KGHM Polska Miedź S.A.

Environmental & Social Information • Nov 16, 2021

Adoption of a Climate Policy by the Management Board of KGHM PolskaMiedź S.A.

The Management Board of KGHM Polska Miedź S.A. ("Company", "KGHM")announces that today it adopted a resolution on the adoption forimplementation of the "Climate Policy of KGHM Polska Miedź S.A."("Climate Policy").

The EU's tightening climate policy, in particular the European GreenDeal and the Fit for 55 package, has a decisive impact on Polishindustry's operating conditions. The radical rise in wholesaleelectricity prices which has been observed over the last several monthsaffects the competitive position of Polish producers at theinternational level, not only in relation to producers outside of Europewho are not limited by restrictive environmental protection regulations,but also those from other EU countries where - in principle - a morebalanced energy mix enables them to acquire energy at a substantiallylower cost.

The revision of the EU's ETS system resulting from introduction of theFit for 55 package means that as a result of an increase in theemissions reduction goal to -61% by 2030 (from the current level of-43%), the Company is experiencing a significant increase in costsconnected with the purchase of greenhouse gas emission rights. Accordingto estimates by KGHM Polska Miedź S.A., additional costs connected withemission rights under the EU ETS system in the years 2021-2030 amount toapprox. PLN 1.04 billion. The Company also expects that the introducedchanges will result in additional costs connected with the purchase ofelectricity due to higher unit market prices. If it is assumed that thecurrent volume of electricity purchased from the market remainsunchanged (approx. 2.24 TWh in 2020), these additional costs will amountto approx. PLN 2.96 billion in the years 2021-2030. KGHM Polska MiedźS.A. anticipates that the costs associated with implementation of theEU's ambitious climate goals would amount in total to PLN 4 billion inthe years 2021-2030. Because of this, the Company will intensify itsexisting decarbonisation efforts (the Energy Development Program) andwill commence new projects in this regard. These actions will be shapedby the adopted Climate Policy.

The Climate Policy is a guiding document, addressed to both internal andexternal stakeholders, whose primary objective is to present the climateambitions of the Company and to define the scope of process andorganisational changes necessary for their implementation. The scope andimpact of the Climate Policy encompasses KGHM Polska Miedź S.A., whichwill subsequently transfer its principles to its subsidiaries.

Ambitions for reduction of greenhouse gas emissions by KGHM in 2030 and2050

The primary goal of the Climate Policy of KGHM is for the Company - asthe Parent Entity of the KGHM Group - to achieve climate neutrality by2050 with respect to Scope 1 emissions (direct emissions primarilyrelated to the Company's production activities) and Scope 2 emissions(indirect emissions associated with the use of electricity and heatacquired from the market), with their maximum possible reduction.

The intermediate target is to reduce total Scope 1 and Scope 2 emissionsby 30% by 2030, compared to the emission levels of 2020. The reductiontargets for the entire KGHM Group will be published no later than in thefirst half of 2023.

The Climate Policy will be followed by the Decarbonisation Program ofthe KGHM Group, which will provide details on how the Climate Policy'sgoals will be attained, as well as total capital expenditures on therealisation of activities aimed at reducing the emission of greenhousegases. The Decarbonisation Program of the KGHM Group will subsequentlybe published.

Legal basis: Art. 17 (1) of MAR (Regulation (EU) No 596/2014 of theEuropean Parliament and of the Council of 16 April 2014 on market abuse(market abuse regulation) and repealing Directive 2003/6/EC of theEuropean Parliament and of the Council and Commission Directives2003/124/EC, 2003/125/EC and 2004/72/EC (Official Journal of theEuropean Union dated 12 June 2014, no. L 173/1).