Key assumptions of the Strategy

In 2016, the Management Board of KGHM Polska Miedź S.A. decided to undertake work on the fundamental revision of the Company’s 2015 Strategy (for the years 2015–2020 with an outlook to 2040). This revision is focused on adapting the Company’s goals to its anticipated financial capabilities, taking into consideration market conditions and the need to optimize costs. The changes in the macroeconomic environment were the main factor justifying the need to revise the 2015 Strategy. These changes made it impossible to achieve the main objective of reaching an output of 1M ton of copper equivalent.

Copper prices in 2010–2016


Source: KGHM

Other factors which made it necessary to revise the 2015 Strategy included:

- the Company’s financial position which made it impossible to pursue investments specified in the 2015 Strategy in a responsible and sustainable manner;

- a high investment risk associated with the execution of certain projects which forced us to verify the KGHM Group’s project portfolio;

- impairment tests conducted in 2015 which resulted in impairment losses of PLN 5,220M, net, at the non-consolidated level of KGHM Polska Miedź and PLN 5,048M on production assets in the consolidated financial statements of the KGHM Polska Miedź Group;

- the need to ensure that current liabilities resulting from debt financing will be paid and stabilization of the level of debt of KGHM Polska Miedź S.A.

As a result of the work undertaken in 2016, an updated version of “KGHM Polska Miedź S.A.’s strategy for the years 2017–2021 with an outlook to 2040” was developed and approved by the Company’s Supervisory Board on May 11, 2017.

The main goal of the Strategy was revised: it now assumes reaching EBIDTA of PLN 7bn in 2021 and the EBITDA margin of the Group exceeding 20% in the years 2017–2021. The EBITDA margin of the KGHM Polska Miedź Group will be measured as the ratio of the Group’s adjusted EBITDA to sales revenue for a given year (taking into account 55% of Sierra Gorda’s EBITDA and sales revenue). We also revised the level of investment and capital expenditure, which is planned to reach PLN 15bn for the entire Group in the period 2017–2021.

KGHM Polska Miedź’s strategy is based on three main pillars which represent Executive Strategies:

Executive Strategies:

Supporting Strategies:

Strategy for international assets

In 2016, we conducted an audit of our international projects and updated KGHM’s strategy in relation to the assets held.

Assumptions of “KGHM Polska Miedź S.A.’s strategy for the years 2017–2021 with an outlook to 2040” with regard to our international assets


We have completed the drilling program in the Morrison mine aimed at increasing mineral reserves in 2018–2019. Furthermore, we plan to conduct exploratoration drilling in the Levack deposit (in the vicinity of the Morrison mine) which could result in an increase in mineral reserves.


The Carlota mine is in the final stages of its life. We will continue leaching the copper ore that remain in the heap leach facility and the production of copper cathodes in the SX/EW plant. We are also analyzing the possibility of continuing operations based on the potential of the Eder deposit located near the Carlota mine.


The Franke mine is also in the final stages of its life – the processing of the extracted ore is planned for 2021. We assume that the mine will continue operating by leveraging its favorable location (copper deposits in the vicinity of the mine) and the assets held (the processing plant) to process ore obtained from external sources and obtain additional income. We submitted an Environmental Impact Study in December 2016, which aims to extend use of the processing plant by 4.5 years. In addition, we are carrying out exploratoration work on areas adjacent to the mine so as to document further resources.

Sierra Gorda

We assume that in the period 2017–2021, the average production of copper mining in the Sierra Gorda mine will reach a level of 70 kt (calculated for 55% ownership). The improvements in the operational performance and cost efficiency should result in Sierra Gorda achieving financial independence in 2021.


We are assuming discontinued production at this mine in 2022, given the investment expenditure being incurred. We have begun developing the optimum closure and land rehabilitation path for the Robinson mine.

International mining projects in “KGHM Polska Miedź S.A.’s strategy for the years 2017–2021 with an outlook to 2040”

Victoria Project

The Victoria project assumes the construction of an underground copper and nickel mine in the Sudbury region in Ontario, Canada. The project will be continued if surplus funds are secured by the Company. The planned annual average output is 18kt of copper and 16kt of nickel per year over a period of 14 years.

Sierra Gorda Oxide Project

The Sierra Gorda Oxide (SGOx) project involves leaching 133.6M t of oxide ore and the construction of the SX-EW installation together with the accompanying infrastructure. The development phase of the project will be undertaken if the Company secures funds allowing the implementation of subsequent steps of the project.

Ajax Project

We anticipate an annual average output of approx. 53kt of copper and circa 114koz of gold over the 18 years of the planned period of the mine’s operation. Obtaining the necessary environmental permit issued by the province of British Columbia and by the federal government of Canada in 2017 is of key importance for the project. The project will continue if the Company ensures surplus funds.


Supporting Strategies

Financial Stability, Innovation and Corporate Social Responsibility are three supporting strategies which complement KGHM Polska Miedź S.A.’s Strategy.

Financial Stability should ensure funds for the KGHM Group, to support its growth and efficiency, and make it independent of challenging market conditions. Innovation is another of our priorities aimed at increasing productivity by increasing the role of intellectual capital through effective management and strengthening the protection of intellectual property. With regards to Corporate Social Responsibility, the KGHM Group’s activities will be focused mainly on developing cooperation with priority stakeholders, strengthening our position as a reliable and stable business partner and responsible employer. In addition we are focused on initiatives aimed at protecting human health and wellbeeing and the natural environment.

Stable production, the importance of health, safety and environmental issues

Dynamic changes in the mining industry resulting from macroeconomic, technological, social and legislative challenges drive the evolution of the KGHM Group’s strategic assumptions. Our Strategy emphasizes the need to secure stable production from the assets held in the long-term perspective. Measures associated with improving the safety of our employees and eliminating environmental risks are of equal importance.

Outlook for the future / long-term objective

In the long-term perspective, we are striving to create a sustainable system which will ensure the conservation of natural resources through efficient and rational utilization. Our activities are based on business practices developed to ensure the Company’s value growth and to meet existing social needs.

We believe the value growth will result from activities undertaken in the following three key areas which are important for sustainable development:

Technical and economic - employee safety and economic effectiveness supported by the use of cutting edge technologies,
Environmental - minimizing negative impacts on the natural environment;
Social and local  - cooperation and partnership with local communities.

Furthermore, we will continue to identify potential areas of investment which will allow us to diversify our financial capabilities as much as possible.