The Open Pits, Including Its OwnThin moat

KGHM Polska Miedź (KGH) — moat facet

KGHM's own Chilean pit produces copper at 0,86 dollars a pound against 3,16 in Poland.

The most instructive comparison KGHM faces is one it owns 55% of.

Grade against cost, 2025~1,6%Polish ore, % Cu0,39%Sierra Gorda ore, % Cu3,16Polish C1, USD/lb0,86Sierra Gorda C1, USD/lbFour times the grade, and nearly four times the cost - the difference is 1 300 metres
Sierra Gorda produced 30% of group EBITDA on a seventh of the Polish tonnage. That is what surface mining does.

Sierra Gorda, its Chilean joint venture, is a conventional open pit whose reserve was restated in July 2026 at about 1 100 million tonnes averaging 0,39% copper1. KGHM's Polish deposits run roughly 1,6% copper2 — four times the grade — and are worked at up to 1 348 metres underground3.

Sierra Gorda contributed 3 115 million złoty of the group's 10 276 million of adjusted EBITDA in 20254 on about 87 thousand tonnes of copper5, against Polish assets producing 570,9 thousand tonnes6. A mine with a quarter of the grade and a seventh of the volume produced 30% of the group's cash profit.

That is what surface mining does, and KGHM's own accounts price the difference at 2,30 dollars a pound. Depth is a permanent handicap: it cannot be engineered away, only paid for.

KGHM's defence is that grade and by-products offset a good deal of it, which is true — the silver credit takes a tonne of copper from 52 201 złoty to 17 4157 — and that its ore sits inside the European Union rather than in a jurisdiction with water shortages, altitude and periodic political renegotiation of mining royalties.

The measure is the C1 gap. At 3,16 dollars a pound in 2025 against 0,86 at Sierra Gorda8, the Polish mine costs nearly four times what KGHM's own open pit does, and no amount of engineering closes a gap that is fundamentally about how far down the copper is.

Moat trajectory: Narrowing

The cost gap is structural and widening as the Polish mine deepens: 3,16 dollars a pound against 0,86 at Sierra Gorda in 2025.

The number that tests this moat
Reported
Sierra Gorda's contribution against its scale
30% of group EBITDA on about 87 thousand tonnes of copper

Sierra Gorda produced 3 115m złoty of the group's 10 276m of adjusted EBITDA on roughly a seventh of the Polish tonnage and a quarter of the grade. That is what surface mining does, and it is a handicap KGHM cannot engineer away.

Source: KGHM Group Management Board's report on activities in 2025 ↗
References
  1. ReportedSierra Gorda, its Chilean joint venture, is a conventional open pit whose reserve was restated in July 2026 at about 1 100 million tonnes averaging 0,39% copper.
    KGHM Polska Miedz S.A. Group - Management Board's report on activities in 2025, the production and unit-cost record (electrolytic copper of 570,9 thousand tonnes against 588,7 in 2024, 592,4 in 2023 and 560,4 in 2020; metallic silver of 1 323 tonnes against 1 403 in 2023; C1 payable copper production cost of 3,16 USD/lb for the Polish assets against 1,03 for KGHM INTERNATIONAL and 0,86 for Sierra Gorda; group payable copper of 710,0 thousand tonnes against 753,7 in 2021; wire rod and wire production of 279,9 thousand tonnes; and world mined silver production of about 25,3 thousand tonnes) — FY2018-FY2025 · publ. 10 March 2026 · source ↗
  2. ReportedKGHM's Polish deposits run roughly 1,6% copper — four times the grade — and are worked at up to 1 348 metres underground.
    KGHM press office - the GG-1 shaft at Kwielice, at 1 348 metres the deepest mining pit in Poland, connecting the Polkowice-Sieroszowice and Rudna mines — 2023 · publ. 30 June 2023 · source ↗
  3. ReportedKGHM's Polish deposits run roughly 1,6% copper — four times the grade — and are worked at up to 1 348 metres underground.
    KGHM press office - the GG-1 shaft at Kwielice, at 1 348 metres the deepest mining pit in Poland, connecting the Polkowice-Sieroszowice and Rudna mines — 2023 · publ. 30 June 2023 · source ↗
  4. ReportedSierra Gorda contributed 3 115 million złoty of the group's 10 276 million of adjusted EBITDA in 2025 on about 87 thousand tonnes of copper, against Polish assets producing 570,9 thousand tonnes.
    KGHM Polska Miedz S.A. Group - Management Board's report on activities in 2025, the financial review and metal markets (adjusted EBITDA of 10 276m złoty against 8 457m in 2024, 5 362m in 2023, 8 865m in 2022 and 10 327m in 2021, of which Sierra Gorda contributed 3 115m and KGHM INTERNATIONAL 1 860m; average copper of 9 945 USD/t against 8 478 in 2023; average silver of 40,03 USD/oz against 28,27 in 2024 and 23,35 in 2023; and an average USD/PLN rate of 3,76 against 4,20 in 2023) — FY2021-FY2025 · publ. 10 March 2026 · source ↗
  5. ReportedSierra Gorda contributed 3 115 million złoty of the group's 10 276 million of adjusted EBITDA in 2025 on about 87 thousand tonnes of copper, against Polish assets producing 570,9 thousand tonnes.
    KGHM Polska Miedz S.A. Group - Management Board's report on activities in 2025, the financial review and metal markets (adjusted EBITDA of 10 276m złoty against 8 457m in 2024, 5 362m in 2023, 8 865m in 2022 and 10 327m in 2021, of which Sierra Gorda contributed 3 115m and KGHM INTERNATIONAL 1 860m; average copper of 9 945 USD/t against 8 478 in 2023; average silver of 40,03 USD/oz against 28,27 in 2024 and 23,35 in 2023; and an average USD/PLN rate of 3,76 against 4,20 in 2023) — FY2021-FY2025 · publ. 10 March 2026 · source ↗
  6. ReportedSierra Gorda contributed 3 115 million złoty of the group's 10 276 million of adjusted EBITDA in 2025 on about 87 thousand tonnes of copper, against Polish assets producing 570,9 thousand tonnes.
    KGHM Polska Miedz S.A. Group - Management Board's report on activities in 2025, the financial review and metal markets (adjusted EBITDA of 10 276m złoty against 8 457m in 2024, 5 362m in 2023, 8 865m in 2022 and 10 327m in 2021, of which Sierra Gorda contributed 3 115m and KGHM INTERNATIONAL 1 860m; average copper of 9 945 USD/t against 8 478 in 2023; average silver of 40,03 USD/oz against 28,27 in 2024 and 23,35 in 2023; and an average USD/PLN rate of 3,76 against 4,20 in 2023) — FY2021-FY2025 · publ. 10 March 2026 · source ↗
  7. ReportedKGHM's defence is that grade and by-products offset a good deal of it, which is true — the silver credit takes a tonne of copper from 52 201 złoty to 17 415 — and that its ore sits inside the European Union rather than in a jurisdiction...
    KGHM Polska Miedz S.A. Group - Management Board's report on activities in the first half of 2026, production, unit costs and employment (electrolytic copper of 291,5 thousand tonnes of which 183,6 thousand from own concentrate, metallic silver of 696,7 tonnes, the pre-precious-metals-credit unit cost of 52 201 złoty a tonne against a total unit cost of 17,415, C1 of 2,44 USD/lb, average group employment of 34 543 including 18 870 at the parent, and payable copper from the international assets of 59,5 thousand tonnes of which Sierra Gorda 40,2 and Robinson 17,7) — H1 2026 · publ. August 2026 · source ↗
  8. ReportedAt 3,16 dollars a pound in 2025 against 0,86 at Sierra Gorda, the Polish mine costs nearly four times what KGHM's own open pit does, and no amount of engineering closes a gap that is fundamentally about how far down the copper is.
    KGHM Polska Miedz S.A. Group - Management Board's report on activities in 2025, the production and unit-cost record (electrolytic copper of 570,9 thousand tonnes against 588,7 in 2024, 592,4 in 2023 and 560,4 in 2020; metallic silver of 1 323 tonnes against 1 403 in 2023; C1 payable copper production cost of 3,16 USD/lb for the Polish assets against 1,03 for KGHM INTERNATIONAL and 0,86 for Sierra Gorda; group payable copper of 710,0 thousand tonnes against 753,7 in 2021; wire rod and wire production of 279,9 thousand tonnes; and world mined silver production of about 25,3 thousand tonnes) — FY2018-FY2025 · publ. 10 March 2026 · source ↗
Sources
Generated September 24, 2026