Mining and smelting production
Utilization of the Company’s resource base and production capacity and optimization of the copper content in the extracted ore and concentrates are the main goals for 2016 in the area of mining and smelting production.
Production and efficiency
In 2016, we have improved our management effectiveness and efficiency. This has contributed to process improvement and therefore, improved production results.
We implement the Lean Management concept consistently in all Divisions of our Group to eliminate wastefulness from the processes defined, to improve them and increase productivity. In 2016, the Lean Management coordinators held regular meetings with employees to train them and convince them of their roles and the value contributed to the changes and improvements implemented.
Lean Management assumes an increase in process efficiency by identifying and eliminating waste. It contributes to optimizing the resources held while maintaining the highest standards and mutual respect in a workplace. One of the advantages of implementing Lean Management is to eliminate activities which do not add value to processes. Therefore, we not only save money, but also our employees’ energy and the time they dedicate to performing specific tasks.
The 5S tool is the key tool of the Lean Management. It is a starting point for further steps of continuous improvement. 5S is a tool/activity aimed at maintaining order rather than cleaning all the time. It is aimed at creating and maintaining an orderly, well organized and safe workplace.
The year 2016 was one of applying solutions which improved the availability of machinery and equipment. In the case of the Concentrators Division, for example, this translated into the highest ore extraction in the history of our mines (33.6M ton on a dry weight basis). Innovative solutions combined with the teamwork of our engineering staff enabled us to launch a new flash furnace production line in the Głogów I Copper Smelter and Refinery.
In 2016, we extracted 32M ton of ore, on a dry weight basis. This is approximately 400k ton more than in 2015. The quantity of copper obtained from the copper ore extracted increased to 480k ton (1.3k ton more than in 2015). The volume of silver in the ore extracted also increased by 74 tonnes to 1,482 tonnes.
In 2016, we processed 31.7M ton (dry weight) of the ore extracted, which is 243.6 kt more than in the prior year. This is the highest result in the history of the operation of our Concentrators Division. The lower content of copper in the ore processes affected the quantity of copper in the concentrate which amounted to 424.3 kt in 2016. The production of concentrate (dry weight) increased by 0.4 percent compared to 2015 and reached 1,866 kt.
The detailed results of the mining production in Poland are presented in the table Mining production of KGHM Polska Miedź S.A.
|Specification||m.u.||2016||2015||2015 = 100%|
|Copper ore extraction (wet weight)||kt||33,620||33,187||101,3|
|Copper ore extraction (dry weight)||kt||31,984||31,571||101,3|
|including copper ore (dry weight)||kt||24 379||24,356||100,1|
|Cu content in ore||%||1.50||1.52||99.0|
|Cu quantity in ore||t||480,038||478,727||100.3|
|Ag content in ore||g/t||46.32||44.57||103.9|
|Ag quantity in ore||kg||1,481,590||1,407,167||105.3|
|Cu quantity in concentrate||t||424,276||425,870||99.6|
|AG quantity in concentrate||kg||1,264,659||1,209,094||104.6|
|Cu content in concentrate||%||22.74||22.91||99.3|
|Production of concentrate (dry weight)||t||1,865,846||1,858,857||100.4|
Smelting and refining production
|Specification||m.u.||2016||2015||2015 = 100%|
|Electrolytic copper, including:||t||535,597||574,310||93.9|
|production from own ore||t||375,961||420,491||89.4|
|production from third party ore||t||159,635||153,819||103.8|
|Copper rod CONTIROD||t||251,039||246,642||101.8|
|CU OFE (UPCAST) wire||t||13,018||14,629||89.0|
|Cu Ag wire||t||3,387||2,390||141.7|
|OC round billets||t||12,978||12,666||102.5|
|Silver in sludge||kg||1,151,230||1,276,975||90.2|
Total surface are of the land managed by the Company with a view to production and extraction activities, held by KGHM Polska Miedź S.A.*
| ||Surface area of land, including:||Total surface area [ha]|
|Perpetual usufruct/joint perpetual usufruct [ha]||Ownership/joint ownership [ha]|
|As at December 31, 2016||5,698.88||1,016.20||6,715.09|
* This list does not cover the property of COPI, JRGH and Headquarters
Amount of land (owned or leased, and managed for production activities or extractive use) disturbed or rehabilitated
|Quantity (ha) 2016|
|Amount of land disturbed and not yet rehabilitated||6,697.97|
|Amount of land disturbed during the reporting period||17.12|
|Amount of land rehabilitated to the agreed end use during the reporting period||0|
|Sum of land disturbed and not yet rehabilitated||6,715.09|
Detailed production results of KGHM INTERNATIONAL LTD. are presented in the table below.
|Payable copper, including:||k ton||89.8||97.6||-8.0%|
|Robinson Mine (USA)||k ton||53.7||56.8||-5.5%|
|Sudbury region mines(CANADA) *||k ton||14.4||14.1||+2.1%|
|Payable nickel||k ton||2.1||2.2||-4.5%|
|TPM - precious metals, including:||koz t||92.1||95.3||-3.4%|
|Robinson Mine (USA)||koz t||46.2||56.8||-18.7%|
|Sudbury region mines (CANADA) *||koz t||36.0||38.5||+19.5%|
|Production of cooper equivalent||k ton||114.8||121.5||-5.5%|
* Morrison and McCreedy West mines in the Sudbury region
In 2016, our Sierra Gorda Mine in Chile recorded an increase in efficiency. The production of copper in concentrate amounted to approx. 94 kt (approx. 87 kt in 2015) and the production of molybdenum in concentrate was over 10 kt (compared with 6.5k kt in 2015). Comparing the data for Q4 2016 with Q3 2015, Sierra Gorda S.C.M improved its production results by 21 percent for copper and 16 percent for molybdenum.
Production* of copper, molybdenum and precious metals (2015 – amounts for the full year) in Sierra Gorda S.C.M.
|Copper production - segment (55%)||kt||51.5||46.3||+11.3%|
|Molybdenum production||mn lbs||22.1||14.6||+51.4%|
|Molybdenum production - segment (55%)||mn lbs||12.2||8.1||+51.4%|
|TPM production - gold||koz t||41.7||41.5||+0.5%|
|TPM production - gold - segment (55%)||koz t||22.9||22.8||+0.5%|
|Production of copper equivalent**||kt||136.5||109.7||+24.4%|
|Production of copper equivalent - segment (55%)||kt||75.1||60.3||+24.4%|
* Payable metal in concentrate
** Value of the production of all metals translated into copper based on market quotations, from own resources
Presentation of production plants
We are one of the world’s leaders in the metallurgic industry, and the production capacity of our copper smelters in the Lower Silesia region is 570 kt of electrolytic copper and 1,300 tonnes of silver per year.
Copper smelters of KGHM:
| Głogów Copper Smelter and Refinery||Legnica Copper Smelter and Refinery||Cedynia Copper Smelter and Refinery – Rolling Mill|
|We use various technological solutions in our smelters:|
|In the Głogów smelter, copper is smelted based on modern one-stage flash furnace technology–the first on its kind in the world. The organizational structure of the copper smelter also includes fhs Precious Metals Plant which produces silver and gold.||The Legnica smelter produces copper cathodes using traditional shaft furnace technology and through the electro-refining process.||The Cedynia smelter is a copper rolling mill that processes electrolytic copper produced in the other two smelters. The process is conducted using modern installation for the production of wire rod using the Contirod method without the use of billets, and for the production of Upcast copper wire.|
KGHM additionally produces:
- Refined lead
- Sulfuric acid
- Nickel sulfate
- Platinum-palladium concentrate
Innovations in production
Innovative solutions support the development of our resource and asset bases, as well as our production function. More and more innovative technologies as well as cooperation with scientific milieus help us increase employee safety.
We are on a constant lookout for solutions and technologies which will, on the one hand, contribute to reducing manufacturing costs, and, on the other, will enable higher recovery of copper and accompanying metals. An example of these activities is the launch of a new flash furnace technological line in 2016 in the Głogów I Copper Smelter and Refinery. The new plant ensures the maintenance of high processing capacity for at least a few decades. We estimate that reducing copper losses in the new production process will ensure at least PLN 9M savings a year.
Our commitment to innovative production technologies is confirmed by the receipt of a first degree award by the Prime Minister for Outstanding Scientific and Technical Achievements which was awarded in November 2016 to a team of specialists from KGHM Polska Miedź S.A. and the Technical University in Wrocław. The scientific research led to developing a method for designing magnetic circuits and constructing electrical engines which are innovative on a global scale. High-power engines manufactured using this method are already being used by KGHM to power ventilators, pumps and the drum mill, ensuring large savings.
Our foreign assets also show an innovative approach to production processes. The processing division in the Robinson mine worked on improving its processes with the use of innovative solutions in effect of which lime consumption was reduced, concentrate grade was improved and scaling-related problems were eliminated.
In the Carlota mine we implemented a subsurface leaching program which enables the recovery of copper from the remaining deposits. We also conducted actions aimed at reducing the use of power and oil.
The MillVis system – an innovative solution which improves the energy-effectiveness and technological performance of the process in the Concentrators Division was awarded the title of “Lower Silesian Technology Vice-Champion 2016” (Dolnośląski Wicemistrz Techniki) 2016. MillVis controls and analyses all factors which have an impact on the correctness of milling the excavated material. The system provides information on the current condition of the milling unit and the parameters of the ground materials. It also allows selecting the appropriate operating settings.
Market position in 2016
We systematically build our position as a global company and as one of the leading silver and copper producers worldwide.
We are the sole producer of rhenium and ammonium perrhenate from our own resources. We would like to join the group of largest multiple raw materials producers in the world. Globally, KGHM ranks eighth in terms of usable copper resources, which, in total, contain 22.7M tonnes of metal in the deposit. Our Group’s Polish deposits are estimated at approx. 17.5M tonnes of metal in usable resources of copper and will enable maintaining the exploitation of copper ore at the current level for the next 40–50 years.
According to assessments, the largest global copper resources are in:
The largest amounts of ore are excavated in:
According to the IntelligenceMine ranking, in 2016 we ranked sixth among the largest global copper producers. In 2016, the ten largest producers provided almost 9.5M tonnes of copper, i.e. 4 percent more than in 2015. Those companies, which included the KGHM Group, ensured 49 percent of global copper production which in 2016 – according to the calculations of the industry portal mining.com – amounted to 19.4M tonnes. According to this data, our share in global production amounted to approx. 3.5 percent.
Source: IntelligenceMine | mining.com
Top 10 corporate equity shares of mine production (‘000 tonnes contained copper in concentrates and recoverable EW cathode)
|1||Codelco1792||Codelco 1829||Codelco 1889||Codelco 2016|
|2||Freeport-McMoRan 1537||Freeport-McMoRan 1476||Freeport-McMoRan 1543||Freeport-McMoRan 1827|
|3||Glencore 1330||Glencore 1344||Glencore 1331||Glencore 1747|
|4||BHP Billiton 1270||BHP Billiton 1206||BHP Billiton 1199||BHP Billiton 1282|
|5||Grupo Mexico 672||Grupo Mexico 723||Grupo Mexico 770||Grupo Mexico 1134|
|6||Rio Tinto 665||Rio Tinto 608||KGHM 572||KGHM 578|
|7||Anglo American 548||Anglo American 530||Anglo American 526||Rio Tinto 557|
|8||KGHM 528||KGHM 513||Rio Tinto 506||Antofagasta 489|
|9||Antofagasta 476||Antofagasta 469||Antofagasta 416||First Quantum 465|
|10||First Quantum 398||First Quantum 378||Vale 398||Vale 433|
Source: CRU International
Top 10 corporate equity shares of refined production (‘000 tonnes recoverable copper)
|1||Codelco 1423||Codelco 1431||Codelco 1411||Codelco 1403|
|2||Glencore 1224||Glencore 1257||Freeport-McMoRan 1224||Freeport-McMoRan 1225|
|3||Aurubis 1133||Jiangxi Copper 1175||Glencore 1223||Tongling 1150|
|4||Jiangxi Copper 1122||Freeport-McMoRan 1149||Jiangxi Copper 1166||Jiangxi Copper 1101|
|5||Freeport-McMoRan 1066||Aurubis 1142||Aurubis 1133||Aurubis 1081|
|6||Tongling 855||Tongling 958||Tongling 1015||Glencore 1017|
|7||Grupo Mexico 671||Grupo Mexico 701||Grupo Mexico 754||Grupo Mexico 759|
|8||KGHM 595||BHP Billiton 616||KGHM 600||Sumitomo Metal Minin 634|
|9||BHP Billiton 578||KGHM 607||Sumitomo Metal Minin 588||Jinchuan Nonferrous M 630|
|10||Sumitomo Metal Minin 556||Sumitomo Metal Minin 599||Jinchuan Nonferrous M 581||BHP Billiton 602|
Source: CRU, Company reports
Top 20 silver producing countries
|Rest of the world||30.5||31.9|
Source: GFMS, Thomson Reuters
Top 20 silver producing companies
|3||3||KGHM Polska Miedź S.A. Group||38.8||41.6|
|4||4||Polymetal International plc.||29.2||32.1|
|6||6||Pan American Silver Corp.||25.4||26.1|
|7||7||Cia. De Minas Buenaventura S.A.A.||24.7||22.1|
|8||8||Volcan Cia. Minera S.A.A.||22.0||24.8|
|9||9||Tahoes Resources Inc.||21.3||20.4|
|10||10||Corp. Nacional del Cobre de Chile||20.9||21.3|
|11||11||South 32 Ltd.||18.2||13.9|
|13||13||Hochschild Mining plc.||17.3||14.8|
|14||14||Hecla Mining Company||17.2||11.6|
|15||15||Southern Copper Corp.||16.2||13.3|
|16||16||Coeur Mining, Inc.||14.8||15.9|
|18||18||Hindustan Zinc Ltd.||14.0||12.0|
|19||19||Industrias Peñoles, S.A.B. de C.V.||12.4||11.5|
|20||20||First Majestic Silver Corp.||11.9||11.1|
Source: GFMS, Thomson Reuters