WARSAW, Aug 7 (Reuters) - Europe's top copper miner KGHM <KGHM.WA> is considering diversifying into nuclear energy and exploring for uranium in the coming years as part of the new management's strategic shift, local media reported on Thursday.
The Puls Biznesu newspaper cited a ruling party politician representing the state-controlled KGHM's home district and unnamed sources close to the company as saying the move would allow the miner to weather slower economic times.
KGHM spokeswoman Monika Kowalska declined to discuss the newspaper report, but added that the wider decision on Poland's nuclear policy was in the hands of the government, which has made no decisions yet.
'If the government decides on that issue, we will consider our possibilities,' she said.
The deputy treasury minister said a move into the energy sector could help KGHM.
'Energy sector is a good direction, as KGHM is a highly energy-consuming enterprise,' Zdzislaw Gawlik told Reuters. 'The final opinion is up to the supervisory board.'
According to Puls Biznesu, KGHM strategy prepared by the company's new management estimates the power plant may cost up to 10 billion euros ($15.5 billion), or more than double the miner's current market capitalisation.
Analysts said the nuclear plant project would limit dividend payouts from KGHM, but some said it may be a good long-term investment.
'Investors who look further into the future, like pension funds, should be enthusiastic,' said Maciej Wewiorski, analyst with IDM SA brokerage in Warsaw. 'This means big investment at the onset but then KGHM could cash in.'
'Ten billion euros is a high price, even if spread across many years. This suggests KGHM might team up with local or foreign players, like CEZ <CEZPsp.PR>,' he said.
High copper prices have booÃsted KGHM's cashflow and made it less vulnerable to this year's equity sell-off. But it also raised costs of potential investment in new copper deposits.
But KGHM, which has spent heavily on telecoms assets, was criticised in the past for moving away from its core copper mining business.
As part of a possible push into nuclear energy, KGHM is considering exploring for uranium, used to fuel nuclear plants.
'When talking about uranium we mean foreign projects,' KGHM Deputy Chief Herbert Wirth told Reuters. 'If the government decided on building a nuclear plant, we would be part of that strategy and we would need processed material from uranium ore.'
'The energy sector is strategic for us and we want our own electric energy source. We will rather not participate in privatisation projects in the sector. We would rather create consortia to realize energy projects that interest us.'
The group's strategy, due to be presented to the supervisory board in two weeks, may also include the yet undefined idea of creating a investment fund made of non-core assets, Wirth said.
KGHM has holdings in around 30 businesses, including all of telecoms group Dialog, which it plans to float, and a 19.6 percent of mobile operator Polkomtel.
By 1203 GMT, shares in KGHM edged up 0.8 percent, while Warsaw's main WIG20 index <.WIG20> slipped 0.6 percent.
(Reporting by Adrian Krajewski and Wojciech Zurawski; editing by Tony Austin) ($1=.6451 Euro) ($1=2.092 Zloty) Keywords: KGHM/ tf.TFN-Europe_newsdesk@thomsonreuters.com ms1 COPYRIGHT Copyright Thomson Financial News Limited 2008. All rights reserved. The copying, republication or redistribution of Thomson Financial News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Financial News.
The Puls Biznesu newspaper cited a ruling party politician representing the state-controlled KGHM's home district and unnamed sources close to the company as saying the move would allow the miner to weather slower economic times.
KGHM spokeswoman Monika Kowalska declined to discuss the newspaper report, but added that the wider decision on Poland's nuclear policy was in the hands of the government, which has made no decisions yet.
'If the government decides on that issue, we will consider our possibilities,' she said.
The deputy treasury minister said a move into the energy sector could help KGHM.
'Energy sector is a good direction, as KGHM is a highly energy-consuming enterprise,' Zdzislaw Gawlik told Reuters. 'The final opinion is up to the supervisory board.'
According to Puls Biznesu, KGHM strategy prepared by the company's new management estimates the power plant may cost up to 10 billion euros ($15.5 billion), or more than double the miner's current market capitalisation.
Analysts said the nuclear plant project would limit dividend payouts from KGHM, but some said it may be a good long-term investment.
'Investors who look further into the future, like pension funds, should be enthusiastic,' said Maciej Wewiorski, analyst with IDM SA brokerage in Warsaw. 'This means big investment at the onset but then KGHM could cash in.'
'Ten billion euros is a high price, even if spread across many years. This suggests KGHM might team up with local or foreign players, like CEZ <CEZPsp.PR>,' he said.
High copper prices have booÃsted KGHM's cashflow and made it less vulnerable to this year's equity sell-off. But it also raised costs of potential investment in new copper deposits.
But KGHM, which has spent heavily on telecoms assets, was criticised in the past for moving away from its core copper mining business.
As part of a possible push into nuclear energy, KGHM is considering exploring for uranium, used to fuel nuclear plants.
'When talking about uranium we mean foreign projects,' KGHM Deputy Chief Herbert Wirth told Reuters. 'If the government decided on building a nuclear plant, we would be part of that strategy and we would need processed material from uranium ore.'
'The energy sector is strategic for us and we want our own electric energy source. We will rather not participate in privatisation projects in the sector. We would rather create consortia to realize energy projects that interest us.'
The group's strategy, due to be presented to the supervisory board in two weeks, may also include the yet undefined idea of creating a investment fund made of non-core assets, Wirth said.
KGHM has holdings in around 30 businesses, including all of telecoms group Dialog, which it plans to float, and a 19.6 percent of mobile operator Polkomtel.
By 1203 GMT, shares in KGHM edged up 0.8 percent, while Warsaw's main WIG20 index <.WIG20> slipped 0.6 percent.
(Reporting by Adrian Krajewski and Wojciech Zurawski; editing by Tony Austin) ($1=.6451 Euro) ($1=2.092 Zloty) Keywords: KGHM/ tf.TFN-Europe_newsdesk@thomsonreuters.com ms1 COPYRIGHT Copyright Thomson Financial News Limited 2008. All rights reserved. The copying, republication or redistribution of Thomson Financial News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Financial News.