Group’s development directions

The Company’s mission and vision have remained unchanged. The updated objectives of the Strategy reflect the changes in the environment – the four existing strategic development directions (Elasticity/flexibility, Efficiency, Ecology and E-industry) were updated to include a fifth element – Energy.

Mission, vision and development directions of the Strategy of KGHM Polska Miedź S.A.

This „5E” Strategy is now comprised of 5 pillars (Core business, New activities, Supporting activities, Health, Prosociality), based on 5 updated development directions.

5 pillars based on 5 updated development directions in the Strategy of KGHM Polska Miedź S.A.

These pillars have been assigned individualised core objectives as well as key performance indicators. The baseline indicators are from 2020 to maintain consistency with the baseline set for the Climate Policy and to maintain the ability to demonstrate effects over a full decade.

Key assumptions for individual pillars of the strategy

I pillar – Core business, comprised of the following elements:

Advanced technology and R&D creating an intelligent production line.
Optimisation of mine production domestically and abroad ensuring long-term operational continuity.
Leadership in the development of low-emissions mining capacity as regards new metals and minerals deposits in Poland.
Development of metallurgy utilising efficient processing based on Circular Economy principles.

Core objective	Goals for 2030:	Base level (2020)
Strengthen the position of the KGHM Polska Miedź S.A. Group as a global player in the mining and metallurgy sector	1. Domestic copper production – approx. 600 thousand tonnes of electrolytic copper (including production based on a higher amount of purchased materials and copper from recycling)	approx. 560 kt of electrolytic copper
	2. International copper production – Higher production by the international assets of KGHM by extending their life-of-mine, developing assets in the mine projects portfolio held and increasing the resource base thanks to advancement of the International Exploration Strategy	approx. 150 kt of payable copper
	3. Silver production – Maintain the position amongst the world’s top-three producers of silver (approx. 1200 tonnes of silver annually)	approx. 1,320 t of silver
	4. Profitability – 10.2% – Average ROCE (return on capital employed) from the last 3 years	8.5%
	5. Cost competitiveness – 3rd decile	4th decile

II pillar – New activities, comprised of the following elements:

To be one of the leading, environmentally-friendly electricity producers, supporting Poland’s energy transition.
Expansion along the value chain by developing the production of new products from copper and other metals (including initiating relationships with partners in Poland and abroad.

Core objective	Goals for 2030:	Base level (2020)
Diversification and aiming at sustainable development by building internal generation capacity from low-emission sources	1. Energy produced – min. 50% of consumption	22% of consumption (694 GWh)
	2. A reduction in estimated CO₂ emissions resulting from electricity consumed – 1.0 million tonnes of eCO₂	1.6 million tonnes of eCO₂
	3. Diversification of the commercial offer in terms of metals (increase in share of new half-finished copper products and highly processed copper products (OFE-Cu rod, OFE-Cu granules) and other metals in the total sales of the Group) – 10%	2%

III pillar – Supporting activity, comprised of the following elements:

To be a major supplier of Smart Mining solutions for products and services sold in Poland and globally.
Ensure the financial stability of the KGHM Polska Miedź S.A. Group and implement systemic solutions aimed at enhancing its value.

Core objective	Goals for 2030:	Base level (2020)
Redefine the way that existing assets supporting the core business are utilised	1. Recycling of scrap – approx. 350 thousand tonnes of copper scrap (copper-bearing materials of varied metals % content)	124 kt of copper scrap
	2. Revenues from sales on foreign markets of selected Group companies – using 2020 as the base year = 100%: an increase by 2030 of 147% versus the base year for the companies KGHM Zanam S.A., Nitroerg S.A. and PeBeKa S.A., and 163% versus the base year for the company DMC Mining Services Ltd.	2020 as base level = 100%

IV – Health, comprised of the following elements:

Development of activities promoting health and health resorts (spas) as a contribution to extending the length and quality of life for citizens.

Core objective	Goals for 2030:	Base level (2020)
Development of the spa assets held as a contribution to extending the length and quality of life for society as a whole	1. LTIFR – the goal of 0 accidents	LTIFR – 7.3
	2. TRIR – the goal of 0 accidents	TRIR – 0.52
	3. Level of support for the area of Health carried out by the KGHM Polska Miedź Foundation – approx. PLN 7 million	approx. PLN 11.5 million¹

¹⁾ Due to the epidemic situation, the area of activity of the KGHM Polska Miedź Foundation - „Health and Safety” was a particular priority in 2020, thus the significantly higher financing in this area in the base year.

V pillar – Support for society, comprised of the following elements:

Growth based on the idea of sustainable development and safety.

Core objective	Goals for 2030:	Base level (2020)
Growth based on the idea of sustainable development and safety	Support for the fair transformation of the mining sector.	Not applicable
	Number of volunteer projects advanced – 30.	25
	The overall level of support granted for culture, sports, and health is approx. PLN 48 million.	approx. PLN 38.5 million

Mission, vision and development directions of the Strategy of KGHM Polska Miedź S.A.

5 pillars based on 5 updated development directions in the Strategy of KGHM Polska Miedź S.A.

Key assumptions for individual pillars of the strategy

Summary of measures of success of the advancement of the Strategy