16 December 2005
Friday 16 December 2005
Comments made by Mr. Vladimir Kim, Executive Chairman at the Annual General
There is no doubt, that 2005 was a landmark year in the history of Kazakhmys - a
year of exceptional change. We successfully launched our shares on the London
Stock Exchange and, within less than three months of listing, we are now
entering the FTSE 100 index. Let me thank our employees as well as our advisers
- without their hard work and commitment, this landmark transaction would not
have been possible.
The success of our IPO reflects the fundamental attraction of investing in
Kazakhstan, a country exceptionally rich in natural resources. Kazakhmys plc is
well positioned to benefit from this mineral wealth.
The recent re-election of Mr. Nazarbayev as President of Kazakhstan has meant
that we continue to operate in a stable political environment, and Kazakhstan's
economy continues to thrive with an average annual GDP growth rate of 9% over
the last five years.
Kazakhmys is actively planning for the future both by furthering existing
development projects such as Aktogay and by considering opportunities to
diversify into other commodities within our region. Given the strength of our
balance sheet and our strong cash flow profile, we are well placed to make
acquisitions in the region where we can find value adding opportunities.
Before I come to the attractive growth opportunities for Kazakhmys, I would like
to refer to some important operational achievements of 2005. Despite a more
difficult operating environment, which included a temporary mine stoppage at the
Nikolaevskoe mine in the first quarter of 2005 and planned extraction and
processing of lower grades ores from some of our mines, in the first nine months
of 2005, Kazakhmys produced 301.1 thousand tonnes of copper cathode of which 7.1
thousand tonnes were used to produce copper rod. With regards to zinc,
production volumes for the first nine months of 2005 were at just over 38,000
tonnes, somewhat below our expectations. This was due to an extended ramp up
period for the smelter which resulted in varying quality and volumes of smelter
output. Full operating capacity is expected to be reached during 2006. A full
production report for the first nine months of the year will be published
separately on Monday, December 19 2005.
In the second half of 2005, we continued with site preparation and land
development works on the Aktogay project. We expect to start full construction
works in 2006 as per the original schedule. The construction works at the
Artemyevskoe mine were completed several months ahead of schedule. Artemyevskoe
has a planned average annual production of circa 28,000 tonnes of copper and
98,000 tonnes of zinc and an expected mine life of 22 years. We have also
continued with our expansion and development program for a number of existing
mining operations to achieve our target of gradual copper production growth in
the short-to-medium term.
At the time of the IPO, we announced the appointment of highly regarded and
experienced non-executive Directors to help create a first class Board. At that
time, we also made clear our intention to appoint another board member who will
act as a senior independent non-executive Director and an announcement to that
effect will be made in due course. I would like to take this opportunity to
thank the entire Board, which has worked effectively and closely with management
since the IPO in establishing best practice.
Kazakhmys' Board believes that effective governance structures and procedures
are essential to the long-term sustainability of its business. In listing on the
London Stock Exchange, we did so in full knowledge of and with the firm
intention of complying with the relevant regulatory and governance requirements.
We are determined to run our business in a way which is in line with best
practice for a UK plc.
As laid out at the time of the IPO, we remain committed to improve the safety
environment across our asset portfolio. The Group has created a Health & Safety
committee headed by our non-executive director David Munro. We are also
delivering on our commitment to the broader community and environment.
Following our listing, Kazakhmys is well placed to pursue its long-term goals.
Our strategic objective remains to maintain and strengthen our position as a
leading copper producer and to achieve growth as a natural resources group and
deliver shareholder value.
In the past few months we have been operating in an environment of attractive
copper prices. Supply and demand fundamentals suggest continued copper price
strength for the coming months. We remain optimistic about China's growth
prospects and its continued demand for copper in particular. We expect copper
prices to remain high by historical standards, although it would not be
unreasonable to expect that prices could ease from their current highs.
Supported by continuing strength in commodity prices we expect to deliver a
solid financial performance for the year. I would like to thank all shareholders
one who have supported our London listing and look forward to your continued
For further information please contact:
Jinsoo Yang, Head of IR Tel: +44 20 8636 7900
Sergei Stephantsov, Deputy Head of IR
Morgan Bone Tel: +44 20 7251 3801
Notes to Editor
Kazakhmys's principal business is the mining, processing, smelting, refining and
sale of copper and copper products, including copper cathode and copper rod, and
is carried on by the Company's main subsidiary LLC Kazakhmys Corporation. Based
on 2004 production, the Group is the 10th largest producer of copper cathode and
mined copper in the world. The Group's operations are vertically integrated.
Kazakhmys operates 16 open pit and underground mines and two smelting and
refining complexes in the Republic of Kazakhstan. Kazakhmys also owns
significant rail infrastructure in Kazakhstan and MKM, a copper products
fabrication company in Germany.
This information is provided by RNS
The company news service from the London Stock Exchange