The company trade unions have voiced new demands for higher wages, asking for moving one third of the workforce into higher salary brackets, which would result in 10% average salary growth in 2007, versus 5.7% increase already guaranteed in the earlier agreement, at the overall cost of PLN 100m. Moreover, the unions demanded additional payment of PLN 100m for the company social fund.
Our view: We expect a negative market impact from the news on the stock. It seems that no agreement between management and unions could hold. However the pressure on wages applies to every copper mining company at present. Another increase in KGHM
cost base would offset part of higher earnings coming from rebounding copper prices.