Adoption of a Climate Policy by the Management Board of KGHM Polska Miedź S.A.

Report number

The Management Board of KGHM Polska Miedź S.A. (“Company”, “KGHM”) announces that today it adopted a resolution on the adoption for implementation of the “Climate Policy of KGHM Polska Miedź S.A.” (“Climate Policy”).

The EU’s tightening climate policy, in particular the European Green Deal and the Fit for 55 package, has a decisive impact on Polish industry’s operating conditions. The radical rise in wholesale electricity prices which has been observed over the last several months affects the competitive position of Polish producers at the international level, not only in relation to producers outside of Europe who are not limited by restrictive environmental protection regulations, but also those from other EU countries where – in principle – a more balanced energy mix enables them to acquire energy at a substantially lower cost.

The revision of the EU’s ETS system resulting from introduction of the Fit for 55 package means that as a result of an increase in the emissions reduction goal to -61% by 2030 (from the current level of -43%), the Company is experiencing a significant increase in costs connected with the purchase of greenhouse gas emission rights. According to estimates by KGHM Polska Miedź S.A., additional costs connected with emission rights under the EU ETS system in the years 2021-2030 amount to approx. PLN 1.04 billion. The Company also expects that the introduced changes will result in additional costs connected with the purchase of electricity due to higher unit market prices. If it is assumed that the current volume of electricity purchased from the market remains unchanged (approx. 2.24 TWh in 2020), these additional costs will amount to approx. PLN 2.96 billion in the years 2021-2030. KGHM Polska Miedź S.A. anticipates that the costs associated with implementation of the EU’s ambitious climate goals would amount in total to PLN 4 billion in the years 2021-2030. Because of this, the Company will intensify its existing decarbonisation efforts (the Energy Development Program) and will commence new projects in this regard. These actions will be shaped by the adopted Climate Policy.

The Climate Policy is a guiding document, addressed to both internal and external stakeholders, whose primary objective is to present the climate ambitions of the Company and to define the scope of process and organisational changes necessary for their implementation. The scope and impact of the Climate Policy encompasses KGHM Polska Miedź S.A., which will subsequently transfer its principles to its subsidiaries.

Ambitions for reduction of greenhouse gas emissions by KGHM in 2030 and 2050

The primary goal of the Climate Policy of KGHM is for the Company – as the Parent Entity of the KGHM Group – to achieve climate neutrality by 2050 with respect to Scope 1 emissions (direct emissions primarily related to the Company’s production activities) and Scope 2 emissions (indirect emissions associated with the use of electricity and heat acquired from the market), with their maximum possible reduction.

The intermediate target is to reduce total Scope 1 and Scope 2 emissions by 30% by 2030, compared to the emission levels of 2020. The reduction targets for the entire KGHM Group will be published no later than in the first half of 2023.

The Climate Policy will be followed by the Decarbonisation Program of the KGHM Group, which will provide details on how the Climate Policy’s goals will be attained, as well as total capital expenditures on the realisation of activities aimed at reducing the emission of greenhouse gases. The Decarbonisation Program of the KGHM Group will subsequently be published.

Legal basis: Art. 17 (1) of MAR (Regulation (EU) No 596/2014 of the European Parliament and of the Council of 16 April 2014 on market abuse (market abuse regulation) and repealing Directive 2003/6/EC of the European Parliament and of the Council and Commission Directives 2003/124/EC, 2003/125/EC and 2004/72/EC (Official Journal of the European Union dated 12 June 2014, no. L 173/1).