WARSAW: Poland’s KGHM, one of the world’s biggest copper producers, expects the price to rise in the mid and long term and boost the prospects for its overseas assets, the firm’s chief executive officer said. Expectations of stronger global economic and demand growth have helped copper rise around 17 percent since mid October. “We are happy about this of course, but one should not jump to conclusions,” Radoslaw Domagalski-Labedzki, who became CEO at the end of October, told Reuters, adding that average prices were forecast to be “minimally higher” in 2017. “We also assume that in the mid and long term copper prices will rise, although it is difficult to prejudge now on the durability of the rising trend,” he said. Supplies of copper from 2018 onwards are expected to shrink due to declining ore grades, capex cuts and no new major finds.
KGHM itself sees its annual copper production in the coming years at close to a 2015 level of 749,000 tonnes, the CEO said, adding that safety would be a priority after an earth tremor killed eight miners in November. Domagalski-Labedzki, a former deputy economy minister in the conservative Law and Justice party (PiS) government, wants to streamline KGHM’s foreign assets, which weigh on its results. The state-run and Poland-focused company invested overseas for the first time in 2011 when it bought Canada’s Quadra FNX, for C$2.87 billion ($2.14 billion), the largest ever foreign acquisition by a Polish company.
KGHM gained control over Chile’s Sierra Gorda copper mine in a move designed to help it become a global player. But this expansion has since been questioned by PiS, which was elected at the end of last year, and KGHM put its oversees assets under review and will decide what to do with them by the end of the first quarter of 2017. However, the CEO has signalled that a potential asset sale is the least likely outcome. “The preferred scenario is the one which will result in improving effectiveness and achieving a return on the investment. We focus on business development and an asset sale is not a pro-development action,” Domagalski-Labedzki said.
