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

Protection of the natural environment

KGHM Polska Miedź S.A., as one of the largest socially responsible companies, takes action to reduce its impact on the environment.

The concept of sustainable development, including conservation of the natural environment, is one of the most significant values driving the Company’s activities.

In pursuing the slogans and values presented above, we are also guided by an awareness of our responsibility not only to the current generations but also to future ones. Therefore, as regards sustainable development actions, we endeavour to find the best solutions serving the purpose of satisfying the demand for copper and other metals in connection with the growing human population (which is estimated to exceed 9 billion by 2040). At the same time, we are aware of the constant growth of the Earth Overshoot Day (for 2019, demand for the Earth’s resources exceeds what it can regenerate by 75%). The trend is shown by the graphs below:

Źródło: ONZ (2013)

Źródło: (26.06.2019)

This tell us to seek solutions for satisfying the existing market demand and also protecting the natural environment.

We prepare and implement the actions in compliance with regulations in force, sometimes even going beyond specific trends and laws. Informing about our activity concerning broadly-conceived environmental protection, we follow the guidelines of the document entitled “Implementing the Recommendations of the Task Force on the Climate-related Financial Disclosures (TCFD)” of June 2017 as well as the Communication from the European Commission 2019/C 209/01 of 19 June 2019 Guidelines on non-financial reporting: Supplement on reporting climate-related information.

Although KGHM Polska Miedź S.A. has consistently implemented all the changing regulations about environmental protection for years, now it is a completely new situation. As a result of the dynamism, momentum and comprehensive nature of the European Green Deal, businesses are faced with challenges unknown so far.

The first and most fundamental of these is the rapidly growing number of regulations relating to climate and environmental protection. This is compounded by an increase in their complexity, resulting in additional costs and risks to production processes. In effect, regardless of the intentions of the initiators and creators of these standards, the continuity of European value chains is at risk.

Another issue relates to the impact that the central political objective of the EU has on the wider business environment. Its scale increasingly goes beyond the literal requirements of particular items of legislation. What is going on here is that there emerges a set of unwritten (but frequently required on a par with formally binding) rules and expectations concerning broadly conceived environmental protection. As a result, it is not only important now just to comply with formally binding standards, but also to keep abreast of trends and the associated social and market expectations. For business, this is another risk, but also an opportunity. Those who will accurately diagnose the development of such trends will be able to adapt to them in advance, improving their own competitive position.

An important issue is also the connection between the standards and trends on the one hand and the actual possibilities of their implementation on the other. In some areas relating to environmental protection, we observe today that the rapid process of making requirements stricter is not accompanied by adequate technological progress to achieve the desired objectives.

All these trends and regulations must be approached in a systemic and reasonable manner. We must not panic, but neither should we ignore the opportunities and threats. Since 2019, I have been the head of a regulatory team at KGHM Polska Miedź S.A., whose task is just to identify the risks appropriately so as to be able to defend ourselves against them or use them as weapons on the competitive market. Our Company, because of conducting business responsibly, is already now the European leader in the production of non-ferrous metals. Our clients appreciate the fact that the products bought by them are produced in a company operating in accordance with the highest global standards, in compliance with the principles of sustainable development. I am deeply convinced that we will manage also in a new green Europe defined by the New Green Deal.

Radosław Żydok
Director of the Regulatory and Strategic Analyses Department

Pro-ecological investments

KGHM Group

Over 186 mn PLN

Spent in 2020 by KGHM on pro-ecological investments1

[including more than PLN 43 million on construction
of an installation to eliminate aresenic and mercury
from gases at the Solinox installation in the Legnica
Smelter/Refinery under the BATAs Program]

1 Reducing emissions of pollutants to the atmosphere

Using the definition and the methodology of identification of natural capital prepared by Natural Capital Coalition, the KGHM Group has considered the following natural resources as the source of its economic and social benefits: mineral resources (ferrous and non-ferrous metal ores, sodium as well as potassium and magnesium salts, organic or mineral aggregates, and petroleum products), water, trees (wood) and air.

Based on the idea of sustainable use of natural capital, we have defined three key areas of interest for the KGHM Group:

protection of climate and ambient air
water and sewage management
waste management and implementation of the idea of a circular economy

Protection of Climate and Ambient Air

The KGHM Group perceives the occurrence of significant climate changes caused by an increase in average temperatures. We are also aware of the fact that the main cause of this process is the growing emission and accumulation of greenhouse gases (GHG) in the atmosphere (according to the IPCC scientific consensus). This disturbed the natural circulation of these gases, consisting in their emission being balanced by the level of assimilation in the environment. As a result, in particular in recent years, we have observed an increased dynamics of the so-called greenhouse effect. These phenomena cause the occurrence of dynamic weather events (thunderstorms, rainstorms, hurricanes, droughts) and climate changes (increase in the average annual temperature, decrease in the average precipitation, and further lowering of water tables as well as the progressing steppe formation).

Feeling responsible for the way of conducting its business activity, the KGHM Group is commencing work on slowing down the pace of the adverse climate changes. By this, we are joining global actions of the international community as well as individual countries and companies aiming to achieve the sustainable development goals which are part of the so-called 2030 Agenda for Sustainable Development adopted by the UN.

We will ultimately perform these actions in a fully systematic manner, as recommended in the Communication of the European Commission. It has established guidelines on non-financial reporting: Supplement on reporting climate-related information (2019/C 209/01), including an Annex on Recommendations of the Task Force on Climate-related Financial Disclosures (TCFD), in the part applicable to the Metals and Mining sector. Despite the non-compulsory, till now, nature of the documents listed above, the Group commenced work for the introduction of the resulting systematic actions and reporting method.

Their point of departure was to determine the significance of the information related to climate for the KGHM Group. Based on the guidelines set by the experts from the AGH University of Science and Technology and using a reporting factor significance examination tool, we have determined the level of significance of the information related to climate to be very high for the KGHM Group. We have also pointed out that its significance will continue at the same level in the short, medium, and long term as well as in the entire value chain of the KGHM Group.

Defining each timeframe, we have assumed the following:

  • the short term is the timeframe of the current strategy of the KGHM S.A. Group
  • the medium term is the 2030 horizon, i.e. the year when the emission targets set by the European Union under the Paris Agreement (COP21) should be met
  • the long term is the 2050 horizon, i.e. the year when the European Union intends to achieve climate neutrality

We have also assessed that the KGHM Group does not and will not have a very high direct impact on climate in the reporting period and in future periods. The main products manufactured by the Group are provided as raw materials to the industries which will be strongly affected by the low-carbon transformation (construction, automotive production, power engineering). The transformation will involve the use of new technologies reducing greenhouse gas emissions and replacement of the current high-emission technologies. Compared to the solutions used to date, low-emission technologies utilize the Group’s products to a greater extent, in particular copper, silver or lead. Accordingly, achieving climate neutrality will be possible only if sufficient volumes of metals produced by the Group are available. In 2017, the World Bank pointed out in its report that by 2050, 300% more metal will be needed for wind turbines, 200% more to produce solar panels and as much as 1000% more to manufacture batteries. In the period of 2020-2050, the technologies that are expected to reduce the EU’s greenhouse gas emissions by 75% will require 22 million tons of copper. Market trends caused by the above conditions will have a positive effect on the demand for the Group’s products.

Looking at climate change more broadly, the KGHM Group also recognizes the impact of environmental conditions on its own financial position and the resulting significant and long-term physical risks. The observed intensification of weather anomalies might influence the Group’s production process, among others, through the lowering of the water level in rivers, which will affect possibilities of discharging excess salinated over-sediment water from the Żelazny Most Tailings Storage Facility (the discharge volume is strictly linked to the flow of water in the Odra river). It was also determined that the risk of electricity and other energy carrier supply interruptions due to rainstorms and hurricane winds was a significant issue.

It must be stated that the KGHM Group has the sufficient resources, knowledge, skills, and attitude to join in the application of low- and zero-emission energy sources, emission reduction, and energy efficiency improvement.

  1. The Company’s participation in the European emissions trading system (ETS), through monitoring and reporting carbon emissions and purchasing emission allowances. This builds the awareness of the influence of climate conditions on the Company’s financial standing and stimulates it to seek and implement new low-emission solutions and technologies. As a result of such actions, KGHM has reduced CO2 emissions from metallurgical processes by changing the shaft furnace technology into the flash furnace one and also has replaced some fine coal-fired units by low-emission natural gas-fired combined cycle units.
  2. In accordance with the best available techniques “BAT” conclusions for the non-ferrous metals industries published in the EC Implementing Decision 2016/1032, KGHM is carrying out investment processes in order to adapt the installations to a further reduction of emissions and the adverse environmental impact.
  3. The KGHM Group has initiated works on a climate policy which will be a systemic solution for implementing the Communication of the European Commission being Guidelines on non-financial reporting: Supplement on reporting climate-related information (2019/C 209/01), including an Annex on the Task Force on Climate-related Financial Disclosures (TCFD) (in the section concerning Metals and Mining). In the medium- and long-term perspective, it will also address quantitative goals regarding:
    • reduction of direct GHG emissions (scope 1), and indirect ones (scope 2 and 3)
    • energy efficiency improvement
    • increase in the use of energy from renewable sources
    • minimisation of actions in regions exposed to a long-term or acute physical risk
    • increase in the percentage of products related to activities satisfying the criteria of a significant contribution to mitigating the effects of climate changes or adjustment to mitigating the effects of such changes
    • engagement in the green finance system resulting from the new taxonomy
  4. The KGHM Group has taken and will continue to take its own actions, also in the future, for climate and ambient air protection without any regulatory enforcement. A summary of these activities for 2020 is presented below in this section.

Water and wastewater management

Water is one of the most valuable natural resources. To confirm that the company’s activities comply with strict environmental standards, KGHM Polska Miedź S.A. regularly monitors the quality of ground and surface water in the vicinity of its plants.

To produce copper, it is necessary to use water, among others, to enrich ore (by flotation), to transport waste by water, and also in the production process in smelters.

Water in the ore enrichment (flotation) process
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KGHM Polska Miedź S.A. has three operational underground copper mines, which mine the ore at depths of 400-1200 m. Because of the constant inflow of water from the rock mass into the mine workings, in order to make it possible for the mines to operate, it is necessary to pump water to the surface all the time (every 24 hours, we remove approximately 85,000 m3 of saline mine water). Depending on the depth of the ore deposit, water may contain from 0.2 to 140 g/l of Cl and about 2.8 g/l of SO42. Mine water extracted from deeper parts of the deposit are more salinated, but the volumes are smaller.

On the surface, retention reservoirs are located next to every mine and every ore enrichment plant. They collect rainwater, overflows of cooling water as well as extracted mine water. Water from the reservoirs is pumped into the flotation tailings ponds (in some cases mine water goes there directly). As a result, neither mine water nor wastewater is discharged into local rivers. At ore enrichment plants, all water is stored in closed systems and used for hydrotransporting flotation tailings to the Żelazny Most tailings storage facility, where suspended solid particles are sedimented. Water from the Żelazny Most Tailings Storage Facility returns, through a system of decantation towers, to the ore enrichment plants.

Because there is a constant inflow of mine water and rainwater into the system, excess water must be removed. Water from the Żelazny Most Tailings Storage Facility is discharged by gravity through a 20 km long pipeline to the Odra river. The volume and quality of discharged water is closely monitored. The general rule is to keep the concentration of the sum of Cl- and SO42- below 1 g/l in the mixed water of the Odra river below the point of discharge. In practice, the discharged water volume is controlled based on a formal table, which takes into account the current flow and salinity of the Odra river. The discharge permit also contains other provisions concerning the concentration of dissolved substances and the water flow rate. Water may be discharged only if the flow of the Odra river is greater than 17.5 m3/s and the flow of the discharged decanted water is less than 2 m3/s. The total level of suspended solids in the discharged water must be maintained under 35 mg/dm3. The size of the flotation tailings pond, especially its surface area, makes the sedimentation of tailings very effective and the overall level of suspended solids is usually kept below 35 mg/dm3. During windy weather, however, higher concentrations of suspended solids can be observed, which requires additional treatment. This situation is monitored through continuous measurements of turbidity of the discharged water. If it is too high then the decanted water is transferred to a nearby wastewater treatment plant to reduce the volume of suspended solids. After this treatment, the water is pumped into a pipeline which discharges it into the Odra river.

Water in the electrolytic copper production process
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KGHM Polska Miedź S.A. has two operational smelters: the Legnica Copper Smelter and Refinery with a shaft furnace and the Głogów Copper Smelter and Refinery with two flash furnace installations.

Both smelters consume significant amounts of water (approximately 11 million m3 per year), which is supplied by Energetyka Sp. z o.o., a KGHM Group company (water collected from the Kaczawa river is directed to the Legnica Copper Smelter and Refinery, while for the needs of the Głogów Copper Smelter and Refinery, water drawn from the Odra river is supplied).

The water used in production processes is routed back to Energetyka for treatment. The industrial wastewater treatment plants operating for the needs of the Głogów and Legnica Smelters specialize in the removal of heavy metals, including arsenic, mercury and cadmium compounds, which are especially problematic. The wastewater treatment technology relies mainly on neutralisation processes supported by coagulants and flocculants.

Because of the high quality of wastewater, approximately 30% of its global stream is reused for production processes in the smelters.

Approximately 8 million m3 of the remaining treated wastewater is discharged to the Odra river (in the case of the Głogów Copper Smelter and Refinery) and to the Pawłówka stream, which feeds the Kaczawa river (in the case of the Legnica Copper Smelter and Refinery).

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