Lubin, Poland 07/12/2015 - KGHM intends to maintain output and keep its operations open despite copper prices falling to their lowest in six years, CEO Herbert Wirth told FastMarkets in an interview.
Three-month LME copper recently traded at $4,582 per tonne, down $30 on Friday's close but up from last month's lows below $4,500 - its cheapest since May 2009.
"In 2016 we will be operating at the same level of production as planned, while our key investments in Poland and abroad are being carried out as scheduled," Wirth said at the company's headquarters here.
But the future of the Polish miner's projects in Canada and the US remain dependant on the copper price, he said.
"If copper prices remain at low levels in the long term, we might possibly think about postponing or suspending our projects there. But this is still an unlikely scenario," he added.
After putting its McCreedy West nickel-copper mine in Canada on care and maintenance in October as part of a cost-cutting programme, KGHM has two operational mines in the US - Robinson and Carlota - and one in Canada, the Morrison mine in Ontario.
But production at McCreedy West accounted for just one percent of KGHM's group-wide production, Wirth noted.
In Chile, the ramp-up of its flagship Sierra Gorda mine will be finished in the first quarter of next year, Wirth said. The company aims to produce 80,000 tonnes of copper from the mine this year and 110,000-120,000 tonnes next year.
Still, the company is struggling to find a stable shipping strategy from Sierra Gorda via the port of Antofagasta due to long-running environmental issues.
"The protests have stopped for now and the issue has been softened but our long-term goal is to build a new port in another location," Wirth said.
The company is the majority holder of Sierra Gorda at 55 percent while the remainder is held by Japan's Sumitomo.
Despite weak copper prices, a weak Polish zloty is softening the blow for the company.
"We are still able to make profit with prices at a current level of $4,500 per tonne," Wirth noted. "The current price environment is not an extreme problem for KGHM. What is more worrying for us is Poland's mining tax."
For the first nine months of 2015, KGHM posted a net profit of 1.675 billion zlotys. But it will pay around 1.4 billion zlotys in mining taxes this year, Wirth said.
He sees copper prices remaining depressed until the end of 2017, with next year set to "as bad as this year", before prices rebound in 2018.
"I remain optimistic from a long-term perspective especially if you take into account the supply/demand side of the equation - copper stocks are lower than we expected and production cuts are already taking place," he said.
Copper demand from China, the world's biggest consumer of the metal, remains unchanged, Wirth said.
"We haven't noticed less interest from our Chinese customers. The demand is still there and quantities of the material booked remain the same," he said.
Europe accounts for 80 percent of KGHM's copper sales, with the remaining 20 percent of production exported to China.
"The demand for copper will always be there - the world economy albeit at a slower rate will keep growing," With said. "The main question for us is: how can we grow and develop in this kind of environment?"
(Editing by Mark Shaw)