Key investment projects in Poland

Program for Providing Access to Deposit (PUZ)

The program for providing access to the deposit comprises a group of capital expenditure projects aimed at making the Głogów Głęboki-Przemysłowy (GGP) deposit available and preparing it for exploitation. Developing the GGP area is one of the largest mining projects in Europe. Providing access to the deposit will maintain the level of production of Polish KGHM copper mines at the planned level for many decades to come.

In 2016 we continued work related to providing access to the GGP deposit:

- As at the end of 2016, the GG-1 shaft which is being dug (mine cage and skip compartments with air intake function) was already over 846 meters (m) deep in the rock (of the target 1,340 m). In the 4th quarter, the process of sealing the shaft tubing lining was conducted.
- We completed work relating to Stage II of the construction of the Surface Air-Conditioning Station at shaft R-XI with respect to expanding the central air-conditioning system. As a result of the work, the amount of cooling energy provided to the 1,200 m level excavations increased from the former 15 to 25 MW.
- We balanced the needs for cooling capacity, which enabled us to begin preparations for designing and constructing a central air-conditioning system at Shaft GG-1. The system will provide chilled water to mining excavations at a level of 1,300 m in the target amount of 30 MW.
- We began preparatory works for the construction of Shaft GG-2 (“Odra”) related to obtaining a permit for constructing facilities needed to start sinking the shaft.

Since 2006 under the Program for Providing Access to the Deposit we have completed 127,812 linear meters of mining excavations, constructing the necessary technical infrastructure (water pipelines, power cables, power distribution rooms, conveyor belts, retention tanks, pipelines and air conditioning equipment, teletechnology). In 2016 we completed nearly 47.5 km of mining excavations in the Rudna and Polkowice-Sieroszowice Mining Zones, which is nearly 76 percent of the total number of opening-out headings and preparatory excavations carried out by KGHM.

Scope of opening-out headings and preparatory excavations [mb]

Production results from the Głogów Głęboki-Przemysłowy area vis-à-vis the KGHM/Legnicko-Głogowski Okręg Miedziowy (LGOM) region

We anticipate a gradual increase in extraction from the GGP area to approx. 8 percent of the total mining production in LGOM in 2020. By the end of 2016 our capital expenditure on the Program for Providing Access to the Deposit amounted to PLN 2,285.7M.

Pyrometallurgy Modernization Program (PMP)

At the end of 2016 the PMP project was at the final stage of completion – the technological go-live of the flash furnace.

Basic benefits of the Pyrometallurgy Modernization Program:

  • approx. 80 percent of copper will be produced according to best and optimally cost-effective available technologies;
  • cost and environmental risks will be eliminated in respect of approx. 40 percent of HMG’s pyrometallurgical production:
    - reduction in dust emissions by approx. 55%;
    - reduction in gas emissions by approx. 58%;
    - reduction in the amount of stored waste;
  • increase in the revenues of the KGHM Group on sales of additional amounts of silver, rhenium, refined lead;
  • ability to intensify the melting of imported chalcopyrite concentrates;
  • reducing expenditure on replacement investments and costs of repairs and labor;
  • meeting the BAT requirements;
  • improving safety at work thanks to eliminating onerous positions in the flash furnace technology;
  • increasing energy efficiency of processes;
  • improving the competitiveness of KGHM’s smelting.

Smelting Development Program

In 2016, we continued completing the following projects under the Metallurgy Development Program:

  • construction of the steam drier at the Głogów II Copper Smelter and Refinery;
  • modernization of the Tank and Electrolite Decopperization Hall at the Legnica Copper Smelter and Refinery ;
  • construction of the concentrate roasting installation at the Głogów I Copper Smelter and Refinery;
  • adaptation of the technical infrastructure to the change in the smelting technology at the Głogów I Copper Smelter and Refinery.

Development of the mechanical mining technology

To ensure that safety at work requirements are met during the excavation of deposits in increasingly difficult conditions in KGHM Polska Miedź S.A. (the increasingly deeper location of the deposits, the original rock temperature leading to deterioration in working conditions, and the increasing threat of rock bursts) we undertake research to develop alternative technologies for the excavation of hard rock compared to the current technology based on blasting. The research is aimed primarily at mechanical excavation both in terms of using sets of heading machines in preparatory and extraction mining works.

In 2016, trial mechanical excavation works were completed in the Polkowice-Sieroszowice mine using sets of three roadheaders for excavating preparatory drifts in the area of the Głogów-Głęboki Przemysłowy deposit. Experience gained during research into this technology confirmed the possibility of excavating hard rock at a pace which enables faster excavation of the face compared to traditional technologies. Initially, the potential of the researched technology was determined in respect of reducing the amount of equipment and operators required, and increasing the safety of the mining work conducted in the most difficult geological and mining conditions.

The project “Development of the Żelazny Most Tailings Storage Facility to ensure the possibility of storing flotation tailings after 2016”

Żelazny Most is the largest Tailings Decontamination Facility in Europe, where tailings from the enrichment of copper ore are stored. Annually, the Żelazny Most Tailings Decontamination Facility stores approx. 18M m3 of talings material. The extension of the mines’ lifespan and maintaining employment in the region requires constant expansion of the Żelazny Most Facility. A concept for expanding the Facility was developed in cooperation with an international team of experts, which consisted of constructing the Southern Site with an area of approx. 609 ha.

In 2016 an application for the decision on the environmental conditions for the project was filed. We also signed agreements for the construction design of the Southern Site and the lease of real estate where the future site is to be located with the Lubin Forest District Office.

Completion of the project will enable storing tailings, and therefore uninterrupted long-term business for KGHM.

Development projects in respect of foreign assets

Sierra Gorda Project (Chile)

Under the Sierra Gorda Oxide Project, the management of oxide ore is planned. Metal is to be recovered through a plant using SX/EW technology. The oxide ore is currently being stored for later leaching.

Victoria Project (Ontario, Canada)

The project work conducted consisted of developing the basic infrastructure to ensure access to utilities (power and gas). In 2016 the decision was made to verify the technical and business assumptions of the project by independent consultants. Due to current macroeconomic conditions, the Management Board of KGHM Polska Miedź S.A. decided to modify the previously adopted time schedule for the project.

Ajax Project (British Columbia, Canada)

In 2016 we published an Updated Feasibility Study which replaced the 2012 version. The Updated Feasibility Study reflects changes to the project, under which the mine’s infrastructure was moved farther away from the nearest buildings in the City of Kamloops, technological improvements were incorporated and the processing facility’s throughput capacity was increased from 60 to 65 kt of ore per day. Currently, KGHM AJAX MINING INC. is focused on obtaining the necessary environmental permits and on continuing to build good relationships with First Nations as well as with the citizens of the City of Kamloops.

Innovation strategy and expenditure on research and development in development projects

In 2016 we put emphasis on innovations. We completed over 170 works worth more than PLN 44M.

In the prior year, the main research and development projects concentrated on innovative solutions for the purpose of the Main Technological Line of KGHM Polska Miedź S.A.

Eighty KGHM employees were engaged in research and development work, pursuing both local and international projects. The project topics were strictly related to production strategy, launching new projects, planning technological changes and environmental aspects.

Selected key actions in 2016:

  • developing new regulations relating to research and development, together with contract templates, including:
    • entering representations of co-authors transferring rights to R&D results to properly secure the intellectual property rights of KGHM Polska Miedź S.A.;
    • work on contractual provisions which properly secure intellectual property rights in contracts for performing R&D works;
    • work on amendments to the “Regulations for performing research and development work in KGHM Polska Miedź S.A.”;
  • entering contract templates and representations relating to research and development work in KGHM Polska Miedź S.A. – launching the acceleration program together with KGHM Cuprum
  • implementing the CRPBR II Repository – an IT tool – the digital archives of research and development works and expert opinions on scientific and technological issues. The resources of the CRPBR II Repository comprise all existing archives of works developed both at the Head Office and in Branches of KGHM Polska Miedź S.A.
  • KGHM Polska Miedź S.A. filing two competition applications for participation in projects co-financed from domestic sources and 10 competition applications as part of the KGHM Polska Miedź S.A. Group
  • continuing projects under the Horyzont 2020 program: BioMOre, DISIRE and IntMet
  • completion of the 3rd CuBR competition

GOOD PRACTICES

In 2016 we continued 12 research and development projects as part of the I and II CuBR competition together with our industry partners and academic entities. In the third competition we positively assessed 11 projects. In factual terms, the projects related to such issues as communication systems in underground excavations, technologies for assessing the condition of shaft hoists, reducing odors from exhaust shafts, and methods of securing and utilizing process gases.

Effective use of resources

Another challenge we had to face in 2016 was the optimum use of our resource base. Initiatives for improving the effectiveness of resource management in mining and smelting facilities translated into real savings.

We were able to increase the effectiveness of resource use thanks to using 3D technology to model deposits, optimizing management of underground machines and pursuing the energy saving program.

With regards to mining, we also improved the effectiveness of extraction, among other things, by adapting the geometry of the exploitation systems to local geological and mining conditions, improving the effectiveness of technological and active methods for reducing the threat of rock bursts and similar natural threats, also by optimizing the management of gangue rock in the areas of exploitation. We also adapted our production capacity in particular regions of the Ore Enrichment Plant to the amounts and quality of the excavated materials supplied.

We increased the effectiveness of using smelting resources by increasing the copper yields on the core flash furnace production line (as a result of implementing new technological solutions, such as an improved process for the decopperization of convertor slag), increasing the availability of revolving–reverbaratory furnaces at the Lead Section (high lead recovery accompanying lower lead content in charge materials), launching rhenium sales in the production area of the Legnica Copper Smelter and improving the energy-effectiveness of the machine park.