Credit risk

Credit risk management

Credit risk is defined as the risk that assumes the possibility of Company's counterparties not being able to meet their contractual obligations. KGHM Polska Miedź S.A. is exposed to credit risk mainly in three areas, related to:

  • trade receivables,
  • cash and cash equivalents and bank deposits,
  • derivative transactions.

The Management Board is responsible for credit risk management in the Company and for adherence to policy in this regard. The main body involved in realising activities in this respect is the Credit Risk Committee.

Trade receivables

The Company limits its exposure to credit risk related to trade receivables by evaluating and monitoring the financial condition of its customers, setting credit limits and using debtor security. Buyer’s credit is only provided to proven, long-term customers, while sale of products to new customers is mostly based on prepayments. To secure its receivables, the Company uses various forms of security and has entered into a receivables insurance contract.

An inseparable element of the credit risk management process realised by the Company is the ongoing monitoring of receivables and the internal reporting system.

Cash and cash equivalents and bank deposits

The Company deposits periodically unallocated cash in accordance with the requirements to maintain financial liquidity and limit risk and in order to protect capital and maximise interest income in accordance with the „Financial Liquidity Management Policy” adopted by the Management Board.

Credit risk related to bank deposits is continuously monitored by a continuous review of financial position and by maintaining an appropriately low level of concentration in individual financial institutions.

Derivative transactions

While derivative transactions enable a reduction in the level of market risk, they result in the exposure to credit risk related to financial institutions. Derivative transactions are entered into with financial institutions with the highest and medium-high ratings issued by international ratings agencies. Credit risk related to derivative transactions is monitored by periodic reviews of the financial condition of financial institutions and by maintaining an optimal degree of diversification of positions.


Detailed numerical data with respect to credit risk are presented in:

Consolidated financial statement for 2015 (PDF 4.5 MB, page 52) 

Report on Group's activities for 2015 (PDF 4.5 MB, page 127) 

Mid-year consolidated financial statement for the first half of 2015 (PDF 3.7 MB, page 65) 

Report on Group's activities for the first half of 2015 (PDF 3.7 MB, page 108)