Integrated Report of KGHM Polska Miedź S.A.
and the KGHM Polska Miedź S.A. Group
for 2020

10.1 Inventories

in PLN millions, unless otherwise stated

Accounting policies

The Group measures inventories at cost, not higher than the sales price less costs of completing production and costs to sell.

Any differences in the value of finished goods constitutes a write-down and is recognised in the costs of sold products.

The costs of inventories of finished goods, half-finished goods and work in progress include costs directly related to the production and variable and fixed indirect costs of production, assigned respectively. Fixed indirect costs of production are allocated on the basis of the normal level of production capacity utilisation.

Inventory disposals are measured at weighted average cost.

Important estimates, assumptions and judgments

In the consolidated financial statements the volume of those inventories of the KGHM INTERNATIONAL LTD. Group which arise from the leaching process, is determined based on the estimated recovery of metal from ore. The nature of the process of leaching copper from ore limits the precision of monitoring the level of inventories arising during this process. In subsequent reporting periods, adjustments are made to the estimated recovery of copper from the leaching of ore in a given reporting period to the level of production achieved in the subsequent period.

As at 31 December 2020 the provisionally-set value of inventories amounted to PLN 77 million (as at 31 December 2019, PLN 74 million).

As at
31 December 2020
As at
31 December 2019
Materials 1 251 844
Half-finished goods and work in progress 2 482 2 790
Finished products 580 926
Merchandise 146 181
Total carrying amount of inventories 4 459 4 741


[Note 4.4] Write-down of inventories during the reporting period from 1 January 2020
to 31 December 2020
from 1 January 2019
to 31 December 2019
Write-down recognised in cost of sales (129) (38)
Write-down reversed in cost of sales 29 38


Maturities of inventories As at
31 December 2020
As at
31 December 2019
Maturity over the 12 months from the end of the reporting period 269 283
Maturity of up to 12 months from the end of the reporting period 4 190 4 458


The value of inventories with a maturity of over 12 months, mainly includes stand-by inventories of materials and spare parts to maintain production continuity and packages of spare parts under contractual obligations in the Parent Entity and in the KGHM INTERNATIONAL LTD. Group and the finished rhenium product. Due to the collapse of the rhenium market after 2011, the demand for this product from the largest recipients dropped drastically and the period in which the inventory of rhenium in the Parent Entity will be sold was extended, while maintaining its functional properties. According to the plans to sell rhenium, the inventory should gradually decrease in the coming years.

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