The Management Board of KGHM Polska Miedź S.A. („the Company”, „KGHM”) announces that on 14 January 2022 the Supervisory Board of the Company approved the Strategy of the KGHM Polska Miedź S.A. Group to the year 2030 with an outlook to 2040 („the Strategy”) as presented by the Management Board.
Three years have passed since the adoption of the Strategy of KGHM Polska Miedź S.A. for the years 2019-2023. As a result of the substantial changes which have occurred in the world during this time, the strategic assumptions were reviewed and refreshed.
The consistent advancement of the Strategy adopted in 2018 enabled the KGHM Group to take advantage of favourable macroeconomic trends to increase the scale of its activities as well as to substantially improve its production results and financial condition.
The three years of advancement of KGHM’s Strategy also involved binding decisions and areas requiring an update given current megatrends. The decision to update the Strategy was dictated in particular by:
- macroeconomic changes of strategic importance for the mining sector, in particular those arising from the green transformation,
- the need to clarify the Company’s actions as regards the commencement of decarbonisation and commitments to protect the climate,
- a focus on securing access to the raw materials base for future copper production, but also actions aimed at developing mining capacity in terms of other metals and mineral resources,
- the intensification of actions aimed at the implementation of innovation in the production process,
- the identification of opportunities to gain competitive advantages and to develop the Company in new, promising business areas.
The justification for this review and redefinition coincided with an extraordinary market situation driven by the SARS-CoV-2 epidemic. Despite the fact that KGHM was exceptionally successful compared to other companies on the market during this difficult time, the desire to maintain its flexibility requires an update for plans regarding the future. The result of the Company’s work is the Strategy to the year 2030 with an outlook to 2040. The Company’s mission and vision remained unchanged. To reflect the changes in the general environment, the four existing strategic development directions (Flexibility/elasticity, Efficiency, Ecology and E-industry) were updated to include a fifth element – Energy.
This „5E” Strategy is now comprised of 5 pillars based on 5 updated development directions. These pillars have been assigned individualised main goals as well as key performance indicators, as follows:
- Pillar – Core business. Comprised of the following elements:
- Advanced technology and R&D creating an intelligent production line;- Optimisation of mine production domestically and abroad ensuring long-term operational continuity;- Leadership in the development of low-emissions mining capacity as regards new metals and minerals deposits in Poland;- Development of metallurgy utilising efficient processing based on Circular Economy principles.Main goal: Strengthen the position of the KGHM Group as a global player in the mining and metallurgy sector
Goals for 2030:
- Domestic copper production – approx. 600 thousand tonnes of electrolytic copper (including production based on a higher amount of purchased materials and copper from recycling).
- International copper production – higher production by the international assets of KGHM by extending their life-of-mine, developing assets in the mine projects portfolio held and increasing the resource base thanks to advancement of the International Exploration Strategy.
- Silver production – maintain the position amongst the world’s top-three producers of silver (approx. 1200 tonnes of silver annually).
- Profitability – 10.2% (Average ROCE (return on capital employed) from the last 3 years).
- Cost competitiveness – 3rd quartile.
2. Pillar – New activities, comprised of the following elements:
- To be one of the leading, environmentally-friendly electricity producers, supporting Poland’s energy transformation;- Expansion along the value chain by developing the production of new products from copper and other metals (including initiating relationships with partners in Poland and abroad).Main goal: Diversification and aiming at sustainable development by building internal generation capacity from low-emission sources
Goals for 2030:
- Energy produced – min. 50% of consumption
- A reduction in estimated CO2 emissions resulting from electricity consumed – 1.0 million tonnes of CO2
- Diversification of the commercial offer in terms of metals – (increase in share of new semi-finished copper products and highly processed copper products (OFE-Cu wire, OFE-Cu granules) and other metals in the total sales of the KGHM Group) – 10%.
3. Pillar – Supporting activities, comprised of the following elements:
- To be a major supplier of Smart Mining solutions for products and services sold in Poland and globally;- Ensure the financial stability of the KGHM Group and implement systemic solutions aimed at enhancing the Group’s value.Main goal: Redefine the way that existing assets supporting the core business are utilised
Goals for 2030:
- Recycling of scrap - approx. 350 thousand tonnes of copper scrap
- Revenues from sales on foreign markets of selected Group companies - using 2020 as the base year = 100%: an increase by 2030 of 147% versus the base year for the companies KGHM Zanam S.A., Nitroerg S.A. and PeBeKa S.A., and 163% versus the base year for the company DMC Mining Services Ltd.
4. Pillar - Health, comprised of the following elements:
- Development of activities promoting health and health resorts (spas) as a contribution to extending the length and quality of life for citizens.Main goal: Development of the spa assets held as a contribution to extending the length and quality of life for society as a whole
Goals for 2030:
- LTIFR – the goal of 0 accidents
- TRIR – the goal of 0 accidents
- Level of support for the area of Health carried out by the KGHM Polska Miedź Foundation – approx. PLN 7 million
5. Pillar – Support for Society, comprised of the following elements:
- Growth based on the idea of sustainable development and safety.Main goal: Growth based on the idea of sustainable development and safety
Goals for 2030:
- Support for the fair transformation of the mining sector
- Number of volunteer projects advanced - 30
- Level of support for the arts, sport and health approx. PLN 48 million
The Strategy of the KGHM Group to the year 2030 also includes climate-related goals as respects reducing emissions by KGHM which are consistent with the Climate Policy of KGHM Polska Miedź S.A., being a complementary document to the Strategy.
The updated Strategy does not alter the Company’s current approach to its business activities. KGHM Polska Miedź S.A. continues to act responsibly and long-term thinking about the Company’s future.
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)