Poland's PM open to talks on further reductions in mineral extraction tax in future

"We realise that, on the one hand, this tax, which has always been something of an overwhelming burden for KGHM, is nothing new. It is not a Polish invention, and copper belongs to the entire nation, so in a way, the whole of Poland must benefit from this copper," the Prime Minister said.

"But on the other hand, KGHM must develop. That is why we have already made the decision to reduce the burden of this tax on KGHM. And I am absolutely open to discussion so that, over time, as work progresses, this tax context becomes increasingly favourable from KGHM's point of view. This is in the interest not only of the company, but of all of us," he added.

Tusk pointed out that copper has recently also gained geopolitical significance.

"(...) we must think in strategic terms, not in a perspective of a year or even five years. Our smelters, which process Polish copper, must have work to do in the future, not just in two- or three-years’ time, but copper is also an absolutely strategic raw material," he stressed, pointing to the great importance of copper in the energy sector, among others.

In recent months, the management board of KGHM has decided to commence geological and hydrogeological exploration work for the Retkow, Gaworzyce and GG-2 'Odra' projects.

This is the first stage of the construction of three new mining shafts in the Copper Basin, which, according to the company, would secure its stable operation in the long term. As reported, the estimated cost of the investment is at least PLN 9 billion (EUR 2.1 bln). The first hole has already been drilled in Retkow.

Tusk pointed out that, according to assurances from KGHM's management board, Polish companies will be responsible for virtually the entire investment.

In October, the Polish government adopted a draft amendment to the act on certain minerals extraction tax, which provides for changes in the rules for calculating the tax on copper extraction, currently paid only by KGHM. In recent years, the group has paid over PLN 3 billion (EUR 709.2 mln) in tax annually, and since its introduction in 2012 – over PLN 30 billion (EUR 7.1 bln).

The government plans to reduce the copper tax from 2026 by changing the formula for its calculation. The cost of this reduction to the budget is estimated at PLN 500 million (EUR 118.2 mln) in 2026, PLN 750 million (EUR 177.3 mln) in 2027 and PLN 750 million (EUR 177.3 mln) in 2028. The changes also provide for the introduction of a mechanism for deducting part of the investment expenditure from tax, starting 2029.

KGHM's CEO Andrzej Szydlo said in an interview with PAP Biznes in October that he was certain that the dialogue with Poland's Ministry of Finance would continue in the future.

pel/ ao/ nl/