KGHM Polska Miedź S.A.
ul. M. Skłodowskiej-Curie 48
59-301 Lubin
T +48 76 74 78 200
www.kghm.com
Dear Stakeholders,
KGHM Polska Miedź S.A. has been active on the market for over 60 years and is currently
at a special stage of development. The Company needs bold and responsible decisions
made with great care and following the consideration of the long-term perspective.
Every subsequent year brings new challenges as regards our operations – we are dealing
with decreasing metal content in the deposit, its thickness is decreasing, haulage routes
are becoming longer and the costs of air conditioning and transport are increasing.
Waste and water management require high capital expenditures. The increasingly difficult
mining conditions must therefore be balanced by the realisation of new investment
projects and ones that will reduce operating costs.
The Management Board of KGHM Polska Miedź S.A. is working intensively on long-term
development plans. Last year, the Company carried out a comprehensive analysis of the
long-term consistency of the Core Production Business. This will allow us to set optimal
development directions, which will result in the strengthening of the entire KGHM Group
by adjusting its operations to the changing environment. The Management Board of
KGHM Polska Miedź S.A. focuses on guaranteeing long-term and stable conditions in
mining, processing and metallurgy. The development and support of the Core Production
Business is our priority. We will continue exploration work to develop the resource base,
maintain or increase production levels and maximise the value of the Company's assets
in the long term.
Moreover, the advancement of individual international assets of the KGHM Group is a
significant challenge. As a result of analyses performed and undertaken actions, the
structure of international assets was sorted out, the supervision was strengthened and a
development direction was made as regards the Victoria project.
Active cost management
Noticeable cost savings were achieved as a result of actions carried out in 2024.
Consequently, with production at a similar level as compared to the previous year, there
was a decrease in cost of consumption of materials, fuels, and energy carriers.
In 2025, KGHM Polska Miedź S.A. continues to work on this area. The Company has
formalised and been implementing a Cost Optimisation Plan, which is necessary to
advance the long-term plans. Optimisation projects are being launched in the area of
planning and accounting for material consumption and services provided by external
entities.
Audits have been finalised in KGHM Polska Miedź S.A. and the KGHM Group, under which
significant irregularities have been identified, among others in terms of water
management in the Tailings Division, personnel management, donations, expenditures
on sponsorship and marketing as well as investments in the photovoltaic farms.
Macroeconomic and market environment
2024 was characterised by high volatility and uncertainty as regards the macroeconomic
environment. In the first half of 2024, copper fixing prices rose to a historic high on the
London Metal Exchange (LME). In the second half of the year, growing uncertainty about
the further growth of global economy somewhat dampened the demand for copper.
A small number of new investments in mining projects around the world and a noticeable
surplus of metallurgical capacity over the supply of copper-bearing materials, associated
with a change in the structure of demand for the raw material in China. The currency
market was characterised by volatility caused by, among others, the main central banks
starting a cycle of interest rate cuts and the strengthening of PLN due to the persistent,
relatively high interest rates in Poland and the forecast of increased inflation levels.
The KGHM Group is an entity of key importance for the Polish economy, is the largest
copper producer in Europe and belongs to the elite group of the world’s top 10 largest
copper producers. According to the World Silver Survey 2024, we hold a second place in
the global ranking of the largest silver producers. Our metallurgical facilities in Głogów,
Legnica and Cedynia have the sector’s distinction - the Copper Mark certificate, which
confirms the efficient copper production in line with the highest standards.
The international certificate for these facilities proves that they meet environmental
standards, conduct responsible production and cooperate with all Stakeholders, including
local communities.
Climate policy and sustainable development
Concurrently to the necessity of securing development needs of the Company as regards
the mining assets, we recognise opportunities associated with the diversification of
energy sources, in particular those associated with renewable energy and energy
transition. Further steps in this area will depend on how the situation on the energy
market develops.
KGHM Polska Miedź S.A. applies and expands activities in line with the principles of the
Circular Economy, which fits in with the global trend of sustainable development and
responsible production. More efficient and environmentally friendly ways of managing
tailings are sought. Amongst the Company’s priorities are sustainable development,
effectiveness and operational profitability as well as actions aimed at environmental
protection.
The Company advances projects to support environmental safety and develops
infrastructure to reduce water hazards, including, among others, a project to build a
retention reservoir on the closed sections of the Lubin mine. A very difficult challenge that
KGHM Polska Miedź S.A. has met was the situation in the Tailings Division. At the
beginning of 2024, the Żelazny Most Tailings Storage Facility was almost at capacity
resulting in the risk of imposition of severe limits to mining if the process continued.
Thanks to swift decisions and actions, at the turn of spring and summer of 2024, the issue
was brought under control and we met the next year with an ordered and safe situation.
In 2024, the maintenance shutdown, performed in a four year cycle at the KGHM’s largest
metallurgical facility - the Głogów I Copper Smelter and Refinery - has come to an end.
During the shutdown, among others the flash and electric furnace was modernised,
sulphuric acid plant was installed and there was an update of the control systems.
Optimisation of the funding structure
The Management Board of KGHM Polska Miedź S.A. attaches great importance to
optimisation of the financing structure and adapts it to the Company’s investment needs.
In June 2024, corporate bonds were issued on favourable terms, with a total nominal value
of PLN 1 billion. We are also looking for opportunities to combine various sources of
financing KGHM’s development: our own, public, private, international and domestic.
The undertaken actions improve the liquidity of the Company and the KGHM Group and
are of great help in securing funds for development by reducing financial costs.
Over the years and as a result of changes to the environment, the current formula of the
minerals extraction tax requires significant amendments. The Management Board of
KGHM Polska Miedź S.A. is engaged in intensive dialogue in order to work out a new,
compromise formula of the tax, which would enable the optimal development of the
Company.
Acknowledgement
I wish to express my thanks to all Employees of the KGHM Group for their contribution
and commitment in realisation of tasks entrusted to them. The recorded production
results are mainly their achievement. Thanks to the high professionalism and
responsibility of the entire Staff, we may advance ambitious production plans.
I wish to express my thanks to all Stakeholders engaged in a dialogue on all levels of our
activities. Most of all, I would like to thank our Shareholders and Clients, which constantly
motivate us to develop even further and increase the quality. My sincere thanks I express
also to people engaged in our good neighbour cooperation with communities within the
Copper Belt, transparent dialogue with the social partners, which unionize our Employees,
and accurate information to market participants as well as the population at large about
our activities.
We do not forget about those, who need our help during difficult times. In the last year,
we actively participated in, among others, providing help to residents of Lower Silesia,
which were victimized by the flood. Apart from the financial and technical support, of
significance is also the active participation of our Employees in building up the flood
embarkments and cleaning up the aftermath of the flood. I sincerely thank all Volunteers
of KGHM Polska Miedź S.A. that reached out to help other people.
I am certain, that as a leader of the European Union in mined copper production we are
well prepared to face challenges that will come in 2025 and beyond. We wish to increase
our competitive advantage on the basis of our resources, potential of our Employees and
efficient, integrated core production business.
On behalf of the Management Board of KGHM Polska Miedź S.A. I hereby present you with
the Annual Report of the Company and the KGHM Polska Miedź S.A. Group for 2024, and
invite you to review the data, and the non-financial indicators, contained in the Report.
Sincerely,
Andrzej Szydło
President of the Management Board
KGHM Polska Miedź S.A.