KGHM POLSKA MIEDŹ S.A.
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Review of financial position

Unit cost of electrolytic copper production – total (PLN/t)

    2010 2011

Pre-precious metals credit cost of copper production

  15 540 17 534

Value of anode slimes

  2 557 3 968

Total unit cost of copper production

  12 983 13 566

Electrolytic copper production ('000 t)

  547,1 571,0

 

Unit cost of electrolytic copper production – from own concentrate (PLN/t)

    2010 2011

Pre-precious metals credit unit cost of copper production

  13 661 14 875

Value of anode slimes

  3 174 4 576

Total unit cost of copper production

  10 487 10 299

Electrolytic copper production from own concentrate ('000 t)

  427,0 446,4

 

The Company’s operating costs are decisively impacted by the costs of electrolytic copper production, whose share in the Company’s costs is over 93%.

The pre-precious metals credit unit cost of copper production (unit cost prior to decrease by the value of anode slimes containing among others silver and gold) in 2011 increased versus 2010 by 1 994 PLN/t, i.e. by 12.8%, mainly due to an increase in the value of purchased copper-bearing materials (+1 010 PLN/t) due to a higher volume of consumption by 4% (4.6 thousand tonnes of copper) and of purchase prices by 22%.


Struktura

The pre-precious metals credit unit cost of copper production from own concentrate increased by 1 214 PLN/t, i.e. by 8.9%, mainly due to an increase in the expenses by nature described below (excluding purchased copper-bearing materials), alongside the positive impact of a higher volume of copper production from own concentrate (+4.5% in relation to 2010).

In 2011 total expenses by nature increased by PLN 1 660 328 thousand, i.e. by 17.6%, mainly due to:

  • the higher value of purchased copper-bearing materials (PLN 880 640 thousand) due to an increase in purchase prices and in the volume of consumption by 10.7 thousand tonnes of copper (of which 4.6 thousand tonnes relates to electrolytic copper production),
  • external services (PLN 227 028 thousand) – mainly due to an increase in the scope of mining preparation work (+9 km) (PLN 118 197 thousand),
  • materials and fuel (PLN 214 731 thousand) – mainly due to an increase in prices,
  • labour costs (PLN 193 530 thousand) – mainly due to higher provisions for future employee benefits by PLN 72 773 thousand,
  • depreciation/amortisation (PLN 56 905 thousand) – due to an increase in realised investments in property, plant and equipment (+20%).

The structure of expenses by nature in 2011 is shown in Chart 9. With respect to prior years, the change in the structure is mainly due to higher consumption of purchased copper-bearing materials (in 2009: 23%, in 2010: 30%) alongside the lower share of employee benefits costs (in 2009: 31%, in 2010: 28%).

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