Total revenue on sale of KGHM Polska Miedź S.A in 2017 totaled PLN 16,024 million, up 6% compared to 2016 (PLN 15,112 million), mainly due to higher copper prices in PLN.
Revenue on the sale of copper in 2017 totalled PLN 12,213 million and were higher than the level of sale in the previous year by 10% (PLN 11,064 million in 2016).
Revenue on the sale of metallic silver in 2017 amounted to PLN 2,447 million and were lower by 6% compared to the level of sale in 2016. Revenue on the sale of gold were reported at the same level as in 2016 (PLN 556 million). The decrease in revenue on the sale of silver was mainly caused by the drop in the quotations of this metal expressed in PLN, compared to 2016.
Revenue on sales by KGHM Polska Miedź S.A (PLN million)
and parts of cathodes
|Copper wire rod and OFE|
|Other copper products||310||260||+19.2||86||78||73||73|
and copper products
|Payable silver in|
|Other products and|
|Goods and materials||185||148||+25.0||37||40||50||58|
|Total revenue on sale||16,024||15,112||+6.0||4,591||3,732||3,805||3,896|
* Value of payable copper reduced by the value of processing premium (TC), Cu refining premium (RcCu) and other deductions affecting the value of Cu concentrate (except the value of Ag refining premium).
** Payable silver value reduced by the value of Ag refining premium (RcAg), negative values resulting from the settlement of contracts from the previous year.
In 2017, compared to 2016, in KGHM Polska Miedź S.A. we reported a decrease in the volume of sales of copper products by 53.8 thousand tons (10%), which was associated with a reduction in the production of electrolytic copper. The volume of cathode sale dropped by 12.9 thousand tons (5%) and copper wire rod and OFE wire by 5.2 thousand tons (2%). Sale of metallic silver in 2017 amounted to 1,185 thousand tons and was similar to the previous year’s level. The volume of sale of gold in 2017 amounted to 117.1 thousand troy ounces, which was an increase by 4% compared to 2016.
Volume of sale of basic products of KGHM Polska Miedź S.A.
|unit||2017||2016||Change (%)||Q4 2017||Q3 2017||Q2 2017||Q1 2017|
and parts of
|Copper wire rod|
and OFE wire
and copper products
|Metallic gold||k troy ounces||117.1||112.5||+4.1||29.2||29.2||27.8||30.9|
* Negative values result from the settlement of contracts from the previous year
26% of sales revenue obtained by KGHM Polska Miedź S.A. in 2017 came from the Polish market. The largest remaining recipients of the products, goods and services offered by the company were China, Germany, the United Kingdom and the Czech Republic.
Revenue on sale of KGHM Polska Miedź S.A by market
For 20 years KGHM Polska Miedź S.A. has been selling copper cathodes to China, where their main recipient is China Minmetals Corporation. We have already sent to the Middle Kingdom nearly 881 thousand tons of this resource for 5 billion dollars. Cathodes from KGHM is 60% of all Chinese imports from Poland. The current framework contract, signed in 2016, provides for exports from 250,000 up to 600,000 tons of cathodes in 2017-2021, worth (depending on the level of orders) from 1.2 billion to 2.8 billion dollars.
Revenues of the KGHM INTERNATIONAL LTD. segment in 2017 amounted to USD 695 million, and thus increased by USD 56 million (+9%), compared to 2016, mainly due to more favourable macroeconomic conditions whose positive impact was partially limited by a reduction in metal sales volumes. As a result of a decrease in the volume of sale of precious metals by 21.7 thousand troy ounces (-23%) their sales declined by USD 4 million (-4%).
Volume and revenue on the sale of KGHM INTERNATIONAL LTD. (USD million)
|Revenue on sale, including*||USD million||695||639||+8.8|
|- Copper||mln USD||454||381||+19.2|
|- Nickel||mln USD||12||21||(42.9)|
|-TPM – precious metals||mln USD||99||103||(3.9)|
|Copper sale volume||kt||80.0||90.2||(11.3)|
|Nickel sale volume||kt||1.1||2.1||(47.6)|
|TPM sale volum||k troz||72.6||94.3||(23.0)|
*Including processing premiums
Cost structure by type
At KGHM Group, we manage our financial capital so as to generate returns for shareholders and bring benefits to other stakeholders. We are able to adapt to ongoing changes and continuous investments in people and resources.
The costs of the Company’s core operations (including production costs of products sold, value of goods and materials sold, selling and general management costs) in 2017 totaled PLN 12,899 million and were up 3% compared to the same period of 2016, mainly due to the higher cost of the mining tax for some minerals and the higher value of used external services. The cost composition by type in 2017 was very similar to 2016.
KGHM Polska Miedź S.A. – costs by type (PLN million)
|2017||2016||Change (%)||Q4 2017||Q3 2017||Q2 2017||Q1 2017|
|Depreciation of fixed|
assets and intangi-
|Costs of employee|
|Taxes and charges,|
|Minerals extraction tax||1,765||1,338||+31.9||456||438||405||466|
|Total costs by type||13,924||12,776||+9.0||3,619||3,570||3,398||3,337|
Cost structure by type in 2017.
The level of operating costs is influenced to a significant extent by production costs of electrolytic copper (before subtracting the value of by-products), whose share is about 94 percent. Production costs of copper in concentrate – C1* was 1.30 USD/pound and 1.52 USD/pound in 2016 and 2017 respectively. The value of the costs was influenced by the strengthening of the Polish zloty against the US dollar, a higher minerals extraction tax and lower production of own minerals.
* Production costs of copper concentrate – C1 is a unit cash production cost of payable copper concentrate, taking into account the costs of extracting and processing the winnings, transport costs, minerals extraction tax, administrative costs of the mining phase and treatment charge and refining charge (TC/RC), decreased by the value of by-products.