Eight Billion Złoty of Other People's MetalNarrow moat

KGHM Polska Miedź (KGH) — moat facet

29% of the parent's costs go on concentrate and scrap to fill smelters the mine cannot.

KGHM spent 8 335 million złoty in 2025 buying metal-bearing materials from outside the group1 — concentrate from other miners and copper scrap from the wider economy.

Purchased metal-bearing materials (zl m)7 43920248 3352025About 29% of the parent's expenses by nature - the second-largest cost after people
It converts a fixed-cost asset into a variable-volume one, and gives KGHM a position in copper recycling.

It is a large number: roughly 29% of the parent's total expenses by nature of 28 940 million2, and the second-biggest cost line after people. It exists because the smelters can process more than the mines can supply, and idle smelter capacity is expensive capacity.

The economics are straightforward. KGHM buys the material at a discount to the metal it contains, refines it, and sells the metal. The discount is the treatment and refining charge, and it is the smelter's margin. Scrap in particular is attractive because it needs less processing than concentrate and arrives already close to metal.

Two things make it more than a filler. It converts a fixed-cost asset into a variable-volume one, and it gives KGHM a position in copper recycling — a source of supply growing faster than mine supply, and one that requires no orebody at all.

The cost of it rose sharply in the first half of 2026, by 2 301 million złoty, on a purchase price 29% higher and 23 thousand tonnes more material consumed3.

The measure is whether the purchased-feed volume grows while the margin on it holds. Volume without margin is just a bigger version of somebody else's business running through KGHM's plant.

Moat trajectory: Widening

Purchased metal-bearing materials cost 2 301 million złoty more in the first half of 2026, and the strategy plans about 180 thousand tonnes of Polish payable copper from scrap.

The number that tests this moat
Reported
Purchased metal-bearing materials
8 335m zł in 2025

About 29% of the parent's expenses by nature, and the second-largest cost after people. It converts a fixed-cost asset into a variable-volume one and gives KGHM a position in copper recycling. The cost of it rose 2 301 million złoty in the first half of 2026 on a purchase price 29% higher.

Source: KGHM Group consolidated financial statements for 2025 ↗
⚠ Threats to the moat
⚠ THREAT 01
The Feedstock Has Its Own Price
A rising copper price lifts the cost of scrap at the same moment it lifts the value of the metal.
References
  1. ReportedKGHM spent 8 335 million złoty in 2025 buying metal-bearing materials from outside the group — concentrate from other miners and copper scrap from the wider economy.
    KGHM Polska Miedz S.A. Group consolidated financial statements for 2025 (group revenue of 36 366m złoty with the parent at 30 964m and KGHM INTERNATIONAL at 3 439m; parent copper revenue of 22 378m and silver revenue of 6 133m; minerals extraction tax of 4 693m against 3 865m in 2024 and 3 496m in 2023; employee benefits of 6 303m; purchased metal-bearing materials of 8 335m; parent net profit of 1 946m against a group profit of 3 688m; total assets of 58 240m, equity of 32 898m and involvement in the Sierra Gorda joint venture of 10 250m including 8 436m of loans) — FY2023-FY2025 · publ. 10 March 2026 · source ↗
  2. ReportedIt is a large number: roughly 29% of the parent's total expenses by nature of 28 940 million, and the second-biggest cost line after people.
    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 ↗
  3. ReportedThe cost of it rose sharply in the first half of 2026, by 2 301 million złoty, on a purchase price 29% higher and 23 thousand tonnes more material consumed.
    KGHM Polska Miedz S.A. Group - Management Board's report on activities in the first half of 2026, financial results (revenue of 24 711m złoty up 40,8%, profit for the period of 5 579m against 580m, adjusted EBITDA of 9 198m up 89,1%, capital expenditure of 1 663m, net debt down 13,5% to 4 691m, equity of 39 814m, available financing of 16 978m, and the 1 979m złoty increase in the minerals extraction tax on higher copper and silver prices) — H1 2026 · publ. August 2026 · source ↗
Sources
Generated September 24, 2026