KGHM's quotations shot up by 9% during Wednesday's session. The increase coincides with reports from the wnp.pl website about the plans of the Canadian company Lumina Metals. The company wants to open a copper mine in Poland, and the ore is to go straight to the smelters of the giant from Lubin.
Investors on the Warsaw Stock Exchange have started buying KGHM shares. In the early afternoon of May 6, the company's price exceeded PLN 328. Such a valuation means an increase of 9 percent in just one day.
Since the beginning of the year, the securities of the Polish concern have already gained almost 17 percent, which is closely related to the ongoing bull market on global markets, where the current copper exchange rate is at a significantly higher level compared to the readings from last year's spring months.
Canadians bet on Poland
Analysts associate the sharp increase in interest in KGHM shares with information from the European Economic Congress in Katowice. According to the wnp.pl portal, the Canadian company Lumina Metals has announced specific plans to build a new copper mine there. The plant is to be built in the vicinity of Nowa Sól. During his speech, the company's CEO, Jordan Pandoff, noted that Poland has more resources of critical raw materials than any other country in the European Union. The head of the Canadian company also added that our country is the world's leader in terms of copper deposits and a leading position in the case of silver.
From the perspective of the Warsaw Stock Exchange, the key element is the role that the Polish giant is to play in the project. Lumina Metals assumes that the concentrate from the new mine will go directly to the Głogów smelter, which belongs to KGHM. Jordan Pandoff assessed such a solution as a huge logistical advantage, because the main recipient of the raw material is practically on site. According to the company's estimates, the construction of the mine may start in four or five years. This project is considered to be one of the largest projects of this type in our country.
A new cycle on the raw materials market
The optimism of Canadians is matched by global trends. In an interview with wnp.pl, Jordan Pandoff stated that the global economy needs dozens of new copper mines. Such demand results directly from the energy transition and the development of modern technologies. The CEO of Lumina Metals believes that after a period of low prices and turbulence during the pandemic, the market has entered a new cycle. He noted that investors have a lot of capital, but they lack high-quality projects.
The topic of Canadian investments in Polish deposits has consistently taken shape in recent months. Already in mid-April, analysts pointed out that the copper giant, which owns the Nowa Sól field, was planning an initial public offering in Toronto and a parallel listing of shares on the Warsaw Stock Exchange. It was a strong signal of the intentions of foreign capital towards our market. Then, just before the current explosion in KGHM's quotations, it was officially confirmed that the Canadians had already chosen the final location for their mine. The declared willingness to cooperate directly with the Polish company has built an extremely favorable investment climate around the giant from Lubin for many years.
However, the representative of the foreign investor pointed to significant barriers. These obstacles hinder the development of the industry on the Vistula. The main problem is high taxes. According to the calculations of the head of the company, the total taxes for the state may reach up to 70 percent. Particularly troublesome from the point of view of profitability is the tax on copper and silver. The regulations on this matter have been in force since 2012. Despite these difficulties, the company continues the process of designing the plant and obtains the necessary permits.
