Description:
(provided by the company) | We are a company with deep traditions, rich in experience and numerous achievements. It is enough to mention that in 2001 we celebrated the 40th anniversary of the founding of KGHM, and a year later the 45th anniversary of the discovery of the copper deposit by Dr. Jan Wyzykowski and the 80th birthday of a pioneer of KGHM - Dr. Eng. Tadeusz Zastawnik, who for many years served as General Director of the Company. Tradition, remembrance, caring for values - these are the foundations on which our current vision has been based. We shall eternally express our gratitude and honor the memory of those who discovered the copper deposit, and the pioneers who built KGHM.
KGHM Polska Miedz S.A. is a modern and dynamically-managed enterprise which is not only an attractive employer, but also a place of friendly people who together create the value and vision of the Company.
We are one of the largest Polish exporters, one of the largest and most significant enterprises in the Polish economy, a company which is stable and worthy of investor trust, from the financial point of view as well as in the realization of its strategy.
KGHM Polska Miedz S.A. is above all one of the largest companies in the world involved in the production of refined copper and silver. In 2004 KGHM produced 550 066 tonnes of copper (3,4% of world production, 6th place globally). This is mainly electrolytic copper, referred to as "four zeros copper" because of its quality (99.99 percent pure copper) and the more highly-processed wire rod, produced in accordance withe the ISO 9002 norm. The cathode copper produced by the Company is registered as "Grade A" by the London Metal Exchange.
KGHM Polska Miedz S.A. is also amongst the world's top four silver producers - in 2004 silver production amounted to 1 344 tonnes (3rd place globally) - the silver being recognized as "Good Delivery - Silver" and traded on the London Bulion Market. Thanks to this the silver produced by the Company may be used in bank settlements. Other products of KGHM include: gold, lead, sulphuric acid, rock salt, and others.
The founding event in the history of KGHM was the discovery in 1957 by Jan Wyzykowski of a copper ore deposit in the vicinity of Lubin and Sieroszowice, in south-western Poland. Mining of this copper deposit on an industrial scale began in 1968. At that time KGHM functioned as a multi-divisional State-owned enterprise. Besides the mines and smelters it also included several dozen service facilities.
On 12 September 1991 KGHM was transformed into a State-owned, joint stock company under the name KGHM Polska Miedz S.A. This was the first step in the later privatization of the company. In July 1997 the shares of the company debuted on the Warsaw Stock Exchange, while its GDRs (Global Depositary Receipts) appeared simultaneously on the London Stock Exchange. As at December 31st, 2004 the largest shareholders of KGHM were: the Polish State Treasury, which owned 44.28% of the share capital and the owners of Global Depositary Receipts (GDRs), who owned 5.04% of the shares of the Company.
KGHM is the largest copper producer in Europe to own its own copper deposit and operate under a fully-integrated production structure, from initial mining to the final, high-quality product. The Company is one of the largest Polish exporters.
The production of non-ferrous metals in KGHM is performed in three mining divisions (ZG Lubin, ZG Polkowice-Sieroszowice and ZG Rudna), two smelting/refining facilities (HM Legnica and HM Glog?w), a copper wire rod plant (HM Cedynia) and a precious metals plant. Copper resources in the Copper Belt are estimated at 33.5 mln tonnes. This is one of the largest single deposits of this metal in the world. Current mining of this deposit is done at a level of from 650 do 1150 m. KGHM will be in a position to mine at a level deeper than 1150 m in a decade or so. Initiating mining at deeper levels requires the solving of problems connected with higher temperatures, which affects mining costs.
The second most important product of the Company is silver. It appears in the excavated ore together with copper. The geological amount of silver is estimated at 91.4 thousand tonnes. It is sold in the form of granulate and bars.
Copper in KGHM is mainly recovered from primary ore (the copper ore deposit), from which concentrate is obtained (containing appx. 27% copper). This concentrate next is processed in the smelter/refineries into anode copper (appx. 99% copper), and then undergoes electrolysis treatment to produce refined copper (containing 99.99% copper). This method is applied to produce copper from sulphuric copper ores.
The Company has an independent commercial structure. Sales are carried out through the Commercial Department, and is assisted by two subsidiary companies: KGHM Polish Copper LTD in London and Kupferhandelsges. m.b.H. in Vienna (both are 100% owned by KGHM Polska Miedz S.A.). The main export markets are Germany, France, Great Britain, Austria and Belgium.
KGHM exports the majority of its production (with only a third of revenues arising from domestic sales). Despite the fact that KGHM is the main supplier of copper for Polish industry, it is not able to apply monopolistic practices with respect to its products. This is because Polish customers enter into contracts based on copper prices set by global markets.
The financial results of KGHM are dependent on global metals prices, as well as on the currency exchange rate. Nearly all revenues are expressed in foreign currencies, primarily the US dollar. Copper represents around 77% of sales in KGHM, while silver accounts for 18%. Remaining revenues come from the sale of gold, lead and other products. Copper sales are based on average monthly copper prices as set on the London Metal Exchange, plus a defined margin.
KGHM is a company which is continuously pursuing a program for growth and for cutting costs. The deep restructurization of KGHM has enabled a reduction in employment from around 42 thousand persons in 1992 to 17 767 employees at the end of 2004. This restructurization has also enabled the separation from the core business of those activities not directly connected with the production of copper into subsidiaries, which in turn will eventually be disposed of.
The long term development program of KGHM anticipates a further expansion of production and the production of other metals. The Company is aiming at optimum exploitation of its production capacity from its own resources, and is also seeking new resources outside of Poland. Normal practice for a company expanding abroad is to form a joint venture with other companies in this sector, although KGHM does not exclude the possibility of independent action in smaller projects. In 1997 a preliminary trial run at mining the rich copper and cobalt Kimpe deposit in the Republic of Congo was launched.
In pursuit of diversification of its activities, the Company invests in areas which have the potential to represent "strategic substitutes", and which do not include metals production. At the moment the investments in telecommunications (Polkomtel, Telefonia Dialog) serve this purpose. In addition, KGHM is actively engaged in the growth of the local region by exploiting the economic strength of the Company and by supporting local entrepreneurship.
KGHM Polska Miedz S.A. is not only a modern company in the sense of the technology which its employs, but also in its adherence to environmental protection standards. Over the last ten years KGHM has been consistently carrying out a program of environmental protection, with total expenditure in this regard reaching over PLN 500 mln. As a result of investments carried out the impact of the copper industry with respect to emissions of hazardous substances, waste flows and tailings has been reduced to a level achieved in the most highly-developed countries, with the Company having one of the cleanest industrial operations in Poland. In 2001, in a prestigious competition hosted by the Minister of the Environment, KGHM was honored with the title Leader of Polish Ecology for its project entitled "Protection of the atmosphere as an element of a complex system of environmental policy". In 2001 KGHM was honored with the title Environment Friendly Firm by the President RP and Minister of the Environment. In 2002 KGHM was honored with Gold Card of Work Leader by CIOP.
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