Southern Copper Corporation

What they do

SCC produces and sells copper, recovering molybdenum, silver, zinc, gold and other metals as by-products or from dedicated mining facilities in Mexico. Principal operations are in Peru and Mexico, with exploration programs in Chile and Argentina. Management focuses on value creation through copper production, cost control, production enhancement and a prudent capital structure.

Revenue drivers

• Copper — The core business; 72.7% of second-quarter 2026 revenue. Over the last three years approximately 75.9% of revenues came from copper. LME prices averaged $6.04 per pound in 2Q26, up 39.8% year over year.
• Molybdenum — The largest by-product at 11.1% of 2Q26 sales, used mainly in stainless-steel alloys and other industrial applications. Average prices rose 43.1% year over year to $29.44 per pound.
• Silver — 8.8% of 2Q26 sales, produced largely at the Toquepala, Cuajone and Buenavista mines. Average prices rose 118.6% year over year to $73.49 per ounce.
• Zinc and other products — Zinc was 3.5% of 2Q26 sales with prices up 30.8%; the remaining 3.9% covers gold, sulfuric acid and other materials.

Recent performance

2Q26 net sales were a record $4,289.0 million, up 40.6% over 2Q25, driven by price gains across copper, molybdenum, zinc and silver, partly offset by lower copper sales volumes (-1.5%). Net income hit a record $1,670.0 million, up 71.6%, with a net income margin of 38.9% versus 31.9% a year earlier. Adjusted EBITDA was a record $2,856.0 million (66.6% margin). Operating cash flow for the first six months was $3,683.0 million, up 116.9% year over year. Copper production fell 3.5% quarter over quarter to 230,662 tonnes, as a 12.0% drop at the Peruvian mines outweighed a 3.2% rise at the Mexican operations.

Strategy

SCC aims to remain profitable through low copper price periods and maximize performance in high price periods via capital spending, exploration and cost reduction programs. Capital investments totaled $864.7 million in the first half of 2026, up 56.2% year over year and equal to 26.7% of net income. In June 2026 the company issued $1.25 billion of 10-year senior unsecured notes at 5.350% to fund the Tia Maria project, SPCC's capital expenditure program and general corporate purposes. On July 16, 2026 the Board authorized a quarterly cash dividend of $1.10 per share plus a stock dividend of 0.0120 shares per share.

Risks

• Metals price dependence — Financial performance is highly dependent on copper, molybdenum, zinc and silver prices, which have historically fluctuated widely and are set by factors beyond the company's control, including demand from China.
• Capital intensity and financing — The business requires significant ongoing capital investment for exploration, extraction, smelting and refining, and the company cannot assure it will maintain production levels that generate sufficient cash or have access to sufficient financing.
• Debt covenants — Financing instruments of SCC and its Minera Mexico subsidiary contain restrictive covenants limiting additional debt and asset sales, with non-compliance potentially requiring immediate repayment of debt obligations.
• Dividend variability — Dividend levels are at the Board's discretion and subject to operating results, cash requirements, legal and contractual restrictions, and limitations imposed by the governments of Peru, Mexico and other countries; future distributions could be lower than recent levels.

Outlook

Management estimates a slight copper market deficit for 2026, with worldwide inventories of 1,125,000 tonnes as of July 17, 2026 covering roughly 15 days of global demand. Full-year copper production is expected to reach 917,000 tonnes, 0.6% above the planned target of 911,400 tonnes. By-product plans call for 163,900 tonnes of zinc (0.9% below plan), 27,900 tonnes of molybdenum (7% above plan) and 24 million ounces of silver in line with plan.