⚠ Every Tonne Costs More to ReachHigh threat

KGHM Polska Miedź (KGH) — threat to the moat

C1 has risen in every year since 2021, and more than half the EBITDA target goes back underground.

A deposit that dips to 1 500 metres has an unusual property: the further you work into it, the more each tonne costs to bring up, and there is no version of the plan in which that reverses.

Where the plan's money goes (zl bn a year)6,5Capital expenditure12,0Adjusted EBITDA targetMore than half the targeted cash profit goes back underground to keep reaching the ore
A deposit that dips to 1 500 metres costs more to work every year, and there is no version of the plan where that reverses.

The evidence is in the cash cost. C1 — the cash cost of producing a pound of payable copper, after the by-product credit — was 2,26 dollars in 2021, then 2,38, 2,98, 3,07 and 3,16 in 20251. Five consecutive years of increase, through a period when the copper price rose and the złoty moved both ways. Some of that is the minerals extraction tax, which sits inside the C1 definition2. Much of it is simply distance.

The capital programme is the same fact stated forward. The Deposit Access Program at Deep Glogow is building shafts, access and development tunnels, and central air-conditioning stations3 — the last of those because at that depth the rock is hot enough that men cannot work without the air being chilled first. Forecast capital expenditure for the group over 2026-2030 is more than 32 billion złoty, about 6,5 billion a year4.

Against an adjusted EBITDA target of 12 billion a year over the same period5, that is more than half of it going back into the ground simply to keep reaching the ore.

The number to watch is C1 in a year when metal prices fall. In the good years the by-product credit hides the trend; 2026's first half showed C1 down 23% to 2,44 dollars on higher precious-metal prices6, with the underlying pre-credit cost up 14,7%7. The second of those is the one that describes the mine.

References
  1. ReportedC1 — the cash cost of producing a pound of payable copper, after the by-product credit — was 2,26 dollars in 2021, then 2,38, 2,98, 3,07 and 3,16 in 2025.
    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. ReportedSome of that is the minerals extraction tax, which sits inside the C1 definition.
    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 Deposit Access Program at Deep Glogow is building shafts, access and development tunnels, and central air-conditioning stations — the last of those because at that depth the rock is hot enough that men cannot work without the air being...
    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 ↗
  4. ReportedForecast capital expenditure for the group over 2026-2030 is more than 32 billion złoty, about 6,5 billion a year.
    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 ↗
  5. ReportedAgainst an adjusted EBITDA target of 12 billion a year over the same period, that is more than half of it going back into the ground simply to keep reaching the ore.
    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. ReportedIn the good years the by-product credit hides the trend; 2026's first half showed C1 down 23% to 2,44 dollars on higher precious-metal prices, with the underlying pre-credit cost up 14,7%.
    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 ↗
  7. ReportedIn the good years the by-product credit hides the trend; 2026's first half showed C1 down 23% to 2,44 dollars on higher precious-metal prices, with the underlying pre-credit cost up 14,7%.
    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 ↗
Sources
Generated September 24, 2026