Poland’s sole copper producer KGHM Polska Miedz SA jumped most in more than six years as the government and the biggest opposition party both sought to reduce the tax burden on one of the nation’s biggest employers.
State-controlled KGHM soared as much as 12 percent and closed at 98 zloty in Warsaw, a gain of 8.1 percent. The company was the biggest gainer among European companies in the MSCI Emerging Market stock index and in Warsaw’s benchmark WIG20 gauge, which increased less than 0.1 percent on Monday.
Law & Justice, which leads the ruling Civic Platform in opinion polls before the Oct. 25 general election, said it would file a motion to “cancel the copper tax” as profitability of KGHM’s mines are “falling radically,” the party said in its Twitter account. Hours later, Prime Minister Ewa Kopacz said during a visit to the company’s headquarters in Lubin that the government must “analyze” whether the miner’s tax structure is optimal for its domestic investments.
“It’s a pre-emptive move from Law & Justice,” Andrzej Knigawka, an analyst at ING Groep NV in Warsaw, said by e-mail. “Now, it’s more likely that Civic Platform will want to do something with this tax before the election.”
Kopacz said KGHM, which employs almost 35,000 workers, was the country’s “national champion” that had to continue investing in extracting local copper deposits. Her comments followed Treasury Minister Andrzej Czerwinski, who said on July 24 that he may soon have “some goods news” for the company.
The budget envisages KGHM paying 1.45 billion zloty ($388 million) in copper taxes this year, compared with 1.5 billion last year. KGHM, valued at 19.6 billion zloty, is forecast to earn a net 2.35 billion zloty in 2015, according to analysts surveyed by Bloomberg.
“This is a tax that destroys KGHM and it needs to be scrapped immediately,” Law & Justice spokeswoman Elzbieta Witek said by phone on Monday. The party will file the bill to parliament this week and if it fails to get enough support, it plans to re-introduce it after elections, she said.