KGHM halts Congo line

The chief executive of the copper and silver group, Krzysztof Skóra, said the firm is already in talks with several potential buyers for its Congolese assets.

"The scale of the venture and the expected return is not satisfactory. Besides that, there is political risk in the country," he said. The company had earlier planned ambitious foreign expansions. "We are closely analyzing the situation on copper markets. We believe that right now it is not a good time for us to buy foreign deposits because high copper prices make such projects expensive," Skóra said.

In April, a few weeks before copper prices hit a record high of $8,800 (zł.28,072) per tonne, Skóra said the group planned to step up efforts to buy foreign deposits in the next three years, focusing on South American countries. KGHM had pumped some $40 (zł.128) million into the Congolese Kimpe project since its start in 1996, but analysts had cast doubt over its profitability and, despite being the sixth-largest copper firm in the world, KGHM does not have much experience with exploring foreign deposits.

"At the moment we are planning to concentrate on utilizing our own domestic deposits because we have higher margins here," Skóra said. These deposits are expected to last another 20 years. 

KGHM, which owns three copper mines and three smelting facilities in south-western Poland, produced more than 560,000 tonnes of electrolytic copper last year. The company had a record high net profit of zł.2.4 billion in 2005 and expects its earnings to rise to zł.3.5 billion this year, thanks to high copper prices.

Skóra said that later this month the company will make a decision on the future of its fixed-line phone operator Dialog. It might sell its entire stake in the operator or consolidate it with a local peer. (Reuters)