Is only carbon leaking from Europe?€¦ · DG production figures are included in Rudna and...
Transcript of Is only carbon leaking from Europe?€¦ · DG production figures are included in Rudna and...
Layers of possibilities
Radosław ŻydokDirector, Regulatory and Strategic Analysis Department
Is only carbon leaking from Europe?The impact of regulatory pressure on the decline in standards in international industry
Brno, November 2019
KGHM Group & its influence on the region
KGHM among the biggest copper and silver producers
1) Copper Market Outlook, CRU, April 20192) The Silver Institute, World Silver Survey 20193) KGHM results as reported in its consolidated financial statement 2018
4
58,1
38,7(3)
34,9
26,2
25,3
24,8
24,5
19,7
19,6
17,3
mn oz
Silver production 2018 2)
1771
1440
1344
1105
892
674
567
521
498
476
kt
Mined Copper production 2018 1)
Core production assets in Poland
Lubin Mine
27 years LOM
2018 production stats:
▪ Cu production (payable): 70 kt
▪ Copper Grade: 0.95%
Legnica Smelter and Refinery
LMA grade A-registered cathodes
Capacity of ~120 kt Cu year (electrolytic) 1
▪ Other metals produced: Ag, Au, Pb, Re
▪ 2018 Cu production: 115 kt
Polkowice-Sieroszowice Mine
37 years LOM
2018 production stats:
▪ Cu production (payable): 196 kt
▪ Copper Grade : 1.71%
Głogów I Smelter and Refinery
LMA grade A-registered cathodes
Capacity of ~ 239 kt Cu per year (electrolytic) 1
▪ Other metals produced: Ag, Au, Pb, Re
▪ 2018 Cu production : 183 kt
Rudna Mine
22 years LOM
2018 production stats:
▪ Cu production (payable): 186 kt
▪ Copper Grade: 1.63%
Głogów II Smelter and Refinry
LMA grade A-registered cathodes
Capacity of ~ 223 kt Cu per year (electrolytic) 1
▪ Other metals produced: Ag, Au, Pb, Re
▪ 2018 Cu production: 204 kt
Deep Głogów Project
▪ Extension of Rudna and Polkowice-Sieroszowice mines
▪ DG production figures are included in Rudna and Polkowice-Sieroszowice mines’ production stats
Cedynia Copper Wire Rod Plant
Contirod and Upcast technology
▪ 2018 Cu production: 266 kt
(1) Capacity without cyclical planned maintenance shutdowns.
5
Level of commercialproduction reached by Sierra Gorda
2015/2016
Proud history of mining and metallurgy
1957 1960 1970 1980 1990 2000 2010
Start of production by the Sierra Gorda mine
Acquisition of the Canadian mining company Quadra FNX
Founding ofthe Lubin and Polkowicemines
Start of constructionof Głogówsmelter/refinery
Start of precious metals plant –silver and gold
IPO - KGHM joins the Warsaw Stock Exchange
Construction of the Sieroszowicemine
Completionof the Rudnamine
Discovery of the copper deposit by Jan Wyżykowski
Start-up of flash furnace technology at the Głogów I smelter
Discovery of the copper deposit brought about a fundamental change in the region’s economy thanks to the growth of KGHM Polska Miedź S.A.
6
Historical changes in the Polish Copper Basin
THENo In 1960, the area of the Copper Basin
was inhabited by 187 thousandpeople.
o It was one of the least economically developed areas of Poland
o The lowest population density inthe region
o Underdeveloped technical infrastructure
o Limited labor resources
NOWo Development of KGHM caused a
comprehensive development of the region
o Gradual inflow of population (over 520 thousand at the moment )
o Sharp increase in employment(over 30 thousand in KGHM group)
o Rapid development of housingand the health care system
o Changes in the sphere of culture and leisure, transformation of social activities
o Changes in the structure of education
o New technologies (as electromobility) in the region
7
The highest standards in copperindustry
Above-average earnings
Like other entities from the mining sector in Europe,KGHM provides thousands of specialist, highlypaid, stable and safe jobs.
It is 67% higher than average gross salary inPoland and 24% higher than in Warsaw which iscommonly believed to be the reachest region inPoland
According to Statistics Poland survey form 2016,average gross salary in Lubin is the highest inPoland.
Health and safety in the first place
Golden Rules of OSH
The Company continues to carry out tasksaimed at implementing a long-term visionof "Zero accidents due to personal andtechnical reasons, zero occupationaldiseases among our employees andcontractors".
10
The Company has high standards in thearea of occupational health and safety,which apply both to employees of theCompany and to entities providing servicesin the area of KGHM Polska Miedź
The life and health of employees as well astheir safety are at the first position in thehierarchy of values of KGHM Polska Miedź
Steady decrease in the numer of accidents
18,6
15,4
12,112,9
10,4 10,2
12,7
10,4 10,3
2010 2011 2012 2013 2014 2015 2016 2017 2018
-45%
The LTIFR (Lost Time Injury Frequency Rate) ratio in 2018, i.e. the total number ofaccidents at work standardised to 1 million hours worked by employees of thetechnological process of KGHM Polska Miedź S.A., decreased by 1.1% in relation to2017, reaching the level of 10.3 (2017 = 10.4) and at the same time was lower by 45%than the value recorded in 2010.
LTIFRKGHM between 2010 and 2018
By prioritising the "Zero Damage" at work policy, KGHM is constantly improvingtechnologies and management systems, building awareness and motivatingemployees to behave in a safe manner.
11
Not only business
CSR projects and activities
Broad cooperation
with local authorities
• Rudna i Grębocice • Polkowice
• Głogów
• Żukowice
Sponsorship
In 2018 r. transferred to:• Sport 22 289 270 PLN• Culture 5 514 214 PLN• Science 1 826 500 PLNTotal 29 629 984 PLN
EKO - health
• Nordic walking• Swimming lessons• Recreational gymnastics
Employee volunteering
• Over 300 activities in total
• 2018r. - 45• 2017r. - 42
13
KGHM Polska Miedź Foundation
Health and safety is a strategic area of the Foundation's activities. In 2018, 74 projectswere co-financed for the total amount of PLN 3,686,410.00 and 175 individuals for thetotal amount of PLN 1,499,880.67.
Established in 2003 with a view to continuing the tradition of the Founder's longstanding pro-social activity.
Sport and recreation is the area of activity of the Foundation, which in 2018 enjoyedthe greatest interest among the beneficiaries. The amount of PLN 4,570,032.10was spent on 171 projects. The Foundation treats sport and recreation as animportant field of social life and therefore intends to continue activities promoting anactive and healthy lifestyle.
The Foundation respects the cultural heritage of previous generations. In 2018 alone,150 projects in the area of culture and tradition were funded, totalling PLN8,263,551.65.
Science and education is an area of the Foundation's activity where in 2018 the amountof PLN 2,565,532.33 was spent on 74 projects.
Health & safety
Science & education
Sport & recreation
Culture & traditions
Balanced value chain
The company operates based on the principles of sustainable development, including in its daily commitments such areas as Society, Environment, Economy, Security and resource efficiency.
They constitute the foundation of the balanced value chain of the company.
16
Responsible & sustainable development
Extraction.
Rational deposit management
Intelligent solutions
in production 4.0
Logistics.
Reducing emissions, streamlininglogistics structures and procedures
Trade.
Trade based on the principles of "Fair Trade"
Raw materials .
Responsible use of raw materials
with care for natural resources
Production.
Reduce the environmental footprint of the product and service
Stakeholders.
Customers, consumers and partners as a benchmark of the company's
responsible business standards
Waste.
Product life cycle based on the Circular Economy
and approach to Circular Economy at every stage of the value chain
Efficiently run business partner
19
Since 2009 has been listed in the RESPECT Index
The use of recognized standards
Knowledge of trends and challenges -participation in local and international organizations
Promoting good market practices in CSR
The metal sector worldwide
Role of mining in national economies
Source: ICMM, Role of mining in national economies, Mining Contribution Index 2018
From the work of organizations, such as the NRGI’s Resource Governance Index and the World Bank’s Worldwide Governance Indicators (WGI), we know that the governance of natural resources
in many of these countries is weak, poor or failing.
The Mining Contribution Index combines data on mining's contribution to countries' gross domestic product (GDP),
export earnings and mineral rents that are paid to host governments.
Chinese mining investments in Africa
Carbon footprint – Europe and the rest of the World
Source: Global Carbon Atlas 2017, Neil Caye, Global Carbon Project, CDIAC
Europe’s lack of resources
Europe’s insufficiency of resources
Strade, 2017, EU raw material import flows – acknowledging non-EU environmental and social footprints
EU - 28 processing industry’s sourcing of selected metals from EU mining, EU recycling and EU imports of ores and intermediateproducts (rough Estimation of metal contentin total volumes)
Europe as a net importer
By over-regulating 40% of production within the EU (60% of non–ferrous metals comefrom imports), we can actually increase our dependence on imports from countries with much less strict regulations
The risks of over-regulation
Worldwide Governance Indicators
Source: World Bank 2018
Governanceconsists of the traditions and institutions by which authority in a country is exercised. This includes the process by which governments are selected, monitored and replaced; the capacity of the government to effectively formulate and implement sound policies; and the respect of citizens and the state for the institutions that govern economic and social interactions among them.
Over-regulation is real
Numbers based on Grant Thornton reports
Since joining the European Union, 235,600 pages of new law have been created in Poland
More and more strategic directions for EU economies are beingformed by Brussels officers rather than nationalgoverments
Currently, about 70% of the law in force in Poland is created in Brussels
That's about the same as 240 five hundred-page volumes(printed double-sided)
Results of over-regulation
Excessive regulation entails a significant increase in operating costs
Non-European producers do not have to invest to adapt their production processes to EU requirements
European producers are losingtheir competitive position
Other sectors most dependent on raw materials are losingposition or increasingdependence on imports
Long-term consequences of over-regulation
The global output of raw materials production may stay the same or evenrise, but…
…which will come mostly from countrieswith lower level of environmentalprotection and lower social standards(in terms of wages, OHS, CSR)
…there will be a substantial shift of investments and inevitable loss of many well paid jobs in Europe, that cometogether with a serious CSR…
…increasing the whole EU's economydependence on imports from other parts of the world…
So is this going to be Ursula’s dreamed New Europe?
A Union that strives for more
My agenda for Europe
Ursula von der Leyen
▪ A European Green Deal
▪ An economy that works for people
▪ A Europe fit for the digital age
▪ Protecting our European way of life
▪ A stronger Europe in the world
▪ A new push for European democracy
We hope Ursula keeps her words!
Thank you