Polish copper miner KGHM (KGHM.WA) plans to buy two mining projects in the next two years as it seeks to expand abroad, its chief executive said on Tuesday.

KGHM, Europe's largest copper miner, earmarked 9 billion zlotys ($2.5 billion) to boost its copper production and seek deposits outside Poland, while maintaining its mobile telecom assets and investing in power production. [ID:nLN488051]

By 2011-2012 we aim at achieving our goal of annual copper production to 700,000 tonnes from 512,000 planned for 2009, CEO Miroslaw Krutin told a press conference.

By 2017, we want 30 percent of our revenue coming from outside our core business.

The falling Polish zloty only partly offsets the tumble of the dollar-denominated copper MCU3 for KGHM. But KGHM also sees its 60-percent drop from July peaks paving the way for cheaper takeover opportunities.

Mining companies are a very attractive target at current valuations and that's the new possibility for KGHM to grow, Krutin said.

Acquisitions are now more profitable than own production.

KGHM plans to short-list targets in the second quarter.

The group already has its sight on two mining projects. A smaller one, which it hopes to buy this year, would raise annual production by 100,000 tonnes, with the latter -- planned for 2010 -- adding another 170,000 tonnes.

The state-controlled group keeps an eye out for deposits in North and South Americas, Krutin said.

Even though KGHM is in Congo, Africa is at the bottom of its preference list and the group plans to cut its engagement in the war-torn country.

KGHM shares, among Warsaw's best performers this year with a 20-percent rise, fell 4.8 percent to 32.19 zlotys by 1217 GMT.

KGHM takeover ideas scare the market, Deutsche Bank analyst Tomasz Krukowski said. They went lousily in the past, as the Congo example shows. The question is whether KGHM finds proper people to execute the deal and manage the mines. The other thing is that it might so happen that KGHM sheds cash just as the macroeconomic situation worsens.

KGHM, which will publish its fourth-quarter results Friday, wants to be a global-player, however to do so it will have to halt its rising production cost, which grew by almost a tenth in the past five years.

Even under the worst-case scenario, KGHM does not expect any annual losses in the coming years, Chief Financial Officer Maciej Tybura told Reuters.

($1=3.650 Zloty) (Writing by Adrian Krajewski; Editing by Sharon Lindores)© Thomson Reuters 2009 All rights reserved