GRI Indexes:

Mining production

Specification
m.u.
2016
2015
2015 = 100%
MINING
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 recovery
%
89.11
89.18
99.9
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%
METALLURGY
Products
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
Granulated copper
t
2,141
2,016
106.2
Other metals
Silver in sludge
kg
1,151,230
1,276,975
90.2
Metallic silver
kg
1,191,127
1,283,209
92.8
Metallic gold
kg
3,540.2
2,702.7
131.0
Pt-Pd concentrate
kg
174.4
136.5
127.8
Raw lead
t
26,059
29,001
89.9
Refine lead
t
30,130
29,253
103.0
Other production
Sulphuric acid
t
619,027
669,080
92.5
Copper sulfate
t
5,864
5,914
99.2
Nickel sulfate
t
2,743
2,967
99.4
Technical selenium
t
81.7
87.0
93.9

Source: KGHM

GRI Indexes:

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
GRI Indexes:

Detailed production results of KGHM INTERNATIONAL LTD. are presented in the table below.


m.u.
2016
2015
Change (%)
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

Sierra Gorda

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.


m.u.
2016
2015
Change (%)
Copper production
kt
93.7
84.2
+11.3%
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.

GOOD PRACTICES
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:

  1. Chile
  2. Peru
  3. China
  4. USA
  5. Australia
  6. Mexico
  7. Canada
  8. Switzerland
  9. Poland

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)

Rank
2013
2014
2015
2016
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)

Rank
2013
2014
2015
2016
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

2016
2015
Country
2016
2015
Rank
Output (Moz)
1
1
Mexico
186.2
192.0
2
2
Peru
147.7
138.0
3
3
China
112.4
110.0
4
4
Chile
48.1
48.6
5
5
Russia46.6
50.8
6
6
Australia
43.6
49.0
7
7
Bolivia
43.5
42.0
8
8
Poland38.5
41.5
9
9
United States
35.4
35.0
10
10
Argentina
30.0
34.7
11
11
Guatemala
26.9
27.5
12
12
Kazahstan
17.8
17.3
13
13
Sweden
16.4
15.9
14
14
India
14.0
12.0
15
15
Canada
13.0
12.2
16
16
Indonesia
11.2
10.0
17
17
Marocco
10.1
9.6
18
18
Turkey
5,6
5,5
19
19
Armenia
4.6
4.0
20
20
Iran
3.6
3.3


Rest of the world
30.5
31.9


World Total
885.8
890.8

Source: GFMS, Thomson Reuters

Top 20 silver producing companies

2016
2015
Company
2016
2015
Rank
Output (Moz)
1
1
Fresnillo plc.
45.7
43.0
2
2
Glencore plc.
39.1
36.6
3
3
KGHM Polska Miedź S.A. Group
38.8
41.6
4
4
Polymetal International plc.
29.2
32.1
5
5
Goldcorp Inc.
28.1
40.4
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
12
12
Sumitomo Corp.
18.1
15.8
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
17
17
Boliden A.B.
14.4
13.5
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