Copper is gold for Polish economy

The mining sector is the pride of Southern Poland . In the eastern part of Silesia it’s the coal mines that set the tone. In the western part tens of thousands of people are dependent on KGHM, one of the largest copper and silver producers in the world.

When the elevator whizzes down, we are accompanied by a hard and deafening wind. ‘It’s the air conditioning’, explains one of the miners. ‘It pumps each minute 6000 cubic feet of air into the mine.’

This is the english version of an article that was published in Het Financieele Dagblad


Me down in the mine

When we arrive at 1000 meters under the ground the air indeed feels pleasantly fresh and not too warm. But that will not last long. With a small all-terrain vehicle we drive through an immense underground road system, about three meters wide and high. At every turn and side road the drivers hoops to prevent accidents. Slowly we descend deeper and deeper into the pitch black ‘Rudna Glowna’ mine.

‘The Rudna mine is one of the most important copper mines of the company KGHM’, says geologist Jaroslaw Suchan. KGHM stands for ‘Kombinat Górniczo Hutniczy Miedzi’, a company that was founded more than fifty years ago when the communist where still ruling Poland.

After the fall of communism in 1989 – in which the miners had a large share – it where bad times for the important coal industry in this region in south-western Poland. ‘It was a huge blow to the people of lower Silezia that all the coal mines were closed down’, says Suchan.

But fortunately KGHM was standing tall. Stephen Marks of KGHM Investor Relations estimates that these days direct and indirect about 100,000 people in lower Silesia depend on KGHM. And its not only Silesia that profits from KGHM. The national interest of the company is also enormous. With sales of almost €6 billion KGHM is one of the largest companies in Poland. The same applies to the company as an energy consumer and exporter. China in particular is keen on the more than 400,000 tons of copper that are extracted each year out of the Polish soil.

Car with the dynamite

Car that drills holes for the dynamite

For the state, with its 31 % stake in KGHM it means a regular income out of dividends, royalties and tax payments that can reach hundreds of millions each year, says Mr. Marks. According to him, the flotation of the group in 1997 was a milestone in the history of KGHM, but perhaps even more important was the acquisition in 2012 of the Canadian mining company Quadra FNX.

With this acquisition for $3 billion – the largest acquisition ever in Polish history – small KGHM suddenly grew into a global player that could compete with other greats such as BHP Billiton and Rio Tinto. It helped KGHM in the top ten of world copper producers, and with the silver production it even progressed to the number one spot.

For Michal Wroblenski, who is the supervisor down in the mine, these are less important data. What matters to him is especially safety. Down in the mine the tunnels seem to be endless. We pass safety doors and underground workshops, till suddenly we stop. There is a smell of rotten eggs hanging in the air, and it has become much warmer.

Wroblenski gives the signal that it is now time to put on our masks, necessary because of the increasing level of hydrogen sulfide in the air, along with rock bursts the greatest danger to the miners in Rudna Glowna.

Fortunately there haven’t been any big mining accidents recently, says Wroblenski but ‘we had of course minor accidents.’ Yet he praises KGHM that puts safety of the staff above all else. ‘Working down here isn’t much more dangerous than working in a factory.’

And then the car stops for a second time. After a short walk looms up in front of us a huge truck with a load full of rock. ‘20 tonnes with a copper content of more than 2 % and a street value of about $ 3,000,’ says Suchan. ‘And thats only one truck. We have about 90 passing by every day.’

A huge drill breaks the rock into smaller pieces that fall on a treadmill a few feet down. ‘This treadmill takes the rock about two kilometres till it reaches a next converting station’, explains Suchan. In total, the stone mass passes fifteen converting stations till it comes out of the ground as grit and is transported from there on to one of the KGHM-smelters.

Put on your gasmasks!

Put on your gas mask!

After an hour in the mine, it’s hard not to sweat. Occasionally we pass miners that took of part of their clothes because of the tropical heat. The only thing they still wear are a pair of shorts, boots, a mininglamp and their salvation set.

This also applies to a man that operates a big machine drilling a hole in the wall for the next load of dynamite. ‘We use about 80 kilograms of explosives to blast new holes twice a day’, explains Suchan.

In comparison to the sometimes loud noise in the mine it’s an oasis of calm in the headquarters of KGHM a few kilometres south in Lubin. It’s A beautiful old building surrounded by pine trees. And Mr. Marks expects it to be a center for the copper industry for a long time to come. At least 30 to 40 years so long as the copper reserves are still there. What happens after is less certain, ‘but that applies to the entire industry’, says Mr. Marks.

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