bodies
and the sustainability issues they undertake
[ESRS 2 GOV-2]
Information provided to the entity's management and supervisory bodies and the sustainable development issues they
undertake, in accordance with the governance structure are presented in section 2.1 Management structure of KGHM
Polska Miedź S.A. and the KGHM S.A. Polska Miedź S.A. Group
KGHM is advancing a variety of initiatives and strategic programs which are crucial to ensuring the continuity of the core
business and development. In 2023, the Management Board of the Company updated and implemented the “Climate Policy
of KGHM Polska Miedź S.A.” The Supervisory Board positively assessed the way in which the Company's Management Board
fulfilled its obligations in relation to the adopted Climate Policy of the Company. In the opinion of the Supervisory Board,
the Company strives at every stage of its operation to ensure compliance with the requirements related to sustainable
development.
The Supervisory Board controls the Company's activities in all areas of its business in accordance with applicable
regulations, such as the Commercial Partnerships and Companies Code, as well as the Company's internal regulations. As
part of its supervisory activities, the Supervisory Board, in its own capacity and with the support of the Strategy Committee,
carries out, among other things, tasks related to monitoring the degree of realisation of the KGHM Strategy (half-year and
annual reports), including programs supporting the implementation of the idea of sustainable development (quarterly
reports).
A detailed description of the manner and scope of the information defined in Article 380
1
of the Commercial Partnerships
and Companies Code with which the Supervisory Board is acquainted, and over which the Supervisory Board exercises
constant supervision, was set forth by the Supervisory Board in the form of a resolution, including with regard to
information concerning:
− the Company's assets, as well as significant circumstances in conducting the Company's affairs, particularly in
the operational, investment and personnel areas,
− progress in the realisation of the Company's designated business development directions.
In the reporting period, as part of its business activities, the Company's Management Board presented periodic
sustainability reports to the Supervisory Board and the Audit Committee of the Supervisory Board, particularly in areas with
an impact on the environment (including climate change) and society. In this respect, the management body also accepted
and presented the related risks to the Audit Committee, which were discussed on a quarterly basis in the reports on
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 46
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supervision of the application of the Competition Law Policy in the KGHM Polska Miedź S.A. Group, compliance
management and reports covering corporate risk management in the Group. The scope of the ESG risks monitored
included, among others:
− water threats,
− water management,
− environmental threats,
− OHS,
− supply chain,
− human rights.
2.2.6 Incorporating sustainability-related results into incentive schemes
[ESRS 2 GOV-3]
The management goals and the criteria for meeting these objectives in terms of financial and non-financial results that
form the basis for determining the variable remuneration for the Management Board are defined by the Supervisory Board
in such a way that they support the implementation of the KGHM Group's strategy. In particular, they should relate to the
strategic objectives embedded in individual pillars/areas of the Strategy, taking into account the key ratios of success
assigned to them.
The Supervisory Board of KGHM Polska Miedź S.A., in the form of a resolution, determines Management Goals for the
Members of the Management Board of KGHM Polska Miedź S.A. for the financial year, including the conditional objectives
which determine claims for the payment of variable remuneration.
Subject to the fulfilment of the conditional objectives, the basis for calculating the variable remuneration for individual
Management Board Members is the degree of fulfilment of the Management Goals set out in the objective cards.
Management goals are cascaded in the form of KPIs to Head Office and Division directors in the form of a Management
Board resolution.
As part of the incentive scheme, goals as regards sustainable development have been assigned to four members of the
Management Board of KGHM Polska Miedź S.A.:
Member of the
Management Board
Management and strategic goals with respect to sustainable development
Contribution of the
goal to the general
objectives for 2023
President of the
Management Board
Development of activities within the framework of social responsibility
Implementation of initiatives in the area of, among other things, building employee
engagement through information campaigns and development programs, and
promotion of work at KGHM Polska Miedź S.A.
10%
Vice President of the
Management Board
(Finance)
Energy transition
Implementation of initiatives in the area of renewable energy, in particular: redefinition
of the Energy Development Program in connection with the update of the Strategy and
RES acquisition and support projects in terms of analyses, financial models, procedures,
etc.
10%
Vice President of the
Management Board
(Development)
Development of automation in production processes
10%
Vice President of the
Management Board
(Production)
Enhancing occupational safety in KGHM Polska Miedź S.A.
Implementation of occupational health and safety promotion and education initiatives,
reduction of accidents by at least 20% compared to the base year 2018.
10%
With the exception of KGHM ZANAM S.A., the significant operating companies of the KGHM Group have not yet set strategic
goals in the area of sustainable development, and therefore have not included such goals in their incentive and
remuneration systems for the management boards or senior management. In the scope of strategic goals set for the
members of the Management Board of KGHM ZANAM S.A., a task promoting sustainable development was included.
Internal auditors of the Integrated Management System at KGHM ZANAM S.A. and employees reporting environmental or
occupational health and safety risks - based on the recommendation of the manager of a particular organisational unit -
may be rewarded by the President of the Management Board from a fund earmarked for initiatives deserving recognition.
In addition, construction innovations or other activities with a positive impact on the working environment, improving
occupational health and safety conditions or reducing emissions, qualify their authors to receive an award from the same
fund, in recognition of their contribution to raising operating standards and company culture in the spirit of ESG.
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 47
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2.2.7 Material impacts, risks and opportunities and their interaction with strategy and business
model
[ESRS 2 SBM-3]
Assessment of materiality of ESG issues
As part of the materiality assessment process carried out for the purpose of identifying the material ESG risks of KGHM
Polska Miedź S.A., the following aspects were taken into account:
− results of the analysis of the identified risks as part of the Corporate Risk Management process of the KGHM
Polska Miedź S.A. Group,
− ESG materiality matrix of KGHM Polska Miedź S.A.
An assessment of the materiality of ESG risks was made using the principle of dual materiality, i.e. an assessment of
materiality of human and environmental impacts and an assessment of financial materiality, then the results of the
assessment were aggregated and a list of material issues was established.
Diagram 14. Double materiality principle according to the CSRD
Material social and environmental impacts
In 2023, work was undertaken to analyse the impacts arising from the value chain. The impacts which emerged at individual
stages of the value chain were verified to confirm the materiality matrix developed so far. Each stage of the value chain has
been mapped to sustainability issues (ESRS) and material topics. The characteristics of the positive and negative impacts
resulting from the Company's activities are described.
Based on the impact analysis, a detailed assessment of the materiality of ESG risks was performed in order to fully illustrate
the impact of the Company's activities on ESG issues.
A full double materiality assessment process is planned in 2024 in order to verify the existing matrix. The double materiality
assessment is an essential first step towards compliance with the CSRD, which is needed so that the organisation can focus
its efforts on those sustainability issues that are most significant to it and its stakeholders.
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 48
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The analysis of impacts is shown in the diagram below.
Table 9. Analysis of impacts
Measure
Positive impact
Negative impact
Exploration
Exploration effects resulting in expansion of the resource
base are a major factor in maintaining/increasing mining
levels in the long term. At the same time, the results of
exploration determine the level of employment in KGHM
and in local companies cooperating with KGHM.
Exploration generally does not exert a significant negative
impact on the environment and the local community, as is
the case of the next stage of the business model, i.e. mining.
In 2023, no habitat disturbance, land erosion, water
pollution, dust or noise emissions occurred at the stage
indicated. In the longer term, exploration may lead to
displacement or impacts on the landscape; however, the
Company assesses the risk of their occurrence as low.
Mining
Conducting mining, processing and smelting activities in
2023 allowed for maintaining and creating new jobs, both in
KGHM and in cooperating companies.
The operation of the company therefore directly translates
into an economic contribution, supporting local
development (e.g. through the expansion of infrastructure
by the local government, to which taxes are paid, education
of young people - future employees) and national
development (e.g. the “copper” tax).
The production of electrolytic copper enables marketing of a
top quality raw material with application in many fields,
including green transformation projects, electronics or
medicine.
Copper is the key material in renewable energy technologies
such as wind turbines, solar panels and electric vehicles. The
development of these sectors is supported by copper mining
as it provides the raw material needed for these
technologies, contributing to the transition towards a more
sustainable energy future.
The by-products of the copper production process (e.g.
precious metals, molybdenum, rhenium) offer a range of
products that are indispensable to many industries in the
contemporary economy.
Parallel to its technological activities, KGHM supported
initiatives in the area of corporate social responsibility,
investing, among other things, in educational or pro-health
projects.
The mining and processing of copper ores involves negative
environmental impacts. Natural habitats may suffer, which
in turn can translate into a loss of biodiversity and the
disruption of the population of fauna and flora species.
Copper acquisition can result in the release of heavy metals
and other pollutants into nearby water sources. Moreover,
the disposal of mining waste, including flotation waste, can
lead to soil degradation.
The processing and smelting processes used to extract
copper from ore can result in the release of air pollutants.
In some cases, activities directly and indirectly related to
mining may require the clearing of forests for infrastructure
development. Deforestation contributes to landscape
disturbance, loss of carbon sinks, increases greenhouse gas
emissions and has a negative impact on biodiversity.
Pollutant emissions are maintained under the relevant
environmental permits.
KGHM's technological processes require substantial
amounts of energy, which still mainly originates from fossil
fuels, translating into the consumption of non-renewable
resources.
Furthermore, pollution associated with mining may pose
health risks to workers and local communities.
In addition, the dominant role of mining in the region can
contribute to reduced economic diversification, which may
negatively affect economic stability in the long term.
Ore
enrichment
Smelting and
refining
Processing
The processing of copper into new forms allows a wider
range of uses for the raw material by diverse groups of
users. The advancement of processing in KGHM allows
access to markets close to the end customer (cooperation
with, among others, manufacturers of cables, wires, flat bars
and copper profiles).
During the processing of electrolytic copper into further
forms, emissions of pollutants to the environment occur,
accompanied by high energy consumption, with coal still
prevailing in the energy mix in Poland.
Sale
Sales of the Group's main products in 2023 provided steady,
stable revenue allowing high-grade raw material to be made
available for a wide range of applications.
Moreover, the company's activities translated into the
economic development of Poland through the payment of
applicable taxes.
Logistics associated with the sale of bulk products can have
a negative impact on the environment (carbon footprint of
transport) or local communities (noise, dust).
Restoration
The overarching goal of restoration is to improve the quality
of the environment, in the best case beyond the framework
imposed by regulations. Responsibly planned and executed
restoration is key to reclaiming a degraded site and can
deliver significant benefits to the natural environment and
the local community.
Introducing plant or animal species as part of restoration can
disrupt local ecosystems and pose a threat to natural
biodiversity.
Temporary disruptions associated with, for example, the
operation of heavy equipment may occur when conducting
the work involving restoration processes. Inadequately
performed restoration may lead to destabilisation of the
ground - land settlement/slumping.
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 49
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The following steps are included in the ESG risk materiality assessment process:
1. Analysis of relevant topics based on the results of the survey and stakeholder interviews.
2. Within each identified key corporate risk, ESG factors have been defined.
3. Based on the foregoing, the results were grouped due to the E, S and G factors and then classified in terms of significant
environmental, stakeholder and OHS impacts and financial materiality.
For the significant topics from the ESG Materiality Matrix of KGHM Polska Miedź S.A. presented in section 6.3 Matrix of
material reporting topics for 2023, weights were assigned taking into account the results of the analyses carried out under
steps 2 and 3 .
Diagram 15. Types of ESG factors
2.2.8 Material ESG risks
Risk associated with the environmental factor
[ESRS 2 IRO-1]
KGHM Polska Miedź S.A., as an organisation aware of the needs of environmental protection, conducts its activities in such
a way as to contribute to the achievement of sustainable development goals to the greatest extent possible. The risk
management system collects and assesses information on the environmental impact of the KGHM Group's activities, but
also data relating to environmental events or conditions with a materially negative financial impact. Risks related to
environmental factors are part of the KGHM Group's operations due to the company's relationship with the functioning of
the ecosystem, but also as a result of conducted mining and metallurgical operations through the use of natural resources.
Thus, we consider as material risks associated with:
− use of water resources,
− climate change and the impact of extreme weather events and/or long-term trends related to weather events,
also in the context of temporary or permanent unavailability of assets and infrastructure within the KGHM Group,
− requirements from the regulator imposed as a result of the global transformation and transition to a low-carbon
economy,
− market requirements related to changes in demand and supply and to changing stakeholder perception as a
result of climate change,
− striving for a circular economy,
− event materialization impact on the natural environment, ecosystem activity and the time needed to restore the
balance that has been disturbed,
− development of innovation in the context of sustainable development and the environment, as well as
cooperation with scientific and research institutions.
ESG
Environment (E) Society (S)
Corporate governance
(G)
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 50
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Diagram 16. Concentration of material impacts, risks and environmental opportunities
Risk associated with the social factors
[ ESRS 2 IRO-1]
At every stage of the value chain, KGHM Polska Miedź S.A. seeks to influence the well-being of all stakeholders while building
the Company's value. We prioritise the achievement of sustainability goals, and social responsibility has always been an
important pillar of our strategy. When conducting our business, we focus not only on profits and the implementation of
our financial strategy. We manage social risk, among other things, through ongoing dialogue and commitment to building
relationships with the community and employees. Thus, we consider as material risks associated with:
− compliance with occupational health and safety rules and commitments as well as actions aimed at accident
reduction,
− developing a transparent, sustainable and responsible supply chain by considering social, ethical and
environmental factors in the selection of suppliers,
− relationships with local communities and events related to activities that improve the quality of life in the
environment affected by the KGHM Group,
− respect for human rights both among employees and throughout the supply chain,
− ensuring diversity and equal opportunities,
− development of employees and their skills through dedicated programs, including attracting and retaining key
talent for the energy transition,
− responsible customer relations.
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 51
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Diagram 17. Concentration of material impacts, risks and social opportunities
Risk associated with corporate governance factors
[ ESRS 2 IRO-1]
KGHM Polska Miedź S.A., as a global organisation, is aware that doing business requires the establishment, development,
promotion and continuous evaluation of a corporate culture. Corporate governance issues are particularly important for
our investors and business partners, as they build trust in the organisation in the long term on the one hand, and build
transparency and stability in the business on the other. Thus, we consider as material risks associated with:
− ethics and transparency, including adherence to policies, procedures and codes underlying an ethical
organisational culture,
− compliance with laws and regulations and anti-corruption practices,
− sustainability management (including effective management of risks in the organisation affecting the stability of
the Company's operations and sustainable development, taking into account risks arising from social and
environmental issues, including climate),
− impact on the economy through the direct and indirect economic impact of the organisation and the development
of the resource base.
Diagram 18. Concentration of material impacts, risks and opportunities of corporate governance
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 52
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2.2.9 Approach to ESG risk management
[ESRS 2 GOV-1, ESRS 2 GOV-5]
Given the global sustainability goals and challenges and ESG-related megatrends, KGHM Polska Miedź S.A. recognises that
it is crucial to understand the environmental, social and corporate governance (ESG) context and the risks associated with
these areas. KGHM Polska Miedź S.A. believes that ESG risk is an inseparable element influencing the management and
functioning of the company, its business model and operating strategy, therefore it must be - like any risk - properly
identified, assessed and managed.
Considering the importance that ESG risk may have for the Company and its environment, KGHM Polska Miedź S.A.
considers it as an integral part of the process of Corporate Risk Management of the KGHM Polska Miedź S.A. Group, which
is described in detail in section 2.3 Risk Management.
The corporate risk management process in the KGHM Polska Miedź S.A. Group consists of four stages: (I) Context definition,
(II) Identification and Assessment, (III) Analysis and response, (IV) Monitoring and communication. From the perspective of
the consideration of ESG risk the second step should be indicated to be of key importance, where ESG risks are also
considered in the risk identification and assessment, which, due to their broad and complex scope covering many areas
related to the environment, society or corporate governance, are not understood as a separate risk category or
subcategory, but as a factor that can affect one or more risks. Moreover, each identified corporate risk is assessed in terms
of its various results in order to identify its potential impact as widely as possible, e.g. impact on reputation and
stakeholders, environmental, regulatory and legal, health and safety.
The third step and in-depth cause-and-effect analysis also takes into account issues related to the identification of ESG risk
factors to be taken as a starting point for the quantification of sustainable development risks.
Diagram 19. Management of sustainable development risk
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 to be faced by the KGHM Polska Miedź S.A. Group. Risk identification as part of the strategic
management process aims to consider the context of the organisation in an integrated way and provide information on
the risks associated with the implementation of the Strategy in specific areas. In accordance with the process in place, the
Strategy Risk Map is updated annually as a graphical representation of the results of the risk assessment. Identified risks
at the strategic level are decomposed into a corporate risk level and a project and program risk level, allowing for effective
management of individual risks. As part of strategic management, the periodic analysis of information on the impact of ESG
trends on KGHM's situation, including information on their potential impact on KGHM's business model, also plays an
important role in analysing the resilience of the Strategy in terms of its counteraction of material impacts, risks and use of
opportunities.
ESTABLISHING A STRONG CORPORATE RISK MANAGEMENT SYSTEM
Contectual analysis
Prioritisation of ESG-related
risks
Responding to risk and
building resilience
Identification and
assessment of risk
comprising ESG factors
Monitoring and
Communication
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 53
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2.3 RISK MANAGEMENT
[ESRS 2 IRO-1, ESRS 2 SBM-3, ESRS 2 GOV-5]
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 this area
are consistent with those of the Parent Entity.
− The introduction of the aforementioned Policy and Procedure and approval of their updates is made at the level
of the Management Board of KGHM Polska Miedź S.A. following recommendations by the Corporate Risk and
Compliance Committee.
− 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 of 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.
The Company publishes key documents concerning risk and risk management on its website in the section 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.
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 sanctions.
The Company keeps registers containing the applicable requirements resulting from identified external regulations
determining the Company's regulatory situation within various aspects of its business, as well as ongoing monitoring of
draft requirements located at various levels of the legislative process in areas of key importance for the Company. The
identified external regulations are accompanied by a register of related internal regulations governing the Company's
internal relations. The Company’s approach enables systematic identification, assessment and analysis of the risk of loss of
compliance or possible non-compliance 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.
The foregoing is to ensure that the Company has current information on non-compliance, risk of non-compliance and their
impact on the organisation, which ensures the creation and protection of shareholder value by establishing a consistent
approach to ensuring compliance and avoiding non-compliance or non-compliance risk, as well as supports the
achievement of business objectives by implementing tools to mitigate the risk of sanctions.
The compliance management process is also a valuable tool within the Company's broader management activities carried
out in the area of sustainable development. The identification of external requirements creating obligations for the
Company to maintain a sound approach to sustainability issues, including those relating to sustainability reporting
standards, allows for understanding and adapting the Company's operations to the dynamic regulatory environment in this
area.
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 54
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The identification of the requirements related to the individual areas that make up the concept of ESG, i.e. environment,
social responsibility and corporate governance, as well as the proper management of data acquired during various stages
of the compliance management process, such as information on incidents, risk of non-compliance or discrepancies, are
part of the Company's due diligence approach in conducting its business in accordance with the principles of sustainable
development.
In 2023, 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 its 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 Polska Miedź S.A. 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.
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 20. 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 the 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 methodologies 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.
The following input parameters, data sources and assumptions are used as part of the identification and evaluation:
− results of the Context analysis,
− Risk Model - a key tool in the context of ensuring that the list of risk types is complete,
− the results of audits and other control tasks identifying potential new risk types in operational areas;
− incidents that occurred in the past in connection with the identified risks, non-standard events that caused the
risk to materialise and had an actual (loss or gain) or potential positive or negative impact on the achievement
of objectives,
− events that may result from the materialisation of risks and their potential consequences,
− ESG Risk Factors to be taken as a starting point for quantifying risks and opportunities associated with
sustainable development,
− the approach of the most likely loss or gain rather than the greatest possible loss or gain when assessing risk.
When identified, each corporate risk is subjected to assessment using the Risk Assessment Matrix, which provides
scaled assessment ranges for the scale of impact, vulnerability and probability. A risk may have various effects, and
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 the Company and the Group in 2023 55
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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 the context of 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 significant 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 approach.
The following input parameters, data sources and assumptions are used as part of this step for the purpose of
determining the risk management methods:
− results of the previous stages of the process, including the identified ESG Risk Factors,
− a comprehensive approach that takes into account points of contact with other areas, outside the Risk Owner's
area of competence, where the effects of risk materialisation may still be significant or even greater than in the
Risk Owner's area,
− an overview of the current approach to risk,
− an analysis to identify potential gaps in the way risks are managed in order to determine the necessary
Adaptation Measures.
A directional decision is called a Response to risk. A change of the method requires specification of Corrective
Actions, i.e. organisational, process, systemic and other changes aimed at reducing the level of key risks.
During this step the applicable KRIs – Key Risk Indicators – are also defined, i.e. a set of business process parameters
or environmental parameters which reflect changes to a given risk profile.
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
risk categories 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 properly executed risk monitoring enables flexible and quick reactions to the changes
occurring in the external and internal environments (e.g. risk escalation, changes in the measures related to risk
response, or risk assessment parameters, etc.).
Realisation of this step guarantees 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.
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 56
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Diagram 21. 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 and ways to address it.
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
and the degree of
efficiency of its
management is
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 current
liabilities on time and to
carry out necessary
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
Financial Liquidity
Management Policy
Internal Audit Rules
Executive Director
for Risk and Audit
Executive Director for Financial Management
Director of the
Internal Audit
Department
Reports to the
Management
Board
Reports to the Vice President
of the Management Board (Finance)
Reports to the
President of the
Management Board
2.3.1 Corporate risk – key risks and risk factors and mitigation
[ESRS 2 IRO-1, ESRS 2 SBM-3]
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. Our comprehensive approach in this area is also
reflected in the actions taken by KGHM in the reporting period in relation to the ESG risks, i.e. environmental, social and
corporate governance issues.
The approach to ESG risk management is further described in section 2.2.9 Approach to ESG risk management.
KGHM Polska Miedź S.A., as part of its risk management, takes into account issues related to climate change in
accordance with best recognised practices and standards and distinguishes a category of climate risk, the significance of
which is equivalent for the Company to the other categories of risk.
In section 4.2 Climate impact management we describe in more detail our climate risk management strategy, which is one
element of the Company's commitment to operational excellence and its mission to act in accordance with sustainable
business principles.
The Risk Model is a tool used to identify risk in the KGHM Polska Miedź S.A. Group. Its structure is based on the sources of
the risks and is divided into the following six categories: Technological, Value Chain, Market, External, Internal and Climate.
Several dozen sub-categories have been identified and defined for each of these categories, covering particular areas of
the operations or management.
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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 of its negative effects, but also in optimisation
of the ability to take on risk and the effectiveness of the tools used and their profitability. The two-track approach is also
reflected in the assessment of dual materiality performed as part of the ESG risk analysis, where both the materiality
of KGHM's impact on people and the environment and financial materiality, understood as the impact of climate change
and sustainable development issues on KGHM, are assessed.
Diagram 22. 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
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 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
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, company’s
interests, or safeguards against loss of confidentiality, 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 risk associated with transitioning to
a low-emission economy (regulatory, reputational, market and technological).
Following is the detailed description of key risks and their factors in the KGHM Polska Miedź S.A. Group in 2023, broken
down into individual categories along with means for their mitigation, including identification of the specific risk 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 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 use the following abbreviations: for the KGHM Polska Miedź S.A. Group - KGHM Group, for the KGHM
INTERNATIONAL LTD. Group – the KGHM INTERNATIONAL Group, for KGHM Polska Miedź S.A. – the Parent Entity.
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 58
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The following graphics are used in the tables below:
Risk assessment (product of impact and probability) assuming that vulnerability to the key risk in
question is assessed at least at a medium level
Assessment of risk trends since the last reported period - stable
Assessment of risk trends since the last reported period - decrease
Assessment of risk trends since the last reported period - increase
For the key risk with the highest assessment and the risk with an upward trend, mitigation has also been described.
Table 10. Risk category - Technology in the Risk Model of KGHM Polska Miedź S.A.
Risk and description of risk factors
(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.
Table 11. Risk category - Value Chain in the Risk Model of KGHM Polska Miedź S.A.
Risk and description of risk factors
Mitigation
(KGHM INTERNATIONAL Group)
Risk related to the estimation of costs of decommissioning certain mines.
With respect to risk factors related to the precision of estimation of costs of decommissioning certain mines, there are questions related
to the need to meet obligatory environmental conditions connected with realistic concepts for such decommissioning. There is also a risk
that the company will have to cover the costs of restoration more quickly than originally assumed, which may have an impact on the need
to update the estimated costs associated with this project.
(KGHM INTERNATIONAL Group)
Risks related to the exhaustion of deposits and/or
insufficient exploration 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 detailed 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.
Individual assets focus on investment in near-mine exploration
opportunities, productivity gains, cost optimisations and efficiency
gains to expand the reserve base and consequently expand the
LOM Plan.
(KGHM INTERNATIONAL Group)
Risk of lower metal yield and quantity and quality relative to
budgeted values.
The risk is associated with factors relating to the parameters and
characteristics of the deposit that affect the yield gained, quantity
and quality of the products. The risk may result in a decline in
production due to lower extraction from metal-poor zones or due
to the content of undesirable elements.
Ongoing analyses and forecasts of results are carried out in order
to optimise the mixing strategy of the ore to be processed,
optimise recovery or other processes that may affect the quantity
and quality of the products obtained.
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 59
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(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.
(KGHM Group)
Risk of exceeding the permissible emissions limits set forth in permits.
The KGHM Group is exposed to the risk of impact on various components of the natural environment resulting from the mining of copper
ore, followed by its processing at all stages of the production process, which could lead to the breaching of permissible emissions limits.
(KGHM Group)
Risk related to the lack of availability of required energy carriers.
The KGHM Group is exposed to the risk of lack of availability of utilities for its operations. Potential disruptions in the supply of key energy
carriers is mainly related to risk factors on the part of external suppliers and breakdowns of their distribution infrastructure. Risk is also
related to the suspension of delivery of energy carriers 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, mining and advanced investments and modernisation work.
(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 (ongoing operations, maintaining production, key suppliers, servicing).
(KGHM Group)
Risk of disruption to the continuity of sales and service processes.
Due to its extensive sales and service structure, the KGHM Group is at risk of disruptions of the continuity of these processes caused
primarily by external factors. The sources of the risk include changes in the demand for individual product ranges and in individual
geographic markets, production limitations, disruptions in transport and logistics (in particular in the context of international transport),
force majeure and limitation of the business activity as a result of the introduced legal regulations at the national and international levels.
The risk may potentially have an impact on the level of revenues generated by the KGHM Group and therefore a change in the level of
operating profits.
In 2023, general uncertainty in the markets related to the armed conflict in Ukraine was a factor affecting the risk exposure. However, the
KGHM Group's vulnerability to this risk is assessed as low due to the control mechanisms in place and the lack of recorded incidents in
the past quarters.
(KGHM Group)
Risks associated with disruptions in the supply of strategic
materials and components affecting the continuity of the
Core Production Business.
The KGHM Group is exposed to the risk of disruptions in the
management of the supply chain resulting mainly from external
factors causing an increase in the sensitivity of the supply chain.
These factors include, among others: unpredictable variations in
supply and demand, changes in supplier bases, technological
changes, changes in buffers in inventory and lead times,
dependence on suppliers, as well as logistical disruptions, force
majeure and fluctuations in currency exchange rates and metal
Permanent contact with suppliers is maintained to enable a quick
response to delays through the supplier and supply direction
diversification strategy employed in the KGHM Group as well as the
application of alternative solutions, e.g. substitutes, changes in
production/assembly schedules. Alternative supply channels,
buffers in the form of inventories, advance planning in terms of
materials and components while maintaining the compatibility of
the solutions used in the infrastructure are also used. In addition,
business continuity and recovery plans have been developed as
part of the implementation of an ISO 22301-compliant business
continuity management system. Systematic measures are taken to
eliminate single instances of delays on the side of suppliers due to
unavailability of components, logistics limitations or delays on the
side of the manufacturers of materials and machinery or their
parts.
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 60
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prices. The efficiency of global supply chains can also be affected
by high inflation.
In 2023, general uncertainty related to the armed conflict in
Ukraine and supply chain disruptions as well as the availability of
materials and components in international markets were
significant factors affecting risk exposure.
Table 12. Risk category - Market in the Risk Model of KGHM Polska Miedź S.A.
Risk and description of risk factors
Mitigation
(KGHM Group)
Risk of reduced revenues as a result of adverse fluctuations
in copper and silver prices, currencies 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 2023, general uncertainty in the financial markets related to the
armed conflict in Ukraine was a significant factor affecting the risk
exposure.
This risk is actively managed by the Parent Entity, in accordance
with the Market Risk Management Policy. One of the methods
used to manage the market risk in the company are the hedging
strategies using derivatives. It is also possible to observe so-called
natural hedging, which is related to the existence of a negative
correlation between the copper price and the USD/PLN exchange
rate, as well as the copper price and the gold and silver price,
which mitigates the adverse effects of price fluctuations.
Information on the impact of COVID-19 and/or the war in Ukraine
on the operations of the Company and the Group is described in
detail below.
More information on market risk is included later in this
subsection.
(KGHM Group)
Credit risk related to trade receivables and loans granted.
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.
The Parent Entity is exposed to Credit Risk due to loans granted to the joint venture Sierra Gorda S.C.M., which depends on the risk
associated with the realisation of the mining project.
In 2023, general uncertainty in the financial markets related to the armed conflict in Ukraine was a significant factor affecting the risk
exposure.
(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 2023, general uncertainty in the financial markets related to the Russia’s aggression against Ukraine was a significant factor affecting
the risk exposure.
(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, utilities and restoration costs.
The KGHM Group is exposed to risks related to external and
internal factors, including metal quotations, currency exchange
rates, the cost of supplying purchased metal-bearing materials,
the amount of treatment, refining and sales premiums and the
cost of services and utilities. This risk is also related to the
estimation of costs of provisions for the restoration of mining
areas based on existing law for the territories in which the KGHM
Group operates.
The risk is significantly linked to an increase in operating costs as
a result of further increases in the price of energy carriers (also
due to the conflict in Ukraine).
In 2023, general uncertainty in the financial markets related to
Russia’s aggression against Ukraine was a significant factor
affecting the risk exposure. Possible continuation of increases in
fuel and energy carrier prices may continue to be the main factor
generating further increases in the costs of sales, selling costs and
administrative expenses.
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-annual plans and budgets enabling
the achievement of profitability under the conditions prevailing on
the market. Ongoing monitoring of selected financial information
to support management processes under conditions of increased
uncertainty.
The purchase of electricity is carried out under bilateral contracts,
framework agreements, the Polish Power Exchange (TGE).
Securing the supply of electricity in various periods and on many
levels, using in-house generation, which significantly increases the
energy security of the KGHM Group. The KGHM Group also carries
out ongoing activities to optimise the increase in electricity costs
through, for example, the purchase of energy-saving equipment.
The purchasing policy for electricity and gas fuel has been
implemented for years in the framework of the Standing
Purchasing Committee for electricity, gas fuel and property rights
established pursuant to the Regulation of the President of the
Management Board.
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 61
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Table 13. Risk category - External Risks in the Risk Model of KGHM Polska Miedź S.A.
Risk and description of risk factors
Mitigation
(KGHM Group)
Risk of reduced 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
rockmass. Key risk factors which affect the materialisation of such risk also involves the results of periodic analyses of the mining situation
and the state of hazard and applied measurement methods. Natural hazards accompanying the underground mining of copper ore
deposits, in particular arise due to mining tremors and their potential effects in the form of rock bursts and roof collapses.
These factors affect safety, 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 resulting in reduced production.
(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
implementing production plans and the advance of preparatory
work. These factors affect safety, 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 resulting in reduced 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 to take over production on a limited
basis.
The creation of a KGHM Polska Miedź S.A. Team for Mine Ventilation
and Air Cooling, whose job is to analyse 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.
On a regular basis, an assessment of gas and gas-geodynamic
hazards at all mine sites is carried out at meetings of the Mine Team
to Recognise and Prevent gas threats and the threat of gas and rock
bursts.
(Parent Entity)
Risk of production restrictions due to unfavourable climate
conditions in the mines.
KGHM is exposed to a specific risk related to the climate
conditions, limiting activities or increasing costs, involving
geological conditions, the temperature of the air sent into the
mines and underground mining conditions.
The use of solutions to counteract underground climate threats
using neutral means (e.g. the use of short airways and directing air
through the lowest temperature rock mass, high-speed air) and
through the use of central, workplace and personal air conditioning.
Ongoing monitoring of the microclimate parameters and
introduction of remote control and visualisation and surveillance
systems (CCTV cameras) in workplaces with particularly adverse
climate parameters.
Securing access to system functionality and against data loss as part
of an IT/OT systems approach.
Reduction of external and internal losses and relative air humidity
and increase in airing intensity. The use of shortened working time.
(Parent Entity)
Risk of loss of excavation functionality associated with
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 drainage equipment, human error
(actions contrary to the project or technology) or erroneous
geological exploration.
Unfavourable hydrogeological conditions may lead to a reduction
in activity (e.g. a reduction in mining) or increased costs
associated with, among others, the management of increased
water inflows at the Żelazny Most tailings storage facility.
Exposure to risk is increased by climate factors associated with
periodic droughts and the low level of the Odra River.
Research into hydrogeological conditions and water hazards,
measuring water inflow to the mines, conducting mining operations
in accordance 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.
Review and updating of the Rescue Plan in case of water inflow.
Development of regional pump stations and the piping system,
construction of water dams aimed at stopping water inflow, drilling
exploratory holes to stabilise uncontrolled water inflow. In order to
mitigate the risk of uncontrolled inflow of water underground, the
project entitled “Construction of the main drainage system in the
area of the SW-4 shaft” is continued, which should ultimately
increase the capacity of mine draining.
Securing access to system functionality and preventing data loss as
part of the approach used in the area of IT/OT systems.
Ongoing monitoring of hydro-technical conditions and the technical
performance of facilities and infrastructure. Ongoing
modernisation, refurbishment, procedure in accordance with the
operating instructions. With the current level of underground water
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 62
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inflows, in order to maintain the safety of the Żelazny Most Tailings
Storage Facility and consequently mitigate risks, water discharges
are carried out in accordance with and within the limits of the water
rights permits held.
(Parent Entity)
Risk of restrictions to the ability to sell sulphuric acid (due
to loss of market/customers and/or a decline in demand,
also 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
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 2023, one of the factors affecting the exposure to risk was the
situation on the fertilizer market in connection with the war in
Ukraine.
Increasing the number of internal storage tanks at smelters as well
as of reservoirs in the port in Szczecin. Search for new markets.
Long-term contracts. Subsidies to customers and incurring
transport costs. Search for alternative ways to manage the acid and
utilise it in the Ore Enrichment Plants. In 2023, ongoing actions were
undertaken to address the situation on the fertilizer market
resulting from the war in Ukraine, i.e. fluctuating demand from
customers.
(KGHM Group)
Risk of loss due to the actions of external parties involved in the procurement, sales and investment process.
The KGHM Group is exposed to the risk of loss resulting from the intentional actions of external entities, e.g. collusion on prices,
insufficient technical and economic potential of contractors, falsification of documentation, fictional contractors, conflicts of interest.
The risk also relates to incorrect verification of external counterparties that may result in contracts being concluded with individuals,
entities, organisations or countries included in sanction lists.
(KGHM Group)
Risk of loss of compliance with requirements (law in force,
intra-corporate regulations and voluntary 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 volatile legal
environment (including environmental and tax requirements)
may be higher operating costs or restriction of such activities. The
risk of interruptions to operations or the need to reorganize work
due to new legislation may have a substantial impact on the
operations of the KGHM Group.
Active cooperation with the academic environment, which issues
opinions on changes to legal acts, and the ongoing providing of
positions and opinions with respect to numerous areas subject to
legislative change (including as part of membership in national and
EU organisations). Cooperation with renowned law firms and the
creation of specialised organisational units which monitor the
regulatory environment. Taking pre-emptive actions in order to
adapt to organisational, infrastructural and technological changes.
In order to standardize the approach to ensuring compliance
defined as observance of the requirements arising from the external
legal regulations and internal regulations or voluntarily assumed
legal obligations and standards (including ethical 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. are in place. 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, among others, 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.
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 63
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Table 14. Risk category - Internal Risks in the Risk Model of KGHM Polska Miedź S.A.
Risk and description of risk factors
Mitigation
(KGHM Group)
The risk of serious work accidents or occupational diseases
caused by improper workplace 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
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 occupational diseases as a consequence of
the effect of the working environment on people. Enhanced
exposure to risk is also related to external factors in terms of sub-
contractors and their safety culture.
A detailed allocation 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 adaptation measures to avoid a similar situation 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.
Activities carried out in line with the self-improvement cycle in
order to continuously seek and prepare for the implementation of
a catalogue of initiatives to further improve health and safety and
meet the Company's long-term goal of "Zero accidents due to
personal and technical causes, zero occupational diseases among
our employees and contractors". The Employee Safety
Improvement Program "I think about the consequences" contains
actions in the area of attitudes, which are enriched with new
intentions every year. The result should be achieved by changing
the attitudes and habits of employees with regard to occupational
health and safety, and by improving the Occupational Health and
Safety Management System to prevent work-related injuries and
health conditions of employees and to provide safe and hygienic
workplaces.
Optimisation of health care for employees, in particular following
workplace accidents and systematic searching for new
organisational and technical initiatives to enable the achievement
of a higher level of safety of 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
current needs.
(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 parameters related to economics, 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 forecast results, at the same time shortening the time
for taking appropriate corrective actions. Sources of risk are linked to potential ineffectiveness of the mechanisms controlling these
processes.
In 2023, general uncertainty in the financial markets related to the armed conflict in Ukraine was a significant factor affecting the risk
exposure.
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 64
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(KGHM Group)
Risk of unavailability of the main IT system, causing
disruption of business processes and cyber 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 information 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 loss of 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 the risk of loss of the
confidentiality, integrity, availability or authenticity of information
assets which have been collected, stored or processed on IT
resources. Permanent monitoring of the owned infrastructure in
terms of vulnerability and analysis and planning of implementation
of ICT solutions increasing security, in accordance with global
trends and best practices in this area. Implementation of security
systems and adequate organisational solutions at various levels of
infrastructure, with the aim of anticipatory reduction of system
vulnerabilities and minimising potential losses of the KGHM Group.
KGHM Polska Miedź S.A. carries out many investment activities in
terms of increasing the level of cyber-security of IT/OT systems in
the area of, inter alia, incident investigation, data security. A
Security Operation Center (SOC) department operates, whose
main task is to provide a 24/7 first line of support for cyber security
incidents.
(KGHM Group)
Risk of failure to adhere to established principles and standards of conduct with respect to counteracting corruption, business
ethics and with respect to procurement processes.
The KGHM Group is exposed to the risk of actions which are harmful to KGHM taken by external entities participating in the procurement,
sales and investment processes. Threats are in the form of potential losses by the KGHM Group resulting from the intentional actions of
external entities, e.g. collusion on prices, 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, mobbing, discrimination, illegality, nepotism)
and human rights violations (such as child labour, forced labour, modern slavery, women’s rights).
(KGHM Group)
The risk of exceeding project/program budgets and schedules
and deviations from the scope and assumed quality. Risk
related to the operational management and development of
strategic projects, taking into account the issues of incurred
costs, permits and infrastructural requirements.
The KGHM Group is exposed to risk related to the advancement of
projects and programs. The risk of changes in budgets, schedule,
scope and deviations from the expected quality of outputs of
projects and/or programs is related to a variety of factors of an
internal nature involving both the methodical 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.
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 in terms 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 ongoing monitoring of progress. On-
going evaluation of the economic feasibility of existing and
anticipated development projects.
The InvestCUp Development Program, dedicated to people who
are involved in the preparation and implementation of projects,
was continued as a tool to improve their effectiveness by
developing their competence and enhancing employee
commitment.
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 65
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Table 15. Risk category - Climate Risk in the Risk Model of KGHM Polska Miedź S.A.
Risk and description of risk factors
(KGHM Group)
Physical climate risk related to negative climate changes.
The KGHM Group is exposed to climate risk related to the adverse impact of factors resulting from specific events, in particular ones related
to rapid (acute) and chronic weather events resulting from climate change, such as storms, floods, fires or heat waves as well as permanent
changes in weather patterns, which may disrupt the value chain and the business continuity of the KGHM Group.
The risk is associated with the changes in the conditions of running business activity or disturbances in the operation of the Core Production
Business, resulting from climate changes and adaptation to such changes. Permanent changes in weather patterns as a consequence of
climate change may also have the effect of making work more onerous and increasing operational costs directly related to business
activities.
More details in section 2.2.7 Material impacts, risks and opportunities and their interaction with strategy and business model.
(KGHM Group)
Climate risk arising from transitioning to a low-carbon economy that is resilient to climate change.
The KGHM Group is exposed to risks arising from the necessity for the economy to adapt to gradual climate changes, in particular by using
low-emission solutions. The transition risk category includes issues related to legal requirements, how clients and other stakeholders
perceive climate issues, technological progress towards a low-emission economy, as well as changes in demand for and supply of certain
products and services whose production has an adverse impact on climate.
Risks relate to changes in business conditions due to climate change and adaptation to these changes in the context of the observed
challenges faced by the mining and metallurgy industries.
More details in section 2.2.7 Material impacts, risks and opportunities and their interaction with strategy and business model.
2.3.2 Information on the impact of COVID-19 and/or the war in Ukraine on the operations of the
Company and the Group
The situation regarding COVID-19 and the war in Ukraine did not have a material direct impact on the operations of the
Company and the Group in 2023. Detailed information concerning this impact and the related risks is presented in notes
1.2.2 and 1.2.3 of the financial statements and the consolidated financial statements.
2.3.3 Political risk in Chile
As a result of the end of the political, cultural, social and economic cycle in Chile, which was characterised by a high degree
of complexity and instability, KGHM Polska Miedź does not identify increased exposure to political risk in this country, and
therefore the likelihood of potential impacts in future periods on its operations there on this account is assessed as low.
After rejecting the draft new constitution in September 2022, Chilean citizens voted for the second time in December 2023
and overwhelmingly voted against the next draft. At the same time, Chilean President Gabriel Boric announced that a third
attempt at drafting and adopting a new Constitution would not take place during his term. 2023 also saw the finalisation of
work on setting new tax levies for the mining industry and the introduction of the Mineral Extraction Tax (the so-called
Royalty). The changes introduced established an ad valorem tax of 1% on copper sales from companies that sell more than
50 thousand tonnes of copper, as well as an additional tax of between 8% and 26% depending on operating margins. Under
the reform, the highest tax rate will be close to 47% for companies producing more than 80 thousand tonnes of copper per
year. The aforementioned changes and tax increases were lower than expected, which could have a positive impact on
both KGHM and the mining sector in Chile as a whole. Accordingly, a return to stability and the development path Chile
followed before the social explosion of 2019 is expected. The Parent Entity monitors the political situation in Chile and the
related impact on the mining industry on an ongoing basis, in order to assess the potential impact on the KGHM Polska
Miedź S.A. Group on an ongoing basis. Depending on the further possible directions of change and the decisions taken by
the Chilean government, different scenarios will be analysed, which may require appropriate adaptation measures.
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 66
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2.3.4 Market, credit and liquidity risks
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 applied 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,
− Financial Liquidity Management Policy and the Rules of the Financial Liquidity Committee,
− Procurement policy for electricity, property rights, guarantees of origin and gaseous fuel.
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.).
Management of financial liquidity is conducted in accordance with the “Financial Liquidity Management Policy in the KGHM
Group”. The Policy regulates the processes implemented by individual companies, while their 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 Policy applies to selected Group companies and its goal 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 16. Risk category – Market, in the Risk Model of the KGHM Polska Miedź S.A. Group
Commodity risk,
currency risk
In 2023, 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 2023 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
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.
Detailed disclosures regarding the management of the risk of changes in metal prices and exchange rates in
2023 in the Parent Entity and in the Group are presented in Notes 7.5.1.2 and 7.5.1.3 of the financial
statements and the consolidated financial statements.
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 2023, the Group was exposed to such risk due to loans granted, free cash invested on deposits,
the reverse factoring program and borrowings.
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 67
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Detailed disclosure concerning the balances of the Parent Entity's and Group's positions exposed to interest
rate risk as at 31 December 2023 is presented in Note 7.5.1.4 of the financial statements and the consolidated
financial statements.
In 2023, the LIBOR reference rates in the Group's external financing agreements were replaced by the SOFR
or CME TERM SOFR rate. These rates also apply to newly concluded contracts with financial institutions in
USD.
The Steering Committee of the National Work Group for reform of the reference rates which was established
in connection with the reform of reference rates in Poland, revised the schedule for the process of replacing
the WIBOR and WIBID reference rates with a new risk-free-rate (RFR) reference rate in October 2023. As part
of the work on the reform, a number of challenges specific to the Polish financial sector have been identified,
arising from the scale and structure of contracts and instruments using WIBOR, generating risks for a safe
conversion. This has resulted in setting new deadlines for introduction of changes in order to reduce the risks
and costs of benchmark reform. The Committee indicated a final conversion date as the end of 2027.
Until 2027, 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 Parent Entity are based on the WIBOR reference rate. In the case of this benchmark, until 2027 we are in
the transitional period, during which adjustments to transactions entered into before the reform will not be
required. After 2027, 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, i.e. 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.
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 2023 amounted to PLN 357 million, of
which:
− PLN 635 million increased revenues from contracts with customers,
− PLN 267 million decreased the result on other operating activities, and
− PLN 11 million decreased the result on financing activities.
Moreover, PLN 102 million of revenue from the settlement of the bond interest rate hedging instrument (CIRS)
was activated in 2023 in the statement of financial position – non-current assets. Meanwhile, other
comprehensive income was increased by PLN 557 million (impact of hedging instruments; increase from PLN
71 million to PLN 628 million).
As at 31 December 2023, the fair value of open transactions in derivatives of the Group (on the metals,
currency and interest rate markets and in embedded derivatives) amounted to PLN 292 million.
Risk of changes in
prices of energy and
energy carriers
In terms of management of market risk arising from changes in energy and energy carriers, the scale and
profile of operations of the Parent Entity have the greatest significance and impact on the results of the KGHM
Polska Miedź S.A. Group. It represents a commodity risk for the Parent Entity, which is measured based on its
impact on cash flows.
Commodity price risk management for planned purchases of electricity and gaseous fuel involves managing
the exposure to the risk of changes in the price of electricity and gaseous fuel over a time horizon of up to 36
consecutive months resulting from energy and gas purchase plans, less previously-concluded purchase
contracts with delivery in future periods.
Detailed disclosures regarding the risk of changes in energy and energy carrier prices in 2023 in the Parent
Entity are presented in Note 7.5.1.5 of the financial statements and the consolidated financial statements.
Price risk related to
changes in the 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 2023, the carrying amount of shares of companies listed on the Warsaw Stock Exchange
and on the TSX Venture Exchange amounted to PLN 703 million.
Credit risk management
Credit risk is defined as the risk that debtors 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 2023, the KGHM Polska Miedź S.A. Group was exposed to the credit risk, mainly in four areas:
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 68
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Table 17. Areas of credit risk in the Risk Model of the KGHM Polska Miedź S.A. Group
Credit risk related
to trade
receivables
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 collaterals held and
the credit limits granted by the insurance company, as of 31 December 2023 the Parent Entity had secured 56%
of its trade receivables (as at 31 December 2022, 76%).
Detailed disclosures regarding credit risk management related to trade receivables in 2023 are presented in note
7.5.2.3 of the financial statements and the consolidated financial statements.
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 review of the credit ratings of financial
institutions with which the Group cooperates, and by limitation of the level of concentration in individual
institutions. As at 31 December 2023, the maximum share of a single entity in terms of credit risk arising from
funds of the Group deposited in financial institutions amounted to 35% (as at 31 December 2022, 30%).
Credit risk related
to derivatives
transactions
All of the entities with which the Group enters into derivatives 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 2023, 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 24% (as at 31 December 2022, 17%). Due to diversification of risk in terms both of the
nature and of their geographical location of risk, 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 the derivative transactions entered into.
Credit risk related
to loans granted
As at 31 December 2023, the balance of loans granted by the Parent Entity amounted to PLN 9 711 million. The
most important positions are long-term loans in the total amount of PLN 9 581 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 2023, the balance of loans granted by the Group amounted to PLN 9 118 million. The most
important of these are short-term and long-term loans in the total amount of PLN 9 096 million, or USD 2 311
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 by 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 Subordination 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 18. 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.
Detailed information regarding available sources of financing and their utilisation in 2023 may be found in
subsection 7.5 Financing in the Group of this Report.
The available sources of financing fully cover the liquidity needs of the Group. The status of the Group’s liabilities
due to borrowings and loans received and bonds issued as at 31 December 2023 amounted to PLN 4 941 million.
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 69
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2.4 DUE DILIGENCE POLICIES AND PROCEDURES
2.4.1 Due diligence declaration (GOV-4)
[ESRS 2 GOV-4]
KGHM acts with due diligence in managing sustainability issues. Detailed information related to this issue is included,
among others, in the following sections of this document:
Key elements of the due diligence process
Sections of the report
Incorporation of due diligence into
governance, strategy and the
business model
− 2.2.5 Information provided to the entity's administrative, governing and supervisory bodies
and the sustainability issues they undertake
− 2.2.6 Incorporating sustainability-related results into incentive schemes
− 4.2.2 Material impacts, risks and opportunities and their interaction with strategy and
business model
Cooperation with stakeholders
affected by the entity at all key
stages of the due diligence process
− 1.4 Interests and views of stakeholders
Identification and assessment of
adverse impact
− 2.2 Management of sustainable development and ESG risks
− 2.2.7 Material impacts, risks and opportunities and their interaction with strategy and
business models
− 2.3 Risk management
− 4.2.3 Description of processes in order to identify and assess significant impacts, risks and
opportunities
− 4.3. Environmental pollution management
− 4.5.2 Description of processes for identification and assessment of significant impacts,
risks, dependencies and opportunities related to biodiversity and ecosystems
− 4.6.1 Description of processes for identifying and assessing significant impacts, risks and
opportunities associated with the use of resources and the circular economy
Taking action to reduce identified
adverse impacts
− 4.2.5 Measures and resources in relation to climate policy
− 4.3.2 Pollution-related activities and resources
− 4.4.2 Activities and resources related to water and marine resources
− 4.5.5 Activities and resources related to biodiversity and ecosystems
− 4.6.3 Activities and resources related to the use of resources and circular economy
− 5.2.5 Taking action concerning significant impacts and applying approaches to mitigate
material risks and take advantage of significant opportunities related to own employees,
and the effectiveness of these actions and approaches
− 5.6.6 Undertaking measures addressing significant impacts on persons performing work in
the value chain
− 5.7.4 Taking action on significant impacts on affected communities
Monitoring the effectiveness of these
efforts and providing relevant
information in this regard
− 4.2.6 Targets related to climate change mitigation and adaptation
− 4.3.3 Pollution-related goals
− 4.4.3 Goals related to water and marine resources
− 5.2.6 Designated objectives aimed at managing the significant impacts, risks and
opportunities associated with own workforce
− 5.7.5 Goals for managing significant impacts, risks and opportunities
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 70
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2.5 ETHICS IN BUSINESS CONDUCT AND RESPONSIBLE BUSINESS CONDUCT
2.5.1 Role of the administrative, supervisory and management bodies
[ESRS 2 GOV-1]
The management structure in KGHM Polska Miedź S.A. and the KGHM Polska Miedź S.A. Group is presented in section
2.1 Management Structure of KGHM Polska Miedź S.A. and the KGHM Polska Miedź S.A. Group The table below shows
detailed responsibilities for managing the areas of ethics, supplier relations and payments at the management board level.
Table 19. GOV-1 - The role of administrative, supervisory and governing bodies (in relation to ethical issues, practices in
relation to suppliers, including payments, and lobbying)
Ethics
Lobbying
Practices in relation to suppliers (including
payments)
The identity of the
administrative, management
or supervisory bodies (such
as a management board
committee or similar) or
persons within the body
responsible for supervising
impacts, risks and
opportunities.
Ethics and anti-corruption
area
Supervision: President of the
Management Board
Business unit:
Ethics and Anti-corruption
Department
Head Office Division:
Executive Director for
Security and Loss Prevention
KGHM Group companies:
Ethics and Anti-corruption
Representatives
Lobbying area
Supervision: Vice President of
the Management Board
(Corporate Affairs)
Business unit:
Regulation Department
Head Office Division: Executive
Director for Legal Affairs
Metal-bearing material suppliers:
Vice President of the Management Board
(International Assets). The Executive Director
for Commerce and Logistics reports to him.
Other suppliers:
Vice President of the Management Board
(Corporate Affairs). The Executive Director for
Procurement reports to him.
Payment issues:
Vice President of the Management Board
(Finance). The Executive Director for Finance
Management reports to him.
The KGHM Group has identified risk owners responsible for impacts, risks and opportunities in the above
areas. Risk and compliance assessments are performed by the Executive Director for Risk and Audit, the
Corporate Risk Management and Compliance Department, the Corporate Risk and Compliance Committee,
and the Audit Committee of the Supervisory Board as well as internal and external audit.
The manner as to how each
body or person's
responsibility for impacts,
risks and opportunities is
reflected in the entity's
terms of reference, the
mandates of the
management board and
other related policies of the
entity.
The Members of the Management Board are in charge of the areas defined in the Organisational
Regulations of KGHM Polska Miedź S.A. and in the resolutions of the Supervisory Board of the Company,
taking decisions independently in their respective areas of responsibility. The responsibilities of the
Executive Directors and Department Directors, the tasks of the Corporate Risk and Compliance and Audit
Committees of the Supervisory Board, and the role of the Ethics and Anti-Corruption Representative are
defined in the bylaws and procedures of these bodies. Personal assignments of responsibilities and scopes
of duties are reflected in work cards.
The Management Board's
role in the governance
processes, controls and
procedures used to monitor,
manage and oversee
impacts, risks and
opportunities and their
supervision.
Responsibility of the Member
of the Management Board:
− comprehensive
management of security
and loss prevention in the
KGHM Group.
Executive Director for
Security and Loss
Prevention:
− implementation of ethics
and anti-corruption
activities across the
Group, including the
Company's international
assets.
Ethics and Anti-corruption
Representative in the KGHM
Group:
− ensuring the coherence
and completeness of
ethical and anti-
Responsibility of the Member
of the Management Board:
− shaping relationships with
the industry and regulatory
environment,
Executive Director for Legal
Affairs:
− supervising regulatory and
legislative activities
affecting the Company’s
operations and (through
subordinate units) for
preparing the Company's
position and submitting
proposals for draft
regulations in close
cooperation with the
business units, liaising and
building relationships with
national, EU and foreign
Responsibility of the Member of the
Management Board
− (International Assets):
shaping of the Company’s commercial
and logistics policies.
Executive Director for Commerce and
Logistics:
− supervising the sale of metals and the
purchase of metal-bearing materials and
compliance with responsible supply chain
standards.
Responsibility of the Member of the
Management Board
− (Corporate Affairs):
shaping the procurement policy
Executive Director for Procurement:
− actions regarding development,
maintaining and implementation of
procurement process standards.
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 71
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corruption activities
implemented in the
KGHM Group.
participants in the
legislative process.
Responsibility of the Member of the
Management Board
− (Finance):
shaping the financial policy in the KGHM
Group, finance in all areas and fields of
the Group’s activities and accounting
service of the Company.
Executive Director for Financial Management:
− supervising the work of subordinate units
in such a way as to ensure the correct
operation of the Company and the Group
in the area of finance.
The Executive Director for Risk and Audit is responsible for supervising the maintenance and development
of the KGHM Group's comprehensive corporate risk management system. As part of the second line of
defence, tasks are performed by the Corporate Risk Management and Compliance Department and the
Corporate Risk and Compliance Committee is established within the governance structures. The
Management Board is ultimately responsible for the risk management system and its oversight, including
ethical aspects, lobbying and supplier relations. The Audit Committee of the Supervisory Board of KGHM is
responsible for monitoring of the level of risk and the manner of dealing with it. The risk management and
compliance function is subject to the assessment of its effectiveness by internal and external audit.
How the role has been
assigned to an individual in a
particular management level
position or committee and
how oversight of that
position or committee is
exercised.
Roles have been assigned to individuals in specific management level positions and supervision is carried
out according to the principles of subordination in compliance with the scheme in place. The Corporate Risk
and Compliance Committee is managed by its Chairman. In accordance with the Best Practices for WSE-
listed Companies, persons responsible for risk management and compliance report directly to the President
of the Management Board. The Supervisory Board is the body whose overriding task is to exercise
continuous supervision over the Company's activities in all its areas.
Structure of reporting to
administrative, management
and supervisory bodies.
In accordance with internal
regulations:
the Executive Director for
Security and Loss Prevention
is responsible for periodical
reporting to the
Management Board on
issues within competences of
subordinate Departments,
including in the area of
ethics.
In accordance with internal
regulations:
KGHM's representatives in
national and international
economic organisations
produce concise post-meeting
and annual activity reports
containing recommendations
regarding the Company's
further involvement. Quarterly
and annual reports on the
work in the organisations are
submitted to the supervising
director.
In accordance with the requirements of
external sector standards, such as:
the LBMA Responsible Gold Guidance, the
LBMA Responsible Silver Guidance and The
Copper Mark Criteria for Responsible
Production, as well as the content of internal
procedures in force in the Company, annual
compliance reports are published concerning
the responsible supply chain for gold and
silver, as well as copper and lead, prepared
by the Compliance Officer in KGHM and
presented to the relevant Member of the
Management Board for approval.
As part of the Corporate Risk Management and Compliance process, Quarterly Risk Management Reports
and Compliance Management Reports are prepared by the Executive Director for Risk and Audit, which are
referred to the Corporate Risk and Compliance Committee for analysis. The Corporate Risk and Compliance
Committee issues recommendations to the Management Board of the Company regarding the approval of
these reports. Following approval by the Management Board, the reports are sent to the meeting of the
Audit Committee of the Supervisory Board of KGHM Polska Miedź S.A.
Information as to whether
specific controls and
procedures are used in the
management of impacts,
risks and opportunities and,
if so, how they are
integrated with other
internal functions.
On the basis of the current
Code of Ethics of the KGHM
Group, documents
consistent with it have been
established relating to the
manner of managing issues
related to the area of ethics
(e.g. discrimination,
mobbing, unequal
treatment, harassment,
regulations of the Ethics
Committee, procedure for
disclosing irregularities and
protection of whistleblowers
in the KGHM Group).
Internal regulations were
implemented in the Company
with the aim of coordinating
the membership of KGHM
Polska Miedź S.A. in national
and international economic
and sector organisations and
establishing the principles for
participation of KGHM
representatives in the activities
of these organisations.
Regulations have been
introduced with regard to the
Map of External Regulations
(MER), which provides a
structured database of
information on draft
legislation. This information
provides an input to the
The Responsible Supply Chain Policy in the
KGHM Group, the Procedure for Examination
of the Supply Chain for Gold and Silver in
KGHM Polska Miedź S.A. and the Procedure
for Due Diligence in Examination of the
Supply Chain for Copper and Lead in KGHM
have been established. In accordance with
the content of the aforementioned
Responsible Supply Chain Policy, in order to
ensure the highest possible standards, the
suppliers are expected to comply with all the
principles indicated therein and refrain from
entering into business relations with entities
that act in a contrary manner.
KGHM uses the approach based on risk
analysis for the identification of risks and
high-risk business relationships, compliant
with the OECD Guidelines for a Responsible
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 72
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compliance management
process consistent with the
corporate risk management
process.
Supply Chain for Minerals from Conflict and
High-Risk Areas.
In the Company, the Principles of Financial
Management and the Economic System of
KGHM Polska Miedź S.A. were adopted,
defining, among others, principles and terms
of payment with suppliers.
The Company has a Corporate Risk Management process in place, aimed at managing corporate risk,
interpreted as the impact of uncertainty, as an integral part of the activities carried out by the Organisational
Units of the KGHM Group, which may result in both opportunities and threats to the accomplishment of
business objectives. The results of the work in the above-mentioned areas provide input into the process which
includes the identification, assessment and analysis of corporate risks in categories such as audit, compliance,
risk management, ethics, counteracting corruption, organisational culture, contractors and outsourcing.
How the administrative,
management and
supervisory bodies and
senior management
supervise the setting of
objectives in relation to
significant impacts, risks and
opportunities, and how they
monitor progress towards
achieving them.
The Supervisory Board of KGHM Polska Miedź S.A. sets objectives, weights and measurable criteria (indicators
and KPIs) for Members of the Management Board. The catalogue of management goals is described in the
Remuneration Policy. In determining the management goals for a given year, the current significant impacts,
risks and opportunities within the activities conducted are taken into account. The variable remuneration for
the ended financial year depends, among other things, on: the General Meeting approving the performance of
duties of a Member in the given financial year, the submission of a report to the Supervisory Board on the
fulfilment of the management goals and the assessment of the fulfilment of these goals. Based on this, the
Supervisory Board determines the amount of variable remuneration payable to the Management Board
Member concerned.
Once the Supervisory Board has adopted the management goals for the year concerned, the Management
Board determines the major directions of action, performance indicators and solidarity measures for senior
management. The Goal Cards are approved by the members of the Management Board according to their
duties. The annual evaluation of the achievement of these goals and work takes place after the publication of
the consolidated annual report by the Company.
How the administration,
management or supervision
authorities determine
whether appropriate skills
and expertise are available
or will be developed to
oversee the issues related to
sustainable development.
The announcement on the commencement of the qualification proceedings for Members of the Management
Board of KGHM Polska Miedź S.A. contains requirements that candidates should have specialist knowledge
concerning the Company's activities in terms of the function for which they are applying. In selecting a
candidate, the Supervisory Board assesses the extent to which the aforementioned requirements are met.
In accordance with the regulations, at least one member of the Audit Committee of the Supervisory Board
must have knowledge and skills associated with the industry or individual members in specific scopes have
knowledge and skills in terms of the industry. At least one member of the audit committee has knowledge and
skills in terms of accounting or auditing of financial statements. Members of the Audit Committee must make
declarations confirming their knowledge and skills, indicating the sources of their experience.
Access to expertise relating
to sustainable development
that the authorities as a
whole either have directly or
can use, for example through
access to experts or training.
The Members of the Management Board responsible for supervising individual sustainability issues (ethics,
lobbying, supplier practices) are experienced managers with past leadership roles in the bodies of various
companies in Poland and abroad. They have, among others, mining, metallurgical, legal and industry
experience and have completed a number of postgraduate studies, including an MBA title. The foregoing is a
key component of the Management Board Members' awareness of the importance of sustainable
development in the management of a large enterprise. The Company shall incur or refund the costs of
individual training of a Management Board Member related to the performance of the management services
contract linking the Management Board Member to the Company and the resulting duties of the Management
Board Member with a prior approval of the Chairperson of the Supervisory Board on a case by case basis.
Members of the Management Board should exercise the professional care in the performance of their duties,
resulting from their professional nature.
The Supervisory Board comprises, within the framework of the operating committees, Members with
qualifications, among others, in terms of accounting or auditing of financial statements, as well as knowledge
and skills in the industry in which KGHM operates, resulting from their education, experience and professional
practice. The Supervisory Board may also commission analyses, expert reports and opinions from experts
outside the Company (advisers to the Supervisory Board).
Development programs are implemented for senior management on a regular basis supporting the building
and developing the professional competence, also in terms of sustainable development.
How professional skills and
expertise relate to the
significant impacts, risks and
opportunities of an
individual.
The skills and expertise of the Members of the Management Board affect their ability to properly analyse and
assess impacts and associated risks and to take them into account in the conduct of the Company's affairs
and in making management decisions on how to respond to events that may relate to both impacts and risks,
taking into account the Company's organisational, financial and production capacity. In accordance with the
corporate governance principles in force in the Company in terms of the risk management and compliance
function, risk ownership is determined on the basis of assigned duties and responsibilities within subordinate
areas of competence. Consequently, the KGHM Group has a transparent and consistent risk management
system adapted to its specific nature and providing strong support for decision-making at all levels of the
organisation.
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 73
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2.5.2 Business policies and corporate culture
[ESRS G1-1, ESRS G1-1 Addendum B]
Key ethical standards in the KGHM Polska Miedź S.A. Group.
The main tool for building the corporate culture, defining priorities and establishing principles applicable to employees is
the Code of Ethics of the KGHM Polska Miedź S.A. Group. It aims to ensure behaviour compliant with the highest standards
of ethics defining Key Ethical Standards and the principles of conduct.
Description of mechanisms of identification, reporting and investigation of concerns related to unlawful conduct
or behaviour contrary to the Code of Conduct
KGHM Polska Miedź S.A. has adopted a Procedure for Disclosure of Irregularities and Protection of Whistleblowers, which
is aimed at creating an internal tool to increase effectiveness in monitoring, detecting and resolving situations involving the
occurrence of violations or irregularities in relation to the regulations adopted in the KGHM Group and law in force due to
business activities conducted by Entities of the Group. The procedure also aims to ensure that whistleblowers are
adequately protected. It defines the mode of submitting whistleblowing reports, indicates the organisational units
responsible for receiving them and conducting investigations and defines the role of the whistleblower and the scope and
rules governing his protection. In 2023, the KGHM Group approved for use a new system for servicing the process of
receiving, recording, handling and archiving information on violations of law and ethical standards, including internal
reports submitted by whistleblowers, in accordance with the standards in force in this regard through the implementation
of the “e-Whistleblower” [“e-Sygnalista”] and “Ethics Line” [“Linia Etyki”] applications.
2.5.3 Supplier relationship management
[ESRS G1-2]
The structure of responsibility for the management of the broader supplier relations is presented above in the section on
the role of administrative, supervisory and management bodies. Responsibility was divided into two areas, i.e. copper-
bearing charge materials procurement and relations with other suppliers.
Description of policies aimed at preventing late payment, particularly for SMEs.
In KGHM Polska Miedź S.A., the Principles of Financial Management and the Economic System of KGHM Polska Miedź S.A.
were adopted, defining, among others, principles and deadlines for payments with suppliers. This document defines the
internal economic and financial system of KGHM Polska Miedź S.A., including the principles for making payments, including
for SMEs. The Principles reflect the legal requirements set out in the Act of 8 March 2013 on prevention of excessive delays
in commercial transactions.
The entity's approach to its relationships with suppliers, taking into account the risks to the entity associated with
its supply chain and impacts on sustainable development issues
The issues in question are regulated in the provisions of the "Principles for the selection of bidders" as a document of
external nature addressed to bidders, and is one of the attachments to the applicable Procurement Policy at KGHM Polska
Miedź S.A. Moreover, taking into account the financial criterion related to the value of turnover between the supplier and
KGHM Polska Miedź S.A., a classification of suppliers as key for KGHM Polska Miedź S.A. is made. All potential key suppliers
are assessed in terms of risk related to compliance with the highest standards of production, business ethics and business
operations. The assessment is carried out as part of the verification of information obtained from suppliers according to
established criteria, covering issues such as respect for human rights, compliance with occupational health and safety rules,
approach to ethical issues and information on implemented management systems, as well as compliance of the supplier's
operations with the regulatory requirements. On the basis of the information obtained from a key supplier, a risk
assessment is assigned to the supplier, allowing a business decision to be made as to whether it is feasible to work with
the entity in question. In addition, as stated in the document “Principles for the selection of bidders”, some potential
Contractors are subject to automatic exclusion from the procurement process in the event of, among others, violation of
legal provisions, including competition law, foreign labour regulations, sanction regulations or conviction by a final
judgement.
Manner of taking into account social and environmental criteria in the selection of the entity's suppliers
Social and environmental criteria are taken into account at the stage of a supplier's registration in KGHM's supplier database
or upon entering into procurement proceedings, and are a condition for establishing business relationships with KGHM.
The above condition is implemented through the so-called Contractor’s Charter, which is one of the attachments to the
current Procurement Policy in KGHM.
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 74
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The Company's approach to suppliers of copper-bearing materials
KGHM Polska Miedź S.A., by applying tested practices resulting from the implementation of relevant documents (among
others: Product Sales and Purchasing Policies for Copper-bearing Materials, Responsible Supply Chain Policy, Anti-
Corruption Policy) works solely and exclusively with suppliers verified in terms of meeting the highest production standards
as well as business ethics and operations.
To this end, appropriate clauses in the contracts are used and the Supplier is required to sign the Contractor’s Charter,
which is a declaration by the Supplier on their adherence to principles related to ethics and responsible business conduct,
responsible supply chain, environmental issues as well as human and labour rights.
The key objective, which is ensuring the security of its commercial operations, is sought by the Company through
cooperation with long-standing, stable trade partners, following their prior verification by the Security and Internal Control
Department.
Under the Responsible Supply Chain Policy, KGHM Polska Miedź S.A. purchases goods and services which do not contribute
to the financing of terrorism and are produced or provided with respect for fundamental human rights, labour standards,
environmental protection and counteracting corruption.
A review and examination of the supply chain is conducted on a case by case basis and, consequently, a risk analysis of
possible purchases or supplies from conflict and high-risk areas.
Treating all suppliers equally, adhering to the principles of free competition, transparency of purchasing processes, their
control and monitoring are key aspects for success in the key objective of achieving a sustainable supply chain.
The Legnica Copper Smelter and Refinery, the Głogów Copper Smelter and Refinery and the Cedynia wire rod plant belong
to the prestigious Copper Mark program - they hold certificates confirming their responsible production according to the
highest standards.
The key criteria of The Copper Mark standard include:
− prohibition of forced labour,
− gender equality,
− occupational Health and Safety,
− freshwater management and protection,
− waste management,
− biodiversity and protected areas,
− development of local communities,
− human rights,
− rights of indigenous peoples,
− cultural heritage.
Copper Mark audits verify, among other things, social and environmental aspects. In addition, holding The Copper Mark
makes it easier to maintain cathode registration on the London Metal Exchange (LME).
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 75
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2.5.4 Counteracting and detection of corruption and bribery
[ESRS G1-3]
Description of procedures used in order to prevent, detect and respond to allegations or incidents related to
corruption and bribery
In order to comply with the key anti-corruption rules in the KGHM Group, in 2020, the Management Board of the Parent
Entity made a decision to implement the Anti-corruption Management System in the Divisions and in the Head Office of
KGHM Polska Miedź S.A. and in the subsidiaries in accordance with the PN-ISO 37001:2017 standard. A series of training
courses for employees was conducted, including training for prospective internal auditors and Representatives for the
Anti-corruption Management System in accordance with PN-ISO 37001:2017.
In 2021, the KGHM Polska Miedź S.A. Group adopted the new Anti-corruption Policy. The team appointed to carry out the
implementation work, with the support of an external expert, prepared, including updating and drafting, new regulations
in the area of anti-corruption, in line with the requirements of the standard, to ensure the implementation of the existing
Anti-corruption Policy. They were adopted by a resolution of the Management Board of KGHM Polska Miedź S.A. and are
implemented in all Group entities as necessary supervisory measures.
Description of key anti-corruption policies and procedures:
Anti-corruption policy
The 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 contains a declaration of full commitment by the senior management 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 standard.
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.
Significant elements of the procedure:
− responsibility and powers in the entire scope of Corruption Risk Management,
− connection between the AMS and Corruption Risk Management,
− corruption risk assessment,
− due diligence of candidates and personnel,
− rules for introducing means of supervising the anti-corruption area,
− awareness and training.
KGHM/ ZSZ/ SZDA/P-11
Handling activities 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.
Significant elements of the procedure:
− basic principles for corruption prevention – prohibition of corruptive behaviours,
− rules of conduct in contacts with public officers, counterparties and other stakeholders,
− procedure in the event of conflict of interest,
− handing business gifts,
− rules of conduct when corruption occurs (attempts to give undue benefits),
− consequences of non-compliance with principles of anti-corruption procedure.
KGHM/ZSZ/SZDA/P-12
Management of
corruption risk with
respect to supervised
organisations and
business partners
The aim of the procedure is to ensure that, under Corruption Risk Management as regards the 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.
Significant elements of the procedure:
− assessment of corruption risk to which the Supervised Organisations are exposed,
− supervisory measures as regards corruption risk pertaining to the Supervised KGHM Organisations,
− verification of compliance and effectiveness of supervisory measures applied by the Supervised
KGHM Organisations,
− internal audits of AMS in the Supervised Organisations,
− internal audits of implemented and applied systems and/or solutions regarding corruption risk
management in the Supervised KGHM Organisations performed by KGHM Polska Miedź S.A.,
− review of the compliance and effectiveness of Corruption Risk Management / AMS,
− due diligence analysis with reference to business partners,
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 76
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− standard supervisory measures with reference to business partners,
− procedure in the event of donations and sponsorship.
Policies associated with the area of anti-corruption:
Procurement Policy
− 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 sets forth supervisory measures mitigating the risk of
irregularities in the procurement process.
Responsible Supply Chain
Policy
− It 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
− The Policy sets forth common principles and goals for the entities and organisational units included
in the KGHM Group related to security and loss prevention. Pursuant to the Policy, all KGHM Group
employees operate in accordance with basic principles: professional integrity, accuracy in the
execution of official duties, loyalty to the employer, a results oriented approach, courage, teamwork,
accountability, shared responsibility for safety and loss prevention and avoidance of actions harmful
to the employer.
Competition Law policy
− Its purpose 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. Consequently, the KGHM Polska Miedź S.A. 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.
Procedures for rapid, independent and objective incident investigation
Irrespective of the process of investigating incidents related to corruption and bribery, there is a Corporate Risk
Management system in place in KGHM Polska Miedź S.A., under which it is possible to take, among others, actions related
to detected incidents. The process of corporate risk management, established in the document Corporate Risk
Management Policy in the KGHM Polska Miedź S.A. Group, is aimed at ensuring that key risks were identified, assessed and
analysed, and on the basis of their assessment, appropriate Risk Response Plans are prepared and Adjustment Actions are
implemented that will enable the mitigation of risks and the achievement of assumed business objectives, and will support
the identification of opportunities to build competitive advantage.
Functions most exposed to corruption and bribery risk
In accordance with current rules, in KGHM Polska Miedź S.A. there exist in individual Divisions Lists of positions and
functions which, due to the results of the corruption risk assessment analysis, require in-depth due diligence. In accordance
with the Corruption Risk Assessment Procedure, if the risk in a particular process is assessed as high or critical and positions
and functions have been identified which may be associated with potential corruption activities in this process, due
diligence analysis is required for candidates and personnel employed in these positions and/or functions.
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 77
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Ethics and anti-corruption training
Table 20. Topics and scope of training delivered in 2023.
Subject
Scope
Number of
employees trained
(including managers)
Ethics and anti-corruption
− circumstances in which corruption may occur in connection with
the duties performed, how to recognise the symptoms of corrupt
activities and key corruption risk indicators, how to prevent, avoid
and respond to corrupt solicitations or offers, and the potential
consequences of corruption;
− the role of Employees in ensuring the effectiveness of the
Corruption Risk Management/Anti-corruption Action Management
System and the resulting benefits for the Organisational Unit
and/or the KGHM Group as a whole;
− the potential consequences of failing to comply with the
requirements of the Corruption Risk Management/Anti-corruption
Action Management System and violations of the Anti-corruption
Policy and internal anti-corruption regulations;
− paths of submitting comments and concerns regarding the
functioning of the Corruption Risk Management/Anti-corruption
Action Management System and suspected breaches of the Anti-
corruption Policy and regulations as well as the benefits of
reporting suspected corruption.
− matters relating to the Code of Ethics and Anti-Abuse Procedure
1 786 persons
Data refers to all
employees in the
Head Office,
Divisions, selected
domestic Group
companies,
including persons in
managerial
positions
Conflict of interest
− Conflict of interest
3 731 persons
(414 persons)
Specialised, industry-specific
training for employees of the
Security and Loss Prevention Head
Office Division
− issues related to handling whistleblower reports
− training with the participation of a Central Anti-Corruption Bureau
officer on contemporary corruption risks and mechanisms
53 persons
(15 persons)
Specialised, industry-specific
training for employees of the
Security and Loss Prevention
Division and Heads of Security
Units in the Divisions and in 8
Group Companies
− detecting and counteracting abuse in groups, including
counteracting corruption in the KGHM Polska Miedź S.A. Group
under the Anti-Corruption Management System (AMS)
47 persons
(24 persons)
Anti-corruption Management
System according to ISO 37001
− the essence, intent and benefits of application of ISO 37001,
− getting acquainted with and “familiarisation” with the
requirements, definitions and scope of ISO 37001,
− familiarisation with the roles and responsibilities of management
in the AMS,
− process management, system procedures, process identification,
− auditing rules,
− principles of AMS integration based on the process approach with
other systems.
105 persons
(19 persons)
Counter-intelligence prevention,
cyber-intelligence and security
conducted by the Internal Security
Agency
− Broadly understood security of business entities, including in the
area of counteracting economic crime, addressed to the
management of the KGHM Group
57 persons
(57 persons)
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 78
Translation from the original Polish version
2.5.5 Investigating incidents related to corruption and bribery
[ESRS G1-4]
The investigation of corruption-related incidents is described in the procedure on “Dealing with corruption-related
activities”: Whenever an incident bearing the features of a corrupt activity, an ambiguous situation, an offer of corruption
or an attempt to make a corrupt payment has occurred, and whenever there is a justified suspicion that an employee has
been involved in a corrupt activity, the Ethics and Anti-corruption Representative investigates the circumstances and
causes of the incident and conducts the appropriate analysis in order to potentially introduce organisational and legal
changes to prevent similar situations in the future.
During the reporting period, no corruption-related events resulting in a final court judgement were recorded in KGHM
Polska Miedź S.A.
Methods of whistleblower protection
The description of channels allowing the reporting of irregularities is contained in the Procedure for Disclosure of
Irregularities and Protection of Whistleblowers, which is available to every employee of KGHM Polska Miedź S.A. through
the internal normative acts system. Moreover, the corporate website of KGHM Polska Miedź S.A. provides access to the
"KGHM Ethics Line" platform for Whistleblowers, available to both employees and third parties, including counterparties
and clients, in four languages - Polish, English, Spanish and Russian. Access to the platform via the corporate website is
available to any potential user of the KGHM Polska Miedź S.A. corporate website, both as an employee and a third party.
The Platform enables anonymous reporting of irregularities and is an alternative channel for other forms of contact defined
in the Procedure – telephone lines, e-mail boxes and mailing addresses.
In accordance with the provisions of the Procedure, any retaliatory behaviour is strictly prohibited in KGHM Polska Miedź
S.A. towards a Whistleblower who submits a notification in good faith and in the reasonable belief that he/she is disclosing
material irregularities, whereby it is irrelevant whether the disclosed information was successfully confirmed and whether
the irregularities actually occurred.
KGHM Polska Miedź S.A. protects a Whistleblower against harassment, discrimination or psychological harassment in
connection with his/her lawful activities in relation to the transmission of reports of detected or suspected irregularities.
Independence of the investigation committee
In accordance with the internal regulations, the composition of the investigation team and/or the Ethics Committee must
ensure the impartiality and independence of the investigation, and consequently the members of the Commission/team
who are related to any of the parties to the case through, inter alia, remaining in a superior-subordinate relationship, are
excluded from the case and the composition of the Commission/team is supplemented accordingly.
Procedure concerning reporting the results of the investigation to administrative, management and supervisory
bodies
Reporting to the top management level and to the governing body (Audit Committee of the KGHM Supervisory Board)
regarding non-compliance with anti-corruption regulations, including disclosed irregularities, is carried out in accordance
with procedure KGHM/ZSZ/SZDA/P-12 Management of corruption risk with respect to supervised organisations and business
partners, as part of the review of compliance and effectiveness of Corruption Risk Management /SZDA.
Policy communication method
The Anti-Corruption Policy is available on the corporate website and on the Intranet, and is also distributed and made
available in physical form in each organisational unit of KGHM. Each newly-recruited employee is made aware of the
provisions of the Policy, which he/she confirms by making a declaration, and undergoes anti-corruption and ethics training,
which is a cyclical training provided every 3 years.
KGHM introduces anti-corruption clauses into contracts with business partners, whereby it provides access to the Anti-
Corruption Policy and commits partners to familiarise themselves with its content and respect its provisions.
Candidates applying for work in KGHM are made aware of the provisions of the Anti-Corruption Policy at the recruitment
stage via the eRekrutacja portal.
The extent of training provided to members of the administrative, management and supervisory bodies
The management staff, including chief executives, are trained in the manner envisaged for all employees. Separate,
dedicated, individual training courses are organised for Members of the Management Board, including training with
representatives of special services such as the Central Anti-Corruption Bureau and the Internal Security Agency .
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 79
Translation from the original Polish version
Number of convictions and amounts of fines for violation of anti-corruption and anti-bribery legislation
As part of the existing corruption risk management process, indicators used to assess the risk have been established,
including, among others, an indicator defined as “the number of corruption incidents resulting in a final conviction”.
Throughout 2022 and 2023 and up to the date of signing of this report, KGHM Polska Miedź S.A. has not recorded any
events according to the defined criteria.
Measures to address violations of anti-corruption and bribery procedures and standards
Pursuant to the Policy, the KGHM Polska Miedź S.A. Group emphasises its commitment to fighting corruption in business,
by way of adopting and uncompromising observance of the “zero tolerance for corruption” principle while ensuring
compliance with legal regulations and voluntary commitments for fighting corruption.
Following the principle that “prevention is better than cure”, the KGHM Group manages corruption risk, identifying and
eliminating factors which increase it by implementing adequate supervisory measures. Internal procedures in KGHM Polska
Miedź S.A. also regulate, among others, principles for dealing with business gifts, situations bearing the features of
corruption or conflicts of interest. Preventive measures also include regular training in the area of anti-corruption.
Each Employee and Representative, no later than within 30 days of his/her employment/establishment of cooperation with
an Organisational Unit in the KGHM Group, is provided with training organised by the Ethics and Anti-corruption
Representative during which he/she is provided with information on the risk of corruption and the approach applied in the
Organisational Unit to this risk. The Representative for Ethics and Anti-corruption shall organise a further training course
on the subject matter referred to above within 3 years of the initial training and thereafter repeat it periodically at 3-year
intervals.
The company organizes communication and educational activities aimed at increasing staff awareness. Guides are
published (ABC of Conflict of Interest, Anti-Corruption Guide), articles in the employee magazine Courier, including special
supplements (Whistleblowers, gifts) and educational films. There are poster campaigns and competitions, as well as events
with the participation of employees at workplaces.
Trainings
In accordance with the provisions of the internal KGHM Procedure: Corruption Risk Management, each Employee and
Representative of KGHM (i.e. any entity or person representing, on any legal basis, any of the Organisational Units of KGHM
(acting on their behalf or for their benefit) in contacts with Business Partners, state authorities and other interested parties
is obliged to confirm that they have been introduced into the Anti-corruption Policy and internal regulations in the area of
corruption risk management and undertake to comply with them in the form of a declaration. Each Employee and
Representative, no later than within 30 days of his/her employment/establishment of cooperation with an Organisational
Unit in the KGHM Group, is provided with training organised by the Ethics and Anti-corruption Representative during which
he/she is provided with information on the risk of corruption and the approach applied in the Organisational Unit to this
risk, in particular:
− circumstances in which corruption may occur in connection with the duties performed, how to recognise the
symptoms of corrupt activities and key corruption risk indicators, how to prevent, avoid and respond to corrupt
solicitations or offers, and the potential consequences of corruption;
− the role of Employees in ensuring the effectiveness of the Corruption Risk Management/Anti-corruption Action
Management System and the resulting benefits for the Organisational Unit and/or the KGHM Group as a whole;
− the potential consequences of failing to comply with the requirements of the Corruption Risk Management/Anti-
corruption Action Management System and violations of the Anti-corruption Policy and internal anti-corruption
regulations;
− paths of submitting comments and concerns regarding the functioning of the Corruption Risk Management/Anti-
corruption Action Management System and suspected breaches of the Anti-corruption Policy and regulations as
well as the benefits of reporting suspected corruption.
The Representative for Ethics and Anti-corruption shall organise a further training course on the subject matter referred to
above within 3 years of the initial training and thereafter repeat it periodically at 3-year intervals.
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 80
Translation from the original Polish version
2.5.6 Political influence and lobbying activities
[ESRS G1-5]
The KGHM Group carries out lobbying activities, but does not engage in activities related to exerting political influence.
Moreover, the Company did not make financial or in-kind contributions of a political or lobbying nature. Lobbying activities
in KGHM Polska Miedź S.A. are supervised by the Vice President of the Management Board (Corporate Affairs) and the
Executive Director for Legal Affairs.
The following table lists the main draft regulations to which KGHM has submitted comments, reservations or proposals for
change.
Table 21. Main topics subject to the lobbying activity
Topics
Name of the project
Environment
− Amendment to the Water Framework Directive (WFD), the Environmental Quality Standards Directive (EQSD)
and the Groundwater Directive (GWD)
− Draft Act on Revitalisation of the Odra River
− Draft regulation amending the regulation on substances particularly harmful to the aquatic environment
and the conditions to be met when discharging waste water into waters or into the ground, and when
discharging rainwater or snowmelt into waters or into water facilities.
− Draft regulation on unit rates of fees for water services.
− Revision of the Air Quality Directive
− Industrial Emissions Directive (IED)
− Proposal for Directive on soil monitoring
− Draft regulation on the assessment of the existence of a significant risk to human health or the environment
in the event of surface contamination.
− Regulation on Ecodesign for Sustainable Products (ESPR)
− Draft Resolution of the Council of Ministers on the establishment of a multi-annual program entitled
Comprehensive development of the Middle Odra River
Taxonomy
− European Union Stakeholder Request Mechanism on Taxonomy
− A delegated act concerning taxonomy, establishing additional technical eligibility criteria for determining the
conditions under which certain economic activities qualify as making a significant contribution to climate
change mitigation or adaptation, as well as determining whether the activity does not cause serious harm to
any other environmental goals
− Delegated act on taxonomy and technical qualification criteria aimed at determining the conditions under
which the economic activity qualifies as making a significant contribution to the sustainable use and
conservation of water and marine resources, to the transition to a circular economy, to pollution prevention
and control, or to the protection and restoration of biodiversity and ecosystems, as well as whether that
economic activity does not cause serious harm to any other environmental goals
Explosives for civil
use
− Draft Act on explosives for civil use
Social security
− Draft Regulation of the Minister of Family and Social Policy amending the regulation on the detailed
principles for determining the basis for the assessment of contributions for pension and disability insurance
Labour law
− Draft Act on the protection of whistleblowers
− Draft Act on collective labour disputes
Spatial planning
− Draft Regulation of the Minister of Development and Technology on the definition of a model form for the
application for a spatial planning act
− Draft Regulation of the Minister of Development and Technology concerning the method of preparing a
draft municipal general plan
− Draft Regulation of the Minister of Development and Technology on defining the form of the application for
establishing the location of a public purpose investment or development conditions
− Draft Act amending the Act on spatial planning and development and certain other acts
Taxes
− Draft Regulation of the Minister of Finance on additional data to be added to the books to be submitted
under the Act on Corporate Income Tax
− Act on Corporate Income Tax
− Act on the minerals extraction tax
Climate
− Proposal for a regulation - Net Zero Industry Act
− Industrial carbon management strategy
Mining
− Proposal for a regulation - Critical Raw Materials Act
− Draft regulation of the Minister of State Assets on mining and mine rescue qualifications
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 81
Translation from the original Polish version
Energy
− Support program for energy-intensive enterprises for 2023
− Draft Regulation of the Council of Ministers on providing information and data necessary for the execution
of investment in terms of construction of a nuclear energy facility and accompanying investments
− Draft Regulation of the Council of Ministers on the detailed scope of the preliminary assessment of the site
intended for the location of a nuclear energy facility
− Draft Regulation of the Ministry of Climate and Environment amending the Regulation on detailed principles
for shaping and calculating tariffs and settlements for heat supply
OHS
− Draft Directive of the European Parliament and of the Council amending Council Directive 98/24/EC and
Directive 2004/37/EC of the European Parliament and of the Council as regards limit values for lead and its
inorganic compounds and diisocyanates, COM (2023) 071
− Regulation of the Minister of the Family, Labour and Social Policy of 12 June 2018 on the maximum
permissible concentrations and intensities of factors harmful to health in the working environment,
− Draft Regulation of the Minister of Family and Social Policy amending the Regulation on health and safety at
work in workplaces equipped with screen monitors
Members of the management or supervisory bodies of the KGHM Group holding concurrently public administration
positions in 2023:
− Tomasz Zdzikot, President of the Management Board - by virtue of serving as the Chairman of the Team of Public
Advisors to the Minister of National Defence on Cyber Security from November 2021,
− Marek Wojtków, Member of the Supervisory Board - by virtue of acting in the capacity of Deputy Director of the
Regional Branch of the Agency for the Restructuring and Modernisation of Agriculture in Wrocław from 2019,
− Piotr Ziubroniewicz, Member of the Supervisory Board - by virtue of acting as the Vice President of the National
Real Estate Holding from January 2022.
2.5.7 Payment practices
[ESRS G1-6]
Payments with external entities are made by the Company in accordance with generally accepted legal regulations and on
the basis of internal regulations determined in the Principles of Financial Management and Economic System of KGHM
Polska Miedź S.A. Trade payables are settled on the last day of the term specified in the payment terms of the contract.
Delays in payments result mainly from decisions to withhold payments, in accordance with the terms of the contract and
instructions from the substantive unit of the division.
Withholding of payment occurs mainly when the counterparty has not provided the required contractual documents
necessary to launch the payment and is most often the result of lack of payment to the subcontractors executing the
contract.
Payment is launched upon receipt of statements that all financial obligations to the contractor's subcontractors have been
settled.
Delays in payment are also due to incorrectly entered data in the financial and accounting system or the submission of a
document for payment after its due date. These situations have an impact on the determination of the payment term and
occur occasionally.
KGHM Polska Miedź S.A. does not monitor the average time needed to settle an invoice from the date of commencement
of calculation of the contractual or statutory payment deadline.
Results in relation to payments
Entity
Average time of invoice
settlement by an entity
[days]
Number of court
proceedings currently
pending in relation to late
payments.
Number of court
proceedings currently
pending in relation to late
payments to SMEs
Percentage of payments to
suppliers made on time
(%)
KGHM INTERNATIONAL LTD.
26
1
1
91
KGHM Metraco S.A.
19
-
-
99.9
KGHM Polska Miedź S.A.
no data
-
-
99.99
KGHM ZANAM S.A.
45
18
1
100
NITROERG S.A.
57
-
-
95.6
PeBeKa S.A.
45
1
1
100
“Energetyka” sp. z o.o.
40
-
-
100
Total
-
20
3
-
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 82
Translation from the original Polish version
The Company uses contractual payment terms
Typical payment terms set out in contracts are payment terms within 30 or 60 days of receipt of the invoice. Due to the
volume of operations, the time of payment of trade payables to the main supplier of materials by
Mercus Logistyka Sp. z o.o. also plays a significant role - in accordance with the agreement in force, a payment term of 14
days applies.
Number of legal proceedings currently pending due to delays in payment
KGHM Polska Miedź S.A. maintains records of disputes, including those arising from potentially unsettled payments. From
the point of view of ongoing litigation, however, it is difficult to assess that KGHM has not settled payments to suppliers, as
external parties lodge claims for a variety of reasons, and the question of whether or not claims are settled shall be decided
by the court in the course of proceedings.
Supplementary information
At the stage of implementation of transfers by the finance unit, all documents authorised for payment passed substantive
and accounting verification. No incidents of deliberate withholding of payments have been recorded, e.g. due to liquidity
problems.
2.6 INFORMATION ON SOURCES OF SUPPLY OF MATERIALS USED IN PRODUCTION, IN GOODS AND
SERVICES
In the area covered by the Procurement Policy in the Group, KGHM Polska Miedź S.A. cooperated with 4 507 suppliers in
2023 (the number of bidders participating actively in procurement proceedings), of which 3 016 suppliers were selected to
perform deliveries.
Share of foreign contractors in the total pool of suppliers - number of foreign suppliers in 2023 - 2 248, of which 339
suppliers were selected for realisation.
KGHM Polska Miedź S.A. cooperates with various groups of counterparties, i.e. intermediaries, wholesalers, distributors
and direct suppliers. Moreover, within the Group, KGHM Polska Miedź S.A. uses Logistics Operator services – specialized
companies performing procurement functions (Mercus Logistyka sp. z o.o., KGHM Metraco S.A., “Energetyka” sp. z o.o.).
In 2023, there were no significant changes in sources of procurement of materials for production, commodities and services
for KGHM Polska Miedź S.A.
The ratio of all registered suppliers to the local suppliers having “the registered office in the territory of the Lower Silesia
voivodship” is 15 941 against 3 665.
KGHM Polska Miedź S.A. also reinforces its market position as a reliable and ethical business partner by caring for social
issues. In the area of procurement to which this Policy applies, the Company also makes efforts to ensure that the
contractors cooperating with it meet the requirements of business ethics and are socially responsible counterparties.
2.7 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. (value of purchases: gross amount of PLN 6 316 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 2023, the production
of electrolytic copper from purchased copper-bearing materials amounted to 206.8 thousand tonnes, which represented
35% of total electrolytic copper production.
For the most part, this production came from copper scrap (146.2 thousand tonnes of copper, 25% of total
electrolytic copper production), which is supplied to the metallurgical plants of KGHM Polska Miedź S.A. by KGHM
Metraco S.A. - a 100% subsidiary of the Parent Entity.
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
from sales of this company to KGHM Polska Miedź S.A. are significant and represent 22% of KGHM Polska Miedź S.A.’s sales
revenue and 19% of sales revenue of the Group.
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 83
Translation from the original Polish version
2.8 SIGNIFICANT CONTRACTS FOR THE COMPANY AND GROUP
23
3 January 2023
KGHM Polska Miedź S.A. signed a contract with Nexans France for the supply of copper cathodes for the years
2023-2027, with an option of an automatic extension of the contract for subsequent five-year periods. The contract
provides for annual deliveries of almost 22.8 thousand tonnes to 27.8 thousand tonnes of cathodes. The value of the
contract is estimated at PLN 4.53 billion to PLN 5.54 billion, depending on the quantitative option used.
28 February 2023
KGHM Polska Miedź S.A. concluded the contract with Vale International SA for the purchase of Cu Salobo
concentrates in the years 2023-2027. The value of the contract is estimated at PLN 8.4 billion to PLN 9.5 billion,
depending on the quantitative option used. The contract provides for annual deliveries of almost 80 thousand tonnes
to 100 thousand tonnes of dry weight.
7 August 2023
KGHM Polska Miedź S.A. concluded the contract with the NKT Group for the purchase of copper wire rod in the years
2023-2027. The value of the transaction will range from PLN 9.6 billion to PLN 14.2 billion depending on options
regarding the volume and term of the contract. The contract provides for an extension option to 2028 requiring
agreement by both parties.
6 November 2023
KGHM Polska Miedź S.A. Signed the 5-year framework agreement for the sale of copper cathodes to China Minmetals
in the years 2024-2028. This is another framework contract with this counterparty. The contract covers the sale of
copper cathodes in the total volume of 250 thousand tonnes to 600 thousand tonnes (in annual quantities from 50
thousand tonnes to 120 thousand tonnes). The estimated value of the 5-year contract ranges from PLN 8.4 billion to
PLN 20.3 billion.
In addition, on 11 January 2024, a long-term sales contract was signed with one of the largest customers of copper wire rod
– the Prysmian S.p.A. Group. The minimum value of the contract is estimated at USD 1.73 billion (PLN 6.88 billion), while
the maximum value at USD 2.46 billion (PLN 9.77 billion). The contract is a continuation of a long-standing cooperation with
the Prysmian Group.
2.9 INFORMATION ON TRANSACTIONS ENTERED INTO BETWEEN RELATED PARTIES, UNDER OTHER
THAN ARM’S LENGTH CONDITIONS
In 2023, neither the Parent Entity nor its subsidiaries entered into related party transactions under other than arm’s length
conditions.
23
Values of contracts based on metal listings and currency exchange rates estimated on the date of contract signing
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 84
Translation from the original Polish version
2.10 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 calculation
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
amounted 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 application 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 judgement 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 approx. PLN 30 million, totalling to PLN 54 million. Both parties to the proceedings
appealed against this judgement.
In a judgement dated 12 June 2019, the Court of Appeal in Wrocław dismissed the appeals of both sides, altering the
judgement of the court of first 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 judgement is binding and was executed by
KGHM on 18-19 June 2019. KGHM Polska Miedź S.A. filed a cassation appeal against the judgement 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 of KGHM was accepted for examination. In a judgement dated 24 November 2022 the Supreme
Court overturned the disputed judgement and ordered the case to be reheard. The case is pending before the Court
of Appeal in Wrocław.
The case files were forwarded to the Court of Appeal in Wrocław and registered under the new reference number I
ACa 52/23. In view of the fulfilment of the obligation - no basis for creating a provision exist. By letters dated 28 April
and 4 May 2023 and additionally by a letter dated 25 May 2023, the plaintiffs submitted a response to the restitution
request contained in the preparatory letter of KGHM Polska Miedź S.A. dated 4 May 2023, to which the declarations
of the Plaintiffs on the disposal of cash obtained from the payment of receivables adjudicated by court judgements of
the first and second instance were attached. By letter dated 13 June 2023. KGHM Polska Miedź S.A. requested the
return of the reply to the application for restitution filed without the required order of the presiding judge or to be
allowed to file a preparatory pleading as a reply to the application, which in turn was opposed by the Plaintiffs by a
pleading dated 30 June 2023.
By a ruling dated 27 October 2023, the Court of Appeal in Wrocław decided to request the Supreme Court to interpret
the judgement dated 24 November 2022 (file ref. III PSKP 10/22) regarding the scope of the revocation of the
judgement of the Court of Appeal dated 12 June 2019 (file ref. I ACa 547/18) by indicating whether the revocation
includes in paragraph II of the Court of Appeal's judgement only the ruling to the extent of dismissing the defendant's
(counterclaimant's) appeal. On 17 November 2023, the lead plaintiffs' application to reassess this order was dismissed.
The case will now be referred to the Supreme Court for interpretation of the decision of this court made in the case.
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 project 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, whose 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 supplied 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 judgement
of the Supreme Court dated 24 November 2022, which indicates the lack of cause to enter into an annex enabling the
payment of additional remuneration to the Plaintiffs.
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 85
Translation from the original Polish version
3 CORPORATE GOVERNANCE STATEMENT
3.1 INDICATION OF LEGAL BASIS AND COLLECTION OF CORPORATE GOVERNANCE PRINCIPLES AND
THE SCOPE OF THEIR APPLICATION
The following Statement on the application of Corporate Governance was prepared in accordance with § 70 sec. 6 point 5
of the Regulation 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., a company listed on the Warsaw Stock Exchange S.A., in the period from 1 January 2023 to 31
December 2023, complied with the corporate governance principles determined in the document “Best Practice for GPW
Listed Companies 2021” (hereinafter DPSN 2021), which was adopted by the Exchange Supervisory Board on 29 March 2021
by Resolution No. 13/1834/2021. The text of the principles is available on the official website of the Warsaw Stock Exchange
dedicated to this subject 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.
In order to increase interest in the topic of corporate governance and shareholder involvement in companies’ affairs, the
Warsaw Stock Exchange has created a benchmarking exercise for companies that have provided information on the current
status of application of the DPSN 2021 principles via the EBI system. The COMPLY factor used for this purpose was defined
as a ratio of principles used to the total number of principles used and not used (“not applicable” responses are not included
in the calculation). KGHM Polska Miedź S.A. applies the principles of the DPSN 2021 at a comparable level as declared by
the companies included in the WSE index, or taking into account all companies that have published a report.
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 the contents of the DPSN 2021 to the greatest possible extent, taking into account the
principles of proportionality and adequacy and the specific nature of the industry.
As part of increasing the level of compliance with corporate governance principles and in fulfilment of the disclosure
obligations of listed companies with respect to the application of corporate governance rules set out in § 29 sec 3 of the
Warsaw Stock Exchange Rules, on 20 October 2023 KGHM Polska Miedź S.A. published the updated “Statement on the
company's compliance with the corporate governance principles contained in Best Practice for GPW Listed Companies
2021”. The update of the declaration "the principle is not applied" and "the principle is applied" concerned principle 3.5.
"Persons responsible for risk and compliance management report directly to the president or another member of the
management board." Consequently, in 2023, KGHM Polska Miedź S.A. increased its COMPLY factor by two percentage
points in relation to the Statement of compliance with Corporate Governance contained in the Report of the Management
Board on the activities of KGHM Polska Miedź S.A. and the KGHM Polska Miedź S.A. Group in 2022.
Diagram 23. COMPLY ratio by KGHM Polska Miedź S.A.
Company
79%
Change
+2pp
WSE index
79%
General
78%
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 86
Translation from the original Polish version
Diagram 24. Corporate governance structure in KGHM Polska Miedź S.A.
3.2 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.
3.2.1 Description of the application of DPSN 2021 – Information policy and communication with
investors
KGHM Polska Miedź S.A., as a listed Company, systematically uploads to its website in the Investors section current and key
information of importance to investors as well as other questions related with broadly understood 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.
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. This section is updated
on an ongoing basis with vital information and documents. The Investors section 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.
Taking into consideration the proper meeting of requirements for 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).
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 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 and 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 individual 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,
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 87
Translation from the original Polish version
− 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 each category: “buy”, “hold”, “sell”, with
contact data for analysts covering the Company,
− information concerning operations on the company’s shares and changes in share capital,
− 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 Individual
Investor Days and Analyst Days,
− 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 strategy, measurable goals, including especially long-term goals, planned actions and progress in this regard,
defined with the aid of financial and non-financial measures.
Moreover, in 2023, the Company carried out intensive activities in terms of communication with investors:
Investor
conferences in
Poland and
abroad
The Company actively met with investors and analysts in Poland and abroad during conferences organised by
brokers. In 2023, 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.
Result
conferences
The Investor Relations Department organised meetings with the Management Board to discuss the financial results
of the Company and the Group. In 2023, the publication of financial results was accompanied by results
conferences open to all stakeholders via live 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 in the section
Investors.
Capital Market
Days
In November 2023, the Investor Relations Department organised an Analyst Day at the Company. The invited
guests went down to the Polkowice-Sieroszowice mine. They subsequently attended management presentations
and a panel discussion at the Company Head Office. The panel discussed topics comprising risk management, the
macroeconomic environment, controlling in the core business and the development of the Company's domestic
resource base. A video recording of the event is available on the Company’s website in the section Investors.
Capital market
events
The Company participated in events organised by institutions of the Polish capital market, which are aimed at
increasing investors’ knowledge:
− WallStreet 27 Conference of the Association of Individual Investors: representatives of the Company actively
participated in the conference, delivering a keynote lecture and providing an interview for the quarterly
magazine "Shareholder";
− Finance and Investment Forum of the Association of Individual Investors: during the Forum, representatives
of the Company provided answers to numerous questions from participants at the KGHM stand;
− 14th Investor Relations Congress of the Association of Stock Exchange Issuers: during the Congress,
representatives of the Investor Relations Department conducted a workshop entitled: “Investor relations in
practice”.
Investor chats
Representatives of the Company were available to individual investors during on-line investor chats. They were
organised on a regular basis following the publication of the Company’s results. In 2023, four investor chats were
held.
ESG
The Company continued its participation in ESG processes (indicators and management of identified
environmental, social and corporate governance topics) in accordance with the adopted Strategy of the KGHM
Polska Miedź S.A. Group to the year 2030 with an outlook to 2040. Communication activities with the capital market,
investors and rating agencies were carried out in this area. An expression of company’s concern for stakeholders
is the creation and continuous development of our ESG section on the corporate website of the Company, which
is dedicated to broadly understood ESG issues and facilitates access to any information related to sustainable
development and integrated reporting by KGHM Polska Miedź S.A.
In 2023, KGHM once again participated in the CDP initiative
24
and provided a wide range of information, including
Scope 3 emissions of the KGHM Polska Miedź S.A. Group. In response to the global challenge of the growing threat
posed by climate change, KGHM has committed to providing expanded environmental impact information in line
with EU regulations and international initiatives, including CO
2
emission reporting, and has set greenhouse gas
reduction targets in the perspective of 2030 and 2050. An expression of the Company’s commitment is, among
others, the certification awarded to its all three metallurgical plants under the prestigious Copper Mark program.
In 2022, the Company published environmental and carbon footprint analyses for its products, i.e. cathodes, wire
rod and Cu-OFE rod. The analyses were carried out by the Institute of Mineral and Energy Economy of the Polish
Academy of Sciences and confirm that KGHM's smelters (Legnica Copper Smelter and Refinery, Głogów Copper
24
CDP - formerly, Carbon Disclosure Project, an international non-profit organisation that collects information on greenhouse gas
emissions and emission reduction efforts.
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 88
Translation from the original Polish version
Smelter and Refinery, Cedynia Wire Rod Division) produce metals in a responsible way and in accordance with the
highest standards. Moreover, the analysis implies that KGHM’s copper products have a footprint lower than the
global average.
The life cycle analysis was carried out in accordance with ISO 14040, ISO 14044, ISO 14067; in addition,
environmental declarations (type II - so-called self-declared environmental statements) were prepared for selected
products in accordance with PN-EN ISO 14021, which were independently verified.
In addition, as part of its continuous improvement and due diligence, the Company updated KGHM’s Policies in
2023, including the Health and Safety Policy, Anti-Corruption Policy, Environmental Policy and Energy Policy, based
on ISO standards, and issued the first edition of the Tax Policy. The Company also published, as a part of the ISMS
implementation - the Information Security Policy in accordance with ISO 27001 and as a part of the BCMS
implementation - the Business Continuity Management Policy in accordance with ISO 22301.
In order to maintain the highest levels of care, transparency and compliance with best practices of the capital
market, the Investor Relations Team regularly responds to surveys, questionnaires and inquiries concerning ESG,
among others from: Sustainalytics
25
, CDP, FTSE Russell, MSCI, WOOD, Refinitiv, Vigeo Eiris.
Quarterly IR
Newsletter
The initiative to publish the Investor Newsletter - an electronically distributed summary of the quarter's most
important events to subscribers was continued. The goal of the publication 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
The Company maintains a dedicated KGHM Investor Relations profile for investors and analysts, available on the
LinkedIn social media platform. On this profile, the Investor Relations Department publishes information that may
be of interest to capital market participants.
IR Release
The IR Release is a communication tool that provides information for investors and analysts on important events
for the Company and Group. The IR Release is made available after each disclosure of the quarterly results and
distributed in electronic form and is available to all stakeholders on the Company’s corporate website.
Awards and prizes in 2023 for activities related to communication with investors and presence in the capital market:
Hero of the Capital
Market
KGHM Investor Relations won in the listed company category for best investor relations among WIG20 and
mWIG40 companies.
The Best of The
Best
The Institute of Accounting and Taxes granted annual awards to companies preparing the best consolidated
annual reports. KGHM was one of the companies awarded. In addition, the Company received a special distinction
for The Best of The Best winner and for the Integrated Report for 2022.
In 2023, analytical reports concerning KGHM Polska Miedź S.A. were prepared by 9 "sell-side" analysts from Poland and 8
from abroad.
Table 22. List of brokerage houses preparing 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
25
Sustainalytics - an international analytical company specialising in providing sustainability assessments and ESG risk analysis.
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 89
Translation from the original Polish version
3.2.2 Clauses of DPSN 2021 not complied with
In accordance with the published Statement on the Company’s compliance with the principles contained in section 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
solutions 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 taken 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. The Company in future will provide 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 resulting 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
solutions in this regard.
3.3 THE MANAGEMENT BOARD AND THE SUPERVISORY BOARD
KGHM Polska Miedź S.A., acting under the principles set forth in section 2 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
to fulfil them in an effective manner.
3.3.1 Description of the application of DPSN 2021 – the Management Board of KGHM Polska Miedź
S.A. (the Management Board)
The principles of appointing and dismissing 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 term of office of the Management Board is three consecutive years. 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 of KGHM Polska Miedź S.A. 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 not 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 are publicly available on the website of the Company in the section 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
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 composition 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
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 90
Translation from the original Polish version
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
meetings shall be recorded. 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.
Composition and Personnel changes of the Management Board and the breakdown of duties
From 1 January 2023 to 31 December 2023, there were no changes in the personnel composition of the Management Board
of the Company which was as follows:
− Tomasz Zdzikot President of the Management Board,
− Mateusz Wodejko Vice President of the Management Board (Finance),
− Mirosław Kidoń Vice President of the Management Board (International Assets) and Acting Vice
President
26
of the Management Board (Development),
− Marek Świder Vice President of the Management Board (Production),
− Marek Pietrzak Vice President of the Management Board (Corporate Affairs).
Moreover, the following changes in the composition of the Management Board of the Company took place after the balance
sheet date:
9 January 2024
Marek Świder resigned from the function of the Vice President of the Management Board (Production) of KGHM Polska
Miedź S.A., and therefore from his membership of the Management Board of KGHM Polska Miedź S.A.
27
13 February
2024
The Supervisory Board of the Company dismissed the following persons from the Management Board of KGHM Polska
Miedź S.A.: Tomasz Zdzikot, Mateusz Wodejko and Marek Pietrzak.
At the same time, the Supervisory Board of the Company delegated a member of the Supervisory Board - Zbigniew
Bryja, to act temporarily as the President of the Management Board of KGHM Polska Miedź S.A., Vice President of the
Management Board (Finance) of KGHM Polska Miedź S.A, Vice President of the Management Board (Corporate Affairs)
of KGHM Polska Miedź S.A. and Vice President of the Management Board (Development) of KGHM Polska Miedź S.A.
for the period from 13 February 2024 until the date of the resolution of the qualification procedures for the position
of President of the Management Board of KGHM Polska Miedź S.A. and at least one of the Vice Presidents of the
Management Board of KGHM Polska Miedź S.A., however for a period not longer than three months.
6 March 2024
Zbigniew Bryja resigned from his position as a Member of the Supervisory Board of KGHM Polska Miedź S.A. and from
temporarily performing the functions of President of the Management Board of KGHM Polska Miedź S.A., Vice
President of the Management Board (Finance) of KGHM Polska Miedź S.A., Vice President of the Management Board
(Corporate Affairs) of KGHM Polska Miedź S.A. and Vice President of the Management Board (Development) of KGHM
Polska Miedź S.A. and simultaneously he resigned from the function in the Supervisory Board.
The Supervisory Board of the Company appointed the following persons to the Management Board of KGHM Polska
Miedź S.A.:
− Andrzej Szydło, by granting him the function of the President of the Management Board,
− Piotr Stryczek, by granting him the function of the Vice President of the Management Board (Corporate Affairs),
− Mirosław Laskowski, by granting him the function of the Vice President of the Management Board (Production),
− Zbigniew Bryja, by granting him the function of the Vice President of the Management Board (Development),
− Piotr Krzyżewski, by granting him the function of the Vice President of the Management Board (Finance).
29 March 2024
Mirosław Kidoń resigned from the function of Vice President of the Management Board (International Assets) of KGHM
Polska Miedź S.A., and thus from membership in the Management Board of KGHM Polska Miedź S.A., as of 1 April
2024.
After the above-mentioned changes, from 1 April 2024 the composition of the Management Board of the Company presents
as follows:
− Andrzej Szydło President of the Management Board,
− Piotr Stryczek Vice President of the Management Board (Corporate Affairs),
− Mirosław Laskowski Vice President of the Management Board (Production),
− Zbigniew Bryja Vice President of the Management Board (Development),
− Piotr Krzyżewski Vice President of the Management Board (Finance).
26
From 2 January 2023 to 11 January 2024 . Up to 1 January 2023 this function was held by Tomasz Zdzikot.
27
As a result of the resignation of Marek Świder, from 11 January 2024 the duties of the Vice President of the Management Board
(Production) were performed by the Vice President of the Management Board, Mirosław Kidoń. Due to the temporary assignment of the
duties of Vice President of the Management Board (Production) of KGHM Polska Miedź S.A. to Mirosław Kidoń, the Supervisory Board
assigned the duties of the Vice President of the Management Board (Development) to Mateusz Wodejko, Vice President of the
Management Board (Finance), as of 12 January 2024.
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 91
Translation from the original Polish version
The distribution of competence in the Management Board as at 31 December 2023 and as at the day of signing the report
is presented in Diagram 13. Management structure of KGHM Polska Miedź S.A.
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 rights 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 of KGHM Polska Miedź S.A. on the assignment of responsibilities to a
given Management Board Member. Within terms of the competences and responsibilities thus defined, each Member of
the Management Board makes his/her own decisions regarding the area assigned to him/her. 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 activity and maintain loyalty to the Company.
Biograms of Members of the Management Board
Andrzej Szydło
President of the
Management Board
A graduate of the Faculty of Mechanical and Power Engineering at Wrocław University of Science and Technology,
as well as the School for Managers in Industry and Studies in Strategic and Operational Corporate Management.
Completed post-graduate studies in managing corporate value at the SGH Warsaw School of Economics.
An experienced manager specialising in management and the implementation of innovative solutions, as well as
the realisation of investment and maintenance projects. Among others he has been involved in implementing ISO-
based management and also Integrated Management Systems. Skilled in conducting negotiations and managing
projects using Prince2 and Ten Step methodology. He has enhanced his know-how during training in the areas of
strategy, labour law and HR. He participated in the KGHM Executive Academy organised by IMD.
Since 2021 he has been a member of the management board of Hyundai Engineering Poland, and previously a
member of the management board of SPS Inscon Sp. z o.o. Since the start of his professional career he has been
involved with KGHM Polska Miedź S.A., where he progressed from shift master at the Głogów Copper Smelter and
Refinery, to manager of the heat and power plant, head of the power unit, technical director and executive director
of this division. In the years 2010 – 2014 he worked in the Head Office of KGHM Polska Miedź S.A. as a director of
the production infrastructure department, a director of the technology department and a director of the
Pyrometallurgy Modernisation Program. He was also chairman and later secretary of the Supervisory Board of one
of the KGHM Polska Miedź S.A. Group’s companies, Energetyka Sp. z o.o.
He is a recipient of a Bronze Service Star, a Bronze Service Medal for Fire Fighting and a Silver Medal „Za Zasługi
dla Obronności Kraju” (Medal of Merit for National Defence). He also received an honorary award from the Minister
of the Economy „Za zasługi dla Energetyki” (Medal of Merit for Energy). In 2006 he received the honorary award
“Zasłużony dla KGHM Polska Miedź S.A.” (In the Service of KGHM Polska Miedź S.A.).
Zbigniew Bryja
Vice President of the
Management Board
(Development)
An experienced manager specialising in the mining sector, especially in the management of companies, production
oversight, supervision of investment activities as regards mining and metallurgy, as well as oversight of mine
operations.
Working for KGHM since the start of his professional career. In the years 1995-1997 he served in the Rudna mine
of KGHM Polska Miedź S.A. as the Chief Engineer for Orebody Mechanics and Development, subsequently in the
years 1997-2002 as the Director for Development and Production Preparation in this mine. He held the position
of Executive Director of the Polkowice-Sieroszowice mine in the years 2002-2003. From 2003 to 2006 he worked in
the Office of the Management Board of KGHM Polska Miedź S.A. (currently the Head Office) as the Executive
Director for Mining, and later as the Executive Director for Investments and Development. In recent years he was
President of the Management Board of the following companies: PAK KWB Adamów S.A., PAK KWB Konin S.A., PAK
Górnictwo sp. z o.o.
He has many years of professional experience in managing corporations, production and in the area of mining
technology. He gained experience in improving production processes and investment projects both in KGHM and
outside of the Group.
He is a graduate of the Mining Faculty of Wrocław University of Science and Technology with a specialty in deposits
mining technology, as well as mine geophysical studies at the AGH University of Science and Technology in Kraków.
He completed a variety of managerial courses in international academic institutions involving the improvement of
investment and financial processes in companies.
He is the author and co-author of numerous articles and publications in areas in which he specialises.
He holds the title of General Mine Director, 1st, 2nd and 3rd degree, granted by the Minister of the Economy. He
was honoured by the President of the Republic of Poland with the Bronze, Silver and Gold Service Cross. He also
received the honorary titles of „Zasłużony dla KGHM Polska Miedź S.A.” (Of service to KGHM Polska Miedź S.A.) and
„Zasłużony dla ZG „Rudna” (Of service to the Rudna mine). In the years 2002-2005 he was appointed by the
President of the Supreme Mining Office as a Member of the Commission on Tremors, Restoration and Corridor
Direction in Copper Ore Mines, and in the years 1998 – 2000 as a Member of the Commission on Restoration of
Corridors and Pillars.
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 92
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Piotr Krzyżewski
Vice President of the
Management Board
(Finance)
A manager with many years of experience in both the production and investment sectors. Experienced in the
management of companies, groups and finance in developed groups. Specialises in the evaluation of the
profitability of investments, restructuring and optimising processes, managing financial risk, managing liquidity
and developing and executing financing strategies.
He is a graduate of the SGH Warsaw School of Economics with a major in finance and banking as well as
international economic relations. Completed doctoral studies in economics. Holds a broker license and completed
numerous courses and training in the areas of team management, crisis management, communication and
international cooperation.
In the years 2006-2014 he managed the area of finance in the company Polski Holding Obronny, and subsequently
served as the President of ARP Venture. In the years 2016-2018 he was an advisor to the Management Board and
CFO in the company Edge One Solutions. From 2018 to 2022 he was a Member of the Management Board of Luma
Holding Ltd. (family office), as well as a Member of the Investment Committee. He was involved in the supervising
of comprehensive finances of a group in Poland and abroad. From 2022 he worked as director of the financial office
of the WIG20 company JSW S.A., where among others he was responsible for company and group liquidity,
exchange rate hedging and financial supervision of key investments.
He created a business model, created and managed a second-round fund in Poland. He built and obtained the first
Sustainability Linked-Loan (SLL) in Central and Eastern Europe, and one of the first in the European mining sector.
He holds managerial experience in the mining and metallurgical sector in Europe and Africa. He carried out
numerous trade finance transactions with partners on various continents.
He is experienced in negotiations, due diligence and the conduct and supervision of acquisitions of companies in
Poland and abroad. A member of Supervisory Boards and Investment Committees – responsible for the processes
of merger, restructuring and optimisation as well as the setting of development directions.
Mirosław Laskowski
Vice President of the
Management Board
(Production)
Since the start of his professional career in 1987 he has been connected with KGHM Polska Miedź S.A. In the years
2015-2016 he served as Vice President of the Management Board (Production) of KGHM Polska Miedź S.A. He was
a Director in the following Divisions of the Company: the Rudna mine and the Polkowice-Sieroszowice mine. An
experienced manager with successes in the management of large employee teams, responsible for implementing
solutions supporting business efficiency and optimising company costs. Responsible among others for planning
the development of the core business and for seeking and implementing new technologies and methods for
managing organisational structures in the copper company.
He has many years of experience in preparing corporate development plans with a 40-50 year outlook. Actively
participated in the implementation of Lean Management systems based on 5S and TPM. He is a co-creator of
several copper ore deposit mining systems and is the originator and co-creator of KGHM’s unified safety system
based on 3 pillars: education, environment and health. He created in the copper company solutions involving the
prevention of mine-related threats. He was also responsible for leading numerous rescue operations.
He received the Knight's Cross of the Order of Polonia Restituta for the rescue operation in the Rudna mine in
March 2013.
A graduate of the Faculty of Mining, with specialisation in deposit mining technology at Wrocław University of
Science and Technology. Also completed post-graduate studies in financial management and organisation and
management at Wroclaw University of Economics. He gained experience in the Leadership Academy and the
Innovation Academy of the ICAN Institute and in the TenStep Academy in Warsaw.
In the years 2017-2018 he was a member of the Gas and Geodynamics Hazard Committee appointed by the
President of the State Mining Authority. Since November 2018 he has been a member of the Hazards Committee
under the President of the State Mining Authority.
Piotr Stryczek
Vice President of the
Management Board
(Corporate Affairs)
He holds experience in the conduct of business activities, strategic consultancy and corporate supervision.
Specialises in corporate developmental restructuring and equity investments.
From 2015 he was president of the management board of Automatyka Spółka z o.o., a company involved in the
comprehensive implementation of new, and the maintenance of existing, production line control systems based
on modern solutions by global producers. Involved with KGHM Polska Miedź S.A., where he worked among others
as director of the corporate supervision department. Carried out the processes of asset and equity restructuring
in KGHM Polska Miedź S.A. and supervised Group companies. In the years 2002-2006 he was a vice president of a
company in the KGHM Group, Pol-Miedź Trans Sp. z o.o. During his professional career he also held managerial
functions in the companies Telefonika S.A. and TELBESKID.
A graduate of the Faculty of Law and Administration at Wrocław University majoring in law and administration,
specialising in management. He is an Attorney-at-law. He has completed a variety of courses and training in the
areas of accounting, strategic communication and equity acquisitions.
He was a member of the supervisory boards and management boards of many limited companies, including in the
Legnica Special Economic Zone, Zagłębie Lubin, KGHM Metale and Krakowska Fabryka Kabli.
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.
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 93
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3.3.2 Description of the application of DPSN 2021 – 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 members elected by employees of the KGHM Polska Miedź S.A. Group. 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.
Composition and personnel changes of the Supervisory Board in 2023
In the period from 1 January 2023 to 31 December 2023, there were no changes to the composition of the 11
th
term
Supervisory Board of KGHM Polska Miedź S.A. which in this period was as follows:
− Agnieszka Winnik-Kalemba Chairwoman of the Supervisory Board
− Katarzyna Krupa Deputy Chairwoman of the Supervisory Board
− Wojciech Zarzycki Secretary
− Andrzej Kisielewicz
− Marek Wojtków
− Radosław Zimroz
− Piotr Ziubroniewicz
members elected by employees of the KGHM Polska Miedź S.A. Group:
− Józef Czyczerski
− Przemysław Darowski
− Bogusław Szarek
On 13 February 2024, the Extraordinary General Meeting of KGHM Polska Miedź S.A.:
− dismissed the following persons from the composition of the Supervisory Board of the Company: Andrzej
Kisielewicz, Katarzyna Krupa, Agnieszka Winnik-Kalemba, Marek Wojtków, Wojciech Zarzycki, Radosław Zimroz
and Piotr Ziubroniewicz, as well as
− appointed the following persons to the composition of the Supervisory Board of KGHM Polska Miedź S.A.:
Zbigniew Bryja, Aleksander Cieśliński, Zbysław Dobrowolski, Dominik Januszewski, Tadeusz Kocowski, Marian
Noga and Piotr Prugar.
In addition, on 6 March 2024, Zbigniew Bryja resigned from the membership in the Company's Supervisory Board.
Following the above changes, the composition of the Supervisory Board is as follows:
− Tadeusz Kocowski Chairman of the Supervisory Board
− Marian Noga Deputy Chairman of the Supervisory Board
− Aleksander Cieśliński
− Zbysław Dobrowolski
− Dominik Januszewski
− Piotr Prugar
members elected by employees of the KGHM Polska Miedź S.A. Group:
− Józef Czyczerski
− Przemyslaw Darowski
− Boguslaw Szarek Secretary
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 are publicly available on the website of the Company in section Corporate governance.
The Supervisory Board shall select from among its members a Chairman of the Supervisory Board, his Deputy and, if
necessary, a Secretary.
For resolutions of the Supervisory Board to be valid it is required that all Members of the Supervisory Board be invited to a
meeting and that resolutions be adopted by an absolute majority of votes, in the presence of at least one-half of the
members. The voting is open, unless the law provides otherwise or any Members of the Supervisory Board requests a
secret ballot.
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 94
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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 during adopting the resolution of at least
one-half of the Members of the Supervisory Board.
Meetings of the Supervisory Board and meetings and votes on resolutions adopted outside of Supervisory Board meetings
shall be recorded. 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 2023, 6 meetings of the Supervisory Board were held.
The absence of Members of the Supervisory Board was incidental and did not affect its work. In 2023, the Supervisory Board
adopted five resolutions to justify the absence of a Member of the Supervisory Board at the meeting. The attendance rate
of individual Supervisory Board Members in 2023 was as follows: Agnieszka Winnik-Kalemba (100%), Katarzyna Krupa
(100%), Wojciech Zarzycki (100%), Andrzej Kisielewicz (83%), Marek Wojtków (100%), Radosław Zimroz (83%), Piotr
Ziubroniewicz (67%), Bogusław Szarek (83%), Przemysław Darowski (100%), Józef Czyczerski (100%).
Qualifications and experience of Members of the Supervisory Board and their independence
The Supervisory Board is the permanent supervisory authority of KGHM Polska Miedź S.A., in all of the Company’s
operational 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. are available on the Company website in the
section Corporate Governance. The Members of the Supervisory Board should, in performing their duties, exercise the due
diligence arising from the professional nature of their activities as well as loyalty towards the Company.
As at 31 December 2022 and 31 December 2023, the following Members of the Supervisory Board: Agnieszka Winnik-
Kalemba, Wojciech Zarzycki, Andrzej Kisielewicz, Piotr Ziubroniewicz, Radosław Zimroz and Marek Wojtków, had 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).
As at the date of signing the report, the following Members of the Supervisory Board: Tadeusz Kocowski, Aleksander
Cieśliński, Dominik Januszewski, Marian Noga, Piotr Prugar and Zbysław Dobrowolski had 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).
Biograms of Members of the Supervisory Board
Tadeusz Kocowski
Chairman of the
Supervisory Board
Professor, habilitated doctor of law. Professor and a former Head of the Department of Economics Law of the
Faculty of Management of Wrocław University of Economics and Business. A retired professor of Wrocław
University, a former director of the Institute of Administrative Studies and a Head of the Department of Public
Economic Law of the Faculty of Law, Administration and Economics of Wrocław University.
He is the author or co-author of around 200 academic publications, among others: Administracyjne prawo
gospodarcze (Administrative economic law), Publiczne prawo gospodarcze (Public economic law), Reglamentacja
działalności gospodarczej w polskim administracyjnym prawie gospodarczym (Rationing of economic activities in
Polish administrative economic law), Prawo dla ekonomistów (Law for economists), Zamówienia publiczne jako
przedmiot regulacji prawnej (Public procurement as a subject of regulations), Prawo geologiczne i górnicze
(Mining and geological law). He promoted 10 doctors of law, prepared 11 reviews of doctoral theses and
participated in 4 postdoctoral dissertations. Co-author of joint studies of the Wrocław University and Wrocław
University of Economics and Business, the graduates of which receive diplomas of both universities, entitled
Legal and Economic Consulting.
At the end of the last century, and currently as well, he actively participates in the process of economic
transformation. Initially in affairs of a self-governing state-owned company and the self-government of its
employees, restitution of commercial companies and local self-governments engaged in economic activities and
subsequently in economic freedom and organisational-ownership changes. In the years 90-92 he cooperated
with KGHM Polska Miedź S.A. in the process of transforming the combine.
He was an advisor in the Economic Development Section of the Voivodeship Office in Wrocław, a member of the
Self-Government Appeal Court. He is an arbitrator in the Wrocław Center of Arbitration at the District Barristers
Council in Wrocław. He is related with the issues of public procurement and public-private partnerships. He
participated in the creation of regulations on safety and fire protection, organiser of many academic conferences
on this topic.
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 95
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Marian Noga
Deputy Chairman of
the Supervisory Board
Professor of economic sciences, he served as rector of Wrocław University of Economics and Dean of the Faculty
of National Economy at the same university. In the years 2000-2004 he was a Senator of the 4th and 5th terms
of the Republic of Poland. He was a member of the Monetary Policy Council in the years 2004-2010. Chairman of
the Committee on Economic Sciences of the Polish Academy of Sciences in the years 2007-2014. In 2010, he was
awarded the badge of honour “For merits to banking in the Republic of Poland”. Author of 34 monographs and
more than 170 scientific articles published in Poland, Germany, Ukraine and the United Kingdom. He is a regular
economic commentator on television, radio and the press.
Bogusław Szarek
Secretary of the
Supervisory Board,
member of the
Supervisory Board
elected by the
employees of the
Group
Employed since 1982 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.
Chairman of the Board of the trade union Krajowa Sekcja Górnictwa Rud Miedzi NSZZ „Solidarność” in Lubin.
Vice-Chairman of the Krajowy Sekretariat Górnictwa i Energetyki of the trade union NSZZ „Solidarność” in
Katowice. Member of the National Committee of the trade union NSZZ „Solidarność”.
Aleksander Cieśliński
Legal counsel with over 20 years of experience in developing legal and expert opinions in the area of EU law and
international protection of human rights for entities in the public and private sectors, international law, as well
as experience in participating in proceedings before the European Court of Human Rights and the Court of Justice
of the European Union.
Moreover, he engaged in economic activity related to international trade and has experience in trade
negotiations with foreign entities.
He is a graduate of the Faculty of Law and Administration of Wrocław University. He received recognition by the
Council of the aforementioned Faculty for his doctorate in international law. He is a professor in the International
and European Law Department of the Faculty of Law, Administration and Economics of Wrocław University. He
conducts seminars and lectures on full-time and postgraduate studies, as well as English speaking studies such
as LMM (Large Language Model).
He has many years of experience in lecturing and teaching, among others for legal trainees, legal advisers and
judges. He was a lecturer in the Department of Economic Law of Wroclaw University of Economics, in the Copper
Basin Vocational University in Lubin and in the Higher School of Trade in Wrocław. He is the author and co-
author of many academic publications and scientific publications, among others in the area of EU and economic
law, including “System prawa UE” (European Union law system) and “Komentarz do Traktatu o Unii Europejskiej”
(Commentary to the Treaty on the European Union).
Józef Czyczerski
Member of the
Supervisory Board
elected by employees
of the Group
Secondary technical education. Since 1979 employed in KGHM Polska Miedź S.A., underground
electromechanics. 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
Member of the
Supervisory Board
elected by employees
of the Group
He 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 Municipality (Gmina) of Legnica, on behalf of which the 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 Sp. z o. 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” in Pol-Miedź Trans Sp. z o. Member of the trade union
Sekcja Krajowa Górnictwa Rud Miedzi NSZZ „Solidarność”. Member of the Management Board of Region Zagłębie
Miedziowe NSZZ „Solidarność”.
Zbysław Dobrowolski
Professor at Jagiellonian University in Kraków, Ph.D in Economics: economics and corporate organisation, with
the status of habilitated doctor in the area of management.
He has more than 30 years of experience in research and the evaluation of enterprises involving public property,
including resulting from more than 25 years of work at the supreme national control body, among others as a
manager of one of the delegations. Engaged in internal auditing activities. Author of numerous scientific
publications on controlling, auditing and implementation of the Committee of Sponsoring Organizations of the
Treadway Commission (COSO) guidelines. Expert in many international programs, including those financed by
the International Organization of Supreme Audit Institutions (INTOSAI), Organisation for Economic Co-operation
and Development (OECD) and European Union (EU), as well as a speaker during the Organization for Security
and Co-operation in Europe (OSCE) conference.
In 1998 he took part in a prestigious internship aimed at the management of the highest governmental control
bodies: the GAO International Auditor Fellowship Program of the U.S. Government Accountability Office. Since
2008 he had been involved with INTOSAI, where in the role of expert he trained employees of the highest
governmental control bodies from several dozen countries, and co-founded three global standards and audit
guidance. He is an expert involved in a dozen or so international enterprises, including those organised by the
OECD or the European Union, aimed at improving the management of international organisations in other
countries.
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 96
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Dominik Januszewski
An experienced manager, an expert in the areas of management and finance. For more than 25 years he worked
in the companies Ernst&Young and Arthur Andersen. In the years 2005-2019 he was a Partner in Ernst&Young
responsible for projects involving business consultancy, transactional consultancy and privatisation, as well as
the auditing of financial statements. As a Partner, he managed a team of more than 200 consultants. His clients
included the largest financial institutions in Poland. Currently he is responsible for a strategic consulting team at
JLL involved in developing and implementing an ESG strategy as well as a strategy to optimize the energy aspects
of companies. He is a Polish Certified Auditor, and has taken numerous professional courses in the areas of
auditing, consultancy and management. In 2022 he received a Certificate from the University of Cambridge:
“Business Sustainability Management”. He is a graduate of the University of Łódź, Faculty of Economics-Sociology,
specializing in Finance and Banking.
Piotr Prugar
A graduate of the Faculty of Law and Administration of Wrocław University. Legal counsel, with many years of
experience in the area of legal services and management of economic entities. Co-worked as and served as the
receiver, liquidator and proxy for company management boards. Served as a representative of creditors in
insolvency and restructuring proceedings, among others in GetBack S.A w restrukturyzacji, Hawe Telekom S.A. w
restrukturyzacji, Fakos sp. z o.o. (subsidiary of Kopex SA), Technical Glassworks (Huta Szkła Technicznego), Paper
Mill in Dąbrowica (Fabryka Papieru w Dąbrowicy), Julia Glassworks (Huta Julia) and others.
Supervisory Board Committees
Within the Supervisory Board there are three permanent 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.
Audit Committee
Responsible for supervision in the areas of financial reporting, the internal control system, risk management and internal
and external audits.
In the period from 1 January 2023 to 31 December 2023, there were no changes to the composition of the Audit Committee
of the Supervisory Board of KGHM Polska Miedź S.A. The composition of the Audit Committee of the Supervisory Board of
from 1 January 2023 to 31 December 2023 was as follows:
− Wojciech Zarzycki Chairman
− Agnieszka Winnik-Kalemba
− Andrzej Kisielewicz
− Katarzyna Krupa
− Marek Wojtków
− Boguslaw Szarek
− Przemyslaw Darowski
The composition of the Audit Committee of the Supervisory Board from 13 February 2024 is as follows:
− Zbysław Dobrowolski Chairman
− Aleksander Cieśliński
− Przemyslaw Darowski
− Dominik Januszewski
− Tadeusz Kocowski
− Marian Noga
− Piotr Prugar
− Boguslaw Szarek
In terms of supervision over 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 terms 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 together with monitoring the
degree of implementation of recommendations made by the Management Board,
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 97
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− controlling 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.
In 2023 there were 7 meetings of the Audit Committee. The absence of Audit Committee Members was incidental and did
not affect its work. In 2023, the Audit Committee adopted four resolutions to justify the absence of a Member of the Audit
Committee at a meeting. The attendance rate of individual Members of the Audit Committee of the Supervisory Board in
2023 was as follows : Wojciech Zarzycki (100%), Agnieszka Winnik-Kalemba (86%), Katarzyna Krupa (86%), Andrzej Kisielewicz
(71%), Marek Wojtków (100%), Bogusław Szarek (100%), Przemysław Darowski (100%).
In 2023, the Audit Committee, during its meetings, dealt with and 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,
− the anti-corruption management system based on the international PN-ISO 37001 standard,
− procedures in the event that the audit firm has lost its license or is otherwise prevented from carrying out the
audit,
− updating the procedure for selecting the audit firm to carry out the audit of financial statements in connection
with the recommendation of the Polish Financial Supervision Authority,
− assessment of the independence of the auditing firm in the provision of permitted non-auditing services,
− implementation of the audit plan for 2022 and the first half of 2023.
Independence assessment
In the period from 1 January 2023 to 31 December 2023 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 met the criteria of independence were Agnieszka Winnik-
Kalemba, Andrzej Kisielewicz, Marek Wojtków, Wojciech Zarzycki.
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 fulfilled independence criteria (60%).
As at the date of signing the report, most of Members of the Audit Committee, including its Chairman, meet 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 independent Members of the Audit Committee are: Tadeusz Kocowski, Aleksander Cieśliński, Dominik Januszewski,
Marian Noga, Piotr Prugar, Zbysław Dobrowolski.
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 8 members of the Supervisory Board fulfils independence criteria (75%).
Qualifications, knowledge and skills
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.
Dominik Januszewski has been selected as a Member of the Audit Committee by virtue of his knowledge and skills in
accounting and auditing financial statements. Compliance with the requirements concerning the knowledge and skills
pertaining to accounting and auditing financial statements was validated by means of verifying appropriate documents
concerning education and work experience. In 1994, Dominik Januszewski graduated from the Faculty of Economics and
Sociology of the University of Łódź, where he studied Finance and Accounting. Since 2001, he has been a qualified certified
auditor.
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 98
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Between 1994 and 2002 Dominik Januszewski worked at Arthur Andersen Polska, first as a consultant in the financial
institution audit department before moving on to become a Manager responsible for auditing financial statements. In
2002, he joined Ernst & Young Polska as a Senior Manager in the audit department of financial institutions. In the years
2005-2019, he was a Partner at Ernst & Young Polska and during this period, among others in years 2007-2015, he served
as a leader of the audit department of financial institutions at Ernst & Young Polska.
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.
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. 146/X/23 of the Supervisory Board of KGHM Polska Miedź S.A., dated 12
October 2023 (hereafter: the “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 a member 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: the “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. 24/X/2023 of the Supervisory Board’s Audit Committee of KGHM Polska Miedź S.A.
dated 12 October 2023 r. (hereafter: the “Selection procedure”).
Main tenets of the Selection policy:
− 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,
− conclusion of an agreement and the providing of services, as well as any change in terms 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:
− the 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,
− the Act dated 11 May 2017 on certified auditors, auditing firms and public oversight,
− the Accounting Act of 29 September 1994.
On 22 October 2023, the Audit Committee of the Supervisory Board positively evaluated the services of the existing auditing
firm and issued a recommendation to the Supervisory Board regarding the extension of the contract with the existing
auditor for auditing and reviewing the financial statements of KGHM Polska Miedź S.A. for 2025 - 2028. On 31 October 2023,
after reviewing the recommendation of the Audit Committee, the Supervisory Board decided to approve the conclusion of
an annex to the existing agreement by the Company.
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 99
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In 2023, the following permitted non-audit services were provided to the Company by the audit firm auditing its financial
statements:
− an independent attestation service of the responsible gold and silver supply chain management process 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 duty,
− evaluation of the Remuneration Report of the Management Board and Supervisory Board of KGHM Polska Miedź
S.A.,
− verification of financial covenants in relation to loan agreements signed between KGHM Polska Miedź S.A. and
the European Investment Bank,
− evaluation of the report prepared in accordance with the provisions of the Government program entitled "Aid for
energy-intensive sectors related to sudden increases in natural gas and electricity prices in 2022",
− evaluation of the calculation report, which includes the calculation of the shares of revenues from specific PKD
codes or PRODCOM codes in total revenues in accordance with the provisions of the Government Program
entitled "Aid for energy-intensive industry related to natural gas and electricity prices in 2023",
− review of the financial statements for the first half of 2023.
In each case the Audit Committee evaluated the independence of the auditing firm and expressed its consent to the
provision of permitted 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 12.9 of the separate and consolidated financial
statements.
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 the Group, training and other benefits provided by the Company, as well as audits
performed by the Supervisory Board in this regard.
The composition of the Remuneration Committee of the Supervisory Board from 1 January 2023 to 31 December 2023 was
as follows:
− Katarzyna Krupa Chairwoman
− Józef Czyczerski
− Andrzej Kisielewicz
− Boguslaw Szarek
− Agnieszka Winnik-Kalemba
− Marek Wojtków
− Wojciech Zarzycki
− Radosław Zimroz
The composition of the Remuneration Committee of the Supervisory Board of KGHM Polska Miedź S.A. from 13 February
2024 was as follows:
− Tadeusz Kocowski Chairman
− Zbigniew Bryja
− Aleksander Cieśliński
− Józef Czyczerski
− Zbysław Dobrowolski
− Marian Noga
− Boguslaw Szarek
The composition of the Remuneration Committee from 7 March 2024 is as follows:
− Tadeusz Kocowski Chairman
− Aleksander Cieśliński
− Józef Czyczerski
− Zbysław Dobrowolski
− Marian Noga
− Boguslaw Szarek
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,
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 100
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− 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,
− 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.
The composition of the Strategy Committee of the Supervisory Board from 1 January 2023 to 31 December 2023 was as
follows:
− Andrzej Kisielewicz Chairman
− Józef Czyczerski
− Przemyslaw Darowski
− Katarzyna Krupa
− Boguslaw Szarek
− Agnieszka Winnik- Kalemba
− Marek Wojtków
− Wojciech Zarzycki
− Radosław Zimroz
− Piotr Ziubroniewicz
The composition of the Strategy Committee of the Supervisory Board from 13 February 2024 was as follows:
− Marian Noga Chairman
− Zbigniew Bryja
− Aleksander Cieśliński
− Józef Czyczerski
− Przemyslaw Darowski
− Zbysław Dobrowolski
− Dominik Januszewski
− Tadeusz Kocowski
− Piotr Prugar
− Boguslaw Szarek
The composition of the Strategy Committee of the Supervisory Board from 7 March 2024 is as follows:
− Marian Noga Chairman
− Aleksander Cieśliński
− Józef Czyczerski
− Przemysław Darowski
− Zbysław Dobrowolski
− Dominik Januszewski
− Tadeusz Kocowski
− Piotr Prugar
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 documents,
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 101
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− 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 the budget,
− other tasks ordered by the Supervisory Board.
3.3.3 Description of the application of DPSN 2021 - Diversity policy
The Company does not have a formally expressed Diversity policy for the Management Board and the Supervisory Board.
However, diversity management applies to the members of the Supervisory Board and the Management Board of KGHM
Polska Miedź S.A. The management and supervisory teams were composed of persons of various genders, ages and
experiences.
Table 23. Diversity structure in the Management Board and the Supervisory Board as at 31 December 2023.
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
KGHM Polska Miedź S.A. applies best practices promoting diversity in relation to 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. 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 in KGHM Polska Miedź S.A. is carried out with full respect to 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.
Instances of non-compliance
In accordance with the Statement on the Company's compliance with the corporate governance principles contained in
section 2 of the DPSN 2021, the following principles regarding the Management Board and the Supervisory Board are
partially applied or not applied:
Table 24. Principles in section 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 criteria, 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 group 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 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 were 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.
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 102
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Principle 2.2.
according to which decisions to elect members of
the management board or the supervisory board
of a company 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. The management and supervisory
teams were composed of persons of various 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 the 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
Management 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
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 the annual report, which in
addition to its responsibilities laid down in the
legislation, the supervisory board prepares and
presents to the annual general meeting once per
year, including information 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.
3.3.4 Remuneration of members of the Parent Entity's bodies and of other key managers of the
Group
Information on remuneration of Members of the Management Board of 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 the "Policy of remuneration of the Management Board and Supervisory Board
Members of KGHM Polska Miedź S.A.” in the templates for the management services contracts concluded by the Company
with members of the 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 amounted 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 financial year, with the provision that the contract was
performed for a period of at least three months, variable remuneration is calculated proportionally.
In March 2023, based on the Statutes of KGHM Polska Miedź S.A., the Bylaws of the Supervisory Board, the management
services contracts, the provisions of resolution no. 8/2016 of the Extraordinary General Meeting and the Act on principles
of shaping the remuneration of persons managing certain companies, the Supervisory Board set Management Goals for
the Management Board of KGHM Polska Miedź S.A. for 2023.
Management goals whose execution is a contingent condition to receive variable remuneration for the financial year of the
Company:
− forming and applying remuneration principles for members of management and supervisory bodies in line with the
provisions of the Act of 9 June 2016 on the principles of shaping the remuneration of persons managing certain
companies in all Group companies,
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 103
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− implementation of the obligations referred to in articles 17-20, article 22 and article 23 of the Act of 16 December 2016
on the principles of state assets management.
The Supervisory Board also established additional management goals for individual members of the Management Board
according to their areas of competence, split into common and individual objectives.
The common objectives consist of:
− KGHM Group adjusted EBITDA,
− KGHM Group payable copper production volume,
− C1 cost of the KGHM Group,
− Review and assumptions of the potential update of the KGHM Group Strategy,
− Management of risks identified as part of significant internal audit recommendations within the subordinate area.
The individual goals per individual Management Board members by competence are as follows:
− Net debt / EBITDA ratio for the KGHM Group,
− IT and Cybersecurity Strategy,
− Development of activities in the framework of social responsibility,
− Assessing the status of safety in the KGHM Polska Miedź S.A. Group,
− Energy transition,
− Automation and digitisation of accounting and payroll processes, including implementation of IT solutions resulting
from legislation,
− Development of strategic planning tools,
− CAPEX - implementation of the budget of capital expenditures on property, plant and equipment,
− CAPEX and OPEX - mining preparatory works,
− Development of automation in production processes;
− Increasing the effectiveness of intellectual property protection,
− Enhancing occupational safety in KGHM Polska Miedź S.A.,
− Mining production of no less than 440 thousand tonnes of copper in ore on an annual basis,
− Maintaining metallurgical production of KGHM Polska Miedź S.A. at no less than 582 thousand tonnes on an annual
basis,
− Service area management system in KGHM Polska Miedź S.A.,
− Strategy of collaboration with Vale Canada Ltd.,
− Decision on disposal or preparation of a development plan for selected international assets,
− Plan to improve accessibility of mining machinery use at Robinson Mine,
− Quantitative realisation of sales of copper produced in the international assets,
− Matrix of competence of domestic Companies of the KGHM Polska Miedź S.A. Group,
− The concept of extra-judicial dispute resolution within the KGHM Polska Miedź S.A. Group,
− Recommendation on the improvement of procurement processes in KGHM Polska Miedź S.A.,
− Centralising of legal services to ensure legal security within the Company.
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 management goals and sets the amount of the variable remuneration due by adopting appropriate
resolutions.
Table 25. Potentially-due remuneration of Members of the Management Board of KGHM Polska Miedź S.A. for 2023
Name and surname
Position
Potentially-due variable remuneration for 2023 (PLN thousand)
Tomasz Zdzikot
Member of the Management Board
- President of the Management Board
1 253.9
Marek Świder
Member of the Management Board
- Vice President of the Management Board
1 170.3
Mateusz Wodejko
Member of the Management Board
- Vice President of the Management Board
1 170.3
Mirosław Kidoń
Member of the Management Board
- Vice President of the Management Board
1 170.3
Marek Pietrzak
Member of the Management Board
- Vice President of the Management Board
1 170.3
Total
5 935.1
The Manager may join the Employee Pension Plan under the terms of the Company Agreement in force in this regard,
provided that the amount of the monthly basic contribution in this Plan is included in the amount of the fixed remuneration
due for this period.
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 104
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Covering the Manager - at the Company's expense - by a life insurance agreement under the group life insurance policies
already in place at the Company is permitted, including in the event of death, accident or illness. The coverage corresponds
to that provided to the management staff, with the only difference being that if the Manager chooses a unit-linked life
insurance, the portion of the premium relating to this option will not be funded by the Company.
Management services contracts also regulate matters concerning the application (use) of any resources (means) of the
Company required to perform contractual obligations and to maintain security requirements as to the collection and
transmission of data, including in particular:
− office space together with the equipment and technical facilities, including a portable personal computer with
wireless Internet access and other necessary equipment, means of communication including a mobile phone,
− 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,
− participation in conferences, seminars or meetings of a business nature related to the Company's scope of
operations and, insofar as necessary for the performance of such obligations, travel in the country and abroad,
− incurring or refinancing costs of individual training for the Manager 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 Manager related to serving in the function,
− 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 Manager, or their utilisation of such, are set forth by the Supervisory Board in
resolutions.
The Contracts also provide that if the Manager serves as a member of a body in a subsidiary of the Company within the
Group, the Manager will not receive additional remuneration for this function, apart from the remuneration provided for
in the management services contract. In addition, the Manager 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. It stipulates 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 provide that for a period
of six months from the date when employment in the function ceases, they are 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 condition for payment of the
compensation in question is to serve in the function of manager for at least six months and having provided the Company
with an appropriate written declaration. A Member of the Management Board who breaches the provisions of the
aforementioned contract will be required to pay a contractual penalty equal to the total compensation received. Payment
of the contractual penalty shall not exclude the Company's right to claim damages in excess of the amount of the penalty
on general terms.
Information on the remuneration of Members of the Supervisory Board of KGHM Polska Miedź S.A.
The remuneration of members of the supervisory body was set on 7 June 2019 by the General Meeting based on the Act
dated 9 June 2016 on principles of shaping the remuneration of persons managing certain companies. According to the
"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 to Members of
the Supervisory Board costs related to participation in the work of the Supervisory Board.
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 105
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Detailed information on the amount of remuneration and other benefits for supervising as well as managing persons may
be found in note 12.8 of the separate and consolidated financial statements and in the "Report on the remuneration of
Members of the Management Board and Supervisory Board KGHM Polska Miedź S.A. for 2023”.
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 11-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 30%) - the system is
based on collective and individual KPIs and goals, 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 director (up to 10%) reflecting among others their attitude, initiative, engagement,
innovation and creativity,
− additional benefits, such as life insurance, the Employee Pension Plan, a Health Care Package,
− a company car,
− severance pay of three times the amount of the basic monthly remuneration, in the case of termination, of the contract
by notice given by the Employer prior to the lapse of the contractual period (if the contract was in force for at least three
months).
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 106
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3.4 SYSTEMS AND FUNCTIONS
KGHM Polska Miedź S.A., under the principles indicated in section 3 of DPSN 2021, strives to maintain effective
systems and functions as essential tools for supervising the Company in all of its operating activities.
3.4.1 Description of the application of DPSN 2021 – Systems and functions
The Company maintains effective internal control and risk management systems and oversight of compliance activities, as
well as effective internal audit function, 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 in performing this assessment.
This assessment by the Supervisory Board 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 25, 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.
Diagram 25. Three lines of defence of KGHM Polska Miedź S.A.’s risk management system
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 107
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3.4.2 Description of main characteristics of internal control and risk management systems as
applied by KGHM Polska Miedź S.A. in the process of preparing financial statements 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 substantives services in the Parent Entity
for consolidation purposes.
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.
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 solutions applied by the Parent Entity are
implemented in the IT systems of the Group’s subsidiaries.
To ensure the adequate utilisation and protection of systems, data, secure access to data and
computer equipment, appropriate organisational and systemic solutions have been implemented.
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.
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 purchasing processes in 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,
− 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 ongoing 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 Executive Director for Risk and Audit who, through his subordinate Corporate risk management
and compliance department, monitors and escalates risks and reports incidents, is responsible for
overseeing the entire corporate risk management process and developing the methods and tools
used by managers in the Parent Entity, all subsidiaries and projects.
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 section 2.3 Risk management.
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 108
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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.
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.
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.
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 109
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3.4.3 Instances of non-compliance with DPSN 2021
In accordance with the published Statement on the Company's compliance with the principles in section 3 of DPSN 2021,
the following principles regarding systems and functions are partially applied or not applied:
Table 26. Principles in section 3 of DPSN 2021 applied partially or not applied in KGHM Polska Miedź S.A.
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 requirements, 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 the Executive Director for Risk and
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, which 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.
In accordance with the published Statement on the Company's compliance with the principles in section 3 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 responsible for risk
management and compliance report directly
to the president or another 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 of 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 the Company and the Group in 2023 110
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3.5 GENERAL MEETING AND RELATIONS WITH SHAREHOLDERS
KGHM Polska Miedź S.A., under the principles indicated in section 4 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 a general meeting.
3.5.1 Description of the application of DPSN 2021 – the General Meeting and relations with
shareholders
General Meetings of KGHM Polska Miedź S.A. (the 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. An Ordinary General Meeting is convened within six
months of the end of each financial year. The General Meeting is convened by the Company’s Management Board. In
situations defined by the Commercial Partnerships and Companies Code, the General Meeting may be convened by the
Supervisory Board or by shareholders. The Statutes of the Company also authorise the Polish State Treasury to convene a
the 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,
− changing 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 to 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.
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 111
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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
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 will 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 Meeting - 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
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 112
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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 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
As at 31 December 2023, the Company's largest shareholders were the Polish State Treasury (31.79% share in the share
capital and total number of votes), Allianz Polska Otwarty Fundusz Emerytalny (5.98%) and Nationale-Nederlanden Otwarty
Fundusz Emerytalny (5.05%). Detailed information on the ownership structure can be found in section 1.5. Shareholders
and the capital market.
3.5.2 Instances of non-compliance with DPSN 2021
In accordance with the published Statement on the Company's compliance with the principles in section 4 of DPSN 2021,
the following principles regarding general meeting are not applied:
Table 27. Principles in section 4 of DPSN 2021 applied partially or not applied in KGHM Polska Miedź S.A.
Principle 4.1.
A company should enable their shareholders to participate
in a general meeting by means of electronic
communication (e-meeting) if justified by the expectations
of shareholders notified to the company, provided that the
company is in a position to provide the technical
infrastructure necessary for such general meeting to
proceed.
The principle is not applied at present.
The principle is not applied at present. In the Company’s opinion, introduction
of the possibility of participation in General Meetings using electronic means
of communication may carry risks of a legal and technical nature leading to
interference with the efficient conduct of General Meetings, and as a result to
the possible questioning of any resolutions adopted. In the Company’s
opinion, the principle of participation in the general meetings of KGHM Polska
Miedź S.A. enables all shareholders to exercise the rights attached to owning
the shares and protects the interests of all shareholders. The Company’s
Statutes do not restrict the participation of shareholders in general meetings
in terms of the use of electronic means of communication, and the Company
is able to ensure the requisite technical infrastructure to conduct such
general meetings. The Company is considering the implementation of the
principle in a situation where the technical and legal aspect no longer raises
any doubts, and when such introduction will be justified by a real need for
this form of communication with shareholders. Since 2016 KGHM Polska
Miedź S.A. has been providing real-time streaming webcasts of its General
Meetings.
Principle 4.8.
Draft resolutions of the general meeting on matters put on
the agenda of the general meeting should be tabled by
shareholders no later than three days before the general
meeting.
The principle is not applied.
The Company applies the Commercial Partnerships and Companies Code in
this regard. In the Company’s opinion, this principle restricts the rights of
shareholders to propose items for the agenda during general meetings.
Principle 4.9.1.
If the general meeting is to appoint members of the
supervisory board or members of the supervisory board
for a new term of office: candidates for members of the
supervisory board should be nominated with a notice
necessary for shareholders present at the general meeting
to make an informed decision and in any case no later
than three days before the general meeting; the names of
candidates and all related documents should be
immediately published on the company’s website.
The principle is not applied.
Years of practical experience by the Company have shown that proposals of
a shareholder (pursuant to the shareholder’s rights arising from the
Commercial Partnerships and Companies Code) of candidates to the
Supervisory Board usually occur during the course of a General Meeting, i.e.
in breach of principle 4.9.1. In the Company’s opinion, despite the fact that
such announcements are made during the course of a General Meeting,
candidates are assessed with due consideration, based on complete
materials regarding the given candidate.
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 113
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3.6 CONFLICTS OF INTEREST AND TRANSACTIONS WITH RELATED PARTIES
KGHM Polska Miedź S.A., under the principles indicated in section 5 of DPSN 2021, strives to maintain best
standards of due diligence in the management of conflicts of interest and in concluding transactions with related
parties under conditions of the potential arising of conflicts of interest.
3.6.1 Description of the application of DPSN 2021 – Conflicts of interest and transactions with
related parties
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/Management Board should
immediately, but no later than at the next meeting of the Supervisory Board/Management Board, inform 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 themself, there may arise a
conflict of interest, including taking part in discussions and in voting on the adoption of resolutions in this regard.
3.6.2 Instances of non-compliance with DPSN 2021
In accordance with the published Statement on the Company's compliance with the principles in section 5 of DPSN 2021,
the Company applies all principles regarding conflicts of interest and transactions with related parties.
In 2023, neither the Parent Entity nor its subsidiaries entered into related party transactions under other than arm’s length
conditions.
3.7 REMUNERATION
KGHM Polska Miedź S.A., under the principles indicated in section 6 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.
3.7.1 Description of the application of DPSN 2021 – Remuneration
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, the Company 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.
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 114
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3.7.2 Instances of non-compliance with DPSN 2021
In accordance with the published Statement on the Company's compliance with the principles in section 6 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 remuneration of individuals managing certain
companies.
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 115
Translation from the original Polish version
4 CARE FOR THE ENVIRONMENT
4.1 ENVIRONMENTAL IMPACT MANAGEMENT
Environmental impact management is a component of sustainability management, which is discussed in a separate section
of this Report (section 2.2 Management of sustainable development and ESG risks). Meanwhile, the subsequent chapters
present KGHM's impact and the management of impacts on individual environmental components, including climate, water
resources and biodiversity.
4.2 CLIMATE IMPACT MANAGEMENT
4.2.1 Transformation plan for climate change mitigation
[ESRS E1-1]
As part of its efforts to achieve climate neutrality in 2050, KGHM Polska Miedź S.A. must undertake a significant effort
associated with decarbonising all key elements of its operations. Given the level of development and the availability of
modern technology, the Company's main activities in the 2030 timeframe will be targeted towards reducing Scope 2 indirect
emissions, while key activities to reduce Scope 1 direct emissions will be implemented successively over the 2050
timeframe.
Since most of the decarbonisation 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.
The main direction of decarbonisation in the area of indirect Scope 2 emissions will be a gradual shift away from the use of
market-sourced electricity and heat to an increasing use of own energy sources. A key element in supporting the reduction
of Scope 2 emissions will be the continued improvement of energy efficiency in production units and process
improvements.
The development of own zero- and low-carbon sources will include in the short to medium term the construction or
acquisition of RES (photovoltaic plants and wind energy), and in the long term will be supplemented by the use of small-
scale nuclear power (SMR). Due to the need to ensure technical security, i.e. uninterrupted energy supply, the development
of own sources will be supported by the construction of hydrogen energy storage infrastructure.
It is assumed that by 2030, KGHM Polska Miedź S.A. will meet at least 50% of its energy demand from its own sources -
primarily emission-free sources. Ultimately, by 2050, the Company will achieve the status of a self-producer of energy, with
a significant share of energy production from SMRs. Comprehensive capital expenditure related to the implementation of
greenhouse gas emission mitigation measures will be determined in 2024 in the KGHM's Decarbonisation Program to be
published at the end of 2024.
The idea of transformation was the foundation for building the applicable Strategy of the KGHM Polska Miedź S.A. Group
to the year 2030 with an outlook to 2040. Importantly, the Business Strategy is a complementary document to the Climate
Policy and takes into account its objectives and the main directions of decarbonisation. Green transformation through
renewable energy and modern technologies is the subtitle of the binding Strategy and at the same time the leading idea of
the document's main narrative. The strategy includes a number of transformation-related elements which, in principle, can
be considered as transformation plans. The key ones, as mentioned above, are related to the development of indigenous,
zero- and low-carbon energy sources. The decomposition of the Strategy implies the implementation of its objectives
through the operation of Strategic Programmes. One of these is the Energy Development Program, based on the RES and
nuclear energy components. Both the adoption of the Business Strategy and the establishment of the Strategic Energy
Development Program involved the approval of the Management Board of KGHM. At the same time, accepting the Strategy
as well as the Strategic Program means declaring key strategic assumptions for financial planning.
The Company's strategy is presented in section 1.2 Strategy of the KGHM Polska Miedź S.A. Group. while the plans and
goals related to the environment are presented in sections 4.2.6 Targets related to climate change mitigation and
adaptation, 4.3.3 Pollution-related goals, 4.4.3 Goals related to water and marine resources, 4.5.6 Goals related to
biodiversity and ecosystems and 4.6.4 Goals related to the use of resources and circular economy.
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 116
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4.2.2 Material impacts, risks and opportunities and their interaction with strategy and business
model
[ESRS 2 SBM-3]
Importance of copper for the energy transition
In 2011, as part of the work to determine demand for non-ferrous metals, the Minerals Education Coalition calculated
28
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.
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. The raw material was listed as a scarce resource
for the European Union in 2020.
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. 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 this metal. After
silver, which is expensive and found in much smaller quantities, copper has the highest electrical conductivity of any metal.
Copper-containing devices (e.g. motors) are therefore much more efficient than counterparts using other metals. Typical
reductions in energy consumption with its use reach 20-30%.
Copper shows an even greater advantage in the manufacture of wiring. Its current-carrying capacity is approximately 60%
greater than that of the same size of aluminium cables and also offsets energy losses in the transmission itself (the ease
with which electrons can move in copper is much easier - especially with the purity produced by KGHM Polska Miedź S.A.
The thermal conductivity of copper is more than half that of aluminium.
All of this makes copper cables more reliable and easier to use: construction, electrical, energy, heavy marine industries,
and they are also easy to transport, handle, assemble and store outdoors (copper does not corrode through passivation).
This is complemented by the high specific weight of copper, which makes it much easier to lay submarine cables for offshore
wind energy purposes. Copper is also an essential raw material for the development of electromobility.
Overall, 22 million tonnes of copper will be needed by 2050 for the technologies facilitating a 75% reduction of EU
greenhouse gas emissions
29
. This amount is roughly the same as the current level of global metallurgical production of
copper (which is slightly over 22.6 million tonnes) and more than ten times greater than the current production capacity of
the European Union. An analysis by the International Energy Agency (IEA) 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%. 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. 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.
It is worth remembering that copper is a material that can be recycled indefinitely, and the reuse of copper does not affect
its conductivity. It is estimated that up to 80%
30
of the copper produced to date is still in production use.
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
31
.
28
https://mineralseducationcoalition.org/
29
https://op.europa.eu/en/publication-detail/-/publication/2d43b7e2-66ac-11e7-b2f2-01aa75ed71a1/language-en/format-PDF/source-
32064602
30
https://copper.org/applications/architecture/awards/2011/Arizona-State-Univer/
31
CarbonClean200TM™ is a joint venture between AsYouSow and Corporate Knights. It is an educational tool exploring the impact of
companies on people, the planet and profits.
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 117
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KGHM Polska Miedź S.A. was the only company from Poland to be so honoured amongst 6 thousand entities from around
the world. Furthermore, in November 2023, KGHM Polska Miedź S.A. was awarded the title of Climate Aware Company 2023
as part of the Corporate Climate Crisis Awareness (CCA) study.
Scenario analyses in climate risks
In the first step of the risk management process (Definition 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)
32
, Sustainable Development Scenario (SDS)
33
, Net Zero Emissions by 2050 (NZE2050)
34
, RCP4.5
35
and RCP8.5
36
.
In the scenario analysis, the assumptions are considered in three time horizons: short-term (2024-2025), medium-term
from 1 to 5 years and long-term (2030), over 5 years (2050), making 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.
At the same time, KGHM has started work on identifying and assessing the impact of climate risk on financial and non-
financial reporting with the aim of, inter alia, determining the consistency of the climate scenarios used with the critical
climate assumptions used in financial reporting.
Impact of climate change on KGHM Polska Miedź S.A.
As part of the third stage of the risk management process (Analysis and Response), an in-depth cause-and-effect analysis
is carried out, part of which is, among other things, a resilience analysis containing ways of dealing with the risks which,
in line with the assumptions of the corporate risk management process, is intended to enable a decision to maintain or
possibly change the current management. The directional decision is called Risk Response and, in the case of climate risk,
is related to a company's ability to adapt to the uncertainty associated with climate change, in other words to climate
resilience and mitigation of that risk.
The analysis covered all risks identified in the climate risk category associated with the adverse impact of climate change
on the activities of KGHM Polska Miedź S.A. The results of the analysis reflect the status as at 31 December 2023, while the
analysis was carried out taking into account the three time horizons shown in the table below.
Table 28. Time perspectives used in the analysis
Symbol
Time perspective
Period
Years
›
Short
up to 1 year
2024 – 2025
››
Medium
from 1 to 5 years
2025 – 2030
›››
Long
over 5 years
2030 – 2050
32
Stated Policies Scenario - a scenario resulting from the policies currently in force
33
Sustainable Development Scenario - includes meeting the Paris Agreement targets and assumes energy production from renewable
sources only
34
Climate Neutrality Scenario up to 2050 - supplements SDS and assumes energy production from renewable sources only
35
RCP4.5 scenario (Representative Concentration Pathways) - estimates the amount of radiative forcing by greenhouse gases in the year
2100 by 4.5 W/m2
36
RCP8.5 scenario (Representative Concentration Pathways) - estimates the amount of radiative forcing by greenhouse gases in the year
2100 by 8.5 W/m2
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 118
Translation from the original Polish version
Diagram 26. Potential change in the level of impact of climate risk on KGHM by time horizon
Time perspective
Short (>)
Average (>>)
Long (>>>)
Risk
Physical violent
Physical chronic
Regulatory
Reputational
Technological
Market
impact unchanged
potential increase in impact
potential decrease in impact
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.
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 materialized 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.
− Active search for technical and technological solutions to reduce the negative impact of operations on the climate,
including technologies that enable remote control and reduce response times.
− Application of solutions counteracting the effects of climate hazards using neutral measures.
− Ongoing monitoring of the microclimate parameters and introduction of remote control and visualisation and
surveillance systems in workplaces with particularly adverse climate parameters.
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 119
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− The Mine-Smelter Emergency Rescue Division of KGHM Polska Miedź S.A. 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 burdensome work
(including the timing and impact of these events):
− throughout 2023 and 2022, 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,
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. 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 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.
− An 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 2023 and 2022, 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 the Company and the Group in 2023 120
Translation from the original Polish version
Transition-related climate 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, implementation of 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 ongoing
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 in order 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 terms of
climate:
− throughout 2023 and 2022, KGHM Polska Miedź S.A. did not record any events according to the criteria defined.
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 for limiting the 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.
− Establishing commercial and business relationships with entities who declare an attitude of caring about
environmental protection and compliance with existing laws in this regard.
− Increasing the 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.
− Implemented and improved effective system for resolving sustainable development themes (ESG) in the form of
regular meetings of the Sustainable Development Council.
− In 2023, an organisational unit was created in the KGHM structure responsible for ESG issues.
Indicator
used for risk
assessment
Number of key customers lost due to negative perception of the business in the face of climate change:
− throughout 2023 and 2022, 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 the Company and the Group in 2023 121
Translation from the original Polish version
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 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 Head Office division dedicated for this risk has been in place since 2022.
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 too low emission
reduction target:
− throughout 2023 and 2022, 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
also involve 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 in the outlook up to 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.
− Continuous improvement of management systems in line with best recognised practices and standards.
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 2023 and 2022, 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 the Company and the Group in 2023 122
Translation from the original Polish version
4.2.3 Description of processes in order to identify and assess significant impacts, risks and
opportunities
[ESRS 2 IRO-1]
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. 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 2.3 Risk management. As a result of these measures, KGHM
identifies 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) Context definition,
(II) Identification and Assessment, (III) Analysis and response, (IV) Monitoring and communication. The critical stages in the
recognition of climate risks include the first stage (scenario analyses as part of Context Definition) and the second stage
(taxonomy of climate risk as part of Identification and Assessment). Scenario analyses are described in more detail in
section 4.2.2 Material impacts, risks and opportunities and their interaction with strategy and business model and represent
the foundation for the identification and assessment of risks, taking into account the climate risk categories which,
according to the classification adopted, fall into the following subcategories:
Diagram 27. Categories of climate risk
With regard to climate risk, at this stage of the process, risks are identified taking into account whether assets and business
activities may be exposed to climate risk and whether it may affect the achievement of targets at the KGHM Polska Miedź
S.A. Group level. The extent to which assets and business activities are likely to be exposed (impact and likelihood) and
vulnerable (susceptibility) to identified climate-related risks is subsequently assessed in accordance with the applicable Risk
Assessment Matrix. It should be mentioned that KGHM Polska Miedź S.A. is currently subject to the process of implementing
the Decarbonisation Program of the KGHM Group, which will indicate which assets and activities will be subject to
transformation in order to move towards a climate-neutral economy by 2050.
The remaining stages of the climate risk management process are consistent with the general corporate risk management
process in the KGHM Polska Miedź S.A. Group.
In accordance with the process in place, the Strategy Risk Map is prepared and presented annually as a graphical
representation of the results of the risk assessment. The Strategy Risk Map incorporating climate risks, contains the
evaluation of the climate change risks identified in KGHM in relation to the individual strategic areas over the three time
horizons within the scenario analyses used. The approach applied allows for adequate adjustment and updating of the
strategy and business model to climate change.
Identified risks at the strategic level are decomposed into a corporate risk level and a project and program risk level,
allowing for effective management of individual risks. As part of the corporate risk management process, an element that
provides another important tool to enable KGHM to adapt and adjust its strategy and business model to climate change
are the Adaptation Measures. The Adaptation Measures are understood as a change of conduct in terms of the specific
risk management, i.e. organisational, process, system, strategic and other changes aimed at reducing the level of that risk.
Climate risk
Physical risk
Violent
Chronic
Transition risk
Regulatory Reputational Technological
Market
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 123
Translation from the original Polish version
4.2.4 Policies related to climate change mitigation and adaptation
[ESRS E1-2]
Climate policy of KGHM Polska Miedź S.A.
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.
Key assumptions of the Climate Policy.
KGHM Polska Miedź S.A. intends to develop its activities continuously and consciously in accordance with the principles of
sustainable development and responsible business, carrying out operations in a manner that takes into account both the
organisation's impact on the climate and the impact of climate change on the Company.
KGHM Polska Miedź S.A. meets the challenges posed by the changing regulatory environment and the resulting obligations
with regard to the impact of the Company's activities on the climate, as well as the impact of climate change on KGHM.
Due to the dominant share of greenhouse gas emissions from KGHM Polska Miedź S.A. in the KGHM Group, the Climate
Policy currently covers only KGHM Polska Miedź S.A. Work on a climate policy for the KGHM Group is in progress. The results
of this work will published by the end of 2024 at the latest.
Energy Policy of KGHM Polska Miedź S.A.
The primary objective of KGHM Polska Miedź S.A. in terms of energy management is to engage in rational energy
management while ensuring the security of energy supply to facilities and installations within the Company's core business.
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.
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 the current and future electricity 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 46.4 MWe each, as well as 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. 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 significant 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 is considering building a small modular
light water nuclear unit with a capacity of up to 500 MW. KGHM takes into consideration mainly SMR projects based on the
well-known concept of small high-pressure light water reactors demonstrating modular, integrated structure which allows
for simplification and shortening of the investment and construction process. On 12 July 2023, the Company received a
fundamental decision from the Minister of Climate and Environment, which is the first administrative decision in the system
of permits and authorisations for a nuclear power plant in Poland. Meanwhile, on 22 December 2023, the President of the
State Atomic Energy Agency (PAA) issued a general opinion on selected technical assumptions for the NuScale NPM-20
reactor technology - one of the technologies indicated by KGHM in its application for the issuance of the fundamental
decision. In the general opinion, the PAA verified the compliance of the selected technical assumptions described in the
application for a general opinion with Polish nuclear safety requirements.
The strategic goal of KGHM Polska Miedź S.A. related to energy transition in the 2030 perspective assumes covering at least
50%, i.e. approximately 1 500 GWh, of the demand for electricity from own sources, including renewable energy sources.
The Company has been implementing activities related to the achievement of its strategic objectives, including the
acquisition of projects from the market (M&A) and the preparation and construction of its own RES installations on the land
owned by KGHM Polska Miedź S.A. Currently, photovoltaic power plant projects and wind farm projects are carried out on
the land owned by KGHM, i.e. at the Głogów Copper Smelter and Refinery and at the Cedynia Copper Wire Rod plant and
in the Obora Sandpit area as well as on the land owned by the Tailings Division, with the total estimated capacity at a level
of 200 MW. Other projects are also being prepared on KGHM’s own land.
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 124
Translation from the original Polish version
Moreover, KGHM Polska Miedź S.A. is also active on the market of mergers and acquisitions in terms of renewable energy
sources and is engaged in several due diligence and valuation processes for assets are available for sale. The activities of
the Company in this scope carried out to date are presented in section 1.1.3 Organisational structure of the Company and
the Group addressing changes in the organisational structure of the Group.
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 the 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 recertification audit conducted in KGHM Polska Miedź S.A. and
in “Energetyka” sp. z o.o. in June 2023 confirmed that the system is compliant with the requirements of the standard,
undergoing continual enhancement, while the energy result is improved. The audit conducted by the UDT CERT Certification
Unit confirmed 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 awarded once again for subsequent three years.
Among others, the EMS reduces the costs of purchase and consumption of power utilities, including the cost of CO₂
emission allowances, acquired as a result of lower greenhouse gas emissions. The intention of the Company is 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.
4.2.5 Measures and resources in relation to climate policy
[ESRS E1-3]
In November 2023, design work was commenced with the aim to develop the Decarbonisation Programs for the Core
Production Business of KGHM Polska Miedź S.A., taking into account the targets for reduction of greenhouse gas emissions
specified in the Climate Policy with the outlook of 2030 and 2050.
In parallel, financial plans for climate change mitigation and adaptation activities will also be developed. The work is
expected to be completed by the end of 2024. It is assumed that, due to the level of development and availability of modern
technology, the Company's main activities in the 2030 timeframe will be aimed at reducing indirect Scope 2 emissions, i.e.
emissions associated with the use of electricity
The main direction of decarbonisation in the area of indirect emissions of KGHM Polska Miedź S.A. will be a gradual
withdrawal from the use of market-sourced electricity and heat to the increasing use of own energy sources. The
development of own sources will include the construction or acquisition of RES installations (photovoltaic power plants and
wind power), as part of strategic projects in the area of solar and wind energy development. A detailed description of the
work carried out in this area is included in Section 1.2.1 Advancement of the Strategy in 2023 – best practice and key
achievements.
Measures to reduce Scope 1 direct emissions will be implemented successively in the 2050 timeframe, including, among
others, taking into account a potential investment to build the CCS/CCU (Carbon Capture and Storage/Carbon Capture and
Utilization) installation at the Głogów Copper Smelter and Refinery, preceded by dedicated R&D work.
4.2.6 Targets related to climate change mitigation and adaptation
[ESRS E1-4, ESRS E1-E4 Addendum B]
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.
The interim target is to reduce combined Scope 1 and Scope 2 emissions by 30% by 2030 compared to 2020 emissions
37
.
37
GHG emissions are calculated in accordance with the GHG Protocol. The protocol indicates that companies select and report a base year
for which verifiable emission data is available. The first emission calculation in accordance with the protocol was performed based on
2020 data (earlier calculations did not include all emission sources). 2020 is therefore indicated in the Climate Policy as the base year.
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 125
Translation from the original Polish version
Diagram 28. Main directions of decarbonisation
1. PPA – Power Purchase Agreement, a contract for the supply of electricity between two parties
2. CCS/CCU Carbon Capture, Storage and Utilisation Technologies
The reduction targets comprising the entire KGHM Group will be published by the end of 2024 at the latest. The emission
reduction targets indicated in the Climate Policy for the Parent Entity of the KGHM Group, namely KGHM Polska Miedź S.A.,
already cover the key part of the KGHM Group's greenhouse gas emissions.
Work will also begin in 2024 with the aim to set reduction targets for Scope 3 - indirect emissions arising throughout the
value chain.
4.2.7 Energy consumption and energy mix
[ESRS E1-5, ESRS E1-5 Addendum B]
As at the date of signing the Report, data on energy consumption divided into conventional and renewable sources and
energy intensity was not available. This information will be published in a separate procedure. The Company will take
appropriate steps to ensure that up-to-date information can be included in future years' reports.
4.2.8 Gross Scope 1, 2 and 3 greenhouse gas emissions and total greenhouse gas emissions
[ESRS E1-6]
Scope 1
Scope 1 greenhouse gas emissions are direct emissions from sources that are owned or controlled by KGHM, such as
emissions from combustion in its own boilers, furnaces and vehicles.
Scope 2
Scope 2 emissions are indirect emissions associated with the generation of purchased or acquired electricity, process
steam, heat or cooling consumed by KGHM.
Scope 2 emissions were calculated in accordance with the GHG Protocol
38
Scope 2 Guidance using two methods:
− The location-based method quantifies Scope 2 greenhouse gas emissions based on average energy production
emission factors for specific locations, including local, regional or national boundaries.
38
Greenhouse Gas Protocol - a global standard that is used to measure and manage greenhouse gas emissions. Emissions are divided
into three scopes: Scope 1, Scope 2, Scope 3.
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 126
Translation from the original Polish version
In case of KGHM Polska Miedź S.A., we used the emission factors for electricity, from the National Balancing and
Emissions Management Center, and for heat, from the Energy Regulatory Office, to calculate the value of Scope 2
emissions based on location.
− The market-based method calculates Scope 2 GHG emissions based on the emissions of the generators from which
the reporting entity buys electricity under a contract bundled with financial instruments or the instruments
themselves separately. We used emission intensity factors from local electricity and heat operators to calculate Scope
2 market emissions.
Scope 3
In accordance with 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 (emissions 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 Scope 1 and 2emissions.
− 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)
− Franchise
− Investment (investment activities (including equity and long-term investments and project financing)
during the reporting year, not covered by Scope 1 or 2).
The Company’s emission data in the years 2020-2023 is presented below.
As at the day of preparation of the Report, data related to Scope 3 greenhouse gas emission was not available. This
information will be published separately. The Company will take appropriate steps to ensure that up-to-date information
can be included in future years' reports. Moreover, the company is working on setting the reduction targets for Scope 3
emissions, including on setting the base year.
Chart 14. Greenhouse gas emissions in production divisions of KGHM Polska Miedź S.A. in the years 2020-2023 (kt e CO
2
)
47%
47%
40%
45%
53%
53%
60%
55%
3 005
3 110
3 220
3 224
2020 2021 2022 2023
Scope 1
Scope 2
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 127
Translation from the original Polish version
Table 29. Greenhouse gas emissions in KGHM Polska Miedź S.A. Divisions in the years 2020-2023 [kt eCO
2
]
2020
Base
year
2022
2023
y/y
change,
base
y/y
change
(%), base
y/y
change
y/y
change
(%)
2030
target
2050
target
SCOPE 1 greenhouse gas emissions
Gross greenhouse gas emissions
1 413.1
1 288.1
1 464.8
+51.6
+3.7%
+176.7
+13.7%
-
-
Percentage of emissions from regulated emission
trading schemes (%)
86
83
84
SCOPE 2 greenhouse gas emissions
Gross greenhouse gas emissions
location-based method
1 592.4
1 931.8
1 759.0
+166.6
+10.5%
-172.8
-8.9%
-
-
Gross greenhouse gas emissions
market-based method
1 605.6
1 899.5
1 854.5
+248.9
+15.5%
-45.0
-2.4%
-
-
Greenhouse gas emissions, TOTAL Scope 1 and 2
location-based method
3 005.5
3 219.8
3 223.8
+218.3
+7.3%
+3.9
+0.1%
-30%
-100%
Greenhouse gas emissions, TOTAL Scope 1 and 2
location-based method
3 018.7
3 187.6
3 319.3
+300.6
+10.0%
+131.7
+4.1%
-30%
-100%
SCOPE 3 greenhouse gas emissions
39
Greenhouse gas emissions
-
1 112.3
-
-
-
-
-
-
-
− Purchase of goods and services
-
748.1
-
-
-
-
-
-
-
− Investment goods
-
140.3
-
-
-
-
-
-
-
− Activities related to fuel and energy (not included
in Scope 1 or 2)
-
97.8
-
-
-
-
-
-
-
− Upstream transport and distribution
-
91.1
-
-
-
-
-
-
-
− Waste generated within the operation
-
-
-
-
-
-
-
-
-
− Business travel
-
0.2
-
-
-
-
-
-
-
− Employees’ commuting to work
-
20.3
-
-
-
-
-
-
-
− Leased senior assets
-
-
-
-
-
-
-
-
-
− Downstream transport
-
14.5
-
-
-
-
-
-
-
− Processing of products sold
-
-
-
-
-
-
-
-
-
− Use of products sold
-
-
-
-
-
-
-
-
-
− Processing of products sold at end of life
-
-
-
-
-
-
-
-
-
− Leased junior assets
-
-
-
-
-
-
-
-
-
− Franchise
-
-
-
-
-
-
-
-
-
− Investments
-
-
-
-
-
-
-
-
-
TOTAL greenhouse gas emissions
location-based method
-
4 332.1
-
-
-
-
-
-
-
TOTAL greenhouse gas emissions
market-based method
-
4 299.9
-
-
-
-
-
-
-
39
As at the day of preparation of the Report, data related to Scope 3 greenhouse gas emission was not available. This information will be
published in a separate procedure. The Company will take appropriate steps to ensure that up-to-date information can be included in
future years' reports. Moreover, the company is working on setting the reduction targets for Scope 3 emission, including determining of
the base year.
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 128
Translation from the original Polish version
Table 30. Greenhouse gas emissions in KGHM Polska Miedź S.A. Group in 2020-2023 [kt e CO
2
]
2020
Base
year
2022
2023
YoY
change,
base
YoY
change
(%),
base
YoY
change
YoY
change
(%)
2030
target
2050
target
SCOPE 1 greenhouse gas emissions
40
Gross greenhouse gas emissions
-
2 261.6
2 318.6
-
-
+57.0
+2.5%
-
-
Percentage of emissions from regulated emission trading
schemes (%)
SCOPE 2 greenhouse gas emissions
41
Gross greenhouse gas emissions
location-based method
-
2 283.4
2 180.9
-
-
-102.5
-4.5%
-
-
Gross greenhouse gas emissions
market-based method
-
2 353.0
2 350.4
-
-
-2.6
-0.1%
-
-
Greenhouse gas emissions, TOTAL Scope 1 and 2
42
location-based method
-
4 545.0
4 499.5
-
-
-45.5
-1.0%
-
-
Greenhouse gas emissions, TOTAL Scope 1 and 2
43
location-based method
-
4 614.6
4 669.5
-
-
+55.0
+1.2%
-
-
SCOPE 3 greenhouse gas emissions
44
Greenhouse gas emissions
-
1 849.0
-
-
-
-
-
-
-
− Purchase of goods and services
-
1 130.5
-
-
-
-
-
-
-
− Investment goods
-
280.1
-
-
-
-
-
-
-
− Activities related to fuel and energy (not included in
Scope 1 or 2)
-
256.7
-
-
-
-
-
-
-
− Upstream transport and distribution
-
122.5
-
-
-
-
-
-
-
− Waste generated within the operation
-
-
-
-
-
-
-
-
-
− Business travel
-
0.4
-
-
-
-
-
-
-
− Employees’ commuting to work
-
44.2
-
-
-
-
-
-
-
− Leased senior assets
-
-
-
-
-
-
-
-
-
− Downstream transport
-
14.5
-
-
-
-
-
-
-
− Processing of products sold
-
-
-
-
-
-
-
-
-
− Use of products sold
-
-
-
-
-
-
-
-
-
− Processing of products sold at end of life
-
-
-
-
-
-
-
-
-
− Leased junior assets
-
-
-
-
-
-
-
-
-
− Franchise
-
-
-
-
-
-
-
-
-
− Investments
-
-
-
-
-
-
-
-
-
TOTAL greenhouse gas emissions
location-based method
-
6 394.0
-
-
-
-
-
-
-
TOTAL greenhouse gas emissions
market-based method
-
6 463.5
-
-
-
-
-
-
-
4.2.9 Removal and storage of greenhouse gases
[ESRS E1-7]
Within the key directions for reducing the carbon footprint in the area of direct emissions, the construction of a CCS/CCU
facility (Carbon Capture and Storage/Carbon Capture and Utilization) at the Głogów Copper Smelter and Refinery is being
considered in creating the Decarbonisation Program.
Given the level of development and availability of CCS/CCU technology, R&D initiatives will be undertaken in the first
instance while key activities will be carried out successively in the 2050 timeframe. In 2023, the preparation of the feasibility
study for the CCS demonstration installation at the Głogów Copper Smelter and Refinery was launched. Work will continue
in 2024.
40
The KGHM Group is in the process of preparing the Climate Policy including determination of reduction targets and the base year
41
See above
42
See above
43
See above
44
As at the day of preparation of the Report, data related to Scope 3 greenhouse gas emission was not available. This information will be
published in a separate procedure. The Group will take appropriate steps to ensure that up-to-date information can be included in reports
for subsequent years. Moreover, the company is working on setting the reduction targets for Scope 3 emission, including determining of
the base year.
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 129
Translation from the original Polish version
Diagram 29. Carbon Capture and Storage Technology
4.2.10 Internal determination of fees for greenhouse gas emission
[ESRS E1-8]
In KGHM Polska Miedź S.A., no internal fee for greenhouse gas emissions has been set.
4.2.11 Anticipated financial effects
[ESRS E1-9]
KGHM Polska Miedź S.A. omits information on the anticipated financial effects of climate-related impacts, risks and
opportunities using the transitional provision for phased-in disclosure requirements (Appendix C, ESRS 1).
4.3 ENVIRONMENTAL POLLUTION MANAGEMENT
[ESRS 2 IRO-1]
The KGHM Polska Miedź S.A. Group conducts ongoing monitoring of its own sites and activities in order to determine the
impact of these activities on the environment.
Direct measurements in the environment exposed to the impact of KGHM's installations comprise atmospheric air quality
monitoring, groundwater monitoring, surface water monitoring and soil monitoring. The monitoring carried out since the
1980s provides a full image of the impact on the environment, as well as knowledge of the effects that have been achieved
as a result of the pro-environmental initiatives and investment activities carried out to date.
KGHM Polska Miedź S.A., being aware of its impact on the environment through its mining and processing operations,
introduces technological solutions and undertakes environmental protection initiatives. An example of key measures aimed
at improvement of ambient air quality, following extensive consultation with the local community, is the BATAs investment
program, the implementation of which has contributed significantly to further reductions in emissions from metallurgical
processes. Activities of this type are key elements of the environmental policy of KGHM Polska Miedź S.A.
A detailed analysis of impacts, risks and opportunities for the KGHM Polska Miedź S.A. Group is included in section 2.2.7
Material impacts, risks and opportunities and their interaction with strategy and business model.
4.3.1 Pollution policy
[ESRS E2-1]
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. in respect to sustainable development, 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. The Vice President of the Management Board
(Production) is responsible for the implementation of the policy.
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 130
Translation from the original Polish version
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 ecological production, protection of the
environment and climate, as well as adoption of Circular Economy concepts, including 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, Concentrators Division and the Tailings Plant, based on the PN-EN ISO 14001 standard, on 12
July 2023 the 2nd edition of the Environmental Policy of KGHM Polska Miedź S.A., approved by the President of the
Management Board, was adopted in the Company.
Also in terms of improvements, in 2021 the process of implementing the Environmental Management System at the
Head Office and in the Mining Divisions in accordance with the ISO 14001 standard commenced, and was completed in
December 2023, as confirmed by group certification by the external entity TUV NORD Polska, and the receipt of a
Certificate for a subsequent 3 years.
In implementing the approved Environmental Management Policy, the 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,
− recover the usable value of 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 the accepted and justified requirements and expectations of stakeholders,
− comply with the requirements of applicable law while respecting ethical principles applicable in the KGHM Group,
− respect legally designated protected areas and ensure that any new operations or changes to existing operations
are carried out lawfully within our licence to operate,
− refrain from conducting activities at World Heritage Sites and, where our activities are adjacent to World Heritage
Sites, we will ensure that our activities do not compromise the safety and value of these sites,
− conduct an open and respectful dialogue with the local community and relevant authorities for the benefit of the
environment and the climate,
− responsibly manage chemicals in accordance with the EU REACH and CLP regulations,
− raise professional qualifications and awareness of employees in respect to the environment and climate,
− foster environmentally-friendly attitudes among staff, contractors and the local community, and
− provide transparent reporting of our real environmental and climate impacts and progress to all stakeholders,
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.
Moreover, the Environmental Policy of KGHM Polska Miedź S.A. takes into account the interests of key stakeholders. The
needs of local communities are incorporated in the processes of designing and implementing investments by applying pro-
environmental solutions required by law. KGHM also takes into account the interests of key stakeholders on a voluntary
basis, going beyond legal requirements.
4.3.2 Pollution-related activities and resources
[ESRS E2-2]
Air pollution
Copper production generates dust emissions which may contain metals and metal compounds. The consistent application
of the Best Available Techniques (BAT) enabled a reduction in dust emissions from electrolytic copper production in KGHM
Polska Miedź S.A. by 91%. 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.
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 131
Translation from the original Polish version
Chart 15. Dust emissions from metallurgical production of KGHM Polska Miedź S.A. in 2023 [g/t of electrolytic copper]
Dust emissions from mining production continue to decrease in spite of the growing output. This 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 measures have led to a 72% decrease in dust emissions from mining production (2023 status vs 2010).
Chart 16. Dust emissions from mining production of KGHM Polska Miedź S.A. in 2023 [g/t of ore]
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. KGHM is a pioneer in
reduction of sulphur dioxide emissions: emissions per tonne of copper produced have been reduced by approximately 84%
vs. 2010. The aim of KGHM is to maintain a consistent level of sulphur dioxide emissions.
Chart 17. Emission of SO₂ of KGHM Polska Miedź S.A. in 2023 [kg/t of electrolytic copper]
Air pollution - BATAs program
In June 2016, the European Commission issued an executive decision establishing BAT conclusions (guidelines) for the non-
ferrous metals industry. 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 implementation was completed in 2023. In the Głogów Copper Smelter and Refinery and in the Legnica Copper Smelter
and Refinery, the above-mentioned program was implemented by building new and adapting the existing technological
installations. The goal of the Program was 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 2023:
280
213
332
252
239
200
135
48
49
58
52
59
33
25
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
-91%
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
2.7
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
-72%
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
1.3
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
-84%
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 132
Translation from the original Polish version
In 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 yard for lead-bearing materials at the Głogów II Smelter and Refinery was built,
− a gas desulphurisation installation at the Kaldo furnace of the Precious Metals Plant was built,
− gas bypass pipelines for the flash furnaces 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
and Refinery was built,
− the desulphurisation and dust removal installation for technological gases from converters at the Głogów II
Smelter and Refinery was modernised,
− an installation to remove mercury- and arsenic-containing dust from gases from the raw lead production furnace
was upgraded,
In 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
modernised,
− a second-stage wet de-duster was built at the drying plant’s dust removal installation in order to reduce arsenic
and mercury emissions,
− installations for wet dust removal from gases above the TM-16 casting machines were designed and constructed,
− a desulphurisation and dust removal installation for gases from the copper granulation process was developed,
− an installation to remove arsenic and mercury from gases at the SOLINOX installation was constructed.
Table 31. Results of investment projects completed by 2023 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
BAT-associated emission levels
(BAT-AEL). Expected adaptation to
BAT
Task completion date
Parameters achieved (in guaranteed
parameter tests)
Effects
HML- Modernisation of the
Psz.1 bag filter dedusting
system and PSZ2 and Psz3
cassette filters in the Shaft
Furnaces
Dust – 2÷5 mg/m
n
3
(BAT 39)
As – 0.05 mg/m
n
3
December 2019
Dust – < 1 mg/m
n
3
,
As – < 0.05 mg/m
n
3
, average 0.02 mg/m
n
3
Dust – decrease by
97%
As – decrease by 84%
HML - Construction of 2nd-
stage wet dedusting system
on the dryer dedusting units
to reduce As emissions down
to the BAT Conclusion levels
Dust – 3÷5 mg/m
n
3
(BAT 38)
As – 0.05 mg/m
n
3
December 2020
Dust – < 1 mg/m
n
3
,
As – < 0.02 mg/m
n
3
, average 0.01 mg/m
n
3
As – decrease by 84%
HML - Design and construction
of installation to eliminate
arsenic from gases above the
TM-16 casting machines
Dust – < 15 mg/m
n
3
(BAT 44)
December 2020
Dust – < 15 mg/m
n
3
, average 9.5 mg/m
n
3
Dust – decrease by
68%
HMG (P-1) Sealing of conveyor
belt tightening stations for
carrying copper concentrate
and of the 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)
Reduction of fugitive
emissions
HMG (PG) Installation of
ground de-leaded slag feeding
into flash furnace
BAT 54:
Specifies methods to reduce the
amount of copper production
primary and secondary waste
materials to be stored
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).
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).
Reduction of fugitive
emissions
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 133
Translation from the original Polish version
Name of task/initiative
BAT-associated emission levels
(BAT-AEL). Expected adaptation to
BAT
Task completion date
Parameters achieved (in guaranteed
parameter tests)
Effects
HMG (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.
Reduction of fugitive
emissions
HMG (P-30) Building a gas
desulphurisation installation
from the Kaldo furnace at the
Precious Metals Plant
Dust – 2÷5 mg/m
n
3
(BAT 140)
SO
2
– 50÷480 mg/m
n
3
(BAT 142)
May 2021
Dust – average 0.6 mg/m
n
3
SO
2
– < 470 (mg/m
n
3
)
Dust – decrease by
91%
SO
2
– decrease by 96%
HMG (P-22) Building an
installation for removing dust
from gases from flash furnace
slag and copper outlets at the
Głogów II Smelter
Dust – 2÷5 mg/m
n
3
(BAT 39)
As – 0.007 kg/h
December 2021
Dust – average 0.054 mg/m
n
3
As – average 0.0019 kg/h
Dust – decrease by
88%
As – decrease by 88%
HMG (P-23) Building an
installation for removing dust
from converter gases
Dust – 2÷5 mg/m
n
3
(BAT 39)
As – 0.002 kg/h
December 2021
Dust – average 0.067 mg/m
n
3
As – average 0.00098 kg/h
Dust – decrease by
94%
As – decrease by 92%
HML - Building a
desulphurisation and dust
removal installation for gases
from the granulation process
Dust – 2÷5 mg/m
n
3
(BAT 45)
SO
2
– 50÷500 mg/m
n
3
(BAT 49)
June 2022
Dust – average 3 mg/m
n
3
SO
2
– average 380 mg/m
n
3
Dust – decrease by
94%
SO
2
– decrease by 98%
HMG (P-31) Development of an
installation reducing
pollutants in air emissions of
process gases from Dörschel
furnaces – stage 2
Dust – 2÷4 mg/m
n
3
(BAT 96)
Hg – 0.01÷0.05 mg/m
n
3
(BAT 11)
As – 0.05 mg/m
n
3
December 2022
Dust – < 1 mg/m
n
3
, average 0.118 mg/m
n
3
Hg – < 0.001 mg/m
n
3
, average 0.0005 mg/m
n
3
As – < 0.01 mg/m
n
3
, average 0.006 mg/m
n
3
Dust – decrease by
91%
Hg – decrease by 99%
As – decrease by 98%
HML – an installation to
remove arsenic and mercury
from gases at the SOLINOX
installation was constructed.
Hg – 0.01÷0.05 mg/m
n
3
(BAT 11)
As – 0.05 mg/m
n
3
August 2023
Hg – average 0.02 (mg/m
n
3
)
As – average 0.05 (mg/m
n
3
)
Hg – decrease by 96%
As – decrease by 97%
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
82% in 2023 vs. 2018.
Chart 18. Arsenic emissions from metallurgical production of KGHM Polska Miedź S.A. in 2023 [g/t of electrolytic copper]
Water pollution
Metallurgical production
The water used in production processes in the Legnica Copper Smelter and Refinery and Głogów Copper Smelter and
Refinery is routed back to the company “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 wastewater 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
5.6
3.7
4.3
2.8
1.3
1.0
2018 2019 2020 2021 2022 2023
-82%
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 134
Translation from the original Polish version
Odra river (in the case of the Głogów Copper Smelter and Refinery) and to the Pawłówka stream, which feeds the Kaczawa
river (in the case of the Legnica Copper Smelter and Refinery). The efficiency of the treatment of wastewater transferred to
“Energetyka”, including the load of metals discharged to the environment, is shown in the table below.
Table 32. Efficiency of wastewater treatment in “Energetyka” treatment plants
Metal load transferred for
treatment
Efficiency of wastewater
treatment in the
“Energetyka” company
Metal load discharged into
the environment
Głogów Copper Smelter and Refinery
610 633 kg
99.82 %
1 120 kg
Legnica Copper Smelter and Refinery
121 360 kg
99.79 %
251 kg
The Cedynia 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
wastewater tanks located in the vicinity of the Power Station building. The wastewater collected in the tanks is processed
entirely in the VACUDEST vacuum de-emulsifier.
The sanitary and rainwater-industrial wastewater captured is directed to the wastewater treatment plant, where it is treated
in the sanitary wastewater treatment line and the rainwater-industrial wastewater treatment line. Treated sanitary and
rainwater-industrial effluents are 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 2023, the volume reached 6 212 m
3
.
Mine production
Due to the fact that there is a constant inflow of mine water and rainwater into the system of water circulation in the ore
enrichment process, excess water must be removed. Discharge of mine/technological wastewater/water from the
operations of KGHM Polska Miedź S.A. is carried out in accordance with the applicable laws and regulations and the
provisions of the water law permit, taking into account the hydrological conditions of the Odra River, which means adjusting
the volume of discharge on a daily basis to the water level in the river and its chemical condition. The retention and dosing
system operating at KGHM Polska Miedź S.A. enables full control and oversight of the discharge of water into the Odra
River. Consequently, at low water levels in the receiving water body, the discharge of wastewater can be stopped. In
addition, the condition of regulating the load of salt contained in the discharged effluent to prevent exceeding 1 000 mg/l
of the sum of chlorides and sulphates in the river waters after mixing with the effluent, is strictly observed. The retention
and dosing system in place also allows for periodic suspension of the discharge of wastewater.
Evaporated salt plant
In June 2023, the Management Board of KGHM Polska Miedź S.A. passed a resolution on the development of a feasibility
study on the construction of a plant for the production of evaporated salt from saline mine water pumped out of mine
workings using evaporative technology. The basic idea of the project is the selective management of mine water aimed at
concentrating water streams with a higher salt content and routing them to the target area of the main dewatering pumping
station, where they can be routed for further processing. The use of process steam, available from existing processes, will
allow the water streams to be desalinated and commercially important salt products (evaporated salt) to be produced in
quantities depending on the magnitude of the chloride concentrations in the evaporated waters. In addition to the
measurable economic effects, these activities will reduce the total salt load deposited with water acquired from rock
dewatering, thereby significantly reducing the Company's environmental impact. Based on preliminary calculations and
similar recent investments, estimated capital expenditure could reach up to PLN 1 billion. According to the preliminary
estimates, the planned implementation period, including the preparatory phase, could be up to six years. The additional
use of desalinated water for the cooling facilities of the smelters is assumed, which will allow efficient use of existing
resources and cost optimisation. The forthcoming activities will aim to analyse in detail the capital expenditure and
operating costs, carry out technological trials of the desalination processes themselves, including waste management, and
define a detailed schedule of activities of an investment nature. Once these tasks have been completed, a decision will be
made on the choice of technology and the scale of the investment.
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 135
Translation from the original Polish version
KGHM INTERNATIONAL LTD.
KGHM INTERNATIONAL LTD. mines also undertake numerous measures to protect water. Carlota Copper Company does
not discharge water into the environment as part of its production activities.
The engineering solutions used at the Carlota mine ensure the separation of contaminated and non-contaminated 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 wastewater treatment plant operated at the Victoria project site. Currently, work is underway
to build a full-scale permanent wastewater treatment plant.
4.3.3 Pollution-related goals
[ESRS E2-3]
The most important environmental objective for the KGHM Group is the continuous reducing of emissions of pollutants
into the air and water, which is achieved by improving purification techniques, further sealing of the processes and reducing
fugitive emissions. The levels of emissions achieved in recent years are so low that their further reduction resulted in every
investment project requiring an in-depth analysis of the cost-effectiveness of the investment in terms of the environmental
effect that can be achieved.
A characteristic element of the current legal regime, in addition to the need to comply with the requirements of the BAT
conclusions is, in the case of changes in the installation, the setting of permissible conditions for the discharge of pollutants
into ambient air. These conditions are verified by means of a uniform methodology based on mathematical modelling of
pollutant dispersion and, on the basis of the results obtained, setting of allowable emissions limits as pollutant loads in an
administrative decision. It is therefore a very demanding system for oversight of the amount of pollutants discharged into
the air, while at the same time taking into account the location of the installation, the environmental conditions in the area
and the impact of atmospheric conditions on the levels of air concentrations in the area of the installation in question.
4.3.4 Air, water and soil pollution
[ESRS E2-4]
KGHM Polska Miedź S.A. omits information on air, water and soil pollution due to the need to implement solutions
consolidating emission data from various activities at the level of the KGHM Polska Miedź S.A. Group.
Disclosures concerning the ESRS E2-4 indicator will be reported for 2024.
4.3.5 Substances of high concern and substances of very high concern
[ESRS E2-5]
Potentially hazardous substances.
As one of the leading European non-ferrous metals producers, KGHM POLSKA MIEDŹ S.A. follows principles of responsible
chemical substance management compliant with the EU Regulations REACH and CLP. The Company has registered all the
substances introduced into trade with the European Chemicals Agency. Pursuing its REACH implementation strategy, it 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:
− REACH Copper Consortium,
− European Precious Metals Federation
− Lead REACH Consortium,
− Nickel REACH Consortium,
− REACH Selenium and Tellurium Consortium,
− REACH Copper Compounds Consortium.
In 2023, 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.
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 136
Translation from the original Polish version
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 a plant,
determining its classification as a plant 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 Concentrators in Rudna and Polkowice were
included in the group of plants 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.
KGHM's production process uses copper concentrates and auxiliary substances that exhibit potential hazardous properties
in accordance with the ESRS definition. Substances recognised as SVHCs (Substances of Very High Concern) are also used in
the production process. The use of these substances takes place in accordance with the conditions set out in the exposure
scenarios and safety data sheets.
Table 33. Substances used in the production process of KGHM Polska Miedź S.A. Group in 2023
Potentially hazardous substances
tonnes
Copper concentrate
1 947 609
Auxiliary substances
54 162
SVHC
tonnes
Auxiliary substances
5 396
The production process produces mainly unclassified electrolytic copper. Nevertheless, substances with potentially
hazardous properties and SVHC are also produced. All substances of potential concern and SVHC are intended only for the
professional uses identified during the REACH substance registration process, and their use shall be compliant with the
conditions set out in the exposure scenarios and safety data sheets.
Table 34. Substances generated in the production process of KGHM Polska Miedź S.A. in 2023
Potentially hazardous substances
tonnes
Nickel sulphate
2 127
Copper sulphate
5 394
Pb concentrate
22 836
Pb-Zn concentrate
23 781
Pt-Pd concentrate
0.078
Selenium
74
Sulphuric acid diluted
32 505
SVHC
tonnes
Refined lead
29 070
4.3.6 Anticipated financial effects
[ESRS E2-6]
KGHM Polska Miedź S.A. omits information on the anticipated financial effects of climate-related impacts, risks and
opportunities related to pollution, using the transitional provision for phased-in disclosure requirements (Appendix C, ESRS
1).
4.3.7 Environmental fees
Table 35. Environmental fees incurred by KGHM Polska Miedź S.A. in 2023 [PLN thousand]
2023
+ Waste storage
5 501.1
+ Water intake
33.6
+ Effluents discharge
82 119.1
+ Emission of pollutants into the air
4 208.4
+ Other charges including municipal waste collection
78.3
Total fees related to environmental protection
91 940.5
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 137
Translation from the original Polish version
4.4 MANAGEMENT OF WATER RESOURCES
4.4.1 Policy related to water and marine resources
[ESRS E3-1]
The Policy of KGHM Polska Miedź S.A. related to water resources is based on a sustainable approach, care for the
environment and compliance with legal standards.
Foundations of the policy related to water and marine resources:
Sustainable use of water
resources
We strive to minimise the impact on water resources by using water efficiently and avoiding excessive
consumption. Our production processes take water conservation into account.
Protection of water quality
We use best available technology (BAT) to prevent pollution and improve water quality. We monitor water
quality on a regular basis and conduct corrective measures when irregularities are detected.
Compliance with
regulations and standards
We comply with applicable regulations concerning the protection of water resources at the national, regional
and local level. We implement international provisions on water conservation whenever this applies to the
operations of the company.
Public participation and
transparency
We cooperate with local communities and non-governmental organisations to understand their concerns and
incorporate their views into the decision-making process. We ensure transparency of the company's activities
related to water resources, and provide information on water consumption and emitted pollutants.
Failure prevention and
crisis management
We have plans in place for emergency situations aimed at mitigating the effects of potential incidents related
to water resources. We train employees on how to deal with failures, as well as cooperate with local emergency
services.
Innovation in terms of
water protection
We invest in research and development of technologies aimed at optimising the use of water and mitigating
the adverse environmental impact.
Sustainable socio-
economic development
We support the local economy and communities through job creation, investment and cooperation with local
communities.
Review and improvement
We conduct periodic reviews of the company's water resources policy in order to adapt to new legal,
technological and social requirements. We implement the latest solutions in monitoring systems for the
purpose of implementing goals related to water resources.
In developing our water resources management policy, we have taken into account the specific characteristics of our
industry as well as local conditions and requirements.
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 138
Translation from the original Polish version
4.4.2 Activities and resources related to water and marine resources
[ESRS E3-2]
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 facilities 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 30. Water in the ore enrichment process (flotation) in KGHM Polska Miedź S.A.
Three underground copper mines (the Lubin Mine Division, the Rudna Mine Division and the Polkowice-Sieroszowice Mine
Division) mine the ore at depths of 400-1350 meters under the ground surface. Due to the constant inflow of water from
the rock mass into the mines, saline mine water is pumped to the surface.
On the surface, retention reservoirs are located next to every mine and every ore enrichment plant collecting 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
wastewater is discharged directly into local rivers. In the ore enrichment plants (i.e. concentrators), all water is used in the
ore flotation process and subsequently for hydrotransport of tailings to the Żelazny Most Tailings Storage Facility. At the
Żelazny Most Tailings Storage Facility, tailings are sedimented and the clarified water is returned via a system of decantation
towers through pipelines on the surface, to the ore enrichment plants.
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 139
Translation from the original Polish version
Copper ore processing in the concentrators, and in particular grinding and flotation, require the supply of significant
quantities of process water. Only water from mine drainage is used for ore processing in KGHM, forming a mine-process
water circulation network between the ore enrichment plants and the Żelazny Most Tailings Storage Facility. In 2023, the
average monthly returns of water from the Żelazny Most Tailings Storage Facility to technological processes in the
Concentrators reached approximately 10.5 million m
3
of which:
− 3.1 million m
3
in the Lubin Concentrator;
− 1.6 million m
3
in the Polkowice Concentrator;
− 5.8 million 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. 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. Discharge of
mine-process wastewater/water from the operations of KGHM Polska Miedź S.A. is carried out in accordance with the
applicable laws and regulations and the provisions of the water law permit, taking into account the hydrological conditions
of the Odra River. The volume and quality of supernatant water discharged from the Żelazny Most Tailings Storage Facility
is closely monitored and regulated in relation to the water level in the river. The retention and dosing system operating at
KGHM Polska Miedź S.A. enables full control and oversight of the discharge of water into the Odra River. Consequently, at
low water levels in the receiving water body, we can suspend the discharge of wastewater. This option was used in July and
August 2022, when a crisis situation was announced for the Odra River and certain restrictions on the use of its water were
introduced. In addition, the condition of regulating the load of salt contained in the discharged effluent to prevent
exceeding 1000 mg/l of the sum of chlorides and sulphates in the river waters after mixing with the effluent is strictly
observed.
All of the aforementioned solutions ensure that despite the identified risk of increased inflow of mine water to the system
of mine and technological water (2.2.7 Material impacts, risks and opportunities and their interaction with strategy and
business model), the discharge of waste water from the Żelazny Most Tailings Storage Facility to the Odra River may be
done in a controlled manner, pursuant to the water law permit.
The Cedynia Wire Rod Division is supplied with water for human consumption and for technological purposes. 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.
Wastewater generated from the area of the Cedynia Wire Rod Division is treated in the local wastewater treatment plant
and, after treatment, discharged via a 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 2023, the volume reached 6 212 m
3
.
Diagram 31. Water in the electrolytic copper production process in KGHM Polska Miedź S.A.
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 140
Translation from the original Polish version
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. Approximately 30% of the global
stream is reused for production processes in the technological processes of the smelters. The remaining treated effluents,
approximately 8 million m
3
, are discharged to the Odra river (in the case of the Głogów Copper Smelter and Refinery) and
to the Pawłówka stream, which feeds the Kaczawa river (in the case of the Legnica Copper Smelter and Refinery).
In the context of water management in our installations, there are many issues that are taken into account and strictly
controlled due to the potential environmental impact. Key related issues include:
Water consumption
The mining and non-ferrous metals processing industry requires significant amounts of water for various
processes, such as mining, processing (flotation), pyrometallurgical processes. Consequently, effective
management and optimisation of water consumption are of key importance for us.
Wastewater discharge
All wastewater generated in our installations is treated before being discharged into the environment.
Pollution
We control the quantity and quality of pollutants discharged into the aquatic ecosystems.
Monitoring and reporting
We regularly monitor and report the results of our measurements, in accordance with the rules and regulations
resulting from the environmental standard.
4.4.3 Goals related to water and marine resources
[ESRS E3-3, ESRS E3-4 Addendum B]
The most significant environmental objectives related to water resources comprise a range of measures aimed at
protection, sustainable use and improvement of water quality, both surface and groundwater.
Preservation of
biodiversity in the aquatic
environment
We maintain the diversity of species and aquatic ecosystems, which contributes to the ecological balance.
Protection and sustainable
use of water resources
We manage water resources sustainably, ensuring that they are available for present and future generations
without excessive exploitation.
Improvement of water
quality
We reduce the generated pollutants to prevent the degradation of aquatic ecosystems.
Securing access to clean
drinking water
We provide access to safe and clean drinking water for the public.
Climate change adaptation
We are developing strategies and measures aimed at adaptation to climate changes that may affect water
availability.
Development of
monitoring systems
We have effective monitoring systems in place that enable strict monitoring of the condition of water resources
and the effects of our operations.
Meeting these objectives is critical to the protection and sustainable management of water resources in our environment.
Companies belonging to the KGHM Polska Miedź S.A. Group did not set measurable goals related to water resources and
water contamination.
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 141
Translation from the original Polish version
4.4.4 Water consumption
[ESRS E3-4]
Table 36. Water management in the KGHM Polska Miedź S.A. Group (thousand m
3
)
WATER WITHDRAWAL
2023
Water withdrawal by
source
Surface water (total)
10 353
Groundwater (total)
5 004
Seawater (total)
-
Water withdrawn as a result of operations, e.g. mine water (total)
44 166
Fresh water (≤1 000 mg/l of total dissolved substances)
-
Other water (>1 000 mg/L of total dissolved substances)
44 166
Water from third parties (total)
1 018
Fresh water (≤1 000 mg/l of total dissolved substances)
1 018
Other water (>1 000 mg/L of total dissolved substances)
-
Total water withdrawal
Surface water (total) + groundwater (total) + seawater (total) + post-production water
(total) + water from other sources (total)
60 541
EFFLUENTS (WATER) DISCHARGE
2023
Wastewater (water)
discharge by
destination
Surface water
49 717
Ground and soil
-
Sea
-
Water provided to third parties
641
Total water
(wastewater) discharge
Surface water + groundwater + seawater + third party water (total)
50 358
Wastewater (water)
discharge – fresh and
other water
Fresh water (≤1 000 mg/l of total dissolved substances)
9 027
Other water (>1 000 mg/L of total dissolved substances)
40 691
WATER CONSUMPTION
2023
Water consumption
Total water consumption
10 182
WATER REUSE
2023
Water reuse
Quantity of water recycled and reused
130 574
Table 37. Water management in KGHM Polska Miedź S.A. (thousand m
3
)
WATER INTAKE
2023
Water withdrawal by
source
Surface water (total)
-
Groundwater (total)
179
Seawater (total)
-
Water withdrawn as a result of operations, e.g. mine water (total)
44 166
Fresh water (≤1 000 mg/l of total dissolved substances)
-
Other water (>1 000 mg/L of total dissolved substances)
44 166
Water from third parties (total)
12 311
Fresh water (≤1 000 mg/l of total dissolved substances)
12 311
Other water (>1 000 mg/L of total dissolved substances)
-
Total water withdrawal
Surface water (total) + groundwater (total) + seawater (total) + post-production water
(total) + water from other sources (total)
56 656
EFFLUENTS (WATER) DISCHARGE
2023
Wastewater (water)
discharge by
destination
Surface water
40 784
Ground and soil
-
Sea
-
Water provided to third parties
10 776
Total water
(wastewater) discharge
Surface water + groundwater + seawater + third party water (total)
51 560
Wastewater (water)
discharge – fresh and
other water
Fresh water (≤1 000 mg/l of total dissolved substances)
10 870
Other water (>1 000 mg/L of total dissolved substances)
40 691
WATER CONSUMPTION
2023
Water consumption
Total water consumption
5 095
WATER REUSE
2023
Water reuse
Quantity of water recycled and reused
129 279
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 142
Translation from the original Polish version
4.4.5 Anticipated financial effects
[ESRS E3-5]
KGHM Polska Miedź S.A. omits information on the anticipated financial effects resulting from impacts, risks and
opportunities related to water and marine resources, using the transitional provision for phased-in disclosure requirements
(Appendix C, ESRS 1).
4.5 BIODIVERSITY IMPACT MANAGEMENT
Biodiversity is a key element of our land management - from design to the final site restoration and long-term management.
Our ambition is to achieve a positive impact on biodiversity in all new projects by working according to the mitigation
hierarchy. The development of ecological restoration plans and possible ecological compensation is a natural part of our
work to achieve this ambition.
4.5.1 Significant impacts, risks and opportunities and their relationship with the strategy and the
business model
[ESRS 2 SBM-3]
The company is committed to biodiversity conservation and responsible land and forest management. In cases where
protection is not possible, the company strives to compensate for the lost natural values. These activities are carried out
on the basis of best practice and in compliance with regulations in force, taking into account sustainability and mitigating
the environmental impact.
KGHM Polska Miedź S.A. and companies of the KGHM Group do not operate in, or in the direct vicinity of, areas of
outstanding natural value (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, KGHM Metraco S.A., “Energetyka” sp. z o.o.).
− Nature 2000 Special Habitat Conservation Areas:
− Kozioróg in Czerna PLH020100 (2.7 km - Głogów Copper Smelter and Refinery, KGHM Metraco, "Energetyka"
Sp. z o.o.),
− “Łęgi Odrzańskie” PLH020018 (11 km - Tailings Division, 2 km - Cedynia Wire Rod Plant, 7 km - Głogów Copper
Smelter and Refinery, KGHM Metraco S.A., “Energetyka” sp. z o.o.),
− “Pątnów Legnicki” PLH020052 (9 km - Legnica Copper Smelter and Refinery, KGHM Zanam, KGHM Metraco S.A.,
"Energetyka" Sp. z o.o.),
− Tarnowskie Góry-Bytom Underground Area PLH240003 (13.5 km - Walcownia Metali Nieżelaznych "Łabędy" S.A.),
− Ponds in Brzeszcze PLB120009 (4.6 km - Nitroerg S.A.),
− Mała Panew Valley PLH160008 (0.5 km – Nitroerg S.A.).
− 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),
− Dąbrowa Forest (4 km - Walcownia Metali Nieżelaznych „Łabędy”),
− Żubrowisko (5.8 km - Nitroerg S.A.).
− 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, KGHM Zanam, KGHM Metraco, "Energetyka"
Sp. z o.o.),
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 143
Translation from the original Polish version
− Lena (in the vicinity of areas managed by the Tailings Division),
− Jedlina Ponds (4 km - Nitroerg S.A.),
− Paprocany (7.1 km – Nitroerg S.A.).
− Animate and inanimate nature monuments (all divisions).
For all new investment projects executed by KGHM Polska Miedź S.A. and companies of the KGHM Group 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), detailed documents are prepared 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.
In addition, in order to assess potential impacts on biodiversity and ecosystems, we have started to review the operational
areas in terms of habitats and species covered by protection and risks that may affect them. Summary reports are produced
for all sites as a basis for the work and reporting carried out by the biodiversity operations.
Diagram 32. Operations of KGHM Polska Miedź S.A. and protected areas
4.5.2 Description of processes for identification and assessment of significant impacts, risks,
dependencies and opportunities related to biodiversity and ecosystems
[ESRS 2 IRO-1]
The establishment of new activities and the expansion of existing activities require access to land. We respect legally
designated protected areas and do not explore or develop projects located on the World Heritage Sites.
The majority of our operations is located in industrial areas adjacent to communities.
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 144
Translation from the original Polish version
All new projects are subject to the procedure on obtaining an environmental permit. Ecological surveys are always carried
out at the beginning of a project to enable the development of the project according to the impact mitigation hierarchy.
The results of biodiversity studies allow for the selection of the best possible location for new developments in terms of
nature conservation value to avoid potential impacts on biodiversity. Environmental Impact Assessments (EIAs) regarding
natural and cultural values are prepared at an early stage of the permit issuing process for new projects or changes to
existing operations.
Potential ecological compensation measures are developed during the permit issuing process for new activities that may
cause biodiversity loss.
In order to assess potential impact on biodiversity and ecosystems, we have started to review the operational areas in
terms of habitats and species covered by protection and risks that may affect them. Summary reports will be produced for
all sites as a basis for the work and reporting carried out by the biodiversity operations.
4.5.3 Transformation plan in terms of biodiversity and ecosystem and including biodiversity and
ecosystems in the strategy and business model
[ESRS E4-1]
In 2023, we commenced the assessments of our operational areas in terms of their potential impact on biodiversity and
ecosystems. Work will continue in 2024. Based on the results of the impact assessment, further measures will be taken to
increase biodiversity and ecosystems.
4.5.4 Policy related to biodiversity and ecosystems
[ESRS E4-2]
The provisions related to biodiversity and ecosystems are included in the Environmental Policy of KGHM Polska Miedź S.A.
The Environmental Policy is based on a sustainable approach, care for the environment and compliance with legal
standards.
The foundation of our policy in relation to biodiversity and ecosystems comprises:
− rational use of natural resources, such as land, water, forests,
− rational management of natural resources,
− recovery of the usable value of land that has been adversely affected by our activities,
− respecting legally designated protected areas and ensuring that any new operations or changes to existing operations
are carried out lawfully within our licence to operate,
− refraining from conducting activities at World Heritage Sites and, where our activities are adjacent to World Heritage
Sites, we will ensure that our activities do not compromise the safety and value of these sites.
A detailed description of the KGHM Polska Miedź S.A. Environmental Policy is included in section 4.3.1 Pollution policy.
4.5.5 Activities and resources related to biodiversity and ecosystems
[ESRS E4-3]
Our operations are sustainable along the entire value chain - from exploration, extraction, production to end processing.
We assume responsibility for the impact of our actions and actively work to minimise the loss of biodiversity and ecosystem
services and enhance biodiversity.
In the case of new projects, we follow a mitigation hierarchy based on the following steps:
− First, avoid impact as much as possible.
− Second, minimise impacts that cannot be avoided by mitigation measures.
− Third, reverse the impact through ecological restoration and reconstruction.
− Fourth, compensate for impacts caused and strive to create a net gain for biodiversity
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 145
Translation from the original Polish version
Monitoring
Extensive monitoring is carried out in the course of the operations, both on the basis of permits and voluntary initiatives.
Monitoring provides control and management of emissions and risks in relation to:
− Air quality,
− Surface water quality,
− Soil and groundwater quality,
− Dust deposition.
Restoration
Once facilities are closed, the area is rehabilitated to restore the use and nature value of the areas that were previously
exploited. The rehabilitation of brownfield sites comprises a range of activities aimed at restoring soil properties, restoring
biodiversity, and improving aesthetic and socio-economic conditions. We always ensure that the areas occupied by the
smelters and mines can be restored once the operation is closed. Closure and restoration plans are prepared in accordance
with applicable law for each site to be closed.
In accordance with the law, restoration funds have been set up for mining sites, landfills and tailings storage facilities where
money has been accumulated to fulfil the obligations related to closure, restoration, supervision, including monitoring.
Additional measures to enhance biodiversity and ecosystems
− afforestation – within the boundaries of Copper Smelters and Refineries and the Tailings Division, the total of 1 469
ha of forest area are situated. As part of the management of these areas, afforestation is carried out, resulting in
planting 423 thousand trees and 1.4 thousand bushes in 2023,
− protection of endangered species – Peregrine falcon
− protection of natural values - the “Łęgi Głogowskie” ecological 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. The implementation
of the flora and fauna protection in 2023 included the appropriate activities associated with the maintenance and
preservation of conservation areas.
− protection of pollinating insects - Copper Bees - this project, resulting in the construction of additional beehives at
the sites of the KGHM Polska Miedź S.A. Divisions, was continued in 2023.
KGHM INTERNATIONAL LTD.
The Carlota mine carries out annual monitoring of 1.01 ha of wetlands. Control of the four sites (Powers Gulch Diversion
Channel inlet and outlet, Pinto Creek Diversion Channel inlet and East Sedimentation Dam) involves annual photography
at fixed locations and collection of vegetation data. 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 growing atop the buttress wall of the pit. The care provided to the plants
has ensured their survival rate comparable to natural ones.
At the Robinson Mine, reclamation work was carried out on the slopes of the waste rock dump. The activities covered
approximately 8.5 ha of the historic facility.
Seven series of migratory bird surveys were carried out in the areas of active construction works from 1 March to 31 July to
confirm there was no negative impact on breeding species.
In addition, annual weed control measures were implemented. The aim of these measures is to effectively eradicate
designated harmful species that pose a threat to the continued economic and environmental value of the land within the
mine boundaries.
The Victoria Project, as required by the Canadian Endangered Species Act, protects the whooping cottontail (Antrostomus
vociferus) habitat, among others by limiting plant development activities outside its existing boundaries during the nesting
season and by providing endangered species training to all new employees.
In addition to this, fish species conservation activities were carried out (monitoring and resettlement in connection with the
installation of a culvert at the core plant) and land surveys during preparatory work for the new PAG rock dump
(identification of wetlands and tree and plant species).
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 146
Translation from the original Polish version
4.5.6 Goals related to biodiversity and ecosystems
[ESRS E4-4]
Our overall goal is to contribute to increasing biodiversity in the areas where we operate by 2030. Detailed targets will be
set once we have carried out an assessment of the potential impacts on the biodiversity and ecosystems of our operational
areas, which we started in 2023.
4.5.7 Impact measures related to biodiversity and ecosystem change
[ESRS E4-5]
Once the assessment of potential impacts on biodiversity and ecosystems has been carried out, impact measures related
to changes in the biodiversity and ecosystems of our operational areas will be identified.
4.5.8 Anticipated financial effects
[ESRS E4-6]
KGHM Polska Miedź S.A. omits information on the anticipated financial effects resulting from impacts, risks and
opportunities related to biodiversity and ecosystems, using the transitional provision for phased-in disclosure requirements
(Appendix C, ESRS 1).
4.6 USE OF RESOURCES AND CIRCULAR ECONOMY
We strive to create closed-loop systems of resources in our mining and smelting operations to optimise value creation and
minimise waste of resources.
We are involved in the production of high-quality metals, which are sold mainly to industrial customers in Europe.
Management of materials is important to KGHM. Concern for people, society and the environment are the leading topics
in the whole KGHM's value chain - from exploration to delivery to the customer.
4.6.1 Description of processes for identifying and assessing significant impacts, risks and
opportunities associated with the use of resources and the circular economy
[ESRS 2 IRO-1]
One of the main tasks of waste management carried out by KGHM 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 while limiting the harmful impact
of the Company's activities on 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.
Risks and opportunities related to the utilization of resources and the circular economy are set out in the Strategy of the
KGHM Polska Miedź S.A. Group to the year 2030 with an outlook to 2040.
Risks associated with the utilization of resources and the Circular Economy:
− Lack of technological readiness in terms of use of recycled feedstock (scrap) at Cedynia Wire Rod Plant installations.
High level of capacity utilization in processing - lack of capacity to increase production e.g. due to energy transition.
− Dependence of smelters on the declining supply of own concentrates
Opportunities associated with the utilization of resources and the Circular Economy:
− increased capacity to manage and commercialise waste as commercial products
− upgrading of existing infrastructure or construction of a new facility for re-melting low and high copper content scrap.
− continuing the implementation of projects related to recycling and the Circular Economy, in order to increase the share
of copper scrap in total production due to production cost optimization and environmental issues.
− securing the supply chain of third-party concentrates in the long term, due to potential problems with access to raw
materials caused by the supply gap in the market.
− considering the possibility of securing the supply of raw materials to smelters by storage of larger quantities of raw
material stocks (own warehouses located in the vicinity of ports or smelters).
− considering the identification of new areas for the acquisition and processing of copper scrap, e.g. cooperation with the
railway industry, the energy sector, the automotive sector (recycling of car batteries), recovery of electro-waste scrap,
recycling of photovoltaic farms and wind farms.
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 147
Translation from the original Polish version
− commencement of activities aimed at the recovery of silver and gold, including from low-quality scrap, in order to
provide greater quantities of cheaper raw material.
4.6.2 Policies related to the use of resources and circular economy
[ESRS E5-1]
Elements of the policy related to the use of resources and circular economy are contained in the Environmental Policy of
KGHM Polska Miedź S.A. The Environmental Policy is based on a sustainable approach, care for the environment and
compliance with legal standards. The foundation of our policy in relation to the use of resources and the circular economy
includes:
− rational use of natural resources, such as land, water, forests,
− rational management of natural resources,
− reducing the volume of generated waste and continuous development of waste management technologies,
A detailed description of the KGHM Polska Miedź S.A. Environmental Policy is included in section 4.3.1 Pollution policy.
4.6.3 Activities and resources related to the use of resources and circular economy
[ESRS E5-2]
Diagram 33. The circular economy concept
Key elements of building the circular economy in KGHM Polska Miedź S.A. include:
− seeking and implementing solutions that allow utilisation of waste storage sites as secondary deposits.
− 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 own production,
− minimising the volume of post-production waste to residual waste levels,
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.
Management of waste generated in 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), pursuant to which all activities should be
planned, designed and carried out in a way that prevents or minimises the volume of generated waste.
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 148
Translation from the original Polish version
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 associated with the Company’s activity is sludge from the “Energetyka” sp. z o.o. effluents treatment plant:
approx. 100 thousand t/year. Other large waste streams include dust and sludge from flue gas dust removal systems
generated in quantities 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.
A detailed description of the technological process in KGHM Polska Miedź S.A. and KGHM INTERNATIONAL LTD. can be
found in section 1.1.4 Business model.
4.6.4 Goals related to the use of resources and circular economy
[ESRS E5-3]
Goals related to the utilization of resources and the circular economy are set out in the Strategy of the KGHM Polska Miedź
S.A. Group to the year 2030 with an outlook to 2040 and assume:
− optimisation of mine production domestically and abroad ensuring long-term operational continuity
− development of metallurgy utilising efficient processing based on Circular Economy principles.
Ambitions:
− Ensuring effective electrolytic copper production – approx. 600 thousand tonnes of electrolytic copper per year
(including production based on a higher amount of purchased materials and copper from recycling).
− Securing future production from international assets – Higher production by the international assets of KGHM by
extending the life-of-mine (LOM) of active mines, developing assets in the mine projects portfolio held and increasing
the resource base thanks to advancement of the International Exploration Strategy.
− Strengthening its position as the world's leading silver producer - Maintaining the position amongst the world’s top-
three producers of silver (approx. 1 200 tonnes of silver annually).
− Increase in scrap melting by: intensifying the purchase of scrap from suppliers, increasing metal recovery as part of
Urban Mining - approximately 350 thousand tonnes of copper scrap
4.6.5 Impact of resources (use of raw materials and consumables)
[ESRS E5-4]
Information on the mining production of the KGHM Polska Miedź S.A. Group can be found in the section on the economic
results of the segments KGHM Polska Miedź S.A. and KGHM INTERNATIONAL LTD.
Scrap
Copper is one of few materials that does not undergo degradation or lose its chemical or physical properties during the
recycling process.
In recent decades, there has been an increasing emphasis on sustainability, where metal recycling plays an important role.
The Circular Economy (CE) is one of the key elements in the society's transition to more sustainable modes of production
and consumption. According to ICGS estimates, approximately 32% of global copper consumption in 2022 originated from
recycling.
A high quality copper scrap processing unit was installed within the core business of the Legnica Copper Smelter and
Refinery, which is the first stage for the Hybrid Smelter 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
the Głogów Copper Smelter and Refinery. As part of the implementation of the first stage of the project, the copper scrap
processing technology with the use of a Revolving Casting-Refining (RCR) furnace was applied. Total anode copper
production at the Legnica Copper Smelter and Refinery was 133 thousand tonnes, of which 58 thousand tonnes, was the
production from the RCR furnace. In 2023, 83 thousand tonnes of scrap was processed at the Legnica Copper Smelter and
Refinery (including 26 thousand tonnes in the RCR furnace), which was consequently recycled for use, not representing
waste that would require disposal by storage. Among the scrap recovered at the Legnica Copper Smelter and Refinery
facilities in 2023, 1 876 tonnes were own returns from other KGHM divisions.
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 149
Translation from the original Polish version
4.6.6 Impact of resources (products and materials put into circulation and waste generated)
[ESRS E5-5, ESRS E5-5 Addendum B]
Information on the metallurgical production of the KGHM Polska Miedź S.A. Group can be found in the section on economic
results of the segments: KGHM Polska Miedź S.A., KGHM INTERNATIONAL LTD.
Waste
Żelazny Most Tailings Storage Facility
The Hydrotechnical Division in Rudna, within the structure of KGHM Polska Miedź S.A., operates in particular the Żelazny
Most Tailings Storage Facility together with the Southern Quarter. The Żelazny Most Tailings Storage Facility is located in
the Lower Silesian Voivodship (on the territory of three municipalities: Rudna, Polkowice i Grębocice), in a valley between
the Dalkowskie Hills in the upper catchment area of the Rudna River, which form a natural boundary on the west and south.
Together with the Southern Quarter, the facility covers an area of approximately 2 100 hectares.
A protective pillar was established for the Żelazny Most Tailings Storage Facility including the Southern Quarter, approved
by a decision of the Director of the District Mining Office in Wrocław. No mining of the copper ore deposit below or in the
immediate vicinity of the facility is conducted. The current and forecast impacts of mining operations correspond to mining
site category 0, i.e. areas where mining impacts on building structures are minor. This situation will also not change if the
mining front enters the municipality of Rudna within the boundaries of the Lubin-Małomice mining area, which has not
been exploited so far.
The Żelazny Most Tailings Storage Facility 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.
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 levels and to seal the bottom of the
facility, while the remainder is disposed of in a landfilling process.
In 2023, the facility received 28.7 million tonnes of code 01 03 81 waste, of which:
− 20.3 million tonnes were recovered through the R5 process (for the construction of the facility dams - 6.2 million tonnes
and sealing of its bottom - 14.1 million tonnes),
− 8.4 million tonnes was disposed of in the D5 landfill process.
The Żelazny Most Tailings Storage Facility 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 2023, a Waste Segregation and Concentration Station was commissioned in terms of thickening technology, and a re-
filling plant was launched.
Waste recovery
The directions and methods of recovery of waste generated by the Company’s installations depend on its material
properties and environmental impact of the process.
Recovery of waste material consists of its use, entirely or partially, in mining technologies, as:
− construction or building material,
− material for reclamation and filling of post-mining voids,
− 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 Głogów Copper Smelter and Refinery.
In 2023, aggregate production was based on: 497.2 thousand tonnes of poured slag, 89.3 thousand tonnes of
granulated slag for batching and 180.9 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 2023: 6.2 million tonnes),
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 150
Translation from the original Polish version
− fine-grained flotation tailings are used to seal the bottom of the Żelazny Most Tailings Storage Facility (in 2023: 14.1
million tonnes),
− granulated slag from the Głogów Copper Smelter and Refinery is used at the Żelazny Most Tailings Storage Facility for
the construction of drainage layers in the waste mass and piers and embankments at the marina (in 2023: 26.2
thousand tonnes).
In the mines of KGHM Polska Miedź S.A., hydraulic backfill is used to fill mined void (goafs). The main material used for this
purpose is sand, but also granulated slag from the Głogów Copper Smelter and Refinery (in 2023, the Rudna Mine used
nearly 5.7 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 2023,
the Głogów Copper Smelter and Refinery supplied 112.4 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 the same 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.
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.
Table 38. Waste management in KGHM Polska Miedź S.A. and in the KGHM Polska Miedź S.A. Group in 2023 [t]
KGHM Polska Miedź S.A. - GENERATED WASTE
2023
Waste generated by group and by
treatment method
Group „01” – waste resulting from
exploration, mining, physical and
chemical processing of ores and other
minerals
generated
28 729 069
waste for recovery
20 328 654
waste for disposal
8 399 458
Group „10” – waste from thermal
processes
generated
1 087 849
waste for recovery
646 292
waste for disposal
17 702
Other waste
generated
71 293
waste for recovery
39 096
waste for disposal
19 402
Total waste generated
Group „1” (total) + Group „10” (total) +
Other waste (total)
29 888 211
KGHM Polska Miedź S.A. Group - GENERATED WASTE
2023
Waste generated by group and by
treatment method
Group „01” – waste resulting from
exploration, mining, physical and
chemical processing of ores and other
minerals
generated
102 532 015
waste for recovery
20 343 072
waste for disposal
82 187 987
Group „10” – waste from thermal
processes
generated
1 166 347
waste for recovery
716 456
waste for disposal
26 036
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
generated
197 392
waste for recovery
121 133
waste for disposal
76 258
Other waste
generated
350 599
waste for recovery
310 601
waste for disposal
27 204
Total waste generated
Group „1” (total) + Group „10” (total) +
Group „19” (total) + Other waste (total)
104 246 353
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 151
Translation from the original Polish version
By-product - diluted sulphuric acid
The sulphuric acid produced at the Legnica Copper Smelter and Refinery and the Głogów Copper Smelter and Refinery was
recognised by administrative decisions of the Marshal's Office of the Lower Silesian Voivodship as a by-product, thus losing
the status of waste. They are used at the Polkowice Mine Concentrator in the enrichment process as a factor enabling
decarburisation of one of the process intermediates.
The decarburisation 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. In 2023, the Głogów Copper Smelter and Refinery re-directed
19 913.9 tonnes of acid for this purpose, with 4 818.3 tonnes of acid re-directed at the Legnica Copper Smelter and Refinery.
By-product - granulated slag from the electric furnace
Granulated slag is produced at the Głogów Copper Smelter and Refinery and was recognised in 2023 by an administrative
decision of the Marshal of the Lower Silesian Voivodship as a by-product.
According to the decision, slag can be used for the following purposes:
− production of grits used in the production of mineral and asphalt mixes,
− production of aggregates (used, among other things, in the production of various types of mixes, for making frost-
resistant drainage and filter layers, as an additive to cement mixes and construction binders and for making
embankments),
− the production of mixtures used for auxiliary and basic substructures,
− embankment layers in the frost zone, drainage layers,
− overloading of overground facilities,
− hydraulic floors in mines,
− at the Żelazny Most Tailings Storage Facility: for the construction of drainage layers (ring drain) in the waste mass and
for the construction of jetties, embankments on the harbour inside the aforementioned facility and the replenishment
of the protective layer in the drainage layer,
− construction of linear drainage drains, road bodies, piers, causeways, static body and slope backfilling,
− road substructure (frost layer) and surface hardening of dirt roads.
4.6.7 Anticipated financial effects
[ESRS E5-6]
KGHM Polska Miedź S.A. omits information on the anticipated financial effects of climate-related impacts, risks and
opportunities, using the transitional provision for phased-in disclosure requirements (Appendix C, ESRS 1).
4.7 ENVIRONMENTAL INVESTMENTS
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 2023, the Company spent
approx. PLN 470 million on environmentally-friendly investments as part of tangible investments, of which the largest
expenditures, in the amount of approx. PLN 214 million, were incurred on maintenance, modernisation and development
of the Żelazny Most Tailings Storage Facility, including its infrastructure. The expenditure incurred by the Hydrotechnical
Plant in 2023 includes, respectively: 95% of the value of outlays earmarked in KGHM for environmentally-friendly
investment related to waste water management, 44% to water management and 82% to waste management. Significant
expenditure, approx. PLN 98 million, was incurred by KGHM on investments aimed at protecting the air, 69% of which were
for investments carried out at the Legnica and Głogów copper smelters/refineries by modernising or expanding dust
removal installations. In 2023, the expenditure on climate protection measures was increased to approximately
PLN 20 million, compared to 2022, leading to the systematic replacement of electrical appliances with energy-efficient
appliances, replacement with low-emission engines, the construction of fixed assets using energy generation from
renewable sources, reducing indirect CO
2
emissions.
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 152
Translation from the original Polish version
Chart 19. Value of expenditures incurred on environmentally-friendly activities in 2023 [in PLN million]
4.8 DISCLOSURES IN ACCORDANCE WITH THE EUROPEAN UNION TAXONOMY FOR SUSTAINABLE
ACTIVITIES IN 2023
Regulation (EU) 2020/852 of the European Parliament and of the Council of 18 June 2020 on establishing a framework to
facilitate sustainable investment, amending Regulation (EU) 2019/2088 (hereinafter: "EU Environmental Taxonomy", "EU
Taxonomy", "Taxonomy"), requires companies to disclose whether, and to what extent, their business activities comply with
the assumptions of the Taxonomy, classifying, and describing environmentally sustainable activities.
For the period from 1 January 2023 to 31 December 2023, 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),
as well as the related qualitative (explanatory) information - specified pursuant to the Commission Delegated Regulation
(EU) 2021/2178
45
, taking into account Commission Delegated Regulation (EU) 2022/1214
46
, amending the above regulation
and Commission Delegated Regulations (EU) 2023/2486
47
and 2023/2485
48
.
The first annual reporting period covered 2021, for which eligibility indicators were reported for the two first goals. For
2022, eligibility and compliance indicators were reported for the first two goals. Reporting for 2023 additionally includes
eligibility indicators for the four remaining goals and new activities assigned to the first two goals of the taxonomy (climate
change mitigation and climate change adaptation).
Pursuant to Commission Delegated Regulation (EU) 2021/2178, as amended by Commission Delegated Regulation (EU)
2023/2486 - taxonomy-eligible economic activities means economic activities as described in Commission Delegated
45
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 (“Delegated Act related to Article 8 of the Taxonomy”).
46
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.
47
Commission Delegated Regulation (EU) 2023/2486 of 27 June 2023 supplementing Regulation (EU) 2020/852 of the European Parliament
and of the Council by establishing technical qualification criteria to determine the conditions under which an economic activity qualifies
as contributing significantly to the sustainable use and conservation of water and marine resources, to the transition towards a circular
economy to the prevention and control of pollution, or to the protection and restoration of biodiversity and ecosystems, and whether
that economic activity does not cause serious harm to any other environmental objective, and amending Commission Delegated
Regulation (EU) 2021/2178 as regards the public disclosure of specific information in relation to those economic activities.
48
Commission Delegated Regulation (EU) 2023/2485 of 27June 2023 amending Delegated Regulation (EU) 2021/2139 establishing the
additional 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 goals.
Water management
166
Environmental monitoring
13
Climate protection
20
Protection of atmospheric air
98
Wastewater management
37
Waste/tailings management
123
protection and restoration of
the usable value of soils,
protection of groundwater
and surface water
13
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 153
Translation from the original Polish version
Regulation (EU) 2021/2139
49
, taking into account Commission Delegated Regulation (EU) 2023/2485 of 27 June 2023
amending the above regulation. Commission Delegated Regulation (EU) 2023/2486 of 27 June 2023, supplements European
Parliament and Council Regulation (EU) 2020/852. Meanwhile, the Delegated Act in the area of nuclear and natural gas
activities is Commission Delegated Regulation (EU) 2022/1214 of 9 March 2022.
Taxonomy-compliant activity is activity contributing substantially to the implementation of one or more of the
environmental objectives, causes no significant harm to any of the environmental goals 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.
As part of the verification of eligibility, an assessment was carried out in terms of a significant contribution to one or more
of the six environmental goals for which technical eligibility criteria have been published. The objectives include:
− climate change mitigation,
− climate change adaptation,
− sustainable use and protection of water and marine resources,
− transition to a circular economy,
− pollution prevention and control,
− protection and recovery of biodiversity and ecosystems.
For the purposes of the disclosures for 2023, companies of the KGHM Polska Miedź S.A. Group conducted an in-depth
analysis of their economic activities, as a result of which taxonomy-compliant activities have been identified, i.e. activities
compliant with the description of activities included in the regulation. 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. The eligibility of an activity
was based on a comparison of the respective actual activity with the description of the activity listed under Annex I or Annex
II of Commission Delegated Regulation (EU) 2021/2139, taking into account Commission Delegated Regulation (EU)
2023/2485 of 27 June 2023 amending the above Regulation and the description of the activities contained in Commission
Delegated Regulation (EU) 2023/2486. The individual types of the conducted activities have been assigned to only one
taxonomy - eligible activity. No part of the revenues, CAPEX and OPEX has been double-counted. 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.
The calculation of indicators of turnover, capital expenditure and operating expenditure was based on the definitions set
out in Annex I of Commission Delegated Regulation (EU) 2021/2178. The calculation of the indicators for the Group takes
into account the relevant consolidation exclusions based on the methods used in the financial statements.
The KGHM Group conducts its business activity outside of the European Union as well. These activities were assessed for
eligibility and compliance in the same manner as all the activities conducted in the EU.
4.8.1 Changes in the Group structure
The taxonomy indicators were calculated based on the structure of the KGHM Polska Miedź S.A. Group as at 31 December
2023. Changes in the composition of the Group are presented in section 1.1.3 Organisational structure of the Company and
the Group. The changes affecting the level of the taxonomy ratios include the acquisition of 100% of the shares of INVEST
PV7 sp. z o.o., which is engaged in the production of electricity using photovoltaic technology.
49
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 goals ("Delegated act laying down technical qualification
criteria").
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 154
Translation from the original Polish version
4.8.2 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, and
− 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 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 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
50
, 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.
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.
The survey conducted on compliance with the minimum social guarantees confirmed the fulfilment of the minimum
safeguards by the KGHM Group.
50
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
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 155
Translation from the original Polish version
4.8.3 Comments on the results
Copper and other raw materials, the mining and processing of which constitute the core business of the KGHM Polska
Miedź S.A. Group, are essential for the success of the energy transition. Copper products represent a key component of the
infrastructure for energy production based on renewable sources. Moreover, without copper, in most cases it would not
be possible to carry out activities which, in accordance with the legal regulations cited above, can be classified as activities
favourable to sustainable development. Paradoxically, the scopes of Annex I and Annex II of Delegated Regulation (EU)
2021/2139 do not cover copper production, including both from primary and from the secondary sources. On this basis,
the disclosures in terms of taxonomy indicators for 2023 do not include the core business activities of the KGHM Polska
Miedź S.A. Group.
More information on the role played by copper in the contemporary world, in particular in the energy transition, is provided
in section 4.2.2 Material impacts, risks and opportunities and their interaction with strategy and business model.
Consolidated disclosures of the KGHM Polska Miedź S.A. Group
Taxonomy-eligible activities of the KGHM Polska Miedź S.A. Group on the basis of the descriptions of activities indicated in
Commission Delegated Regulation (EU) 2021/2139 in Annex I and II, taking into account Commission Delegated Regulation
(EU) 2022/1214 of 9 March 2022, Commission Delegated Regulation (EU) 2023/2485 of 27 June 2023 and Commission
Delegated Regulation (EU) 2023/2486 of 27 June 2023:
− 1.3 Forest management
− Revenues generated by the economic activity
− 2.1 Hotels, holiday homes, camping grounds and similar establishments
− Revenues generated by the economic activity, as well as purchases from the business (OPEX)
− 3.1 Manufacture of renewable energy technologies
− Revenues generated by the economic activity, as well as purchases from the business (CAPEX and OPEX)
− 3.3 Manufacture of low carbon technologies for transport
− Revenues generated by the economic activity - the item discloses turnover and the related CAPEX and OPEX, as well
as purchases from the economic activity (OPEX),
− 3.4 Maintenance of roads and highways
− Purchases from the economic activity (CAPEX)
− 3.5 Application of concrete in civil engineering
− Purchases from the economic activity (OPEX)
− 3.6 Manufacture of other low carbon technologies
− Purchases from the economic activity (OPEX)
− 4.1 Electricity production using solar photovoltaic technology
− Revenues generated by the economic activity - the item discloses turnover and the related CAPEX as well as
purchases from the economic activity (CAPEX),
− 4.9 Transmission and distribution of electricity
− Revenues generated by the economic activity - the item discloses turnover and the related CAPEX and OPEX, as well
as purchases from the economic activity (CAPEX and OPEX)
− 4.15 District heating/cooling distribution
− Revenues generated by the economic activity - the item discloses turnover and the related CAPEX and OPEX, as well
as purchases from the economic activity (CAPEX and OPEX)
− 4.25 Production of heat/cool using waste heat
− Revenues generated by 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 (OPEX)
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 156
Translation from the original Polish version
− 5.1 Construction, extension and operation of water intake, treatment and supply systems
− Revenues generated by the economic activity - the item discloses turnover and the related CAPEX and OPEX, as well
as purchases from the economic activity (CAPEX and OPEX)
− 5.2 Renewal of water collection, treatment and supply systems
− Purchases from the economic activity (CAPEX)
− 5.3 Construction, extension and operation of waste water collection and treatment
− Revenues generated by the economic activity - the item discloses turnover and the related CAPEX and OPEX, as well
as purchases from the economic activity (CAPEX and OPEX)
− 5.5 Collection and transport of non-hazardous waste in source segregated fractions
− Revenues generated by the economic activity - the item discloses turnover and the related CAPEX and OPEX
− 5.9 Material recovery from non-hazardous waste
− Revenues generated by the economic activity - the item discloses turnover and the related CAPEX and OPEX
− 6.2 Freight rail transport
− Revenues generated by the economic activity - the item discloses turnover and the related CAPEX and OPEX, as well
as purchases from the economic activity (OPEX)
− 6.3 Urban and suburban transport, road passenger transport
− Revenues generated by 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
− Revenues generated by the economic activity - the item discloses turnover and the related CAPEX and OPEX, as well
as purchases from the economic activity (CAPEX and OPEX)
− 6.15 Infrastructure enabling low-carbon road transport and public transport
− Purchases from the economic activity (CAPEX and 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)
− 7.4 Assembly, conservation and repair of electric vehicle charging stations in buildings (and in parking areas near
buildings)
− Purchases from the economic activity (OPEX)
− 7.7 Acquisition and ownership of buildings
− Revenues generated by the economic activity as well as purchases from the economic activity (OPEX)
− 8.1 Data processing, hosting and related activities
− Revenues generated by the economic activity - the item discloses turnover and the related OPEX as well as
purchases from the economic activity (OPEX),
− 13.3 Activities related to the production of motion pictures, video recordings, television programs, sound recordings
and music recordings
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 157
Translation from the original Polish version
− Purchases from the economic activity (OPEX).
The disclosures aligned with the Taxonomy of the KGHM Polska Miedź S.A. Group for 2023, prepared in accordance with
the methodology discussed at the beginning of this chapter of the Report and in accordance with Annex II of Commission
Delegated Regulation (EU) 2021/2178, taking into account Commission Delegated Regulation (EU) 2023/2486 amending the
above Regulation and Commission Delegated Regulation (EU) 2023/2485, 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 the Company and the Group in 2023 158
Translation from the original Polish version
Table 39. Percentage share of turnover in products or services related to Taxonomy-eligible economic activity in 2023
Financial year N
Year
Criteria concerning material contribution
Criteria concerning the “does not
cause serious harm” principle
Economic activity (1)
Code or codes (2)
Turnover (3)
Turnover share, year N (4)
Climate change mitigation (5)
Climate change adaptation (6)
Water and marine resources (7)
Pollution (8)
Circular economy (9)
Biodiversity 10
Climate change mitigation (11)
Climate change adaptation (12)
Water and marine resources (13)
Pollution (14)
Circular economy (15)
Biodiversity 16
Minimum safeguards (17)
Participation in
taxonomy-
compliant
activity (A.1.)
or taxonomy-
eligible activity
(A.2.)
Turnover,
year N-1 (18)
Categ
ory
(supp
orting
activiti
es)
(19)
Categ
ory
(transi
tion
activiti
es)
(20)
Text
[PLN million]
%
Y
51
/N;
N/EL
Y/N;
N/EL
Y/N;
N/EL
Y/N;
N/EL
Y/N;
N/EL
Y/N;
N/EL
Y/N
Y/N
Y/N
Y/N
Y/N
Y/N
Y/N
%
E
T
A. TAXONOMY-ELIGIBLE ACTIVITY
A.1 Types of environmentally sustainable activities (Taxonomy-compliant)
District heating/cooling distribution
CCM 4.15
0.75
0.00%
Y
N/EL
N/EL
N/EL
N/EL
N/EL
N/A
Y
Y
Y
N/A
Y
Y
-
Production of heat/cool using waste heat
CCM 4.25
2.11
0.01%
Y
N/EL
N/EL
N/EL
N/EL
N/EL
N/A
Y
N/A
Y
Y
Y
Y
0.00%
Construction, extension and operation of
water collection, treatment and supply
systems
CCM 5.1
2.84
0.01%
Y
N/EL
N/EL
N/EL
N/EL
N/EL
N/A
Y
Y
N/A
N/A
Y
Y
0.01%
Collection and transport of non-
hazardous waste in source segregated
fractions
CCM 5.5
260.42
0.78%
Y
N/EL
N/EL
N/EL
N/EL
N/EL
N/A
Y
N/A
N/A
Y
N/A
Y
0.92%
Material recovery from non-hazardous
waste
CCM 5.9
33.92
0.10%
Y
N/EL
N/EL
N/EL
N/EL
N/EL
N/A
Y
N/A
N/A
N/A
Y
Y
0.07%
51
Y - Yes, taxonomy-eligible activity and taxonomy-compliant activity for the corresponding environmental objective
N - No, taxonomy-eligible activity but non-compliant with the taxonomy for the corresponding environmental objective
EL - taxonomy-eligible activity for the corresponding environmental objective
N/EL - taxonomy non-eligible activity for the corresponding objective
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 159
Translation from original Polish version
Turnover due to environmentally sustainable activities
(Taxonomy-compliant) (A.1)
300.03
0.90%
100.0%
0%
0%
0%
0%
0%
1.01%
Including supporting activities
-
%
%
%
%
%
%
%
%
E
Including transition-related
-
%
%
%
T
A.2 Taxonomy-eligible but not environmentally sustainable activity (activities non-compliant with the Taxonomy)
N/EL
N/EL
N/EL
N/EL
N/EL
N/EL
Forest management
CCM 1.3
0.02
0.00%
EL
N/EL
N/EL
N/EL
N/EL
N/EL
-
Hotels, holiday homes, camping grounds
and similar establishments
BIO 2.1
0.91
0.00%
N/EL
N/EL
N/EL
N/EL
N/EL
EL
-
Manufacture of renewable energy
technologies
CCM 3.1
0.02
0.00%
EL
N/EL
N/EL
N/EL
N/EL
N/EL
-
Manufacture of low carbon technologies
for transport
CCM 3.3
1.67
0.00%
EL
N/EL
N/EL
N/EL
N/EL
N/EL
0.06%
Electricity production using solar
photovoltaic technology
CCM 4.1
0.03
0.00%
EL
N/EL
N/EL
N/EL
N/EL
N/EL
-
Transmission and distribution of
electricity
CCM 4.9
40.09
0.12%
EL
N/EL
N/EL
N/EL
N/EL
N/EL
0.07%
Distribution in heating/cooling systems
CCM 4.15
86.92
0.26%
EL
N/EL
N/EL
N/EL
N/EL
N/EL
0.21%
Construction, extension and operation of
effluents collection and treatment
CCM 5.3
0.70
0.00%
EL
N/EL
N/EL
N/EL
N/EL
N/EL
0.00%
Freight rail transport
CCM 6.2
67.51
0.20%
EL
N/EL
N/EL
N/EL
N/EL
N/EL
0.15%
Urban and suburban transport, road
passenger transport
CCM 6.3
3.36
0.01%
EL
N/EL
N/EL
N/EL
N/EL
N/EL
0.01%
Infrastructure for rail transport
CCM 6.14
0.29
0.00%
EL
N/EL
N/EL
N/EL
N/EL
N/EL
0.00%
Acquisition and ownership of buildings
CCM 7.7
4.53
0.01%
EL
N/EL
N/EL
N/EL
N/EL
N/EL
0.01%
Data processing, hosting and related
activities
CCM 8.1
14.35
0.04%
EL
N/EL
N/EL
N/EL
N/EL
N/EL
0.04%
Turnover from Taxonomy-eligible but not
environmentally sustainable activity (activities non-
compliant with the Taxonomy) (A.2)
220.37
0.66%
99.6%
0%
0%
0%
0%
0.4%
0.55%
A. Turnover from Taxonomy-eligible activity (A.1+A.2)
520.41
1.55%
99.8%
0%
0%
0%
0%
0.2%
1.55%
B. TAXONOMY NON-ELIGIBLE ACTIVITY
Turnover from Taxonomy non-eligible activities
32 946.86
98.45%
TOTAL
33 467.26
100%
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 160
Translation from original Polish version
Table 40. Percentage share of capital expenditure in products or services related to a Taxonomy-compliant economic activity in 2023
Financial year N
Year
Criteria concerning material contribution
Criteria concerning the DNHS
principle (“does not cause serious
harm”)
Economic activity (1)
Code or codes (2)
Capital expenditure (3)
Percentage of capital expenditure, year N
(4)
Climate change mitigation (5)
Climate change adaptation (6)
Water and marine resources (7)
Pollution (8)
Circular economy (9)
Biodiversity 10
Climate change mitigation (11)
Climate change adaptation (12)
Water and marine resources (13)
Pollution (14)
Circular economy (15)
Biodiversity 16
Minimum safeguards (17)
Participation in
taxonomy-
compliant
activity (A.1.)
or taxonomy-
eligible activity
(A.2.)
Capital
expenditure,
year N-1 (18)
Categ
ory
suppo
rting
activiti
es
(19)
Categ
ory
transit
ion
activiti
es
(20)
Text
[PLN million]
%
Y/N;
N/EL
Y/N;
N/EL
Y/N;
N/EL
Y/N;
N/EL
Y/N;
N/EL
Y/N;
N/EL
Y/N
Y/N
Y/N
Y/N
Y/N
Y/N
Y/N
%
E
T
A. TAXONOMY-ELIGIBLE ACTIVITY
A.1 Types of environmentally sustainable activities (Taxonomy-compliant)
Construction, extension and operation of
water collection, treatment and supply
systems
CCM 5.1
3.18
0.06%
Y
N/EL
N/EL
N/EL
N/EL
N/EL
N/A
Y
Y
N/A
N/A
Y
Y
0.08%
Collection and transport of non-
hazardous waste in source segregated
fractions
CCM 5.5
22.71
0.45%
Y
N/EL
N/EL
N/EL
N/EL
N/EL
N/A
Y
N/A
N/A
Y
N/A
Y
0.07%
Material recovery from non-hazardous
waste
CCM 5.9
4.70
0.09%
Y
N/EL
N/EL
N/EL
N/EL
N/EL
N/A
Y
N/A
N/A
N/A
Y
Y
0.07%
Capital expenditure for environmentally sustainable
activities (Taxonomy-compliant) (A.1)
30.58
0.61%
100%
0%
0%
0%
0%
0%
0.22%
Including supporting activities
-
%
%
%
%
%
%
%
%
E
Including transition-related
-
%
%
%
T
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 161
Translation from original Polish version
A.2 Taxonomy-eligible but not environmentally sustainable activity (activities non-compliant with the Taxonomy)
N/EL
N/EL
N/EL
N/EL
N/EL
N/EL
Manufacture of renewable energy
technologies
CCM 3.1
1.69
0.03%
EL
N/EL
N/EL
N/EL
N/EL
N/EL
0.07%
Manufacture of low carbon technologies
for transport
CCM 3.3
0.09
0.00%
EL
N/EL
N/EL
N/EL
N/EL
N/EL
0.01%
Maintenance of roads and highways
CE 3.4
0.24
0.00%
N/EL
N/EL
N/EL
N/EL
EL
N/EL
-
Manufacture of other low carbon
technologies
CCM 3.6
-
-
-
-
-
-
-
-
0.17%
Manufacture of cement
CCM 3.7
-
-
-
-
-
-
-
-
0.00%
Manufacture of iron and steel
CCM 3.9
-
-
-
-
-
-
-
-
0.00%
Electricity production using solar
photovoltaic technology
CCM 4.1
25.40
0.51%
EL
N/EL
N/EL
N/EL
N/EL
N/EL
-
Transmission and distribution of
electricity
CCM 4.9
30.98
0.62%
EL
N/EL
N/EL
N/EL
N/EL
N/EL
0.35%
Distribution in heating/cooling systems
CCM 4.15
22.25
0.45%
EL
N/EL
N/EL
N/EL
N/EL
N/EL
0.70%
High-efficiency co-generation of
heat/cooling and electricity from gaseous
fossil fuels
CCM 4.30
-
-
-
-
-
-
-
-
0.39%
Construction, extension and operation of
water collection, treatment and supply
systems
CCM 5.1
22.98
0.46%
EL
N/EL
N/EL
N/EL
N/EL
N/EL
0.28%
Renewal of water collection, treatment
and supply systems
CCM 5.2
1.91
0.04%
EL
N/EL
N/EL
N/EL
N/EL
N/EL
-
Construction, extension and operation of
effluents collection and treatment
CCM 5.3
3.77
0.08%
EL
N/EL
N/EL
N/EL
N/EL
N/EL
0.20%
Freight rail transport
CCM 6.2
23.13
0.46%
EL
N/EL
N/EL
N/EL
N/EL
N/EL
1.07%
Transport by motorbikes, passenger cars
and light commercial vehicles
CCM 6.5
0.66
0.01%
EL
N/EL
N/EL
N/EL
N/EL
N/EL
0.01%
Freight transport services by road
CCM 6.6
0.76
0.02%
EL
N/EL
N/EL
N/EL
N/EL
N/EL
0.01%
Infrastructure for rail transport
CCM 6.14
13.27
0.27%
EL
N/EL
N/EL
N/EL
N/EL
N/EL
0.08%
Infrastructure enabling low-carbon road
transport and public transport
CCA 6.15
0.15
0.00%
N/EL
EL
N/EL
N/EL
N/EL
N/EL
-
Construction of new buildings
CCM 7.1
5.35
0.11%
EL
N/EL
N/EL
N/EL
N/EL
N/EL
0.18%
Renovation of existing buildings
CCM 7.2
40.75
0.82%
EL
N/EL
N/EL
N/EL
N/EL
N/EL
0.89%
Installation, maintenance and repair of
energy efficiency equipment
CCM 7.3
13.53
0.27%
EL
N/EL
N/EL
N/EL
N/EL
N/EL
0.55%
Data processing, hosting and related
activities
CCM 8.1
0.07
0.00%
EL
N/EL
N/EL
N/EL
N/EL
N/EL
0.06%
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 162
Translation from original Polish version
Capital expenditure from Taxonomy-eligible but not
environmentally sustainable activity (activities non-
compliant with the Taxonomy) (A.2)
207.00
4.15%
99.8%
0.1%
0%
0%
0.1%
0%
5.01%
A. Capital expenditure from Taxonomy-eligible activity
(A.1+A.2)
237.58
4.76%
99.8%
0.1%
0%
0%
0.1%
0%
5.23%
B. TAXONOMY NON-ELIGIBLE ACTIVITY
Capital expenditure from Taxonomy non-eligible
activities
4 753.85
95.24%
TOTAL
4 991.44
100%
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 163
Translation from original Polish version
Table 41. Percentage share of operating expenditure from products or services related to Taxonomy-compliant economic activity in 2023.
Financial year N
Year
Criteria concerning material contribution
Criteria concerning the DNSH
principle (“does not cause serious
harm”)
Economic activity (1)
Code or codes (2)
Operating expenditure (3)
Percentage of operating expenditure, year
N (4)
Climate change mitigation (5)
Climate change adaptation (6)
Water and marine resources (7)
Pollution (8)
Circular economy (9)
Biodiversity (10)
Climate change mitigation (11)
Climate change adaptation (12)
Water and marine resources (13)
Pollution (14)
Circular economy (15)
Biodiversity 16
Minimum safeguards (17)
Participation in
taxonomy-
compliant
activity (A.1.)
or taxonomy-
eligible activity
(A.2.)
Operating
expenditure,
year N-1 (18)
Categ
ory
suppo
rting
activiti
es
(19)
Categ
ory
transit
ion
activiti
es
(20)
Text
[PLN million]
%
Y/N;
N/EL
Y/N;
N/EL
Y/N;
N/EL
Y/N;
N/EL
Y/N;
N/EL
Y/N;
N/EL
Y/N
Y/N
Y/N
Y/N
Y/N
Y/N
Y/N
%
E
Y
A. TAXONOMY-ELIGIBLE ACTIVITY
A.1 Types of environmentally sustainable activities (Taxonomy-compliant)
Distribution in heating/cooling systems
CCM 4.15
3.36
0.16%
Y
N/EL
N/EL
N/EL
N/EL
N/EL
N/A
Y
Y
Y
N/A
Y
Y
-
Production of heat/cool using waste heat
CCM 4.25
12.81
0.62%
Y
N/EL
N/EL
N/EL
N/EL
N/EL
N/A
Y
N/A
Y
Y
Y
Y
0.54%
Construction, extension and operation of
water collection, treatment and supply
systems
CCM 5.1
8.53
0.41%
Y
N/EL
N/EL
N/EL
N/EL
N/EL
N/A
Y
Y
N/A
N/A
Y
Y
0.51%
Collection and transport of non-
hazardous waste in source segregated
fractions
CCM 5.5
9.95
0.48%
Y
N/EL
N/EL
N/EL
N/EL
N/EL
N/A
Y
N/A
N/A
Y
N/A
Y
0.48%
Material recovery from non-hazardous
waste
CCM 5.9
3.37
0.16%
Y
N/EL
N/EL
N/EL
N/EL
N/EL
N/A
Y
N/A
N/A
N/A
Y
Y
0.13%
Freight rail transport
CCM 6.2
6.16
0.30%
Y
N/EL
N/EL
N/EL
N/EL
N/EL
N/A
Y
N/A
Y
Y
N/A
Y
0.26%
Operating expenditure for environmentally sustainable
activities (Taxonomy-compliant) (A.1)
44.18
2.13%
100%
%
%
%
%
%
1.91%
Including supporting activities
-
%
%
%
%
%
%
%
%
E
Including transition-related
-
%
%
%
Y
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 164
Translation from original Polish version
A.2 Taxonomy-eligible but not environmentally sustainable activity (activities non-compliant with the Taxonomy)
EL; N/EL
EL;
N/EL
EL;
N/EL
EL;
N/EL
N/EL
N/EL
Hotels, holiday homes, camping grounds
and similar establishments
BIO 2.1
0.02
0.00%
N/EL
N/EL
N/EL
N/EL
N/EL
EL
-
Manufacture of renewable energy
technologies
CCM 3.1
0.07
0.00%
EL
N/EL
N/EL
N/EL
N/EL
N/EL
0.01%
Manufacture of low carbon technologies
for transport
CCM 3.3
0.67
0.03%
EL
N/EL
N/EL
N/EL
N/EL
N/EL
0.04%
Application of concrete in civil
engineering
CE 3.5
0.05
0.00%
N/EL
N/EL
N/EL
N/EL
EL
N/EL
-
Manufacture of other low carbon
technologies
CCM 3.6
0.63
0.03%
EL
N/EL
N/EL
N/EL
N/EL
N/EL
0.01%
Manufacture of cement
CCM 3.7
-
-
-
-
-
-
-
-
0.00%
Manufacture of iron and steel
CCM 3.9
-
-
-
-
-
-
-
-
0.08%
Transmission and distribution of
electricity
CCM 4.9
14.41
0.69%
EL
N/EL
N/EL
N/EL
N/EL
N/EL
0.63%
Distribution in heating/cooling systems
CCM 4.15
15.17
0.73%
EL
N/EL
N/EL
N/EL
N/EL
N/EL
0.55%
High-efficiency co-generation of
heat/cooling and electricity from gaseous
fossil fuels
CCM 4.30
22.46
1.08%
EL
N/EL
N/EL
N/EL
N/EL
N/EL
1.10%
Construction, extension and operation of
water collection, treatment and supply
systems
CCM 5.1
3.41
0.16%
EL
N/EL
N/EL
N/EL
N/EL
N/EL
0.16%
Construction, extension and operation of
effluents collection and treatment
CCM 5.3
2.29
0.11%
EL
N/EL
N/EL
N/EL
N/EL
N/EL
0.10%
Freight rail transport
CCM 6.2
39.35
1.89%
EL
N/EL
N/EL
N/EL
N/EL
N/EL
2.00%
Urban and suburban transport, road
passenger transport
CCM 6.3
1.08
0.05%
EL
N/EL
N/EL
N/EL
N/EL
N/EL
0.03%
Transport by motorbikes, passenger cars
and light commercial vehicles
CCM 6.5
0.33
0.02%
EL
N/EL
N/EL
N/EL
N/EL
N/EL
0.01%
Freight transport services by road
CCM 6.6
2.17
0.10%
EL
N/EL
N/EL
N/EL
N/EL
N/EL
0.06%
Infrastructure for rail transport
CCM 6.14
13.16
0.63%
EL
N/EL
N/EL
N/EL
N/EL
N/EL
0.65%
Infrastructure enabling low-carbon road
transport and public transport
CCA 6.15
3.11
0.15%
N/EL
EL
N/EL
N/EL
N/EL
N/EL
-
Construction of new buildings
CCM 7.1
0.46
0.02%
EL
N/EL
N/EL
N/EL
N/EL
N/EL
0.00%
Renovation of existing buildings
CCM 7.2
22.55
1.08%
EL
N/EL
N/EL
N/EL
N/EL
N/EL
1.56%
Installation, maintenance and repair of
energy efficiency equipment
CCM 7.3
2.53
0.12%
EL
N/EL
N/EL
N/EL
N/EL
N/EL
0.10%
Installation, maintenance and repair of
electric vehicle charging stations in
buildings (and in car parks at buildings)
CCM 7.4
0.01
0.00%
EL
N/EL
N/EL
N/EL
N/EL
N/EL
-
Acquisition and ownership of buildings
CCM 7.7
0.12
0.01%
EL
N/EL
N/EL
N/EL
N/EL
N/EL
-
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 165
Translation from original Polish version
Data processing, hosting and related
activities
CCM 8.1
9.84
0.47%
EL
N/EL
N/EL
N/EL
N/EL
N/EL
0.57%
Activities related to the production of
motion pictures, video recordings,
television programs, sound recordings
and music recordings
CCA 13.3
0.02
0.00%
N/EL
EL
N/EL
N/EL
N/EL
N/EL
-
Operating expenditure from taxonomy-eligible but not
environmentally sustainable activity (activities non-
compliant with the Taxonomy) (A.2)
153.90
7.40%
97.92%
2.03%
0%
0%
0.03%
0.01%
7.67%
A. Operating expenditure from Taxonomy-eligible
activity (A.1+A.2)
198.09
9.53%
98.39%
1.58%
0%
0%
0.03%
0.01%
9.58%
B. TAXONOMY NON-ELIGIBLE ACTIVITY
Operating expenditure from Taxonomy non-eligible
activities
1 880.77
90.47%
Total
2 078.86
100%
KGHM Polska Miedź S.A.The Management Board’s Report on the activities of the Company and the Group in 2023 166
Translation from the original Polish version
4.8.4 Key performance indicators prepared in accordance with Delegated Regulation 2023/2486
Proportion of turnover / Total turnover
Goals
Compliance with
Taxonomy by goals
Eligibility for Taxonomy
by goals
CCM
0.90%
1.55%
CCA
-
-
WTR
-
-
CE
-
-
PPC
-
-
BIO
-
0.003%
Proportion of capital expenditure / Total capital
expenditure
Goals
Compliance with
Taxonomy by goals
Eligibility for Taxonomy
by goals
CCM
0.61%
4.75%
CCA
-
0.003%
WTR
-
-
CE
-
0.005%
PPC
-
-
BIO
-
-
Proportion of operating expenditure / Total
operating expenditure
Goals
Compliance with
Taxonomy by goals
Eligibility for Taxonomy
by goals
CCM
2.13%
9.37%
CCA
-
0.15%
WTR
-
-
CE
-
0.002%
PPC
-
-
BIO
-
0.001%
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 167
Translation from original Polish version
5 EMPLOYEES AND SOCIETY
5.1 RESPECTING HUMAN RIGHTS
In April 2022, the Company adopted a Human Rights Policy. The adoption of the Human Rights Policy 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 terms of maintaining the Copper Mark certification
by the Company. 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.
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, ensuring safety at work, ensuring respect among employees and acting with respect for women's rights and
equal pay, caring for the environment and conducting its activities with respect for the rights of indigenous peoples - on
the basis of functioning normative acts. Work is currently pending to ensure consistency and comprehensiveness of these
activities.
An analysis of the impacts, risks and opportunities in the context of social issues is included in section 2.2.7 Material impacts,
risks and opportunities and their interaction with strategy and business model.
5.2 RESPONSIBLE EMPLOYER
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 environmental and social aspects, based on order and balanced activity with
other elements which constitute the world order.
5.2.1 Human Rights in KGHM Polska Miedź S.A.
[ESRS S1-1, ESRS S1-1 Addendum B]
In accordance with the provisions of the adopted Human Rights Policy, 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.
The Company pledges 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 Guidelines for Responsible Supply Chains of
Minerals from Conflict-Affected and High-Risk Areas.
KGHM declares that respect for human rights by other entities with which we cooperate is an important factor to be taken
into account when establishing mutual relations. All human rights violations can be reported through the anonymous
Whistleblower Platform called the KGHM Ethics Hotline.
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:
− care for fair pay, the right to rest and equal access to training.
− lack of acceptance of any form of violation of personal dignity and gender equality, including: discrimination,
harassment, abuse and other actions that violate the rules of social coexistence.
− combating 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, KGHM also respects, protects and promotes family and parental
values.
KGHM recognises the protection of human rights as 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 Human Rights Policy has been developed taking into account the corporate risk management methodology adopted
by the Company. Potential risks in human rights violations in the Company's operations were identified and assessed. At
the same time, actions were identified to mitigate or reduce the identified risks.
Despite the limitations specific for the mining, steel and metal refining industries, the Company strives for continuous
improvement of attitudes. This Policy is supported by the Company’s existing regulations and procedures which form part
of this document.
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 168
Translation from original Polish version
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.
5.2.2 Policies related to own workforce
[ESRS S1-1, ESRS S1-1 Addendum B]
Work Regulations at 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.
Work and remuneration regulations and anti-abuse, occupational health and safety procedures have been
adopted in each material operating company of the KGHM Group. The "Code of Ethics of the KGHM Polska
Miedź S.A. Group" has been introduced for application in each company.
HR Policy of KGHM Polska
Miedź S.A.
The HR policy in KGHM emphasises that it is KGHM's employees who are the company's most valuable asset -
they create the company's unique culture and build its position in the market. In order to meet its key
objectives, the company systematically invests in the labour market and is committed to educating the younger
generation. It pays particular attention to the quality of its workforce, emphasising that employees are the
foundation for the growth of the business, enhancing its global position and transforming it into an
organisation ready for the future. KGHM attracts the top level experts and professionals, allowing it to recruit
people with high capacity who perfectly respond to the company's needs. The success of an organisation
depends on the contribution of every employee.
The uniqueness of the HR policy pursued is confirmed by the fact that KGHM employees are not only talented
and highly qualified, but also act in accordance with the values of KGHM, are open to change, search for
innovative solutions and are willing to share their knowledge and experience. Most importantly, however,
KGHM employees, regardless of their position, perceive their personal development as a challenge through
which the entire organisation benefits.
As a global company, KGHM provides a unique opportunity for people who want to gain access to cutting-edge
technology and solutions. They have this opportunity by participating in the work of specialised project teams.
Participation in the work of such a team is also an excellent opportunity to share knowledge and experience
within the company's structures.
KGHM’s Declaration on the
Protection of Human
Rights
KGHM Polska Miedź S.A. recognizes, respects and observes human rights - including employee rights. The
Company is committed to conducting operations in accordance with the UN Universal Declaration of Human
Rights. The approach to the protection of human rights is defined by “KGHM’s Declaration on the Protection of
Human Rights”. The employee's dignity and personal assets are subject to unconditional protection and the
mutual relationships are based on their respecting. 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, such as the International Labour Organization (ILO) or UN Global
Compact. Regulations and policies are created taking account of the welfare of employees and mutual
relationships, based on best practice, irrespective of the jurisdiction of the place of operation of the company.
The Company creates a culture, work environment and venue free from discrimination. No form of
discrimination is tolerated, in particular due to gender, race, age, origin, religion, disability, world view, sexual
orientation, social status, marital status, political party and trade union membership or the form of
employment.
International Mobility
Policy
Since 2015, KGHM Polska Miedź S.A. has been actively pursuing a policy of international employee mobility in
response to the dynamic growth of international operations and the acquisition of international assets. This
policy is a key element of the company's talent management and global development strategy. The policy aims
to optimise the use of human resources by effective allocation of talents in the Group's strategic locations such
as Chile, Canada and the USA. The policy comprises national and international assignments, providing support
in career development and knowledge transfer.
The international mobility policy at KGHM Polska Miedź S.A. is the foundation of the talent management and
global development strategy. Due to this policy, the company manages its human resources effectively on an
international arena, contributing to the increase in competitiveness and operational efficiency.
Training Policy
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
adapted well to sudden and unpredictable changes. For the sake of employee health, processes of
digitalisation, digitisation and automation of management and administrative processes have been
accelerated; remote or hybrid working options have been introduced where possible, and desktop training has
been converted to e-learning methods. 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.
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 169
Translation from original Polish version
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 uniform “Principles for recruitment of candidates for employment in KGHM Polska
Miedź S.A.”. The selection of personnel at KGHM is carried out respecting the principles of legalism,
transparency, timeliness, efficiency, diversity and equal access to employment.
The management of recruitment processes is supported by the eRekrutacja system, which makes it possible
to recruit employees in a fully digitised manner and to use the existing candidate database while maintaining
the highest standards of data security. The Company acts in accordance with the principles of due diligence,
and conducts electronic registration of job candidates on the basis of advertisements placed on the website:
https://rekrutacja.kghm.com/Recruitment, which contains job offers published by the KGHM Polska Miedź S.A.
Group.
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 accordance
with the adopted anti-corruption standards, KGHM Polska Miedź S.A. applies due diligence in the process of
selecting personnel for positions that are associated with a higher than low risk of corruption.
In 2023, two video guides were recorded to reinforce the employer's image in communicating with potential
employees, including tips for candidates, writing a professional CV and how to prepare for a recruitment
interview at KGHM. The videos were posted on the Careers tab and on social media, and used in educational
activities in collaboration with the research and teaching community.
5.2.3 Procedures for working with own employees and employee representatives in terms of impact
[ESRS S1-2]
HR projects in KGHM Polska Miedź S.A.
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.
“Competent in the sector”
program
As part of the KGHM Polska Miedź S.A. Program, KGHM Polska Miedź S.A. has been supporting education in
the professions most relevant to the region, as well as those of key importance to the Company, since 2018.
The Program covers 10 schools from such towns as: Legnica, Bolesławiec, Lubin, Chojnów, Polkowice, Głogów
and Wschowa. In the 2022/2023 school year, more than 1 900 students attended educational classes and 472
students carried out practical vocational training at 8 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 633 300, funds in the amount of PLN 828 533 have been donated to purchase additional equipment and
furnishings for school workshops and classrooms for teaching professional subjects, while 349 graduates were
employed in Divisions of KGHM Polska Miedź S.A. 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.
Digital Future of Copper
Program
In July 2023, KGHM launched the "Digital Future of Copper" educational project for 250 students from eight
secondary school institutions in the Copper Belt and Lubuskie Voivodship, coordinated by the Central
Information Processing Center (COPI). The aim of the program is the comprehensive development of students
in the area of digital competence, integrating theory and practice through structured classes, internships,
professional visits, academic conferences and seminars. The project focuses on acquiring practical skills and
creating a platform for networking with industry professionals, supporting the individual development of
young talent. COPI offers comprehensive support to participants through a variety of educational activities,
enabling them to explore the secrets of the copper industry and develop essential digital skills. The investment
aims to strengthen the capacity of future industry leaders by building a strong educational foundation focused
on digital technologies.
Digitisation of HR
processes
In 2023, as part of making HR operations more efficient, improvements have been introduced to speed up and
facilitate processes related to service, business travel and strengthening the employer’s image and
communication with job candidates in recruitment processes. Work was completed on the electronic process
of conducting the adaptation of newly hired employees of administrative and office structures in the Head
Office of KGHM, consisting of courses included in the training management system.
Neurodiversity
In 2023, a development program was launched at the Company with the aim to build awareness in the area of
neurodiversity both among KGHM employees and in the social and business environment. In June 2023, a
Conference was organised with the participation of representatives of local business and cooperating KGHM
universities and the event was held under the patronage of the Ministry of Education. Workshops for willing
employees and managers of the Company were also held in June and November 2023, which is important in
the context of shaping an inclusive company culture.
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 170
Translation from original Polish version
Survey on employee
engagement in KGHM
Polska Miedź S.A.
In 2023, KGHM conducted an employee engagement survey for the third time, which covered both the Head
Office and the Company divisions. In this process, which continued from 23 November to 21 December 2023,
employees were encouraged to participate by the slogan “Let's talk about the company, as copper unites us”.
The aim of the survey was to diagnose areas requiring change and those representing strengths of the
organisational culture. A total of 12 295 employees participated in the survey, representing 65% of the
workforce, providing an in-depth look at the perception of the company, the prevailing mood and planning
future action in key areas.
The 2023 Engagement Survey has been enhanced with a refreshed survey questionnaire, incorporating
suggestions from previous editions. Thus, KGHM plans to propose measures that reflect the expectations of
employees. As in previous years, the survey was combined with a charity event. The Company has secured
funds that will be donated to charities identified by individual Divisions, to support local communities.
Psychological support for
KGHM 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 and continued in 2023. The aim of the InvestCUp
initiative is to increase and consolidate existing competence, exchange experience and best practices in the
area of investment project implementation.
Post-graduate studies -
Copper Leaders
The Copper Leaders Postgraduate Program at the University of Warsaw is a program addressed to middle level
management, based on MBA standards. The program comprehensively discusses the role of leadership in
managing change, projects, people and finance. The second edition of these studies has already been
completed
Data Science Studies
Data Science studies at the University of Warsaw comprise a master's program that provides students with
exceptional knowledge in data science. The program combines extensive knowledge and skills in data analytics,
econometrics and machine learning, IT programming with soft skills, making graduates of the program highly
desirable experts.
Studies in Cyber security
of industrial systems
The postgraduate course on Cyber Security of Industrial Systems at the Silesian University of Technology aims
to teach graduates practical skills in managing the security of a company's systems and to learn about
instruments to combat cybercrime
Leader Academy - KGHM
Giants
The program initiated as a pilot project in 2021/2022 and dedicated to the lowest level managers from the
KGHM Head Office and Divisions, was continued in 2023. Developing key leadership competencies has a direct
impact on employee performance, translates into the organisational climate and the Company's business
results, therefore leaders with well-developed skills are able to increase team motivation and commitment,
leading to better use of resources, innovation and optimisation of processes within the organisation. Training
under the KGHM Giants Leadership Academy program was continued until May 2023.
Adaptation training
program for new
employees
The adaptation program is dedicated to newly-hired employees recruited in the administrative and office
structures of the Head Office of KGHM, and ultimately also in the Divisions of the Company. It is a continuation
of the onboarding training initiated in 2020, which has been provided in an electronic training management
system since 2023. Its aim is the effective introducing of a new employee to the organisation and to the tasks
of the job, as well as shaping positive employee attitudes and supporting integration with the team. On the
one hand, it enables faster induction of a new employee and completion of the first employment formalities,
while on the other hand, it supports the supervisor, the mentor and the professional units involved in carrying
out the tasks assigned to their role. The progress and satisfaction level of the Onboarding Training Plan
participant's adaptation process is monitored by HR staff using automated reports.
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 the process of acquiring new employees, the company reinforces its position as a leading employer by
presenting its culture based on its core values in job offers and by offering a wide range of additional benefits
to its employees.
Succession and
replacement plan
In 2023, the Principles for the creation and operation of a succession and replacement plan for key positions
in KGHM "Polska Miedź S.A." were implemented covering all Divisions of the Company. The aim of the
procedure is to verify the key positions in terms of maintaining the continuity of production and strategic
processes, and to appoint their replacements (in case of temporary absence) and successors (as successors to
the position).
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 171
Translation from original Polish version
HR projects in the domestic companies of the KGHM Polska Miedź S.A. Group
In 2023, HR projects were implemented in the Group's domestic companies concerning, among other things, the
enhancement of professional skills and qualifications and the improvement of work efficiency, including using tools with
an incentive function.
In order to ensure adequate human resources, including the prevention of excessive staff turnover, procedures for the
professional adaptation of employees, programs of development activities were implemented, and cooperation with
universities continued.
HR projects have also included issues relating to remote working arrangements.
In addition, in 2023, the companies implemented projects in the field of:
− reducing levels of sickness-related absence,
− employee development paths,
− digitalisation of the HR and payroll area.
HR projects in the companies of the KGHM INTERNATIONAL LTD. Group
In 2023, KGHM INTERNATIONAL LTD. organised a number of events and initiatives to strengthen the commitment and
appreciation of the hard work of its employees, as well as to develop educational cooperation and development initiatives.
The consolidated and detailed descriptions of these activities are presented below:
Succession planning
In order to ensure operational efficiency, minimise the risks of losing key competences and enable a smooth
transition between generations of employees, work on succession plans continued in 2023. Internal and inter-
company successors in key positions (such as, for example, Chief Mining Engineer, Crusher Manager, Health
and Safety Manager, etc.) have been identified. Programs have been implemented to support the
development of identified successors.
Volunteer program
Voluntary activity and community initiatives build a positive image of the company in the local community and
wider society. This strengthens relationships with local stakeholders, customers and employees. Employees
at Robinson Mine worked a total of more than 485 hours continuing their community activities. To improve
this initiative, the HR team updated the Volunteer Policy to clearly define the rules of the program and
introduced small incentives for employees in the form of stickers and T-shirts for campaign participants.
Pro-worker meetings and
events
In 2023, events were organised and initiatives were introduced to recognise and express gratitude to the
employees of KGHM INTERNATIONAL LTD. for their efforts and hard work. These included, among others,
educational meetings for families, team-building and festive events, the creation of a CSR guide for employees,
competitions with prizes for exemplary attendance and conduct in line with the company values, competitions
to promote a healthy diet (Maintain No Gain Contest).
Cooperation with
Educational Institutions
KGHM INTERNATIONAL LTD. continued to work with universities in Nevada, Utah, Idaho and Montana to
recruit interns and students, demonstrating the company's commitment to developing young talent and
building career paths in the mining sector.
It also cooperated with high schools, including White Pine High School, to attract students’ interest in careers
in mining as part of a long-term strategy to invest in future generations of workers. Collaboration continued
with the Great Basin College on the Maintenance Technical Cooperative (MTC) program. The MTC program
offers participants the opportunity to learn a job by attending classes at a local college and working within the
structures of KGHM INTERNATIONAL LTD. Participants can benefit from a wide range of vocational courses.
The company offers the following options for those willing to join the program:
− Scholarships for high school students: a scholarship and practical training for local high school students
currently enrolled in the program or planning to enrol next semester.
− In-house employee program: full tuition fee reimbursement for employees remaining in full-time
employment.
− Staff-Students: employing part-time staff as students who join work and study. During the study, the
company covers or subsidises tuition fees.
Exit interviews
An exit interview is an interview conducted with an employee when their employment with a company
terminates. It is an important tool for the HR department as it enables to understand the reasons why an
employee resigns, identify areas for improvement within the company and apply retention measures that can
contribute to the retention of more employees. HR teams strive to learn as much as possible from employees
who decide to leave. To improve the process of collecting feedback and potentially increase the number of
completed interviews, in 2023 HR Services introduced Exit Interview surveys in an online format, which will
positively translate into the employee's level of knowledge about the company. The aim is also to collect more
comprehensive feedback from departing employees.
Onboarding and training
for new employees (New
Hire Orientations)
Onboarding, the process of induction of new employees to the company, ensures that an employee is
effectively integrated into the company culture and organisational structure, which has a positive impact on
the sense of belonging. Well-planned onboarding facilitates an understanding of the role and expectations,
which accelerates the effectiveness of the new employee and allows for establishing a relationship with the
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 172
Translation from original Polish version
team, which fosters collaboration. Therefore, in 2023, as part of the effort to increase retention in the
company, HR teams endeavoured to organise attractive welcome events for new employees to support
relationship building and a positive onboarding experience. Integration activities such as cornhole, Jenga, disc
golf and bowling have also been introduced to strengthen bonds between new employees and support them
in making their first friends in their new working environment.
Simulated recruitment
interviews
Simulated recruitment interviews are simulated interviews that help candidates prepare for real-life situations
during the recruitment process. They are important since they allow candidates to develop their ability to
answer recruitment questions, work on self-confidence and improve verbal and non-verbal communication.
Robinson Mine's HR team took part in 20 simulated interviews at White Pine High School, contributing to the
students' professional development. It had a positive impact on the mine's image as an employer in the region
and helped to identify promising candidates, potential future employees of Robinson Mine.
Participation in Career
Fairs
Participation in the career fair is a strategic step for the company, allowing it not only to find potential
employees, but also to build a positive image of the company on the labour market. In 2023, KGHM
INTERNATIONAL Group HR teams participated in various job fairs (WPHS, UNR STEM, Utah Valley University
STEM, University of Utah STEM, Indigenous Communities Job Fairs). They were involved in interviewing
potential candidates and students, collecting CVs and making contacts for potential placements and future
recruitment.
Scholarship Program
KGHM INTERNATIONAL LTD. supports the development of young people who are interested in developing
their skills. One of the activities introduced to support students, is the scholarship program. Any student
interested in participating must submit an application, write a one-page essay answering the question: "How
important do you think mining is?" or "How has mining affected your life?" and provide proof of enrolment.
An applicant can apply during his/her school career by meeting certain criteria.
HR projects in Sierra Gorda S.C.M.
For Sierra Gorda S.C.M., 2023 was a period of intensive change, characterised by a rebranding, a new strategy, mission and
vision and a changed logo, reflecting the evolution and strengthening of its current image. The company has focused on
being a leader in mining copper ore of low content, delivering “green copper” to the world and generating value for
humanity and shareholders. Key strategic pillars: Unique Culture, Excellence and Growth and Green Copper shaped the
company's direction of activities.
Supporting the Organic
Development of the
Company
The HR strategy for 2023-2025 focused on business continuity. Key activities included:
− Negotiations with trade unions: This can be considered one of the key successes of 2023. The
negotiations went smoothly and in an atmosphere of mutual respect. Three New Collective Agreements
were signed with each of the three trade unions, which will be in force for three years. This success shows
that Sierra Gorda, after years of working and cooperating with the Trade Unions, has achieved a very
good working relationship, while the HR Department strives to care for it and maintain it.
− Playbook Guidebook: The edition of the guidebook, which is regarded as a strategy guide, is aimed to
introduce employees to the main strategy assumptions and the company's objectives for each year of its
operations.
− Improving infrastructure and facilities for employees: Sports pitches, gyms, canteens and relaxation
spaces have been modernized. A food truck, new canteens and a meeting place for employees, the Baro
Pub, have been opened as places where employees can buy snacks, drinks and necessities. Installation of
air conditioning units in further residential buildings at the mine was performed.
− Strategy workshop for the management staff: Strategy workshop for the senior management staff
was conducted: The aim of the workshop was to establish the company's new strategy, as well as the
organisation's goals for 2023 - 2024.
− Employee services satisfaction survey at the mine: The survey was carried out to identify the opinions
of employees regarding transport, food and accommodation and improvement of these services.
− Management meetings: In 2023, regular meetings of the management staff and directors to address
important company topics continued, with the aim of maintaining the communication and interpersonal
relationships necessary to achieve company goals.
− "Como Vamos?" meetings: Monthly meetings for all employees to learn about the main projects and
activities of the company's various departments were continued in 2023.
− 7x7 operating mode: A special 7x7 operating mode has been introduced which provides for operational
continuity at Sierra Gorda.
− “Choose food wisely” program: The program aimed to raise awareness among employees to choose
canteen food in reasonable quantities to prevent food waste and protect the environment from pollution.
− KPI determination course: This course provides the organisation with guidance and guidelines on how
to properly set objectives for the next years of work. At Sierra Gorda S.C.M., all white collar workers are
included in the management by objectives system.
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 173
Translation from original Polish version
− Meeting with Polish Deputy Prime Minister, Jacek Sasin: In 2023, a meeting was held with Deputy
Prime Minister of the Republic of Poland, Jacek Sasin, during which awards were presented to Sierra
Gorda S.C.M. management for their leadership and contribution to the transformation and success of the
Sierra Gorda S.C.M. mine from 2018 to 2022.
Employee retention and
development
The company has focused on talent development and employee retention:
− EmPODERATE Young Talent Program: A development program that aims to recruit young professionals
with limited experience to train and prepare them for important positions within the company.
− The “Recommended” initiatives: Through these initiatives, employees can recommend people whose
experience and professional profile match the positions for which the company is seeking employees.
The employee earns points for the recommendations made, redeemable for rewards. A special
“Recommended” edition, dedicated exclusively to women was also organised to increase female
employment at the mine.
− Talent Management - Succession Maps - Critical Knowledge Management: As part of the program,
the company identifies employees for key positions and generates development programs for them to
help prepare them for those positions in the future. The company also identifies employees who have
knowledge critical to the organisation and prepares them as mentors.
− Mujeres Empoderadas (Women of Power): Women who achieved professional success at Sierra Gorda
S.C.M. are distinguished once a year in the Women of Power (Mujeres Empoderadas) magazine.
− Development platform for administrative staff: A platform developed for Sierra Gorda administrative
staff to enable learning and development. The platform offers a wide range of free training courses on
various topics aimed at personal development in different areas. In 2023, more than 1000 training
courses were made available on the platform.
− Career development program for excavator operators: Each year, employees meeting a number of
requirements have the opportunity to take technical tests to check their knowledge, development and
promotion opportunities.
− Leadership Skills Course: A course designed to strengthen soft skills, particularly leadership. The
workshop is addressed to future managers and persons with strong managerial potential.
− Survey on motivation at work for long-serving employees: A survey was conducted to identify the
motivating aspects in staff with more than five years' seniority in the company that encourage them to
stay with the organisation in order to translate the results into specific retention measures in the
organisation.
Improvement of HR
processes
Commitment to digitalisation and modernisation of HR processes, including:
− New onboarding process: A new staff deployment program was prepared in 2023 which has been
implemented since 1 January 2024. This is a process that lasts 3 days and takes place at the Sierra Gorda
S.C.M. mine. During this process, employees receive detailed information on each area of the company
and become familiar with the entire production chain. Its aim is for the new employee to become better
acquainted with the culture, values and also to identify more easily with Sierra Gorda S.C.M. from their
first days of work in the company. It is important for Sierra Gorda S.C.M., due to the high demand for
professionals in the Chilean market and competition in the labour market.
− Implementation of a digital leave request platform: A platform that allows employees to submit
holiday leave requests online (from a mobile phone or laptop). These requests are approved by the
manager and the documentation is automatically saved in the folder assigned to each employee. The
platform launched has a facilitating function and safeguards against making mistakes when recording
absences.
− Digitisation of applications for eligible benefits: All applications for benefits, which were previously
signed on paper, have been automated.
− Digitisation of personal files: The digitisation process of personal files continued in 2023, as part of the
modernisation strategy aimed to move towards digital documentation.
− Document management platform for newly recruited employees: The platform serves to streamline
obtaining all the necessary documents from a newly recruited employee. The platform streamlines the
communication process between the employee and the HR department.
− “Breakfast in the canteen” application: Implementation of the application whereby office workers can
order breakfast via their mobile phone and pick it up at a location of their choice at the mine.
− “Estar Conectados” application: The application through which employees are informed about Sierra
Gorda news and events on their phone in real time.
Working culture and
environment
Promoting culture, high efficiency and a friendly working environment:
− The “Word Tour Rio de Janeiro” workshop: The workshop to get better acquainted with our “sello
PODER”, a competence system for white-collar workers and to integrate employees from different
departments of the organisation.
− Young Talent Internship and Placement Program: A program dedicated to children and family
members of Sierra Gorda S.C.M. employees to support their career development, as well as to help
employees better identify with the company.
− Organisational climate assessment: A company climate survey in which as many as 82.8% of Sierra
Gorda employees participated. The assessment provides an opportunity to elicit information from
employees and implement actions that help improve the working environment.
− Quality of life in Sierra Gorda: Continuation of the campaign to promote a healthy diet.
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 174
Translation from original Polish version
− Staff awards: Implementation of distinctions for employees of collaborating companies, based on ESTAR
values, thereby integrating them into the culture and way of working within the Sierra Gorda S.C.M. team.
− Assessment of employees by their supervisors: Staff appraisals are organised annually to discuss the
development and continuous improvement of our employees.
− Celebrations and Family Programs: Organising company events and supporting the engagement of
employee families.
− “Mujer Avanza” (Woman with Progress) program: The program serves to build positive relationships
between partners of our employees and Sierra Gorda S.C.M. As part of the program, meetings and events
are organised to integrate and spend time together and a volunteering program for employees’ wives is
also conducted.
5.2.4 Processes of mitigating negative impacts and channels for reporting problems by entity's
employees
[ESRS S1-3, ESRS S1-3 Addendum B]
In 2023, the KGHM Polska Miedź S.A. Group focused its efforts on developing processes to mitigate negative impacts and
improve channels for its own employees to report problems. With a variety of policies in place, the company aims to create
a working environment free of negative impacts, while allowing employees to take an active role in identifying and reporting
potential issues.
In the area of environmental protection, the company has an environmental policy in place that sets out commitments in
terms of mitigating the impact on ecosystems. Similarly, the climate policy focuses on reducing greenhouse gas emissions
while the occupational health and safety policy focuses on ensuring safe working conditions.
In terms of ethics and conduct, the KGHM Group has a code of ethics and a code of conduct which provide the basis of
ethical principles for employees. These actions do not only represent formal documents, but above all are a part of building
an organisational culture based on integrity, transparency and respect.
Channels for reporting problems by employees are further strengthened through the responsible supply chain policy and
human rights policy. These policies not only define the social responsibility criteria for suppliers and the company's
commitment to human rights, but also create the conditions for employees to report potential problems.
The KGHM Polska Miedź S.A. Group has diverse policies that provide a framework for the processes of mitigating the
negative impacts and provide channels for employees to report problems. In this way, the company actively engages in
developing a working environment free of negative impacts and supports social responsibility initiatives.
The Group has an KGHM Ethics Hotline which provides employees, on an equal footing with other stakeholders, the ability
to report violations of rights and ethical standards.
5.2.5 Taking action concerning significant impacts and applying approaches to mitigate material
risks and take advantage of significant opportunities related to own employees, and the
effectiveness of these actions and approaches
[ESRS S1-4]
In the reporting period, the KGHM Group did not undertake any new activities in the area of Human Rights. Nevertheless,
KGHM wishes to emphasise the importance of monitoring and conscious management of human rights issues across its
operations. A description of existing practices is presented below.
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 Board expressed in the Human Rights Policy is fully
implemented by promoting the same attitude among the Company’s employees. Oversight of the implementation and
execution of the resolution and the update of the Policy has been entrusted to the Executive Director for
Communication.
The right to
working conditions
that meet health
and safety
requirements
Occupational health and safety, due to the nature of the Company’s activities, is one of the key strategic objectives and
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 persons staying on the Company’s premises.
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 175
Translation from original Polish version
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.
Human rights and
the value chain
KGHM Polska Miedź S.A. does not undertake actions leading to gaining business benefits while disregarding human
rights.
The Company avoids working with companies that use forced labour, slave labour, child labour, companies that fail to
ensure safety conditions at a workplace and companies that fail to respond to other unethical activities.
KGHM Polska Miedź S.A. - through the implementation of relevant documents (Procurement Policy, Contracting Policy,
Responsible Supply Chain Policy, Anti-Corruption Policy) - verifies entities we cooperate with from the perspective of
human rights protection.
To that end, special clauses are used 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
KGHM maintains 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.
The Company prioritizes 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).
The Company 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).
Communication of
the Human Rights
Policy to personnel
and external
stakeholders
Employees of the Company have been introduced with the adopted Human Rights Policy of KGHM. The Company also
provides training concerning the protection of human rights to its employees. As at 31 December 2023, 5 675 members
of the KGHM staff had undergone online training (e-learning) on human rights and the adopted Human Rights Policy,
as well as the tools for its observance in KGHM.
Moreover, following adoption of the Human Rights Policy numerous communication activities have been carried out,
both addressed to employees (workshops, webinars, publications in internal media, including the special edition of
the CUrier bi-weekly, 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).
The Human Rights Policy is available to all KGHM stakeholders and can be found on the Company's corporate website.
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 the 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.
The aforementioned actions exclude the parent entities “Energetyka” sp. z o.o. and PeBeKa S.A.
5.2.6 Designated objectives aimed at managing the significant impacts, risks and opportunities
associated with the Company’s own workforce
[ESRS S1-5]
Workforce management is the key element of any organisation's strategy, and in the case of KGHM this is of particular
importance. The objectives set in this area are compliant with the requirements of ESRS S1-5, which focus on identifying
and managing the significant impacts, risks and opportunities associated with the workforce.
KGHM Polska Miedź S.A. is continuously taking action to:
− Reduce negative impacts on the workforce:
− Implementation of health and prevention programs to reduce sickness-related absence and improve the overall
health of employees.
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 176
Translation from original Polish version
− Providing regular occupational health and safety training to minimise accidents at work.
− In addition to their motivational function, extensive access to employee benefits and social care has a significant
impact on the health and well-being of employees.
− Increase positive impacts on the workforce:
− Providing training and development programs, including subsidised studies, to support the ongoing professional
development of employees.
− Organising integration events and building community at the workplace to increase employee satisfaction and
engagement.
− Manage material risks and significant opportunities:
− Implementation of talent and career management programs, including succession plans, to ensure continuity and
growth of the organisation.
− Monitoring of remuneration indicators, including the wage gap, to ensure wage equity and equal opportunities.
KGHM Metraco S.A. does not have measurable objectives. It minimises risks and sets targets for further actions,
focusing on:
− limiting potential negative impacts on employees in the areas of: remuneration levels, closing pay gaps, improving the
functioning of work-life balance provisions and improving communication.
− increasing positive impacts in terms of: improving employee awareness in the areas of ethics, anti-corruption and social
dialogue, enhancing the competence of the company's employees (including implementation of planned training).
− managing risks and opportunities in order to maintain the company's attractiveness as an employer, have qualified
staff and provide high quality services, and have transparent procedures and effective communication.
In KGHM INTERNATIONAL LTD. the key performance indicators for the entire company are related to safety, production,
training, finance and human resources. As of the date of submission of the statement, no measurable objectives had been
defined.
In KGHM ZANAM S.A., human resources risks are defined and monitored: the risk of sharing or influence of personal data,
untimely and/or incorrect calculation of wages or social security contributions and the risk of disruption of business
continuity due to the departure of specialised employees.
Analyses on staff turnover are conducted on a monthly basis, the trend is positive. The turnover for 2021-2023 was
respectively: 12.15%, 12.41% and 11.37%.
5.3 OUR EMPLOYEES
5.3.1 Employment
Group Employment
In 2023, the Group employed 34 747 people, which means an increase of 0.8% compared to the previous year. The
employment structure is shown in the table below:
Table 42. Average employment in the Group
2023
2022
Change (%)
KGHM Polska Miedź S.A.
18 875
18 680
+1.0
KGHM INTERNATIONAL LTD.
2 422
2 161
+12.1
Sierra Gorda S.C.M.
52
865
824
+5.0
Domestic Group companies
12 575
12 804
(1.8)
Other Group companies
10
9
+11.1
Total
34 747
34 478
+0.8
52
Sierra Gorda S.C.M. - employment proportional to share in the company (55%)
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 177
Translation from original Polish version
Chart 20. Employment structure in the Group in 2023
53
KGHM Polska Miedź S.A.
In 2023, employment in KGHM Polska Miedź S.A. was higher than in the previous year. Employment at the end of 2023
amounted to 18 974 people, and was 0.3% higher than at the end of the prior year. Average annual employment in KGHM
Polska Miedź S.A. was 18 875.
Table 43. Average employment in KGHM Polska Miedź S.A.
2023
2022
Change (%)
Mines
12 657
12 521
+1.1
Metallurgical plants
3 624
3 616
+0.2
Other divisions
2 594
2 543
+2.0
KGHM Polska Miedź S.A.
18 875
18 680
+1.0
The increase in employment was mainly due to:
− expansion of mining infrastructure,
− increasing employment in IT services, in particular in the area of cybersecurity,
− increased demand for qualified employees due to the expansion of the Żelazny Most Tailings Storage Facility.
Domestic companies
In 2023, the average employment in domestic companies of the KGHM Polska Miedź S.A. Group decreased as compared to
2022 by 229 FTEs (i.e. 1.8%). The decrease resulted from a change in the composition of the Group.
International companies
In 2023, average employment in the international companies of the KGHM Polska Miedź S.A. Group increased by 302 FTEs
(10%) as compared to 2022, while an increase of employment by 12.1% was recorded in the KGHM INTERNATIONAL LTD.
Group companies and an increase of 5% in the joint venture Sierra Gorda S.C.M.
5.3.2 Characteristics of the entity’s employees
[ESRS S1-6]
KGHM's employees are the company's most valuable asset - they create the company's unique culture and build its position
in the market. To secure its strategic objectives, the company has been consistently investing in the labour market for years
and actively influencing the education process for young people. It maintains due diligence in relation to its employees, as
it is the workforce that plays a key role in the development of all areas of the business model, builds the company's global
relevance and makes it an integrated organisation that is open to the future. KGHM recruits the best experts and specialists.
As a result of these measures, the company employs people with the highest potential who realistically respond to its
needs. The work of each is equally important to the success of the entire organisation.
The detailed characteristics of the entity's employees is included in section 5.4.3 Diversity indicators .
53
Sierra Gorda S.C.M. - employment proportional to share in the company (55%)
KGHM Polska Miedź S.A.
54%
KGHM INTERNATIONAL
LTD.
7%
Sierra Gorda S.C.M.
2%
Domestic Group companies
36%
Other Group companies
1%
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 178
Translation from original Polish version
Table 44. Total number of employees by type of employment contract and by gender
54
for indefinite period
for defined period
COMPANY
F
M
F
M
Total
KGHM Polska Miedź S.A.
1 300
16 512
72
1 090
18 974
KGHM INTERNATIONAL LTD.
286
1 694
11
486
2 477
Other Companies
3 784
7 147
667
1 217
12 815
KGHM Polska Miedź S.A. Group
5 370
25 353
750
2 793
34 266
Table 45. Total number of employees by employment type (full-time or part-time) and gender
55
full-time
part-time
COMPANY
F
M
F
M
Total
KGHM Polska Miedź S.A.
1 365
17 598
7
4
18 974
KGHM INTERNATIONAL LTD.
296
2 174
1
6
2 477
Other Companies
4 398
8 321
54
42
12 815
KGHM Polska Miedź S.A. Group
6 059
28 093
62
52
34 266
Table 46. Number of new employee hires by gender
Number of employees (headcount)
56
Number of new employee hires
Percentage of new employee hires
Group
KGHM Polska
Miedź
Group
KGHM Polska
Miedź
Group
KGHM Polska
Miedź
2023
F
6 120
1 372
604
63
9.9%
4.6%
M
28 146
17 602
2 414
784
8.6%
4.5%
Total
34 266
18 974
3 018
847
8.8%
4.5%
2022
F
6 050
1 378
737
93
12.2%
6.7%
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%
Table 47. Number of employee departures by gender
Number of employees (headcount)
57
Number of employee departures
Percentage of employee departures
Group
KGHM Polska
Miedź
Group
KGHM Polska
Miedź
Group
KGHM Polska
Miedź
2023
F
6 120
1 372
523
60
8.5%
4.4%
M
28 146
17 602
1 995
722
7.1%
4.1%
Total
34 266
18 974
2 518
782
7.3%
4.1%
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%
54
Status as at 31 December 2023, excluding members of the Management Board employed under civil law contracts - Contracts for the
provision of management services
55
Status as at 31 December 2023, excluding members of the Management Board employed under civil law contracts - Contracts for the
provision of management services
56
Number of employees (headcount) as at the last day of the year, excluding members of the Management Board employed under civil
law contracts - Contracts for the provision of management services
57
Number of employees (headcount) as at the last day of the year, excluding members of the Management Board employed under civil
law contracts - Contracts for the provision of management services
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 179
Translation from original Polish version
Table 48. Number of new employee hires by age category
Number of employees (headcount)
58
Number of new employee hires
Percentage of new employee hires
age
Group
KGHM Polska
Miedź
Group
KGHM Polska
Miedź
Group
KGHM Polska
Miedź
2023
<30
4 419
2 413
1 066
360
24.1%
14.9%
30-50
22 142
13 397
1 601
438
7.2%
3.3%
50+
7 776
3 169
357
49
4.6%
1.5%
2022
<30
4 407
2 525
1 220
477
27.7%
18.9%
30-50
21 887
13 315
1 881
599
8.6%
4.5%
50+
7 543
3 074
381
45
5.1%
1.5%
Table 49. Number of employee departures by age category
Number of employees (headcount)
59
Number of employee departures
Percentage of employee departures
age
Group
KGHM Polska
Miedź
Group
KGHM Polska
Miedź
Group
KGHM Polska
Miedź
2023
<30
4 419
2 413
416
56
9.4%
2.3%
30-50
22 142
13 397
1 120
294
5.1%
2.2%
50+
7 776
3 169
982
432
12.6%
13.6%
2022
<30
4 407
2 525
502
66
11.4%
2.6%
30-50
21 887
13 315
1 366
343
6.2%
2.6%
50+
7 543
3 074
1 078
407
14.3%
13.2%
5.3.3 Characteristics of non-employees who are the entity's own employees
[ESRS S1-7]
Types of non-employees who are the entity's own employees
− natural persons other than those conducting economic activity performing civil law contracts for KGHM, i.e. contracts
of mandate, contracts for specific work,
− natural persons providing management services to KGHM, performing services under civil law contracts,
i.e. agreements for the provision of management services - refers to members of the Management Board.
The manner in which the legal relationship binding the parties is concluded, and the principles and amount of the
remuneration paid, is compliant with the applicable law and the principles set out in KGHM's normative acts.
Table 50. Total number of non-employees constituting the entity's own employees in the Group
2023
KGHM Polska Miedź S.A.
306
KGHM INTERNATIONAL LTD.
84
Other Group companies
1 922
Total
2 312
58
Number of employees (headcount) as at the last day of the year, excluding members of the Management Board employed under civil
law contracts - Contracts for the provision of management services
59
Number of employees (headcount) as at the last day of the year, excluding members of the Management Board employed under civil
law contracts - Contracts for the provision of management services
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 180
Translation from original Polish version
5.3.4 Scope of collective bargaining and social dialogue
[ESRS S1-8]
Currently, 17 trade unions operate in KGHM Polska Miedź S.A., which have established 43 company (inter-company) trade
union organisations at the employers included in the Company.
As at 31 December 2023, 16 985 employees belonged to trade unions, representing 89.5% of the workforce.
Employees exempted from service for the term of office in the management board of a company trade union organisation:
41 employees.
Relations with trade unions
KGHM Polska Miedź S.A.
In 2023, the Management Board of KGHM Polska Miedź S.A. and the trade unions that are parties to the Collective
Bargaining Agreement for Employees of KGHM Polska Miedź S.A. (hereafter referred to as: ZUZP) held discussions and
negotiations on changes to the provisions of the ZUZP.
The above negotiations resulted in the conclusion of two Additional Protocols, no. 26 and 27.
Additional Protocol no. 26 was concluded on 21 June 2023 and involved a 13.2% increase in monthly base salary rates,
Additional Protocol no. 27 was concluded on 18 December 2023. The main changes contained in the above document
comprise:
− an increase in the second shift allowance base from category X to category XI of the table of monthly basic rates of pay,
− a change in the rules for payment of the coal allowance to pensioners, i.e.: unification of the rules for calculating the
cash allowance throughout the company,
− the introduction of a partial payment for employees for preventive and curative holidays in the amount of PLN 50 per
period,
− an increase of the grading scale for all posts by one category.
In 2023, the parties to the ZUZP also signed 2 agreements:
− dated 26 January 2023 on wage formation and employee benefits, introducing the following elements of wage
formation:
− an increase of 13.2% in monthly basic salary rates, as reflected in Additional Protocol no. 26,
− an increase of the grading scale of the workforce at a level of 20%,
− conditional payment of a one-off gratuity in the amount of PLN 2 000 gross per employee.
− dated 22 August 2023 on the prepayment of an additional annual bonus for the first half of 2023 in the amount of 3%
of the remuneration, and an additional one-off bonus for this period in the amount of 2% of the remuneration.
Group companies in Poland
With few exceptions, trade unions operate in the Group's domestic companies. In 2023, the companies held discussions
with the trade unions on wage issues, bonus rules, employment and working conditions and social issues as well as the
amount of the contribution for the Employee Pension Scheme. Discussions were held in many companies concerning the
rules for remote working. The above-mentioned activities resulted in the conclusion of agreements, the signing of additional
protocols to Collective Bargaining Agreements and amendment to the remuneration regulations.
“Energetyka”
sp. z o.o.
In this company, employees are subject to the Company Collective Agreement for Employees of "Energetyka" sp. z o.o.
concluded on 7 November 1996, including Additional Protocols to the Collective Agreement, the parties to which include
the Company and the company trade union organisations. As at 31 December 2023, 6 company trade union organisations
operated in the Company sp. z o. o., of which 4 are parties to the ZUZP.
The number of employees who are members of trade union organisations as at 31 December 2023 is 544, which accounted
for approximately 72% of total employment. Cooperation with trade union organisations on matters arising from labour
legislation is carried out on an ongoing basis within the deadlines set out in such legislation.
In this company, the Employee Council, selected in elections held on 6-8 July 2022, is in place. With regard to the conditions
for informing employees and consulting them, the statutory regulations contained in the Act of 7 April 2006 on Informing
and Consulting Employees (Journal of Laws No. 79, item 550, as amended) apply.
There were no collective disputes between the Employer and the Company Trade Union Organisations. The Company also
consults with employee representatives on all activities related to occupational health and safety.
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 181
Translation from original Polish version
KGHM Metraco
S.A.
The company has 4 trade union organisations representing 66% of the total workforce, as well as an Employee Council (5-
member Council) and a Company Social Labour Inspector (1 person), along with Division Social Labour Inspectors (3
persons, each in the area of a different facility). In addition, regarding labour issues, an Ethics Committee operates on
behalf of the employer with a Representative for Ethics and Anti-Corruption (5 members of the Committee).
Meetings between the employer and the trade unions are held at least 4 times a year. Meetings between the employer and
the Employee Council are held at least twice a year. Meetings between the employer and the Representative for Ethics and
Anti-Corruption also take place regularly. Contact between employees and the Commission is possible in person, by
telephone or through a dedicated e-mail address. Ongoing contact is possible with all the above Commissions, Councils
and the Representative. When hiring an employee, the employer informs the employee of his/her right to join any trade
union organisation.
NITROERG S.A.
In this company, cooperation is maintained with the employees or their representatives (i.e. the trade union organisations
operating in the company) to obtain opinions and proposals on the impacts on its own employees. This includes collecting
opinions, queries, analysing them and providing answers and implementing them in practice if accepted.
Regular meetings are held with trade union representatives to discuss current issues, discuss problems, consult and
negotiate pay and other matters in accordance with legal requirements. A standing social committee is also in place to
analyse and apply for social assistance for employees in need.
Employee satisfaction surveys are carried out on various aspects through anonymous questionnaires, where employees
have the opportunity to express their opinions and thereby influence change. The position of Chief Officer for
Organisational Culture also operates, implementing these issues in practice.
KGHM ZANAM
S.A.
There are 7 Company Trade Union Organisations in the company. No collective disputes with trade unions were initiated
or continued in 2023. In accordance with the provisions of the Collective Agreement, the scope and functioning of the
agreement were the subject of meetings during which other matters of importance to the parties, which are the subject of
cooperation between the employer and the trade unions, were also discussed. During the talks, the parties strived for joint
constructive and effective problem-solving and partnership cooperation.
As a result of the talks, 5 agreements regulating the principles of wage regulation and additional payments during the year
were signed, aimed at strengthening the incentive function of the applied remuneration principles. The Management Board
is open to meetings with representatives of the workforce-Trade Unions in any situation concerning requests/problems
raised on an ongoing basis. Individual meetings between employees and the Management Board are also possible.
Centrum Badań
Jakości
sp. z o.o.
On 30 March 2023, representatives of three of the four trade union organisations in Centrum Badań Jakości sp. z o.o.
submitted a letter implying that the authors were convinced that an industrial dispute had been initiated. The Management
Board presented a different position on the subject. The trade union organisations informed the State Labour Inspectorate
that an industrial dispute had been initiated. On 26 April 2023, an Agreement was signed and accepted by all trade union
organisations operating in the company. The agreement concerned salary increases in basic pay and seniority allowance.
The signing of the agreement brought the negotiation process to an end, and the three trade union organisations that had
initiated the industrial dispute declared that the industrial dispute had been concluded.
MERCUS
Logistyka
sp. z o.o.
It was not possible to conclude the collective dispute initiated in 2019. Its reason was the employer's decision not to take
into account, among others, the wage demands raised by the "Solidarity 80" Trade Union. Despite numerous efforts taken
by the company to end the dispute, it was not possible to bring it to an end. Nevertheless, in 2023, agreements were
reached with trade unions in the company and arrangements were made regarding new wage and non-wage demands.
International companies of the Group
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 2023 to ensure the compliance with the provisions of the Collective
Bargaining Agreement. 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 2024, so negotiations with the trade union are planned.
In DMC-brand companies, only the employees of the company operating in Chile (DMC Mining Services Chile SpA) are
represented by trade unions. The company maintains good relations with the trade unions and adheres to the provisions
of the collective agreements concluded.
The other subsidiaries of the KGHM INTERNATIONAL LTD. Group located in the United States, Canada and South America
do not have any trade union representation.
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 182
Translation from original Polish version
5.4 DIVERSITY AND EQUAL OPPORTUNITIES
5.4.1 KGHM values
Zero-harm, teamwork, accountability, courage and results-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.
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.
5.4.2 Diversity and equal opportunities
Respecting diversity and equal opportunities is an important part of culture in the KGHM Polska Miedź S.A. Group. KGHM
ensures that the environment and workplace created by the Group is free of any discrimination. As a global company,
KGHM Polska Miedź S.A. also applies labour and employee relations standards in force in individual countries and as
defined by international institutions. The approach to diversity management is defined by the “Diversity Declaration of
KGHM Polska Miedź S.A.”. 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.
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.
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.
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 organisations 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.
In order to level the playing field and encourage everyone to pursue technical professions, regardless of gender, KGHM
runs the "Competent in the Industry" program, under which the Company works with selected schools to educate young
people in line with the real requirements of business and the achievements of the copper industry. Moreover, KGHM
provides the opportunity to benefit from a scholarship program and to undertake practical vocational training. The
company also promotes women in technical professions and shows the opportunities for work and development available
to women at KGHM. The activities aimed at levelling the playing field include the project “A road to profession” carried out
by the KGHM Polska Miedź Foundation. Activities include training for dozens of alumni of the Correctional Institution in
Głogów. The aim of the program is to make it easier for young people who are at risk of exclusion to start their activity in
the labour market.
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 183
Translation from original Polish version
5.4.3 Diversity indicators
[ESRS S1-9]
Chart 21. Members of supervisory bodies, by gender [%]
Chart 22. Members of supervisory bodies, by age [%]
Table 51. Employment by age and individual job categories
Management
Board
Senior
management
Management
staff
White-collar
positions
Blue-collar
positions
<30
-
1
21
661
3 736
30-50
24
137
1 043
5 875
15 063
50+
31
97
528
2 352
4 768
Table 52. Percentage share of women and men in individual position categories by gender
2023
2022
Group
KGHM Polska
Miedź
Group
KGHM Polska
Miedź
Position category
gender
Management Board
F
3.6%
0.0%
3.9%
0.0%
M
96.4%
100.0%
96.1%
100.0%
Senior management
F
26.5%
13.2%
27.2%
13.6%
M
73.5%
86.8%
72.8%
86.4%
Management staff
F
28.8%
17.4%
30.7%
17.1%
M
71.2%
82.6%
69.3%
82.9%
White-collar positions
F
42.3%
27.0%
42.4%
27.6%
M
57.7%
73.0%
57.7%
72.4%
Blue-collar positions
F
7.9%
0.6%
8.1%
0.6%
M
92.1%
99.4%
91.9%
99.4%
Men
79.3%
Women
20.7%
<30
1.5%
30-50
64.7%
50+
33.8%
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 184
Translation from original Polish version
Table 53. Percentage share of employees in individual job categories, by age
2023
2022
Position category
age
Group
KGHM Polska
Miedź
Group
KGHM Polska
Miedź
Management Board
<30
0.0%
0.0%
0.0%
0.0%
30-50
43.6%
60.0%
41.2%
60.0%
50+
56.4%
40.0%
58.8%
40.0%
Senior management
<30
0.4%
0.0%
0.0%
0.0%
30-50
58.3%
50.9%
62.4%
57.6%
50+
41.3%
49.1%
37.6%
42.4%
Management staff
<30
1.3%
0.6%
1.4%
0.3%
30-50
65.5%
67.6%
65.4%
69.9%
50+
33.2%
31.8%
33.2%
29.8%
White-collar positions
<30
7.4%
4.4%
7.6%
4.8%
30-50
66.1%
72.0%
67.9%
72.9%
50+
26.5%
23.5%
25.2%
22.3%
Blue-collar positions
<30
15.9%
15.9%
15.9%
16.7%
30-50
63.9%
70.4%
63.8%
69.7%
50+
20.2%
13.7%
20.3%
13.6%
5.4.4 Adequate wages
[ESRS S1-10]
In KGHM Polska Miedź S.A., all employees are remunerated based on the national minimum wage in accordance with Polish
law.
The basic legal acts regulating the remuneration principles include the Company Collective Bargaining Agreement (ZUZP)
for Employees of KGHM Polska Miedź S.A. and the bonus regulations in force at the Head Office and the Divisions.
In accordance with the ZUZP for Employees of KGHM Polska Miedź S.A., an employee is entitled to remuneration resulting
from the employment contract and the provisions of the Agreement.
The parties to the ZUZP undertake annual negotiations to determine the new level of the components of employees'
remuneration and benefits set out in the Agreement. The companies unanimously declare that all employees are
remunerated adequately according to their education, experience, qualifications and taking into account the national
minimum wage.
5.4.5 Social protection
[ESRS S1-11]
As part of its support for employees, the company provides the material and social support for employees financed from
the Company Social Benefits Fund and provides a range of benefits acting as non-wage employee incentive factors.
The Company Social Benefits Fund (ZFŚS) 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 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.
Employees on maternity and parental leave are also offered a full range of benefits available from the ZFŚS. In this way, we
support employees in the process of returning to work.
Moreover, the provisions of the regulations of the Company Social Benefits Fund make it possible to grant to eligible
persons:
− non-repayable financial assistance as part of the company's policy related to the wellbeing of its employees and as a
manifestation of measures to support employees also in specific life situations (allowances in the event of individual
accidents, natural disasters, long-term illness or death). Similar assistance is organised for former employees,
pensioners and heirs.
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 185
Translation from original Polish version
− 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 provides 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 ZUZP.
Medical care subscription
In addition to benefits from the Company Social Benefits Fund, under the provisions of the ZUZP, all employees of the
Company and their family members have the opportunity to benefit from subscription-based medical care.
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.
5.4.6 Persons with disabilities
[ESRS S1-12]
KGHM Polska Miedź S.A. creates an accessible and supportive working environment for persons with disabilities by adapting
the infrastructure and IT systems to their needs and by using modern technology to facilitate their daily work. The company
ensures equality in employment by offering equal opportunities for professional development where this work is feasible.
Through training and education, KGHM is raising awareness and acceptance of diversity. A key element of the organisational
culture is diversity and inclusion, where every employee has the opportunity to make a meaningful contribution to the
team.
The rate of own employees with disabilities as at 31 December 2023 amounted to 0.3% of employees, of which the disability
rate among women is 1.7% and among men 0.2%.
Table 54. Percentage of persons with disabilities in material operational companies
2023
KGHM Polska Miedź S.A.
0.3
KGHM INTERNATIONAL LTD.
0.0
KGHM ZANAM S.A.
0.65
KGHM Metraco S.A.
1.48
NITROERG S.A.
1.7
PeBeKa S.A.
0.64
“Energetyka” Sp. z o.o.
1.44
5.4.7 Regular evaluation of work
[ESRS S1-13]
Employees are assessed on an ongoing basis in terms of their performance, which results from the bonus regulations of
the Head Office and the Divisions. The Management Board and the top management staff are subject to assessment in
terms of performance of the management goals. The Company does not have a uniform policy for Periodic Employee
Assessment.
5.4.8 Training and development
[ESRS S1-13]
In implementing the training policy described above, in 2023, KGHM 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.
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 186
Translation from original Polish version
5.4.9 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, adapted to the profile of activity.
Training processes in KGHM Polska Miedź S.A.
One of the key factors indicating that the organisation is a good place to work is the provision of development opportunities
for employees.
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 information on 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.
In 2023, the objective of employee development activities in KGHM was both to maintain and to improve human capital.
Actions also focused on the efficient management of the Company's intellectual capital, taking into account the strategic
directions 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 qualifying examinations to take on 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 2023 in terms of training processes
The thematic scope of training and conferences in which KGHM employees participated was extended in relation to the
previous year. In addition to topics closely related to the mining and production industry, they were provided with the
opportunity to acquire knowledge and competence, among others, in the areas of climate policy, sustainable development,
corporate governance, compliance management, in line with the Company's operations.
In 2023:
− employees attended a single training event 52 555 times,
− 87 persons benefited from the co-funding of courses of higher study, postgraduate studies,
− 68 people completed postgraduate studies in the group system organised by KGHM Polska Miedź S.A in collaboration
with Warsaw University and Silesian University of Technology.
The development of skills through the co-funding of higher courses of study comprised mainly:
− MBA studies,
− higher education (bachelor's, engineering and master's degrees),
− group postgraduate studies , "Copper Leaders" 2nd edition and "Data Science" in cooperation with the University of
Warsaw, as well as "Cyber security of industrial systems" carried out by the Silesian University of Technology.
KGHM's Implementation Doctorate Program was officially completed in 2023. Ph.D thesis defences are ongoing in
accordance with the schedules set by the universities that participated in the program.
Language courses
In 2023, language courses were mostly delivered in an online format by providing all employees of the Company with a
platform for learning English, Spanish, German and, on a pilot basis, Italian. Widespread access to the courses from any
mobile device has facilitated the development of communication skills, not only in the professional area but also in personal
life. Classroom language courses continued for senior executives whose official responsibilities include controlling domestic
and international assets.
E-learning courses
In 2023, 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 on Information Security Policy based on the ISO 27001standard;
− GDPR training;
− training on recognising and preventing conflicts of interest;
− training on Human Rights Policy,
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 187
Translation from original Polish version
− training on Climate Policy,
− training in terms of 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 2023, 20 472 employees of the Company attended e-learning courses.
Table 55. Number of training hours by gender
Number of training hours
Group
60
KGHM Polska Miedź
2023
F
69 016
36 562
M
571 672
487 912
Total
640 688
524 474
Table 56. Number of training hours by employment structure
Number of training
hours
61
KGHM Polska
Miedź
2023
Management Board
184
Senior management
2 750
Management staff
31 122
White-collar positions
106 531
Blue-collar positions
383 887
Total
524 474
In many cases, Group companies do not keep statistics on training hours by employment structure.
The ESRS S1-14 indicator is described in section 5.5.7 Accident rate in KGHM Polska Miedź S.A. and 5.5.8 Accident rate in
the Group’s international assets.
5.4.10 Work-life balance
[ESRS S1-15]
In 2023, KGHM Polska Miedź S.A. continued to implement strategic initiatives to support the work-life balance of employees,
in accordance with applicable legal regulations and corporate policies. Recognising the importance of this balance for the
operational efficiency and the mental health of employees, the company sought to create a working environment that took
these aspects into account.
Initiatives:
Flexible working
hours
In response to the changing needs of employees, KGHM Polska Miedź S.A. has introduced more flexible working hours,
making it possible to adjust professional duties to personal life within the limits of the regulations in force.
Remote and Hybrid
working
The company used remote and hybrid working options where feasible and in accordance with the operational
requirements, keeping in mind the work-life balance of employees.
Employee Support
Programs
Support programs have been introduced, including psychological counselling and health and recreational activities, to
support the overall wellbeing of employees within the existing corporate policies.
60
Dato for the Group do not include the following companies: KGHM INTERNATIONAL LTD, Uzdrowiska Kłodzkie S.A. and Walcownia
Metali Nieżelaznych "ŁABĘDY S.A." - the companies do not keep statistics according to such criteria
61
The hours are rounded up to the integer
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 188
Translation from original Polish version
The number of employees authorised to take leave for family reasons, by gender, is presented below.
Table 57. Number of employees authorised to take leave for family reasons, by gender
62
Number of employees (headcount)
Number of persons authorised to use
holiday leave
Percentage of persons authorised to
use holiday leave
Group
KGHM Polska
Miedź
Group
KGHM Polska
Miedź
Group
KGHM Polska
Miedź
2023
F
5 825
1 372
5 825
1 372
100%
100%
M
25 964
17 602
25 964
17 602
100%
100%
Total
31 789
18 974
31 789
18 974
100%
100%
5.4.11 Remuneration indicators (pay gap and total remuneration)
[ESRS S1-16, ESRS S1-16 Addendum B]
As part of the activities of KGHM Polska Miedź S.A., an important aspect of human resources management is the monitoring
and reporting of wage indicators, including the pay gap and total remuneration. In 2023, the company continued its
commitment to ensuring pay equity through a thorough analysis of pay by gender, taking into account various factors
influencing remuneration levels. As part of its pay equity efforts, KGHM used a methodology that took into account the
various aspects of employees' work, qualifications and professional experience. These actions are consistent with social
and corporate responsibility and form part of the Group's strategic human capital management.
The difference in remuneration of men and women is described as a percentage part of men's earnings. The Gender Pay
Gap indicator - GPG - is used to calculate the difference.
Table 58. Ratio of the basic and the total average annual remuneration of women to the remuneration of men
Type of remuneration
Gender pay gap - GPG
Average annual remuneration
Basic
2.9%
Total
8.5%
Average hourly remuneration
Basic
5.5%
Total
9.4%
The noticeable difference between the average annual and hourly remuneration results from the use of reduced working
hours in the mining and production Divisions, due to the presence of working conditions particularly onerous or particularly
harmful to health. Employees, mainly men, working under these conditions and working in reduced hours are entitled to
be paid as if they were working an eight-hour day.
An analysis of the components included in basic and total remuneration shows that the pay gap to the detriment of women
is most affected by pay components related to working conditions, mainly linked to the workplace (underground) and
working systems.
5.4.12 Incidents, complaints and serious human rights impacts
[ESRS S1-17, ESRS S1-17 Addendum B]
No incidents, complaints or serious human rights impacts were identified in 2023.
62
The data for the Group excludes KGHM INTERNATIONAL LTD, which does not keep statistics based on such criteria
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 189
Translation from original Polish version
5.5 OCCUPATIONAL HEALTH AND SAFETY
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 2023, the implementation of the Employee Safety Improvement Program was continued, focusing on work safety
enhancement, in particular in the mining and metallurgy areas in accordance with the Company’s updated strategy up to
2030 with an outlook to 2040.
The Company has high occupational safety and health standards confirmed by an 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
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.
5.5.1 OHS Policy
Since 2014, the Company has had a uniform Occupational Health and Safety Policy in place, which was redefined in 2023.
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.
5.5.2 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.
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 190
Translation from original Polish version
5.5.3 OHS golden rules
Diagram 34. Golden Rules of OHS applicable 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 maintain harmony and
order at my workplace
I think of my family
5.5.4 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 the 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.
5.5.5 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 of the Company’s facilities. Internal
audits are carried out as part of the implemented Occupational Health and Safety Management System, in accordance with
the ISO 45001:2018 standard.
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 191
Translation from original Polish version
The Company also undergoes periodic audits by the external Certifying Entity, the purpose of which is to confirm the
compliance of this System with the ISO 45001 standard. The granting and maintenance of Certificates confirms the
compliance.
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.
5.5.6 Initiatives in the area of occupational safety
In 2023, the implementation of the Employee Safety Improvement Program was continued, focusing on work safety
enhancement, in particular in the mining and metallurgy areas in accordance with the Company’s updated strategy up to
2030 with an outlook to 2040.
The program is gradually being developed by adding new initiatives. The most important initiatives include:
− 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,
− expanding the use of industrial automation solutions aimed at eliminating or reducing hazardous industrial accidents
and reducing the presence of workers in difficult working environments,
− construction of modern monitoring systems for seismic activity, rock mass condition or water hazards,
− introducing new solutions in terms of personal protective equipment of employees,
− technical and organisational solutions ensuring adequate working conditions in relation to climate risk,
− changing the behaviour, habits, approaches and views of employees using different communication channels and
forms of communication, including:
− OHS Vortal (available via the intranet),
− 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,
− cross audits,
− system of employee initiatives,
− OHS alert - contact boxes.
In 2021, at the Company's Head Office, jointly with the Mine-Smelter Emergency Rescue Division and the research and
development unit, KGHM Cuprum Sp. z o.o. CBR’s first training course on working at height, using VR 360
o
technology, was
prepared and is being gradually implemented in individual divisions. In 2022, on the basis of training videos prepared by
KGHM Cuprum Sp. z o.o. CBR, 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.
CBR designed and developed an interactive instruction in VR technology in the field of RKO for all employees of the
Company, as well as a training course checking the acquired knowledge with the use of situational distractors. In 2023, the
solution was awarded at the 49th National Competition on the Improvement of Working Conditions organised by the
Ministries of Family and Social Policy.
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 192
Translation from original Polish version
5.5.7 Accident rate in KGHM Polska Miedź S.A.
[ESRS S1-14, ESRS S1-14 Addendum B]
In 2023, the Company recorded an increase in the number of accidents at work
63
, calculated on a year-on-year basis, from
149 to 177 people injured (by 28 accidents). In 2023, 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 higher by 20 (a rise from 142 to
162). The majority of the recorded accidents at work (97.7%) were of a minor nature, with the main causes being, in order,
loss of balance by the workers, rock falls, and contact (impact) with or by moving/non-moving objects.
A total of 15 workplace accidents were recorded in the mines of KGHM Polska Miedź S.A., which were caused by natural
hazards inherent in the rock mass (a rise by 8 accidents compared to 2022). These incidents represented 10.4% of all
workplace accidents in the mines during this period. The Company undertakes numerous measures and 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 2023, which is the total number of workplace accidents
64
in
the Company, which is the number of accidents per million hours worked by KGHM Polska Miedź S.A. employees, was at
6.0 and it was 18% higher than the 2022 figure (5.1). However, it should be emphasised that the Company is pursuing its
long-term strategy aimed at successive reduction of the number of accidents at work. The LTIRF
KGHM
performance ratio in
2023 was 68% lower (6.0 vs 18.6) than the value recorded in 2010. The accident rate standardised to the number of hours
worked in 2023 was 42% lower than in 2018 and 18% lower than in 2020.
Chart 23. LTIFR
KGHM
ratio in the Parent Entity in the years 2010-2023
5.5.8 Accident rate in the Group's international assets
[ESRS S1-14]
In 2023, the entities in which KGHM Polska Miedź S.A. conducts mining operations in Canada, the United States and Chile,
recorded in aggregate 2 more workplace accidents (up from 23 in 2022 to 25 workplace accidents). The consolidated TRIR
(Total Recordable Incident Rate) for these operations was 0.4. It was 0.1 higher than in 2022 and 87% lower than the figure
recorded in 2010.
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 “Zero harm” vision. KGHM Chile SpA, which engages in its own exploration and other undertakings, recorded 1
workplace accident in 2024 (vs. 1 recorded in 2022) with a TRIR of 0.6.
63
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)
64
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
6,0
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
-68%
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 193
Translation from original Polish version
The Sierra Gorda S.C.M. joint venture recorded 9 workplace accidents in 2023 (compared to 9 registered in 2022), with a
TRIR of 0.2.
Chart 24. TRIR
65
rate in the Group's international assets in the years 2010–2023
5.6 MANAGING THE IMPACT ON EMPLOYEES IN THE VALUE CHAIN
5.6.1 Interests and views of stakeholders
[ESRS 2 SBM-2]
The approach is described in detail in section 1.4 Interests and views of stakeholders.
5.6.2 Significant impacts, risks and opportunities and their relationship with the strategy and the
business model
[ESRS 2 SBM-3]
The influence and impact on employees throughout the value chain, including primarily in relation to employees of
suppliers and external companies providing services to the companies of the KGHM Polska Miedź S.A. Group, is based on
the principles and policies described further in this section. Actions towards employees of entities cooperating with KGHM
Polska Miedź S.A. are closely related to the business model and strategy of the Group. In particular, the purpose of the
impact is to ensure that the assumptions of the strategy are achieved in terms of safety, effectiveness and environmental
protection.
5.6.3 Policies related to employees in the value chain
[ESRS S2-1, ESRS S2-1 Addendum B]
KGHM has defined the impact on employees in the value chain through several key areas: safety and health, education and
development, ethics and anti-corruption, and corporate social responsibility.
Safety and health
KGHM considers the safety and health not only of its direct employees, but also of its subcontractors as a priority. The
application of advanced management systems, standards and procedures, as well as the implementation of preventive
and health promotion programs, such as vaccinations and health checks, reflect the Company's considerable
commitment to ensuring optimal working conditions.
Education and
development
KGHM invests in the development of the competencies and qualifications of its employees and value chain
collaborators by offering access to training, workshops and the e-learning platform. Cooperation with universities and
umbrella schools emphasises a long-term commitment to shaping the workforce of the future, for the benefit of the
sector as a whole.
Ethics and anti-
corruption
The Company attaches great importance to adherence to ethics and anti-corruption principles, which is reflected in
the application of the code of ethics, the anti-corruption policy, procedures of the anti-corruption management system
and the implementation of whistleblowing procedures and systems. KGHM also requires its business partners to
observe the same high standards by, among others, the introduction of anti-corruption clauses to contracts.
Corporate social
responsibility
KGHM actively participates in the life of local communities and is involved in activities aimed at protection of the
environment, promoting sport and culture. Support for initiatives such as the KGHM Summer run called “Bieg Piastów”
or the KGHM Polska Miedź Foundation is an expression of the Company's commitment to act as a responsible and
conscious market participant.
65
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
0.4
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
-87%
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 194
Translation from original Polish version
KGHM systematically analyses and evaluates its impact on employees in the value chain, focusing particularly on safety,
development, ethics and social responsibility. These activities not only contribute to improving working conditions, but also
build lasting value for the Company, its employees and the broadly understood business environment.
Types of value chain employees that KGHM may significantly affect through its activities:
Direct employees
Persons employed by KGHM under an employment contract or a civil law contract who perform tasks related to the
exploration, mining, production, transport and sale of copper and other metals. KGHM cares about their safety, health,
education, development, ethics and social responsibility. KGHM has more than 34 thousand direct employees worldwide.
Non-employees
constituting the
entity's own
employees
Persons performing civil law contracts for KGHM, i.e. contracts of mandate, contracts for specific work, contracts for the
provision of management services.
Employees of
subcontractors
Persons employed by companies collaborating with KGHM in the performance of various services and projects. KGHM
requires its subcontractors to adhere to the same safety, health, ethics and anti-corruption standards as its direct
employees. KGHM cooperates with more than 3 thousand subcontractors in Poland and abroad.
Supply chain
employees
Persons employed by suppliers of raw materials, materials, equipment and services necessary for the operation of
KGHM. KGHM undertakes efforts to build long-term partnerships with suppliers based on mutual trust and
benefits. KGHM promotes the principles of sustainable development and responsible business among its suppliers and
expects them to meet certain quality, environmental and social criteria.
Employees of
customers
Persons employed by recipients of KGHM's products and services, such as copper, silver, gold, ores, sulphuric acid,
ammonium nitrate or telecommunications. KGHM cares for the high quality and reliability of its products and services,
as well as their safe and effective use by customers. KGHM supplies its products and services to more than 50 countries
worldwide, to various economic sectors such as energy, construction, automotive industry, electronics or medical sector.
Local community
workers
Persons living in areas where KGHM operates or has an impact on the natural and social environment. KGHM engages
in dialogue and cooperation with local communities, respects their rights and needs and supports their development
through socially responsible activities such as volunteering, sponsorship, philanthropy, environmental protection or the
promotion of sport and culture. KGHM operates in a dozen or so countries on different continents, taking into account
the specific characteristics and expectations of local inhabitants.
KGHM is a company that attaches great importance to sustainable development and responsible business. To that end, a
number of regulations have been developed and implemented in the form of Codes and Policies that reflect the Company’s
commitment and approach towards our employees, partners, customers, communities and the environment.
The Codes and Policies of KGHM Polska Miedź S.A. are available on the Company website in the section Policies and Codes.
One of the Company’s priorities is to ensure safe and decent working conditions for employees and subcontractors. The
ethical and anti-corruption principles, as well as human and employee rights are unconditionally observed. No forms of
forced labour, exploitation, discrimination or bullying are accepted. Special emphasis is placed on the protection of children
against any forms of harm and abuse. The Company does not employ people under the age of 18 and does not work with
entities that violate the rights of children.
The activities and standards of the Company are regularly reviewed and certified by independent institutions and
organisations. KGHM holds the prestigious Copper Mark, which confirms the responsible production of copper in line with
the highest environmental, social and governance requirements.
The Company also undergoes regular, internal and external, quality and safety audits which confirm the effectiveness of
the implemented and functioning management systems. KGHM is ISO certified in terms of quality, environment, health and
safety and energy. The Company has an implemented and functioning anti-corruption management system compliant with
ISO 37001 Standard, which also incorporates internal audits, is implementing an information security system based on ISO
standards, and is planning to certify its implemented business continuity management system.
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 195
Translation from original Polish version
Detailed information for material operational companies:
“Energetyka” sp.
z o.o.
This company has a Code of Ethics in place which covers issues relating to employee relations in the value chain.
KGHM Metraco
S.A.
This company describes its impact on employees in the value chain as positive. Suppliers are informed about the
documents adopted at KGHM Polska Miedź S.A. and are obliged to comply with the rights and obligations described
therein. The documents refer to domestic and international law standards. This company has no plans to introduce
detailed policies to cover employees in the value chain.
KGHM
INTERNATIONAL
LTD.
Canada: At present, this company has not analysed the impact on employees in the value chain. The company's policies
related to the Code of Ethics, the Code of Conduct, the Responsible Supply Chain Policy and the Human Rights Policy,
which is reviewed annually, are adhered to in relation to employees in the supply chain. An initiated analysis of the
company's suppliers and their supply chain has not been completed. The company applies the Canadian Modern Slavery
Act (Federal Act S-211).
The companies in Canada and in the United States review the procedures and regulations that apply to the KGHM Polska
Miedź S.A. Group with their employees every March.
In Chile, the political affiliations of the Company directors are checked using PEP forms
66
.
NITROERG S.A.
This company carries out quarterly analyses of risks, including the risk of corruption. In addition to the impact on its
employees, the Company also has an impact on suppliers of raw materials, goods and services (particularly services
provided on the Company's premises) and on customers. The issue of risks related to the occurrence of child labour or
forced or compulsory labour does not apply to this company.
The person responsible for implementing policies and procedures is the President of the Management Board of Nitrogen
S.A. The Company has no plans to introduce policies that would only cover employees in the Company's value chain.
KGHM ZANAM
S.A.
Anti-corruption clauses have been introduced in the text of contracts concluded with business partners, pursuant to which
the Business Partner undertakes to be compliant. The Company has not recorded any significant negative impact on the
employees of suppliers in its value chain or on the buyers of products.
This company purchases from suppliers from a significant number of EU countries, and there have been no instances of
risk of child labour, forced or compulsory labour. In its sales contracts, KGHM ZANAM requires customers to become
familiar with, among other things, the Code of Ethics of the KGHM Polska Miedź S.A. Group and the Anti-Corruption Policy
posted on the KGHM Polska Miedź S.A. website.
The compliance with the foregoing is the responsibility of: the Management Board of the Company, the Internal Control,
Safety and Loss Prevention Department. The Company has no plans to introduce policies that would cover employees in
the Company's value chain.
5.6.4 Collaborative processes with persons performing work in the value chain in terms of impacts
[ESRS S2-2]
Policies related to employees performing work in the value chain
KGHM adopts a responsible approach to managing its value chain, which encompasses both suppliers and customers of
products and services. As part of its sustainability policy, emphasis is placed on respecting human rights, labour rights and
environmental standards in all business activities and relationships. Policies regarding those performing work in the value
chain are based on the following principles:
− Human rights commitments: As a signatory to the UN Global Compact, the Company is committed to complying with
the UN Guiding Principles on Business and Human Rights, the International Labour Organisation Declaration on
Fundamental Principles and Rights at Work and the OECD Guidelines for Multinational Enterprises. KGHM's Human
Rights Policy sets out expectations towards employees, suppliers and business partners regarding the respect for the
dignity, freedom and equality of all persons. KGHM is opposed to all forms of human trafficking, forced or compulsory
labour and child labour and takes measures to prevent and combat such practices in the value chain. The Company
also supports the engagement of employees in the value chain in social dialogue and collective bargaining, and ensures
that they are able to report any human rights violations and benefit from remedies.
− Supplier Code of Conduct: To ensure consistency of standards and values throughout the value chain, KGHM has
developed and implemented a Supplier Code of Conduct, which sets out requirements for suppliers in terms of legal,
ethical, human rights, labour rights, environmental and safety compliance. This code is an integral part of supplier
contracts and is regularly assessed and monitored. If non-compliance with the code is identified, appropriate action is
taken, such as dialogue, training, improvement or termination of cooperation.
66
PEP - Politically Exposed Person. A declaration (PEP) on holding a politically exposed position, being a family member (cohabitant) or a
close associate of a politically exposed person
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 196
Translation from original Polish version
− Compliance with international instruments: As part of our sustainability policy, we aim to continuously improve our
value chain management practices and processes in line with international instruments and initiatives such as the
Global Reporting Initiative (GRI), the Transparency in Supply Chain Initiative (ITSCI), the Initiative for Responsible Mining
(IRMA) and the Responsible Minerals Supply Chain Initiative (RMI). We also cooperate with our stakeholders, including
non-governmental organisations, academic institutions and regulators, to share knowledge and experience and to
identify and address potential challenges and risks related to those working in the value chain. In 2023, we did not
record any cases of non-compliance with the UN Guiding Principles on Business and Human Rights, the International
Labour Organisation Declaration on Fundamental Principles and Rights at Work or the OECD Guidelines for
Multinational Enterprises in our value chain.
Detailed information for significant operational companies
“Energetyka” sp.
z o.o.
This company engages in dialogue with employees at various levels of activity. Employees have the opportunity to meet
in person with the Representative for Ethics and Anti-Corruption, their superiors, as well as with members of the
company's Management Board. Systematic meetings are held between members of the Management Board and
representatives of the Trade Unions and the Employee Council operating in the company.
KGHM Metraco
S.A.
An anonymous telephone line and traditional mail is available. Trade unions also operate in KGHM Metraco S.A. and
participate in the decision-making process of the Management of the company.
KGHM
INTERNATIONAL
LTD.
Canada. Employees in the supply chain are covered by company policies related to the Code of Ethics, Code of Conduct,
Responsible Supply Chain Policy, Human Rights Policy, Federal Act S-211 (Canada's Modern Slavery Act) including the
obligations to report and describe measures that have been taken to prevent and reduce the risk that the company or its
suppliers are using forced or child labour.
USA/Sudbury. The supply chain manager monitors suppliers on an ongoing basis.
The companies in Canada and the USA review corporate policies for all employees every March and familiarise new
employees with procedures in this area.
NITROERG S.A.
In addition to the regulations concerning employees directly hired by the Company, the Company has introduced, among
other things, the Anti-Corruption Clause, the text of which is made known to and accepted by the Company's contractors.
Suppliers entering into procedures conducted by the Company in the procurement support system accept the Contractor's
Charter.
The Contractors read and accept the Anti-Corruption Clause - the document (along with the Anti-Corruption Policy and the
Code of Ethics) is available on the Company's website, including information on the possibility to report irregularities. The
Company has Trade Unions which employees can contact.
KGHM ZANAM
S.A.
Anti-corruption clauses have been introduced in the wording of agreements concluded with business partners, pursuant
to which the Business Partner undertakes to comply with the Anti-Corruption Policy of the KGHM Group and the Code of
Ethics of the KGHM Group. A Code of Ethics containing channels for reporting fraud has been posted on the company's
website.
The contracts concluded include provisions informing the supplier about the documents implemented by KGHM ZANAM
S.A. which are posted on the company's website (https://kghmzanam.com/en/). The supplier declares that it is familiar
with the documents and undertakes to apply them. This company does not take measures to directly inform employees
in the value chain about the existing systems for reporting ethical concerns and infringements of principles of ethics.
5.6.5 Objectives and processes of mitigating negative impacts and channels for reporting problems
by employees in the value chain
[ESRS S2-3, ESRS S2-5]
The Company engages in dialogue with employees in the value chain in the following ways:
KGHM Polska Miedź S.A. is committed to managing and mitigating negative impacts on employees in the value chain.
To this end, the Company implements a number of processes and mechanisms:
− Processes for mitigating negative impacts: KGHM takes measures to identify, assess and manage negative impacts on
employees in the value chain. These actions include regular supplier audits and assessments, employee training and
education, as well as the implementation of standards and procedures to promote safe and decent working conditions.
− Problem reporting channels: KGHM has established whistleblowing mechanisms that allow employees in the value
chain to report any concerns or issues related to human rights, labour rights, health and safety, and other sustainability
issues. These mechanisms provide confidentiality and protection for the individuals reporting concerns, as well as fair
and effective remedies.
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 197
Translation from original Polish version
5.6.6 Undertaking measures addressing significant impacts on persons performing work in the
value chain
[ESRS S2-4]
The issue of the impact on employees in the value chain is covered by a number of formal policy documents that regulate
the principles and standards of responsible action of the KGHM Polska Miedź S.A. Group towards its employees, suppliers,
contractors and local communities. Some of these documents include:
Responsible Supply
Chain Policy
The Policy defines the principles and requirements for sourcing metals from conflict-affected and high-risk areas, in
line with international guidelines and standards. The policy is aimed at prevention and elimination of any form of
violation of human rights, humanitarian law, labour law, the right to association, the right to environmental
protection, the right to cultural and natural heritage and the right to combat corruption and money laundering in
the KGHM supply chain.
Occupational Health
and Safety Policy
The Policy defines KGHM's objectives and obligations to ensure safe and healthy working conditions for all
employees and subcontractors, in accordance with applicable regulations and standards. The policy comprises,
among others, the prevention of accidents and occupational diseases, the improvement of a safety culture, the
improvement of employees' skills and raising awareness, the implementation of best practices and technical
solutions, the monitoring and assessment of occupational risks and the continuous improvement of the
occupational health and safety management system.
Collective Labour
Agreement for
Employees of KGHM
Polska Miedź S.A.
(ZUZP)
The ZUZP defines the principles and criteria for determining and payment of the remuneration for KGHM
employees, in accordance with market principles, fairness, motivation and efficiency. The policy comprises, among
others, the variable remuneration system, the bonus system, the reward and honours system, the fringe benefits
system, and the system for informing and consulting employees on remuneration issues.
Competition Law
Policy
The Policy defines the principles and requirements concerning the compliance with the competition law by
employees and collaborators of KGHM, in accordance with applicable laws and standards. The Policy is aimed at
preventing and eliminating all forms of unfair competition, such as price collusion, market sharing, abuse of
dominant position, agreements on supply or offtake conditions, exchange of confidential information, use of
prohibited or discriminatory clauses in commercial contracts, participation in public procurement procedures,
lobbying and contacts with antitrust authorities.
Anti-Corruption
Policy
The Policy defines the principles and standards, aimed at maintaining conformity with applicable anti-corruption
regulations in jurisdictions, in which the KGHM Polska Miedź S.A. Group operates and voluntary commitments aimed
at combatting corruption. The Group applies a zero tolerance policy towards corruption and bribery. In the Policy,
the upper management declares its full commitment to activities related to maintaining and continuously improving
the implemented Anti-corruption Management System, which conforms to the requirements of PN-ISO 37001
standard.
5.7 MANAGING THE IMPACT ON LOCAL COMMUNITIES
5.7.1 Policies related to affected communities
[ESRS S3-1]
The Company continues its dialogue with local governments and communities located in areas where KGHM’s activities
may have an impact. This dialogue also relates to the protection of human rights, which is included in the provisions of the
Human Rights Policy and in the Code of Ethics of the KGHM Polska Miedź S.A. Group, in force in all companies.
In addition, DMC Mining Services Chile SpA has a Corporate Social Responsibility Policy in place, which sets out the
commitment to CSR programs of customers and the intention to recognise the local communities in which operations are
carried out. Sierra Gorda Mine has a Community Relations Plan in place and identifies stakeholders. The preparation of the
policy in this scope is planned in 2024.
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).
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 198
Translation from original Polish version
Social dialogue
The copper giant has been an active participant in the life of local communities for many years. Key stakeholders of the
social side include:
− inhabitants of the Copper Basin,
− local government authorities,
− business representatives,
− representatives of academia,
− representatives of associations and local organisations serving the public.
In the perception of local people, KGHM is not only the main employer in the region, offering stable employment and high
wages, but also an active promoter of social life.
Guided by corporate social responsibility, the Company carries out, among other things, programs to promote health,
sport, culture, education and projects to counteract environmental threats.
In 2023, once again the local governments of the Copper Basin also received financial support from KGHM. KGHM has
provided 14 local governments in the Copper Basin with funds as part of the Company's broad program of CSR and socially
responsible business activities for local people. The transfer of funds takes place annually, as part of the good cooperation
between KGHM Polska Miedź S.A. and the local government units in which the Company operates. As part of the agreement,
the municipalities provide funds for health promotion initiatives, healthy lifestyles and pro-social activities. Local
government units take measures, among others, to protect the life and health of present and future generations, the
development and integration of the local community in the fields of culture, science and sport. A total of PLN 3.5 million
has been earmarked for, among other things, preventive examinations, medical equipment, thermal modernisation of
schools, construction of outdoor gyms or modernisation of village halls. The money was granted to the municipalities of
Głogów, Lubin, Jerzmanowa, Przemków, Grębocice, Kotla, Żukowice, Gaworzyce, Pęcław, Rudna, Radwanice and the cities:
Głogów, Legnica and Polkowice.
Thanks to support from KGHM, examinations and consultations at the diabetes or pulmonology clinic will be carried out in
Głogów up to mid-2024. In Grębocice, residents will be able to benefit from rehabilitation, or visits to a cardiologist and an
ENT specialist. The municipality of Kotla will equip and develop village halls, playgrounds or sports fields. Meanwhile, the
thermal modernisation of the primary school buildings in Białołęka will be carried out by the municipality of Pęcław.
Successive socially important projects will be carried out in the areas of health, education or culture in the Copper Basin.
Polkowice will buy an ultrasound scanner to expand the diagnosis of urinary tract diseases. Legnica will continue the
Healthy Legnica program campaign, while the municipality of Lubin will carry out, among other things, chess training or
additional sports activities for schoolchildren.
5.7.2 Cooperation processes for interacting with affected communities
[ESRS S3-2]
Cooperation with social partners is a key factor in the success of the development projects undertaken by the company. It
also contributes to reducing social risks in KGHM's operations. Mechanisms for social dialogue naturally accompany
activities which, through their scale and nature, affect the quality and living standards of residents. KGHM implements the
strategic assumptions of its CSR policy by engaging in dialogue and partnership with the local environment. The company
is a good neighbour and a trusted investor. In order to act efficiently, it incorporates social, cultural and economic elements
into its projects. KGHM works closely with local governments and non-governmental organisations, analyses information
on the needs of local communities and supports them in selected areas organisationally and financially. As a consequence,
the company creates a sustainable, fair and equal relationship with the environment. The company's pro-social projects
and sponsoring activities in Poland are carried out through the corporate KGHM Polska Miedź Foundation established
specifically for this purpose. Its main areas of activity include charitable work, preventive health care, promotion of sport
and support for culture and science. KGHM employees are also very much engaged in the implementation of social
programs , taking part in numerous voluntary actions.
The involvement of KGHM Polska Miedź S.A. in cooperating with potentially affected communities is particularly important
as part of ongoing projects, including the investment project entitled "Exploration and evaluation of a deposit of potassium
and magnesium salts in the vicinity of Puck". KGHM organised, as well as participated in, events organised by local
government units located within the boundaries of the Puck concession, under which exploration of the Mieroszyno deposit
is carried out.
The aspect of project development and the commencement of mining activities in the region of the Puck district is currently
the subject of a comprehensive expert opinion entitled "Project Feasibility Study", the results of which will enable the
Management Board of KGHM to make appropriate business decisions. A large-scale undertaking such as the construction
of a possible mine and its numerous associated infrastructures in an area that is new to the Company, undeveloped for
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 199
Translation from original Polish version
mining, and far removed from its core business, requires appropriate preparatory activities of an informative nature for
both local government units and residents in the vicinity of the potential mining area and site.
As part of the exploration and appraisal work intensified over the past two years, the Company has been carrying out
geological work in the form of drilling, the implementation of which requires a number of permits and decisions, starting
with approval of the traffic plan at the District Mining Office, obtaining the opinion of the municipality as to the Plan in
question, where the drilling would take place, concluding a lease agreement for a plot of land for drilling, or obtaining a
decision approving the mining waste management plan from the marshal's office. In view of the foregoing, the Company
took the initiative and organised meetings with representatives of the aforementioned institutions to provide information
on the ongoing project in the Puck region, its progress and further plans related to it. Meetings with the heads of
municipalities, representatives of the county (Governor of Puck), or representatives of the Pomorskie Voivodship, i.e. the
Voivode, the Marshall or the Chairman of the Voivodship Council, were organised on the Company's initiative in 2023 to
provide information on the project, its chances of success and, above all, the identified threats affecting its possible
implementation in order to work out a joint method of mitigating them.
Furthermore, the concession - under which all geological and other work are carried out - was already subject to another
amendment in 2023 (at the initiative of the concession holder, i.e. the Company). The procedure for granting or amending
a concession consists, among other things, of a stage in which the municipalities included in the concession area give their
opinion on the Geological Work Project, which defines the scope of work and the work planned to be carried out.
Accordingly, KGHM is in constant e-mail and telephone contact with representatives of the local government units
responsible for issuing the above opinions in order to quickly exchange information, dispel doubts or eliminate
inaccuracies.
In 2023, at the invitation of the Mayor of Władysławowo and the Mayor of the Municipality of Puck, KGHM representatives
participated in meetings of the Municipal Council (separately for each entity). The agendas of the above meetings included
an item on KGHM's activities in the region. During the discussion on the Puck project, the concerns and doubts of the
residents of the municipalities about the project being carried out were allayed, as well as the desire to work closely with
the local communities, which will be developed gradually as the work develops and progresses.
In addition, in 2023, KGHM undertook a number of activities with municipalities where investment projects are being
implemented, including:
Cooperation with the
Municipality of Żukowice in
connection with the
implementation of an
investment project:
"Construction of the GG-2
shaft"
− Implementation of the Agreement entered into between KGHM Polska Miedź S.A. and the Żukowice
Municipality in order to compensate the local community for the impact of the investment, was
continued,
− The Agreement between KGHM Polska Miedź S.A. and the Żukowice Municipality for the
construction of a local road connecting the GG-2 "Odra" shaft site with the DK12 national road was
continued, which will create the possibility of further implementation of the investment project
"Construction of the GG-2 ("Odra") shaft with the necessary surface and underground
infrastructure." The road will also act as an access road for the residents of the Municipality to the
agricultural properties in the area
Cooperation with the
Municipality of Grębocice in
connection with the
implementation of an
investment project:
“Construction of the GG-1
shaft” and “Construction of
the Retków shaft”:
− An Agreement was signed between KGHM Polska Miedź S.A. and the Municipality of Grębocice,
driven among others by the need to limit the impact of the activities carried out by the Company
and the needs in terms of the development of the technical, economic and social infrastructure of
the Municipality, in light of the commencement and execution of the investment consisting of the
construction of the "Retków" intake shaft with a material and driving function, together with the
necessary surface and underground infrastructure,
− Implementation of the Agreement between KGHM Polska Miedź S.A. and the Municipality of
Grębocice on the reconstruction of local road no. 634 in connection with KGHM's work on placing
infrastructure in the road for the Central Air Conditioning System was continued.
Cooperation with the
Municipality of Gaworzyce
in connection with the
implementation of an
investment project:
“Construction of the
Gaworzyce shaft”
− The execution of the Agreement between KGHM Polska Miedź S.A. and the Municipality of
Gaworzyce continued, driven by, among others, recognition by the Parties of the need to limit the
impact of the activities carried out by the Company and of the needs for the development of the
Municipality in terms of its technical, economic and social infrastructure in light of the
commencement and implementation of the investment involving the construction of the
"Gaworzyce" exhaust shaft.
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 200
Translation from original Polish version
KGHM INTERNATIONAL LTD.
− The Robinson mine actively participates in City Council and County Commission meetings.
− Sudbury, in the context of exploratory concessions, conducts regular, ongoing consultations and meetings.
Activities comprising community engagement are co-managed with a joint venture partner.
− The Victoria Project holds monthly meetings with First Nations representatives, aimed at negotiating and
consulting the implementation of a Closure Plan, which, if appropriate, are organised weekly. All progress in talks,
doubts raised and explanations given are continuously monitored and registered. Negotiation progress and
consultation outcomes are reported internally at weekly leadership team meetings, current project team
meetings and they are also included in the monthly reports on the advancement of the Victoria Project.
NITROERG S.A.
By cooperating with local governments, religious associations and local NGOs in the Tarnogórski and Bieruńsko-Lędziński
districts, the company receives information that is important in terms of conducting dialogue with local communities.
It analyses such information and pursues its policy with respect for the rights of local communities. Cooperation takes
place on a regular basis throughout the year.
KGHM ZANAM S.A.
The Company actively engages in general social goals, especially among the local community, mainly by supporting
initiatives that are difficult to achieve without the assistance of a socially committed business. The Company actively
supports the professional development of the local community, culture, promotes physical activity, acts as a charity and
supports educational institutions. In 2023, it continued its cooperation with secondary schools - Technical Schools and First
Degree Trade Schools (including Zespół Szkół Technicznych i Ogólnokształcących im. Henryka Pobożnego in Legnica, Zespół
Szkół nr 1 im. B. Krupińskiego in Lubin, Zespół Szkół in Chocianów) in the field of practical vocational training and
apprenticeship, as well as with higher education institutions as part of compulsory student training (among others:
University of Zielona Góra, Witelon Collegium in Legnica). In 2023, the Company participated in and co-organised initiatives
related to employment activation by means of a job fair, labour exchange, organising a field trip for students on the
Company's premises.
5.7.3 Remediation processes for negative impacts and channels for affected communities to report
problems
[ESRS S3-3]
The Company maintains a constant dialogue with local communities to work towards improving their living conditions. It
uses social needs assessment surveys (Lubin-Głogów Copper Basin), meetings with residents, joint advisory committees,
open days and direct contacts with local community leaders. By participating in the development of the regions, the
company supports investments in infrastructure (water supply systems, wastewater treatment plants, urban monitoring,
improvement of communications, health care) and social issues, including involvement in the organisation of events for
employees and residents and charitable events.
Residents have the opportunity to communicate directly with the Company through various communication channels
(social media, traditional and email exchanges, open days, meetings). Moreover, residents have the opportunity to report
concerns about impacts individually, e.g.: the impact of mining operations via the “For residents” tab on the company's
corporate website, where the procedures for, among others, reporting mining damage directly to the affecting entities are
explained and made available.
Rehabilitation processes and activities are described in sections 5.7.2 Cooperation processes for interacting with affected
communities and 5.7.4 Taking action on significant impacts on affected communities.
5.7.4 Taking action on significant impacts on affected communities
[ESRS S3-4]
The activities of KGHM Polska Miedź S.A., which contribute to achieving significant positive impacts, focus on supporting
local communities through social programs.
ECO-Health
The ECO-Health program was launched as part of the Company's corporate social responsibility and its priorities
are the promotion of preventive healthcare and active lifestyles among the Copper Basin residents.
Nordic walking
The Nordic Walking project is addressed to people over 30 years of age. It involves regular classes with qualified
and experienced instructors. So far, 14 editions of the Nordic walking project have been held in which more than
1,900 people participated.
Swimming
lessons
Swimming lessons involve cyclical lessons in the basics of swimming for children aged 5-10. Classes are held at
indoor swimming pools in several towns in the Copper Basin: Chojnów, Legnica, Lubin, Polkowice, Głogów and
Rudna.
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 201
Translation from original Polish version
Children develop their basic swimming skills under the supervision of qualified instructors from swimming clubs in
the region. So far, 11 editions of the swimming lessons have been held in which more than 3,500 people
participated. A record number of 540 participants took part in 2023, almost 200 more than in previous years.
Gymnastics for
seniors
Recreational gymnastics using specialised hammocks is a KGHM project for seniors aged 55-80, which is
implemented in several towns in the region. In 2023, exercises took place in Głogów, Legnica and Lubin. To date,
four editions of the project have taken place, with around 350 participants.
Medical
examinations
The ECO-Health program also comprises medical examination projects. In 2023, the screening project dedicated to
KGHM employees, which has been ongoing for several years, was completed by Copper Health Center, a member
of the KGHM Group.
Costs of projects in 2023:
− Children's swimming lessons project: PLN 281 305
− Nordic walking project: PLN 19 900
− Project of gymnastics classes for seniors: PLN 67 500
− Screening project: PLN 205 700
Information concerning significant operational companies
KGHM
INTERNATIONAL
LTD.
Robinson mine: Any mitigation measures identified must be carried out in accordance with the applicable agreement or
operating permit. Environmental impacts as well as socio-economic impacts shall be assessed as part of any activities
related to the issuing of permits.
In 2022 and 2023, there were audits in the Robinson mine by internal and external institutions aimed verifying the
realisation of policies and principles associated with broadly understood sustainable development, including OHS and
corporate governance. As a result of the audit by MSHA (Mine Safety and Health Administration) in 2023, 18 breaches were
identified, the vast majority of which was classified as insignificant. Two significant events were addressed and solved
within the schedule and did not have an impact on the mine’s operations. Moreover, audits performed by this body in
September and December 2022 identified irregularities in the management of mining machinery park. As a result of the
audit, the Robinson mine undertook a number of actions, among others on the manner of conducting repairs as well as
hastening the replacement of a part of the haulage trucks. Visitations by MSHA in 2023 indicated that all notifications
concerning the mining machinery submitted in September and December 2022 were addressed and solved.
Sudbury Basin: The Buried Treasure Project has agreements signed with Mattagami First Nation, Temagami First Nation
and Teme-Augama Anishnabai. These confidential low-level engagement agreements provide support and capacity for
implementation, site access, environmental monitoring, employment and procurement.
Victoria project: In 2014, an Advanced Exploration Agreement was negotiated and implemented with the Indigenous
Nations (Atikameksheng Anishnawbek, Sagamok Anishnawbek First Nation and Métis Nation of Ontario). These agreements
comprise provisions related to the inclusion of traditional and cultural knowledge in planning and operations, dispute
resolution mechanisms, financial support for capacity building and contract implementation, preferential hiring and
procurement commitments, and agreed environmental monitoring and reporting requirements Implementation of these
agreements involves monthly meetings and ongoing consultations. The Victoria Project is currently consulting, in
accordance with the Ministry of Mines' delegation, with four First Nations (Atikameksheng Anishnawbek, Sagamok
Anishnawbek First Nation, Whitefish River First Nation and Métis Nation of Ontario) on the submission of a closure plan. In
some cases, this required the negotiation of confidential benefit agreements that should be in place and implemented in
2024. Additionally, a community presentation was held for residents and associations near the project site. Community
concerns were identified and resolved in 2023.
Ajax project: The business unit assesses historic mining sites to characterise the environmental impact. This description
will be used to develop appropriate mitigation plans.
NITROERG S.A.
Activities are monitored on an ongoing basis as part of cyclical meetings between Company representatives and
representatives of local authorities (Tarnogórski and Bieruńsko-Lędziński counties, Kupski Młyn commune, Bierun city), as
well as local NGOs.
KGHM ZANAM
S.A.
In 2023, the company continued its cooperation with secondary schools - Technical Schools and First Degree Trade Schools
(including Zespół Szkół Technicznych i Ogólnokształcących im. Henryka Pobożnego in Legnica, Zespół Szkół nr 1 im. B.
Krupińskiego in Lubin, Zespół Szkół in Chocianów) in terms of practical vocational training and apprenticeship, as well as
with universities in the framework of compulsory student traineeships (e.g. University of Zielona Góra, the Witelon
Collegium in Legnica.
In 2023, this company participated in and co-organised initiatives related to employment activation by means of a job fair,
labour exchange, organising a field trip for students on the company's premises.
In 2023, no requests, comments, notifications, claims from the local community or external institutions regarding harm or
nuisance resulting from the company's industrial impact on the environment were recorded. The company supports the
surrounding Communities and Organisations through donations and sponsorships.
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 202
Translation from original Polish version
In 2023, the support was provided to institutions such as associations, sports clubs and educational institutions. The
company also organised excursions to allow the surrounding community to learn more about the company, its employees
and the profile of our activities. In 2023, the company was visited by, among others, wards of the Polkowice Orphanage.
5.7.5 Objectives for managing significant impacts, risks and opportunities
[ESRS S3-5]
The strategic objectives relating to the Company's impact on society are defined in Pillar V of the Company’s Business
Strategy, i.e. Pro-sociality, which defines, among other things, the directions of activities in the area of corporate social
responsibility.
Goal for 2030:
Base year
2020
Intermediate
goals /
milestones
Ambition
Supporting equitable transformation
of the mining industry - Securing new
jobs
Not
applicable
Not defined
Support for the fair transformation of the mining sector.
Number of volunteer projects
advanced – 30.
25 projects
Not defined
Releasing employee potential and KGHM's commitment to
pro-social activities.
Level of support for culture, sport and
health approx. PLN 48 million.
approx.
PLN 38.5
million
Not defined
Active promotion of relevant activities that bring added
value to local communities and enhance Poland's positive
image internationally.
The basis for the adoption of the above targets for 2030 under Pillar V was based on intra-organisational arrangements
with the business units based on plans and the Company's current commitment to pro-social activities.
The Company conducts extensive social dialogue based, among other things, on cooperation with local authorities.
Activities pursued include, among others, thematic conferences with representatives of local authorities and local non-
profit organisations, sponsorship and charitable activities. All investment projects are preceded by a public consultation
ensuring the licence to operate.
Information concerning material operational companies
KGHM
INTERNATIONAL
LTD.
In the case of the Sudbury operation, the mitigation measures described in the closure plans will be implemented during
operations and at closure. These focus primarily on environmental protection, site rehabilitation and mitigation of impacts
on the rights of indigenous peoples. In addition, management plans are monitored through routine inspections and
regular meetings with first nations. Not applicable to other KGHM INTERNATIONAL LTD. assets.
NITROERG S.A.
Such monitoring takes place on an ongoing basis during meetings with representatives of local authorities (mayors, district
governors and councillors), as well as NGOs operating in the Tarnogórski and Bieruńsko-Lędziński districts. Monitoring is
carried out through comments, reminders, complaints and other types of letters or e-mails.
KGHM ZANAM
S.A.
In the area of environmental protection, the company has not set measurable, result-oriented goals with a specified time
horizon for their implementation related to its impact on local communities.
In the scope of marketing and PR, the company has not defined measurable, result-oriented goals with a specified time
horizon for their implementation related to its impact on local communities.
5.8 EXPENDITURES INCURRED BY THE COMPANY AND THE GROUP TO SUPPORT CULTURE, SPORTS,
CHARITIES, MEDIA, SOCIAL ORGANISATIONS, TRADE UNIONS ETC.
Sponsorship activity
KGHM is a “good neighbour and trustworthy investor”. It supports local communities, social organisations 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 expenditures incurred by the Company to support culture in 2023 amounted to PLN 11 million. The Company
supported sports initiatives in the amount of PLN 39 million. The Company contributed nearly PLN 4 million to academia.
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 203
Translation from original Polish version
In 2023, the amount of contributions paid by KGHM to organisations to which membership is optional is PLN 12 million,
while expenditure in KGHM Polska Miedź S.A. related to cooperation with the media amounted to PLN 7 million.
Moreover, in 2023, KGHM Polska Miedź S.A. made a financial donation to the KGHM Polska Miedź Foundation for statutory
purposes in the total amount of PLN 54 million, and to Group companies in the total amount of PLN 250 thousand.
Supporting the Foundation is one of the priorities of the cooperation with community organisations. However, it is worth
mentioning that the Company also supports numerous industry organisations by being their member.
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 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. 2023 was a continuation of the implementation of the above assumptions.
The efficient functioning of important cultural or scientific institutions today is largely dependent on the support of
sponsors. Without the support of companies such as KGHM, many valuable projects would not have a chance for successful
implementation. Therefore, when considering sponsorship activities, KGHM also takes into account the social aspect of
each project.
Areas of pursued sponsorship activity of KGHM Polska Miedź S.A.:
Sports
The Company considers the area of sport as an important area of social life and therefore supports both top-class
professional sport and amateur sport. As the biggest employer in the region, it appreciates the importance of sport
in shaping the leisure culture of adults and its educational role with regard to young people. The Parent Entity is
the major sponsor and at the same time the owner of Zagłębie Lubin S.A., a football team playing in Extra Class
(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. KGHM also supports other running events, e.g. the Straceńców Cross or the New Year's March in Głogów.
Culture and
social issues
KGHM Polska Miedź S.A. is involved in numerous projects in the area of culture and social affairs. It participates in
the organisation of, and becomes a patron of, significant projects that are addressed to the region and the whole
country. Since 2019, KGHM has become a patron of the Royal Castle in Warsaw. It has also been supporting the
Wrocław Opera for many years. KGHM also continued its patronage of the Warsaw Uprising Museum, which
provided museum lessons in history and the Polish language ( on-site and online) at various levels of education -
from primary school to secondary schools, technical schools and vocational schools. The Company is also willing
to support valuable film productions, e.g. the film adaptation of Janusz Korczak's prose story "Kajtek the Wizard",
but also intergenerational cultural meetings - the Festival of Rural Housewives.
Science
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 2023, 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 or the Krynica Forum.
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 of the Management Board 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.
Expenditure related to the functioning of trade unions in the Company
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 2023, they amounted in total to PLN 14 million,
including remuneration plus overhead of trade union activists released from the obligation to work of PLN 13 million,
resulting from the Act dated 23 May 1991 on trade unions.
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 204
Translation from original Polish version
6 ABOUT THE REPORT
6.1 GENERAL BASIS FOR THE PREPARATION OF THE STATEMENT ON NON-FINANCIAL INFORMATION
[ESRS 2 BP-1]
This statement has been prepared in consolidated form for the KGHM Polska Miedź S.A. Group. The scope of consolidation
is equivalent to the financial statements. Subsidiaries belonging to the Group are exempt from individual sustainability
reporting in accordance with Article 19a(9) or Article 29a(8) of Directive 2013/34/EU.
The formal basis for this statement is the NFRD (Non-Financial Disclosure Reporting Directive) implemented to the Polish
Accounting Law. In the Statement for 2023, the Group decided to incorporate the CSRD (Corporate Sustainability Reporting
Directive) guidelines and the ESRS sustainability information reporting standards, one year before they become mandatory
for large public interest entities. The ESRS indicators included in the 2023 reporting framework are identified in the Report
and in the index of indicators. With regard to the preparation of the dual materiality analysis process and the analysis of
impacts, risks and opportunities, the GRI standard (section 6.3 Matrix of material reporting topics for 2023) was the basis
for preparation. The structure of this statement is consistent with the approach taken in the reports of prior years. It will
be fully adapted to the structure set forth in the ESRS standards in the first full year of ESRS-compliant reporting for the
KGHM Polska Miedź S.A. Group, i.e. in the statement for 2024.
The statement incorporates information regarding the value chain of the KGHM Polska Miedź S.A. Group. In accordance
with the list of ESRS disclosures (IRO-1), the omission of information with regard to anticipated financial effects has been
used. The option to omit specific information on intellectual property, know-how or innovation results has not been
exercised.
The statement includes taxonomy disclosures compliant with Regulation (EU) 2020/852 of the European Parliament and of
the Council of 18 June 2020 on establishing a framework to facilitate sustainable investment, amending Regulation (EU)
2019/2088.
The statement includes information on climate change issues pursuant to TCFD (Task Force on Climate-Related Financial
Disclosures) guidelines, detailing the approach of the KGHM Polska Miedź S.A. Group in this regard towards management
(sections 2 and 4 of the statement), strategy (section 4), risk and opportunities (sections 2 and 4), goals and measurement
of execution (section 4).
The KGHM Polska Miedź S.A. Group has not used the exemption from the obligation to disclose information on expected
events or matters under negotiation in accordance with Article 19a(3) and Article 29a(3) of Directive 2013/34/EU.
6.2 DISCLOSURE IN RELATION TO SPECIAL CIRCUMSTANCES
[ESRS 2 BP-2]
Not applicable
6.3 MATRIX OF MATERIAL REPORTING TOPICS FOR 2023
In the opinion of KGHM Polska Miedź S.A., the materiality analysis of ESG topics developed in 2022 as part of the preparatory
work for the "Statement on non-financial information of KGHM Polska Miedź S.A. and the KGHM Polska Miedź S.A. Group
for 2022” has not become outdated. KGHM Polska Miedź S.A. – for the needs of development and publication of the
Sustainability Statement for 2024 in 2025 – will re-examine double materiality, in accordance with the procedure
contained in the CSRD and ESRS. The survey will be carried out before the development of next year's statement.
The materiality analysis process conducted in 2022 proceeded in accordance with the standard “GRI 3: Material Topics
2021” and, in addition, took into account the principle of double materiality recommended by the CSRD, in force in the
European Union since the 2024 reports.
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 and ratings (S&P, SASB),
− identification of material topics identified by sustainability leaders in the industry,
− including material topics identified in the draft EU ESRS reporting standard,
− taking into account the weight of topics provided by stakeholders in the previous materiality analysis process,
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 205
Translation from original Polish version
− 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 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 relevant in 2022 and are still relevant in the context of operations in 2023.
The perspective on the assessment of these topics has changed: instead of relevance to the Company and the 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 the 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.
The diagram below shows the identified topics that are material for stakeholders and have material social, environmental
and economic impacts.
Diagram 35. 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
PLN mn
2-11
PLN mn
11-110
PLN mn
110-120
PLN mn
>220
PLN mn
FINANCIAL IMPACT
No.
Subject
Environmental
and social
impact
Financial
impact
1
Striving for a circular economy
8
5
2
Prevention of 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
Staff development
4
2
16
Customer satisfaction
4
2
6.4 DESCRIPTION OF THE PROCESS AIMED TO IDENTIFY AND ASSESS SIGNIFICANT IMPACTS, RISKS
AND OPPORTUNITIES
[ESRS 2 IRO-1]
The description of the process is presented in section 2.2.7 Material impacts, risks and opportunities and their interaction
with strategy and business model.
6.5 RISK MANAGEMENT AND INTERNAL CONTROLS OVER SUSTAINABILITY REPORTING
[ESRS 2 GOV-5]
Risk management is described in section 2.3 Risk management.
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 206
Translation from original Polish version
6.6 ESRS DISCLOSURE REQUIREMENTS COVERED BY THE ENTITY'S SUSTAINABILITY STATEMENT
[ESRS 2 IRO-2]
Index of ESRS indicators with reference pages in the report.
Mandatory disclosures - ESRS 2
Index
Description of indicator
Comments
Page
number
ESRS 2 BP-1
General basis for preparation of the sustainability statements
204
ESRS 2 BP-2
Disclosure in relation to special circumstances
204
ESRS 2 GOV-1
The role of the administrative, management and supervisory
bodies
43, 52, 70
ESRS 2 GOV-2
Information provided to and sustainability matters addressed by
the undertaking’s administrative, management and supervisory
bodies
45
ESRS 2 GOV-3
Integration of sustainability-related performance in incentive
schemes
46
ESRS 2 GOV-4
Statement on sustainability due diligence
69
ESRS 2 GOV-5
Risk management and internal controls over sustainability
reporting
52, 53,
205
ESRS 2 SBM-1
Strategy, business model(s) and value chain
7
ESRS 2 SBM-1
Addendum B
Participation in activities listed in Addendum B
No participation in the listed
activities
-
ESRS 2 SBM-2
Interests and views of stakeholders
37, 193
ESRS 2 SBM-3
Material impacts, risks and opportunities and their interaction
with strategy and business model
37, 44,
47, 53,
56, 116,
142, 193
ESRS 2 IRO-1
Description of the processes to identify and assess material
impacts, risks and opportunities
49, 50,
51, 53,
56, 122,
129, 143,
146, 205
ESRS 2 IRO-2
Disclosure Requirements in ESRS covered by the undertaking’s
sustainability statements
206
Environmental disclosures
Index
Description of indicator
Comments
Page
number
ESRS E1-1
Transition plan for climate change mitigation
115
ESRS E1-1
Addendum B
Undertakings excluded from the EU Paris-aligned benchmarks
Companies of the Group are not
undertakings excluded from the EU
Paris-aligned benchmarks
ESRS E1-2
Policies related to climate change mitigation and adaptation
123
ESRS E1-3
Actions and resources in relation to climate change policies
124
ESRS E1-4
Targets related to climate change mitigation and adaptation
124
ESRS E1-4
Addendum B
GHG emission reduction targets
124
ESRS E1-5
Energy consumption and diversification including energy intensity
125
ESRS E1-5
Addendum B
Energy consumption from non-renewable sources disaggregated
by source
As at the date of signing of this
Report, this data is not available.
Information within this scope will
be published separately
125
Energy consumption and mix
Energy intensity associated with activities in high climate impact
sectors
ESRS E1-6
Gross Scopes 1, 2, 3 and Total GHG emissions and GHG emission
intensity based on net revenue
125
ESRS E1-7
GHG removals and GHG mitigation projects financed through
carbon credits
128
ESRS E1-8
Internal carbon pricing
129
ESRS E1-9
Potential financial effects from material physical and transition
risks and potential climate-related opportunities
The entity omits the information
defined in ESRS E1-9 in the first
129
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 207
Translation from original Polish version
year of preparation of the
sustainability statement.
ESRS E2-1
Policies related to pollution
129
ESRS E2-2
Actions and resources related to pollution
130
ESRS E2-3
Targets related to pollution
135
ESRS E2-4
Pollution of air, water and soil
135
ESRS E2-4
Addendum B
Quantity of each pollutant listed in Annex II of the E-PRTR
(European Pollutant Release and Transfer Register) emitted to air,
water and soil
This disclosure will be reported for
2024 due to the need to implement
solutions consolidating emission
data from various activities at the
level of the KGHM Polska Miedź S.A.
Group
-
ESRS E2-5
Substances of concern and substances of very high concern
135
ESRS E2-6
Potential financial effects from pollution-related impacts, risks
and opportunities
The entity omits the information
defined in ESRS E2-6 in the first
year of preparation of the
sustainability statement.
136
ESRS E3-1
Policy related to water and marine resources
137
ESRS E3-1
Addendum B
Practices related to sustainable oceans and seas
Not applicable
ESRS E3-2
Activities and resources related to water and marine resources
138
ESRS E3-3
Targets related to water and marine resources
140
ESRS E3-4
Water consumption
141
ESRS E3-4
Addendum B
Total amount of water recycled and reused
140
Total amount of water consumed in cubic meters per net revenue
of own operations
ESRS E3-5
Anticipated financial effects from material water and marine
resources-related risks and opportunities
The entity omits the information
defined in ESRS E3-5 in the first
year of preparation of the
sustainability statement.
142
ESRS E4-1
Transformation plan in terms of biodiversity and ecosystem and
including biodiversity and ecosystems in the strategy and
business model
144
ESRS E4-2
Policy related to biodiversity and ecosystems
144
ESRS E4-2
Addendum B
Sustainable land / agriculture practices or policies
Not applicable
Sustainable oceans / seas practices or policies
Policies to address deforestation
ESRS E4-3
Actions and resources related to biodiversity and ecosystems
144
ESRS E4-4
Targets related to biodiversity and ecosystems
146
ESRS E4-5
Impact metrics related to biodiversity and ecosystems change
146
ESRS E4-6
Potential financial effects from biodiversity and ecosystem-related
impacts, risks and opportunities
The entity omits the information
defined in ESRS E4-6 in the first
year of preparation of the
sustainability statement.
146
ESRS E5-1
Policies related to the use of resources and circular economy
147
ESRS E5-2
Activities and resources related to the use of resources and
circular economy
147
ESRS E5-3
Goals related to the use of resources and circular economy
148
ESRS E5-4
Impact of resources (use of raw materials and consumables)
148
ESRS E5-5
Impact of resources (products and materials put into circulation
and waste generated)
149
ESRS E5-5
Addendum B
Non-recycled waste
149
Hazardous waste and radioactive waste
ESRS E5-6
Potential financial effects from resource use and circular
economy-related impacts, risks and opportunities
The entity omits the information
defined in ESRS E5-6 in the first
year of preparation of the
sustainability statement.
151
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 208
Translation from original Polish version
Social disclosures
Index
Description of indicator
Comments
Page
number
ESRS S1-1
Policies related to own workforce
167, 168
ESRS S1-1
Addendum B
Obligations in terms of policy concerning the respect for human
rights
167, 168
ESRS S1-1
Addendum B
Due diligence strategies in relation to issues covered by the
International Labour Organisation’s relevant conventions
167, 168
ESRS S1-1
Addendum B
Procedures and measures for preventing trafficking in human
beings
167, 168
ESRS S1-1
Addendum B
Workplace accident prevention policy or management system
167, 168
ESRS S1-2
Processes for engaging with own workers and workers’
representatives about impacts
169
ESRS S1-3
Processes to remediate negative impacts and channels for own
workers to raise concerns
174
ESRS S1-3
Addendum B
Complaints-handling mechanism
174
ESRS S1-4
Taking action on material impacts on own workforce, and
approaches to mitigating material risks and pursuing material
opportunities related to own workforce, and effectiveness of
those actions
174
ESRS S1-5
Targets related to managing material negative impacts, advancing
positive impacts, and managing material risks and opportunities
175
ESRS S1-6
Characteristics of the undertaking’s employees
177
ESRS S1-7
Characteristics of non-employee workers in the undertaking’s own
workforce
179
ESRS S1-8
Scope of collective bargaining and social dialogue
180
ESRS S1-9
Diversity indicators
183
ESRS S1-10
Adequate wages
184
ESRS S1-11
Social protection
184
ESRS S1-12
Percentage of persons with disabilities
185
ESRS S1-13
Training and skills development indicators
185
ESRS S1-14
Health and Safety indicators
192
ESRS S1-14
Addendum B
Number of fatalities as a result of work-related injuries and work-
related ill health
192
ESRS S1-14
Addendum B
Number of days lost to work-related injuries and fatalities from
work-related accidents, work-related ill health and fatalities from
ill health
192
ESRS S1-15
Work-life balance
187
ESRS S1-16
Compensation indicators (pay gap and total compensation)
188
ESRS S1-16
Addendum B
Unadjusted gender pay gap
188
ESRS S1-16
Addendum B
Excessive CEO pay ratio
Data will be disclosed beginning
from 2024
-
ESRS S1-17
Incidents, complaints and severe human rights impacts and
incidents
188
ESRS S1-17
Addendum B
Incidents of discrimination
188
ESRS S1-17
Addendum B
Non-compliance with the UN Guiding Principles on Business and
Human Rights or the OECD Guidelines
188
ESRS S2-1
Policies related to value chain workers
193
ESRS S2-1
Addendum B
Obligations in terms of policy concerning the respect for human
rights
193
ESRS S2-1
Addendum B
Violations of UNGC principles and OECD
The entity is compliant with UN
Guiding Principles on Business and
Human Rights of the OECD
Guidelines
-
ESRS S2-1
Addendum B
Due diligence strategies in relation to issues covered by the
International Labour Organisation’s relevant conventions
193
ESRS S2-2
Processes for engaging with value chain workers about impacts
195
ESRS S2-3
Processes to remediate negative impacts and channels for value
chain workers to raise concerns
196
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 209
Translation from original Polish version
ESRS S2-4
Taking action on material impacts on value chain workers, and
approaches to managing material risks and pursuing material
opportunities related to value chain workers, and effectiveness of
those actions, metrics
197
ESRS S2-4
Addendum B
Severe human rights issues and incidents connected to its
upstream and downstream value chain
There were no severe human rights
issues and incidents connected to
the entity’s value chain in the
reporting period
-
ESRS S2-5
Targets related to managing material negative impacts, advancing
positive impacts, and managing material risks and opportunities
related to value chain workers
196
ESRS S3-1
Policies related to affected communities
197
ESRS S3-1
Addendum B
Non-compliance with the UN Guiding Principles on Business and
Human Rights or the OECD Guidelines
We are compliant with the Guiding
Principles
-
ESRS S3-2
Processes for engaging with affected communities about impacts
198
ESRS S3-3
Processes to remediate negative impacts and channels for
affected communities to raise concerns
200
ESRS S3-4
Taking action on material impacts, and approaches to mitigating
material risks and pursuing material opportunities related to
affected communities, and effectiveness of those actions and
approaches
200
ESRS S3-4
Addendum B
Human rights issues and incidents
There were no severe human rights
issues and incidents connected to
the affected communities in the
reporting period
-
ESRS S3-5
Targets related to managing material negative impacts, advancing
positive impacts, and managing material risks and opportunities
202
ESRS S4
Consumers and end users
Not applicable
Corporate governance disclosures
Index
Description of indicator
Comments
Page
number
ESRS G1-1
Corporate culture and business conduct policies
73
ESRS G1-1
Addendum B
United Nations Convention against Corruption
KGHM’s Policy is compliant with the
Convention
-
ESRS G1-1
Addendum B
Whistleblower protection
73
ESRS G1-2
Management of relationships with suppliers
73
ESRS G1-3
Prevention and detection of corruption or bribery
75
ESRS G1-4
Confirmed incidents of corruption or bribery
78
ESRS G1-4
Addendum B
Fines for violations of anti-corruption and anti-bribery laws
section 24(a)
ESRS G1-5
Political influence and lobbying activities
80
ESRS G1-6
Payment practices
81
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 210
Translation from original Polish version
Economic results
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 211
Translation from original Polish version
7 ECONOMIC PERFORMANCE OF THE GROUP
Copper production
C1 cost
Revenues
Adjusted EBITDA
Loss for the period
711
kt
2.87
USD/lb
33 467
PLN mn
5 362
PLN mn
-3 691
PLN mn
7.1 PRODUCTION
In 2023, payable copper production by the Group was lower by 3.0%, or by 22.2 thousand tonnes compared to 2022. The
decrease was in respect of KGHM INTERNATIONAL LTD. (-16.3 thousand tonnes) and Sierra Gorda S.C.M. (-12.3 thousand
tonnes on a 55% basis) and was not offset by higher production by KGHM Polska Miedź S.A. (+6.4 thousand tonnes).
The increase in copper production by KGHM Polska Miedź S.A. in 2023 was due to the higher availability of production lines,
in particular to an increase in efficiency of the working time of infrastructure of the Tank House in the Głogów Copper
Smelter and Refinery, and involved production both from own concentrate as well as from purchased copper-bearing
materials.
The decrease in copper production by Sierra Gorda S.C.M. was mainly due to the extraction of ore with lower copper content
and lower recovery, which was not offset by a higher volume of ore processed.
The decrease in production by the segment KGHM INTERNATIONAL LTD. was mainly due to lower production by the
Robinson mine (-15.4 thousand tonnes). Additionally, during the first four months of 2022 production by the Franke mine
was included (-2.8 thousand tonnes). Higher copper production versus the prior year was recorded by the Sudbury Basin
mines (+2.1 thousand tonnes). The decrease in production by the Robinson mine in 2023 was due to the mining of a
transition zone with low copper content, and at the same time with high content of clay minerals, acid-soluble copper and
zinc, which negatively impacted the flotation process. Moreover, at the start of the year the mine had to deal with difficulties
related to the low effectiveness of mining machinery. Since the fourth quarter of 2023, mining has been carried out beyond
the transition zone, leading to a substantial improvement in production results.
Detailed information on production results may be found in the sections dedicated to individual segments. The Group’s
production is shown below.
Table 59. Production by the Group
67
2023
2022
Change (%)
4Q’23
3Q’23
2Q’23
1Q’23
Payable copper (kt)
Group
710.9
733.1
(3.0)
183.6
176.0
175.8
175.5
- KGHM Polska Miedź S.A.
592.4
586.0
+1.1
148.9
147.7
146.8
149.0
- KGHM INTERNATIONAL LTD.
39.9
56.2
(29.0)
15.8
8.7
7.8
7.6
- Sierra Gorda S.C.M.
78.6
90.8
(13.4)
18.9
19.6
21.2
18.9
TPM (koz t)
Group
184.4
177.5
+3.9
50.9
41.0
45.1
47.4
- KGHM Polska Miedź S.A.
111.0
87.3
+27.1
27.7
25.6
26.8
30.9
- KGHM INTERNATIONAL LTD.
40.6
55.9
(27.4)
14.5
7.7
9.3
9.0
- Sierra Gorda S.C.M.
32.9
34.3
(4.1)
8.7
7.7
9.0
7.5
Silver (t)
Group
1 428.3
1 327.1
+7.6
329.4
387.2
330.8
380.9
- KGHM Polska Miedź S.A.
1 403.3
1 298.4
+8.1
323.2
381.0
324.2
374.9
- KGHM INTERNATIONAL LTD.
2.7
2.0
+35.0
0.5
0.7
0.8
0.7
- Sierra Gorda S.C.M.
22.3
26.7
(16.5)
5.7
5.5
5.8
5.3
Molybdenum (mn lbs)
Group
3.6
3.0
+20.0
0.5
1.0
1.1
1.0
- KGHM Polska Miedź S.A.
-
-
×
-
-
-
-
- KGHM INTERNATIONAL LTD.
0.1
0.1
-
0.1
0.0
0.0
0.0
- Sierra Gorda S.C.M.
3.5
2.9
+20.7
0.4
1.0
1.1
1.0
67
Sierra Gorda – 55% share held by the Group
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 212
Translation from 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, revenues do not include revenues of the
segment Sierra Gorda S.C.M. Detailed information on segment’s sales is presented in the sections devoted to the results of
individual segments.
Chart 25. Geographic structure of Group sales
Chart 26. 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 60. C1 cost of producing payable copper in the Group (USD/lb)
2023
2022
Change
(%)
4Q’23
3Q’23
2Q’23
1Q’23
Group
2.87
2.20
+30.5
2.64
2.93
2.90
3.00
- KGHM Polska Miedź S.A.
2.98
2.38
+25.2
2.87
2.97
2.98
3.08
- KGHM INTERNATIONAL LTD.
4.15
2.14
+93.9
2.22
5.40
5.66
5.00
- Sierra Gorda S.C.M.
1.68
1.50
+12.0
2.02
1.69
1.50
1.48
Poland
26%
Germany
18%
China
12%
Italy
7%
Czechia
7%
United Kingdom
7%
Other
23%
Copper
71%
Silver
13%
Gold
3%
Services
5%
Other
8%
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 213
Translation from original Polish version
7.4 FINANCIAL RESULTS
7.4.1 Statement of profit or loss
Table 61. Financial results of the Group (in PLN million)
2023
2022
Change (%)
4Q’23
3Q’23
2Q’23
1Q’23
Revenues from contracts with customers
33 467
33 847
(1.1)
7 819
7 891
8 172
9 585
Cost of sales, selling costs and administrative
expenses
(35 107)
(29 503)
+19.0
(10 548)
(7 697)
(7 939)
(8 923)
Profit/(loss) on sales
(1 640)
4 344
×
(2 729)
194
233
662
Profit or loss on involvement in a joint venture
698
1 455
(52.0)
(241)
165
627
147
Other operating income and (costs)
(2 817)
962
×
(2 565)
697
(579)
(370)
Finance income / (costs)
159
(272)
×
243
(267)
109
74
Profit/(loss) before income tax
(3 600)
6 489
×
(5 292)
789
390
513
Income tax expense
(91)
(1 715)
(94.7)
765
(354)
(153)
(349)
Profit/(loss) for the period
(3 691)
4 774
×
(4 527)
435
237
164
Adjusted EBITDA
5 362
9 024
(40.6)
1 127
1 173
1 260
1 802
Adjusted EBITDA, defined as profit/loss on sales increased by depreciation/amortisation recognised in expenses by nature
and adjusted by recognition/reversal of impairment losses on property, plant and equipment in the core business, is one
of the basic parameters considered by the Management Board of the Parent Entity when evaluating the results of individual
operating segments. A detailed definition of this indicator and its reconciliation to profit or loss for the period of the Group
may be found in Part 2 (Information on segments and revenues) of the Consolidated financial statements for 2023.
Adjusted EBITDA of the KGHM Polska Miedź S.A. Group for 2023, representing the sum of the indicators reported by
individual segments, amounted to PLN 5 362 million:
KGHM
Polska Miedź S.A.
KGHM
INTERNATIONAL LTD.
Sierra Gorda
S.C.M.*
Other
segments
Sum of
segments
Adjusted EBITDA for 2023
3 563
(142)
1 584
357
5 362
During the reporting period the Company redefined adjusted EBITDA by including depreciation/amortisation recognised in
expenses by nature in the calculation method (until now, depreciation/amortisation recognised in profit or loss).
The applied approach is widely used by numerous exchange-listed companies, including those in the mining sector, ensures
consistency and comparability with plans of individual operating segments of the KGHM Polska Miedź S.A. Group and
parameters applied in the credit agreements. The comparable period was restated pursuant to the presentation in the
current reporting period, EBITDA has changed as compared to the one presented in the published Consolidated financial
statements for 2022 - an increase in the amount of PLN 159 million.
In the subsequent parts of this Report, adjusted EBITDA for 2023 and 2022 is presented based on the updated definition.
The total impact of this change in definition for 2022, reflected in this Report, is PLN 159 million:
KGHM
Polska Miedź S.A.
KGHM
INTERNATIONAL LTD.
Sierra Gorda
S.C.M.*
Other
segments
Sum of
segments
Adjusted EBITDA for 2022 -
depreciation/amortisation recognised in
profit or loss (the Report for 2022)
5 400
1 001
2 190
274
8 865
Adjusted EBITDA for 2022 -
depreciation/amortisation recognised in
expenses by nature (the Report for 2023)
5 470
1 089
2 190
275
9 024
Difference
70
88
-
1
159
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 214
Translation from original Polish version
Table 62. Main factors impacting the change in profit or loss of the Group
Item
Impact on
change of
profit or loss
(in PLN million)
Description
EBITDA
(3 056)
A decrease in EBITDA of operating segments (excluding Sierra Gorda), comprised of:
− lower EBITDA of the segment KGHM Polska Miedź S.A. by PLN 1 907 million,
− lower EBITDA of the segment KGHM INTERNATIONAL LTD. by PLN 1 231 million,
− higher EBITDA of other segments by PLN 82 million.
The results of the aforementioned segments are described respectively in sections 8, 9 and 11 of the
Management Board’s Report.
Impairment of
property, plant
and equipment
and intangible
assets
(3 889)
In 2023 there was an increase in impairment losses on property, plant and equipment and intangible
assets in the total amount of PLN 3 889 million (PLN 147 million in 2022, PLN 4 036 million in 2023). The
impairment losses in 2023 comprised:
− an impairment loss in the amount of PLN 3 589 million due to an impairment test conducted on the
mining and metallurgical assets of KGHM Polska Miedź S.A.,
− an impairment loss in the amount of PLN 424 million in the value of assets of the CGU Victoria,
− the reversal of an impairment loss in the amount of PLN 23 million due to water rights on sources
held in Chile
A detailed description of the assumptions and the results of the conducted impairment tests may be
found in part 3 of the consolidated financial statements. A comprehensive presentation of the
impairment losses recognised/reversed is presented in note 4.4 of the consolidated financial statements.
Profit or loss on
involvement in
a joint venture
(757)
A decrease in the result on involvement in a joint venture, comprised of:
− a decrease in profit due to the reversal of allowances for impairment of loans granted to a joint
venture, PLN 772 million,
− an increase in interest income on loans by PLN 15 million.
Exchange
differences
(1 828)
A decrease in the result on exchange differences due to:
− a lower, by PLN 2 363 million, result on exchange differences presented in other operating income
and costs (mainly due to loans within the Group),
− a higher, by PLN 535 million, result on exchange differences from the measurement and realisation
of borrowings presented in financial income and costs (mainly exchange differences on borrowings
of KGHM Polska Miedź S.A.)
Income tax
+1 624
A decrease in income tax, mainly due to:
− a decrease in current tax by PLN 687 million, mainly due to lower EBITDA,
− a decrease in the adjustment of deferred tax by PLN 884 million, mainly as a result of impairment
losses.
Other
(559)
Other adjustments of the result, mainly:
− a decrease in gain from the disposal of subsidiaries by PLN 179 million (in 2022 the Group recorded
a gain from the sale of S.C.M. Franke in the amount of PLN 143 million, and gain from the sale of
INTERFERIE S.A. and Interferie Medical SPA Sp. z o.o. in the amount of PLN 37 million),
− a decrease in gain from the disposal of intangible assets by PLN 127 million (in 2022 the Group
recorded a gain from the sale of the OXIDE project in the amount of PLN 135 million)
Chart 27. Change in profit/loss of the Group in 2023 (in PLN million)
4 774
-3 691
+1 624
-3 056
-3 889
-1 828
-757
-559
Profit for
2022
Change in EBITDA
(without Sierra
Gorda)
Impairment loss on
property, plant and
equipment
Profit or loss on
involvement in joint
ventures
Exchange
differences
Income tax Other Loss for
2023
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 215
Translation from original Polish version
7.4.2 Cash flow
Table 63. Cash flow of the Group (in PLN million)
2023
2022
Change
(%)
4Q'23
3Q'23
2Q'23
1Q'23
Net cash generated from financing activities, including:
6 051
2 464
×2.5
2 409
712
1 450
1 480
Change in working capital
3 735
(2 317)
×
2 027
480
949
279
Net cash used in investing activities
(4 798)
(2 695)
+78.0
(1 762)
(1 049)
(824)
(1 163)
Net cash used in/(generated from) financing activities
(747)
(446)
+67.5
(361)
(105)
(347)
66
Net cash flow
506
(677)
×
286
(442)
279
383
Exchange differences
23
(27)
×
40
(34)
26
(9)
Cash and cash equivalents at beginning of the period
1 200
1 904
(37.0)
1 403
1 879
1 574
1 200
Cash and cash equivalents at the end of the period
1 729
1 200
+44.1
1 729
1 403
1 879
1 574
Net cash generated from operating activities in 2023 amounted to +PLN 6 051 million and mainly comprised:
− EBITDA, excluding Sierra Gorda S.C.M., PLN 3 778 million,
− a positive impact from a change in working capital by PLN 3 735 million, including PLN 2 868 million due to trade
payables transferred to factoring,
− income tax paid, PLN 1 646 million.
Net cash used in investing activities in 2023 amounted to -PLN 4 798 million and mainly comprised:
− expenditures on property, plant and equipment and intangible assets of the segment KGHM Polska Miedź S.A in
the amount of PLN 3 074 million,
− expenditures on property, plant and equipment and intangible assets of the segment KGHM International LTD in
the amount of PLN 984 million,
− expenditures on property, plant and equipment and intangible assets of other segments in the amount of PLN
602 million,
− investments related to the acquisition of photovoltaic farms, PLN 141 million under advances granted in financial
assets, and PLN 7 million in expenditures on the acquisition of subsidiaries,
− repayment of the loan by Sierra Gorda S.C.M. with interest, PLN 163 million.
Net cash used in financing activities in 2023 amounted to -PLN 747 million and mainly comprised the balance of proceeds
and repayments of borrowings in the amount of -PLN 378 million, dividends paid to shareholders of the parent entity in
the amount of PLN 200 million, interest paid in the amount of PLN 81 million and repayment of lease liabilities,
PLN 83 million.
After reflecting exchange differences on cash and cash equivalents, the balance of cash and cash equivalents increased by
PLN 529 million and at the end of 2023 amounted to PLN 1 729 million.
Chart 28. Cash flow of the Group in 2023 (in PLN million)
1 200
1 729
+6 051
-4 798
-378
-200
-81
-65
Cash as at
1 January 2023
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 2023
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 216
Translation from the original Polish version
7.4.3 Assets
Table 64. Consolidated assets (in PLN million)
31.12.2023
31.12.2022
Change (%)
30.09.2023
30.06.2023
31.03.2023
Property, plant and equipment and intangible assets
26 749
28 630
(6.6)
29 809
28 884
28 820
Joint ventures – loans granted
9 096
9 603
(5.3)
10 349
9 635
9 511
Financial instruments
1 613
1 789
(9.8)
1 685
1 736
1 659
Deferred tax assets
137
137
-
138
139
143
Other non-financial assets
386
220
+75.5
232
233
220
Non-current assets
37 981
40 379
(5.9)
42 213
40 627
40 353
Inventories
8 425
8 902
(5.4)
8 783
8 888
8 538
Trade receivables
932
1 177
(20.8)
1 513
765
1 131
Tax assets
985
367
×2.7
324
372
367
Derivatives
760
796
(4.5)
439
766
611
Other financial assets
296
337
(12.2)
259
426
373
Other non-financial assets
275
286
(3.8)
563
478
388
Cash and cash equivalents
1 729
1 200
+44.1
1 403
1 879
1 574
Current assets
13 402
13 065
+2.6
13 284
13 574
12 982
TOTAL ASSETS
51 383
53 444
(3.9)
55 497
54 201
53 335
At the end of 2023, total assets in the consolidated statement amounted to PLN 51 383 million and were lower as compared
to 31 December 2022 by PLN 2 061 million. The main changes comprised:
− a decrease in the value of property, plant and equipment and intangible assets by PLN 1 881 million, mainly as a
result of impairment losses by PLN 4 036 million and depreciation/amortisation at the level of PLN 2 641 million.
The increase in this amount is due to cash expenditures in the amount of PLN 4 776 million. A detailed description
of the assumptions and results of the conducted impairment tests may be found in part 3 of the consolidated
financial statements. The share of individual segments in the cash expenditures incurred is presented in note 2.2
of the consolidated financial statements,
− a decrease in the value of derivatives by PLN 517 million, including due to hedging by PLN 946 million (in respect
of metals, PLN 555 million, currencies, PLN 251 million and cross currency interest rate swaps, PLN 140 million)
and an increase in the value of instruments initially designated as hedging excluded from hedge accounting,
entirely comprising currencies (+PLN 474 million). A detailed presentation of assets and liabilities due to
derivatives may be found in notes 7.1 and 7.2 of the financial statements,
− an increase in tax receivables by PLN 618 million, mainly due to the surplus of income tax advances in KGHM
Polska Miedź S.A. In 2023 the Company made income tax advances under a simplified formula, i.e. at a fixed level
calculated on the basis of income earned in 2021,
− a decrease in the carrying amount of loans for Sierra Gorda by PLN 507 million, mainly due to foreign exchange
losses in the amount of PLN 1 042 million and loans repaid, PLN 163 million. The increase in the value of loans
was impacted by accrued interest in the amount of PLN 597 million and gains due to the reversal of allowance for
impairment, PLN 101 million,
− a decrease in the value of inventories by PLN 477 million, mainly due to the write-down of inventories, PLN 442
million (including PLN 370 million of the segment KGHM INTERNATIONAL LTD. since the cost was higher than the
net realisable value),
− an increase in cash and cash equivalents by PLN 529 million, which were of a short term nature and were mainly
related to an increase in factoring liabilities in the fourth quarter of 2023.
Chart 29. Change in assets of the Group in 2023 (in PLN million)
53 444
51 383
+618
+529
+174
-1 881
-517
-507
-477
Assets as at 31
December 2022
Property, plant
and equipment
and intangible
assets
Derivatives Tax assets Sierra Gorda
loans
Inventories Cash and cash
equipment
Other Assets as at 31
December 2023
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 217
Translation from original Polish version
7.4.4 Equity and liabilities
Table 65. Consolidated equity and liabilities (in PLN million)
31.12.2023
31.12.2022
Change (%)
30.09.2023
30.06.2023
31.03.2023
Equity
28 630
32 146
(10.9)
33 108
32 791
32 172
Borrowings, leases and debt securities
4 761
5 220
(8.8)
5 363
5 046
5 899
Derivatives
202
719
(71.9)
384
453
540
Employee benefits liabilities
3 117
2 621
+18.9
2 896
2 778
2 692
Provisions for decommissioning costs of mines and
other facilities
1 923
1 859
+3.4
1 672
1 705
1 751
Deferred tax liabilities
646
1 151
(43.9)
1 281
1 175
1 081
Other liabilities
487
543
(10.3)
468
476
506
Non-current liabilities
11 136
12 113
(8.1)
12 064
11 633
12 469
Borrowings, leases and debt securities
964
1 223
(21.2)
1 041
966
618
Derivatives
499
434
+15.0
296
429
343
Trade and similar payables
6 188
3 094
×2.0
5 033
3 881
2 819
Employee benefits liabilities
1 709
1 699
+0.6
1 669
2 067
1 819
Tax liabilities
611
1 233
(50.4)
649
707
1 366
Provisions for liabilities and other charges
194
173
+12.1
179
172
182
Other liabilities
1 452
1 329
+9.3
1 458
1 555
1 547
Current liabilities
11 617
9 185
+26.5
10 325
9 777
8 694
Non-current and current liabilities
22 753
21 298
+6.8
22 389
21 410
21 163
TOTAL EQUITY AND LIABILITIES
51 383
53 444
(3.9)
55 497
54 201
53 335
Equity and liabilities at the end of 2023 were lower by PLN 2 061 million, mainly due to:
− a decrease in equity by PLN 3 516 million due to a loss for the period in the amount of PLN 3 691 million and
dividends paid, PLN 200 million. In 2023, the Group recorded an increase in actuarial loss due to the measurement
of benefits after the period of employment, by PLN 252 million (including deferred tax) and an increase in reserves
from the measurement of financial instruments by PLN 704 million (including PLN 294 million from an increase
in the measurement of Tauron Polska Energia S.A. and PLN 451 million from an increase in the measurement of
cash flow hedging instruments),
− a decrease in borrowings, leases and debt securities by PLN 718 million, mainly due to EBITDA, PLN 3 778 million
(excluding Sierra Gorda), a change in working capital, PLN 3 735 million (including PLN 2 868 million due to
payables transferred to factoring) and foreign exchange gains, PLN 356 million. The increase in borrowings was
mainly due to income tax paid, PLN 1 646 million, cash expenditures, PLN 4 798 million, dividends paid, PLN 200
million and an increase in the balance of cash and cash equivalents by PLN 529 million. At the end of 2023, 83%
of borrowings is long-term, 48% of borrowings is denominated in USD and 50% in PLN.
− a decrease in the value of derivatives by PLN 452 million, including due to hedging by PLN 790 million (in respect
of metals, PLN 272 million, currencies PLN 130 million and cross currency interest rate swaps, PLN 388 million)
along with an increase in the value of trade instruments (+PLN 379 million), mainly currencies. A detailed
presentation of assets and liabilities due to derivatives may be found in notes 7.1 and 7.2 of the financial
statements,
− higher employee benefits liabilities by PLN 506 million, mainly due to an increase in the measurement of liabilities
due to the coal equivalent by PLN 191 million, jubilee awards by PLN 144 million and retirement and disability
benefits by PLN 128 million. The higher measurement of liabilities was mainly due to actuarial losses, PLN 452
million.
− higher current trade and similar payables by PLN 3 094 million mainly due to an increase in liabilities transferred
to factoring by PLN 3 003 million. Trade payables transferred to reverse factoring are presented in the statement
of financial position as „Trade and similar payables” and are categorised as „similar”, as, given the significant
judgment of the Group, such a presentation best reflects the nature of such transactions.
− a decrease in tax liabilities by PLN 622 million, mainly in respect of income tax liabilities in KGHM Polska Miedź
S.A. Tax liability for 2022 was paid by 30 June 2023. At the end of 2023 the Company did not have any income tax
liabilities.
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 218
Translation from original Polish version
Chart 30. Change in equity and liabilities of the Group in 2023 (in PLN million)
7.4.5 Contingent assets and liabilities due to guarantees granted
As at 31 December 2023, contingent assets amounted to PLN 459 million and mainly comprised promissory notes
receivables in the amount of PLN 111 million and guarantees received by the Company in the amount of PLN 324 million.
As at 31 December 2023, the liabilities of the Group due to guarantees and letters of credit granted amounted to a total of
PLN 1 132 million (as at 31 December 2022: PLN 1 156 million) and due to promissory notes payables amounted to PLN 257
million (as at 31 December 2022: PLN 170 million).
Detailed information regarding contingent assets and liabilities, including guarantees granted, may be found in notes 12.5
and 8.6 of the consolidated financial statements.
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 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.
7.5.1 Net debt in the Group
Borrowings of the Group at the end of 2023 amounted to PLN 5 725 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 2023 amounted to PLN 1 702 million, are of a short
term nature.
Table 66. Net debt structure of the Group (in PLN million)
31.12.2023
31.12.2022
Change (%)
30.09.2023
30.06.2023
31.03.2023
Liabilities due to:
5 725
6 443
(11.1)
6 404
6 012
6 517
Bank loans
667
1 263
(47.2)
955
686
936
Other loans
2 272
2 434
(6.7)
2 618
2 542
2 760
Debt securities
2 002
2 002
-
2 044
2 001
2 045
Leases
784
744
+5.4
787
783
776
Free cash and cash equivalents
1 701
1 179
+44.3
1 376
1 852
1 543
Net debt
4 024
5 264
(23.6)
5 028
4 160
4 974
+3 094
+506
-3 516
-718
-622
-452
-353
53 444
51 383
Equity and
liabilities as at 31
December 2022
Equity Trade payables Employee
benefits liabilities
Borrowings Tax liabilities Derivatives Other Equity and
liabilities as at 31
December 2023
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 219
Translation from original Polish version
Table 67. Net debt structure of the Parent Entity (in PLN million)
31.12.2023
31.12.2022
Change (%)
30.09.2023
30.06.2023
31.03.2023
Liabilities due to:
5 691
6 445
(11.7)
6 397
5 968
6 532
Bank loans
590
1 194
(50.6)
875
616
859
Other loans
2 058
2 241
(8.2)
2 378
2 323
2 520
Debt securities
2 002
2 002
-
2 044
2 001
2 045
Cash pooling
350
321
+9.0
411
341
401
Leases
691
687
+0.6
689
687
707
Free cash and cash equivalents
1 463
971
+50.7
1 065
1 556
1 251
Net debt
4 228
5 474
(22.8)
5 332
4 412
5 281
7.5.2 Sources of financing in the Group
As at 31 December 2023, the Group held open lines of credit, loans and debt securities with a total available amount of PLN
14 937 million, out of which PLN 4 941 million had been drawn.
Table 68. Sources of financing in the Group
68
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 5 903 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 limit 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 3.6
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 four instalments were drawn with the
payback period expiring on 28 June 2030, 23 April 2031, 11 September 2031 and 6 March 2035. 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 or the SOFR rate plus a margin, which depends
on the net debt/EBITDA ratio.
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 are used to finance general corporate goals.
Bilateral bank loans in
the amount of up to
PLN 3.5 billion
The Group holds lines of credit in the form of short-term and long-term bilateral agreements in the total amount
of PLN 3 452 million. Interest is based on a fixed interest rate or on the variable interest rates WIBOR, 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 suppliers of the Group. Reverse factoring is treated by the Group as an important element in
diversifying the sources of financing working capital.
The aforementioned sources fully cover the current, medium- and long-term liquidity needs of the Group.
68
Detailed information on the aforementioned borrowings and debt securities may be found in note 8.4.3 of the financial statements
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 220
Translation from original Polish version
7.5.3 Debt position as at 31 December 2023
The following table presents the Group’s borrowing structure and the extent to which borrowing was utilised.
Table 69. Amount of borrowing available and drawn by the Group (in PLN million)
Amount drawn
as at 31.12.2023
Amount drawn
as at 31.12.2022
Change (%)
Amount available
as at 31.12.2023
Amount drawn
(%) as at
31.12.2023
Unsecured, revolving syndicated credit facility
-
528
(100.0)
5 903
-
Loans
2 272
2 434
(6.7)
3 582
63.4
Bilateral bank loans
667
735
(9.3)
3 452
19.3
Debt securities
69
2 002
2 002
-
2 000
100.1
Total
4 941
5 699
(13.3)
15 386
32.1
As at 31 December 2023, 50% of the Group’s debt came from liabilities drawn in PLN, 48% in USD, 1% in EUR and 1% in
CAD.
7.5.4 Evaluation of financial resources management
In 2023, 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 2023, the Group held PLN 1 702 million of free cash and cash equivalents and had open credit lines for
total available financing in the amount of PLN 14 937 million, out of which PLN 4 941 million had been drawn.
In 2023, 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 the financial covenant at a specified level. 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 covenant as at 30 June 2023 and 31 December 2023, met the conditions specified in agreements.
Table 70. Net debt / EBITDA of the Group
31.12.2023
31.12.2022
Change (%)
30.09.2023
30.06.2023
31.03.2023
Net debt / Adjusted EBITDA
1.06
0.77
+37.7
1.18
0.89
0.87
69
The carrying amount of PLN 2 002 million includes a valuation, or interest accrued from the date of final payment of interest, i.e. from 27
December 2023 to 31 December 2023.
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 221
Translation from original Polish version
7.5.5 Loans granted by Group companies
As at 31 December 2023, the balance of receivables due to loans granted by the Parent Entity, in accordance with the
measurement pursuant to IFRS 9, amounted to PLN 9 711 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 9 118 million.
Table 71. The most significant
70
loans granted by Group companies as at 31 December 2023
Lender
Borrower
Year
granted
Total amount of
loans
Total balance of receivables due to
loans granted
71
Maturity
Loans granted within the Group
KGHM Polska Miedź S.A.
KGHM INTERNATIONAL
LTD.
2015-2023
USD 197 mn
USD 206 mn
PLN 807 mn
from
31.12.2027
to 30.06.2034
KGHM Polska Miedź S.A.
Future 1 Sp. z o.o.
2013-2016
USD 874 mn
USD 1 190 mn
PLN 4 681 mn
31.12.2024
2017
PLN 7 mn
PLN 10 mn
31.12.2024
KGHM Polska Miedź S.A.
Quadra FNX Holdings
Chile Limitada
2015-2017
USD 437 mn
USD 395 mn
PLN 1 554 mn
31.12.2024
KGHM Polska Miedź S.A.
Quadra FNX FFI S.à r.l.
2017-2020
USD 497 mn
USD 654 mn
PLN 2 647 mn
15.12.2024
31.12.2024
Future 1 Sp. z o.o.
KGHM INTERNATIONAL
LTD.
2012
USD 453 mn
USD 395 mn
PLN 1 555 mn
31.12.2027
Future 1 Sp. z o.o.
Quadra FNX FFI S.à r.l.
2017
USD 1 419 mn
USD 1 546 mn
PLN 6 085 mn
15.12.2024
KGHM INTERNATIONAL
LTD.
FNX Mining Company Inc.
2015
USD 140 mn
USD 105 mn
PLN 413 mn
on demand
KGHM INTERNATIONAL
LTD.
Robinson Holdings USA
Ltd.
2018
USD 86 mn
USD 113 mn
PLN 444 mn
on demand, no
later than
30.06.2025
KGHM INTERNATIONAL
LTD.
DMC Mining Services Ltd.
2022
CAD 10 mn
CAD 11 mn
PLN 33 mn
01.12.2024
Quadra FNX FFI S.à r.l.
Quadra FNX Holdings
Chile Limitada
2018-2020
USD 347 mn
USD 460 mn
PLN 1 809 mn
31.12.2024
DMC Mining Services Ltd.
DMC Mining Services
Chile SpA
2019-2022
USD 14 mn
USD 20 mn
PLN 61 mn
on demand
FNX Mining Company
Inc./ DMC Branch
DMC Mining Services Ltd.
2019-2021
CAD 57 mn
CAD 57 mn
PLN 169 mn
on demand
KGHM Chile SpA
Minera Carizalillo SpA
2022
USD 9 mn
USD 9 mn
PLN 35 mn
on demand
Franke Holdings LTD
KGHM INTERNATIONAL
LTD.
2022
CAD 23 mn
CAD 23 mn
PLN 68 mn
31.12.2024
Loans granted to other entities
Quadra FNX FFI S.à r.l.
Sierra Gorda S.C.M.
2012
USD 1 700 mn
USD 2 311 mn
PLN 9 094 mn
on demand, no
later than
15.12.2024
The following table presents significant loans granted in 2023 by the Parent Entity and Group companies, with the balance
of receivables due to loans granted as at the end of 2023 (reflecting accrued interest, redemption and measurement
pursuant to IFRS 9).
Table 72. Loans granted by the Parent Entity and Group companies in 2023
Lender
Borrower
Year
granted
Total amount of
loans
Total balance of receivables due
to loans granted
72
Interest on loans
as at 31.12.2023
Maturity
Loans granted within the Group
KGHM POLSKA MIEDŹ
S.A.
KGHM
INTERNATIONAL LTD.
2023
USD 106 mn
USD 110 mn
PLN 433 mn
6.39%
31.12.2033
KGHM POLSKA MIEDŹ
S.A.
KGHM
INTERNATIONAL LTD.
2023
USD 38 mn
USD 38 mn
PLN 150 mn
7.26%
30.06.2034
KGHM POLSKA MIEDŹ
S.A.
KGHM
INTERNATIONAL LTD.
2023
USD 44 mn
USD 44 mn
PLN 173 mn
6.36%
31.03.2029
KGHM INTERNATIONAL
LTD.
Minera Carizalillo SpA
2023
USD 4 mn
USD 4 mn
PLN 16 mn
6.00%
31.12.2027
70
Balance of receivables over PLN 25 million
71
Including accrued, unpaid interest as at 31 December 2023.
72
Including accrued, unpaid interest as at 31 December 2023
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 222
Translation from original Polish version
Moreover, after the end of the reporting period, on 12 February 2024 the Company granted a loan to KGHM
INTERNATIONAL LTD. in the amount of USD 30.6 million (PLN 122.9 million) for financing the purchase of mining machinery
in the Robinson mine.
7.5.6 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 in the group of accounts - 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.
7.6 ECONOMIC OUTLOOK FOR 2024 AND ACHIEVEMENTS OF TARGETS IN 2023
KGHM Polska Miedź S.A. does not publish forecasts of financial results. However, in regulatory filings dated
21 December 2022 and 28 December 2023 the Company published its main Budget assumptions respectively for 2023 and
2024, which are presented in the table below.
Table 73. Implementation of targets of the Budget in 2023 and targets of the Budget for 2024
2023
Budget 2023
Execution (%)
Budget 2024
Change (%)
KGHM Polska Miedź S.A.
Production of copper in concentrate
kt
395.4
389.7
101.5
391.0
(1.1)
Production of silver in concentrate
t
1 319.9
1 261.5
104.6
1 281.0
(2.9)
Electrolytic copper production, including:
kt
592.4
582.1
101.8
569.2
(3.9)
- from own concentrate
kt
385.5
385.3
100.1
370.4
(3.9)
Metallic silver production
t
1 403.3
1 300.9
107.9
1 239.3
(11.7)
Copper products sales volume
kt
584.7
606.8
96.4
593.2
+1.5
Silver products sales volume
t
1 351.6
1 303.0
103.7
1 291.9
(4.4)
Total unit cost of electrolytic copper production
from own concentrate
73
PLN/t
33 255
36 340
91.5
35 950
+8.1
Capital expenditures on property, plant and
equipment
74
PLN mn
3 199
3 250
98.4
4 100
+28.2
Other investments, including loans
75
PLN mn
1 054
2 129
49.5
1 488
+41.2
KGHM INTERNATIONAL LTD.
Payable copper production
kt
39.9
56.0
71.3
58.3
+46.1
TPM production
koz t
40.6
59.2
68.6
48.7
+20.0
Sierra Gorda (55%)
Payable copper production
kt
78.7
80.3
98.0
87.5
+11.2
Molybdenum production
mn lbs
3.5
5.7
61.4
5.7
+62.9
7.6.1 Achievement of targets in 2023
In 2023, the Company recorded production of electrolytic copper which was 10.3 thousand tonnes (+2%) higher than the
Budget target for 2023, with production from own concentrate maintained at the planned level. In the case of silver,
production was higher by 102 tonnes (+8%). As a result, sales of silver were also higher than planned (+49 tonnes, or 4%).
However, sales of copper were lower than assumed in the Budget by 22.1 thousand tonnes (-4%) as a result of complying
with customers’ ongoing needs.
Production of payable copper and precious metals by KGHM INTERNATIONAL LTD. was lower than assumed in the Budget,
mainly due to lower production by the Robinson mine.
Sierra Gorda ended 2023 with payable copper production at a level slightly lower (-2%) than the target, mainly due to lower
recovery.
73
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 value of anode slimes and divided by the
volume of electrolytic copper production from own concentrate.
74
Excluding costs of borrowing, leases per IFRS 16 unrelated to an investment project as well as expenditures on development work –
uncompleted.
75
Acquisition of shares and investment certificates together with loans.
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 223
Translation from original Polish version
The total unit cost of electrolytic copper production from own concentrate in KGHM Polska Miedź S.A. was lower than
planned by 8%, mainly due to lower cost of own concentrate and metallurgical processing cost.
Capital expenditures on property, plant and equipment were realised at the level of PLN 3 199 million, or 2% lower than
assumed in the Budget. However, other investments including increases in share capital of subsidiaries and other equity
investments, amounted to PLN 1 054 million versus the target of PLN 2 129 million, mainly due to the postponement of RES
investment plans.
7.6.2 Targets for 2024
Production – higher copper production by the Group in 2024 by 4.0 thousand tonnes (+1%) compared to the amount
recorded in 2023:
− KGHM Polska Miedź S.A. -23.2 thousand tonnes (-4%) with lower production from own concentrate by 15.1 thousand
tonnes,
− KGHM INTERNATIONAL LTD. +18.4 thousand tonnes (+46%),
− Sierra Gorda +8.8 thousand tonnes (+11%).
The assumed level of sales of copper by KGHM Polska Miedź S.A. is higher by 8.5 thousand tonnes (+1%).
Total unit cost of electrolytic copper production from own concentrate (KGHM Polska Miedź S.A) will increase by 8% due
to the adopted assumptions regarding higher prices of materials and technological fuels as well as energy 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 assumed increase by 28% as compared
to the amount achieved in 2023 due to the greater scope of work and the expected price increases.
The increase in equity investments assumed in the budget for 2024 concerns primarily the financing of infrastructure
development in Group companies, investments in renewable energy sources and expenditures on the Victoria project.
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 224
Translation from original Polish version
8 ECONOMIC RESULTS OF THE SEGMENT KGHM POLSKA MIEDŹ S.A.
Copper production
C1 cost
Revenues
Adjusted EBITDA
Loss for the period
592
kt
2.98
USD/lb
29 084
PLN mn
3 563
PLN mn
-1 153
PLN mn
8.1 PRODUCTION
The main goals set by the Management Board in terms of production and occupational health and safety for 2023 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,
− developing mine ventilation connections with the GG-1 shaft at the level of the deposit,
− 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 and quantities required to execute production
tasks along with successive replacement of the machine park,
− realisation of the planned practical scope of preparatory and access work using the commissioning system at the
level of 57 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,
− tests were conducted on RFC (Reflux Flotation Cell) flotation machinery, 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),
− 8.5 million tonnes of ore were processed 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
− maintaining the share of imported concentrates and copper scrap accompanying the smelting of own
concentrates in order to carry out the planned high level of electrolytic copper production,
− planned maintenance carried out at the Legnica Copper Smelter and Refinery,
− 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 order to carry out the planned high level of electrolytic copper
production,
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 Consequences”,
− the implementation of agreed elements of the Program to eliminate the most frequent threats to workplace
safety through utilisation of innovative technology,
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 225
Translation from original Polish version
− constant monitoring of threats occurring in the workplace 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 health and safety management system in the Company pursuant to
the PN ISO 45000:2018 standard.
8.1.1 Mine production
In 2023 extraction of ore (dry weight) amounted to 30.4 million tonnes and was at a similar level to the level recorded in
2022.
Average copper content in extracted ore amounted to 1.46% and was higher than the level achieved in 2022. In the case of
silver in ore, content amounted to 50.44 g/t and was higher compared to the prior year.
As a result the amount of copper in extracted ore was higher than in 2022 by 2.8 thousand tonnes of copper and amounted
to 445.5 thousand tonnes. The volume of silver in ore increased by 852 kg and amounted to 1 534 tonnes.
In 2023, 30.5 million tonnes of feed (dry weight) were processed (or 9 thousand tonnes more compared to 2022). The higher
amount of ore extracted by the Mining Divisions, of a higher copper content, had a direct positive impact on the amount of
obtained copper in concentrate, which amounted to 395.4 thousand tonnes (or 2.9 thousand tonnes more compared to
2022).
The production of concentrate (dry weight) increased by 6 thousand tonnes compared to 2022.
The amount of silver in concentrate was higher than in 2022 by 0.3%.
Table 74. Mine production of KGHM Polska Miedź S.A.
Unit
2023
2022
Change (%)
4Q’23
3Q’23
2Q’23
1Q’23
Mined ore (wet weight)
mn t
32.1
32.1
-
7.5
8.1
8.1
8.3
Mined ore (dry weight)
mn t
30.4
30.5
(0.3)
7.2
7.7
7.7
7.9
Copper grade
%
1.46
1.45
+0.7
1.46
1.47
1.47
1.46
Copper in ore
kt
445.5
442.7
+0.6
104.2
113.1
113.6
114.6
Silver grade
g/t
50.4
50.4
-
50.2
50.4
50.9
50.3
Silver in ore
t
1 534.2
1 533.3
+0.1
359.0
387.4
392.3
395.5
Production of concentrate (dry weight)
kt
1 761
1 755
+0.3
414
451
451
445
Copper in concentrate
kt
395.4
392.5
+0.7
92.2
100.9
101.8
100.5
Silver in concentrate
t
1 319.9
1 315.8
+0.3
308.3
334.2
338.8
338.6
8.1.2 Metallurgical production
The production of electrolytic copper as compared to 2022 increased by 6.4 thousand tonnes, or by 1.1% and reached the
highest level in the history of KGHM, i.e. 592.4 thousand tonnes. This increase in production was facilitated by higher
processing of own concentrate and of purchased metal-bearing materials in the form of scrap and imported concentrate.
Supplementing own concentrate with purchased metal-bearing materials enabled the effective utilisation of existing
technological capacity.
The production of metallic silver compared to 2022 increased by 104.9 tonnes, or 8.1%, and reached the highest level in the
history of KGHM, i.e. 1 403.3 tonnes. In comparison to 2022, the production of metallic gold increased by 736 kg, or 27.1%.
The production of other metallurgical products derives from the level of electrolytic copper production and depends on the
type of raw material used and, in the case of processed copper products, on market demand.
Table 75. Metallurgical production of KGHM Polska Miedź S.A.
Unit
2023
2022
Change (%)
4Q’23
3Q’23
2Q’23
1Q’23
Electrolytic copper, including:
kt
592.4
586.0
+1.1
148.8
147.7
146.8
149.1
- production from own concentrates
kt
385.5
381.5
+1.0
98.5
92.2
95.6
99.2
- production from purchased metal-
bearing materials
kt
206.8
204.5
+1.1
50.3
55.5
51.2
49.9
Wire rod, OFE and CuAg rod
kt
275.8
277.8
(0.7)
59.7
73.9
70.3
71.9
Metallic silver
t
1 403.3
1 298.4
+8.1
323.2
381.0
324.2
374.9
Metallic gold
koz t
111.0
87.3
+27.1
27.7
25.6
26.8
30.9
Refined lead
kt
29.1
28.8
+1.0
8.1
6.5
7.3
7.1
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 226
Translation from original Polish version
Chart 31. Production of electrolytic copper (thousand tonnes) and metallic silver (tonnes)
8.1.3 Main production goals
The main goals set by the Management Board in terms of production and occupational health and safety for 2024 are a
continuation of actions taken in 2023, 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 2024:
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 and number required to execute production tasks,
− the consistent introduction of mining vehicles with low-emission engines and the continuation of work related to
implementing zero-emission, electric battery-powered mining vehicles,
− continued construction of the Central Air Conditioning Station at the GG-1 shaft with target capacity of 40 MW,
− development of the mine dewatering system,
− realisation of the planned scope of preparatory and access work using the commissioning system in 2024 at the
level of 59 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 – reduction of power
consumption,
− monitoring and assessing the impact of technological water on the technological parameters and condition of
technical infrastructure,
− optimisation of ore transport logistics,
− optimisation of water management,
− continued testing at an industrial scale of RFC (Reflux Flotation Cell) flotation machinery,
in metallurgy
− conducting a planned technological shutdown – maintenance of the flash furnace at the Głogów I Copper Smelter
and Refinery,
− optimisation of the processing of recycled materials and scrap in all fire phases aimed at maximising the
production of electrolytic copper at the Legnica Copper Smelter and Refinery and at the Głogów 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,
− 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 in terms of identifying and monitoring workplace hazards,
− the introduction of organisational and technical solutions aimed at eliminating threats, reducing professional risk
and accidents,
− implementation of technical solutions to balance changes in workplace conditions, in particular in mining,
− permanent improvement aimed at making employees more safety-conscious, including their habits, attitudes and
views, in particular awareness of causes and the consequences of their actions,
− consistent adaptation to changes in hygienic and biological standards for the workplace environment,
− preparation for generational changes in and the introduction of active solutions in age management,
− maintaining a certificate confirming conformance of the OHS Management System with the ISO 45001 standard,
− implementation of IT solutions in the area of workplace safety, including in terms of workplace data and
information analytics.
381.5
385.5
204.5
206.8
586.0
592.4
2022 2023
Electrolytic copper production (kt)
from purchased
metal-bearing
materials
from own
concentrate
1 298.4
1 403.3
2022 2023
Metallic silver production (t)
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 227
Translation from original Polish version
8.2 SALES
In 2023, the level of sales of copper products by the Company was higher than that achieved in 2022 and amounted to
584.7 thousand tonnes, versus 565.0 thousand tonnes in the prior year. In 2023, sales of copper cathodes amounted to
306.3 thousand tonnes, meaning an increase by 9.5% compared to 2022. Sales of copper wire rod and OFE rod decreased
by 2.4%, amounting to 275.5 thousand tonnes in 2023.
Sales of metallic silver in 2023 amounted to 1 351.6 tonnes, meaning an increase by 1% compared to volume in 2022. Sales
of gold in 2023 amounted to 114.6 thousand troy ounces.
Table 76. Sales volume of basic products of KGHM Polska Miedź S.A.
Unit
2023
2022
Change (%)
4Q’23
3Q’23
2Q’23
1Q’23
Cathodes and cathodes parts
kt
306.3
279.7
+9.5
75.1
70.0
77.9
83.3
Copper wire rod and OFE rod
kt
275.5
282.3
(2.4)
64.6
69.7
68.4
72.8
Other copper products
kt
2.9
3.0
(3.3)
0.6
0.9
0.7
0.8
Total copper and copper products
kt
584.7
565.0
+3.5
140.2
140.6
147.0
156.9
Metallic silver
t
1 351.6
1 338.3
+1.0
310.9
357.3
311.2
372.2
Metallic gold
koz t
114.6
80.5
+42.4
19.2
28.8
26.6
40.0
Refined lead
kt
25.6
29.3
(12.6)
6.7
5.2
6.9
6.8
Total revenues from sales by KGHM Polska Miedź S.A. in 2023 amounted to PLN 29 084 million, representing an increase
by 2.3% versus 2022, when revenues amounted to PLN 28 429 million.
Revenues from sales of copper products in 2023 increased by 0.4% and amounted to PLN 22 290 million (compared to
revenues in 2022 at the level of PLN 22 207 million).
Revenues from metallic silver sales in 2023 increased by 1% to PLN 4 389 million, compared to PLN 4 341 million in 2022.
Revenues from sales of metallic gold in 2023 increased to PLN 932 million, versus PLN 649 million in 2022 (+44%).
The increase in revenues from contracts with customers by PLN 655 million compared to the prior year was mainly due to:
− a decrease by PLN 1 651 million in revenues from the sale of basic products (copper, silver, gold) due to a less-
favourable average annual USD/PLN exchange rate (a change from 4.46 to 4.20),
− an increase by PLN 1 107 million in revenues due to a higher sales volume of basic products: copper (+19.7
thousand tonnes, +3%), silver (+13 tonnes, +1%) and gold (+34 thousand troy ounces, +42%),
− a change by +PLN 817 million in adjustments to revenues due to hedging transactions, from -PLN 182 million to
+PLN 635 million,
− higher by PLN 140 million revenues due to: higher prices of silver (+1.62 USD/oz t, +7%) and gold (+141 USD/oz t,
+8%) with lower copper prices (-319 USD/t, -4%),
− an increase by PLN 241 million in other revenues from sales, including revenues from the sale of merchandise
(+PLN 293 million).
Table 77. Revenues from contracts with customers of KGHM Polska Miedź S.A. (in PLN million)
2023
2022
Change (%)
4Q’23
3Q’23
2Q’23
1Q’23
Cathodes and cathodes parts
11 392
10 803
+5.5
2 644
2 537
2 845
3 366
Copper wire rod and OFE rod
10 786
11 283
(4.4)
2 417
2 657
2 663
3 050
Other copper products
112
122
(8.2)
21
32
26
32
Total copper and copper products
22 290
22 207
+0.4
5 082
5 226
5 534
6 448
Metallic silver
4 389
4 341
+1.1
980
1 154
1 035
1 221
Metallic gold
932
649
+43.6
156
230
216
331
Refined lead
264
294
(10.2)
68
52
70
73
Other goods and services
563
570
(1.2)
169
137
131
125
Merchandise and materials
646
367
+76.0
160
161
154
173
Total revenues from contracts with
customers
29 084
28 429
+2.3
6 615
6 960
7 140
8 370
8.2.1 Geographical structure of sales
In 2023, KGHM Polska Miedź S.A. earned most of its revenues from domestic sales, which amounted to 24% of total
revenues. The remaining major customers of KGHM came from Germany (21%), China (10%), Czechia (8%), Italy (7%) and
Hungary (5%).
The following chart shows the geographic structure of revenues in 2023. Sales revenue includes the result from the
settlement of hedging instruments.
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 228
Translation from original Polish version
Chart 32. Sales revenues of KGHM Polska Miedź S.A. by market (in PLN million)
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 2023 amounted to PLN 30 004 million and was 23% higher compared to
the corresponding period of 2022. The Company’s cost of sales, selling costs and administrative expenses was significantly
impacted by impairment losses recognised on the Company’s production assets in Poland in the amount of PLN 2 806
million, which are the result of tests conducted as a result of the identification of indications of a possible change in the
recoverable amount of the Company’s assets. In terms of the costs of basic operating activities, impairment losses are
recognised in the items: „Cost of sales, selling costs and administrative expenses” in the amount of PLN 2 675 million, and
in „Administrative expenses”, PLN 131 million.
After excluding the impact of the impairment losses, the costs of basic operating activities increased by 11%, mainly due to:
the increase in sales of copper, silver and gold products and by higher prices for technological materials and external
services rates due to the current market situation.
Total expenses by nature in 2023 as compared to 2022 were higher by 15%, i.e. PLN 3 964 million, of which PLN 2 806
million represented impairment losses on the Polish production assets of the Company. The increase in costs was also
impacted by the minerals extraction tax, which was higher by PLN 450 million (+15%) despite lower 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%, which was no longer in effect in 2023.
The cost of consumed purchased metal-bearing materials was lower in 2023 compared to 2022 by PLN 1 147 million (a
lower volume by 16 thousand tonnes of copper and a lower price by 6%).
Table 78. Expenses by nature of KGHM Polska Miedź S.A. (in PLN million)
2023
2022
Change (%)
4Q’23
3Q’23
2Q’23
1Q’23
Depreciation of property, plant and
equipment and amortisation of intangible
assets
1 675
1 504
+11.4
400
427
435
413
Employee benefits expenses
5 475
4 832
+13.3
1 410
1 340
1 458
1 267
Materials and energy, including:
12 955
13 687
(5.3)
3 058
2 906
3 270
3 721
− purchased metal-bearing materials
7 712
8 859
(12.9)
1 915
1 678
1 908
2 211
− electrical and other energy
2 224
1 921
+15.8
365
573
602
684
External services
2 638
2 238
+17.9
754
659
645
580
Minerals extraction tax
3 496
3 046
+14.8
699
824
905
1 068
Other taxes and charges
632
487
+29.8
179
157
55
241
Other costs
2 988
101
x29.6
2 868
28
59
33
Total expenses by nature
29 859
25 895
+15.3
9 368
6 341
6 827
7 323
Expenses by nature, excluding purchased metal-bearing materials, the minerals extraction tax, and impairment losses on
production assets amounted to PLN 15 845 million and were higher as compared to the corresponding period of 2022 by
PLN 1 855 million, mainly due to increases in the following costs:
− consumption of materials and energy (+PLN 415 million) – mainly due to higher prices for technological materials and
electricity,
− labour (+PLN 643 million) – due to an increase in remuneration rates and an increase by PLN 147 million in the
revaluation of provision for future employee benefits,
− external services (+PLN 400 million) – mainly due to an increase in transportation, repairs and maintenance services
and in mine preparatory work,
− depreciation/amortisation (+PLN 171 million) – an increase due to investments advanced in prior periods.
Poland
7 074
24%
Germany
6 070
21%
China
2 982
10%
Czechia
2 279
8%
Italy
2 172
7%
Hungary
1 439
5%
Other countries
7 068
24%
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 229
Translation from original Polish version
The structure of expenses by nature in 2023 (excluding impairment losses on production assets) is presented below. As
compared to the prior year, it is at a very similar level.
Chart 33. Structure of expenses by nature in 2023
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 94%.
Chart 34. 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 2022: 2.38
USD/lb and in 2023: 2.98 USD/lb. The increase in this cost by 25% was mainly due to the higher costs of materials, external
services and labour described above, but also to the increase in the minerals extraction tax, due to the lack of the relief that
the Company took advantage of in 2022, as well as the strengthening in the PLN versus the USD. Positive impact on this
cost came from the valuation of by-products due to higher silver and gold prices.
Chart 35. 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 2022 by 5 616 PLN/t (+15%),
with higher production from own concentrate. The increase in the unit cost was mainly due to an increase in prices of
energy, technological materials, external services and higher labour costs. The total unit cost of copper production from
own concentrate was higher compared to 2022 by 5 480 PLN/t (+20%) with a slightly higher valuation of anode slimes due
to higher precious metals prices.
Purchased
metal-bearing materials
29%
Employee benefits
expenses
20%
Minerals extraction tax
13%
External services
10%
Materials and fuel
11%
Depreciation/amortisation
6%
Electrical and other
energy
8%
Other taxes and charges
2%
1.57
1.95
2.00
2.03
1.99 1.99
0.81
1.13
0.98
0.93
0.88
0.99
2.38
3.08
2.98
2.97
2.87
2.98
2022 IQ'23 IIQ'23 IIIQ'23 IVQ'23 2023
including the minerals
extraction tax
27 775
31 980
35 431
32 933
32 729
33 255
10 942
11 471
11 330
11 061
10 455
11 078
38 717
43 451
46 761
43 994
43 185
44 333
2022 IQ'23 IIQ'23 III'23 IVQ'23 2023
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 the Company and the Group in 2023 230
Translation from original Polish version
8.4 FINANCIAL RESULTS OF THE SEGMENT KGHM POLSKA MIEDŹ S.A.
8.4.1 Statement of profit or loss
In 2023, the Company recorded loss for the period in the amount of PLN 1 153 million, or the result by PLN 4 686 million
lower than in the prior year.
Table 79. Basic items of the statement of profit or loss of KGHM Polska Miedź S.A. (in PLN million)
2023
2022
Change
(%)
4Q’23
3Q’23
2Q’23
1Q’23
Revenues from contracts with customers, including:
29 084
28 429
+2.3
6 614
6 960
7 140
8 370
- adjustment to revenues due to hedging transactions
635
(182)
×
210
198
162
65
Cost of sales, selling costs and administrative expenses
(prior to impairment losses on property, plant and
equipment and intangible assets)
(27 196)
(24 463)
+11.2
(6 613)
(6 514)
(6 696)
(7 373)
Impairment losses on property, plant and equipment and
intangible assets
(2 808)
-
×
(2 808)
-
-
-
Profit/loss on sales
(920)
3 966
×
(2 807)
446
444
997
Other operating income and (costs)
(230)
1 299
×
(1 108)
689
373
(184)
Finance income / (costs)
120
(269)
×
245
(298)
117
56
Profit/loss before income tax
(1 030)
4 996
×
(3 670)
837
934
869
Income tax expense
(123)
(1 463)
(91.6)
780
(307)
(209)
(387)
Profit/(loss) for the period
(1 153)
3 533
×
(2 890)
530
725
482
Depreciation/amortisation in expenses by nature
(1 675)
(1 504)
+11.4
(400)
(427)
(435)
(413)
Adjusted EBITDA
3 563
5 470
(34.9)
401
873
879
1 410
Table 80. Main factors impacting the change in profit or loss of KGHM Polska Miedź S.A.
Item
Impact on
change in
result (in PLN
million)
Description
Revenues from
contracts with
customers
+655
The higher revenues were mainly comprised of: a higher sales volume of basic products, the more
favourable impact of adjustments to revenues due to hedging transactions, alongside a less
favourable USD/PLN exchange rate. A detailed description of the increase in revenues may be
found in section 8.2 Sales.
Cost of sales,
selling costs and
administrative
expenses (prior
to impairment
losses)
(2 733)
An increase in cost of sales, selling costs and administrative expenses, mainly comprised of:
− an increase in expenses by nature by PLN 1 156 million, with respect to all groups of expenses
by nature, except for costs of purchased metal-bearing materials which decreased by PLN 1 147
million. A detailed description of changes in expenses by nature may be found in section
8.3 Costs.
− adjustments to change in products and work in progress by PLN 1 491 million (-PLN 174 million
in 2023; -PLN 1 665 million in 2022),
Impairment
losses on
property, plant
and equipment
and intangible
assets recognised
in costs of sales,
selling costs and
administrative
expenses
(2 808)
Of which nearly the entirety (PLN 2 806 million) results from the impairment test conducted on the
mining and metallurgical assets, described in detail in part 3 of the financial statements.
Other operating
income and
(costs)
(1 529)
A decrease in the result on other operating activities, mainly comprised of:
− a lower result due to exchange differences on assets and liabilities other than borrowings by
PLN 1 270 million,
− impairment losses on fixed assets under construction and intangible assets not yet available for
use (-PLN 963 million) mainly due to the impairment test conducted on the mining and
metallurgical assets (-PLN 965 million), described in detail in part 3 of the financial statements,
− reversal of impairment losses on shares in subsidiaries in 2023 in the amount of PLN 827 million,
due to shares in Future 1 Sp. z o.o. (PLN 741 million) and in KGHM Metraco S.A. (PLN 86 million),
− income in 2023 due to assistance under the government program „Aid for energy-intensive
sectors related to sudden increases in natural gas and electricity prices in 2022 and 2023”, in the
amount of PLN 178 million,
− a lower level of reversals of impairment losses on financial instruments measured at amortised
cost by PLN 195 million, including due to loans by PLN 198 million,
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 231
Translation from original Polish version
− higher fair value losses on financial assets measured at fair value through profit or loss by
PLN 136 million, including due to loans (-PLN 94 million) and due to trade receivables
(-PLN 42 million),
− higher fair value gains on financial assets measured at fair value through profit or loss by
PLN 37 million, including due to loans by PLN 56 million,
− a lower level of financial support granted to municipalities by PLN 93 million.
Finance income /
(costs)
+389
An increase in the result on finance income and costs, mainly comprised of:
− a higher by PLN 537 million result on exchange differences due to the measurement and
realisation of borrowings,
− higher by PLN 94 million interest costs on borrowings,
− unwinding of the discount effect, -PLN 49 million.
Income tax
expense
+1 340
A decrease in income tax, mainly due to lower:
− deferred income tax by PLN 691 million,
− current income tax by PLN 558 million,
− adjustment of current income tax for prior periods by PLN 91 million
Chart 36. Change in profit for the period of KGHM Polska Miedź S.A. (in PLN million)
8.4.2 Cash flows
Table 81. Statement of cash flows of KGHM Polska Miedź S.A. (in PLN million)
2023
2022
Change
(%)
4Q’23
3Q’23
2Q’23
1Q’23
Net cash generated from operating activities, including:
5 639
1 791
×3.1
2 114
427
1 336
1 762
Change in working capital
3 185
(1 877)
×
1 779
404
887
115
Net cash used in investing activities
(4 332)
(1 629)
×2.7
(1 289)
(833)
(651)
(1 559)
Net cash (used in)/generated from financing activities
(809)
(506)
×1.6
(423)
(79)
(393)
86
NET CASH FLOW
498
(344)
×
402
(485)
292
289
Exchange differences on cash and cash equivalents
(2)
(3)
×0.7
(2)
(9)
12
(3)
Cash and cash equivalents at beginning of the period
985
1 332
×0.7
1 081
1 575
1 271
985
Cash and cash equivalents at the end of the period
1 481
985
×1.5
1 481
1 081
1 575
1 271
Net cash generated from operating activities in 2023 amounted to +PLN 5 639 million and mainly comprised:
− EBITDA in the amount of PLN 3 563 million,
− the positive impact of a change in working capital by PLN 3 185 million, including PLN 2 886 million due to trade payables
transferred to factoring,
− income tax paid in the amount of PLN 1 631 million.
Net cash used in investing activities in 2023 amounted to -PLN 4 332 million and mainly comprised:
− expenditures on property, plant and equipment and intangible assets in the amount of PLN 3 074 million (including
PLN 3 037 million on mining and metallurgical assets) – information on capital expenditures may be found in section
8.5 of this Report,
− the balance of proceeds and expenditures due to loans granted (with interest) in the amount of -PLN 714 million, mainly
with respect to loans to the subsidiary KGHM INTERNATIONAL LTD. related to advancement of the Victoria project (USD
233 million),
− expenditures due to the acquisition of shares (-PLN 224 million), including mainly due to increases in the share capital
of the subsidiaries Energetyka Sp. z o.o., POL-MIEDŹ TRANS Sp. z o.o., Zagłębie Lubin S.A. and PMT Linie Kolejowe Sp. z
o.o.,
− advances granted on property, plant and equipment and intangible assets -PLN 143 million, and
− advances granted for the acquisition of financial assets (-PLN 141 million), with respect to investments related to
advancement of the strategy as regards RES projects (the acquisition of photovoltaic farms).
3 533
-1 153
+655
+389
+1 340
-2 733
-2 808
-1 529
Profit for
2022
Revenues from
contracts with
customers
Costs of sales,
selling costs and
administrative
expenses
Impairment losses
recognised in costs
of sales, selling
costs and
administrative
expenses
Other operating
income (costs)
Finance income
(costs)
Income tax Loss for
2023
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 232
Translation from original Polish version
Net cash used in financing activities during the same period amounted to -PLN 809 million and mainly comprised: the
balance of proceeds and expenditures due to borrowings drawn in the amount of -PLN 422 million, expenditures due to
dividends paid to shareholders in the amount of -PLN 200 million, and interest paid in the amount of -PLN 145 million,
including due to debt, -PLN 119 million.
After reflecting exchange differences on cash and cash equivalents, in 2023 cash and cash equivalents increased
by PLN 496 million and amounted to PLN 1 481 million.
Chart 37. Cash flow of KGHM Polska Miedź S.A. (in PLN million)
8.4.3 Assets
Table 82. Assets of KGHM Polska Miedź S.A. (in PLN million)
31.12.2023
31.12.2022
Change
(%)
30.09.2023
30.06.2023
31.03.2023
Property, plant and equipment and intangible assets
20 590
22 497
(8.5)
23 222
22 872
22 467
Investments in subsidiaries - shares
4 807
3 701
+29.9
3 917
3 817
3 816
Financial instruments, including:
11 119
10 392
+7.0
11 819
11 175
10 628
- loans granted
9 638
8 763
+10.0
10 283
9 580
9 124
Other non-financial assets
265
117
×2.3
123
125
263
Non-current assets
36 781
36 707
+0.2
39 081
37 989
37 174
Inventories
7 506
7 523
(0.2)
7 769
7 876
7 340
Trade receivables
471
620
(24.0)
1 099
436
691
Tax assets
932
312
×3.0
274
296
319
Derivatives
760
796
(4.5)
439
766
611
Cash pooling receivables
424
588
(27.9)
639
413
167
Other financial assets
327
322
+1.6
262
298
342
Other non-financial assets
214
142
+50.7
423
316
275
Cash and cash equivalents
1 481
985
+50.4
1 081
1 575
1 271
Current assets
12 115
11 288
+7.3
11 986
11 976
11 016
TOTAL ASSETS
48 896
47 995
+1.9
51 067
49 965
48 190
As at 31 December 2023, total assets amounted to PLN 48 896 million, or an increase as compared to the end of 2022
by PLN 901 million, or by 2%, mainly comprised of:
− a decrease in property, plant and equipment and intangible assets by PLN 1 907 million, which is mainly due to
impairment losses of PLN 3 777 million and depreciation/amortisation at the level of PLN 1 675 million. Increases in this
amount are due to cash expenditures incurred in the amount of PLN 3 074 million. A detailed description of the
assumptions and the results of the conducted impairment tests may be found in part 3 of the financial statements. The
share of individual segments in cash expenditures is presented in part 2 of the financial statements,
− higher investments in subsidiaries by PLN 1 106 million, including due to a reversal of impairment losses of
FUTURE 1 Sp. z o.o. in the amount of PLN 741 million and of KGHM METRACO S.A. by PLN 86 million, along with an
increase in the share capital of Energetyka Sp. z o.o. by PLN 159 million,
− an increase in long-term loans (+PLN 875 million) granted mainly to KGHM INTERNATIONAL LTD. due to realisation of
the Victoria project,
− a decrease in derivatives by PLN 517 million, including due to hedging by PLN 946 million (in respect of metals PLN 555
million, currencies PLN 251 million and cross currency interest rate swaps by PLN 140 million) and an increase in the
value of instruments initially designated as hedging excluded from hedge accounting, entirely comprising currencies
(+PLN 474 million). A detailed presentation of assets and liabilities due to derivatives may be found in notes 7.1 and 7.2
of the financial statements,
985
1 481
+5 639
-4 332
-422
-200
-145
-44
Cash and cash
equivalents as at 1
January 2023
Cash generated
from operating
activities
Cash used in
investing activities
Proceeds/
expenditures due
to borrowings
Dividends paid Interest paid Other Cash and cash
equivalents as at
31 December 2023
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 233
Translation from original Polish version
− an increase in tax assets by PLN 620 million, mainly due to the surplus of income tax advances. In 2023 the Company
made income tax advances under a simplified formula, i.e. at a fixed level calculated on the basis of income earned in
2021,
− an increase in cash and cash equivalents by PLN 496 million, which were of a short term nature and were mainly related
to an increase in liabilities transferred to factoring in the fourth quarter of 2023.
Chart 38. Change in assets of KGHM Polska Miedź S.A. (in PLN million)
8.4.4 Equity and liabilities
Table 83. Equity and liabilities of KGHM Polska Miedź S.A. (in PLN million)
31.12.2023
31.12.2022
Change (%)
30.09.2023
30.06.2023
31.03.2023
Share capital
2 000
2 000
-
2 000
2 000
2 000
Other reserves from measurement of financial instruments
320
(395)
×
63
222
(435)
Accumulated other comprehensive income
(921)
(702)
+31.2
(821)
(771)
(749)
Retained earnings
27 419
28 772
(4.7)
30 309
29 779
29 254
Equity
28 818
29 675
(2.9)
31 551
31 230
30 070
Borrowings, leases and debt securities
4 508
5 000
(9.8)
5 074
4 784
5 633
Derivatives
202
719
(71.9)
384
453
540
Employee benefits liabilities
2 821
2 394
+17.8
2 645
2 532
2 453
Provisions for decommissioning costs of mines
and other technological facilities
1 389
1 233
+12.7
1 132
1 133
1 123
Deferred tax liabilities
328
705
(53.5)
912
856
703
Other non-current liabilities
220
260
(15.4)
236
232
243
Non-current liabilities
9 468
10 311
(8.2)
10 383
9 990
10 695
Borrowings, leases and debt securities
833
1 124
(25.9)
913
844
498
Cash pooling liabilities
350
321
+9.0
411
341
401
Derivatives
499
434
+15.0
296
429
342
Trade and similar payables
6 065
2 819
×2.2
4 777
3 664
2 486
Employee benefits liabilities
1 315
1 365
(3.7)
1 274
1 722
1 481
Tax liabilities
405
1 061
(61.8)
485
525
1 209
Provisions for liabilities and other charges
82
110
(25.5)
115
116
116
Other current liabilities
1 061
775
+36.9
862
1 104
892
Current liabilities
10 610
8 009
+32.5
9 133
8 745
7 425
Non-current and current liabilities
20 078
18 320
+9.6
19 516
18 735
18 120
TOTAL EQUITY AND LIABILITIES
48 896
47 995
+1.9
51 067
49 965
48 190
The change in equity and liabilities was mainly comprised of:
− a decrease in equity by PLN 857 million due to a loss for the period in the amount of PLN 1 153 million and dividends
paid, PLN 200 million. In 2023, the Group recorded an increase in actuarial losses due to the measurement of benefits
after the period of employment, by PLN 219 million (including deferred tax) and an increase in reserves from the
measurement of financial instruments by PLN 715 million (including PLN 294 million from an increase in the
measurement of Tauron Polska Energia S.A. and PLN 451 million from an increase in the measurement of cash flow
hedging instruments),
− higher current trade and similar payables by PLN 3 246 million, mainly due to an increase in liabilities transferred to
factoring by PLN 3 021 million. Trade payables transferred to reverse factoring are presented in the statement of
financial position as „Trade and similar payables” and are categorised as „similar”, as, given the significant judgment of
the Company, such a presentation best reflects the nature of such transactions,
47 995
48 896
+1 106
+875
+620
+496
+228
-1 907
-517
Assets as at
31 December
2022
Property, plant
and equipment
and intangible
assets
Investment in
subsidiaries
Long-term loans Derivatives Tax assets Cash and cash
equivalents
Other Assets as at
31 December
2023
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 234
Translation from original Polish version
− a decrease in borrowings, leases and debt securities by PLN 783 million, mainly due to EBITDA, PLN 3 563 million, a
change in working capital, PLN 3 185 million (including PLN 2 886 million due to liabilities transferred to factoring) and
foreign exchange gains, PLN 358 million. The increase in borrowings was mainly due to income tax paid, PLN 1 631
million, cash expenditures, PLN 4 332 million, dividends paid, PLN 200 million, and an increase in the balance of cash
and cash equivalents by PLN 496 million. At the end of 2023, 84% of borrowings is long-term, 47% of borrowings is
denominated in USD and 53% in PLN,
− a decrease in tax liabilities by PLN 656 million, mainly in respect of overpayment of tax liabilities due to the application
of fixed income tax advances under a simplified formula, i.e. at a fixed level calculated on the basis of income earned
in 2021. Tax liabilities for 2022 were paid by 30 June 2023. At the end of 2023 the Company did not have any income
tax liabilities,
− a decrease in liabilities due to derivatives by PLN 452 million, including due to hedging by PLN 790 million (in respect
of metals PLN 272 million, currencies PLN 130 million and cross currency interest rate swaps, PLN 388 million) and an
increase in the value of trade instruments (+PLN 379 million), mainly currencies. A detailed presentation of assets and
liabilities due to derivatives may be found in notes 7.1 and 7.2 of the financial statements,
− higher liabilities due to employee benefits (+PLN 377 million), mainly due to an increase in the measurement of liabilities
due to the coal equivalent (+PLN 191 million), jubilee awards (+PLN 112 million) and retirement and disability benefits
(+PLN 109 million).
Chart 39. Change in equity and liabilities of KGHM Polska Miedź S.A. (in PLN million)
8.4.5 Contingent assets and liabilities due to guarantees granted
As at 31 December 2023, contingent assets amounted to PLN 531 million and related mainly to promissory notes
receivables in the amount of PLN 383 million and guarantees received by the Company in the amount of PLN 147 million.
As at 31 December 2023, the Company held liabilities due to guarantees granted and letters of credit in the total amount
of PLN 1 537 million.
Detailed information regarding contingent assets and liabilities, including due to guarantees granted, may be found in notes
12.5 and 8.6 of the financial statements.
As far as the Company is aware, at the end of the reporting period the Company determined the probability of payments
resulting from the contingent liabilities as low.
47 995
48 896
+3 246
+377
+26
-857
-783
-656
-452
Equity and
liabilities as at
31 December
2022
Equity Trade and
similar payables
Borrowings and
debt securities
Current tax
liabilities
Derivatives Employee
benefits
liabilities
Other Equity and
liabilities as at
31 December
2023
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 235
Translation from original Polish version
8.5 CAPITAL EXPENDITURES
In 2023, capital expenditures on property, plant and equipment amounted to PLN 3 467 million. Together with expenditures
incurred on uncompleted development work, capital expenditures amounted to PLN 3 474 million and were higher than in
the prior year by 20.8%.
Table 84. Structure of expenditures on property, plant and equipment and intangible assets of KGHM Polska Miedź S.A.
(in PLN million)
2023
2022
Change (%)
4Q’23
3Q’23
2Q’23
1Q’23
Mining
2 689
2 116
+27.1
939
638
559
553
Metallurgy
594
621
(4.3)
283
138
114
59
Other activities
86
57
+50.9
68
10
5
3
Development work - uncompleted
7
9
(22.2)
4
-
1
2
Leases per IFRS 16
76
98
74
+32.4
13
12
51
22
Total
3 474
2 877
+20.8
1 307
798
730
639
including borrowing costs
173
182
(4.9)
21
27
67
58
Investment activities comprised projects related to the replacement of equipment, maintenance and development:
Projects related to replacement aimed at maintaining production equipment in an undeteriorated condition, represent
41% of total expenditures incurred.
Chart 40. Structure of expenditures on replacement of KGHM Polska Miedź S.A.
Projects related to maintenance 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 41. Structure of expenditures on maintenance of KGHM Polska Miedź S.A.
77
Development projects aimed at increasing or maintaining the current level of revenues from sales, implementation of
technical and technological activities optimising use of existing infrastructure, decreasing operating costs, represent 25%
of total expenditures incurred.
76
reflects PLN 2.5 million incurred in 2023 due to leases under tangible investments
77
UZ – Deposit Access Program
Replacement of the machine
park in the mines 34%
Significant components and
substantial maintenance
17%
Other replacement of
infrastructure 49%
Outfitting of the mines 53%
Development of the Żelazny
Most Tailings Storage
Facility 12%
Main dewatering equipment
and system at the SW-4
shaft (UZ) 22%
Construction of the SW-4
shaft 4%
Other 9%
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 236
Translation from original Polish version
Chart 42. 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.
Chart 43. Structure of expenditures on adaptation of KGHM Polska Miedź S.A.
Detailed information on the advancement of key projects may be found in section 1.2 Strategy of the KGHM Polska Miedź
S.A. Group.
Deposit Access Program
75%
Exploration of the resource
base 19%
Other 6%
Purchase of CO2 emissions
allowances under the
emissions trading system
(EU ETS) 58%
Construction of a copper
concentrate storage facility
at the Rudna Concentrator
5%
Upgrade with virtualisation of
Experion PS steering
systems from Honeywell 9%
Other 22%
Construction of a silver bar
casting station 6%
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 237
Translation from original Polish version
9 ECONOMIC RESULTS OF THE SEGMENT KGHM INTERNATIONAL LTD.
Copper production
C1 cost
Revenues
Adjusted EBITDA
Loss for the period
39.9
kt
4.15
USD/lb
2 451
PLN mn
-142
PLN mn
-1 120
PLN mn
9.1 PRODUCTION
Table 85. Production of KGHM INTERNATIONAL LTD.
Unit
2023
2022
Change
(%)
4Q’23
3Q’23
2Q’23
1Q’23
Payable copper, including:
kt
39.9
56.2
(29.0)
15.8
8.7
7.8
7.6
- Robinson mine (USA)
kt
31.5
46.8
(32.7)
14.1
6.8
5.2
5.3
- Sudbury Basin mines (Canada)
78
kt
4.5
2.5
+80.0
0.7
0.8
1.5
1.6
Payable nickel
kt
0.4
0.4
-
0.1
0.0
0.2
0.1
Precious metals (TPM), including:
koz t
40.6
55.9
(27.4)
14.6
7.7
9.3
9.0
- Robinson mine (USA)
koz t
21.6
38.6
(44.0)
10.6
4.3
3.5
3.2
- Sudbury Basin mines (Canada)
79
koz t
19.0
17.3
+9.8
3.9
3.4
5.9
5.8
For most of 2023, the Robinson mine operated in a so-called transitional zone, characterised by relatively low quality of ore,
resulting in lower recovery and copper content in concentrate. This factor was the main reason for the decrease in copper
production by KGHM INTERNATIONAL LTD. by 29% compared to the level in 2022. The situation improved decisively in the
last quarter of 2023. The increase in copper content in the deposit being mined by Robinson led to a substantial increase
in payable copper production, which in the fourth quarter amounted to 15.8 thousand tonnes, versus 8.0 thousand tonnes
on average in the three preceding quarters of 2023.
The decrease in precious metals production by 27% during the year is also a consequence of the aforementioned problems
in the Robinson mine.
9.2 REVENUES
Table 86. Volume and sales revenues of KGHM INTERNATIONAL LTD. (in USD million)
Unit
2023
2022
Change
(%)
4Q’23
3Q’23
2Q’23
1Q’23
Revenues from contracts with
customers
80
, including:
USD mn
586
720
(18.6)
187
114
122
163
- copper
USD mn
337
451
(25.3)
122
58
59
98
- nickel
USD mn
8
12
(33.3)
1
1
3
3
- TPM – precious metals
USD mn
68
100
(32.0)
22
12
15
19
Copper sales volume
kt
43.3
54.8
(21.0)
16.3
7.9
8.4
10.7
Nickel sales volume
kt
0.4
0.4
-
0.1
0.0
0.2
0.1
TPM sales volume
koz t
42.1
55.2
(23.7)
13.6
6.8
9.7
12
78
McCreedy West mine in the Sudbury Basin
79
As above
80
Reflects processing premium
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 238
Translation from original Polish version
Table 87. Sales revenues of KGHM INTERNATIONAL LTD. (in PLN million)
Unit
2023
2022
Change
(%)
4Q’23
3Q’23
2Q’23
1Q’23
Revenues from contracts with
customers
81
, including:
PLN mn
2 451
3 217
(23.8)
764
470
506
711
- copper
PLN mn
1 409
2 015
(30.1)
498
242
243
426
- nickel
PLN mn
33
55
(40.0)
2
5
14
12
- TPM – precious metals
PLN mn
284
448
(36.5)
89
49
62
84
The revenues of KGHM INTERNATIONAL LTD. in 2023 amounted to USD 586 million, or PLN 2 451 million, or a decrease
respectively by 19% and 24% compared to the corresponding period of 2022. The decrease in revenues was mainly due to
the weak production results of the Robinson mine during the first three quarters of 2023. Moreover, revenues in 2023 do
not reflect Franke (the mine was sold in April 2022, and from the start of 2022 to the moment of disposal of the asset, the
mine recorded sales revenue in the amount of USD 31 million). It should be noted that revenues from mining services
performed by DMC Mining Services recorded an increase by 24%, mainly due to the provision of a wider range of services.
The impact of individual factors on the change in revenues is presented in the subsection on the financial results of KGHM
INTERNATIONAL LTD.
9.3 COSTS
Table 88. C1 payable copper production cost of KGHM INTERNATIONAL LTD.
Unit
2023
2022
Change
(%)
4Q’23
3Q’23
2Q’23
1Q’23
C1 payable copper production cost
82
USD/lb
4.15
2.14
+93.9
2.22
5.40
5.66
5.00
The average weighted unit cash cost of copper production for all mines in the segment KGHM INTERNATIONAL LTD. in 2023
amounted to 4.15 USD/lb, or nearly twice an increase compared to 2022. This decrease in cost efficiency was likewise a
result of the aforementioned problems in the Robinson mine which led to a decrease in the volume of copper production
sold. In addition, the level of C1 cost in 2023 was negatively affected by write-down of ore and concentrate inventories from
the Robinson mine as their value was higher than their net realisable value and lower capitalised stripping costs due to the
lower scope of access work by the Robinson mine.
In tandem with the move in the fourth quarter to mining in a target zone, Robinson’s results also improved, with a
simultaneous drop in C1 cost compared to the level recorded in the first three quarters of 2023.
9.4 FINANCIAL RESULTS
Table 89. Financial results of KGHM INTERNATIONAL LTD. (in USD million)
2023
2022
Change
(%)
4Q’23
3Q’23
2Q’23
1Q’23
Revenues from contracts with customers
586
720
(18.6)
187
114
122
163
Cost of sales, selling costs and administrative
expenses, including:
83
(791)
(631)
+25.4
(182)
(181)
(199)
(229)
(recognition)/reversal of impairment losses on non-
current assets
(2)
(8)
(75.0)
-
-
-
(2)
Profit/(loss) on sales
(205)
89
x
5
(67)
(77)
(66)
Profit/(loss) before taxation, including:
(330)
229
x
(181)
(77)
18
(90)
Income tax expense
61
(27)
x
29
(3)
21
14
Profit/loss for the period
(269)
202
x
(152)
(80)
39
(76)
Depreciation/amortisation in expenses by nature
(169)
(147)
+15.0
(70)
(40)
(33)
(26)
Adjusted EBITDA
(34)
224
x
75
(27)
(44)
(38)
81
Reflects processing premium
82
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
83
Cost of products, merchandise and materials sold, selling costs and administrative expenses
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 239
Translation from original Polish version
Table 90. Financial results of KGHM INTERNATIONAL LTD. (in PLN million)
2023
2022
Change
(%)
4Q’23
3Q’23
2Q’23
1Q’23
Revenues from contracts with customers
2 451
3 217
(23.8)
764
470
506
711
Cost of sales, selling costs and administrative
expenses, including:
84
(3 306)
(2 820)
+17.2
(727)
(752)
(827)
(1 000)
- (recognition)/reversal of impairment losses on non-
current assets
(7)
(36)
(80.6)
1
(0)
0
(8)
Profit/(loss) on sales
(855)
397
x
37
(282)
(321)
(289)
Profit/(loss) before taxation, including:
(1 370)
1 022
x
(741)
(320)
85
(394)
Income tax expense
250
(122)
x
115
(16)
88
63
PROFIT/LOSS FOR THE PERIOD
(1 120)
900
x
(626)
(336)
173
(331)
Depreciation/amortisation in expenses by nature
(706)
(656)
+7.6
(287)
(169)
(138)
(112)
Adjusted EBITDA
(142)
1 089
x
323
(113)
(183)
(169)
Table 91. Key factors impacting the change in financial result of KGHM INTERNATIONAL LTD.
84
Cost of products, merchandise and materials sold, selling costs and administrative expenses
Item
Description
Lower revenues – impact
on result
-USD 134 million
-USD 101 million - lower revenues due to a change in the metal sales volume, of which:
− copper (-11 kt; -USD 74 million),
− precious metals (-13.1 koz t; -USD 27 million)
-USD 30 million - lower revenues due to a change in the metal sales prices, of which:
− copper (-USD 27 million)
− other, including precious metals and nickel (-USD 3 million)
+USD 29 million - higher revenues realised by DMC Mining Services Ltd.
-USD 32 million - other factors, including mainly higher processing premiums (-USD 27 million)
Higher cost of sales,
selling costs and
administrative expenses
- impact on results -USD
160 million
-USD 78 million - higher write-down of ore and concentrate inventories as their value was higher than their
net realisable sales price and other adjustments (write-down in the amount of USD 88 million for 2023 versus
USD 10 million in 2022)
-USD 38 million – impact of change in products and work in progress (-USD 24 million versus -USD 62 million
in 2022).
-USD 40 million – lower capitalised stripping costs due to a lower scope of access work by the Robinson mine
+USD 6 million – lower impairment losses on non-current assets
-USD 10 million – higher expenses by nature, mainly depreciation/amortisation, employee benefits and
external services
Impact of other
operating and financing
activities
-USD 265 million
-USD 170 million - reversal of allowance for impairment of loans granted for the construction of the Sierra
Gorda mine (+USD 26 million in 2023 versus +USD 196 million in the corresponding period of 2022).
- USD 53 million – result on the sale of the Oxide project (to Sierra Gorda S.C.M.) and of the Franke mine in
2022 (in 2023 this type of transaction did not occur)
-USD 63 million – higher impairment losses on fixed assets under construction and intangible assets not yet
available for use (mainly on the Victoria project)
+USD 13 million – reversal of impairment losses on fixed assets under construction and intangible assets
(mainly on the Ajax project) at the end of 2023 (did not occur in 2022)
+USD 8 million – other factors, including higher interest income (+USD 15 million)
Taxation – impact on
results (+USD 88 million)
A decrease in income tax mainly due to lower results of Robinson
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 240
Translation from original Polish version
Chart 44. Change in profit or loss for the period of KGHM INTERNATIONAL LTD. (in USD million)
85
9.5 CASH EXPENDITURES
Table 92. Cash expenditures of KGHM INTERNATIONAL LTD. (in USD million)
2023
2022
Change
(%)
4Q’23
3Q’23
2Q’23
1Q’23
Victoria project
70
49
+42.9
20
18
17
15
Stripping and other
165
155
+6.5
83
35
16
31
Total
235
204
+15.2
103
53
33
46
Table 93. Cash expenditures of KGHM INTERNATIONAL LTD. (in PLN million)
2023
2022
Change
(%)
4Q’23
3Q’23
2Q’23
1Q’23
Victoria project
293
221
+32.5
81
75
72
65
Stripping and other
690
692
(0.3)
342
147
63
138
Total
984
913
+7.8
424
222
135
203
Cash expenditures by the segment KGHM INTERNATIONAL LTD. in 2023 amounted to USD 235 million, and were higher
by USD 31 million (+15%) compared to 2022, mainly as regards expenditures to advance the Victoria project.
85
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, fixed assets under construction and intangible assets
202
-269
+88
-134
-166
-45
-214
Profit for
2022
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 Loss for
2023
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 241
Translation from original Polish version
10 ECONOMIC RESULTS OF THE SEGMENT SIERRA GORDA S.C.M.
Copper production
C1 cost
Revenues
Adjusted EBITDA
Profit for the period
78.7
kt (55%)
1.68
USD/lb
3 319
PLN mn (55%)
1 584
PLN mn (55%)
68
PLN mn (55%)
The segment Sierra Gorda S.C.M. is a joint venture, whose owners are the KGHM Polska Miedź S.A. Group (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 the note of the
consolidated financial statements concerning the operating segments.
10.1 PRODUCTION
In 2023, Sierra Gorda S.C.M. produced 13% less copper than in 2022, with molybdenum production higher by 19%.
Table 94. Production of copper, molybdenum and precious metals by Sierra Gorda S.C.M.
86
Unit
2023
2022
Change (%)
4Q’23
3Q’23
2Q’23
1Q’23
Copper production
kt
143.0
165.1
(13.4)
34.5
35.7
38.4
34.4
Copper production – segment (55%)
kt
78.7
90.8
(13.4)
19.0
19.6
21.2
18.9
Molybdenum production
mn lbs
6.3
5.3
+18.9
0.7
1.7
2.1
1.8
Molybdenum production – segment (55%)
mn lbs
3.5
2.9
+18.9
0.4
1.0
1.1
1
TPM production – gold
koz t
59.8
62.4
(4.2)
15.8
13.9
16.4
13.7
TPM production – gold -segment (55%)
koz t
32.9
34.3
(4.2)
8.7
7.7
9
7.5
The decrease in copper production was a consequence of the mineralogical composition of the areas mined in 2023, which
were characterised by lower copper content than in 2022. The quality of the ore processed also played a role in the decrease
in copper recovery by more than 1% during the year. A positive factor was the nearly two-percent rise in the level of ore
processed.
The increase in molybdenum content, as well as the aforementioned increase in the volume of ore processed, were the
main factors responsible for the increase in payable molybdenum production. The visible decrease in molybdenum
production in the last quarter of 2023 was due to unplanned shutdowns, including mainly related to eliminating the causes
of breakdowns in the hydro-transport installation and the nature of the processed ore (the high content of swelling clays
causing disturbances in the molybdenum flotation process and the decrease in recovery).
86
Payable metal in concentrate
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 242
Translation from original Polish version
10.2 SALES
Revenues from sales in 2023 amounted to USD 1 443 million (on a 100% basis), or PLN 3 319 million respectively to the 55%
interest held by KGHM Polska Miedź S.A.
Table 95. Sales volume and revenues of Sierra Gorda S.C.M.
Unit
2023
2022
Change
(%)
4Q’23
3Q’23
2Q’23
1Q’23
Revenues from contracts with
customers
87
, including from the sale of:
USD mn
1 443
1 617
(10.8)
378
337
339
389
- copper
USD mn
1 164
1 322
(12.0)
304
263
278
319
- molybdenum
USD mn
128
153
(16.3)
34
40
21
33
- TPM (gold)
USD mn
120
109
+10.1
32
27
33
28
Copper sales volume
kt
146.5
165.6
(11.5)
38.2
34.0
39.9
34.4
Molybdenum sales volume
mn lbs
5.8
7.8
(25.6)
1.8
1.7
1.1
1.2
TPM (gold) sales volume
koz t
61.1
61.4
(0.5)
16.6
14.0
16.2
14.3
Revenues from contracts with
customers
88
- segment (55%)
PLN mn
3 319
3 974
(16.5)
840
768
779
932
In comparison to the results achieved in 2022, revenues decreased respectively by 11% in the functional currency and by
17% in PLN million (on a 55% basis). The decrease in revenues is a direct result of the extraction of ore with a lower copper
content, which led to lower sales by 19.1 thousand tonnes of payable copper (-12%). The volume of molybdenum sales was
also lower (-26%). The change volume of sales of metals produced by Sierra Gorda S.C.M. is responsible for USD 214 million
of the USD 174 million decrease in revenues. Other factors were mainly an increase in revenues resulting from more
favourable macroeconomic conditions.
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.
10.3 COSTS
The cost of sales, selling costs and administrative expenses, prior to the reversal of impairment loss on non-current assets,
amounted to USD 1 089 million, of which USD 947 million were costs of products sold, and USD 142 million were total
selling costs and administrative expenses. Proportionally to the interest held (55%) the costs of the segment amounted to
PLN 2 505 million.
Table 96. Cost of sales, selling costs and administrative expenses and production cost of payable copper (C1) of Sierra
Gorda S.C.M.
Unit
2023
2022
Change
(%)
4Q’23
3Q’23
2Q’23
1Q’23
Costs of sales, selling costs and administrative
expenses (prior to the reversal of impairment
loss in 2023)
USD mn
(1 089)
(1 107)
(1.6)
(330)
(263)
(254)
(242)
Reversal of impairment loss on non-current
assets
USD mn
101
-
x
101
-
-
-
Costs of sales, selling costs and administrative
expenses (prior to the reversal of impairment
loss on non-current assets in 2023) – segment
55%
PLN mn
(2 505)
(2 721)
(7.9)
(737)
(602)
(586)
(580)
C1 unit cost
89
USD/lb
1.68
1.50
+12.0
2.03
1.69
1.50
1.48
87
Reflecting treatment/refining and other charges
88
Reflecting treatment/refining and other charges
89
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
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 243
Translation from original Polish version
Costs incurred in 2023 (prior to the reversal of impairment loss) were at a comparable level to those recorded in the
corresponding period of 2022, although there were changes in terms of individual items of expenses by nature:
2023
2022
Change
(%)
External services
279
224
+24.6
Higher costs due to:
− higher contractual rates,
− a higher scope of maintenance services during maintenance
shutdowns of the concentrator plant
− a higher scope of vulcanisation services due to higher
consumption of tires,
− a higher scope of work of mining machinery and equipment
(higher rental cost),
− unfavourable impact of the USD/CLP exchange rate
Depreciation/amortisation
335
381
(12.1)
Lower costs, mainly in respect of depreciation of investments related
to stripping
Materials and fuel
201
220
(8.6)
Mainly due to lower prices for fuel and explosives
Spare parts
81
68
+19.1
A higher scope of maintenance compared to 2022
Energy
196
246
(20.3)
The result of utilising renewable energy and energy resales
Labour costs
161
99
+62.6
Higher costs resulting among others from signed wage agreements
Selling costs
74
93
(20.4)
Lower costs resulting from a lower sales volume and lower seaborne
transport rates.
Other costs
63
55
+14.5
Mainly higher costs of insurance and travel costs.
Capitalised stripping costs
(293)
(189)
+55.0
An increase in a scope of work and unit cost of extraction.
Change in inventories
(8)
(90)
-91.1
Costs of sales, selling costs
and administrative
expenses
1 089
1 107
(1.6)
The increase in costs of external services and labour, given the drop in the volume of copper sales, was the main cause of
the deterioration of the C1 unit cash cost of copper production, which increased from 1.50 USD/lb in 2022 to 1.68 USD/lb
in 2023.
10.4 FINANCIAL RESULTS
10.4.1 Statement of profit or loss
In 2023, adjusted EBITDA amounted to USD 689 million, of which proportionally to the interest held (55%) PLN 1 584 million
is attributable to the KGHM Group.
Table 97. Results of Sierra Gorda S.C.M. in USD million (on a 100% basis)
2023
2022
Change
(%)
4Q’23
3Q’23
2Q’23
1Q’23
Revenues from contracts with customers
1 443
1 617
(10.8)
378
337
339
389
Cost of sales, selling costs and administrative expenses
(prior to the reversal of impairment loss)
(1 089)
(1 107)
(1.6)
(330)
(263)
(254)
(242)
Reversal of impairment loss on non-current assets
101
-
x
101
-
-
-
Profit/(loss) on sales
455
510
(10.8)
149
74
85
147
Profit/loss for the period
36
97
(62.9)
13
(11)
2
32
Depreciation/amortisation in expenses by nature
(335)
(381)
(12.1)
(83)
(84)
(85)
(83)
Adjusted EBITDA
689
891
(22.7)
131
158
171
229
Table 98. Results of the segment Sierra Gorda S.C.M. proportionally to the interest held (55%) in PLN million
2023
2022
Change
(%)
4Q’23
3Q’23
2Q’23
1Q’23
Revenues from contracts with customers
3 319
3 974
(16.5)
840.3
768
779
932
Cost of sales, selling costs and administrative expenses
(prior to the reversal of impairment loss)
(2 505)
(2 721)
(7.9)
(737)
(602)
(586)
(580)
Reversal of impairment loss on non-current assets
219
-
x
219
-
-
-
Profit/(loss) on sales
1 033
1 253
(17.5)
322
166
193
352
Profit/loss for the period
68
239
(71.5)
15
(26)
1
78
Depreciation/amortisation in expenses by nature
(770)
(937)
(17.8)
(184)
(191)
(197)
(198)
Adjusted EBITDA
1 584
2 190
(27.7)
287
357
390
550
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 244
Translation from original Polish version
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/loss for the period of Sierra Gorda S.C.M. by USD 61 million.
Table 99. Main factors impacting the change in the financial result of the segment Sierra Gorda S.C.M.
Chart 45. Change in profit/loss for the period of Sierra Gorda S.C.M. (in USD million)
97
36
+101
+8
+18
-174
-14
Profit for
2022
Change in sales
revenue
Impact of costs of
sales, selling costs
and administrative
expenses (excl.
impairment
reversal)
Impact of other
operating and
financing activities
Reversal of
impairment loss on
non-current assets
Taxation Profit for
2023
Item
Description
Lower sales revenue – impact
on result
-USD 174 million
Lower revenues from copper sales (-USD 145 million), mainly due to a lower sales volume by 19 thousand
tonnes (-USD 158 million), with a positive impact of price factors (+USD 13 million)
Lower revenues from molybdenum sales (-USD 26 million), mainly due to a lower sales volume (-USD 49
million), the impact of which was partially offset by more favourable price factors (+USD 23 million)
Higher revenues from sales of silver and gold (+USD 9 million)
Higher treatment and refining charges due to market conditions (-USD 12 million)
Lower cost of sales, selling
costs and administrative
expenses prior to the
reversal of impairment loss
on non-current assets –
impact on result
+USD 18 million
Lower costs of sales, selling costs and administrative expenses mainly due to lower costs of energy,
materials and fuels and of depreciation/amortisation, offsetting higher costs in items such as external
services, labour costs and spare parts.
Reversal of impairment loss
on non-current assets
+USD 101 million
In the profit/loss on sales for 2023, a reversal of impairment losses on non-current assets in the amount
of USD 101 million was recognised. In 2022 Sierra Gorda S.C.M. did not recognise or reverse any
impairment losses in this regard.
Impact of other operating
and financing activities
-USD 14 million
− an impairment loss on fixed assets under construction (-USD 19 million in 2023),
− higher interest on loans (-USD 15 million)
− impact of other factors (+USD 20 million), including mainly higher interest income and lower costs of
interest on a loan granted by the Owners to build the mine.
Taxation +USD 8 million
− income tax +USD 4 million – mainly due to lower profit before income tax resulting from lower
revenues
− other, including the minerals extraction tax +USD 4 million
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 245
Translation from original Polish version
10.5 CASH EXPENDITURES
In 2023, 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 481 million, of which the majority, or USD 260 million (54%) were cash
expenditures incurred on stripping to gain access to further areas of the deposit, with the rest related to development and
the replacement of property, plant and equipment.
Table 100. Cash expenditures of Sierra Gorda S.C.M.
Unit
2023
2022
Change
(%)
4Q’23
3Q’23
2Q’23
1Q’23
Cash expenditures on property, plant and
equipment
USD mn
481
420
+14.5
129
102
114
136
Cash expenditures on property, plant and
equipment – segment (55% share)
PLN mn
1 106
1 031
+7.3
285
233
261
327
The increase in cash expenditures by 15% compared to 2022 was mainly due to capitalised stripping costs and was the
result of a greater scope of work, as well as the unit cost being the basis for capitalisation.
The positive cash flow generated from operating activities (USD 686 million) completely covered cash expenditures on
property, plant and equipment (USD 481 million), while the surplus was utilised among others to make payments towards
the Owners due to the loan granted to build the mine. The total amount of the principal and interest repaid in 2023
amounted to USD 70 million, of which USD 39 million is attributable to the KGHM Polska Miedź S.A. Group (respectively
USD 350 million and USD 193 million in the corresponding period of 2022).
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 246
Translation from original Polish version
11 ECONOMIC RESULTS OF OTHER SEGMENTS
Companies in the other 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.
11.1 REVENUES
Table 101. Revenues from contracts with customers of companies within the KGHM Group – excluding intra-segment
revenues (in PLN million)
From external customers
From KGHM Polska Miedź SA
TOTAL
Revenues from contracts with
customers
2023
2022
Change %
2023
2022
Change %
2023
2022
Change %
Metraco S.A.
233
222
+5.0
5 132
5 892
(12.9)
5 365
6 114
(12.3)
Mercus Logistyka Sp. z o.o.
52
70
(25.7)
1 144
1 121
+2.1
1 196
1 190
+0.5
PeBeKa S.A.
-7
52
×
1 146
883
+29.8
1 139
935
+21.8
Energetyka Sp. z o.o.
109
128
(14.8)
806
732
+10.1
915
860
+6.4
KGHM ZANAM S.A.
77
63
+22.2
784
683
+14.8
861
746
+15.4
Centrozłom Wrocław S.A.
638
812
(21.4)
5
2
×2.5
643
814
(21.0)
NITROERG S.A.
279
319
(12.5)
223
216
+3.2
502
535
(6.2)
WPEC S.A. w Legnicy
330
251
+31.5
9
7
+28.6
339
258
+31.4
Miedziowe Centrum Zdrowia S.A.
277
225
+23.1
39
31
+25.8
316
256
+23.4
POL - MIEDŹ TRANS Sp. z o.o.
68
51
+33.3
186
173
+7.5
254
224
+13.4
Other
608
573
+6.1
447
383
+16.7
1 055
957
+10.2
TOTAL
2 664
2 766
(3.7)
9 921
10 123
(2.0)
12 585
12 889
(2.4)
Information on the activities of the Group’s main companies may be found in section 1.1.7 Our assets.
11.2 FINANCIAL RESULTS
Table 102. Financial results of other segments – prior to consolidation adjustments (in PLN million)
2023
2022
Change
(%)
4Q’23
3Q’23
2Q’23
1Q’23
Sales revenue
12 585
12 889
(2.4)
3 186
2 960
3 203
3 236
- including from external clients
2 664
2 766
(3.7)
646
631
682
705
Profit/loss on sales
64
2
×32.0
38
-16
102
-60
Profit/loss for the period
28
-51
×
19
-26
103
-68
Depreciation/amortisation in expenses by nature
-295
-274
+7.7
-78
-74
-74
-69
Adjusted EBITDA
357
275
+29.8
116
57
175
9
In 2023, other segments recorded a profit for the period, prior to recognition of consolidation adjustments, in the amount
of PLN 28 million, or an improvement as compared to 2022 by PLN 79 million (the loss for 2022 amounted to PLN 51 million).
The profit/loss for the period is comprised of profits/losses of individual companies of the KGHM Group after eliminating
turnover between companies within the same segment.
The highest profit on sales was achieved by the following companies: Energetyka Sp. z o.o. (PLN 31.5 million), KGHM ZANAM
S.A. (PLN 27.8 million), NITROERG S.A. (PLN 27.1 million) and Miedziowe Centrum Zdrowia S.A. (PLN 16.6 million). The lowest
results were recorded by Centrozłom Wrocław S.A. (-PLN 42.4 million) and Zagłębie Lubin S.A. (-PLN 23.3 million). The
adjustment of profit/loss on sales due to intra-segment turnover (i.e. between subsidiaries) amounts to approximately
PLN 135 million, meaning a surplus of intra-segment revenues over costs, including manufacturing costs.
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 247
Translation from original Polish version
11.3 CASH EXPENDITURES
The total cash expenditures of other segments in 2023 amounted to approx. PLN 581 million, compared to approx. PLN
387 million in 2022.
Table 103. Cash expenditures – acquisition of intangible assets and property, plant and equipment (in PLN million)
Company within the KGHM
Group
Amount
Main investment expenditures
Energetyka Sp. z o.o.
229
Mainly the acquisition of CO
2
emission allowances, but also includes, among others,
investments on the modernisation and development of the plant in Legnica involving the
generation of heat in the form of hot water and steam, as well as de-mineralised water.
PeBeKa S.A.
98
Mainly investments comprising the replacement of heavy mining and auxiliary machinery and
other equipment and machinery.
WPEC S.A. w Legnicy
69
Mainly a developmental investment in the modernisation of heat supply system in Legnica.
POL - MIEDŹ TRANS Sp. z o.o.
48
Replacement-related investments with respect to repairing railway cars using its own system,
as well as development-related investments in the form of purchases of platform railway cars
for intermodal transport, which will enable the Company to increase its carrying volume.
KGHM ZANAM S.A.
35
Among others replacement- and development-related investments in the plants in Polkowice
and Legnica, as well as investments involving mine-related work.
Centrozłom Wrocław S.A.
28
Among others replacement-related investments in loading cranes and press-shears on the
terrain of many divisions, including the division in Legnica.
Other
74
TOTAL
581
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 248
Translation from original Polish version
Disclosure in accordance with Annex III of Commission Delegated Regulation (EU)
2022/1214, supplementing Commission Delegated Regulation (EU) 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 [for consolidated
data]
Turnover
Table 104. Taxonomy disclosure: Turnover - Template 1 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 engages in 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 engages in 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
3.
The company engages in 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 engages in the construction or operates facilities for generation of electricity using gaseous fossil fuels, finances or has
exposure to such activity.
NO
5.
The company engages in 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.
NO
6.
The company engages in 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
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 249
Translation from original Polish version
Table 105. Taxonomy disclosure: Turnover - Template 2 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
%
Amount
%
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
0.00
0%
0.00
0%
0.00
0%
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
0.00
0%
0.00
0%
0.00
0%
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
0.00
0%
0.00
0%
0.00
0%
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
0.00
0%
0.00
0%
0.00
0%
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
0.00
0%
0.00
0%
0.00
0%
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
0.00
0%
0.00
0%
0.00
0%
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
300.03
0.9%
300.03
0.9%
0.00
0%
8.
Total applicable key performance indicator
33 467.26
33 467.26
0.00
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 250
Translation from original Polish version
Table 106. Taxonomy disclosure: Turnover - Template 3 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
%
Amount
%
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
0.00
0%
0.00
0%
0.00
0%
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
0.00
0%
0.00
0%
0.00
0%
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
0.00
0%
0.00
0%
0.00
0%
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
0.00
0%
0.00
0%
0.00
0%
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
0.00
0%
0.00
0%
0.00
0%
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
0.00
0%
0.00
0%
0.00
0%
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
300.03
100%
300.03
100%
0.00
0%
8.
Total amount and total share of other taxonomy-
compliant economic activities in the denominator of
the applicable key performance indicator
300.03
100%
300.03
100%
0.00
0%
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 251
Translation from original Polish version
Table 107. Taxonomy disclosure: Turnover - Template 4 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
%
Amount
%
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
0.00
0%
0.00
0%
0.00
0%
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
0.00
0%
0.00
0%
0.00
0%
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
0.00
0%
0.00
0%
0.00
0%
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
0.00
0%
0.00
0%
0.00
0%
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
0.00
0%
0.00
0%
0.00
0%
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
0.00
0%
0.00
0%
0.00
0%
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
219.47
0.7%
219.47
0.7%
0.00
0%
8.
Total amount and total share of taxonomy-eligible
but taxonomy non-compliant economic activities
in the denominator of the applicable key
performance indicator
219.47
0.7%
219.47
0.7%
0.00
0%
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 252
Translation from original Polish version
Table 108. Taxonomy disclosure: Turnover - Template 5 Taxonomy non-eligible economic activity
Template 5 Taxonomy non-eligible economic 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
0.00
0%
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
0.00
0%
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
0.00
0%
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
0.00
0%
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
0.00
0%
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
0.00
0%
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
32 946.86
98.4%
8.
Total amount and total share of taxonomy non-eligible
economic activities in the denominator of the applicable key
performance indicator
32 946.86
98.4%
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 253
Translation from original Polish version
Capital expenditures
Table 109. Taxonomy disclosure: Capital expenditures - Template 1 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 engages in 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 engages in 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
3.
The company engages in 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 engages in the construction or operates facilities for generation of electricity using gaseous fossil fuels, finances
or has exposure to such activity.
NO
5.
The company engages in 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.
NO
6.
The company engages in 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
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 254
Translation from original Polish version
Table 110. Taxonomy disclosure: Capital expenditure - Template 2 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
%
Amount
%
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
0.00
0%
0.00
0%
0.00
0%
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
0.00
0%
0.00
0%
0.00
0%
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
0.00
0%
0.00
0%
0.00
0%
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
0.00
0%
0.00
0%
0.00
0%
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
0.00
0%
0.00
0%
0.00
0%
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
0.00
0%
0.00
0%
0.00
0%
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
30.58
0.6%
30.58
0.6%
0.00
0%
8.
Total applicable key performance indicator
4 991.44
4 991.44
0.00
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 255
Translation from original Polish version
Table 111. Taxonomy disclosure: Capital expenditure - Template 3 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
%
Amount
%
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
0.00
0%
0.00
0%
0.00
0%
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
0.00
0%
0.00
0%
0.00
0%
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
0.00
0%
0.00
0%
0.00
0%
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
0.00
0%
0.00
0%
0.00
0%
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
0.00
0%
0.00
0%
0.00
0%
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
0.00
0%
0.00
0%
0.00
0%
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
30.58
100%
30.58
100%
0.00
0%
8.
Total amount and total share of other
taxonomy-compliant economic activities in the
denominator of the applicable key performance
indicator
30.58
100%
30.58
100%
0.00
0%
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 256
Translation from original Polish version
Table 112. Taxonomy disclosure: Capital expenditure - Template 4 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
%
Amount
%
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
0.00
0%
0.00
0%
0.00
0%
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
0.00
0%
0.00
0%
0.00
0%
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
0.00
0%
0.00
0%
0.00
0%
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
0.00
0%
0.00
0%
0.00
0%
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
0%
0.00
0%
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
0.00
0%
0.00
0%
0.00
0%
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
206.76
4.1%
206.61
4.1%
0.15
0%
8.
Total amount and total share of taxonomy-
eligible but taxonomy non-compliant
economic activities in the denominator of the
applicable key performance indicator
206.76
4.1%
206.61
4.1%
0.15
0%
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 257
Translation from original Polish version
Table 113. Taxonomy disclosure: Capital expenditures - Template 5 Taxonomy non-eligible economic activity
Template 5 Taxonomy-non-eligible economic 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
0.00
0%
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
0.00
0%
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
0.00
0%
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
0.00
0%
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
0.00
0%
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
0.00
0%
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
4 753.85
95.2%
8.
Total amount and total share of taxonomy non-eligible
economic activities in the denominator of the applicable
key performance indicator
4 753.85
95.2%
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 258
Translation from original Polish version
Operating expenditure
Table 114. Taxonomy disclosure: Operating expenditure - Template 1 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 engages in 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 engages in 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
3.
The company engages in 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 engages in the construction or operates facilities for generation of electricity using gaseous fossil fuels, finances or has
exposure to such activity.
NO
5.
The company engages in the construction, modernisation or operates facilities for combined generation of heat/cooling and
electricity using gaseous fossil fuels, finances or has exposure to such activity.
YES
6.
The company engages in 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
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 259
Translation from original Polish version
Table 115. Taxonomy disclosure: Operating expenditure - Template 2 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
%
Amount
%
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
0.00
0%
0.00
0%
0.00
0%
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
0.00
0%
0.00
0%
0.00
0%
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
0.00
0%
0.00
0%
0.00
0%
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
0.00
0%
0.00
0%
0.00
0%
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
0.00
0%
0.00
0%
0.00
0%
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
0.00
0%
0.00
0%
0.00
0%
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
44.18
2.1%
44.18
2.1%
0.00
0%
8.
Total applicable key performance indicator
2 078.86
2 078.86
0.00
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 260
Translation from original Polish version
Table 116. Taxonomy disclosure: Operating expenditure - Template 3 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
%
Amount
%
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
0.00
0%
0.00
0%
0.00
0%
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
0.00
0%
0.00
0%
0.00
0%
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
0.00
0%
0.00
0%
0.00
0%
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
0.00
0%
0.00
0%
0.00
0%
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
0.00
0%
0.00
0%
0.00
0%
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
0.00
0%
0.00
0%
0.00
0%
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
44.18
100%
44.18
100%
0.00
0%
8.
Total amount and total share of other
taxonomy-compliant economic activities in the
denominator of the applicable key performance
indicator
44.18
100%
44.18
100%
0.00
0%
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 261
Translation from original Polish version
Table 117. Taxonomy disclosure: Operating expenditure - Template 4 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
%
Amount
%
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
0.00
0%
0.00
0%
0.00
0%
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
0.00
0%
0.00
0%
0.00
0%
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
0.00
0%
0.00
0%
0.00
0%
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
0.00
0%
0.00
0%
0.00
0%
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
22.46
1%
22.46
1%
0.00
0%
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
0.00
0%
0.00
0%
0.00
0%
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
131.37
6.3%
128.25
6.2%
3.13
0%
8.
Total amount and total share of taxonomy-
eligible but taxonomy non-compliant
economic activities in the denominator of the
applicable key performance indicator
153.83
7.4%
150.71
7.2%
3.13
0%
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 262
Translation from original Polish version
Table 118. Taxonomy disclosure: Operating expenditures - Template 5 Taxonomy non-eligible economic activity
Template 5 Taxonomy-non-eligible economic 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
0.00
0%
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
0.00
0%
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
0.00
0%
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
0.00
0%
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
0.00
0%
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
0.00
0%
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
1 880.77
90.5%
8.
Total amount and total share of taxonomy non-eligible economic
activities in the denominator of the applicable key performance
indicator
1 880.77
90.5%
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 263
Translation from 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 providing 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
COMEX
The Commodity Exchange, Inc. – a global commodity exchange with its head office in New York,
which focuses on trade in derivatives (forward contracts and options) on metals such as gold and
silver, as well as copper, aluminium, steel, molybdenum, zinc, lead and iron ore.
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.
COPI
the Central Information Processing Center – KGHM Polska Miedź S.A.’s Division
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
CSRD
Directive 2022/2464 of the European Parliament and of the Council on sustainability reporting
(CSRD - Corporate Sustainability Reporting Directive) published in the Official Journal of the EU on
16 December 2022.
CRU
CRU Group, an analytical company with its head office in London, involved in, among others,
business analytics and advisory services, mainly on the mining, metals and fertiliser markets
Deposit/Orebody
Natural collection of minerals in the earth, arising as a result of various geological processes
EE TGE YA
Price of electricity on the Warsaw Commodity Exchange (Towarowa Giełda Energii, TGE) to be
supplied in the next calendar year (YA – Year Ahead)
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
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 264
Translation from original Polish version
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
ESRS
(European
Sustainability
Reporting
Standards)
European Sustainability Reporting Standards issued in the form of Commission Delegated
Regulation (EU) 2023/2772. The regulation entered into force and is applicable from 1 January 2024.
Fed
The Federal Reserve System, often shortened to the Federal Reserve or abbreviated as Fed is the
central bank of the United States of America
Flotation (ore
enrichment)
A stage in the process of breaking down ore into fragments 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
FOMC
(The Federal Open
Market Committee)
The Federal Open Market Committee, a body within the Federal Reserve System that determines
the direction of monetary policy, supervision over open market operations in the United States of
America, as well as the availability and cost of money
Green
transformation
Actions to increase the use of renewable sources for energy production
INE
Shanghai International Energy Exchange, a subsidiary of Shanghai Futures Exchange, enabling the
trade of future contracts and options for crude oil, copper, palm oil with low sulphur content as
well as rubber
Innovation Rules
and Regulations
An internal document of the Company, which sets the rules and procedures for reviewing and
rewarding the submitted projects, acquisition by KGHM of rights to use the projects and acquisition
of rights to obtain Exclusive Rights.
ISO
International Organization for Standardization
LBMA
London Bullion Market Association – a precious metals association responsible for setting main
standards on the silver and gold markets.
LME
London Metal Exchange – the largest non-ferrous metal exchange in the world, which enables the
trade in forward contracts and options on various commodities. It is a global benchmark for prices
of metals and plays a key role in international trade.
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
Management staff
Managers of individual units or departments, including senior management and middle
management
Mine excavation
Open area left after the mining work
Mobility policy
The International Mobility Policy of the KGHM Polska Miedź S.A. Group, which sets the principles
governing the transfer of employees delegated from one of the entities of the KGHM Polska Miedź
S.A. Group to another entity of the KGHM Polska Miedź S.A. Group with a head office in a different
country.
Muck
Rock removed from a mine face. Contains both ore and barren rock
NBP
National Bank of Poland
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
OPEC+
A broader agreement that includes OPEC members (Organization of the Petroleum Exporting
Countries) and additional countries producing petroleum that agreed to cooperate with OPEC in
order to regulate the supply of petroleum on international markets.
Ore
Rock which contains one or more useful elements. Ore can be monometallic (containing a single
metal) or polymetallic (containing more than one metal)
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 265
Translation from original Polish version
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 of permits and restrictions in the sale
and use of certain chemicals
Sell-side
A term used in the finance services sector that covers the provision of securities sales services by
entities such as investment banks, brokerage houses or market makers
Senior
management
The highest level in the unit’s organisation (Management Board, Supervisory Board)
SHFE
Shanghai Futures Exchange, one of the main futures exchanges in China, involved in the trade of
financial instruments based on metals (for example copper, aluminium, zinc), including precious
metals, energy carriers and rubber.
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
Time frame
A perspective and a deadline set for the completion of a given task. They are defines as follows:
- a short-term perspective – a period of up to 2 years
- a medium-term perspective – a period of between 2 to 5 years
- a long-term perspective – a period of over 5 years
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
WTI Crude Oil
WTI Crude Oil (West Texas Intermediate) – a brand of oil from USA. It serves as one of the main
international price benchmarks for petroleum (aside from Brent and Urals).
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 the Company and the Group in 2023 266
Translation from original Polish version
List of diagrams
Diagram 1. Competitive advantages of the KGHM Polska Miedź S.A. Group ............................................................................................................ 8
Diagram 2. KGHM Polska Miedź S.A. Group Structure as at 31 December 2023 ................................................................................................... 10
Diagram 3. KGHM INTERNATIONAL LTD. Group Structure as at 31 December 2023 ............................................................................................ 11
Diagram 4. Reporting segments of the KGHM Polska Miedź S.A. Group ................................................................................................................. 12
Diagram 5. Business model of KGHM Polska Miedź S.A. ............................................................................................................................................ 15
Diagram 6. Integrated geological, mining and metallurgical activities in KGHM Polska Miedź S.A. .................................................................... 17
Diagram 7. Simplified flowchart of the core business of the KGHM INTERNATIONAL LTD. Group .................................................................... 17
Diagram 8. Forecasts of real GDP growth per the International Monetary Fund from April 2024 versus previous forecasts ..................... 23
Diagram 9. Location of the production assets of the KGHM Polska Miedź S.A. Group ......................................................................................... 26
Diagram 10. KGHM Polska Miedź S.A.’s sustainable value chain ................................................................................................................................. 32
Diagram 11. Mission, Vision and Development Directions of the Strategy of KGHM Polska Miedź S.A. .............................................................. 33
Diagram 12. 5 Pillars based on 5 development directions in the Strategy of KGHM Polska Miedź S.A. ............................................................... 33
Diagram 13. Distribution of duties between Members of the Management Board, taking into account sustainable development areas .. 43
Diagram 14. Double materiality principle according to the CSRD ............................................................................................................................... 47
Diagram 15. Types of ESG factors ...................................................................................................................................................................................... 49
Diagram 16. Concentration of material impacts, risks and environmental opportunities ..................................................................................... 50
Diagram 17. Concentration of material impacts, risks and social opportunities ...................................................................................................... 51
Diagram 18. Concentration of material impacts, risks and opportunities of corporate governance ................................................................... 51
Diagram 19. Management of sustainable development risk........................................................................................................................................ 52
Diagram 20. Corporate risk management process in the KGHM Polska Miedź S.A. Group.................................................................................... 54
Diagram 21. Organisational structure of risk management in KGHM Polska Miedź S.A ......................................................................................... 56
Diagram 22. Risk categories in the Risk Model of KGHM Polska Miedź S.A. and their definitions ........................................................................ 57
Diagram 23. COMPLY ratio by KGHM Polska Miedź S.A. ............................................................................................................................................... 85
Diagram 24. Corporate governance structure in KGHM Polska Miedź S.A. ............................................................................................................... 86
Diagram 25. Three lines of defence of KGHM Polska Miedź S.A.’s risk management system .............................................................................. 106
Diagram 26. Potential change in the level of impact of climate risk on KGHM by time horizon.......................................................................... 118
Diagram 27. Categories of climate risk ........................................................................................................................................................................... 122
Diagram 28. Main directions of decarbonisation ......................................................................................................................................................... 125
Diagram 29. Carbon Capture and Storage Technology ............................................................................................................................................... 129
Diagram 30. Water in the ore enrichment process (flotation) in KGHM Polska Miedź S.A. .................................................................................. 138
Diagram 31. Water in the electrolytic copper production process in KGHM Polska Miedź S.A. .......................................................................... 139
Diagram 32. Operations of KGHM Polska Miedź S.A. and protected areas ............................................................................................................. 143
Diagram 33. The circular economy concept .................................................................................................................................................................. 147
Diagram 34. Golden Rules of OHS applicable in KGHM Polska Miedź S.A. .............................................................................................................. 190
Diagram 35. ESG materiality matrix of KGHM Polska Miedź S.A. ............................................................................................................................... 205
Table of charts
Chart 1. Geographical breakdown of global copper concentrates production in 2023 ................................................................................... 19
Chart 2. Geographical breakdown of global refined copper production in 2023 ............................................................................................. 19
Chart 3. Geographical breakdown of global refined copper consumption in 2023 ......................................................................................... 20
Chart 4. Geographical breakdown of global copper wire rod production in 2023 ........................................................................................... 20
Chart 5. Geographical breakdown of global wire rod consumption in 2023 ..................................................................................................... 20
Chart 6. Geographical breakdown of global mined silver production in 2023 .................................................................................................. 21
Chart 7. Change in commodities prices in 2023 - first vs last day of the year ................................................................................................... 23
Chart 8. Copper price (average monthly) per the London Metal Exchange - in USD/t ..................................................................................... 24
Chart 9. Silver price (average monthly) per the London Bullion Market Association - in USD/oz t ............................................................... 24
Chart 10. Price of molybdenum (monthly average) per Platts - in USD/lb ........................................................................................................... 25
Chart 11. USD/PLN exchange rate (average monthly) per the National Bank of Poland ................................................................................... 25
Chart 12. Geographic shareholder structure ............................................................................................................................................................. 41
Chart 13. 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 2022 ...................................................................................................................... 42
Chart 14. Greenhouse gas emissions in production divisions of KGHM Polska Miedź S.A. in the years 2020-2023 (kt e CO
2
) ................ 126
Chart 15. Dust emissions from metallurgical production of KGHM Polska Miedź S.A. in 2023 [g/t of electrolytic copper] ...................... 131
Chart 16. Dust emissions from mining production of KGHM Polska Miedź S.A. in 2023 [g/t of ore] ............................................................ 131
Chart 17. Emission of SO₂ of KGHM Polska Miedź S.A. in 2023 [kg/t of electrolytic copper] .......................................................................... 131
Chart 18. Arsenic emissions from metallurgical production of KGHM Polska Miedź S.A. in 2023 [g/t of electrolytic copper] ................. 133
Chart 19. Value of expenditures incurred on environmentally-friendly activities in 2023 [PLN mn] ............................................................ 152
Chart 20. Employment structure in the Group in 2023 .......................................................................................................................................... 177
Chart 21. Members of supervisory bodies, by gender [%] .................................................................................................................................... 183
Chart 22. Members of supervisory bodies, by age [%] ........................................................................................................................................... 183
Chart 23. LTIFR
KGHM
ratio in the Parent Entity in the years 2010-2023 ................................................................................................................ 192
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 267
Translation from original Polish version
Chart 24. TRIR rate in the Group's international assets in the years 2010–2023 .............................................................................................. 193
Chart 25. Geographic structure of Group sales ....................................................................................................................................................... 212
Chart 26. Product structure of Group sales ............................................................................................................................................................. 212
Chart 27. Change in profit/loss of the Group in 2023 (in PLN million) ................................................................................................................ 214
Chart 28. Cash flow of the Group in 2023 (in PLN million) .................................................................................................................................... 215
Chart 29. Change in assets of the Group in 2023 (in PLN million) ....................................................................................................................... 216
Chart 30. Change in equity and liabilities of the Group in 2023 (in PLN million) ............................................................................................... 218
Chart 31. Production of electrolytic copper (thousand tonnes) and metallic silver (tonnes) .......................................................................... 226
Chart 32. Sales revenues of KGHM Polska Miedź S.A. by market (in PLN million) ............................................................................................ 228
Chart 33. Structure of expenses by nature in 2023 ................................................................................................................................................ 229
Chart 34. Cost of producing copper in concentrate – C1 (USD/lb) ....................................................................................................................... 229
Chart 35. Pre-precious metals credit unit cost of electrolytic copper production – from own concentrate (PLN/t) ................................... 229
Chart 36. Change in profit for the period of KGHM Polska Miedź S.A. (in PLN million) ................................................................................... 231
Chart 37. Cash flow of KGHM Polska Miedź S.A. (in PLN million) ......................................................................................................................... 232
Chart 38. Change in assets of KGHM Polska Miedź S.A. (in PLN million) ............................................................................................................ 233
Chart 39. Change in equity and liabilities of KGHM Polska Miedź S.A. (in PLN million) ................................................................................... 234
Chart 40. Structure of expenditures on replacement of KGHM Polska Miedź S.A. ........................................................................................... 235
Chart 41. Structure of expenditures on maintenance of KGHM Polska Miedź S.A. .......................................................................................... 235
Chart 42. Structure of expenditures on development of KGHM Polska Miedź S.A. .......................................................................................... 236
Chart 43. Structure of expenditures on adaptation of KGHM Polska Miedź S.A. .............................................................................................. 236
Chart 44. Change in profit or loss for the period of KGHM INTERNATIONAL LTD. (in USD million) ............................................................. 240
Chart 45. Change in profit/loss for the period of Sierra Gorda S.C.M. (in USD million) ................................................................................... 244
List of tables
Table 1. Description of the business model of KGHM Polska Miedź S.A. ........................................................................................................... 16
Table 2. Market conditions significant for the operations of the KGHM Polska Miedź S.A. Group - average prices .................................. 25
Table 3. Activities of subsidiaries and joint ventures of KGHM Polska Miedź S.A. ............................................................................................ 30
Table 4. Key achievements of the KGHM Polska Miedź S.A. Group in advancing the strategic activities
in individual strategic directions of development in 2023 ..................................................................................................................... 34
Table 5. Map of key stakeholders of the KGHM Polska Miedź S.A. Group in 2023 ........................................................................................... 37
Table 6. Channels of communication with selected key stakeholders ............................................................................................................... 38
Table 7. Shareholder structure of the Company as at 31 December 2023 and as at the date of signing of this report ........................... 41
Table 8. Key share price data of the Company on the Warsaw Stock Exchange ............................................................................................... 42
Table 9. Analysis of impacts ........................................................................................................................................................................................ 48
Table 10. Risk category - Technology in the Risk Model of KGHM Polska Miedź S.A. ......................................................................................... 58
Table 11. Risk category - Value Chain in the Risk Model of KGHM Polska Miedź S.A. ........................................................................................ 58
Table 12. Risk category - Market in the Risk Model of KGHM Polska Miedź S.A. ................................................................................................. 60
Table 13. Risk category - External Risks in the Risk Model of KGHM Polska Miedź S.A. ..................................................................................... 61
Table 14. Risk category - Internal Risks in the Risk Model of KGHM Polska Miedź S.A. ..................................................................................... 63
Table 15. Risk category - Climate Risk in the Risk Model of KGHM Polska Miedź S.A. ........................................................................................ 65
Table 16. Risk category – Market, in the Risk Model of the KGHM Polska Miedź S.A. Group ............................................................................ 66
Table 17. Areas of credit risk in the Risk Model of the KGHM Polska Miedź S.A. Group .................................................................................... 68
Table 18. Risk category – Liquidity risk, in the Risk Model of the KGHM Polska Miedź S.A. Group .................................................................. 68
Table 19. GOV-1 - The role of administrative, supervisory and governing bodies (in relation to ethical issues,
practices in relation to suppliers, including payments, and lobbying) ................................................................................................. 70
Table 20. Topics and scope of training delivered in 2023........................................................................................................................................ 77
Table 21. Main topics subject to the lobbying activity .............................................................................................................................................. 80
Table 22. List of brokerage houses preparing analytical reports on KGHM Polska Miedź S.A. ........................................................................ 88
Table 23. Diversity structure in the Management Board and the Supervisory Board as at 31 December 2023. ........................................ 101
Table 24. Principles in section 2 of DPSN 2021 partially applied or not applied ............................................................................................... 101
Table 25. Potentially-due remuneration of Members of the Management Board of KGHM Polska Miedź S.A. for 2023.......................... 103
Table 26. Principles in section 3 of DPSN 2021 applied partially or not applied in KGHM Polska Miedź S.A. .............................................. 109
Table 27. Principles in section 4 of DPSN 2021 applied partially or not applied in KGHM Polska Miedź S.A. .............................................. 112
Table 28. Time perspectives used in the analysis ................................................................................................................................................... 117
Table 29. Greenhouse gas emissions in KGHM Polska Miedź S.A. Divisions in the years 2020-2023 [kt eCO
2
] .......................................... 127
Table 30. Greenhouse gas emissions in KGHM Polska Miedź S.A. Group in 2020-2023 [kt e CO
2
]................................................................ 128
Table 31. Results of investment projects completed by 2023 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. ............................................................. 132
Table 32. Efficiency of wastewater treatment in “Energetyka” treatment plants .............................................................................................. 134
Table 33. Substances used in the production process of KGHM Polska Miedź S.A. Group in 2023 .............................................................. 136
Table 34. Substances generated in the production process of KGHM Polska Miedź S.A. in 2023 ................................................................. 136
Table 35. Environmental fees incurred by KGHM Polska Miedź S.A. in 2023 [PLN thousand] ....................................................................... 136
Table 36. Water management in the KGHM Polska Miedź S.A. Group (thousand m
3
) ..................................................................................... 141
Table 37. Water management in KGHM Polska Miedź S.A. (thousand m
3
) ........................................................................................................ 141
Table 38. Waste management in KGHM Polska Miedź S.A. and in the KGHM Polska Miedź S.A. Group in 2023 [t] ................................... 150
Table 39. Percentage share of turnover in products or services related to Taxonomy-eligible economic activity in 2023 ...................... 158
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 268
Translation from original Polish version
Table 40. Percentage share of capital expenditure in products or services
related to a Taxonomy-compliant economic activity in 2023 .............................................................................................................. 160
Table 41. Percentage share of operating expenditure from products or services
related to Taxonomy-compliant economic activity in 2023. ................................................................................................................ 163
Table 42. Average employment in the Group .......................................................................................................................................................... 176
Table 43. Average employment in KGHM Polska Miedź S.A.................................................................................................................................. 177
Table 44. Total number of employees by type of employment contract and by gender ................................................................................ 178
Table 45. Total number of employees by employment type (full-time or part-time) and gender ................................................................. 178
Table 46. Number of new employee hires by gender ............................................................................................................................................ 178
Table 47. Number of employee departures by gender .......................................................................................................................................... 178
Table 48. Number of new employee hires by age category .................................................................................................................................. 179
Table 49. Number of employee departures by age category ............................................................................................................................... 179
Table 50. Total number of non-employees constituting the entity's own employees in the Group ............................................................. 179
Table 51. Employment by age and individual job categories ................................................................................................................................ 183
Table 52. Percentage share of women and men in individual position categories by gender ....................................................................... 183
Table 53. Percentage share of employees in individual job categories, by age ................................................................................................ 184
Table 54. Percentage of persons with disabilities in material operational companies .................................................................................... 185
Table 55. Number of training hours by gender ....................................................................................................................................................... 187
Table 56. Number of training hours by employment structure ........................................................................................................................... 187
Table 57. Number of employees authorised to take leave for family reasons, by gender .............................................................................. 188
Table 58. Ratio of the basic and the total average annual remuneration of women to the remuneration of men ................................... 188
Table 59. Production by the Group
........................................................................................................................................................................... 211
Table 60. C1 cost of producing payable copper in the Group (USD/lb)............................................................................................................... 212
Table 61. Financial results of the Group (in PLN million) ....................................................................................................................................... 213
Table 62. Main factors impacting the change in profit or loss of the Group ..................................................................................................... 214
Table 63. Cash flow of the Group (in PLN million)................................................................................................................................................... 215
Table 64. Consolidated assets (in PLN million) ........................................................................................................................................................ 216
Table 65. Consolidated equity and liabilities (in PLN million) ............................................................................................................................... 217
Table 66. Net debt structure of the Group (in PLN million) ................................................................................................................................... 218
Table 67. Net debt structure of the Parent Entity (in PLN million) ....................................................................................................................... 219
Table 68. Sources of financing in the Group ............................................................................................................................................................ 219
Table 69. Amount of borrowing available and drawn by the Group (in PLN million) ....................................................................................... 220
Table 70. Net debt / EBITDA of the Group ................................................................................................................................................................ 220
Table 71. The most significant loans granted by Group companies as at 31 December 2023 ....................................................................... 221
Table 72. Loans granted by the Parent Entity and Group companies in 2023 .................................................................................................. 221
Table 73. Implementation of targets of the Budget in 2023 and targets of the Budget for 2024 .................................................................. 222
Table 74. Mine production of KGHM Polska Miedź S.A. ......................................................................................................................................... 225
Table 75. Metallurgical production of KGHM Polska Miedź S.A. ........................................................................................................................... 225
Table 76. Sales volume of basic products of KGHM Polska Miedź S.A. ............................................................................................................... 227
Table 77. Revenues from contracts with customers of KGHM Polska Miedź S.A. (in PLN million) ................................................................. 227
Table 78. Expenses by nature of KGHM Polska Miedź S.A. (in PLN million) ....................................................................................................... 228
Table 79. Basic items of the statement of profit or loss of KGHM Polska Miedź S.A. (in PLN million) .......................................................... 230
Table 80. Main factors impacting the change in profit or loss of KGHM Polska Miedź S.A. ............................................................................ 230
Table 81. Statement of cash flows of KGHM Polska Miedź S.A. (in PLN million) ............................................................................................... 231
Table 82. Assets of KGHM Polska Miedź S.A. (in PLN million) ............................................................................................................................... 232
Table 83. Equity and liabilities of KGHM Polska Miedź S.A. (in PLN million)....................................................................................................... 233
Table 84. Structure of expenditures on property, plant and equipment and intangible assets
of KGHM Polska Miedź S.A. (in PLN million) ............................................................................................................................................ 235
Table 85. Production of KGHM INTERNATIONAL LTD. ........................................................................................................................................... 237
Table 86. Volume and sales revenues of KGHM INTERNATIONAL LTD. (in USD million) ................................................................................. 237
Table 87. Sales revenues of KGHM INTERNATIONAL LTD. (in PLN million) ........................................................................................................ 238
Table 88. C1 payable copper production cost of KGHM INTERNATIONAL LTD. ................................................................................................ 238
Table 89. Financial results of KGHM INTERNATIONAL LTD. (in USD million) ..................................................................................................... 238
Table 90. Financial results of KGHM INTERNATIONAL LTD. (in PLN million) ...................................................................................................... 239
Table 91. Key factors impacting the change in financial result of KGHM INTERNATIONAL LTD. ................................................................... 239
Table 92. Cash expenditures of KGHM INTERNATIONAL LTD. (in USD million) ................................................................................................. 240
Table 93. Cash expenditures of KGHM INTERNATIONAL LTD. (in PLN million) ................................................................................................. 240
Table 94. Production of copper, molybdenum and precious metals by Sierra Gorda S.C.M. ........................................................................ 241
Table 95. Sales volume and revenues of Sierra Gorda S.C.M. .............................................................................................................................. 242
Table 96. Cost of sales, selling costs and administrative expenses and production cost
of payable copper (C1) of Sierra Gorda S.C.M. ....................................................................................................................................... 242
Table 97. Results of Sierra Gorda S.C.M. in USD million (on a 100% basis) ........................................................................................................ 243
Table 98. Results of the segment Sierra Gorda S.C.M. proportionally to the interest held (55%) in PLN million ........................................ 243
Table 99. Main factors impacting the change in the financial result of the segment Sierra Gorda S.C.M. ................................................... 244
Table 100. Cash expenditures of Sierra Gorda S.C.M. .............................................................................................................................................. 245
Table 101. Revenues from contracts with customers of companies within the KGHM Group
– excluding intra-segment revenues (in PLN million) ............................................................................................................................ 246
Table 102. Financial results of other segments – prior to consolidation adjustments (in PLN million) .......................................................... 246
Table 103. Cash expenditures – acquisition of intangible assets and property, plant and equipment (in PLN million) .............................. 247
Table 104. Taxonomy disclosure: Turnover - Template 1 Activities related to nuclear power and natural gas. ........................................... 248
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 269
Translation from original Polish version
Table 105. Taxonomy disclosure: Turnover - Template 2 Taxonomy-compliant economic activity (denominator) .................................... 249
Table 106. Taxonomy disclosure: Turnover - Template 3 Taxonomy-compliant economic activity (numerator) ........................................ 250
Table 107. Taxonomy disclosure: Turnover - Template 4 Taxonomy-eligible but taxonomy non-compliant economic activity ................ 251
Table 108. Taxonomy disclosure: Turnover - Template 5 Taxonomy non-eligible economic activity ............................................................. 252
Table 109. Taxonomy disclosure: Capital expenditures - Template 1 Activities related to nuclear power and natural gas. ...................... 253
Table 110. Taxonomy disclosure: Capital expenditure - Template 2 Taxonomy-compliant economic activity (denominator) .................. 254
Table 111. Taxonomy disclosure: Capital expenditure - Template 3 Taxonomy-compliant economic activity (numerator) ...................... 255
Table 112. Taxonomy disclosure: Capital expenditure - Template 4
Taxonomy-eligible but taxonomy non-compliant economic activity ................................................................................................. 256
Table 113. Taxonomy disclosure: Capital expenditures - Template 5 Taxonomy non-eligible economic activity ......................................... 257
Table 114. Taxonomy disclosure: Operating expenditure - Template 1 Activities related to nuclear power and natural gas. .................. 258
Table 115. Taxonomy disclosure: Operating expenditure - Template 2 Taxonomy-compliant economic activity (denominator) ............ 259
Table 116. Taxonomy disclosure: Operating expenditure - Template 3 Taxonomy-compliant economic activity (numerator) ................. 260
Table 117. Taxonomy disclosure: Operating expenditure - Template 4
Taxonomy-eligible but taxonomy non-compliant economic activity ................................................................................................. 261
Table 118. Taxonomy disclosure: Operating expenditures - Template 5 Taxonomy non-eligible economic activity ................................... 262
KGHM Polska Miedź S.A. The Management Board’s Report on the activities of the Company and the Group in 2023 270
Translation from original Polish version
SIGNATURES OF ALL MEMBERS OF THE MANAGEMENT BOARD
This report was authorised on 23 April 2024.
President
of the Management Board
Andrzej Szydło
Vice President
of the Management Board
Zbigniew Bryja
Vice President
of the Management Board
Piotr Krzyżewski
Vice President
of the Management Board
Mirosław Laskowski
Vice President
of the Management Board
Piotr Stryczek