⚠ The Rock Gets Hotter and the Haul Gets LongerHigh threat

KGHM Polska Miedź (KGH) — threat to the moat

A mine that must refrigerate its own air is operating at the edge of what is physically practical.

Everything that makes deep mining expensive gets worse with time, because the only direction the working face moves is further away.

C1 cash cost, Polish assets (USD/lb)20212022202320242025Five consecutive years of increase, through rising and falling copper prices alike
The only direction the working face moves is further away, and the cash cost has followed it every year.

The cash cost says so. C1 went 2,26, 2,38, 2,98, 3,07 and 3,16 dollars a pound across 2021 to 20251, and the pre-credit cost of a tonne of copper from own concentrate rose 14,7% in the first half of 2026 alone, to 52 201 złoty2. Some of that is tax and some is wage inflation, but the underlying gradient belongs to the geology.

The capital programme is the tell. Central air-conditioning stations are being built as part of the Deep Glogow access works3. A mine that has to refrigerate its own air before people can work in it is operating at the edge of what is physically practical, and each further increment of depth costs more than the last.

Nothing about this is a surprise or a failure of management; it is what the deposit is. But it does mean the honest long-run assumption for KGHM is a rising real cost curve, and that a flat copper price is a slowly deteriorating business rather than a stable one.

The exchange rate has been compounding it. The złoty strengthened from 4,46 to the dollar in 2022 to 3,76 in 20254, so a cost base paid in złoty has been rising against revenue earned in dollars at the same time as the mine has been getting deeper.

Watch the pre-credit unit cost rather than C1. C1 nets off the precious metals and therefore falls whenever silver rallies, which disguises exactly the trend that matters.

References
  1. ReportedC1 went 2,26, 2,38, 2,98, 3,07 and 3,16 dollars a pound across 2021 to 2025, and the pre-credit cost of a tonne of copper from own concentrate rose 14,7% in the first half of 2026 alone, to 52 201 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. ReportedC1 went 2,26, 2,38, 2,98, 3,07 and 3,16 dollars a pound across 2021 to 2025, and the pre-credit cost of a tonne of copper from own concentrate rose 14,7% in the first half of 2026 alone, to 52 201 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 ↗
  3. ReportedCentral air-conditioning stations are being built as part of the Deep Glogow access works.
    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. ReportedThe złoty strengthened from 4,46 to the dollar in 2022 to 3,76 in 2025, so a cost base paid in złoty has been rising against revenue earned in dollars at the same time as the mine has been getting deeper.
    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 ↗
Sources
Generated September 24, 2026