Manufactured capital

Production at KGHM Polska Miedź S.A. is a fully integrated production process whereby the end product of one technological phase forms the input (intermediate product) for the subsequent phase.

Mining in KGHM Polska Miedź S.A. is performed by three mining divisions: Lubin, Rudna and Polkowice-Sieroszowice. In the subsequent phase the Concentrators Division prepares concentrate for the smelters and refineries, while the Tailings Division is responsible for storing and managing the tailings generated by the copper ore enrichment process. The organisational structure of KGHM includes two metallurgical divisions: the Legnica Copper Smelter and Refinery and the Głogów Copper Smelter and Refinery, as well as the Cedynia copper wire rod plant. These two divisions belong to the prestigious Copper Mark program and may use this certificate that confirms efficient copper production in accordance with the highest standards. In addition, a high quality copper scrap processing unit was installed within the core production line of the Legnica Copper Smelter and Refinery, which is the first stage for the Hybrid Smelter being designed in Legnica. Ultimately, it will be supplemented with the Scrap Trading Base, where the feedstock will be prepared for remelting at the Legnica Copper Smelter and Refinery and the Głogów Copper Smelter and Refinery. As part of the first stage of the Hybrid Smelter in Legnica, the copper scrap processing technology with the use of a Revolving Casting-Refining (RCR) furnace was applied. The applied RCR furnace permits remelting copper scrap with an average 95% Cu content with the optimum efficiency up to 90 thousand tonnes of anode copper per year.

In addition to the above, work was also carried out in exploration areas. Geological work continued under the „Retków-Ścinawa” and „Głogów” concessions. At the start of November 2022 the concession-granting body, at the request of KGHM, confirmed geological documentation for another copper ore deposit called „Retków-Grodziszcze”. The „Retków-Grodziszcze” deposit was separated from the exploration concession „Retków-Ścinawa”. In addition, in March 2022 the concession for the „Głogów” area was altered. Geological work also continued within the Synklina Grodziecka and Konrad concession areas. Additionally, analytical and conceptual work was carried out on synergies in concession work between KGHM’s neighbouring geological concession areas in the „Bytom Odrzański” concession. Within the Kulów-Luboszyce concession area, in turn, exploration work continued using surface-based drillholes. In the Radwanice concession area, geological exploration work was carried out using underground mine workings, and surface-based geophysical research was performed. In the Puck concession area, in turn, work began on subsequent drillholes. The concession was also amended – by approving an addendum to the Geological Works Project. In terms of the „Nowe Miasteczko” concession, in turn, a concept was developed to conduct further geological work. Consequently, a request to alter the concession was submitted to the concession-granting body.

The segment operates three mines (Robinson Mine and Carlota Mine in the United States and McCreedy West Mine in Canada) as well as two mining projects, Project Victoria and Project Ajax.

The Robinson Mine is located in the state of Nevada. It includes 3 large pits: Liberty, Tripp-Veteran and Ruth. Currently, Ruth is in operation. The sulphide ore mined by conventional methods is then enriched by flotation. The final product is a copper-gold concentrate and, separately, a molybdenum concentrate. 

The Carlota mine is located in the Western part of the Miami-Globe mining region, in the state of Arizona. In the Carlota mine copper ore is extracted by conventional methods typical for open-pit metals mines, i.e. the ore is mined by blasting and then transported by haulage trucks. Production in the Eder South area resumed in 2018, while mining operations in the Eder North area began in 2021. Due to the nature of the oxide ore, it is processed using the heap leach, solvent-extraction and electrowinning method. The end product is electrolytic copper in the form of cathodes. As of 30 June 2022, the criteria set by IFRS 5 under which Carlota Copper Company was classified as an asset held for sale were reassessed. As a result of the analysis, the Parent Entity’s management reclassified the company’s assets and liabilities to continuing operations as of 30 June 2022, due to the fact that a sale was not highly probable. The process of selling Carlota Copper Company’s mining assets has not been completed. In accordance with IFRS 5.27, the recoverable amount of Carlota Copper Company’s assets was determined immediately after reclassification. There were no significant differences from the carrying value as of 30 June 2022. In November 2022, the process of selling Carlota Copper Company resumed, but in the opinion of the Parent Entity’s Management Board, it is not advanced enough to conclude that a sale is highly probable. This way, as at 31 December 2022, the company’s assets and related liabilities are not recognized as held for sale. 

The Sudbury Basin is located in central Ontario in Canada, approx. 400 km north of Toronto. In this region KGHM INTERNATIONAL LTD. owns a variety of assets; however, since April 2019, mining has only been conducted in the underground McCreedy West mine due to the fact that the Morrison/Levack mine was placed into Care & Maintenance. Extraction is through mining methods which are dependent on the geometry of the deposit – mainly a mechanised method of selective extraction using undercutting of successive levels from bottom to top at various mine levels. All of the ore extracted from the mine, containing copper, nickel and precious metals, is processed in the Clarabelle plant in Sudbury, owned by Vale.

This Victoria Project is located in the Canadian province of Ontario. In 2022, work continued at the project site to prepare selected elements of surface infrastructure for further development of the project. Among other things, the construction of the shaft tower of one of the two target shafts has been completed, there has been significant progress in the construction of the foundations of the hoisting machinery building, the construction of the water treatment station has been completed. Work on the mine water reservoir was also underway. In addition, engineering work related to the construction of the production shaft also continued, as did activities related to maintaining good relations and cooperation with key project stakeholders.

The Ajax project is located in British Columbia, Canada. Since the EA Certificate has not been granted, in 2022 the work focused mainly on monitoring and securing the project site in accordance with regulatory requirements.

The segment now includes the Sierra Gorda Mine. Until 26 April 2022, it included also the Franke Mine. 

The Sierra Gorda mine is located in the Atacama desert, in the north of Chile. The mine commenced commercial production (since then it has prepared statements of profit or loss) on 1 July 2015. The ore is extracted using explosives, and next is loaded and hauled away in trucks to the processing plant, where it is crushed and milled. The end product of Sierra Gorda’s processing plant is copper concentrate and molybdenum concentrate. In 2022 Sierra Gorda focused on implementing an optimisation program to improve the operation of the mine, processing plant, infrastructure and the tailings pond. Currently, most of the oxide ore resources planned for processing have been mined and deposited near the location of the future copper leaching and recovery plant (SX-EW).

In Q4 2021, an agreement was reached between KGHM Polska Miedź S.A. and the then second joint venture partner of Sierra Gorda S.C.M. – Sumitomo (Sumitomo Metal Mining Co., Ltd. and Sumitomo Corporation) regarding the sale of the SG Oxide project to Sierra Gorda S.C.M., with the sale date set for 1 January 2022. The cash payment was made on 4 March 2022, and the gain on the sale was PLN 135 million. The Sierra Gorda Oxide project involves the leaching of the copper oxide ore of Sierra Gorda on a permanent heap and the production of high-quality copper cathodes in a solvent extraction and electrowinning (SX-EW) installation, with a production capacity of approx. 30 thousand tonnes per year. On 26 April 2022, the KGHM Group sold 100% of the shares of Sociedad Contractual Minera Franke, which owns the Franke mine in Chile, to Minera Las Cenizas S.A. for a negotiated initial purchase price of USD 25 million.