Fifty-Two Thousand Złoty, Then SeventeenNarrow moat

KGHM Polska Miedź (KGH) — moat facet

Two published costs for one tonne of copper, and the gap between them is the company.

KGHM publishes two costs for the same tonne of copper, and the gap between them is the company.

Two costs, moving opposite ways (H1 2026)+14,7%Pre-credit cost-42,9%Post-credit costThe mine got more expensive; the by-products got more valuable, three times over
The pre-credit figure is the mine. The post-credit figure is the silver market, and only one of them is KGHM's doing.

In the first half of 2026 the pre-precious-metals-credit unit cost of electrolytic copper from own concentrate was 52 201 złoty a tonne. The total unit cost, after the value of the silver, gold and other by-products was subtracted, was 17 415 złoty1.

Two thirds of the cost of the copper is paid for by something else that was already in the rock. That is the arithmetic that lets a mine working at 1 348 metres2 compete with open pits at a fraction of the depth.

The two numbers also move in opposite directions, which is what makes the disclosure so useful. Over that half-year the pre-credit cost rose 14,7% while the post-credit cost fell 42,9%3 — the mine got more expensive and the by-products got more valuable, and the second effect was three times the first. In a year when silver falls, both will move the same way and the effect will be brutal.

KGHM's own commentary is candid about which force is which: the pre-credit cost rose mainly because of a higher minerals extraction tax, and excluding that tax the cost was 3% lower4.

The measure is the ratio between the two figures. At roughly three to one it is the widest it has been; a narrowing ratio means silver is doing less of the work.

Moat trajectory: Widening

The ratio between the pre-credit and post-credit cost is about three to one, the widest it has been.

The number that tests this moat
Reported
Direction of the two unit costs
pre-credit +14,7%, post-credit -42,9%

In the first half of 2026 the mine got more expensive and the by-products got more valuable, and the second effect was three times the first. In a year when silver falls both move the same way. The pre-credit figure is the one that describes the mine.

Source: KGHM Group Management Board's report for H1 2026 ↗
⚠ Threats to the moat
⚠ THREAT 01
A Credit Is Not a Cost Advantage
A C1 of 3,16 dollars says the credit makes an expensive mine viable, not a cheap one.
References
  1. ReportedThe total unit cost, after the value of the silver, gold and other by-products was subtracted, 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. ReportedThat is the arithmetic that lets a mine working at 1 348 metres compete with open pits at a fraction of the depth.
    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. ReportedOver that half-year the pre-credit cost rose 14,7% while the post-credit cost fell 42,9% — the mine got more expensive and the by-products got more valuable, and the second effect was three times the first.
    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. ReportedKGHM's own commentary is candid about which force is which: the pre-credit cost rose mainly because of a higher minerals extraction tax, and excluding that tax the cost was 3% lower.
    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 ↗
Sources
Generated September 24, 2026