Poland Floats ‘Copper Valley’ Idea as Lumina Metals Surges on Warsaw Bourse Debut

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(Bloomberg) — Poland aims to join the ranks of the world’s top copper producers as new mines planned by Canada’s Lumina Metals Corp. in the eastern European country are poised to more than double output from state-controlled giant KGHM Polska Miedz SA.

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Lumina shares soared as much as 46% on its Warsaw bourse debut on Tuesday, following an initial public offering in Canada in April aimed at raising funds to finance a new copper mine in southwestern Poland. The stock traded well above the equivalent of its C$11.60 closing price in Toronto, reflecting strong demand from Polish investors, including retail traders who were unable to participate in the Canadian offering.

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Lumina projects “present tremendous opportunities for Poland for a dramatic increase in copper and silver production capacity,” Prime Minister Donald Tusk said at the Warsaw bourse. “After consultations with our largest player, KGHM, we concluded that this strengthens Poland’s prospects of becoming an absolutely crucial supplier of the metal of the future.”

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The comments come as the government is considering the creation of a “Copper Valley” to foster an industrial ecosystem around copper and silver production, according to Deputy Technology and Development Minister Michal Jaros.

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“It is not enough simply to extract and export raw materials,” he told Bloomberg News in an interview. “We need to develop the next stages of the value chain right here in Poland.”

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Poland seeks to prop up industries ranging from electric vehicles to electronics and power infrastructure in an effort to reduce its reliance on exports of unprocessed metals. Copper plays a crucial role in helping transition from fossil fuels and due to its widespread use in electrical wiring.

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“Everyone wants to build their own Silicon Valley. The problem is that there is only one Silicon Valley,” said Jaros in Warsaw. “We, on the other hand, have something that many European countries do not have – a strategic raw material, a well-developed mining industry and a strong manufacturing base.”

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Tax Changes

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Lumina plans to develop its Polish projects near KGHM’s existing mines and smelters. They will require $6.4 billion in total investment and generate average annual copper-equivalent production of 390,000 tons during its first 10 years. KGHM’s existing annual mining output stands at about 390,000 tons in Poland, making it the European Union’s largest copper producer. 

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Lumina Chief Executive Officer Jordan Pandoff hopes the Polish administration will lower a copper output tax to make investments feasible after Tusk’s cabinet has recently introduced certain reliefs, but kept a mechanism that effectively penalizes firms for higher output.

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“We appreciate the constructive dialog with the government,” said Pandoff. “At the same time, if you wish to see the next generation of greenfield mines developed in Poland, a further progress will be required to ensure the fiscal framework becomes competitive.” 

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