The Management Board of KGHM Polska Miedź S.A. ("Company") informs that on December 19, 2018, the Supervisory Board of the Company approved the Strategy of KGHM Polska Miedź S.A. for years 2019 - 2023.
In the face of macroeconomic changes in the raw materials industry, as well as the strong impact of global megatrends, in the fourth quarter of 2018, the Management Board of KGHM Polska Miedź S.A. made a decision on the necessity to review the Strategy of KGHM Polska Miedź S.A. The decision was dictated in particular by: • dynamic changes in the mining and processing industry, caused by macroeconomic, technological and legislative challenges,
• evolution of directions of global economic development - megatrends affecting the mining industry, including technological breakthroughs, changes demographic and social, shortage of natural resources, climate change, changes in power among global economies, rapid urbanization,
• prioritization and adaptation of the investment program to the financial capabilities of the Company,
• partial implementation of strategic tasks and initiatives included in the Company Strategy from 2017.
The purpose of the strategic review was to ensure the consistency of the Company's Strategy with the current market environment and the needs of the KGHM Polska Miedź S.A. Group. ("KGHM Group"). As a result of the work, the assumptions of the Company Strategy for 2019-2023 ("Strategy") were established. Four strategic development directions have been distinguished:
• Flexibility - covering mainly issues related to industry 4.0, digitalization and electromobility,
• Efficiency - which is a response to increased competition in the manufacturing and mining industries and industry 4.0,
• Ecology - based on electromobility, development of pro-ecological regulations, closed-circuit economy and pro-ecological production,
• E-industry - based on robotization, digitization, knowledge-based society and industry assumptions 4.0.
The indicated directions are reflected in separate strategic areas, which have been assigned individualized main goals, they are:
main goal: "Maintenance of cost-effective domestic and foreign production";
main objective: "Increasing the efficiency and flexibility of the KGHM CG as part of Polish and foreign assetsforeign ";
main goal:" Increasing the efficiency of the KGHM CG through innovative activities ";
• Financial Stability,
main objective:" Ensuring long-term financial stability and developing mechanisms supporting further development. "
• Effective Organization,
main goal:" Implementing system solutions aimed at increasing the value of the KGHM Group ";
• Man and the Environment,
main goal:" Growth based on the idea of sustainable development and security as well as strengthening the image of the socially responsible KGHM CG;
Each of the main objectives has been decomposed for operational purposes, whose task is to achieve the main goal Each of the six strategic areas was also correlated with the four mentioned development directions, creating a matrix of initiatives.
Each of the strategic areas was metered through the following KPIs (Key Performance Indicators, an g. Key Performance Indicators):
1. Domestic mining production at the level of 450 thousand. tonnes of Cu in ore at an average annual cost of C1 not higher than 3800 USD / tonne in the period 2019-2023.
2. Average annual processing of ore in Sierra Gorda at the level of at least PLN 130,000 tonnes from 2020.
3. Average annual metallurgical production in Poland at the level of 540,000 tonnes per year in the period 2019-2023.
1. Achieving the possibility of basing 35% of metallurgical production on external loads, including scrap up to 2030.
2. Increase in the share of highly processed copper products (OFE-Cu wire, OFE-Cu granulate and end-use products) in the total sales of the KGHM CG to 10% at the end of 2030.
3. Satisfying 50% of the demand of KGHM Polska Miedź S.A. for electricity from own sources and Renewable Energy Sources ("RES") until the end of 2030.
1. Ensure implementation of 100% of innovative projects in accordance with the principles of a coherent model for managing innovation and research and development ("R & D") in the KGHM Group in the period 2019-2023.
2. Increase of expenditure on innovation and R & D works to the level of 1% of revenues of KGHM Polska Miedź S.A. in 2023.
3. Referral of min. 75% of funds allocated for R & D and innovations in the period 2019-2023 for solving the challenges of KGHM Polska Miedź S.A. in the area of the Main Technological Line.
1. Supporting the financing structure of the KGHM CG on long-term instruments.
2. Shortening the cash conversion cycle.
3. Effective market and credit risk management in the KGHM Group.
• Effective Organization,
1. Ensuring the financial stability of the KGHM Group companies operating in Poland based on their own operations since 2022.
2. Increase in the effectiveness of support functions by 20% as a result of centralization and digitization of key back-office processes until 2023.
3. Implementation of key strategic assumptions at the level of at least 80% of the annual goals assigned to them, in each year of the strategy's validity.
4. Flexible response to changing macroeconomic and geological-mining conditions. The discontinuation of production at the Morrison mine in Sudbury is under consideration.
• Man and Environment,
1. Annual improvement in the rate of occupational accidents - LTIFR (national assets) and TRIR (foreign assets) by at least 20%.
2. Running a participatory budget at the level of 20% of deductions for donations from tax on some minerals until 2020.
3. By 2023, the level of commitment and satisfaction of employees of the KGHM Group at the level of 70% has been achieved.
The updated Strategy does not change the Company's current approach to its business operations. KGHM Polska Miedź S.A. maintains its responsible attitude and long-term thinking about the future of the company.
Legal basis: Article 17 para. 1 MAR (Regulation (EU) No 596/2014 of the European Parliament and of the Council of 16 April 2014 on market abuse (Regulation on market abuse) and repealing Directive 2003/6 / EC of the European Parliament and of the Council and of the Commission directive 2003/124 / EC, 2003/125 / EC and 2004/72 / EC (Official Journal of the European Union of 12 June 2014, No L 173/1)
Source: company website, investor relations, current and periodic reports.