Kazakhmys PLC is a leading international natural resources group with significant interests in copper, gold, zinc, silver and power generation. It is the largest copper producer in Kazakhstan and one of the top worldwide with 17 operating mines, 10 concentrators and 2 copper smelters. Kazakhmys Mining operations are fully integrated from mining ore through to the production of finished copper cathode and rod. Total copper cathode equivalent produced in 2010 from own ore was 303 thousand tonnes. Production is backed by a captive power supply and significant rail infrastructure. Kazakhmys Mining produces significant volumes of other metals, including zinc, silver and gold. In 2010, it produced 167 thousand tonnes of zinc in concentrate. The Group is in the top ten largest silver producers in the world (14 million ounces produced in 2010). Kazakhmys Power has a 50% interest in the coal fired Ekibastuz GRES-1 plant, the largest in Kazakhstan with a nameplate capacity of 4,000 MW. Kazakhmys Power also operates the captive coal mines and power stations which supply power to the Mining Division. The Group is part of the FTSE-100 index of companies listed on the London Stock Exchange and is also listed on the Kazakhstan and Hong Kong Stock Exchanges. It had revenues of $3.2 billion in 2010 with Group EBITDA (excluding special items) of $2.8 billion. The Group employs some 61,000 people, principally in Kazakhstan. The Group’s strategic aim is to optimise its current operations, deliver its major growth projects and to diversify and participate in the development of the significant natural resource opportunities in Central Asia.
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Kazakhmys has produced a fit-for-purpose 2010 Annual Report which addresses reporting requirements in the UK. Structure and navigation Given the amount of content within the Annual Report, the design focuses on clear navigation, efficient communication of information and a clean layout. Only a small number of colours are used throughout the report to assist the clean layout of information. An opening ‘cut short’ section provides an introduction to Kazakhmys, making a clear business case for the Group’s focus on copper, demonstrating the strength of its business model, highlighting the strategic advantages of its location in Central Asia, and outlining the Group’s growth prospects. This section is highly designed, using hard working graphics and imagery to get across its key messages. It provides a high level overview of the Group that is useful for small investors and those new to the Group, as well as institutional stakeholders. Management The management statements provide a good introduction to the Annual Report. The introduction to the Group’s strategy in the Chairman’s Statement is strong, as is his commitment to social responsibility. Both statements give a good ‘through the eyes of management’ view of the business picking up on key issues such as safety, and the optimisation of the business. They also dovetail nicely in terms of content with the Chairman focusing on the ‘big picture’ issues and the Chief Executive talking in more detail about specific operational achievements and objectives. Strategy The Annual Report includes a clear reaffirmation of the Group’s vision and overall strategy (page 5). The profile of this discussion has been raised significantly with a more effective graphical representation of strategy and the clear discussion of long term strategic drivers. The strategy links very clearly with the Group’s KPIs (p10-11), giving investors and stakeholders a clear picture of overall Group performance against its key strategic priorities. Corporate Responsibility As Kazakhmys does not produce a separate Corporate Responsibility Report, the section within the Annual Report is detailed and reports on performance against material issues. The section also contains information on issues, performance and policies. Performance is tracked over three years, providing context for 2010s results. Business Review Kazakhmys’ performance reporting is thorough, with significant levels of financial and non-financial performance data throughout the report along with segmental figures and qualitative operational achievements. The Business Reviews have been developed both in terms of information design and content. The opening page for each of the two major businesses (Copper and Power) provides a summary of highlights helping readers to access the information they require quickly. These sections also contain detailed market reviews encompassing graphs to explain many of the key market trends. Governance and Directors’ Remuneration The depth of content within the Governance section is good with plenty of information about processes and procedures. Board committee reports are highlighted and discuss the activities undertaken throughout the year. The Remuneration Report is extensive and the use of tables and graphs makes the information easier to digest and understand.