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

Operating results

GRI[ ]

Metals production
KGHM Group

  • Slightly lower production vs 2019:
    • w by KGHM Polska Miedź due to the lower grade and thickness of the mined deposit, as well as due to the restricted supply of copper scrap in the first half of 2020
    • by KGHM INTERNATIONAL due to lower production by the Franke mine (lower quality ore, lower recovery) and the Sudbury Basin (lower extraction from deposits rich in TPM); in Q1 2019 extraction from the Morrison mine was suspended
  • Higher copper production by the Sierra Gorda mine due to a higher volume of ore processed, higher recovery and a higher copper grade in ore,
  • Lower molybdenum production both by Sierra Gorda (extraction of ore with a lower Mo grade and lower recovery), and by Robinson (extraction of lower-quality ore)

* TPM – Total Precious Metals, comprising gold, platinum and palladium

Production results

KGHM Polska Miedź S.A.

  • Ore extraction results from areas selected for mining
  • Mined copper production
  • Lower production due to a restricted supply of copper scrap in the first half of 2020 and to the maintenance shutdown at the Głogów I Smelter/Refinery
  • Lower production due to lower silver content in charge materials

Production initiatives implemented in KGHM Polska Miedź S.A.

Full integration of processes in management of the supply chain
  • Implementation of an integrated material planning system based on the structure of where costs arise
  • Implementation of systemic tools to evaluate deviations from the execution of plans in real time
  • Organisation and restriction of materials base indices utilised in planning and deliveries
  • Construction and integration of IT tools supporting the process of ordering materials from suppliers
  • Monitoring of integrated materials utilisation processes
  • Utilisation of advanced analitical models in the area of materials utilisation
  • Digitalisation and automatisation of the processes of distribution and replenishment of inventories using EDI (Electronic Data Interchange) and VMI (Vendor Managed Inventory)
  • Systemic forecasting and modelling of inventories levels based on historic utilisation as well as actual and announced needs
  • Transfer of RW documents to electronic form

Production results

Sierra Gorda*

Higher than expected copper production in 2020

  • Higher payable copper production in 2020 versus 2019 thanks to higher ore throughput, improved recoveries and higher metal content in mined ore
  • Higher extraction by the Sierra Gorda mine led to higher production of copper, silver and gold in 2020 compared to 2019
  • Lower molybdenum production due to extraction in areas with lower molybdenum content compared to ore extracted in prior periods; this factor was partially offset by higher ore throughput

*On a 55% basis

 

Production results

KGHM INTERNATIONAL

Copper production lower by 6.5% than targeted in the 2020 budget

  • Lower production mainly by the Franke mine (lower-quality ore extracted – high carbonates content in the deposit), the Sudbury Basin (lower extraction and lower copper content in ore) and by the Robinson mine (extraction of lower copper-grade ore)

 

  • Lower silver production in the Sudbury Basin due to lower extraction and lower silver content in ore
  • Lower gold production by the Robinson mine (lower gold content in ore, lower recovery) and TPM in the Sudbury Basin (lower extraction, lower TPM content in ore)
  • Lower molybdenum production by the Robinson mine due to mining lowerquality ore from a transitional zone, with lower recovery due to higher clay minerals content

Production results of KGHM Polska Miedź S.A.

In 2020, the main objectives set by the Management Board in terms of production and occupational health and safety were:

  • optimal utilisation of the resource base and production capacity of the Company,
  • optimisation of Cu content in ore and concentrate.

in mining
  • expansion of mining operations within the Głogów Głęboki-Przemysłowy (Deep Głogów) Mining Area
  • improvement of the ore extraction technology, greater mining efficiency and improved occupational health and safety, achieved by:
    • adaptation of the geometry of mining systems to local geological and mining conditions
    • improvement of the efficiency of technological and active methods of limiting the threat of rock bursts and of other associated natural hazards
    • proper barren rock management in mining areas (selective extraction, siting of rock, mechanical ore mining),
  • a greater scope of work with respect to identifying gas-related hazards, and the use of new technical solutions and means of prevention to counteract this hazard,
  • commencement of work related to exploration of the “Retków” copper ore deposit in the “Grodziszcze” area
  • continued work on connecting the T/W-469 tunnel network with the projected sub-shaft area of the GG-1 shaft (T/W-169 tunnel network with D slopes)
  • construction of the GG-1 shaft, shaft sinking has reached a depth of 1231 meters, sinking of a shaft in the rock salt interval
  • continuation of the construction of the Central Air Conditioning System in shaft GG-1, in respect of construction of the Surface-based Central Air Conditioning System and the Ice Water Transportation System
  • implementation of Stage 1 of the “GG-2 Shaft Construction” Project – continuation of planning work and negotiation of transaction terms with the owner of the land plot. A design of geological works was produced
  • for the implementation of Stage 1 of the “Gaworzyce Shaft Construction” Project – Stage 1 of the Programming and Spatial Concept was completed and the shaft’s location was approved
  • maintaining the efficiency of self-propelled mining vehicles in an assortment required to execute production tasks
  • realisation of the planned scope of mine development and access work using the commissioning system at the level of 53.5 thousand running meters,
in-ore processing
  • maintaining the production capacity of individual Ore Enrichment Plants to process up to the amount and quality of ore supplied
  • maintaining the production of concentrates in an amount and quality necessary for optimal use of the production capacity of the furnace sections of the smelters
  • improving flotation enrichment technology,
  • processing trial of ore from the Lubin Mine – Polkowice Concentrator Division
  • exchange of ore screening systems from shafts RI and RIII in the Rudna Concentrator Division
  • completion of the replacement of a hydro cyclone battery in the Polkowice Concentrator Division, under strategy task “Modernisation of Classification Systems”
  • assembly and commissioning of 12 synchronous medium voltage engines with permanent SMH magnets for mill propulsion
  • commencement of over 60 technical and technological tests
in metallurgy
  • optimum utilisation of infrastructure, which enabled production targets to be fully met with respect to the main products
  • minimizing environmental impact by actions designed to improve the effectiveness of the dedusting and hermetic sealing processes, to decrease fugitive emissions
  • maintaining recovery levels of copper and silver in metallurgical processes
  • shortening by 8 days of the overhaul-related downtime of the flash furnace in Głogów I Copper Smelter and Refinery, whereby the overhaul was fully completed
  • continuation of the investment task related to the revitalisation of the tankhouse at Głogów I Copper Smelter and Refinery and a concurrent increase of electrorefining production capacities as a result of a new organisation of the house’s roof replacement works
  • increase of the share of recycling in copper production as a result of bigger processing of scrap at Głogów Copper Smelter furnaces and maximisation of scrap processing at all furnace stages at Legnica Copper Smelter
  • optimum management of semi-finished products between the metallurgical facilities,
in occupational health and safety
  • implementation, in line with the Company’s new strategy, of the planned task package of the Program to improve occupational health and safety at KGHM Polska Miedź S.A. “Think About Consequences” to the year 2023
  • implementation of the agreed components of the Program to remove the most common occupational safety hazards by using innovative technologies
  • implementation of a uniform approach to communicating the Policy, Vision, the OHS Golden Principles
  • ongoing monitoring of occupational hazards and execution of organisational and technical goals aimed at limiting occupational risks and accident rate
  • continuous improvement of the occupational safety and hygiene management system by the Divisions of KGHM Polska Miedź S.A. and implementation of the new OHS ISO 45001:2018 standard
  • commencement of new organisational and research initiatives aimed at improving occupational health and safety, in particular in the Company’s mines

Mining production

  • 301-1

In 2020, extraction of ore (dry weight) amounted to 29.7 million tonnes, which was 0.2 million tonnes less than in 2019.

The average copper content in extracted ore amounted to 1.49% and was slightly lower than the level achieved in 2019. The content of silver in the ore extracted was at a lower level than in 2019 and amounted to 48.0 g/ton.

As a result, the volume of copper in extracted ore was lower than in 2019 by 7.3 thousand tonnes of Cu, and amounted to 442.0 thousand tonnes. The volume of silver in extracted ore decreased down to 1,423 tonnes.

In 2020, 29.7 million tonnes of ore (dry weight) were processed (0.2 thousand tonnes less than in 2019). The lower amount of ore extracted by the Mining Divisions directly affected the amount of copper in concentrate, which was 392.7 thousand tonnes.

The concentrate production (dry weight) decreased against 2019 by 23.4 thousand tonnes.

The Silver content in concentrate was lower by 2.5% than in 2019.

Mining production of KGHM Polska Miedź S.A.

Unit 2020 2019 Change (%) IVQ’20 IIIQ’20 IIQ’20 IQ’20
Mined ore (wet weight) million tonnes 31.2 31.4 (0.6) 7.7 8.0 7.8 7.7
Ore extraction (dry weight) million tonnes 29.7 29.9 (0.7) 7.2 7.6 7.5 7.4
Copper grade % 1.49 1.50 (0.7) 1.47 1.48 1.50 1.52
Copper in ore thousand tonnes 442 449.3 (1.6) 106.5 111.9 111.8 111.8
Silver grade g/t 48 48.7 (1.4) 48.0 46.8 47.6 49.5
Silver in ore tonnes 1,423 1,456 (2.3) 349 354 355 365
Production of concentrate (dry weight) thousand tonnes 1,740 1,763 (1.3) 426 438 439 437
Copper in concentrate thousand tonnes 392.7 398.9 (1.6) 95.9 98.0 99.7 99.1
Silver in concentrate tonnes 1,218 1,249 (2.5) 301 300 305 312

Metallurgical production

The production of electrolytic copper fell by 5.2 thousand tonnes, i.e. 0.9%, compared to 2019. The lower production of electrolytic copper was a result of limited supply of copper scrap in H1 2020 which led to underutilisation of production capacities and overhaul downtime in Głogów I Copper Smelter and Refinery. In H2 2020, own concentrate was supplemented with purchased metal-bearing materials in the form of scrap, blister copper and imported concentrate, and the existing technological capacity was effectively used.

The production of other metallurgical products (silver, wire rod, OFE rod) derives from the level of electrolytic copper production and depends on the type of raw material used, and above all on market demand.

In comparison to 2019, the production of metallic gold fell by 215 kg, i.e. by 6.7%, and metallic silver production was lower by 77 tonnes, closing the year at 1,323 tonnes.

Metallurgical production of KGHM Polska Miedź S.A.

Unit 2020 2019 Zmiana
(%)
IVQ’20 IIIQ’20 IIQ’20 IQ’20
Electrolytic copper, including: thousand tonnes 560.4 565.6 (0.9) 148.5 131.1 139.8 141
– production from own concentrates thousand tonnes 413.3 418.3 (1.2) 126.2 81.3 102.8 103
– production from purchased materials thousand tonnes 147.0 147.3 (0.2) 22.1 49.9 37.0 38.0
Wire rod, OFE rod and CuAg rod thousand tonnes 259.5 266.1 (2.5) 62.9 65.4 61.2 70.0
Round billets thousand tonnes 14.9 ×
Metallic silver Tonnes 1,323 1,400 (5.5) 348 280 366 329
Metallic gold koz t 96.8 103.7 (6.7) 29.7 21.5 20.4 25.2
Refined lead thousand tonnes 30.2 30.1 +0.3 8.0 6.4 7.9 7.9

Main production goals

The main goals set by the Management Board in terms of production and occupational health and safety for 2021 are a continuation of actions taken in 2020, i.e.:

  • optimal utilisation of the resource base and production capacity of the Company,
  • optimisation of Cu content in ore and concentrate.

in mining
  • access and development work to intersect the deposit in the Deep Głogów mining area,
  • continuation of work related to exploration of the Retków copper ore deposit in the Grodziszcze area,
  • continuation of work related to prevention of gas-related threats (hydrogen sulphide and methane) and the use of new technical solutions and means to counteract this threat,
  • continuation of work to utilize the capacity of the input and output ventilation shafts in the interconnected mine ventilation system,
  • achieving a level of dilution of the extracted ore which is adequate to the deposit’s parameters,
  • continuation of the GG-1 shaft construction project,
  • continued construction of the central air conditioning system at the GG-1 shaft,
  • continuation of Stage 1 of the Project „Construction of the GG-2 shaft” – completion of planning work, acquisition of legal title to land, commencement of project works,
  • continuation of Stage 1 of the Project “Construction of the Gaworzyce Shaft” – conclusion of an agreement with the Municipality, acquisition of legal title to land,
  • maintaining the operational readiness of mining vehicles in an assortment required to execute production tasks,
  • realisation of the planned scope of mine development and access work using the 2021 commissioning system,
in-ore processing
  • improvement of energy performance of the machinery park in the Concentrators Division,
  • optimisation of vision parameters control in the technological process,
  • launch of the carbonate removal installation in Polkowice Concentrator – optimisation of the technological process of flow I after introduction of a new stream,
  • optimisation of the milling, classification and flotation process,
  • maintaining availability of the machine park and production capacity of individual Concentrators Division Areas to match the amount of ore supplied,
  • maintaining the production of concentrates in an amount and quality necessary for optimal use of the production capacity of the smelters and refineries,
  • searching for possibilities to use alternative and renewable energy sources in Ore Concentrators,
  • monitoring and examination of the impact of technological water on technological parameters and condition of technical infrastructure;
in metallurgy
  • increase of the share of imported concentrates in order to achieve high production levels of electrolytic copper, in the situation of lower own concentrate production,
  • continued increase of scrap processing in Głogów Copper Smelter furnaces,
  • planned implementation of the two-week overhaul of the flash furnace complex in Głogów II Copper Smelter and Refinery in April,
  • completion of the roof and wall replacement project in the tankhouse of Głogów I Copper Smelter and Refinery, started in Q4 2019, with practically minimised impact on the availability of electrolysers and copper cathodes production capacity,
  • maintaining high production of electrolytic copper in Legnica Copper Smelter, despite the shutdown of the only shaft furnace in H2 2020, connected with the growth in smelting own concentrates in modern Flash Furnace technology,
  • continued minimisation of environmental impacts by actions designed to improve the effectiveness of the dedusting and hermetic sealing processes, as well as optimisation of water and sewage management,
  • maintaining recovery levels of copper and silver in metallurgical processes and the availability of metallurgical equipment,
  • optimum management of semi-finished products between the metallurgical facilities,
in occupational health and safety
  • continued implementation of the Program to improve occupational health and safety in KGHM Polska Miedź S.A. “Think About Consequences”,
  • implementation of an action package to continue to effective mitigate the external threats due to the COVID-19 pandemic,
  • improvement of the occupational health and safety management system according to the ISO 45001:2018 standard, implemented in 2020,
  • continuation of pilot research into an anti-collision system for supporting operators (warning the machine’s operator of a potential collision with people or another machine) under a Program to remove the most common occupational safety hazards by using innovative technologies,
  • preparation and distribution of a new package of educational and instruction materials, to improve employee habits,
  • continual improvement of occupational hazards monitoring and execution of organisational and technical goals aimed at further limiting occupational risks and the accident rate,
  • searching for new innovative organisational and technical solutions designed to improve occupational safety, in order to meet the industry 4.0 challenges,
  • efficient transposition of new European and domestic requirements with respect to OHS into the Company’s internal regulations.

Sale

In 2020, the Company recorded a 1-percent increase in sales of copper products, which amounted in total to 561.0 thousand tonnes, compared to 557.0 thousand tonnes in the previous year. In 2020, the sales of copper cathodes increased to 300.7 thousand tonnes, or by 9% compared to 2019. Sales of copper wire rod and OFE rod fell by 3%, amounting to 258.6 thousand tonnes in 2020.

In 2020, the sales of metallic silver amounted to 1,369 tonnes, which represents a 2% fall in comparison to the 2019 volume. In 2020, there were no silver concentrate sales.

Gold sales in 2020 amounted to 100.1 koz t, which represents a slight fall relative to the previous year (-1%).

Sales volume of basic products of KGHM Polska Miedź S.A.

Unit 2020 2019 Change
(%)
IVQ’20 IIIQ’20 IIQ’20 IQ’20
Cathodes and cathode parts thousand tonnes 300.7 275.7 +9.1 89.0 63.9 80.3 67.5
Copper wire rod and OFE rod thousand tonnes 258.6 267.4 (3.3) 66.8 63.5 64.2 64.1
Other copper products thousand tonnes 17 13.9 (87.8) 0.4 0.5 0.3 0.5
Total copper and copper products thousand tonnes 561.0 557.0 +0.7 156.2 127.9 144.8 132.1
Metallic silver tonnes 1,369 1,393 (1.7) 379 281 364 345
Metallic gold koz t 100.1 101.4 (1.3) 32.8 17.1 19.8 30.4
Refined lead thousand tonnes 29.0 30.0 (3.3) 7.7 6.7 7.2 7.4

The total sales revenue of KGHM Polska Miedź S.A. in 2020 was PLN 19,326 million, which represents a 9% growth in comparison to 2019, when the sales revenue was PLN 17,683 million.

Revenues from copper product sales rose by 6% in 2020 and amounted to PLN 14,258 million (compared to PLN 13,474 million in 2019). The change in the sales volume and revenue of the “Other copper products” is related to the suspended production of copper billets in Legnica Copper Smelter. In view of the low profitability of copper billets production and sales, limited sales demand and lack of any possibility of significant costs restructuring, the billets production was discontinued as from 2020. At present, possibilities are examined to use the existing installation for production of other products, in line with market demand.

Revenues from metallic silver sales in 2020 were also higher (+24%) and amounted to PLN 3,453 million compared to PLN 2,789 million in 2019.

Despite the lower volume of metallic gold sales, sales revenues in this regard increased by 27%, or PLN 690 million, compared to PLN 543 million in 2019.

Revenues from contracts with customers of KGHM Polska Miedź S.A. (PLN million)

2020 2019 Change
(%)
IVQ’20 IIIQ’20 IIQ’20 IQ’20
Cathodes and cathode parts 7,593 6,533 +16.2 2,478 1,662 1,912 1,541
Copper wire rod and OFE rod 6,623 6,611 +0.2 1,874 1,678 1,540 1,531
Other copper products1 42 330 (87.3) 9 14 8 11
Total copper and copper products 14,258 13,474 +5.8 4,361 3,354 3,460 3,083
Metallic silver 3,453 2,789 +23.8 1,127 802 776 748
Metallic gold 690 543 +27.1 233 125 136 196
Refined lead 220 247 (10.9) 58 51 52 59
Other goods and services 336 394 (14.7) 93 76 82 85
Merchandise and materials 369 236 +56.4 94 55 166 54
Total sales revenue 19,326 17,683 +9.3 5,966 4,463 4,672 4,225
1) No production of round billets in 2020

Geographical breakdown of sales

In 2020, KGHM Polska Miedź S.A. earned most of its revenues from domestic sales, which amounted to 23% of total revenues. Amongst the Company’s other customers, the largest came from Germany (16%), China (14%), the United Kingdom (10%) and the Czech Republic (7%).

The figure below presents the geographical breakdown of sales revenues in 2020. Sales revenues also include results from the settlement of hedging instruments.

Costs

In 2020, the Company’s cost of sales, selling costs and administrative expenses (cost of products sold, goods and materials sold, as well as selling costs and overheads) amounted to PLN 16,161 million, and was 6% higher as compared to 2019. The Company’s cost of sales, selling costs and administrative expenses were substantially affected by the use of inventories, which translated in to a higher sales volume.

Total expenses by nature in 2020, as compared to 2019, were higher by 3%, mainly due to higher by PLN 196 million consumption of purchased materials (an increase of 5 thousand tonnes and a price higher by 3%), as well as a higher minerals extraction tax (PLN 105 million).

Costs by nature of KGHM Polska Miedź S.A. (PLN million)

2020 2019 Change
(%)
IVQ’20 IIIQ’20 IIQ’20 IQ’20
Depreciation of fixed assets and intangible assets 1 364 1 298 +5,1 408 309 322 325
Employee benefits expenses 3 835 3 594 +6,7 1 061 952 932 890
Materials and energy, including: 6 326 6 196 +2,1 1 706 1 719 1 377 1 524
external inputs 3 974 3 778 +5,2 1 100 1 145 810 919
Energy and energy factors 988 939 +5,2 260 235 243 250
External services 1 716 1 767 (2,9) 457 416 413 430
Minerals extraction tax 1 625 1 520 +6,9 505 442 334 344
Other taxes and charges 397 397 108 83 99 107
Other costs 123 124 (0,8) 51 20 36 16
Total costs by nature 15 386 14 896 +3,3 4 296 3 941 3 513 3 636

Expenses by nature, excluding external inputs and the minerals extraction tax, amounted to PLN 9,787 million and were higher as compared to the corresponding period of the previous year by PLN 189 million, mainly due to:

  • labour costs (PLN +241 million) – due to an increase in remuneration and a higher provision for the annual bonus,

depreciation/amortisation (PLN +66 million) – an increase due to investments completed in prior periods, at lower costs of:

  • consumption of materials and energy (-PLN 66 million) – mainly due to lower gas and coke prices, as well as lower consumption volume of technological materials,
  • external services (PLN -51 million) – mainly due to lower costs of mine development work and transport services.

The structure of costs by nature in 2020 is presented below. As compared to the previous year, they were at a very similar level.

The Company’s operating costs are decisively impacted by the costs of electrolytic copper production (before deduction of the value of by-products), whose share is about 90%.

Production costs of payable copper concentrate – C1 (USD/lb)

Cost of producing copper in concentrate – C1 (unit cash cost of producing payable copper in concentrate, reflecting costs of ore extraction and processing, transport costs, the minerals extraction tax, administrative costs during the mining stage, and smelter treatment and refining charges (TC/RC), less the value of by-products) was as follows: in 2019, 1.74 USD/lb and in 2020, 1.62 USD/lb, respectively. The cost was impacted by a weakening in the PLN relative to the USD, and higher silver and gold prices, which has an impact on the higher value of by-products.

Pre-precious metals credit unit cost of electrolytic copper production – from own concentrate (PLN/t) 

The pre-precious metals credit unit cost of copper production from own concentrate (unit cost before the deduction of the value of anode slimes containing, among others, silver and gold) is higher than that recorded in 2019by 1,206 PLN/t (5%), alongside a lower production from own concentrate by 5 thousand tonnes of Cu (1.2%). The increase in unit cost was affected mainly by higher costs of labour and depreciation and amortisation. The total unit cost of electrolytic copper production from own concentrate is lower than in 2019 by PLN/t 174 (-1%), due to higher market prices of precious metals, which caused and increase in anode slimes prices.

Production results of The KGHM Polska Miedź Group

In 2020, a slight (by 7.5 thousand tonnes, i.e. 1%) increase in the Group’s copper production was noted relative to 2019. The increase is applicable to the Sierra Gorda S.C.M. segment (+22.3 thousand tonnes for the share of 55%), primarily as a result of bigger ore processing and higher CU content. On the other hand, in the KGHM INTERNATIONAL LTD and KGHM Polska Miedź S.A. segments, there was a fall in production by 9.6 thousand and 5.2 thousand tonnes Cu, respectively.

The lower output of KGHM Polska Miedź S.A. was a result of a lower capacity and thickness of the ore seam, as well as the limited supply of copper scrap in H1 2020 and an overhaul downtime in Głogów I Copper Smelter and Refinery.

Lower production in KGHM INTERNATIONAL LTD. was noted in the Sudbury Basin, and Franke, and the Robinson mine.

Detailed information about production results can be found in the chapters devoted to the individual segments. Production results of the Group are given below.

Production results in the Group

2020 2019 Change
(%)
IVQ’20 IIIQ’20 IIQ’20 IQ’20
Payable copper (thousand tonnes) Group  709.1 701.6 +1.1 188.1 170.3 176.6 174.1
KGHM Polska Miedź S.A. 560.4 565.6 (0.9) 148.5 131.1 139.8 141
KGHM INTERNATIONAL LTD. 66.9 76.5 (12.5) 17.7 18.5 16.6 14.1
Sierra Gorda S.C.M. 1) 81.8 59.5 +37.4 21.9 20.7 20.2 19
Total precious metals [koz t]
Group
194.3 220.1 (11.7) 49 45.3 48.5 51.5
KGHM Polska Miedź S.A. 96.8 103.7 (6.7) 29.7 21.5 20.4 25.2
KGHM INTERNATIONAL LTD. 66.1 85.2 (22.4) 11.7 16.2 20.4 17.8
Sierra Gorda S.C.M. 1) 31.4 31.2 +0.6 7,6 7.6 7.7 8.5
Silver (tonnes)
Group
1,353 1,417 (4.5) 356 288 373 335
KGHM Polska Miedź S.A. 1,323 1,400 (5.5) 347 280 366 329
KGHM INTERNATIONAL LTD. 2 2 1 1
Sierra Gorda S.C.M. 1) 28 15 +86.7 8 8 7 6
Molybdenum (million pounds)
Group
9.4 11.9 (21) 2.2 1,9 3.5 1.8
KGHM Polska Miedź S.A. ×
KGHM INTERNATIONAL LTD. 0.4 0,8 (50) 0.1 0.1 0.1 0.2
Sierra Gorda S.C.M.1) 9.0 11.2 (19.6) 2.1 1.9 3.4 1.6
1) 55% share of the Group

Structure of consolidated sales revenue

The geographic and product structures of the consolidated sales revenue of the Group are presented in the charts below. In accordance with the adopted principle of consolidation by the equity method, sales revenue do not include revenues of the Sierra Gorda S.C.M. segment. Detailed information about sales by segment can be found in the chapters devoted to the results of individual segments.

Production costs of payable copper C1 in The Group

Unit costs in the Group’s segments are presented in the table below. Detailed description of the individual items can be found in the chapters devoted to the individual segments.

Production costs of payable copper C1 in the Group (USD/lb)

2020 2019 Change (%) IVQ’20 IIIQ’20 IIQ’20 IQ’20
Group 1.59 1.70 (6.5) 1.61 1.56 1.58 1.61
KGHM Polska Miedź S.A. 1.62 1.74 (6.9) 1.68 1.61 1.59 1.58
KGHM INTERNATIONAL LTD. 1.91 1.74 +9.8 2.00 1.62 1.83 2.19
Sierra Gorda S.C.M. 1.19 1.41 (15.6) 1.08 1.21 1.34 1.15

C1 Unit cost*

KGHM Group

  • The decrease in C1 cost in KGHM Polska Miedź versus 2019 was due to the weakening of the PLN vs the USD and to higher silver and gold prices, meaning a higher valuation of by-products
  • The increase in C1 by 10% in KGHM INTERNATIONAL was due to lower copper sales volume which was partially offset by higher revenues from sales of associated metals (+5%)
  • The decrease in C1 cost in Sierra Gorda by 16% was due to a higher copper sales volume, lower fuel prices, lower labour costs and lower costs of external services, materials and other costs categories
  • The decrease in C1 was achieved alongside a decrease in revenues from sales of associated metals

 

*C1 cost – cash cost of concentrate production reflecting the minerals extraction tax, plus administrative expenses and smelter treatment and refining charges (TC/RC), less depreciation/amortisation and the value of by-product premiums, calculated for payable copper in concentrate

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