Letter from the President

Thanks to the tremendous discipline and commitment of our employees, effective management and forward-looking action, we have achieved very satisfactory results: we have maintained the targeted levels of payable copper and silver production, we are recording an increase in revenue in the KGHM Group and its strong operating result, despite operating in a challenging macroeconomic environment. Russia’s aggression against Ukraine, affecting, among other things, the prices of metals and energy commodities, China’s uncertain economic outlook, rising energy, fuel and food prices that have translated into high inflation – these are the challenges we have faced and continue to face. A significant part of the global increase in price dynamics is precisely due to the rising prices of energy carriers, which are often an inherent cost factor throughout the economy, including the mining and metal processing sectors.

At this point, I would especially like to thank all employees for their diligent and demanding work, as well as their commitment and responsibility. Thanks to a wealth of experience, open-mindedness and continuous improvement of competence, our Company has built a unique culture of interaction and achieved a high position in the international arena, ranking seventh among the world’s mining copper producers and second in the world in silver production.

The Company’s mission statement reflects its goal “To always have copper” with its consistently pursued vision “To effectively use its resources to become a leader in sustainable development.”

Last year, we continued our key investment projects. We have completed the sinking of the GG-1 shaft to a level of 1,348 meters, which is now the deepest mining pit in Poland. This unique project required us to take an innovative approach and use state-of-the-art technological solutions taking into account climate considerations. We are also implementing our proprietary solutions at another key investment project, the Tailings Segregation and Compacting Station at the Żelazny Most Tailings Storage Facility. Ahead of schedule, we completed an overhaul shutdown at the Głogów Copper Smelter and Refinery. We are constantly working to extend KGHM’s value chain and to develop in line with the idea of a circular economy. At the Legnica Copper Smelter and Refinery, we are continuing the Hybrid Smelter program, which addresses the needs of copper recycling.

In January 2022, a fifth element – Energy – was added to the four proven Es (Efficiency, Ecology, Elasticity/flexibility and E-industry) in our strategy. We plan that by 2030, 50% of the electricity consumed by KGHM will come from its own sources, including RES. Our Sierra Gorda mine is already 100 percent powered by renewable energy. In Poland, we are also developing PV projects, both by building our own installations and buying green energy from the market. In 2022, among other things, we entered into a contract to purchase all the energy that will be generated at the new Żuki solar power plant in the Wielkopolskie Voivodeship – that is 5,300 MWh/year from nearly 10,000 photovoltaic modules. Last year, we also submitted Poland’s first application for the evaluation of small modular reactor (SMR) technology to the National Atomic Energy Agency, and in February we signed an agreement with NuScale to begin work on implementing advanced small modular reactors (SMRs) in Poland. We are also looking at the opportunities related to wind energy and the potential of hydrogen.

We are also a leader in the energy transition in Poland because of our groundbreaking research and development projects. In the Copper Basin, an innovative technology using copper-silver alloys is being tested that can significantly reduce electricity transmission losses. Already now, on the experimental section of the line in the Copper Basin they are about 20% lower.

We also prioritize environmental activities and pro-environmental investments. We are implementing the Climate Policy adopted in 2021, we have calculated the balance of Scope 1, 2 and 3 greenhouse gas emissions for 2021 for the KGHM Polska Miedź S.A. Group, and we are continuing the Program to adapt the Company’s technological installations to the requirements of BAT conclusions for the nonferrous metals industry and to restrict emissions of arsenic (BATAs) In 2022, we put into operation six more installations that significantly improve air quality.

We care about the safety of the environment in which we operate, local communities and Group employees. Our efforts in the field of occupational safety are confirmed not only by the evaluations of external auditors or by the Safe Work Leader Card for 2023-2024, which has been awarded once again for achievements in the area of occupational health and safety improvement, but also by accident rate figures. The LTIFR ratio for KGHM Polska Miedź S.A. is 5.05. The number of workplace accidents was 149, lower by 16 compared to the 12 months of 2021. The TRiR ratio for the international assets (total for the employees of the KGHM INTERNATIONAL LTD. Group and Sierra Gorda S.C.M. and their subcontractors) in 2022 is 0.34.

Safety is also one of the main areas of the Company’s 2022 Human Rights Policy. It represents KGHM’s clear declaration and commitment to the issue of human rights compliance. These are indisputable and universal principles that, in the face of war, are extremely important but also verifiable. The Group’s involvement in humanitarian aid to refugees and victims from Ukraine was a simple test of our social responsibility.

I would like to thank everyone who joined in these activities – our volunteers, employees, partners and NGOs – for their cooperation and commitment. I would like to express our respect to our local communities for good neighbourly relations and joint initiatives for the development of the regions in which we live and work together.

I would also like to thank our shareholders and our clients for the trust you have placed in us.

In July 2022, a quarter of a century passed since the copper giant KGHM Polska Miedź S.A. went public. Today, after nearly 25 years, we can say with a feeling of pride that KGHM continues to be one of the main driving forces on the Warsaw Stock Exchange, and KGHM shares are a significant component of the WIG, WIG20 and WIG30 indices.

2023 is another challenging year. KGHM’s budget approved for the period assumes maintaining stable operating, economic and financial results, a safe level of debt, and meeting ambitious development and investment targets with the highest expenditures for these purposes in our history. We plan to strengthen the production capacity of the Group’s various segments in accordance with the profiles and characteristics of individual assets. We focus on faster development of mining projects and emphasizing that we supply metals that are essential for the development of the global economy and that make up Poland’s raw material security.

On behalf of the Management Board of KGHM Polska Miedź S.A., I am presenting to you the Integrated Report of the Company and the KGHM Polska Miedź S.A. Group for 2022 and invite you to review the operating data and non-financial indicators contained in the Report.