KGHM copper wants changes to mineral extraction tax to also apply to silver

The Ministry of Finance has begun the process of agreeing on amendments to the act on tax on the extraction of certain minerals, which aims to reduce the tax burden on copper producers in order to enable the implementation of investment plans related to the role of copper in the transformation of the economy as a key product for clean energy technologies.

The reform provides for the possibility of deducting 50 percent of expenditure on investment projects to increase production incurred from 2026 and a three-year period of reduced tax rates. In the first three years of the reform, copper producers will obtain funds for investments in the amount of PLN 750 million (EUR 176.1 mln) per year, and in subsequent years approximately PLN 1.5 billion (EUR 352.2 mln) per year.

"In view of the above-mentioned conditions for the implementation of investments and the nature of the business, we propose to reduce the reduction coefficient to 0.4 from 2029, to extend the provisions on the taxation of copper mining to the taxation of silver mining to the same extent," KGHM wrote.

According to the draft bill, the coefficient is to be 1 from January 1, 2026.

"Changes in the taxation formula outside copper should also cover silver, as both metals are produced in the same process. KGHM's activities are based on integrated deposit exploitation, where key metals accompanying copper, such as silver, are already taken into account at the stage of resource assessment and deposit development decisions," KGHM pointed out.

"Therefore, silver mining should not be viewed as an 'add-on' to the company's activities, but as an integral part of the production process that determines its efficiency," it argued.

KGHM stated that the tax on the extraction of certain minerals, which amounted to over PLN 30 billion (EUR 7 bln) in total since its introduction, has significantly limited the company's investment opportunities related to the development of its domestic resource base, ensuring its exploitation and its ability to operate profitably in the global copper market.

"This is because other copper and silver producers are subject to a levy set at a level many times lower than in Poland (at least five times lower)," KGHM explained.

KGHM pointed out that a comparison with countries that are significant in terms of global copper production (e.g. Chile, Peru, Canada) shows that even after the introduction of the so-called investment relief in the form proposed in the draft, the effective taxation under the copper tax will still be significantly higher.

"This results in a further weakening of the company's competitiveness against the industry, which operates globally, due to its lack of resistance to inflationary trends in the global and domestic economy - the increase in copper and silver prices, instead of offsetting the effects of inflation, is consumed by the exponential tax formula," KGHM emphasised.

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