The Silver That Pays for the CopperNarrow moat

KGHM Polska Miedź (KGH) — moat facet

Two thirds of the cost of KGHM's copper is paid for by metals that come up the same shaft at no extra cost.

Producing a tonne of copper from KGHM's own concentrate cost 52 201 złoty in the first half of 2026. After the precious metals in the same rock were credited against it, the cost was 17 415 złoty1.

The cost of a tonne of copper, H1 2026 (zl)52 201Before by-product credit17 415After by-product creditThe precious metals in the same rock pay for two thirds of the copper
Take the credit away and the mine is uneconomic at almost any copper price it has traded through.

That single pair of numbers is the most important disclosure the company makes. Two thirds of the cost of KGHM's copper is paid for by metals that come up the same shaft, in the same ore, at no additional cost of extraction. Take the credit away and the mine is uneconomic at almost any copper price it has traded through.

The credit is large because the silver is exceptional. KGHM holds first place in the world ranking of largest silver mines and second among largest silver producers2, and produced 1 323,3 tonnes of metallic silver in 20253. There is no second Polish company doing this, and very few anywhere: a copper deposit that is simultaneously one of the two biggest silver sources on earth is a geological accident, not a strategy.

What that accident has been worth lately is the whole story of the last two years. Silver revenue at the parent went 4 389 million złoty in 2023 to 6 133 million in 20254, and then roughly doubled again in the first half of 2026, to 5 843 million5. Copper revenue over the same period went 22 290 million to 22 378 million6 and then rose 32,3%7. The copper company's growth has been in silver.

And here is the part that keeps this facet from being a genuine moat. A by-product credit is not a cost advantage that KGHM controls; it is a second commodity price, set in London, moving for reasons that have nothing to do with Lower Silesia. In 2025 silver averaged 40,03 dollars an ounce against 21,73 in 20228. The credit did not get better because KGHM got better.

So it cuts precisely both ways: it is the reason a deep, high-cost mine earns anything at all, and it is a second exposure to a price nobody at KGHM sets. The number that tests it is the pre-credit cost, which rose 14,7% in the first half of 2026 even as the post-credit cost fell 42,9%9. The first is the mine. The second is the silver market.

Moat trajectory: Widening

The by-product credit has never been larger. Silver averaged 40,03 dollars an ounce in 2025 against 23,35 in 2023, and the credit took a tonne of copper from 52 201 złoty to 17 415 in the first half of 2026. It widened because a price moved, which is why it is not a moat.

The number that tests this moat
Reported
By-product credit per tonne of copper
52 201 złoty before it, 17 415 złoty after

Two thirds of the cost of KGHM's copper is paid for by precious metals in the same rock. This is what makes a deep, high-cost mine viable, and it is not a cost advantage KGHM controls - it is a second commodity price. The ratio between the two figures is about three to one, the widest it has been; a narrowing ratio means silver is doing less of the work.

Source: KGHM Group Management Board's report for H1 2026 ↗
Aspects of the moat
DIG DEEPER 01
Fifty-Two Thousand Złoty, Then Seventeen
Two published costs for one tonne of copper, and the gap between them is the company.
DIG DEEPER 02
First Among Mines, Second Among Producers
No single mining complex on earth lifts more silver, and KGHM never went looking for it.
DIG DEEPER 03
Gold, Lead and What Else Is in the Rock
A third tier of metals that costs nothing incremental and could not fill a silver-sized hole.
DIG DEEPER 04
Two Prices on One Invoice
Silver is 27% of parent revenue and climbing - copper company describes less of this every year.
⚠ Threats to the moat
⚠ THREAT 01
Copper Revenue Has Not Grown Since 2023
Three years, a 2% spread, and a strengthening złoty taking back what the copper price gave.
⚠ THREAT 02
The Silver Tonnage Has Not Moved Either
Silver output has drifted down for three years - every złoty of the increase, and more, is price.
References
  1. ReportedAfter the precious metals in the same rock were credited against it, the cost was 17 415 złoty.
    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 ↗
  2. ReportedKGHM holds first place in the world ranking of largest silver mines and second among largest silver producers, and produced 1 323,3 tonnes of metallic silver in 2025.
    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 ↗
  3. ReportedKGHM holds first place in the world ranking of largest silver mines and second among largest silver producers, and produced 1 323,3 tonnes of metallic silver in 2025.
    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 ↗
  4. ReportedSilver revenue at the parent went 4 389 million złoty in 2023 to 6 133 million in 2025, and then roughly doubled again in the first half of 2026, to 5 843 million.
    KGHM Polska Miedz S.A. Group - Management Board's report on activities in 2024, which carries the 2023 comparatives (minerals extraction tax of 3 496m złoty in 2023 against a group loss of 3 691m for that year, parent silver revenue of 4 389m, and parent employee benefits expense of 5 475m) — FY2023-FY2024 · publ. March 2025 · source ↗
  5. ReportedSilver revenue at the parent went 4 389 million złoty in 2023 to 6 133 million in 2025, and then roughly doubled again in the first half of 2026, to 5 843 million.
    KGHM Polska Miedz S.A. Group - Management Board's report on activities in 2024, which carries the 2023 comparatives (minerals extraction tax of 3 496m złoty in 2023 against a group loss of 3 691m for that year, parent silver revenue of 4 389m, and parent employee benefits expense of 5 475m) — FY2023-FY2024 · publ. March 2025 · source ↗
  6. ReportedCopper revenue over the same period went 22 290 million to 22 378 million and then rose 32,3%.
    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 ↗
  7. ReportedCopper revenue over the same period went 22 290 million to 22 378 million and then rose 32,3%.
    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 ↗
  8. ReportedIn 2025 silver averaged 40,03 dollars an ounce against 21,73 in 2022.
    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 ↗
  9. ReportedThe number that tests it is the pre-credit cost, which rose 14,7% in the first half of 2026 even as the post-credit cost fell 42,9%.
    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