Stable production and financial results – KGHM presents its results for the first 9 months of 2023

Production of copper and silver by the KGHM Polska Miedź S.A. Group was at and above the levels set in the budget targets for 2023. The copper giant has published its production,  operating and financial results for the first three quarters of 2023.

The operating and financial results of KGHM, as well as of other entities in the mining sector, continue to be impacted by the ongoing uncertainty as to the development of the global macroeconomic situation. This is due in particular to the ongoing armed conflict in Ukraine and its consequences, including above all the continued high levels of inflation in most of the world’s economies.

“In KGHM we continue to operate in compliance with the idea of sustainable development and the efficient management of resources, as well as being focused on innovation and care for the natural environment. I would like to point out that our solid results are a consequence of the hard work of our entire staff, which, as we have demonstrated more than once, is the key to the success of KGHM. Our divisions are working efficiently, which leads to higher production and enhanced effectiveness by the Company. We are not slowing down with our investments, and continue to search for the most economically justifiable solutions,” said Tomasz Zdzikot, President of the Management Board of KGHM Polska Miedź S.A.

PRODUCTION RESULTS

Despite the uncertainty and volatility prevalent in the economic environment, production of the basic metals by the KGHM Polska Miedź S.A. Group, i.e. copper and silver, was achieved at a stable level. Production of copper in Poland was as follows: mined copper in ore, 341 thousand tonnes; refined electrolytic copper, 443.5 thousand tonnes.

KGHM Polska Miedź S.A. recorded an increase in the extraction of ore, dry weight, by 1.3 proc compared to the first 9 months of 2022. Production of copper in concentrate by KGHM Polska Miedź S.A. also rose by around 3 percent. KGHM likewise reported increases in the production of metallic silver (+8%) and gold (nearly 35 percent higher).

It is worth noting that the over 30 percent increase in extraction of ore, in the volumes of copper and silver, in the Deep Głogów area, are the result among others of a decisive improvement in working conditions in mining areas in the vicinity of KGHM’s newly-opened GG-1 shaft.

In turn, production of payable copper by the international assets was as follows: Sierra Gorda 59.7 thousand tonnes (on a 55% basis), Robinson 17.3 thousand tonnes, Carlota 2.9 thousand tonnes, and the Sudbury Basin 3.9 thousand tonnes.

OPERATING AND FINANCIAL RESULTS

KGHM is pleased to report results at a good level, compared to the corresponding period of 2022, which were characterised by a different economic base. These results are mainly due to the efforts undertaken by the Management Board in terms of optimisation and cost discipline. These include extension of the supply chain, optimisation of the management of materials inventories, resulting for example in an improvement in the utilisation of expendables or the maximal use of scrap in the production cycle. In terms of sales, KGHM optimises copper contracts onto the European market due to the better parameters for cathode premiums, and maximises the processing of copper into wire rod, which is also characterised by superior premiums and lower transport costs.

Ensuring cost-effective domestic production was possible thanks to consistency and the continuation of key investments.

Consolidated revenues of the KGHM Group for the first three quarters of 2023 amounted to PLN 25 648 million, meaning at the same level as achieved in the prior year.

Adjusted EBITDA of the Group for the first three quarters of 2023 amounted to PLN 4 235 million and was 40% lower than that recorded in the corresponding period of 2022. The decrease in adjusted EBITDA compared to the first nine months of the prior year was mainly due to a less favourable exchange rate and lower copper prices, alongside cost pressures.

Profit for the three quarters of 2023 amounted to PLN 836 million, or 84% lower than in the corresponding prior-year period. The decrease in profit for the period was due to a lower operating result, a lower result on exchange differences and one-offs recognised in the prior year in the form of the sale of the Oxide project to Sierra Gorda, along with the sale of the Franke mine outside of the Group, as well as a lower reversal of allowances on loans granted to joint ventures.

Net assets of the Group as at 30 September 2023 amounted to PLN 33 108 million.

In the first nine months of 2023 the International Assets transferred USD 46.6 million to KGHM Polska Miedź S.A.

INVESTMENTS IN DEVELOPMENT

KGHM is engaged in opening new areas of the copper ore deposit and in developing the infrastructure needed to mine them.

The Company is advancing its development plans, including the Deposit Access Project, under which the largest mine shaft in Poland – GG-1 – was built. This shaft, located in the village of Kwielice, is one of the most important investments in the history of the copper giant, and the largest underground project in the non-ferrous metals sector in Europe. In June a key milestone for this project was reached when the shaft was connected underground with the corridors of the Rudna mine. Work continues on preparing the shaft to temporarily serve in a ventilation function. Final design work is being carried out to prepare the shaft to serve in its final material and personnel transport function.

Work is also underway on preparations to construct KGHM’s 32^nd shaft, GG-2. The headframe site is located in the village of Słone in the Copper Basin. Work includes preliminary ground construction at the site. These preparations are aimed at constructing the facilities needed to begin sinking the shaft, together with freezing of the rockmass and design work.

ENERGY INVESTMENTS

 Thanks to its efforts and its own sources of energy, including from RES, KGHM was able this year to cover nearly 17 percent of its total power consumption from its own sources. In September, KGHM bought a portfolio of eight solar power installations with a combined capacity of nearly 50 MW. The solar power farms acquired by the Company are located in the following voivodeships: Lower Silesia, Łódź, Pomerania and Greater Poland. The acquired installations ensure around 2 percent of KGHM’s total need for electricity.

KGHM Polska Miedź S.A. is also engaged in PV projects situated on its own terrain, at the Głogów Smelter and Refinery, the Cedynia Wire Rod Plant, at the Tailings Division and in the vicinity Obora Sandpit.

The copper giant is also advancing its energy development program, reducing its use of conventional power sources and increasing the company’s energy independence. This also includes investment plans involving among others the area of energy transformation. The Ministry of Climate and the Environment issued KGHM a basic decision with respect to the construction of a small modular nuclear reactor (SMR) in Poland. At the same time, KGHM received government approval for the planned investment, in accordance with the assumptions and concepts presented by the Company. 

SUSTAINABLE DEVELOPMENT

KGHM, to meet the increasing expectations of stakeholders in terms of protecting the climate, is enhancing the transparency of its messaging and its periodic non-financial disclosures – both with respect to KGHM’s impact on the climate as well as adaptation of the Company to climate change. KGHM maintains ongoing relationships and dialogue with local communities and governments.

EMPLOYEE VOLUNTEERS

 Volunteerism is an important element in KGHM’s pro-society actions in the Copper Basin. To date there have been 217 actions with the participation of 1917 KGHM employee volunteers. Of these, 42 projects were carried out by companies within the KGHM Group. Dozens of these involved various activities, whether collections for the needy, social initiatives to promote foster parenting, or projects promoting an active lifestyle. Actions carried out amongst employees include promoting an active lifestyle or the campaign to promote reading „Mie(dź) apetyt na czytanie”. This year’s actions in the company’s divisions included the creation of small apiaries under the title „Copper bees”. The hives are cared for by employee volunteers of KGHM.