⚠ The Feedstock Has Its Own PriceModerate threat

KGHM Polska Miedź (KGH) — threat to the moat

A rising copper price lifts the cost of scrap at the same moment it lifts the value of the metal.

Buying a third of your raw material means being a customer in a market you also supply, and the terms move against you exactly when business is good.

What the extra feed cost in H1 2026+29%Purchase price+23Volume consumed, ktA rising copper price lifts the cost of scrap and concentrate at the same time as the metal
The smelter's spread is set by treatment charges negotiated globally, not by the copper price it benefits from.

Purchased metal-bearing materials cost 2 301 million złoty more in the first half of 2026 than a year earlier, on a purchase price 29% higher and volume up 23 thousand tonnes of copper1. A rising copper price raises the cost of scrap and concentrate at the same time it raises the value of the finished metal, so the smelter's spread does not widen with the metal — it is set by treatment charges that are negotiated separately.

There is a volume risk too. Scrap availability depends on what the wider economy is scrapping, and third-party concentrate depends on whether other miners have surpluses and whether Asian smelters have bid them away. Neither is something KGHM can plan around beyond a year.

The exposure is growing rather than shrinking: the strategy assumes about 180 thousand tonnes of the roughly 590 thousand tonnes of Polish payable copper will come from scrap2.

There is a quality dimension as well as a price one. Purchased material arrives with its own impurities and its own recovery characteristics, and a smelter tuned for Lower Silesian concentrate is not indifferent to what else it is asked to process.

Watch the share of refined output from own concentrate, which was 63% in the first half of 20263. Every point it falls is a point of KGHM's output whose margin is set by a treatment charge rather than by an orebody.

References
  1. ReportedPurchased metal-bearing materials cost 2 301 million złoty more in the first half of 2026 than a year earlier, on a purchase price 29% higher and volume up 23 thousand tonnes of copper.
    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 ↗
  2. ReportedThe exposure is growing rather than shrinking: the strategy assumes about 180 thousand tonnes of the roughly 590 thousand tonnes of Polish payable copper will come from scrap.
    KGHM Polska Miedz S.A. Group - Management Board's report on activities in the first half of 2026, the Strategy of the KGHM Group 2055+ approved on 3 July 2026 and its targets (payable copper production above 730 thousand tonnes a year of which about 590 thousand from Polish assets including 180 thousand from scrap, adjusted EBITDA averaging 12 billion złoty at a 25,6% margin, capital expenditure above 32 billion złoty across 2026-2030, at least 220 MW of installed renewable capacity, the Sierra Gorda fourth grinding line at 725 million dollars raising output about 20% while shortening the life of mine by three years, the Deep Glogow Deposit Access Program, and shareholders including the State Treasury at 31,79%) — 2026-2030 and beyond · publ. August 2026 · source ↗
  3. Moat Explorer calcWatch the share of refined output from own concentrate, which was 63% in the first half of 2026.
    Moat Explorer calculation - arithmetic on figures KGHM reports: ore grade (30 387 thousand tonnes of copper over 1 858 259 thousand tonnes of ore, and 91 837 tonnes of silver over the same), the by-product credit (52 201 less 17 415 złoty a tonne), the European share of parent sales (about 17 147m of 21 927m), copper and silver as a share of parent revenue (22 378m and 6 133m of 30 964m), the minerals extraction tax against parent net profit (4 693m over 1 946m), the dividend against trailing earnings (1,50 against 43,44 a share), and own concentrate as a share of refined output (183,6 of 291,5 thousand tonnes) — FY2023-H1 2026 · publ. September 2026 · source ↗
Sources
Generated September 24, 2026