TREASURY MANAGEMENT

Treasury Management

Treasury Management

Introduction

Kazakhmys is an international natural resources company engaged in the production of copper and other metals as by-products, including zinc, silver and gold, and power generation. The company operates in the UK, Kazakhstan and Germany. Kazakhmys operates through five segments: copper, MKM, power, gold, and petroleum. The company's copper segment is operated through its subsidiaries: Kazakhmys Corporation, a Kazakhstan based company, which is engaged in the processing and sale of copper and other metals, including zinc, silver and gold; and Kazakhmys Sales, a UK based company, which purchases the exported products from Kazakhmys Corporation. The segment also supports the mining operations including power generation, coal mining and transportation.

The company's copper division operates its sites across Kazakhstan with 17 open pit and underground mines, 10 concentrators and two smelting and refining complexes. The company's MKM segment, which operates in Germany, produces refined copper products and manufactures and sells a variety of pre-finished and semi-finished copper and copper alloy products, including wires, sheets, plate strips, tubes and bars. These are sold primarily to customers in the construction, automotive, aviation and general engineering industries through its worldwide sales team.

ENRC is a holding company. Through its subsidiaries, Co. is engaged in the production of copper and other metals as by-products, including zinc, silver and gold, and power generation. Co.'s main operations are in ENRC and the surrounding countries of central Asia. Co. operates through the following divisions: ENRC Copper, ENRC Gold and ENRC Petroleum.

The company's power segment, which operates in Kazakhstan, is engaged in the sale of electricity and coal to external customers. It carries out its operations through Ekibastuz GRES-1coal-fired power station, and the Maikuben West coal mine. Kazakhmys' gold segment is involved in the mining and processing of gold ore into refined ore and exploration and development activity in the precious metal sector within the Central Asian region. The company's gold business operates primarily in Kazakhstan and has a development project in Kyrgyzstan. The company's petroleum segment currently holds a licence to conduct its oil and gas exploration and development activities in the Eastern Akzhar Exploration Block in western Kazakhstan.

Discussion and Analysis

A statement given by Matthew Hird, the Chief Financial Officer at Kazakhmys is given below. The statement has been taken from the company's 2010 annual report. Preliminary results announcement On 3 March 2011, Kazakhmys PLC issued a trading update which covered the production and selected unaudited financial results of the Kazakhmys Group's subsidiary and joint venture businesses for the year ended 31 December 2010. The trading update excluded the contribution from ENRC PLC (ENRC), in which the Group has a 26% shareholding. This preliminary results announcement includes the audited consolidated financial results of the Kazakhmys Group for the year ended 31 December 2010, including the Group's proportionate share of ENRC's unaudited earnings, on an equity accounting basis. (Gatto, 2000)

Revenues During 2010 demand for industrial metals, such as copper and zinc, was mainly driven by the recovery in the world's major ...