Los Mercados y lugares de abastecimiento de alimentos

The purpose of diversifying revenues and gaining independence from energy prices, crucial from the point of view of business opportunities for KGHM Polska Miedź S.A., were investments in the energy sector, mainly in the energy generation segment. From the point of view of KGHM Polska Miedź S.A., power generation is one of the most attractive sectors, as it is not correlated with conditions on the metals markets and represents a stable source of revenues. In respect to increasing energy production to meet the company's own energy needs, projects were continued whose realisation will ensure approx. 30% of the energy needs of KGHM Polska Miedź S.A. (at present, energy production by the subsidiary “Energetyka” Sp. z o.o. represents around 10% of the Parent Entity's total energy needs) and will also lead to diversification of the energy generation portfolio and will significantly reduce the company's exposure to the risk represented by the EU's climate policy and to changes in fuel and electricity prices. The most important projects in this regard are:

1/ „Construction of gas-steam blocks at the Głogów and Polkowice power plants” with installed

capacity of 90 MWe and planned power generation of 560 GWh, all of which will be used to meet the power needs of KGHM Polska Miedź S.A. In the years 2010-2012 work was performed in respect of construction, assembly of key equipment, installation and electrical work, as well as equipment related to control and measurement and automation based on actual execution projects. Key equipment from the electrical and installation sectors was delivered. Commencement of operations of these blocks is planned in the second quarter of 2013.

2/ „Construction of a research installation for the underground gasification of brown coal in the Legnica-Głogów Copper Belt”. Under the concession obtained in 2012 for exploration of the brown coal deposit in the Głogów region, in a selected area located in the Legnica-Głogów Copper Belt, a program of geological work was begun (6 boreholes were drilled) aimed at exploring and evaluating the brown coal resources in the years 2012-2015. Positive results from this geological work will enable a decision to be taken on whether to apply for a mining concession for this deposit using an underground brown coal gasification research installation.

In 2012, KGHM Polska Miedź S.A. took an active part in the realisation of the most important energy projects of a national scope. These projects are being considered on a purely commercial basis, and their realisation will enable diversification of the structure of revenues and an increase in the market value of KGHM Polska Miedź S.A. The long term investments in the energy sector are aimed at ensuring 30% of revenues. The main projects in this regard are:

1/ „Construction of a power generation source based on the utilisation of natural gas as the raw material for its generation, on the grounds of the existing Blachownia Power Plant”.

In respect of realisation of the agreement entered into on 20 January 2010 with TAURON Polska Energia S.A. and TAURON Wytwarzanie S.A., and on the basis of the permits received on 23 July 2012 of the European Commission (the applicable antimonopoly body) with respect to concentration, on 5 September 2012, KGHM Polska Miedź S.A. founded a special purpose company with TAURON Wytwarzanie S.A. called „Elektrownia Blachownia Nowa” sp. z o.o. KGHM Polska Miedź S.A. acquired 50% of the shares in the share capital of the special purpose company. The share capital of this company is PLN 65 million.

Together with the founding of this company, a Shareholders Agreement was signed describing the detailed principles of cooperation between the parties regarding realisation of the enterprise, comprising the preparation, construction and operation of the approx. 850 MW gas–steam block on the grounds of the Blachownia power plant in Kędzierzyn-Koźle belonging to the TAURON Group. In accordance with this Agreement, the Partners anticipate that the total estimated expenditure on this investment in the years 2012-2017 will amount to around PLN 3.5 billion. The project will be realised using the project finance formula – at least 50% of its budget will be financed from outside sources.

In 2012, the special purpose company performed work related to preparing the investment, involving the acquisition of required documentation comprising among others sector projects, construction permits, connection conditions and the commencement of tender procedures to select advisors and a contractor to build the block.

2/ „Exploration for and extraction of shale gas in Poland (KCT Project)”.

On 4 July 2012, KGHM Polska Miedź S.A. signed a Framework Agreement with the following companies: Polskie Górnictwo Naftowe i Gazownictwo S.A. (“PGNiG”), ENEA S.A., PGE Polska Grupa Energetyczna S.A., and TAURON Polska Energia S.A. on the exploration, evaluation and extraction of shale gas in geological formations for which concessions have been granted to PGNiG for the exploration and evaluation of deposits of crude oil and natural gas in relation to the Wejherowo area with respect to the Kochanowo, Częstkowo and Tępcz pads of total area of 160 km2 _{(KCT Project).}

Estimated expenditures on exploration, evaluation and extraction with respect to the first three zones within the area of cooperation determined in the agreement are estimated at PLN 1 720 million.

In accordance with Annex No. 1 to the Framework Agreement signed on 12 November 2012, the parties agreed that the date for determining the details regarding the terms of cooperation, including the budget and project schedule, participation of the parties in financing expenditures resulting from the agreed budget, participation in profit and on the principles of responsibility, among others contractual penalties, would be prolonged from 4 November 2012 to 4 February 2013.

Due to on-going negotiations regarding the detailed terms of cooperation under which among others the project documentation is being developed, on 21 February 2013 the parties decided to prolong the period for determination of details regarding the terms of cooperation until 4 May 2013 by signing Annex no. 2 to the Framework Agreement. Should such specific arrangements not be determined by 4 May 2013, the Agreement may be terminated by each of the parties. Moreover, if within three months after reaching such arrangements the parties have not received all of the required corporate approvals, or if by 31 December 2013 the required antimonopoly clearances have not been received, the Agreement will expire.

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3/ „Preparation for the construction and operation of the first Polish nuclear power plant”.

On 5 September 2012, KGHM Polska Miedź S.A., PGE Polska Grupa Energetyczna S.A., TAURON Polska Energia S.A. and ENEA S.A. signed a Letter of Intent regarding the purchase of shares of a special purpose company founded in order to build and operate the first Polish nuclear power plant. In accordance with the Letter of Intent, the above-mentioned companies will work together to develop a draft agreement which will describe their rights and obligations in executing the project, with the assumption that PGE Polska Grupa Energetyczna S.A. will play the leading role.

On 28 December 2012 the Parties to the Letter of Intent prolonged the effective period of the Letter of Intent to 31 March 2013.

PILLAR IV – REGIONAL SUPPORT

KGHM Polska Miedź S.A., assuming responsibility for its impact on the social and natural environments in which it operates, commenced work on implementation of the CSR (Corporate Social Responsibility) strategy adopted in 2012. The CSR strategy comprises the company's principles of corporate social responsibility and balanced growth in accordance with international CSR guidelines for the mining sector and with ISO 26000 defining standards in this area. The CSR strategy assumes the achievement by the company over the period to the year 2018 a position as a stable, professional, global leader, which takes into consideration the common good and a balanced management of its resources through:

– creating innovative solutions minimising the environmental impact of the operations KGHM Polska Miedź S.A.,

– building a position as a „good neighbour” and trusted investor, – ethics and transparency in managing relations with stakeholders, and – care for its employees.

In 2012, the first CSR report was published for the years 2010-2011 along with a historical profile of the company's actions in regards to corporate social responsibility in the years 1961- 2011.