Polish copper producer KGHM plans to maintain 2021’s projected output levels in subsequent years, with higher demand expected on the back of increased investment in green energy projects, its chief executive said.
State-run KGHM had considered closing operations when the coronavirus pandemic first hit Poland last March amid uncertainty over demand and prices, but opted to continue production with special measures in place.
Copper prices have since rebounded, jumping in January to levels unseen since 2011, while shares in KGHM, which had slid to their lowest since 2009 last March 12 at 49.4 zlotys ($13.30), traded at over 200 zlotys on Wednesday.
“No one was smart enough in 2020 when it comes to prices. No one was able to predict that the growth would be so dynamic. These times are very interesting when it comes to demand – it is high and is rising,” Marcin Chludzinski told Reuters.
In terms of prices, “we can expect a better situation than last year”, he said.
“In three to five years, (demand) should be even higher due to projects related to green energy, electromobility and new technologies,” the CEO added. He said consumption would also be supported by the new U.S. administration’s pledge to join a push for less polluting energy.
Copper, a highly efficient conductor of electricity and heat, is used in renewable energy systems to generate power from solar, hydro, thermal and wind energy.
KGHM, which owns copper mines and smelters in Poland as well as mines in Chile, the United States and Canada, said earlier this year that it sees its electrolytic copper production at 573,000 tonnes this year.
Production of payable copper in the Chilean Sierra Gorda mine is seen rising to 99,000 tonnes for the 55% stake held by KGHM.
KGHM sees this stake as optimal, the CEO said, commenting on plans by its Japanese partner Sumitomo Corp to sell its 45% share in the project. He said 2021 will be a “breakthrough” year for Sierra Gorda.
Last year KGHM’s operations in the United States were affected by the country’s trade issues with China, but thanks to increased demand the group managed to sell its copper elsewhere.
“Not all of our production volumes from the U.S. are directed to China. We send it where the client is,” Chludzinski said.
“When we failed to place supplies on the Chinese market due to tariff issues, we were able to place it elsewhere, in the U.S. and other countries.” He declined to discuss details.
($1 = 3.7142 zlotys)
(By Agnieszka Barteczko; Editing by Jan Harvey)