The Sustainable Development Concept and Management Model in KGHM Polska Miedź S.A. has been developed by a specially appointed team of professionals composed of persons representing the areas of the organization’s operations. The starting point was the “2030 Sustainable Development Agenda” adopted by the United Nations in 2015, which identif es 17 sustainable development objectives. The report of the International Council of Mining and Metals (ICMM) on the research conducted in 2007- 2017, pointing to the greatest challenges for mining companies, as seen by their shareholders, became an important element of preparation of the Model.

The Greatest Challenges for Mining Companies According to ICMM

* For historical comparability. Data from 2014 and 2017 pertaining to “environmental issues” comprise climate changes, pollution, bio-diversity. Similarly, the mentions of a social con ict / lack of acceptance and engagement of the community are comprised in the “social acceptance issues”.

Three from among UN’s 17 sustainable development objectives – environment, economy and society – are perceived as typical of the mining industry. The Sustainable Development Concept and Management Model for KGHM Polska Miedź S.A. adopts also other key areas. These include safety, understood as ensuring full safety to employees and the environment, and care for the safety of operations of the company and resource ef - ciency, understood as sustainable work on the deposit, making it possible to mine it in the best way, while preserving the balance in the natural environment.

Sustainable development
Impact of each objective on the mining industry

Sustainable development in mining

Society and economic impact

With pride, we may emphasize that in the regions in which we operate consistently, we reduce social inequalities. The Legnica and Głogów Copper District is a special social and economic driver for the neighboring areas. We improve the quality of healthcare services, we provide attractive jobs and motivate people to take advantage of education. We create sustainable cities, towns and communities.

 We understand how important our organization is in the economic growth of the region of our operation. Owing to KGHM Polska Miedź S.A., the Copper Basin, where an industrial center was started to be built nearly 60 years ago, is now the wealthiest part of Lower Silesia. In the period, the population in many places there increased even tenfold. We cooperate with various types of suppliers, business partners, intermediaries, wholesalers. They include suppliers of raw materials, sub-assemblies, manufacturers of end products, distributors. Our activity also allows our suppliers for stable development.

 We are the largest employer in Lower Silesia. We provide direct jobs to over 33 thousand people, and further thousands may develop their businesses by cooperating with KGHM companies. According to estimates, for one mining job, there are further f ve jobs connected with it. We contribute substantially to reduction of poverty, elimination of hunger and economic development of the areas in the neighborhood of which we operate. 

The Jerzmanowa and Polkowice municipalities, where we conduct mining activity are ranked among the wealthiest municipalities in Poland.

Ministry of Finance’s Ranking of the Wealthiest Municipalities in Poland

No.Municipality Code
Municipality
G Indicator for 2018
1
10 01 04 2
Kleszczów
31,962.75
2
10 09 05 2
Rząśnia
8,634.17
3
02 23 05 2
Kobierzyce
5,808.52
4
20 10 05 2
Mielnik
5,793,.09
5
0 0 0 2
Jerzmanowa
5,753.53
6
32 05 07 2
Rewal
5,741.33
7
0 1 0 3
Polkowice
5,593.17
8
14 21 05 2
Nadarzyn
5,508.24
9
30 21 15 2
Suchy Las
5,433.47
10
30 21 17 2
Tarnowo Podgórne
5,020.31

Source: Samorząd.pap.pl

Health

We take care of the health and quality of life of not only our employees and their families, but also all the region’s inhabitants. One example of our operation may be the activity of Miedziowe Centrum Zdrowia (“Copper Health Care Center”) and implemented health promotion programs and grants awarded to health care providers.

Education

Attractive salaries and wages, proceeds to the local budgets provided by KGHM Polska Miedź S.A. as well as grants and sponsorship contribute directly to the level of wealth of the region in which we operate. Due to this, many of the inhabitants can af ord to attend school, including paying for further education. We also cooperate with many universities and scholars. We encourage our employees to pursue continuous development, of ering many attractive paths of competence improvement.

Responsible consumption and production

We are improving our technological process to make it as optimal, safe and sustainable as possible. We eliminate waste and manage resources rationally, striving to eliminate waste as much as possible. In our production, we apply the Lean Management concept, which allows for using many methods and tools for better resource utilization. Our company is characterized by a unique – and virtually unknown in the resource industry – and highly integrated technological chain. From exploration, prospecting and extraction of raw materials, through mining, production and transport, and f nally delivery of products to our customers and stakeholders, we carry out all these tasks ourselves. Managing such complex processes with extremely dif erent characteristics calls for an integrated and sustainable approach.

GRI Indexes:

KGHM Polska Miedź S.A.’s sustainable value chain

Safety and resource efectiveness

We understand sustainable development as safe development. A natural priority for a mining company is physical safety of its employees – this issue is given the highest priority in our operations. In everyday operations, we attach tremendous importance also to the safety of the environment, energy and resources. Raw materials security is connected with resource efciency. Considering the industry in which we operate and the integrated technological process, the efcient and rational management of our resources is of key importance to us. We are aware that continual improvement and searching for ways of better resource management at each stage of production may translate into a number of benefts. Even the smallest innovation may lead to greater efciency or new savings. The concept and program of the Circular Economy are really close to us – we understand how important it is in the world today to move away from a linear concept of the economy conceived as closing the circulation of materials used.

Partnership

We wish to join forces and intensify the cooperation with institutions who equally cherish the idea of sustainable development. In 2017, at the “Partnership for Sustainable Development” conference organized by the Ministry of Development, representatives of the company signed Partnership Charters for the Implementation of Sustainable Development Objectives. By this token, KGHM Polska Miedź S.A. joined a group of about 40 signatories, i.e. organizations and enterprises which have declared their wish to follow the path of sustainable development. 

We are involved in sustainable development also abroad by participating in international organizations. We are participating actively in, among others, the works of the European Innovation Partnership on Raw Materials. In 2017, KGHM also received a mandate on the EIP’s High Level Steering Group, which gives us an opportunity to participate actively in the creation of the EU’s raw materials strategy and policy. These actions are related, inter alia, to participation in the European Union’s Horizon 2020 Framework Program and initiatives and meetings of working groups involved in the active creation of raw materials policy in Europe. Furthermore, as of 2017 KGHM has its own representative on the European Technology Platform on Sustainable Mineral Resources (ETP on SMR). The implementation of the Platform’s objectives will contribute to the medium- and long-term security of stable procurement of raw materials (including key raw materials, industrial mineral materials and wooden materials) which are indispensable for the fulfllment of the basic needs of any modern society. The Platform also has an advisory role in the creation of the European Innovation Partnership’s (EIP’s) raw materials policy

Sustainable Development Council

We continue our activities relating to sustainable development and we would like to intensify them, so as to achieve our vision and become a leader in sustainable development, not just in Poland. The body supporting these eforts is the Sustainable Development Council established in the beginning of 2018. The key reason for its establishment was the business development vision of operating according to accepted standards and canons shaping the future functioning of raw material companies across the world, as well as the need for the company’s internal information integrity and coherence. 

The Council’s primary goal is to ensure transparent communications and creation of an open forum for knowledge sharing and promotion of activities refecting the idea of sustainable development. The Council’s activities will complement the vision incorporated in the business strategy of KGHM Polska Miedź S.A. and the results of its work will support the strategic directions of the Company’s development. Furthermore, the Council serves as a kind of sustainable development incubator, aggregating as well as promoting raw material industry standards accepted in Poland and across the world. 

The Council’s tasks also include validating and justifying the presentation of specifc sustainable development measures in the company’s reports. The measures have been developed by a team preparing the Concept and Model of Sustainable Development Management at KGHM Polska Miedź S.A. based on, among others, multi-dimensional comparative analyses of the largest global companies from the industry. Owing to the measures, we are able to report in a clear and transparent manner, the company’s current and future position for each sustainable development objective adopted by the company, i.e. resource efciency, the environment, safety and the economy

Key non-financial indicators of KGHM Polska Miedź S.A. identified in accordance with the Concept of sustainable development:


2016
2017
Environment
SO2/Mg Cuel emission ratio at the level of 0.008
0.006
0.002
Dust/Mg Cuel emission ratio at the level of 0.001
0.001
0.001
CO/Mg Cuel emission ratio at the level of 3.0
3.7
2.6
Society
Maintaining membership in the RESPECT Index
YES*
YES 1
0% investment activity without a social dialogue policy
no data
YES 2
Conclusion and maintaining of long-term contracts; achievement of the proper sales structure ensuring long-term relations with customers
no data
YES 3
Sponsorship and charitable activities in building corporate social responsibility [sponsorship expenses for the purposes of the Company's promotion
PLN 26.6 million
PLN 25.8 million
Resource efficiency
Maintaining the term of resource self-sufficiency until 2055 or later
no data
Info4
Winnings extraction (the above) per mine employee [ton]
2.712
2.641
Production of electrolytic Cu per Company/smelter employee [ton]
29/152
29/148
Maintaining Cu yields (goal in 2017: no less than in 2016) [%]
98.18
98.23
Safety
LTIRFKGHM (Lost Time Injury Frequency Rate KGHM)
12,65
10,4

* investment activities understood as projects to which the company has no legal title (e.g. construction permits).

1. Since 2009, KGHM Polska Miedź S.A. has been one of the companies listed on the Warsaw Stock Exchange forming the Respect Index, which testifies to the application of the highest standards of social responsibility, ethical principles, best practices and internal regulations.

2. The company observes the “license to operate” principle regulating such activities. Ultimately, they will be formally spelt out in the Social Dialogue Policy. In this context, investment activities mean projects to which the Company has no legal title, such as a construction permit, etc.

3. In order to foster good, long-term relations with customers and achieve the status of preferred supplier in 2017, over 80 percent of copper sales and over 70 percent of silver sales took place in the framework of long-term contracts (i.e. longer than 6 months); Sales were geographically diversified, relative to the location of demand for Cu and Ag produced by KGHM (Company’s Cu and Ag sales revenue split in 2017):

Country
Percentage [%]
Poland
26
China
13
Germany13
United Kingdom
11
Czech Republic
8
Other countries
28
Total100

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