Strategy of KGHM Polska Miedź S.A. for the years 2017-2021 with an outlook to the year 2040

Thursday, 11 May, 2017
8/2017

On 11 May 2017 the Management Board of KGHM Polska Miedź S.A. („Company”) adopted a resolution on establishing the Strategy of KGHM Polska Miedź S.A. for the years 2017-2021 with an outlook to the year 2040 („Strategy”), which was subsequently approved by the Supervisory Board of the Company.

The Strategy is oriented towards stable, long-term activity, based on the rational and sustainable utilisation of resources. This goal will be attained by developing assets, increasing production and safety and by developing a coherent Group organisation, at the same time ensuring financial stability and further development of corporate social responsibility and innovation.

The main goal of the Strategy is to achieve EBITDA of the Group at the level of PLN 7 billion in 2021 as well as an average EBITDA margin for the Group of over 20% in the years 2017–2021.

1.  Priorities of the Strategy of KGHM Polska Miedź S.A. for the years 2017-2021 with an outlook to the year 2040.

-    EBITDA of the Group at the level of PLN 7 billion in 2021 as well as an average EBITDA margin for the Group of over 20% in the years 2017-2021.

-    Total equity investments and capital expenditures by the Group domestically and abroad at the level of PLN 15 billion in the years 2017-2021.

-    Stable average annual production by the domestic and international assets, with costs guaranteeing financial security.

-    Operations compliant with the concept of sustainable development to harmonise the mutual expectations of stakeholders in terms of achieving economic, social and pro-environmental goals.

-    Financial stability to achieve the adopted investment program on time and on budget.

-    Orientation towards innovative solutions to improve productivity.

-    Readiness to bring the international assets to full, mature productivity to maximise revenues and the rate of return on foreign investments.

-    Utilisation of the potential of the KGHM Polska Miedź S.A. Group’s companies.

2.  Basic business assumptions

Maximise the value of the international assets by:

-    removing bottlenecks in and increasing the production capacity of the Sierra Gorda mine to the average annual level of approx. 70 thousand tonnes of mined copper annually (on a 55% basis) in the years 2017-2021;

-    mining in the Robinson mine until the end of 2022 under the most favourable scenario for KGHM Polska Miedź S.A.;

-    operating the Carlota, Franke and Morrison mines and preparing a plan to extend their mine lives on the basis of resources within nearby deposits; and

-    preparing optimal financial and operational plans for the execution of the Sierra Gorda Oxide, Victoria and Ajax projects.

Maintaining and developing production in Poland, of which:

-    continuation of the project to access the Głogów Głęboki-Przemysłowy (Deep Głogów) deposit, of the Pyrometallurgy Modernisation and Metallurgy Development Programs, and development of the Żelazny Most tailings storage facility, as well as commencement of the project to access the Radwanice-Gaworzyce deposit;

-    exploration and documentation of copper ore deposits in the following areas: Synklina Grodziecka, Konrad, Retków-Ścinawa, Głogów, Bytom Odrzański and Kulów-Luboszyce; and

-    execution of geological projects concerning other resources, e.g. the project to explore and document the potassium-magnesium salt deposit in the area of Puck.

Development of a coherent and effective KGHM Polska Miedź S.A. Group:

-    organisational integration by improving management processes and standards;

-    organisational and cost optimisation of the values chain; and

-    cooperation with respect to a sustainable supply chain.

Securing financial stability:

-    consolidation of borrowing by the Group and utilisation of funds aimed at the implementation of development projects;

-    implementation of uniform financial processes within the Group, including the management of credit, currency and market risks; and

-    maintaining the ratio of Net Debt to Adjusted EBITDA at the level of below 2x, with the prospect of achieving  the optimal level of below 1x.

A Company open to innovation:

-    increase the role of innovation in the KGHM Polska Miedź S.A. Group;

-    innovation as the road to development and raising productivity throughout the Group;

-    concentration on the intellectual capital possessed and on protecting intellectual property; and

-    promotion of co-authorship as regards innovation, and cooperation with the academic/scientific and business spheres.

Corporate Social Responsibility:

-    strengthen the positive image of the KGHM Polska Miedź S.A. Group;

-    build a picture of the Group as both environmentally-friendly and health-friendly;

-    maintain the Company’s status as being socially responsible;

-    continue effective co-operation with local communities and internal stakeholders;

-    solidify the Group’s position as a trusted and stable business partner and responsible employer; and

-    improve the efficiency of internal and external communications by the KGHM Polska Miedź S.A. Group.

 

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)

 

 

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