Southern Copper just printed its richest quarter ever—$3.4 bn in sales and a 33 % net margin—while guiding 2026 CapEx to $2 bn as the long-delayed Tia Maria mine finally moves into construction.
Southern Copper (NYSE: SCCO) delivered the most profitable quarter in its 73-year history after by-product prices and a 46 % surge in zinc output more than offset a 7 % drop in copper production, management revealed in overnight results.
The Scorecard That Matters to Investors
- Net sales: $3.4 bn, +15 % YoY
- Adjusted EBITDA: $1.98 bn, +17 % YoY, margin 59 %
- Net income: $1.11 bn, +23 % YoY, margin 33 %
- Operating cash flow: $1.56 bn, +8.4 % YoY
- Cash cost (after by-product credits): $0.42/lb Cu, −34 % QoQ
Copper output fell to 234 892 t on lower Peruvian and Mexican grades, yet the average LME copper price rose 7 % to $4.44/lb and by-product credits hit $895 mn—$1.81 for every pound of copper produced—thanks to 12 % higher molybdenum prices and a 34 % spike in silver.
Why Cash Cost Collapsed 34 % in One Quarter
CFO Raul Jacob told analysts the swing was “almost entirely driven by the new Buenavista zinc concentrator running at full tilt on high-grade zinc ore.” Zinc volumes jumped 46 % while silver rose 16 %, pushing total by-product credits 22 % above Q2 levels and chopping the net cost of producing copper to one of the lowest figures in the industry.
Tia Maria: Green Light After a Decade of Delays
On 14 October the Peruvian Ministry of Energy granted the final exploitation authorization for the $1.4 bn Tia Maria project, sending construction readiness from 7 % to 23 % overnight. Management will spend $866 mn on the site in 2026 alone, targeting first cathode production in H2 2027 at an initial 100 000 tpa capacity.
Jacob stressed the company now holds “all permits required to start pre-stripping and plant construction,” removing the single biggest overhang on the stock since community protests first stalled the project in 2015.
2026 Guidance: Copper Flat, CapEx Doubles
Management guided:
- Copper production: ~911 000 t (flat vs revised 2025 plan)
- Capital expenditure: ~$2 bn (vs $1.1 bn expected in 2025)
- Cash cost (before by-products): $2.15–$2.20/lb assuming current by-product prices hold
The spend surge reflects Tia Maria plus early works at Los Chancas and Michiquillay, two Peruvian projects that could add a combined 300 000 tpa copper in the early 2030s.
Dividend: $0.90 Cash + 0.85 % Stock Sweetener
The Board declared a $0.90 cash dividend and a 0.0085-share stock dividend, payable 28 November. Treasury holds 65 mn shares earmarked for future stock payouts, giving SCCO flexibility to keep the hybrid policy until copper-intensive growth projects consume free cash flow.
Risk Radar: What Could Derail the Story
- Peruvian politics: Presidential election cycle kicks off Q2 2026; any rollback of mining permits would hit Tia Maria timeline.
- Ore-grade decay: Cuajone grades start declining next year; a $600–$700 mn concentrator expansion is still awaiting Board approval.
- Metal-price leverage: Every $0.10/lb change in copper moves annual EBITDA by ~$200 mn; moly and silver now contribute 20 % of revenue.
Investor Takeaway
Southern Copper is transitioning from a cash-flow cow to a growth story. The Q3 numbers prove the by-product engine can fund both sector-leading dividends and the largest capital program in company history. If Tia Maria ramps on schedule, 2027 production could top 1 mn tpa for the first time, just as global copper deficits widen. The stock is pricing in zero execution risk; any slip on Peruvian permitting or social licence will be the first test of that thesis.
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