A Kilometre and a Half DownThin moat

KGHM Polska Miedź (KGH) — moat facet

Grade is what you have; depth is what it costs to use it, and KGHM works at 1 348 metres.

Depth is the whole reason this excellent orebody produces expensive copper.

How far down the copper is (metres)~300Top of deposit1 348GG-1 shaft~1 500Base of depositThe GG-1 at Kwielice is the deepest mining pit in Poland
Grade is what you have; depth is what it costs to use it, and this is why 1,6% ore makes 3,16-dollar copper.

The deposit runs from a few hundred metres to about 1 5001, and KGHM works the deep end of it. The GG-1 shaft at Kwielice reaches 1 348 metres, the deepest mining pit in Poland2. At that depth the constraints stop being commercial and become physical: rock temperature, ventilation volume, the time it takes a shift to reach the face and come back, and the cost of hoisting every tonne of ore and every tonne of waste up more than a kilometre of vertical shaft.

This is why a company mining 1,6% copper has a cash cost of 3,16 dollars a pound while its own Chilean open pit, working a quarter of that grade at the surface, produces copper for 0,863. Grade is what you have; depth is what it costs to use it.

It is also why the capital programme never ends. The Deposit Access Program is sinking shafts and building central air-conditioning stations at Deep Glogow4 — refrigeration as mining infrastructure — and forecast group capital expenditure runs above 32 billion złoty across 2026-20305.

The compensation is real: the deposit is polymetallic, and the silver that makes the economics work is in the same rock at no extra metres of shaft.

Watch the pre-credit cost of a tonne of copper, which was 52 201 złoty in the first half of 2026 against 45 501 a year earlier6. That is the number depth controls, and it goes one way.

Moat trajectory: Narrowing

Every year of mining moves the working face further from the shaft. The pre-credit cost of a tonne rose 14,7% in the first half of 2026 alone, and there is no version of the plan in which depth reverses.

The number that tests this moat
Reported
Ore mined in Poland, first half of 2026
15,34 million tonnes at 1,525% copper

Mining deeper keeps the grade up but costs more to reach. Tonnage and grade holding as the mines go down is what keeps the deposit economic; either falling would show depth catching up.

Source: KGHM Group Management Board's report, first half of 2026 ↗
⚠ Threats to the moat
⚠ THREAT 01
The Rock Gets Hotter and the Haul Gets Longer
A mine that must refrigerate its own air is operating at the edge of what is physically practical.
References
  1. ReportedThe deposit runs from a few hundred metres to about 1,500, and KGHM works the deep end of it.
    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. ReportedThe GG-1 shaft at Kwielice reaches 1 348 metres, the deepest mining pit in Poland.
    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. Moat Explorer calcThis is why a company mining 1,6% copper has a cash cost of 3,16 dollars a pound while its own Chilean open pit, working a quarter of that grade at the surface, produces copper for 0,86.
    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 ↗
  4. ReportedThe Deposit Access Program is sinking shafts and building central air-conditioning stations at Deep Glogow — refrigeration as mining infrastructure — and forecast group capital expenditure runs above 32 billion złoty across 2026-2030.
    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. ReportedThe Deposit Access Program is sinking shafts and building central air-conditioning stations at Deep Glogow — refrigeration as mining infrastructure — and forecast group capital expenditure runs above 32 billion złoty across 2026-2030.
    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 ↗
  6. ReportedWatch the pre-credit cost of a tonne of copper, which was 52 201 złoty in the first half of 2026 against 45 501 a year earlier.
    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