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Key sales markets

A quarter of KGHM Polska Miedź S.A.’s 2016 sales revenue was earned on the Polish market. Germany, China, the United Kingdom and the Czech Republic were among the largest customers purchasing our finished goods, goods for resale and services.

Revenues from KGHM Polska Miedź S.A. sales by market (PLN M)

Industries with which we cooperate

Uses for the copper delivered by KGHM

The copper cathodes we produce are sold to manufacturers of such semi-finished copper goods as wire rod, wire, round billets, sheet and tape, and copper alloys. The cable industry, including energy, power machines, electro-technical, electronics and automotive manufacturers, is a large customer for our OFE copper wire. Copper grain produced by KGHM is used for galvanization and for manufacturing catalytic converters. Our copper is also used in the construction industry, mainly in the production of pipes, rods, sections, flat profiles and tapes, and in broadly understood architecture.

Copper and its alloys are the only antimicrobial touch surfaces registered by the United States Environmental Protection Agency as a material which reduces 99.9 percent of all bacteria during two hours of mutual contact.

Therefore, the medical industry is also a significant customer of our copper. In 2016 we prepared equipment for the operating rooms of the Miedziowe Centrum Zdrowia healthcare center in Lubin consisting of antimicrobial copper touch elements. The operating ward was modernized to minimize the risk of infection and was commissioned for use in January 2017.

Other metals

Silver

The main customers for the silver excavated by the KGHM Group are financial institutions. The silver we produce, apart from its investment value is also used in such industries as the jewelry, electronic, electro-technical, photovoltaic, numismatics, photographic and medical industries.

Rhenium

Rhenium, a by-product in copper manufacturing, is a very valuable and rare metal; it is a strategic metal used for purposes which require extremely high temperature resistance. The rhenium we sell is used mainly to manufacture so-called super-alloys for the purpose of the aeronautical industry and as a catalyst in the production of high octane fuels in the petrochemical industry. It is also used to produce heating components, electric contacts, electrodes, electromagnets, vacuum tubes, flashbulbs, metallic coatings or rocket engine components. KGHM Polska Miedź S.A. is the only European producer of this metal from its own resources. 

Gold

The gold offered by KGHM in the form of bars is sold to the jewelry industry and to banks, it is also used in the electrical and medical industries.

Molybdenum

This metal which is excavated from the Sierra Gorda mine in Chile and from the Robinson mine in the USA is used in the construction, aeronautic, munitions, oil, nuclear and electronic industries.

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90 percent of our customers are long-standing partners of KGHM Customer satisfaction surveys concerning the quality of products and services are conducted permanently, at each stage of cooperation, among other things, during telephone conversations and meetings with our counterparties. To maintain good relationships with counterparties and the business environment, each year we organize meetings with domestic and foreign customers. We also build and reinforce our relations with customers by participating in industry meetings, fairs, conferences and seminars. We enable our Business Partners to visit our facilities. We also cooperate in organizing audits to confirm the quality of our offer and qualify our Group as a reliable ISO-certified supplier.

Customers who evaluate the KGHM Group appreciate the high quality of our goods, our flexibility and understanding of the diverse needs of the entities which order goods.

2016 was the last year of the term of the framework agreement with China Minmetals Corporation concluded for the years 2012–2016. In 2016 the KGHM Group concluded contracts with China Minmetals Corporation amounting to 10 percent of the value of our equity. In June 2016 we concluded a new framework agreement with our Chinese partner for the sale of copper cathodes in the years 2017–2021. The estimated value of the contract exceeds PLN 10bn.

Our business partners include Japanese companies Sumitomo Metal Mining and Sumitomo Corporation. Together we operate a joint venture, Sierra Gorda S.C.M., in which KGHM holds a 55 percent interest, and the Sumitomo Group holds 45 percent. In February 2016 we confirmed the intention to act jointly on behalf of the Sierra Gorda mine.

KGHM products

Copper, silver and other metals marked with the KGHM logo have been a synonym of the highest quality for years, and are appreciated and recognized throughout the world. Supplementing our portfolio by new metals such as molybdenum, palladium or nickel has helped us join the group of global multi raw materials enterprises.

The spectrum of KGHM Group products

Almost 70% of all sales revenues constitute revenues from sales of copper and copper goods.
70%

The basis for our commercial offer are copper cathodes from electrolytic copper. They meet all the quality requirements and those produced in Poland are registered as “A” quality on the London Metals Exchange and on the Shanghai Futures Exchange. Copper cathodes are also the key products of the Carlota mine in the USA and of the Franke mine in Chile which are part of the KGHM INTERNATIONAL LTD. Group. Apart from the copper cathodes offered by KGHM, copper wire rods and OFE copper wire are also popular with customers.

We also offer round billets from cathode copper and refined lead in the form of ingots, used in the production of batteries and lead oxides. Our portfolio also contains copper concentrate which is produced in the Robinson mine in the USA and in the Chilean Sierra Gorda mine. The offered concentrate contains over 20 percent of copper and a small addition of gold. We sell it for further processing as commercial goods. Another product is the copper, nickel and TPM (precious metals – gold, platinum, palladium, silver and colbalt) ore from the Morrison mine in Canada, which is further processed by the smelter in the Sudbury mining region.

Due to their unique physical and chemical properties and rarity, precious metals have always been the most sought for and valuable raw materials in the history of civilization. In the copper production process KGHM obtains precious metals such as silver, gold, palladium and platinum.

Almost 17 percent of all sales revenues constitute revenues from sales of metallic silver.
17%

We are one of the leading producers of metallic silver (approx. 1200 ton per year).

Silver

Silver of 99.99% Ag purity is produced in the form of bars weighing approx. 1000 oz (32.15 kg) and granulate. Silver in the form of bars, registered under the KGHM HG brand, holds Good Delivery certificates issued by the London Bullion Market Association and a certificate of registration on the New York Mercantile Exchange NYMEX.

Rhenium

Rhenium is a very valuable and rare metal. It melts at a temperature of 3,186°C, which is the third highest melting temperature among all the elements. That and its highest boiling temperature (5,596°C), high density (21.03 g/cm³), and high hardness and resistance to corrosion and deformation, make it an exceptional metal. Our offer includes metallic rhenium, ammonium perrhenate and rhenium powder. The high quality of these products is guaranteed by certificates from globally renowned laboratories, and the reliability of deliveries is guaranteed by our constant sources of the metal – our own copper deposits which contain this valuable element.

Gold

We recover gold with a purity of over 99.99% Au from gold-bearing slag which is the product of the process of silver electrorefining. We offer the product in the form of bars weighing from 0.5 to 12 kg. The remains from gold production are used to obtain small amounts of platinum-palladium concentrate.

Molibden

Our position on the molybdenum market—being a raw material needed by the fastest growing and mightiest global economies—is becoming increasingly stronger. Production of the molybdenum concentrate was launched in the Sierra Gorda mine in Chile in 2015. The concentrate, which contains approx. 48 percent of molybdenum, undergoes refining, and is then sold for further processing in the form of an oxide. Most of the raw material produced is used in alloys resistant to high temperatures and corrosion; therefore, 65 percent of the metal produced is used by the steel industry.

Our offer also includes products such as sulfuric acid, copper sulfate, nickel sulfate and technical selenium. We obtain those products in the processing of copper concentrates.

Sales volumes of basic products in the KGHM Group, by segment


J.m.
2016
2015
Cathodes and cathode elements
kt
246.4
294.4
Copper rods and OFE wire
kt
265.1
264.8
Other copper goods
kt
13.1
12.2
Total copper and copper goods
kt
524.6
571.4
Metallic silver
t
1,189.0
1,245.0
Metallic gold
kg
3,499.0
2,660.0
Refined lead
kt
29.7
30.4

Source: KGHM

Outlook for our products

Technological progress allows us to implement KGHM products in cutting-edge applications. The increasing possibilities allow for more refined processing of materials which results in a greater number of possible areas of application. Moreover, constant work is being carried out on increasing the quality, conductivity, robustness and effectiveness of copper products and alloys. Trolleys used in the construction of high-speed railway lines are an excellent example.

Copper is also used in industries which are universally associated with modern solutions and environmental protection. It is used in wind farm components and in other systems which allow the generation of energy from renewable sources. Copper is also widely applied in the modern automotive industry, starting from new conventional cars, through hybrid vehicles, to autonomous cars.

The contemporary economy also has high expectations with regard to silver. This metal is one of the components of solar panels. Since the photovoltaic sector is developing dynamically and has high potential, we are also expecting an increased demand for silver from this sector.

Advanced technologies will also use rhenium. A particularly promising customer for this chemical element is the energy sector.

Cooperation with industry organizations

We are an industry expert which shares its knowledge and experience with other entities on the market. The KGHM Group is active in many organizations, both national and international. We are a reliable and valued partner in the mining and metallurgical sectors.

The KGHM Group and industry organizations

We are a member of 25 national and international organizations which are of key importance to our industry.
25


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National organizations

Związek Pracodawców Polska Miedź
(Employers’ Organization of Polish Copper) monitors and gives opinions on draft legislation important for the economy, protects the rights and represents the interests of employers in the copper industry.
Zachodnia Izba Gospodarcza
(Western Business Chamber), a local government economic organization which associates business entities operating in Lower Silesia. Currently, the Chamber comprises more than 300 enterprises from various industries.
Krajowa Izba Sportu
(National Sports Chamber), a local government economic organization representing enterprises connected with sports.
Stowarzyszenie Księgowych
w Polsce Oddział Okręgowy w Legnicy
(Accountants Association in Poland, Local Branch in Legnica ) which, among other activities, provides specialist support for financial and accounting structures.
Stowarzyszenie Emitentów Giełdowych
(Association of Stock-Exchange Issuers), as a representative of companies listed on the Warsaw Stock Exchange, provides Stock Exchange issuers with knowledge and advice in respect of stock exchange market regulations, as well as the rights and duties of participating companies.
Polska Izba Ekologii w Katowicach
(Polish Environmental Chamber in Katowice), a local government economic organization representing the economic interests of associated entities, in particular before the state and local government authorities, with regard to broadly understood environmental protection and sustainable development principles.
Stowarzyszenie Inżynierów
i Techników Metali Nieżelaznych
(Association of Non-Ferrous Metals Engineers and Technicians), an independent organization of a scientific, technical and managerial nature, which associates engineers and technicians of all specializations and related professions whose activities are connected with the non-ferrous metals industry.
Izba Energetyki Przemysłowej i Odbiorców Energii
(Industrial Energy Sector and Energy Recipients Chamber) associates entities which generate, trade in and consume electricity and heat energy throughout Poland. The Chamber gives its opinions on all planned amendments to the Energy Law and on respective secondary legislation.
Izba Gospodarcza Zaawansowanych Technologii
(Polish Chamber of Commerce for High Technology), an entity which stimulates the development of knowledge-based entrepreneurship and assists in ensuring commercial success in respect of innovative projects in the area of high technology.
Polsko-Kanadyjska Izba Gospodarcza
(Polish-Canadian Chamber of Commerce) is an entity supporting the promotion of economic, commercial and cultural relations between Poland and Canada.
Izba Gospodarcza Metali Nieżelaznych i Recyclingu
(Economic Chamber of Non-Ferrous Metals and Recycling), an autonomous and voluntary organization which supports the development of non-ferrous metals and recycling industries in Poland.

International organizations

International Copper Association (ICA)
Responsible for staking out directions for further activities, strategy and financing of international undertakings and promotional activities related to copper and its applications.
European Copper Institute
An organization promoting the use of copper.
Eurometaux
Eurometaux constitutes an interlink between the European non-ferrous metals industry and the authorities of the European Union as well as other international and inter-governmental organizations. It mainly focuses on monitoring legal regulations which can affect the situation of the non-ferrous metals industry.
Euromines
Represents and promotes the interests and views of the European metals and minerals mining industry in European Union institutions.
International Copper Study Group
A group which prepares statistics related to production, consumption and trade in copper.
European Precious Metals Federation
Represents the interests of its members before European institutions, in particular with regard to processing safety, waste management, trade, customs administration, taxes and competition.
London Bullion Market Association (LBMA)
A regulator of the silver, gold, platinum and palladium market. Announces reference prices for the market (such as London silver Fix, London AM and PM Gold Fix), sets out quality criteria by introducing and monitoring a list of precious metals producers from the “Good Delivery” list.
International Wrought Copper Council
A promoter of the production of semi-finished goods made of copper and its alloys.
International Precious Metals Institute
An organization which promotes knowledge on the possible applications, re-use and recycling of precious metals from original and secondary sources.
European Technology Platform on Sustainable Mineral Resources
A platform which safeguards the supply and access to European deposits, supports exploration of the mining potential in Europe by assisting in the development of mining technologies and creating added value generated by technological research and development.
Minor Metals Trade Association (MMTA)
An organization promoting the interests of producers of rare-earth elements.
International Lead and Zinc Study Group (ILZSG)
An organization promoting transparency in lead and zinc trading by monitoring and analysing the market, producing publications and providing necessary information and statistics to its member organizations.
European Sulphuric Acid Association(CEFIC-ESA)
An association of European producers from the sulfuric acid sector and of organizations involved in the distribution and recycling of sulfuric acid.

KGHM INTERNATIONAL LTD. partners with, subscribes to, and is member of various industry organizations, including:

  1. The Mining Association of Canada (MAC), Canada
  2. Prospectors and Developers of Canada (PDAC), Canada
  3. Canadian Institute of Mining, Metallurgy and Petroleum (CIM), Canada
  4. Mining Association of British Columbia, Canada
  5. Mineral Exploration Research Centre – Laurentian University, Canada
  6. Geological Association of Canada, Canada
  7. Canadian Mining Industry Research Organization (CAMIRO), Canada
  8. Ontario Mining Association, Canada
  9. Committees appointed by Ministry of Labour, Canada
  10. Arizona Mining Association, USA
  11. Society for Mining, Metallurgy & Exploration (SME), USA
  12. The University of Arizona - Center for Environmentally Sustainable Mining (CESM), USA
  13. Nevada Mining Association, USA
  14. Society of Economic Geologists (SEG), International organization
  15. Consejo Minero, Chile
  16. nstitute of Internal Audit, USA / Vancouver
  17. National Mining Association (SONAMI), Chile
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Compliance

In 2016, as in the previous year, there were no cases of non-compliance with mandatory regulations or voluntary codes governing marketing communication in KGHM Polska Miedź S.A., including with respect to advertising, promotion and sponsoring. In 2016, no legal measures were taken against the Company with regard to cases of violating the principles of free competition or monopolistic practices.