The Polish state copper producer KGHM Group reported substantially higher sales and earnings in the first half of 2019. Group revenues increased 19% year-on-year to PLN11.2Bn (US$2.8Bn) from PLN9.4Bn (US$2.4Bn) in H1 2018, resulting in a 7% rise in EBITDA to PLN2.7Bn (US$0.7Bn) and a 59% surge in net profit to PLN1.0Bn (US$0.3Bn). The main factors influencing the results were higher production and sales of copper and silver (particularly from its core Polish operations), a more favourable exchange rate relative to the US dollar, and generally lower metals prices.
Payable copper production by KGHM Group jumped 19% from 295kt to 352kt, mainly as a result of increased capacity availability at its smelting and refinery plants in Poland where output surged 26% from 227kt to 287kt. This was due to a three-month furnace maintenance shutdown at its Glogow II smelter and refinery the previous year. KGHM Group’s 55% attributable share of production at the Sierra Gorda mine in Chile also improved, rising 19% from 25kt to 29kt due to higher extraction and processing and a better ore grade. Copper throughput at the KGHM International subsidiary, however, fell 16% from 43kt to 36kt. Shipments of copper wire rod from KGHM Polska Miedz rose 4% from 130kt to 135kt, distinguishing Poland as one of the few European consumers to see growth in the first half of 2019. The group’s Silver production leapt 47% from 485t to 713t, while molybdenum output fell 21% from 8Mlbs to 6Mlbs. Comparing average US dollar selling prices during the first half of the year, copper prices fell 11%, silver dropped 9%, and molybdenum rose 1%, while the Polish Zloty depreciated by 9% relative to the US dollar.
Some significant progress has been seen during 2019 on a number of capital investment projects. After a total of 16 month’s work, the new RCR copper scrap processing furnace was successfully commissioned at the Legnica copper smelter and refinery, the largest single investment in the history of the complex. The addition of charging raw materials to the furnace began at the start of June and the first anode was successfully cast on June 28th. Meanwhile, at the Glogow copper smelter and refinery, a near three-year project to construct, establish and test a concentrate roasting installation was completed at the end of June. Additionally, from the 1st July 2019, KGHM Polska Miedz will benefit from a 15% reduction in the Polish government’s minerals extraction tax on its mined copper and silver ores.