KGHM: Polish champion going global

Polish mining company KGHM, after taking over the Canadian company Quadra FNX (KGHM International Ltd. today) aspires to be one of the biggest global players in the metals market, with a copper resource base which is the fourth-largest globally.

The acquisition of Quadra FNX was one of the key undertakings of this Polish company. The transaction was also the largest foreign investment in Polish history. With its acquisition, the dynamically developing business of KGHM has taken over the producing mines in three countries: Chile, the USA and Canada, as well as world - class projects, such as Sierra Gorda in Chile and Victoria in the Sudbury Basin in Ontario, Canada. After the takeover, the resources of KGHM Group increased by more than 28 percent, reaching the level of 38.7 million tonnes. Moreover, there was a geographical diversification of the portfolio of the projects implemented by KGHM and consequently a reduction of the risk of doing business. "The acquisition of Quadra FNX was motivated not only by the company's valuable assets, but also by the competent and experienced management team and the skilled personnel, who have successfully built a prosperous company in a very short time," said the President and CEO of KGHM, Herbert Wirth.

Two world-class development projects - the Sierra Gorda project in Chile (a 55% stake) and the wholly-owned Victoria project in Sudbury,  Canada are being carried out as planned.

Sierra Gorda

The construction works on the  world’s 5th largest copper project are on schedule with progress at the end of June at just over 50%. The first of the power lines was completed and  the installation of conveyor belts was started. Some of the world's largest shovels and haul trucks with payload capacity of 300 tons are already working on site. "Sierra Gorda is currently one of the safest mining projects in the world. Thanks to our Zero Harm policy we have managed to avoid any serious accidents, despite very harsh working conditions and a fast pace of construction" said Maciej Ściążko, (deputy General Manager of the Sierra Gorda Project).

Start of production on the project  is planned for Q2 2014.

Victoria Project

On August 1st, 2013 KGHM International entered into an agreement with the global mining company Vale. The agreement governs the development of the Victoria project as well as the ore off-take to Vale's processing facilities in the Sudbury Basin in Ontario, Canada. This opens the door for the development of KGHM's third most important project.

The Company has gained the right to build and operate the project as a sole owner. Furthermore, both companies agreed to the new terms of the off-take coming from KGHM International's mines in the Sudbury Basin, including the future Victoria Mine. "Thanks to the execution of this agreement, the value of the project has increased and we are able to significantly reduce the risk of project development, which will allow us to begin construction later this year," said Jarosław Romanowski, Executive Vice President of KGHM International Ltd. "I strongly believe that along with Sierra Gorda, Victoria will be our most notable overseas project and the second most significant value creation driver”.

The Victoria Project, located in one of the largest mining centers – the Sudbury Basin in Ontario, Canada – was one of the greatest discoveries in the history of the region. The deposit, containing ore rich in copper, nickel and precious metals, will be extracted as an underground mine.

Foreign mining assets play a very important role in the further development of KGHM. To start with, the company boasts highly qualified staff and a wide portfolio of mining projects. Moreover, it is successfully carrying out projects located in world famous copper- mining provinces in politically and economically stable countries. These projects are expected to become the engine of growth for the company in the coming years. Today, analysts estimate that the foreign production assets account for nearly nearly 40 percent of KGHM's valuation

KGHM's ambition is to have a number of projects in various locations to ensure stable production growth throughout the upcoming years.

Anna Osadczuk, KGHM