KGHM Polska Miedź S.A.’s Strategy for 2017-2021
Until 19 December 2018, KGHM Polska Miedź S.A. implemented the Business Strategy adopted in May 2017, as published in the document entitled “KGHM Polska Miedź S.A.’s Strategy for 2017-2021 with an outlook to 2040”. The structural layout of this strategy is presented in the diagram below
The Strategy's primary objective was based on the achievement of its 6 key pillars, i.e. three executory strategies (Development of Domestic and Foreign Assets, Production and Safety, and Coherent Organization) and three supporting strategies (Corporate Social Responsibility, Innovation and Financial Stability). The objectives of the selected pillars are presented in the diagram below.
Key pillars forming KGHM Polska Miedź S.A.’s strategy and their main objectives for 2017-2021
The Company’s strategy was rooted in its mission based on the slogan “To Always Have Copper” and its vision: “Use our resources efficiently to become a leader in sustainable development”.
Execution of the main strategic tasks in 2018
Following are the most important projects and initiatives, including the degree of their advancement, in accordance with the Strategy in force in the Company until 19 December 2018.
|Exploration program of KGHM Polska Miedź S.A. in Poland:|
Radwanice - Gaworzyce
|Exploration is not currently being conducted within the Radwanice-Gaworzyce deposit. Due to the wide variability in geological and mining conditions, it is planned that in future the areas Radwanice Zachód and Radwanice Północ will be explored from the underground mine works, conducted mainly in areas of copper mineralisation. The date for commencing this work depends on the progress of mining in the areas Sieroszowice and Radwanice Wschodnie. Within this deposit mining is underway in the areas Radwanice Wschodnie and Gaworzyce.|
|Synklina Grodziecka and Konrad||Given the fact that the costs associated among others with dewatering the projected mine play a critical role in determining the economic feasibility of the project; a hydrogeological research is conducted, planned to be performed in the years 2018-2020.|
Administrative proceedings which were conducted in respect of the concession-granting body involving the possibility of continuing the geological work under the Synklina Grodziecka concession were concluded on 24 January 2019 with the issuance of a new concession decision. Work in the area subject to the concession will be carried out in parallel with hydrogeological research within the Konrad concession.
|Retków - Ścinawa and Głogów||The Company is continuing to advance stage 2 of exploration and evaluation work within the Retków-Ścinawa concession, under which three exploratory drillholes have been sunk to date. At the end of August 2018 a decision was received altering the Retków-Ścinawa concession which permits the drilling of another drillhole. In the second half of 2018 drilling of hole no. S-727 commenced within the Retków-Ścinawa concession. With respect to the Głogów concession, in 2018 surface-based geophysical research was performed. At the end of 2018 additional information was prepared for the Geological Work Project and a request was submitted to the concession-granting body to extend the life of the concession.|
|Exploration projects in the preparatory phase:|
Bytom Odrzański Kulów - Luboszyce
|As a result of a decision by the Supreme Administrative Court, which dismissed cassation appeals in respect of the concessions Bytom Odrzański and Kulów-Luboszyce, a decision as to the granting of concessions for the areas in question requires a reconsideration by the concession-granting body. In 2018, the concession-granting body did not reconsider this matter.|
|Based on a new reinterpretation of the geological profile of the region as well as on an economic and technical feasibility study conducted on the possibility of mining the studied potassium-magnesium salt deposits reflecting the mine model and processing technology, it was decided to conduct further geological work. In 2018, drilling work was continued. In March 2018, Addition no. 1 to the Geological Works Project was submitted to the Ministry of the Environment (ME), in which the sinking of another drillhole was proposed.|
The Supreme Administrative Court at a hearing on 27 February 2019 dismissed the cassation appeals of a competing company which had filed a complaint against the concession granted to KGHM.
|Key development projects of the Core Business in Poland:|
Pyrometallurgy Modernisation Program at the Głogów Copper Smelter and Refinery
|Production by the flash furnace of the Głogów I Copper Smelter and Refinery was stabilised in accordance with the current production plan.|
Settlement procedures and the final handovers of contracts and orders with respect to the Pyrometallurgy Modernisation Program are near completion.
|Increasing cathode production at the Legnica Copper Smelter and Refinery to 160 kt/year (RCR+ISA)||Work continues on the construction of a Revolving Casting–Refining furnace (RCR) at the Legnica Copper Smelter and Refinery. Assembly of equipment continues: the RCR furnace, post combustion chamber, full evaporation tower, casting machinery, the installation to provide utilities, electrical installation and the APKiA (“Aparatury Kontrolno-Pomiarowej i Automatyki”, or Control-Measurement and Automation Apparatus). The planned date of technological commissioning is the second quarter of 2019.|
|Development of the Żelazny Most Tailings Storage Facility||Based on the permit received in 2016 to develop the Main Facility to a crown height of 195 meters a.s.l. and a permit to further operate the Tailings Storage Facility, the dam is being built up successively as part of the on-going operations of the Division. In March 2018, a building permit was issued for the Southern Quarter. Construction of the Southern Quarter will enable the additional deposition of waste tailings in the amount of around 170 million m3.|
In May 2018, an agreement was signed for the construction of the Southern Quarter. Construction work is underway which is expected to be completed at the end of December 2021. A “Substitute Building Permit” for the Tailings Segregation and Thickening Station was received. Construction work commenced on building the Tailings Segregation and Thickening Station, whose commissioning is planned for 30 June 2020.
|Development of international assets|
(Sudbury Basin, Canada)
KGHM Polska Miedź S.A. Group 100%
|In 2018 required permits for the project were reviewed and work commenced on preparing applications to obtain them. The project team also conducted work related to securing existing infrastructure and project terrain, questions of an administrative and legal nature and maintaining relations with First nations in Ontario in Canada. Infrastructure under the Victoria project will be built if the Company can secure a financial surplus.|
|Sierra Gorda Oxide |
KGHM INTERNATIONAL LTD. Group 100%.
Sumitomo Metal Mining and Sumitomo Corporation hold an option to acquire in total a 45% stake
in the project.
|In 2018, work was performed aimed at minimising potential project risks and enhancing its efficiency, mainly by analysing the option of preparing the ore for the heap leaching process by preliminary crushing. This analysis also included crushing tests. In addition, column leaching tests of the crushed material were carried out. Initial verification of the procedures involved in amending the required permits for the project was also carried out.|
(British Columbia, Canada)
KGHM Polska Miedź S.A. Group 80%
Abacus Mining and Exploration Corp. 20%
|As a result of the negative decisions received from the Government of Canada and the provincial authorities of British Columbia against the granting of an Environmental Assessment Certificate for the Ajax project, in 2018 only necessary work related to securing existing infrastructure and required monitoring of the terrain was carried out.|
Mine – Phase 1
KGHM INTERNATIONAL LTD. Group 55%, Sumitomo Metal Mining and Sumitomo Corporation 45%
|Production of copper in concentrate in 2018 amounted to 96.9 thousand tonnes, while production of molybdenum in concentrate amounted to 26.75 million pounds (on a 100% basis).|
In 2018, work was carried out related to optimising the processing of the sulphide ore. The actions taken were concentrated on stabilising the volume and production parameters of the ore processing process as well as on stabilising the work of the processing plant and increasing metals recovery.
At present work is aimed at developing the mine based on phase I of the investment along with actions aimed at optimising the production line, which should lead to increased production capacity.
|Improving efficiency in the core business in Poland||In 2018, initiatives aimed at automating production in the Mining Divisions of KGHM continued.|
In addition, projects related to automating production, which were added to the KGHM 4.0 program in the area INDUSTRY, commenced realisation:
Tasks aimed at reducing energy consumption in KGHM Polska Miedź S.A. are advancing in accordance with the schedule under the Energy Management System implemented in the Company in compliance with PN-EN ISO50001:2012 and with the Energy Savings Program (ESP). During the reported period, as a result of the realisation of tasks identified under the aforementioned actions conducted in the Divisions, energy consumption was reduced by 65.7 GWh.
In order to optimise underground machinery management and to improve their operating efficiency ratios, the Company is aiming to stabilise the long-term trend of replacement of mining vehicles at the level of at least 16% annually and to stabilise the availability of primary machinery at the level of at least 74.5%. In 2018, actions were continued aimed at achieving the planned level of machinery replacement, which in the period from 1 January 2016 to 31 December 2018 amounted on an accrued basis to 15.3%, as well as actions aimed at improving availability, which in the period from 1 January 2016 to 31 December 2018 amounted on an accrued basis to 72.9%.
The Company has joined the Polish Committee for Standardization, where it is involved in tasks aimed at creating standards, thanks to which it can improve its own Energy Management System based on the newest versions of international standards (e.g. updated standard ISO50001:2018), while at the same time monitoring the actions of the International Organization for Standardization (ISO) which remain of interest to KGHM.
|Improvement in occupational health and safety||In 2018, the Company recorded a decrease in the total number of workplace accidents, calculated on a year-on-year basis from 300 to 297 injured. Most of the registered workplace accidents (approx. 98.7%) were characterised as light injuries, with the main causes being in order: contact (striking) with or by moveable/ immoveable objects, loss of balance by employees, rock falls and injuries related to using workplace tools. At the same time the number of days absent caused by workplace accidents decreased by 7.5% yoy. The ratio LTIRFKGHM (Lost Time Injury Frequency Rate KGHM) in 2018, or the total number of workplace accidents, being the number of accidents per million hours worked for the entire core business of KGHM Polska Miedź S.A., decreased as compared to 2017 and amounted to 10.3 (2017 = 10.4).|
During the reporting period the Company continued work involving implementation of the multi-year Occupational Health and Safety Program in KGHM Polska Miedź S.A. Further reconstructions of selected workplace accidents in the Divisions of KGHM Polska Miedź S.A., instruction films and an educational film were prepared. Further editions of the so-called safety passport were developed as well as educational materials on industrial hygiene. New technical solutions were tested in the Divisions of KGHM aimed at improving OHS, and new formulas of cooperation with subcontractors were implemented. The Company is continuing to advance the goals of „Zero accidents due to human and technical reasons, zero occupational illnesses among our employees and contractors”.
|Initiatives aimed at enhancing knowledge and innovation in KGHM Polska Miedź S.A.:|
Main R&D initiatives
|In the third quarter of 2018, the project „Utrzymanie Kopalni i Sprzętu” (Maintained Mine & Machine) was initiated, subsidised under KIC Raw Materials. Its goal is to build a management processes support system to maintain mine production and mine machinery. KGHM Polska Miedź S.A. is responsible for defining research problems.|
During the reporting period a subsidy was received from KIC Raw Materials for the project „Monitoring pracy maszyn do kruszenia minerałów” („Operation monitoring of mineral crushing machinery”). Initiation is expected at the start of 2019.
The AMCO project continues, subsidised under the auspices of KIC Raw Materials, aimed at building an innovative automated microscope system for analysing metals ore. The project concluded in January 2019. The result of the project was the development of an automated, user-friendly and intuitive microscope system enabling the rapid measurement of useful minerals content. The system correctly identifies minerals and moderately identifies barren rock, and may serve as a supplement to the solutions already applied by KGHM Polska Miedź S.A.
Under the Horizon 2020 Program, the Company participates in the subsidised research project INTMET („Integrated innovative metallurgical system to efficiently enrich polymetallic, complex and low-grade ores and concentrates”), under which technology for the processing of, among others, metal ores are being developed.
Advancement of the subsidised project BioMOre („New mining concept for extracting metals from deep ore deposits using biotechnology”) was concluded, in which the Company played the key role of coordinator. As a result of advancement of this project a technology for the bioleaching of a deposit in-situ under actual conditions was effectively verified. Due to the specific nature of the deposits currently being mined by KGHM Polska Miedź S.A., this bioleaching technology is not sufficiently effective.
The Company, together with international consortiums, submitted a subsidy application under the Horizon 2020 Program for the project FineFuture, under which research is planned to improve mineral particulate flotation. The application was positively reviewed by the European Commission structures, which granted financing for the project.
Advanced work is underway to prepare applications for subsidising from the Horizon 2020 Program in the areas: management of Big Data from industrial infrastructure, and technology to recover cobalt from slag from the blister copper conversion process.
Under preparation are proposals for financing by the KIC Raw Materials program in the following areas:
|CuBR Program ||20 R&D projects having a total value of around PLN 150 million are being advanced under the CuBR Joint Venture, co-financed by the National Centre for Research and Development (NCRD).|
Together with the National Centre for Research and Development, applications submitted under the fourth CuBR competition were verified. 4 of the proposed projects qualified for negotiation. The negotiations and the signing of agreements are planned for the first half of 2019.
|Intellectual property||In 2018, 3 inventions arising from R&D work were submitted to the Patent Office of the Republic of Poland.|
Conditional approval was received for the granting of a patent for invention no. P.404821 called „Means for indicating the placement of moveable parts of equipment or machinery as well as a unit for indicating the placement of moveable parts of equipment or machinery” arising from R&D work.
KGHM Polska Miedź S.A. is a co-proprietor of European patent no. EP2873475 "Method of manufacturing wires of Cu-Ag alloys" delivered and advanced under a CuBR project, whose validation is planned in the following countries: Austria, Belgium, Czechia, Estonia, France, Germany, Hungary, Italy, Latvia, Lithuania, Romania, Slovakia, Slovenia, Spain, the United Kingdom and Poland. An entry was made in the registry of co- proprietors from submission no. P397200 (delivered and advanced under a CuBR project); for patent PL 221274; in the EUIPO (European Union Intellectual Property Office) rights from the registration of 6 community models: Power overhead line conductor.
Proceedings are underway in the matter of defending the KGHM’s written and graphic trademark in China and registration of the KGHM trademark in Canada.
During the reporting period the Company was awarded the title Mistrz Techniki (Engineering Champion) and Dolnośląski Mistrz Techniki (Lower Silesian Engineering Champion) for a „System to manage energy in KGHM Polska Miedź S.A.” and the title Wicemistrz Techniki (Vice Engineering Champion) for its solution: „Dyspozytornia ONE CONTROL ROOM”; the title Złoty Laur Innowacyjności 2018 (Golden Laureate of Innovation 2018) was awarded for the solution One Control Room.
Corporate Social Responsibility Strategy
In 2018, the Corporate Social Responsibility Strategy was pursued. Various initiatives were undertaken with a view to achieving the Strategy’s main objective, namely to “Strengthen the image of the KGHM Polska Miedź S.A. Group”. The diagram below describes the CSR objectives of the KGHM Group.
CSR objectives of the KGHM Group
The implementation of the KGHM Group Corporate Social Responsibility Strategy was based on:
The Corporate Social Responsibility Strategy is based on five key strategic objectives:
- shaping cooperation with local communities and internal organizations,
- establishing the position of a trusted and stable business partner,
- maintaining the position of a responsible employer, building an image of the KGHM Polska Miedź S.A. Group as friendly to human health and the environment,
- increasing the effectiveness of the KGHM Polska Miedź S.A. Group’s internal and external communication.
The first objective pertains to shaping cooperation with local communities and internal organizations through:
- building the principles of long-term cooperation for social engagement,
- determining the principles for conducting dialogue with local communities and gaining social approval for running the business (“license to operate”) on the basis of best business practices,
- implementing uniform and transparent principles governing charitable activities and sponsorship – building the position of a global leader who cares about the common good,
- creating social involvement programs to better understand the stakeholders’ expectations and in response to their needs,
- supporting KGHM’s key investment processes at all stages of their development.
The next objective is to establish the position of a trusted and stable business partner, through:
- extensive promotion of KGHM in domestic and international industry initiatives (scope of sustainable development)
- communication support in maintaining and developing trade cooperation with long-term and stable partners,
- development of cross-sectoral cooperation,
- attaining the rank of the “investor of choice” thanks to compliance with the principles of sustainable development, and development of a relation-based system of cooperation with suppliers,
- respect for human rights and expectations of local communities.
The third objective of the CSR activities is to maintain the rank of a responsible employer. In this area, the Company:
- promotes voluntary service to increase employee engagement at the Group level,
- builds the image of an attractive employer,
- supports communicative implementation of occupational safety policy rules,
- conducts operations based on the highest standards of dialogue with the employees,
- undertakes activities designed to attain a leading position in the industry in terms of occupational health and safety, as well as stability of employment, remuneration, and continuing employee education – “life-long learning”,
- promotes transparency based on ethics and corporate governance rules, in particular respect for human rights,
- supports and promotes the education of future human resources.
The environmental aspect is of fundamental importance under the fourth objective – building the image of the KGHM Group as friendly to human health and the environment. In this area, the Company:
- carries out CSR Programs: of Health Promotion and Prevention of Environmental Hazards - ECO-Zdrowie, and initiatives for innovativeness and natural environment – Strefa Innowacji (Innovation Zone), Employee Volunteers Copper Heart
- strengthens the role and activity of the KGHM Polska Miedź S.A. Group in the area of environmental protection,
- develops programs and initiatives to minimize environmental impact: reduce emissions of greenhouse gases, increase energy efficiency, improve waste management and post-mining reclamation, reduce use of and protect water resources).
The last, fifth pillar of CSR activities is to increase the effectiveness of internal and external communication in the KGHM Group. The key initiatives in this area include:
- standardization of communication rules and behaviors, internally and outside of the KGHM Polska Miedź S.A. Group,
- organization of coordinated PR activities of the KGHM Polska Miedź S.A. Group on the international level,
- improvement of internal communication in KGHM Polska Miedź S.A.,
- standardization and consolidation of the reporting tools in the key companies of the KGHM Polska Miedź S.A. Group,
- development of an international education system in the area of sustainable development.
In Q1 2018, as part of the pursuit of its Strategy for 2017-2021, the Company launched some very dynamic activities focused on implementing the Sustainable Development Concept and Management Model at KGHM Polska Miedź S.A. To this end, the Sustainable Development Council was established.
The Sustainable Development Council’s key objective stemmed from our business development vision of operating according to accepted standards and canons shaping the future functioning of commodity companies across the world as well as the need for internal information integrity and coherence in the Company's operations. As regards the former issue, the Council’s main task was to map KGHM Polska Miedź S.A.’s objectives and activities onto the 17 sustainable development goals set by the United Nations (known as the 2030 Agenda for Sustainable Development). They are presented in the following diagram.
United Nations’ sustainable development goals for 2030 (2030 Agenda for Sustainable Development)
Based on its in-depth analysis of the 2030 Agenda for Sustainable Development, the Sustainable Development Council takes action to increase the positive impact of KGHM Polska Miedź S.A. on the achievement of goals 07 through 09 and weakening the negative impact in the case of goals 06, 13 and 15. These issues are presented in the following diagram.
Key Elements of Sustainable Development in Mining:
The activities described above resulted in the development of KGHM Polska Miedź S.A. sustainable value chain, as presented in the diagram below.
KGHM Polska Miedź S.A.’s sustainable value chain
Key non-financial indicators
Key non-financial indicators of KGHM Polska Miedź S.A. identified and reported in accordance with the Sustainable Development concept for 2016-2018
|Maintaining membership in the RESPECT Index||YES||YES||YES1|
|0% investment activity without a social dialogue policy||n/a||YES||YES2|
|Conclusion and maintaining of long-term contracts; achievement of the proper sales structure ensuring long-term relations with customers||n/a||YES||YES3|
|Sponsorship and charitable activities in building corporate social responsibility [sponsorship expenses for the purposes of the Company's promotion and regional support, i.e. sports/culture/science]||26.6 mln PLN||25.8 mln PLN||29.6 mln PLN|
|Maintaining the term of resource self-sufficiency until 2055 or later||n/a||n/a||n/a|
|Winnings extraction (the above) per mine employee [tonne]||2 712||2 641||2 558|
|Production of electrolytic Cu per Company / smelter employee [tonne]||29 / 152||29 / 148||27/ 139|
|Maintaining Cu yields [%]||98.18||98.23||97.82|
|LTIRFKGHM (Lost Time Injury Frequency Rate KGHM)||12.65||10.4||10.3|
From 2009 to 2018 (and beyond) without any interruption, KGHM Polska Miedź S.A. has been one of the companies listed on the Warsaw Stock Exchange forming the Respect Index, which testifies to the application of the highest standards of social responsibility, ethical principles, best practices and internal regulations.
The Company observes the “license to operate” regulating such activities. Ultimately, they will be formally spelled out in the Social Dialogue Policy to be developed. In this context, investment activities mean projects to which KGHM has no legal title, such as a construction permit, etc.
In order to foster good long-term relations with customers and achieve the status of preferred supplier in 2018, nearly 80% of copper sales and over 85% of silver sales took place in the framework of long-term contracts (i.e. longer than 6 months).
Given the macroeconomic changes in the commodities sector, as well as the strong impact of global megatrends, in the fourth quarter of 2018 the Management Board of KGHM Polska Miedź S.A. decided that it was necessary to conduct a review of the Strategy of KGHM Polska Miedź S.A. Justification for the decision to undertake a strategic review was based among others on the following external factors:
- Lower than expected global economic growth,
- The trade conflict between the USA and China, as a factor destabilising global economic growth,
- Strengthening of the USD, representing one of the main factors responsible for the weakening of prices of commodities which are traditionally denominated in this currency,
- Slower economic growth in the Eurozone compared to the USA, while its potential for growth may be threatened by Brexit,
- An insufficient number of new significant copper projects globally and delays in existing mining projects, which could potentially exacerbate the copper deficit and lead to a lower pace of supply growth in future years,
- Greater importance placed on new technology in mining, due to the need to improve workplace safety and reduce costs. Increased significance of the Internet of Things (IOT), Big Data, diffused data bases (block-chain),
- New perspectives for metals such as: copper (electromobility market), nickel (battery sector),
- Restrictions in scrap sales in China.
Based on the above, new strategic directions were set for KGHM Polska Miedź S.A., under the 4E formula:
The Strategy identifies four key development directions for the Company:
The aforementioned directions were reflected in individual strategic areas with individual main targets. Each of the main targets was broken down into operational goals, aimed at the realisation of the main target. Each of the six strategic areas was correlated to the four aforementioned development directions, which resulted in the creation of the initiatives matrix. Each of the strategic areas was measured by the following KPIs (Key Performance Indicators):
|Main goal||Key Performance Indicator (KPI)|
|Production||Maintain cost-effective Polish and international production||Mining production in Poland at the level of 450 thousand tonnes of copper in ore, with an average yearly C1 cost not higher than 3800 USD/t in the years 2019-2023.|
Average annual daily ore processing in Sierra Gorda at the level of at least 130 thousand tonnes – from 2020.
Average yearly metallurgical production in Poland at the level of 540 thousand tonnes in the years 2019-2023.
|Development||Increase the efficiency and flexibility of the KGHM Group’s Polish and international assets||Ensure the possibility of basing 35% of metallurgical production on purchased copper-bearing materials, including scrap, to 2030.|
Increase the share of highly processed copper products (OFE-Cu rod, OFE-Cu granulate and end-application products) in the KGHM Group’s total sales to the level of 10% at the end of 2030.
Satisfy 50% of KGHM Polska Miedź S.A.’s demand for electricity from its own sources of energy generation and renewable energy sources by the end of 2030.
|Innovation||Increase the KGHM Group’s efficiency through innovation||Ensure that 100% of innovation projects are realised pursuant to the rules of a coherent model of innovation management and research and development work (R&D) in the KGHM Group, in the years 2019-2023.|
Increase expenditures on innovation and R&D work to the level of 1% of KGHM Polska Miedź S.A.’s revenues by 2023.
Allocation of at least 75% of funds for R&D and innovation in the years 2019-2023 to meet the challenges faced by KGHM Polska Miedź S.A. in the Core Business.
|Financial Stability||Ensure long-term financial stability and the development of mechanisms supporting further development||Basing the KGHM Group’s financing on long-term instruments. Shorter cash conversion cycle. Efficient management of market and credit risk by the KGHM Group.|
|Efficient Organisation||Implement systemic solutions aimed at increasing the KGHM Group’s value||Ensure the financial stability of the Polish-based KGHM Group companies, on the basis of their own activities, from 2022.|
Increase the efficiency of support functions by 20% as a result of centralisation and digitalisation of key back-office processes by 2023.
Achievement of key strategic targets, at the level of at least 80% of the yearly goals assigned to them, in each of the years the strategy is in force.
Flexible reaction to volatile macroeconomic, geological and mining conditions. A halt in the Morrison mine’s production in Sudbury is being considered.
|People and the Environment||Growth based on the idea of sustainable development and safety as well as enhancing the KGHM Group’s image of social responsibility||Annual improvement of the Lost-time injury frequency rate (LTIFR – for Polish assets) and the Total Recordable Incident Rate (TRIR – for international assets) by at least 20%.|
Maintain a participation budget at the level of 20% of the amount of deductions for donations from the minerals extraction tax by 2020.
Achievement of a 70% level of commitment and satisfaction of the KGHM Group’s employees by 2023.
The Strategy adopted in December 2018 does not change the Company’s current approach to business operations. KGHM Polska Miedź S.A. upholds its responsible approach and its long-term thinking about the company’s future.
The 4E Strategy accents, in a stronger manner than heretofore, tasks related to efficiency. The Strategy has several aspects: energy effectiveness (aimed at maximising energy independence), financial effectiveness (by utilising long-term instruments), effectiveness through innovation (among others by committing a minimum of 1% of annual revenues to R&D) and also effectiveness related to the core production line, e.g. by optimising metallurgy. The 4E Strategy is heavily concentrated on technologies of the future, focusing on areas such as the Internet of Things, automatisation and digitalisation. The KGHM 4.0 Program has received strategic and priority status given the Company’s passage into the digital age. The 4E Strategy also places greater weight on the question of human resources management. The Company has recognised the necessity of taking into account in its plans elements related to skills of the future and potential generational issues. Employee safety and development meanwhile remain priority issues.
The Company’s strategic intentions are also accented by a stronger impact from global megatrends, putting greater emphasis on new technologies, innovation and efficiency/effectiveness.
Investment targets under the 4E Strategy
The main development goal for the domestic (i.e. Poland-based) companies is to ensure continuity and workplace safety within the core production line of KGHM Polska Miedź S.A. The investment activities of KGHM Polska Miedź S.A. include the advancement of projects ensuring production, broken down into the areas of development, maintenance and replacement:
are aimed among others at purchasing underground mining equipment, replacing mine infrastructure, components and maintenance at the metallurgical and processing plants. Such projects are aimed at maintaining production equipment in a non-deteriorated condition.
are aimed among others at developing infrastructure to match mine advancement and building the Southern Quarter and the Tailings Segregation and Thickening Station. They are aimed at ensuring mine production at the level set forth in the Production Plan.
are aimed among others at gaining access to new areas of the deposits, exploration projects, optimising metallurgical technology and modernising the processing plants. They are aimed at increasing the production volume of the core business, implementing technical-technological actions aimed at optimising the utilisation of existing infrastructure, maintaining production costs and adapting the Company’s activities to changes in standards, laws and regulations.
In terms of continuing the adopted investment plans for tangible investments, the Company’s investment plans primarily include projects related to the Company’s core business, i.e. the production of copper.
Key investment activities:
- The Deposit Access Program
- The Change in the L-VI shaft’s function to a material – transport shaft (Lubin mine infrastructure)
- The program to adapt the technological installations of KGHM to the requirements of BAT Conclusions for the non-ferrous metals industry and to restrict emissions of arsenic (BATAs).
- Development of the Żelazny Most Tailings Storage Facility.
- Construction of the RCR furnace for processing copper scrap at the Legnica Copper Smelter and Refinery.
- The Metallurgy Development Program at the Głogów Copper Smelter and Refinery
- KGHM 4.0.
- Exploration projects
In terms of the Group’s assets abroad, the Group intends to focus on maximising the value of its assets portfolio. In terms of its international development projects, the Company intends to advance them in accordance with the Strategy if sufficient, excess funds can secured.
KGHM Polska Miedź S.A., as a result of its activities, bears responsibilities towards numerous social groups. The Company operates based on the principles of sustainable development, reflecting in its daily activities obligations in areas such as society, the environment, the economy, safety/security and effective utilisation of the Company’s natural resources. Because of this, the new Strategy of KGHM Polska Miedź S.A. for the years 2019-2023 published in December 2018 foresees the advancement of the following five areas involving the Sustainable Development of KGHM Polska Miedź S.A.:
Sustainable Development in KGHM Polska Miedź S.A.
Advancement of the aforementioned goals will be supported in KGHM Polska Miedź S.A. by the actions of the previously mentioned Sustainable Development Council in KGHM Polska Miedź S.A. Realisation of these goals is also assured by KGHM’s membership in the European Technology Platform on Sustainable Mineral Resources – ETP on SMR in Brussels, in which KGHM’s representative also serves as President. The European Technology Platform on Sustainable Mineral Resources serves as a think-tank for the resolution of problems involving the raw materials sector. The primary goal of the Platform is to transform the sector from one which is conservative and less disposed to change into an industry which is innovative and focused on change, as well as on cooperation with academia. The Platform acts in an advisory capacity with respect to commodities policy, which is of such tremendous importance for KGHM Polska Miedź S.A.