41.1 Provision for mine decommissioning costs

The provision is created for mines included in the Group based on estimated costs of liquidating facilities and reclaiming land to the original condition after the completion of the exploitation process. The provision for mine decommissioning costs includes the balance of the Mine Decommissioning Fund (“MDF”), which is created under the Geological and Mining Law and the related implementing provisions, by the Group’s mining companies as a pre-determined ratio of the tax depreciation charge on fixed assets or, for the exploitation fee, the equivalent of the charge transferred to a separate bank account. The financial assets of the MDF are presented in the statement of financial position under non-current and current financial assets, while the balance of the MDF is recognised under the provision for future costs of mine decommissioning.

As at 31 December 2020, the balance of the provision amounted to PLN 374,814 thousand and the change in the balance is mainly related to the revaluation of the provision due to a change in the discount rate adopted to calculate the provision – a reduction in the discount rate from 2.1% to 1.2%. The following tables present the amount of appropriation to the MDF, the assets of the MDF and the balance of liabilities arising from future costs of mine decommissioning.