KGHM Polska Miedz SA
WSE:KGH
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KGHM Polska Miedz SA
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Ladies and gentlemen, once again, we are meeting at a conference on financial results of KGHM, the company and the group. This meeting is not a direct one. We rely on a video conference. This is the second time again when our annual results will be commented on without the participation of the audience. Nevertheless, we have no doubt, bearing in mind the interest of our stakeholders and all employees. We have to opt for this choice of transmission is our means of communication.
We decided not to postpone the data publication, and we can boast that we provided our annual reports to the Financial Supervision Committee in a new format, and that was a successful submission. Even here in the studio. To appear in front of you without protective masks. We implemented the necessary procedure, specially security for all the participants of the event.
Today, we will present the results for the fourth quarter 2020 and the whole year 2020, the effect of our work will be commented by our management Board, Marcin Chludzinski, President of the Management Board. Professor Katarzyna Kreczmanska-Gigol, Vice President of the Management Board for Finance. Mr. Adam Bugajczuk, Vice President of the management Board for Development; Pawel Gruza, Vice President of the Management Board for Foreign Assets; Radoslaw Stach, Vice President of the Management Board for Production.
We will start traditionally with comments of our management board regarding last year's event. Then we will proceed to a Q&A session. Let me announce it right away. If there are any questions that we won't be able to transmit today. You will find them all with that transcript on our website. I would also like to invite you to ask questions. Traditionally, you know our e-mail address. Ladies and gentlemen, let's start our conference, Mr. Marcin Chludzinski, President of the Management Board. The floor is yours.
Ladies and gentlemen, do you remember March 2020? That was not a very long time ago, just a year ago, empty shelves and shops when people stockpiled and queues that had never been seen by the younger generation. Do you remember searching for even a single pair of protective gloves or exorbitant prices of disinfectants? A few months before rumors appeared about the mysterious in virus in Wuhan in China, but nobody thought then that we were facing the greatest crisis of the modern world. The pandemic, which would paralyze the functioning of the world. Nobody was prepared for that, either Poland or anyone in the world, all contingency management programs were insufficient. And none of those programs envisaged disaster on that scale.
Office buildings, health centers became empty overnight. Polish people returned on a mass scale to Poland within the safe return home program. Nobody knows what will happen in the future, nobody makes long-term forecast, well-known analysts refrain from making comments. Some enterprises also in our industry, dramatically reduced their operations to discontinued them altogether. Our activities are dominated by 2 themes: security of our employees and security of production launch part of business in Poland now operates in a remote mode. People work from home. But of course, we cannot allow miners to work from home. It is technically not feasible. And every single day with production, with sales counts.
In this situation, we are facing a dramatic shortage of information. And we have to manage risk in this turbulent, unpredictable environment. We set as our priority, the safety and security of our employees. We make bold decisions. We were the first to implement thermovisual temperature measurements and -- we also introduced our new sanitary procedures, which were then deployed in other plants. And most importantly, we give security to our team that we will make every effort to keep jobs.
Copper prices are dropping to a record low prices. Such prices had not been recorded for a decade. Keeping those prices for a longer time would mean production below the break-even level. Transport is slower. We have delays in deliveries. When the government is considering how to cope with remote education that was introduced all of a sudden. We are trying to cope with the falling price of copper, problems with logistics, problems with deliveries.
So what are we doing in the situation? First of all, our effective strategy. Back in 2018, we assumed that the time of stability across the world was coming to an end. And a roller coaster future was ahead of us, unpredictable developments in business environment and in the market. Our response to those consideration was assuming great flexibility and adjusting for new conditions and greater flexibility in business. That is helping us extremely and come back with the virus. We have a record high security level and we maintain jobs for thousands of our people. Secondly, communication, above all communication to our employees. We use all effective communication channels. We know that getting through to sanitary information line is hard. That is why we have information line, which is available around the clock. We respond to doubt of our miners and/or families. We explain to them our procedures and the point of following them.
We use intranet extranet and special short message text, special TV and company newspaper, we inform them, educate them. We combat fake news when posters are no longer effective. We have mobile billboards. When we're unable to meet our managers face-to-face, we prepare daily -- weekly bulletins for them with issues that are of greatest concern to our employees. And we make ever effort to be concrete honest and specific in this communication. Specific to the point to which almost complete uncertainty of the future allows us to do.
Secondly -- or thirdly, we dramatically improve security of our employees. Right from the beginning of the pandemic, we have been equipping our people with protective measures. We disinfect our facilities regularly -- machines. We introduced a series of minor but significant initiatives. We have shifted work in offices to allow staggered presence of people. We keep nerves of steel, that is in the DNA of the mining culture. We have this professional ethics that forces us to conduct rescue operations. And even in situation -- even the toughest miners in situations of emergency and threat lose their regular control. But we also have effort across the organization throughout Poland. In March, which was the most difficult month, we distributed 20,000 liters of disinfectants. We organized temporary hospitals in lower Silesia. In our center for months, we have center for COVID patients. We donate funds through our foundation to health centers.
Long time ago, the wide spot shortages of even the basic devices and hospitals. We provide hospitals and health centers with protective equipment. We take care of families and of our neighbors, our volunteers prepare meals, help people in doing shopping. We know that those activities can increase wellness of entire social group. We organize psychological assistance to the most vulnerable groups. We planned that 120 telephone consultations would be more or less the average in a week, but that was the number of calls within an hour. We take measures to reduce the impact of possible depression, we ensure psychological assistance, emotional assistance to those who are completely exhausted by the situation. Some also say that post-traumatic stress disorder will be one of the consequences of the pandemic, and it can affect as much as 70% of the population.
2020 was a dramatic year. GDP fell drastically in the EU and in the world. Fire has literally infected key global economies, concerning alarming levels of occupancy in hospitals. And precarious as one of very few companies, we keep our pipelines running without 1 day of downtime. The production in the group comes to 907 million tonnes of copper, which wasn't achieved by accident. It is a result of our crisis management, solidarity, prudent decisions, fast response and trust. A year later after March 2020, I am proud to report that this has been working, and we are working, achieving A grades or A plus grades, a record EBITDA for 2020, came to PLN 6.6 billion. The net profit of the capital group came to PLN 1.79 billion, the leverage fell from 1.5% to 0.9%. And the cash flow increased by more than PLN 1.5 billion. Thank you.
Ladies and gentlemen, thank you, President, for this comment. Now over to Radoslaw Stach. And let's hear about our production performance.
Distinguished ladies and gentlemen, while I am moving to discuss the production performance of the capital group, a very good level of 709,000 of tonnes of copper and the extremely robust performance in the Sierra Gorda mine, which increased its output versus 2019, silver production and precious metals and molybdenum both domestically and internationally, will be discussed in later slides.
Before I start discussing the domestic production and the developments in mines and smelters, and units, let me cast some more lights on safety, our priority topic 2020. Results are impressive, 20% more safety in place as a result of initiatives and culture changing efforts in our company, and the credit really goes to all our people. We have been recognized by the Golden Charter of Safe Employer, which proves that we are moving ahead in the right direction, which makes us proud going forward.
With -- as far as our production performance in domestic units are concerned, copper and electrolytical copper and silver this performance has been stable, no peaks and troughs, which means that we weathered the storms in 2020 with respect to silver production, and that's 1,400 tonnes in 2019. That was a record at that time, we wanted to carry it over to 2020. However silver is a performance-related or output related metal, which is directly related to the amount of extracted ore. Now we launched a number of efficiency projects to improve the efficiency of our plant and machinery and to boost our cost efficiency. I would like to highlight one of the projects that boosted our production last year and that was a supply chain project, which integrated 3 processes, resource planning process, supplier procurement process and inventory management.
Now that integration and digitization and automation of these processes translated into enormous cost savings in real time, and we could watch the results as we rolled out the program in the fourth quarter of 2020. And overall, in that hard year, as the President mentioned, and the carriers market, price-wise and otherwise, our output has defended its high levels. And the credit goes to strong management decision and the commitment of all our people. Thank you very much. And now foreign assets, Vice President, Pawel Gruza. Pawel Gruza, I'm sorry.
Good morning or good afternoon, indeed. Ladies and gentlemen, 2020 will be marked as a pandemic year, pandemic without borders, in fact, in our jurisdictions outside of Poland. The pandemic status was a hard one was definitely alarming however, as a result of efforts launched in Poland, we managed to maintain continuity of our business, which was top priority, safety of people, discipline, these were the 2 labels that we could use to describe our Chilean and North American operations, unfortunately, in other mines operated by our competitors.
Some of the safety measures didn't prove successful. There were cases of downtime and stoppage. We did not have those issues. As we gradually optimized our Sierra Gorda operations, which was a low-cost optimization effort. We could achieve a very robust production performance. And you can see this on the slide, and it's -- they are speaking for themselves. In fact, KGHM International suffered from more setbacks as a result of the quality of the all the content of metal in the extracted rock and lower outputs. Lower outputs here had not been set off in 2020.
To complete the picture of our international assets, I would like to discuss the financial performance in the first 6 months of the year or in the first quarter, in fact, we saw a major risk of falling prices. We launched a number of cost efforts both on OpEx and CapEx ends. And we also reviewed our headcount and employment structure to bring costs down dramatically, we also restructured KGHM International. And at the end of the day, the financial performance of our international assets is highly positive and it contributes enormously to the entire successful results of the group.
Thank you very much. Now we've started on the financial front. Let's hear much more from Professor Katarzyna Kreczmanska-Gigol, VP Finance of the group.
Ladies and gentlemen, Mr. Chludzinski has already mentioned that it was -- it is since 2018 that we have been getting ready to embrace the new developments in the world economy, and we had been anticipating developments that can lead to poor market performance, lower capital performance or recession, in fact, the bull market, which persisted for so many years, could, in fact, be challenged. However, we had not anticipated the crisis coming from something that we today call a global pandemic. However, we did make provisions for a rainy day in our financial portfolio. And in fact, the 3 years of efforts that we put in to make sure that our financial performance is stable, helped us enormously in 2020. Revenue from contracts came higher by 4%, vis-à-vis 2019. And 2019 was a good year. I would like to emphasize that.
2020 was, in fact, a turbulent one and no one really knew what would happen the next day, in fact. Notably, our financial performance with respect to contract revenue is higher by PLN 909 million. The unit cost performance, again, in the hard year as it was. This cost came lower. So it was squeezed by 6% to 1.9 in C1, in the C1 cost, we already include the higher cost of the copper tax of the mining -- mineral extraction tax. So the cost performance would have been even higher if it wasn't for the tax charge.
Furthermore, KGHM Polska Miedz S.A., the mother company. C1 cost was reduced by 7% against 2019. At Sierra Gorda, the costs declined even further by 16% in KGHM International. This cost came higher and it was the highest in the segment, but that resulted from lower copper sales volumes. And partly, it was offset by higher revenue on associated metals sales.
Now lets look at EBITDA. Something that analysts are mainly looking at, and it is also critical for us, EBITDA versus 2019 is higher by 27%. Note that EBITDA is higher by PLN 839 million in the mother company, KGHM Polska Miedz S.A is higher at Sierra Gorda by PLN 686 million. We have a lower EBITDA in other business divisions, but these divisions include companies that were vulnerable, and they were strongly affected by the pandemic. And we had a lower EBITDA in KGHMI. As I said already, this resulted from low sales volumes and the termination of the DMC contract in the U.K..
Ladies and gentlemen, as regards to our net result it was higher in 2020 by 26%. What I would like to draw your attention to is that our net result in the group, was mostly affected by the change in revenues, which high by PLN 909 million, and we had better results on joint ventures. I would also like to mention that with regard to costs by type, we had higher costs by type, and they were high by PLN 47 million however, to a large extent, this was due to higher remuneration. We had an increase in remuneration as a consequence of our social commitment agreement, which we follow in spite of different conditions. We had copper tax increase by PLN 105 million and higher depreciation. These will actually factors beyond our control.
However, as for other activities, we saw a reduction in third-party services, which declined by PLN 429 million. And this is, ladies and gentlemen, the result of action that we consciously took. This has already been mentioned. First of all, cost discipline across the company that we maintained in spite of the difficult situation. As regards cash flows, if you look at our cash flow statement, you will see that the effect of last year is very positive. I would also like to draw your attention to one item change in working capital. This is the effect of action that we took, starting from the moment when we announced our new strategy. We announced then that we would release cash flows in connection with the steps we were taking. And these included implementation on a large-scale of factoring debt of the group in KGHM Polska Miedz, that is an indicator of which we are proud net-debt-to-EBITDA 0.9. That is an excellent result, especially if we bear in mind that at the end of 2019, it was 1.5%.
Please also look at debt -- net debt, it went down by almost PLN 1 billion. Thank you very much.
Thank you very much, Professor, for presenting details of the financial results. Now I would like to invite Vice President for Development, Adam Bugajczuk. Who will give us details regarding development and investment in KGHM.
Ladies and gentlemen, before I discuss details of our results in development and investment. I would like to say that my area also kept pace with the rest of the company. As a result of which we succeeded in completing all investments, both financially and substantively, which contributed to the fantastic results that were achieved by the company and that have already been presented by my colleagues. We spent PLN 2.48 billion. And in analytical terms, the distribution of this spending was very proportionate. With very small differences. For our key development investment, of course, we have the extension of the Iron Bridge container expansion.
I would like to give you some details about the stage at which we are present. Now the investment is complete and 88%. As regards to the segregation station, which is an element of the expansion of the whole facility, we are at 78%. As for the program of deposit availability, we prepared more than 40 kilometers of corridors for mining work. BG 1 Shaft was deepened to over 1,300 meters and after all problems that we experienced about -- with water, we are moving forward. In GG-2, we -- also moving forward, we managed to make returns and conditions of the financial side of this investment, and we are proceeding with administrative efforts. As for BAT Conclusions and environmental efforts, PLN 161 million was spent last year on this purpose. And both in Glogow and in Legnica, we managed to complete all our key investments.
Now I would like to discuss briefly the depletion of our Glogow deposits, we have always talked about that, and you can find yourselves that we now have all key indicators at levels that were higher than in previous years. With regard to other key investments -- were also key investments, although not a spectacular Iron Bridge development of preparation of mining exploitation. We managed to buy a few presses, pump station in Adamovka, which is also a part of the Iron bridge. Program, construction of waste station and also refurbishment of Glogow plant. This year, PLN 160 million was spent mining investment, PLN 161 million was linked to BAT Conclusions. And the other elements related to ecological efforts are shown in detail in the graph in the materials.
As for renewable energy sources, we have already completed certain investments. We have built the first photovoltaic farm at Legnica. Copper mine, we are now working on other investments, which will contribute to the achievement of the target of 50% of energy coming from our own sources. This is a target we are pursuing very consistently. And you can see in our presentation, the breakdown of the areas will accomplish those tasks.
Thank you very much.
Thank you for presenting the details of our investments. Ladies and gentlemen, we have shown you our production financial results, also the development in our foreign assets and investments.
Now I would like to ask President Chludzinski for a brief summary of our efforts.
Ladies and gentlemen, we have experienced a very difficult period. It was not an easy year. It was not an easy moment in the history of our company. And by the way, our company celebrated its 60th anniversary of this year, which is a quite decent age, although we are not old yet. We are full of life and energy. And we have to keep in mind that pandemic continues, there is continued risk to health. And we are also combating the effects of the pandemic on our operations. Our crisis units are adjusting our procedures and modes of operation to what the situation brings. But it is worth saying that also the term of office of the management board is coming to an end. On the 15th of April, a new term of office of the management Board will start.
And I would like to show you some big numbers that illustrate what happened in the past 3 years. And a lot of activities were undertaken in various dimensions. Savings, process efficiency, logistics, all those projects, hundreds of projects and thousands of people who worked on those individual things. We started 2018 and now we are drawing to an end of the term of office in mid second quarter 2021. EBITDA was PLN 4.7 billion. Now we are at over PLN 6 billion. Sales, plus 15%. That is on revenues. And in volumes, 30%.
We now caused C1, which is a very important parameter for us, had a 12% decrease in spite of high production, but there was the higher tax which drives this cost. 12% decrease is a very significant achievement.
Net debt to EBITDA, which was a difficult ratio. And a lot of energy was put into improving this ratio. Also, the exchange rate of U.S. dollar is important. But 44% change for the better, that is to reduce this ratio. From 1.60 to 0.90 is a very significant change.
Copper production, that is our daily activity that we are trying to stabilize. But apart from stabilization over the past 2 years, in fact, it was a bit longer than 2 years, 2.5 years, to be exact. From 634 tonnes, we went up by 12%.
And there are thousands of people working for those results. I can say with full responsibility that this is a huge success of the entire company, KGHM, the management board, and I would like to thank the management board for the effort that has been put in. We covered a long way. We are still on the road to our ultimate targets, but we have already covered a lot of ground. I would like to thank Kasia Gigol-Kreczmanska (sic) [ Katarzyna Kreczmanska-Gigol ] for being with us. Because of her professional plans, she will end her work for KGHM at the end of this term of office. But I would like to extend my thanks to her for contributing to our results. You have been a very important contribution to our results.
And as for things that are still ahead of us, ladies and gentlemen, I think we cannot say that everything is under our control. There are a lot of challenges ahead apart from the pandemic. We have ESG challenge, sustainable development, carbon footprint. This year, we are starting a comprehensive development of our strategy that will determine the impact of ESG on our long-term activities. This year, we will also have a review of the strategy to see what needs to be changes or change what needs to be rethought in the context of global development. We have flexibility built into our strategy. But this is the time to have a closer look at the strategy revisited.
And of course, there are capital expenditures, which are always necessary. Investments are always needed to continue production, and the prospects are very good. Copper has got macroeconomic parameters, that's another good situation. And demand, as we assume, will not decrease but will go up. So we want to invest as much as possible to get as much of that product, copper and silver, to continue our production -- other business projects and the pipeline. We are strongly interested in biocide aspects -- of biocidal aspects of copper or silver. There's much to be done here. We are looking out for opportunities, and we want to certainly embark on those as we move forward. Thank you very much.
Now we have to recognize our Professor -- Madame Professor, to thank her cordially for her performance, which is an exceptional gesture in a financial performance conference, you will admit. As we present our financial performance, we are also celebrating the end -- the end of one of our management board tenure, and it's coming on the 17th of April.
Now this is not the end of the conference. We will have a Q&A moderated by Janusz Krystosiak, Head of Investor Relations at KGHM. er@kghm.com (sic) [ ir@kghm.com ] is the address you may send your queries to. Our timing slot is limited, so we will not be able to take and answer all questions, but we will -- we will post both the questions and answers on our website soon. So over to Janusz Krystosiak, Head of Investor Relations.
Thank you. Good afternoon. We have quite a large number of questions, they are coming as I speak. And I'm trying to cluster them into common headings. So I will not read out all of them. So let's go.
This is a question about our Sierra Gorda mine. What are the future plans with respect to KGHM investments in Sierra Gorda? Are we still considering divesting this asset? And what is the status of the process, if appropriate? So over to our colleague responsible for international assets.
Now Sierra Gorda is a strategic asset at KGHM. We are not planning to change our equity position in this operation. We have been focusing and we are focusing on what is bringing the best performance for us. We are focusing on optimizing production processes and it appears we still have some headroom for that with quite low capital expenditures. So this is going to be a very economical optimization.
A question from Justyna Piszczatowska, green-news.pl. What is the progress in photovoltaic projects? What is the capacity that KGHM is planning to launch by year-end?
Large photovoltaic projects relate to huge upfront investments with respect to the foundation and the spatial planning and zoning. We are going to launch some of our projects -- there will be a larger capacity volume than last year as we launched our Legnica projects. We're still acquiring concessions and land, as we speak. So the final result will be reflective of how well we have -- how well we have concluded those discussions.
[ Pawel, clean energy. ]
At the end of 2020, debt -- net debt-to-EBITDA came to 0.9 from 1.5 at the end of previous year, are you planning to continue to reduce this ratio?
Our debt position is one of our key targets with respect to financial stability. We want our debt to be plateaued at a safe level. Are we going to have lower levels of debt? Well, let me put it this way. The debt ratio is both affected by the level of debt and the level of EBITDA. 0.9 is an impressive -- is an impressive level, and we want to continue below 2.0.
[ Tomasz Rosinski, ] again, is asking a question about the budget of KGHM and specifically, CapEx, the management is planning to spend PLN 2.9 billion in Polish operations and PLN 300 million in international projects and public supporting activities. Can you give us examples of largest CapEx projects that will be implemented this year?
Let me make a short introduction, and then I will hand over to Adam. The increase of our capital expenditure is part of our philosophy, which is -- which is to improve our access to mining operations and mining capacity. Internationally, you see that Sierra Gorda is performing well because it is optimizing its costs, and it's optimizing its production. So we are building on existing assets, and we want to extract as much value of -- out of them as possible, therefore, capital expenditures is not that high, if I may comment. So as we plan to continue extracting more value from existing assets, we are not planning to increase expenditure into more assets.
Yes, indeed, we are focusing on projects that are adding value to the technology process. The deposit access program will continue of course, where we're going to increase the number of square meters of our tunnels, and the shaft and the air conditioning and the conditioning station. So this is going to be a landmark project.
And Zelazny Most, this obviously will be developed and the environmental and BAT Conclusions related investments will continue as they have for some years already as part of our strategy. And this is a reflection of our -- of our efforts to adapt to the market opportunities and to the needs in terms of our production performance.
Mr. Jakub Szkopek from mBanku is asking about output in 2020 in Glogów -- Deep Glogów. Can this output be increased? Or will there be -- can it be expected to grow in 2021 and at what rate?
Deep Glogów is obviously about the future of KGHM, and we mentioned this project so many times in previous conferences. We kept saying that we would like to continue growing output, and we follow the deposits. I don't want to attach any numbers to the growth rate. However, we will increase the extraction of ore from the site.
And Jakub is asking another question. In 2020, energy consumption in the group was higher by 8%, whilst the production of dry ore fell down, which meant that the operation was energy intensive. And how are you going to plan to keep the energy efficiency ratio or energy intensity ratio?
Now we are committed to looking to such technologies and processes that decrease the use or consumption of energy, and I would have to go into my new detail into the nitty gritty of the processes because energy is very much process related. And by the way, we have not just the mining, but also the processing and the downstream activities. So I believe that this result is very good and the certificates that we have imposes an obligation on us to keep lowering the energy consumption. And by the way, let me add that we have launched and commissioned major investment projects, and they [ are ] electricity intensive, in fact. And in fact, all of the replacement projects have helped us reduce energy use or energy efficiency, improved energy efficiency by about 10%, which is a trend that we're going to continue.
Now a question about safety. I will not indicate the author, but let me read.
Whilst the pandemic is bringing restriction, has this translated into higher safety levels? So it's caused by the pandemic or some previous efforts put forward by management earlier?
I believe that safety is critical, and we have always been committed to doing our utmost. So it's not just during the pandemic -- safety is part and parcel of our strategy. We wanted to bring accidents -- accidents down and to improve our safety level. So Radek, can you comment on this, please?
Yes, we have launched a number of programs. The strategic program and thinking about the consequences or impacts. And we -- each year, we try to focus on a specific aspect of safety. I don't agree that because of the pandemic and the pandemic related procedures, safety is better. In fact, we launched our safety agenda in 2018, and we continued in 2019 and 2020. So I wouldn't make the connection here between the pandemic restrictions and safety. These are 2 different aspects, but they add up together at the end of the day. And obviously, the pandemic related measures improved our health performance, no doubt about that. But the performance and the rate of improvement, 30% on a year-on-year basis, it really comes from our hard work across the recent years.
Jacek Saja, Radio Plus. A question to President, Adam Bugajczuk. The current copper prices can be optimistic. But COVID situation, the COVID situation is precarious as it was in 2020. So will investments be at risk? Are you planning the photovoltaic projects?
Of course, the level of uncertainty is high, but because in 2020, we, in fact, succeeded in completing all the major financial -- all technical investments, there's no reason why we shouldn't repeat this success this year. And this is obviously an ambitious budget. But we are consistent and robust so I believe that all items of the plan will be implemented, including the photovoltaic farms.
I have a question. And in fact, there are several questions in this thread: dividend. Dividend for 2020. One of the questions, actually, portrays a scenario: If not for 2020, could we hope for a down payment -- down dividend payment for 2021? I'm smiling because -- but let me ask the President for a comment.
And this has been a traditional question in our financial performance conferences. And in fact, we haven't been paying our dividend recently. I do understand this question. It's a legitimate one. Now we are approaching the statutory time of announcing, and we're going to use that time to make this decision as prudent as possible.
[ Kamila Wystraki, ESP News ]. Will KGHM see a further reduction in the C1 cost?
I can say that this parameter of cost, C1, is something that we constantly monitor and think about. We are able to prove that this cost is decreasing. Of course, it has to be said that to some extent, it is not only within our control. For example, it is driven partially by tax, but we are trying to keep it as low as possible.
A question about Lubin in '24. I think it is going to be addressed to me. The question is to the representative of Investor Relations.
What is the reason of the decline in share prices in recent weeks?
The question was concise. So the answer should be concise as well. But I would like to say that we are trying to help you in understanding business. We are trying to build business and its value, build value for the company. I would just like to draw your attention to a variable environment in which we operate in a capital market in the raw materials market. Recent weeks have been characterized by fluctuations in share market and commodities market also has its additional conditions -- also behavior of currencies are a factor here. Prices of copper are definitely influenced by the changes in commodity -- commodities exchanges.
In the recent week, we have experienced particular variability. According to recent comments and analyses, that is mainly due to the pandemic, the extended lockdowns and uncertainty as to when these might be lifted or extended. So the uncertainty related to the pandemic drives the prices of commodities and our primary commodity -- that is, copper. In recent days, we have seen a strengthening of the dollar, and that, in turn, also affected prices of commodities.
Again, a development from recent days, we have seen significant dynamics, both ups and downs in asset valuations. Paradoxically, also in the situation [ we're in ] declining profitability. The variability is so significant. So I cannot give you a straightforward answer.
Let me add something to what Janusz has said. Indeed, recently, in stock exchanges in New York and Europe, this has been going on, and we have to follow those developments. But it is also worth mentioning that last year -- and this comprises about last year -- our share value increased and had quotations over 200%. So our benchmark is very high at the moment.
A question from Pawel Puchalski, Santander. And maybe I can combine it with another question again from the same person. The situation in the foreign assets, acceleration of efforts related to the launch of Victoria mine, and in general, the situation with assets in KGHM International. Pawel Gruza?
We are investing in Victoria. Some of those investments result from our obligation to comply with environmental regulations. And some of them result from our willingness to understand this deposit better -- to explore it better. And I think that is it as regards Victoria.
And regarding other assets, we have a certain procedure in place, a certain way of thinking about our foreign assets. As any company in our industry, we evaluate our assets and we qualify them as strategic or nonstrategic. And then accordingly, action is taken.
One more question from Pawel Puchalski. Why does KGHM not participate in offshore wind project, which would considerably modify the profile of energy consumption in the company and CO2 emissions profile as well as for offshore programs?
KGHM doesn't have to participate in everything that is taking place around. There are a lot of companies that are interested in those investments. We have more immediate challenges in the field of energy, also linked to the philosophy that we have adopted, namely that it would be best and most efficient for us also in terms of economic efficiency of our investment -- will be to connect green energy sources directly to our recipients that is to our mining plan. This gives us the best economic result. This is what we are focusing on.
Thank you very much. Ladies and gentlemen, I'm looking through the questions and most of the threads have already been mentioned. If there are questions that we have not answered, we will provide answers as soon as possible, and we will post them directly on our website. Thank you very much.
Ladies and gentlemen, we could spend hours -- talking for hours on hand about KGHM. This is our work and our passion. But we are over one hour in this transmission, so we do not want to tax your patience too much. Thank you very much for your attention, for all your questions. I would like to thank you on behalf of the whole management board, and I invite you to the next conference next quarter. Thank you very much. Goodbye.
[Statements in English on this transcript were spoken by an interpreter present on the live call.]