Sustainable development of KGHM Polska Miedz SA

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Sustainable development of KGHM Polska Miedz SA

• KGHM Polska Miedz S.A.
• 59-301 Lubin
• M.Sklodowska-Curie St.48
• Poland

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Sustainable development of KGHM Polska Miedz SA

• KGHM Polska Miedz SA is 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.

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Sustainable development of KGHM Polska Miedz SA

• 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

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Sustainable development of KGHM Polska Miedz SA

• On 12 September 1991 KGHM was transformed into a
  state-owned, joint stock company under the name
  KGHM Polska Miedz S.A.
• 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

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Sustainable development of KGHM Polska Miedz SA

• At March 1st, 2002 the largest shareholders of
  KGHM were
• the Polish State Treasury, which owned 44.28 of
  the share capital,
• the owners of Global Depositary Receipts (GDRs),
  who owned 14.67 of the shares ,
• PKO Bank Polski S.A., which held 5.38 of the
  shares.

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Sustainable development of KGHM Polska Miedz SA

• In the multi-divisional company KGHM Polska Miedz
  S.A. is a Head Office and 10 Divisions
• 3 mining divisions (ZG "Lubin", ZG "Rudna", ZG
  "Polkowice-Sieroszowice"),
• 3 copper smelter/refineries (HM "Legnica", HM
  "Glogów", HM "Cedynia"),
• an Ore Enrichment Plants Division,
• a Hydrotechnical Division,
• an Emergency Mine/Smelter Rescue Services
  Division,
• the newest division - established in 2001 - the
  Central Data Processing Center

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Structure of KGHM

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Sustainable development of KGHM Polska Miedz SA

• The activities of the Company comprise
•     metals ore mining,
•     the production of copper, precious metals,
  other non-ferrous metals and salt,
•     the casting of light and non-ferrous metals,
  
•     management of metallic wastes and scraps and
  of industrial wastes,
•     wholesale sales based on direct or
  contractual payments,
•     financial holding associations,
•     geological-exploratory activities,
  engineering and technical services for industry,
  mining and transport enterprises, environmental
  protection,
•     the generation and distribution of
  electrical energy and of steam and hot water, the
  generation of gas, and the distribution of
  gaseous fuels through a supply network, and
•     professional emergency rescue services.

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Sustainable development of KGHM Polska Miedz SA

• The main processes of the technological line are
  as follows
•         Mining (ore, in average ,2 of copper
  30 80 ppm of silver)
•         Ore enrichment (copper concentrates up
  to 30 of copper),
•         Smelting and refining (anode
  copper,appx.99),
•         Electrolytic refining (catode
  copper,99.99),
•         Casting,
•         Rolling,
•         Recovery of precious metals (Ag,Au,Pt/Pd
  slime,Se),
•         By-products (sulphuric acid,copper
  sulphate,nickel sulphate,crude lead,rock salt).

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Sustainable development of KGHM Polska Miedz SA

• The core business of the Company is mainly
  limited to
•     Copper ore mining, and
•     Production of copper, precious metals and
  other non-ferrous metals

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Sustainable development of KGHM Polska Miedz SA

• The main processes of the technological line are
  as follows
•         Mining (ore, in average ,2 of copper
  30 80 ppm of silver)
•         Ore enrichment (copper concentrates up
  to 30 of copper),
•         Smelting and refining (anode
  copper,appx.99),
•         Electrolytic refining (catode
  copper,99.99),
•         Casting,
•         Rolling,
•         Recovery of precious metals (Ag,Au,Pt/Pd
  slime,Se),
•         By-products (sulphuric acid,copper
  sulphate,nickel sulphate,crude lead,rock salt).

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Sustainable development of KGHM Polska Miedz SA

• Information on the source of raw materials for
  KGHM Polska Miedz S.A.
• sedimentary type deposit covering the area of
  over 550 square kilometers of the foresudetic
  monocline ,
• accumulation of sulphides in the Rotliegendes
  sandstones, copper shales and in Zechstein
  carbonaceous rocks (dolomites and limestones),
• the thickness of the deposit zone is variable and
  changes from 0.4 do 26 meters ,
• On the deposit area over 110 ore minerals have
  been found ,
• the basic are copper ore minerals but there is
  also a numerous group of silver, lead, cobalt,
  nickel, molybdenum, zinc, iron and precious
  metals minerals.

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Geological cross-section
                                                
                                                  
                                                  
                                 Fig. 1.
Geological cross-section of the Legnica Glogów
Copper District
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Sustainable development of KGHM Polska Miedz SA

• In 2001 KGHM produced
• 498 451 tonnes of copper (3.3 of world
  production, 7th place globally)electrolytic
  "four zeros copper(registered as "Grade A" by
  the LME),the more highly-processed wire rod ,
• 1 163 tonnes (2nd place globally) - the silver
  being recognized as "Good Delivery - Silver" and
  traded both on the London Bulion Market as well
  as on the LME,

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Sustainable development of KGHM Polska Miedz SA

• The Company has an independent commercial
  structure.Sales are carried out through
• the Commercial Department,
• assisted by two subsidiary companies KGHM Polish
  Copper LTD in London and KGHM Kupferhandel
  G.m.b.H. in Vienna (both are 100 owned by KGHM
  Polska Miedz S.A.) and by a representative office
  in Prague.

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Sustainable development of KGHM Polska Miedz SA

• In 2001
• 62 of copper produced by the company was
  exported,
• the biggest foreign buyers were Germany, France,
  China and Czech Republic ,
• copper represents around 76 of sales ,
• 92 of silver was exported mainly to the Great
  Britain, Germany and Belgium,
• silver accounts for 18 of sales,
• remaining revenues come from the sale of gold,
  lead and other products .

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Sustainable development of KGHM Polska Miedz SA

• 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 18,514 employees at the end of
  2001 ,
• the restructurization has enabled the separation
  from the core business of those activities not
  directly connected with the production of copper
  into subsidiaries,
• the total unit copper production cost has been
  substantialy reduced ,
• This fall in the unit cost was impacted by
  increased effectiveness in the mining of the
  deposit, a systematic increase in production
  volume and by the rationalization of external
  costs,
• serious modernization not only by purchasing new
  technological lines but by extensive
  transformation of old post-soviet technologies
  into the modern ones.

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Sustainable development of KGHM Polska Miedz SA

• The long term development program of KGHM
  anticipates
• further expansion of copper production ,
• the production of other metals,
• optimum exploitation of its production capacity
  from its own resources ,
• seeking new resources outside of Poland ,
• to form joint ventures with other companies in
  this sector,
• the possibility of independent action in other
  projects .

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Sustainable development of KGHM Polska Miedz SA

• The Company invests in areas which have the
  potential to represent "strategic substitutes",
  and which do not include metals production
• in telecommunications (Polkomtel, Telefonia
  Dialog) ,
• is actively engaged in the growth of the local
  region by exploiting the economic strength of the
  Company and by supporting local entrepreneurship.
  

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Sustainable development of KGHM Polska Miedz SA

• KGHM Polska Miedz S.A. is not only a modern
  company in the sense of the technology which it
  employs, but also in its adherence to
  environmental protection standards,
• carried out the systematic activity on reducing
  the environmental impact of its activity,
• total expenditure in this regard reached over USD
  130 mln,
• 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,
• In 2001, in a prestigious competition hosted by
  the Minister of the Environment, KGHM was honored
  with the title Leader of Polish Ecology .

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Sustainable development of KGHM Polska Miedz SA

• In all its activities KGHM has strong
  intellectual support form research centres
• Non-ferrous Metals Institute in Gliwice ,
• branch institutes of Non-ferrous Metals
  Department of Mining and Metallurgical Academy in
  Kraków ,
• some institutes of universities in Poznan and
  Wroclaw ,
• foreign institutions from Finland (Outokumpu) and
  Canada (Dynatec).

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Sustainable development of KGHM Polska Miedz SA

• KGHM is an effective, innovative and
  communicative European enterprise, aimed at the
  realization of economic,social,research and
  development, and environmental goals, pursuant
  both to the mission and to the strategic growth
  of the Company,according to the principle of
  sustainable development.