KGHM management has cancelled plans to acquire copper deposits abroad, scrapping plans to open mines in Africa, South America and Asia, and saying that the minefields have become too expensive. Instead, KGHM would focus on developing its domestic deposits, situated deeper than the currently operated ones.
Our view: Scrapping the plans on acquiring new deposits abroad is negative news to us because KGHM domestic mine production is bound to decline in the upcoming years and we believe that copper prices will remain high. Although the market might not take it as a negative news, due to the fact KGHM track record in the field has been floppy (Kongo), we would expect KGHM stock price down today, considering declining copper price yesterday.