Southern Copper Q2 2026 Earnings Report

Southern Copper EPS Results

• Actual EPS: $2.01
• Consensus EPS: $1.95
• Beat/Miss: Beat by +$0.06
• One Year Ago EPS: N/A

Southern Copper Revenue Results

• Actual Revenue: N/A
• Expected Revenue: N/A
• Beat/Miss: N/A
• YoY Revenue Growth: +40.60%

Southern Copper Announcement Details

• Quarter: Q2 2026
• Date: 7/23/2026
• Time: Before Market Opens
• Conference Call Date: Wednesday, July 22, 2026
• Conference Call Time: 11:00AM ET

Southern Copper (NYSE:SCCO) (NYSE: SCCO) is a large, integrated copper producer whose operations span the full value chain from exploration and mining to smelting, refining and the sale of copper and other metal products. The company produces a range of copper products including copper concentrate and refined cathodes, and recovers valuable byproducts such as molybdenum, silver and zinc. Southern Copper concentrates on high-volume, long-life assets designed to support steady production and processing capabilities.

Southern Copper’s operations are concentrated in Peru and Mexico, where it owns and operates multiple large-scale mining and processing facilities. The company supplies copper and byproducts to industrial customers around the world, serving markets in the Americas, Asia and Europe. Its geographic footprint and integrated model position the company to respond to global copper demand driven by infrastructure, construction and electrification trends.

Southern Copper is majority-owned by Grupo México and is part of a larger mining group with extensive experience in base metals. Over time the company has pursued expansions and capital projects to increase production and improve processing efficiency, while also engaging in exploration and development activities to support its long-term asset base. Its scale and integration distinguish it among publicly listed copper producers.

In addition to raw metal production, Southern Copper’s business includes mine development, concentrate blending and metallurgical operations necessary to deliver market-ready metals. The company reports on operational performance and project progress as part of its regular disclosures and participates in industry efforts around environmental management and community engagement, reflecting the typical responsibilities of major mining operators. Investors and market participants generally follow Southern Copper for exposure to copper and associated base-metal markets.

Southern Copper Q2 2026 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Southern Copper reported record quarterly sales, adjusted EBITDA, and net income, with Q2 sales up 41% year over year to $4.3 billion and net income up 72% to $1.67 billion. Adjusted EBITDA rose 60% to a record $2.96 billion, reflecting strong copper and by-product pricing plus operating discipline.
• Neutral Sentiment: Copper production fell 3.5% in the quarter to 230,662 tons, mainly due to lower ore grades and recoveries in Peru, partially offset by higher output in Mexico. Management still lifted full-year 2026 copper guidance to 917,000 tons, up about 1% from the original plan.
• Neutral Sentiment: By-product markets were very favorable, with molybdenum, silver, and zinc prices all significantly higher year over year, supporting revenue growth. However, production for these by-products declined in the quarter due to lower grades and mine-specific output declines.
• Positive Sentiment: The company highlighted strong cash generation, with operating cash flow up 117% in the first half to $3.68 billion. Southern Copper also placed a $1.25 billion 10-year bond at 5.35% to help fund the Tia Maria project and broader capital spending.
• Neutral Sentiment: Southern Copper reiterated its long-term growth pipeline, including Tia Maria, Los Chancas, Michiquillay, and El Pilar, with management saying Tia Maria remains on track and El Pilar has renewed water rights and is set for early works in September. The company continues to see Peru and Mexico as the main drivers toward materially higher copper output later this decade.

Presentation

[Operator]

Good morning, and welcome to Southern Copper Corporation's Q2 and six months 2026 results conference call. With us this morning, we have Southern Copper Corporation's Mr. Raúl Jacob, Vice President of Finance, Treasurer, and CFO, who will discuss the results of the company for the Q2 and six months 2026, as well as answer any questions that you may have.

[Operator]

The information discussed on today's call may include forward-looking statements regarding the company's results and prospects, which are subject to risk and uncertainties. Actual results may differ materially. The company cautions not to place undue reliance on these forward-looking statements.

[Operator]

Southern Copper Corporation undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. All results are expressed in full US GAAP. I'll pass the call on to Mr. Raúl Jacob.

[Raúl Jacob Ruisánchez, VP of Finance, Treasurer, and CFO at Southern Copper]

Thank you very much, Carmen. Good morning, everyone. Welcome to Southern Copper's Q2 of 2026 results conference call. At today's conference, I'm accompanied by Mr. Leonardo Contreras, CEO of Southern Copper and also a board member. Let me first begin by mentioning that Southern Copper delivered another exceptional quarter, registering record-breaking results in sales, adjusted EBITDA, and net income.

[Raúl Jacob Ruisánchez, VP of Finance, Treasurer, and CFO at Southern Copper]

These outstanding achievements are driven by operating excellence and reflect our commitment to creating long-term value for our stakeholders in a context marked by sustained demand for copper and the other minerals we produce.

[Raúl Jacob Ruisánchez, VP of Finance, Treasurer, and CFO at Southern Copper]

We will begin with an update and overview of the copper market and then review Southern Copper's key results related to production, sales, operating costs, financial results, expansion projects, and ESG. After this, we will open the session for questions.

[Raúl Jacob Ruisánchez, VP of Finance, Treasurer, and CFO at Southern Copper]

The London Metal Exchange copper price increased 30% from an average of $4.32 per pound in the Q2 of 2025 to $6.04 this past quarter. In the COMEX market, we saw a 31% increase with an average of $6.16 per pound this quarter. Based on current supply and demand dynamics, we estimate a slight copper market deficit for 2026.

[Raúl Jacob Ruisánchez, VP of Finance, Treasurer, and CFO at Southern Copper]

Copper inventories worldwide, the total combining stock held in London Metal Exchange, COMEX, Shanghai, and London warehouses, that the sum of these inventories sits at 1,123,000 tons as of yesterday, July 21st.

[Raúl Jacob Ruisánchez, VP of Finance, Treasurer, and CFO at Southern Copper]

We estimate that this inventory can currently cover approximately 15 days of global demand. Let's look at Southern Copper's production for the past quarter. Copper represented 73% of our sales in the Q2 of 2026.

[Raúl Jacob Ruisánchez, VP of Finance, Treasurer, and CFO at Southern Copper]

Copper production registered a decrease of 3.5% compared to the trend in the Q2 of last year, standing at 230,662 tons this past quarter. Our quarterly result reflects a 12% drop in production in Peru, mainly attributable to lower ore grades and recoveries at both Toquepala and Cuajone.

[Raúl Jacob Ruisánchez, VP of Finance, Treasurer, and CFO at Southern Copper]

These results were partially offset by an increase in production at our Mexican operation of 3.2%, which was driven by higher production at our Buenavista, La Caridad, and Inca mines. For 2026, we expect to produce 917,000 tons of copper, an increase of about 1% over our initial plan.

[Raúl Jacob Ruisánchez, VP of Finance, Treasurer, and CFO at Southern Copper]

For molybdenum, it represented 11% of our sales in the Q2 and is currently our first by-product. Molybdenum prices averaged $29.44 per pound this quarter, compared to $20.57 in the Q2 of 2025. This represents an increase of 43%.

[Raúl Jacob Ruisánchez, VP of Finance, Treasurer, and CFO at Southern Copper]

Molybdenum production dropped 11% in the Q2 of this year compared to the same period of last year. This was mainly driven by a decrease in production at all our mines due to lower ore grades. In 2026, we expect to produce 27,900 tons of molybdenum. This is 7% above our initial plan. For silver, it represented 9% of the company sales value in the Q2 of this year.

[Raúl Jacob Ruisánchez, VP of Finance, Treasurer, and CFO at Southern Copper]

Silver prices averaged $73.49 per ounce this quarter, compared to $33.62 in the Q2 of last year. This represents an increase of 118% in price. Silver is currently our second by-product. Despite high production at our La Caridad and Inca mines, silver production fell 4% in the Q2 of 2026, driven by the lower production at the Toquepala, Cuajone, and Buenavista mines.

[Raúl Jacob Ruisánchez, VP of Finance, Treasurer, and CFO at Southern Copper]

Refined silver production decreased 0.3% quarter-over-quarter, driven mainly by a drop in production at the Ilo Refinery in Peru. In 2026, we expect to comply with our plan to produce 24 million ounces of silver. Zinc was 4% of our sales value in the Q2 of 2026, with an average price of $1.57 per pound in the quarter, which represents a 31% increase compared to last year's Q2.

[Raúl Jacob Ruisánchez, VP of Finance, Treasurer, and CFO at Southern Copper]

Mine zinc production decreased 14% quarter-on-quarter to total 39,250 tonnes. This decrease was mainly driven by lower production at the Buenavista, San Martin, and Charcas mines. Refined zinc production decreased 6% in the Q2 of this year vis-à-vis the same Q2 of 2025. This was principally due to lower ore grades. For this year, 2026, we expect to produce 163,900 tonnes of zinc. Financial results.

[Raúl Jacob Ruisánchez, VP of Finance, Treasurer, and CFO at Southern Copper]

For the Q2 of 2026, sales were $4.3 billion. This is $1.2 billion higher than printed in the Q2 of 2025, a 41% increase. Copper sales increased 38%, while the volume fell 1.5% in a scenario of the mentioned better prices. Regarding our main by-products, we registered higher sales for molybdenum by 34%.

[Raúl Jacob Ruisánchez, VP of Finance, Treasurer, and CFO at Southern Copper]

Zinc sales in turn rose 24%. Silver were up 86% in the three cases of these by-products due to higher prices, and these sales were partially offset by a decrease in volume. Our total operating costs and expenses increased $202 million or 14% compared to the Q2 of 2025.

[Raúl Jacob Ruisánchez, VP of Finance, Treasurer, and CFO at Southern Copper]

The main cost increments were in operating materials, purchased copper, diesel and fuel, workers' participation, and translation difference, as well as other factors. These cost increments were partially offset by a decrease in repair materials and inventory consumption.

[Raúl Jacob Ruisánchez, VP of Finance, Treasurer, and CFO at Southern Copper]

The Q2 2026 adjusted EBITDA hit a record high of $2,956 million, which represented an increase of 60% with regard to the $1,791 million registered in the Q2 of 2025. The adjusted EBITDA margin in the Q2 of this year stood at 67% versus 59% in the Q2 of last year.

[Raúl Jacob Ruisánchez, VP of Finance, Treasurer, and CFO at Southern Copper]

Adjusted EBITDA year-to-date was $5,569 million, which is 58% higher than printed in the six months of 2025. The adjusted EBITDA margin in the six months of this year stood at 65% versus 57% for the six months of 2025. Operating cash cost per ton of copper before by-product credits was $2.29 per ton in the Q2 of 2026. That is $0.02 lower than the value for the Q1 of this year.

[Raúl Jacob Ruisánchez, VP of Finance, Treasurer, and CFO at Southern Copper]

The 1% decrease in operating cash cost is a result of lower cost per ton from production and administrative expenses and higher premiums. This result was partially offset by a decrease in treatment and refining charges. Southern Copper operating cash costs, including the benefit of by-product credits, was $0.05 per ton in the Q2 of 2026.

[Raúl Jacob Ruisánchez, VP of Finance, Treasurer, and CFO at Southern Copper]

Even though this cash cost was $0.15 higher than the cash cost of -$0.11 for the Q1, we think that this is an excellent mark for the company. Regarding by-products, we had a total credit of $1,106 million or $2.24 per ton in the Q2 of 2026.

[Raúl Jacob Ruisánchez, VP of Finance, Treasurer, and CFO at Southern Copper]

These figures represent a 7% decrease compared to a credit of $1,189 million or $2.41 per ton reported in the Q1 of 2026. Total credits have increased for molybdenum and zinc, and decreased for silver and sulfuric acid.

[Raúl Jacob Ruisánchez, VP of Finance, Treasurer, and CFO at Southern Copper]

The Q2 of 2026 net income hit a record high of $1,670 million, up 72% versus the $973 million registered in the Q2 of last year. This was mainly the result of higher net sales and the cost control measures that we imposed in our operations. The net income margin in the Q2 of 2026 stood at 39% versus 32% in the Q2 of 2025.

[Raúl Jacob Ruisánchez, VP of Finance, Treasurer, and CFO at Southern Copper]

On a year-to-date basis, net income was 69% higher than in 2025 due to higher net sales. Cash flow from operating activities in the six months of this year was $3,682 million, which represents an increase of 117% compared to the $1,698 million posted in the six months of last year.

[Raúl Jacob Ruisánchez, VP of Finance, Treasurer, and CFO at Southern Copper]

This improvement was attributable to strong cash generation of our operations, which was driven by higher sales and a decrease of $719 million in operating assets and liability requirements.

[Raúl Jacob Ruisánchez, VP of Finance, Treasurer, and CFO at Southern Copper]

This year, on June 24th, the company issued $1.25 billion in a 10-year fixed rate senior unsecured notes. This debt is due in 2036 with an annual interest rate of 5.35%. Demand for the notes was $4 billion, which was 3.2x greater than the total issued amount.

[Raúl Jacob Ruisánchez, VP of Finance, Treasurer, and CFO at Southern Copper]

Proceeds will be used exclusively by Southern Peru Copper Corporation, our Peruvian branch, to develop the Tia Maria project, finance its capital expenditure program, as well as general corporate purposes for Southern Peru Copper Corporation. Regarding capital investment, Southern Copper current capital investment program for this decade exceeds $20.5 billion and includes investments in projects in Peru and Mexico.

[Raúl Jacob Ruisánchez, VP of Finance, Treasurer, and CFO at Southern Copper]

In the Q2 of the year, we spent $423 million on capital investments, which reflected a 79% increase over the figure reported in the Q2 of 2025 and represents 25% of this quarter's net income.

[Raúl Jacob Ruisánchez, VP of Finance, Treasurer, and CFO at Southern Copper]

In the first half of the year, we spent $865 million on capital investments, which represents a 27% net income and reflects the impact of a 56% increase in capital expenses year-on-year. Looking at our Peruvian projects, as Peru is poised to begin a new executive cycle, we're encouraged by the initial statements made by President-elect Keiko Fujimori.

[Raúl Jacob Ruisánchez, VP of Finance, Treasurer, and CFO at Southern Copper]

Accordingly, SCC reiterates its commitment to work with incoming administration to promote economic growth and social development in Peru through the advancement of our Peruvian projects, Tia Maria, Los Chancas, and Michiquillay, which represent a combined investment of approximately $10.3 billion.

[Raúl Jacob Ruisánchez, VP of Finance, Treasurer, and CFO at Southern Copper]

Given that there is a description of our main capital projects in Southern Copper's pursuit, I'm going to focus on updating new developments for each of them. In the case of the Tia Maria project, located in the Peruvian region of Arequipa.

[Raúl Jacob Ruisánchez, VP of Finance, Treasurer, and CFO at Southern Copper]

As of June of this year, June 30th, the company has committed $1.101 million to various project activities, of which $693 million has already been invested. Mass earthwork has moved 13.8 million metric tons of material from the Toquepala Deposit. This is a 71% progress. Also most purchase orders for the project's major equipment have been issued.

[Raúl Jacob Ruisánchez, VP of Finance, Treasurer, and CFO at Southern Copper]

Regarding the leaching process, purchase orders have been placed for key state-of-the-art equipment and procurement activities for the remaining major equipment continue. Regarding the power supply, electromechanical works are underway at the main electrical substations and efforts continue to build the 220-kilowatt transmission line.

[Raúl Jacob Ruisánchez, VP of Finance, Treasurer, and CFO at Southern Copper]

Currently, the mass earthworks required to develop both the dry and wet areas are in their final stage. Civil works and steel structure assembly have commenced in key facilities, including the primary, secondary, and tertiary crushing circuits, as well as the solvent extraction and electrowinning facilities, among others.

[Raúl Jacob Ruisánchez, VP of Finance, Treasurer, and CFO at Southern Copper]

At the close of June, the Tia Maria project had reached 42% completion and 5,817 new jobs have been created. Of these positions, 1,254 have been filled with local applicants.

[Raúl Jacob Ruisánchez, VP of Finance, Treasurer, and CFO at Southern Copper]

For the Los Chancas project in the Apurímac, Peruvian, in the region of Apurímac in Peru, as of June 30th, the presence of illegal miners within the project area continues despite the state on-site enforcement efforts through the environmental prosecutor's office. This has hindered the project's progress.

[Raúl Jacob Ruisánchez, VP of Finance, Treasurer, and CFO at Southern Copper]

Meanwhile, community development and environmental management programs continue in the communities of Chaparro and Capayllo, both located within our direct area of influence.

[Raúl Jacob Ruisánchez, VP of Finance, Treasurer, and CFO at Southern Copper]

In the case of the Michiquillay project in the Peruvian region of Cajamarca, studies to estimate mineral reserve and develop the mine plan coupled with hydrologic and hydrogeological assessments are currently underway. In addition, the technical research is progressing and entering its final phase.

[Raúl Jacob Ruisánchez, VP of Finance, Treasurer, and CFO at Southern Copper]

Focusing in our Mexican projects, Southern Copper has several projects in its Mexican pipeline that may boost organic growth if they are found to be of value for both the stakeholders and the communities in which we operate. These projects are Angangueo and Chalchihuites, which are part of the Mexican copper circuit, and the Pilares network, which are expected to bolster our position as a fully integrated copper producer.

[Raúl Jacob Ruisánchez, VP of Finance, Treasurer, and CFO at Southern Copper]

We're engaged in talks with the current administration to continue rolling out SCC's Mexican investments for $10.2 billion. El Pilar in the Sonora State. It's a greenfield project that has obtained the necessary environmental permits and will begin very site preparation work in September of the year. Next September, in other words, to develop energy lines, water pipelines, roads, workers' accommodations, and similar facilities.

[Raúl Jacob Ruisánchez, VP of Finance, Treasurer, and CFO at Southern Copper]

Project construction will commence in the Q1 of 2027, and production is expected to begin in the second half of 2029. This project is located in Sonora, in Mexico, approximately 45 kilometers away from the Cananea and the Buenavista mine. Its copper oxide mineralization contains estimated proven and probable reserves of 317 million tons of ore, with an average copper grade of 0.249% and a life mine of 18 years.

[Raúl Jacob Ruisánchez, VP of Finance, Treasurer, and CFO at Southern Copper]

It will operate as an open pit mine with annual production capacity of 36,000 tons of copper cathode, utilizing cost-efficient and environmentally friendly SX-EW technology. SX-EW stands for cold extraction and electrowinning. With an investment of $551 million, this project will employ a direct workforce of 450 people during the construction phase and 300 during the operational phase.

[Raúl Jacob Ruisánchez, VP of Finance, Treasurer, and CFO at Southern Copper]

For environmental, social, and corporate governance or ESG practices, over the last 5 years, we have reported several times on the Cularjahuira Dam, located in the Candarave area in southern Peru. This is in the Tacna region in Peru. This dam has transformed the lives of 80% farmers of the area and their facilities by providing year-round access to water.

[Raúl Jacob Ruisánchez, VP of Finance, Treasurer, and CFO at Southern Copper]

According to the Ministry of Agricultural Development, crop yields in the area have risen around 20%. This infrastructure, with a capacity of 2.5 million cubic meters, was built by our company through an alliance with the Peruvian state and local farmers. We continue to work with authorities to build the Callazas and Calientes Dams, also in the Candarave area. With these additional dams, more than 90% of farmers' water needs will be covered.

[Raúl Jacob Ruisánchez, VP of Finance, Treasurer, and CFO at Southern Copper]

Moving to Mexico, students from the COBACH and Esqueda schools, both in Sonora, Mexico, performed admirably in national and international competitions, including the Mexican Mathematics Olympiad and Infomatrix 2026. These achievements reflect the company's commitment to education and the development of STEAM skills. The company currently benefits 3,000 students through 11 education centers it operates in Mexico and Peru.

[Raúl Jacob Ruisánchez, VP of Finance, Treasurer, and CFO at Southern Copper]

Sports drive community integration and wellbeing. To promote integration and wellbeing through sports, our company joined the global social initiative of the Mexican government. Our efforts, which focus on communities neighboring our operations, have brought together 2,629 participants who are organized into 206 teams of employees and community members with categories for children and youth.

[Raúl Jacob Ruisánchez, VP of Finance, Treasurer, and CFO at Southern Copper]

Alongside this initiative, 580 volunteers work to create 14 community murals and recognition sports venues, which strengthens harmonious relations, inclusion, and the social fabric.

[Raúl Jacob Ruisánchez, VP of Finance, Treasurer, and CFO at Southern Copper]

These sports and cultural programs cover approximately 41% of the young population close to our Mexican operations. Dividend announcements. Regarding dividends, as you know, it is the company policy to review our cash position, expected cash flow generation from operations, capital investment plans, and other financial needs at each board meeting to determine the appropriate quarter dividend.

[Raúl Jacob Ruisánchez, VP of Finance, Treasurer, and CFO at Southern Copper]

Accordingly, on July 16 of this year, Southern Copper Corporation announced a quarterly cash dividend of $1.10 per share of common stock and a stock dividend of 0.012 shares of common stock per share.

[Raúl Jacob Ruisánchez, VP of Finance, Treasurer, and CFO at Southern Copper]

This will be payable on August 27 of this year, 2026, to shareholders of record at the close of business on August 11, 2026. Let me mention that factoring in both the cash dividend and the equivalent value of the stock dividend, the total estimated dividend payment is $3.23 per share.

[Raúl Jacob Ruisánchez, VP of Finance, Treasurer, and CFO at Southern Copper]

Ladies and gentlemen, with these comments, we end our presentation today. Thank you very much for joining us. Now we would like to open the floor for questions.

[Operator]

Thank you so much. As a reminder, to ask a question, press star one one on your telephone and wait for your name to be announced. To remove yourself, press star one one again. One moment for our first question. It's from Richard Garchitorena with Barclays. Please proceed.

[Richard Garchitorena, Analyst at Barclays]

Great. Thank you for taking my question. Just want to talk about copper production in the quarter. Was down 3.5% year-over-year. Can you just talk about how the grades have progressed at Toquepala, in Cuajone. What do you see that doing in the second half of this year? Is that impacting your full year production expectations at all?

[Raúl Jacob Ruisánchez, VP of Finance, Treasurer, and CFO at Southern Copper]

Thank you very much for your question, Richard. Well, we have been reporting, and we mentioned this at the beginning of the year, that our expectation was at the first part of the year, we were expecting to produce in 2026 about 910,000 tons of copper. Now we're expecting for this year 917,000 tons of copper.

[Raúl Jacob Ruisánchez, VP of Finance, Treasurer, and CFO at Southern Copper]

We are improving a little bit on our plan. The main reason for the change or for the lower production vis-a-vis last year, it's the ore grades, particularly at the Cuajone Mine, where we had a reduction that translating into about 35,000 tons of lower copper production, and the difference comes from Toquepala.

[Raúl Jacob Ruisánchez, VP of Finance, Treasurer, and CFO at Southern Copper]

As I mentioned, we have been, at the same time, doing some important efforts to increase production for the Mexican operations, and that has allowed us to maintain our production levels in Mexico, but having a lower volume in the range of 40,000 tons in total at the Peruvian sites.

[Richard Garchitorena, Analyst at Barclays]

Great. If I can just ask a bigger picture question. You talked about $10.3 billion in CapEx required for your Peruvian projects. With the new administration, is the expectation that there will be some additional funding incentives that could be potentially in place for local production growth? Relative to that, you did issue $1.25 billion of debt for Tia Maria.

[Richard Garchitorena, Analyst at Barclays]

Is funding going to be the main expectation for financing these new projects? How do you think about financing the rest, major of the projects?

[Raúl Jacob Ruisánchez, VP of Finance, Treasurer, and CFO at Southern Copper]

The latest bond issue, the one that we mentioned in our press release for $1.25 billion, was for mainly for financing the Tia Maria project. As you know, we expect to spend in total $1.8 billion in Tia Maria. With this bond, we should cover a significant portion of it.

[Raúl Jacob Ruisánchez, VP of Finance, Treasurer, and CFO at Southern Copper]

If by any reason we finish Tia Maria before spending this money, we will have some other projects that could absorb a portion of the funds. If that will be the case, that will be a very small amount. For the Peruvian projects, we are indicating the expected capital expenditures for each of them, for Los Chancas and Michiquillay.

[Raúl Jacob Ruisánchez, VP of Finance, Treasurer, and CFO at Southern Copper]

Those numbers will be reviewed and updated when we have a goal for the project, as we have done in this past quarter with El Pilar, where we have already a budget that is what we expect to spend in the construction of El Pilar. Generally speaking, the company considers use of some debt at certain point in the developing of the projects of the company.

[Raúl Jacob Ruisánchez, VP of Finance, Treasurer, and CFO at Southern Copper]

Well, as a good practice to have a balance or a better balanced capital, debt capital structure in our financial statements. That's basically it. Even though I cannot assure you that we will issue bonds or some other forms of financing at each time that we go on with the project, this is what we have been doing in the last few years. I believe that we could move on in the same direction for the future projects as well.

[Richard Garchitorena, Analyst at Barclays]

Thank you.

[Raúl Jacob Ruisánchez, VP of Finance, Treasurer, and CFO at Southern Copper]

You're welcome.

[Operator]

Thank you. Our next question is from Emerson Vieira with Goldman Sachs. Please proceed.

[Emerson Vieira, Analyst at Goldman Sachs]

Hello, good morning, everyone. I have two questions. The first of them, I want to just talk a little bit more about your project.

[Raúl Jacob Ruisánchez, VP of Finance, Treasurer, and CFO at Southern Copper]

I'm sorry, Emerson.

[Emerson Vieira, Analyst at Goldman Sachs]

Can you hear me?

[Raúl Jacob Ruisánchez, VP of Finance, Treasurer, and CFO at Southern Copper]

I can't copy you well.

[Emerson Vieira, Analyst at Goldman Sachs]

Is it better now?

[Raúl Jacob Ruisánchez, VP of Finance, Treasurer, and CFO at Southern Copper]

Yes.

[Emerson Vieira, Analyst at Goldman Sachs]

Okay.

[Raúl Jacob Ruisánchez, VP of Finance, Treasurer, and CFO at Southern Copper]

Go on, please.

[Emerson Vieira, Analyst at Goldman Sachs]

Thank you. Yeah, I have two questions. The first of them is regarding Tia Maria project. I understand that the physical progress is advancing, right? There is a critical equipment component, which is the desalination plant. I just wanted to double-check-

[Raúl Jacob Ruisánchez, VP of Finance, Treasurer, and CFO at Southern Copper]

Emerson

[Emerson Vieira, Analyst at Goldman Sachs]

If-

[Raúl Jacob Ruisánchez, VP of Finance, Treasurer, and CFO at Southern Copper]

Emerson, please. Sorry for saying this, could you separate a little bit your voice from the microphone because it doesn't copy you well.

[Emerson Vieira, Analyst at Goldman Sachs]

Okay. How about now? Better?

[Raúl Jacob Ruisánchez, VP of Finance, Treasurer, and CFO at Southern Copper]

Excellent.

[Emerson Vieira, Analyst at Goldman Sachs]

Okay. Thank you. Yeah, got an issue here with the mic. Yeah, I have two questions. First of them on the project, on Tia Maria specifically. It's good to see that physical progress is advancing, I understand there's a critical component, which is the desalination plant.

[Emerson Vieira, Analyst at Goldman Sachs]

I wanted just to double-check if the order to purchase that equipment has already happened, and if not, if this is a risk for delaying the product. If I recall well, last quarter, inaudible starts off in the Q3 of 2027, and in this press release, the company mentioned it starts off in the second half. Just trying to understand if you guys see risk of some delays in this project. That's for Tia Maria.

[Emerson Vieira, Analyst at Goldman Sachs]

On the Mexican project, El Pilar, just trying to understand here if the company was able to obtain the water license that was expired. You mentioned that all your licenses have been obtained, but just double-checking if everything is indeed well-placed to start the early works. These are the projects. I have quickly another question, but I'll do later on.

[Raúl Jacob Ruisánchez, VP of Finance, Treasurer, and CFO at Southern Copper]

Okay. Let me start by El Pilar, because that's the easiest to answer. We already have the water license renewed, so we're ready to go, and that's why we are reporting it, beginning initial works of construction in September, and then a full construction process in the Q1 of next year.

[Raúl Jacob Ruisánchez, VP of Finance, Treasurer, and CFO at Southern Copper]

For Tia Maria, we're putting purchase orders and doing the proper contracts to different suppliers of the major parts of equipment, among them, the desal plant. For now, we don't expect a delay in the project. That's what we're reporting. If there is a perception that the project will delay a little bit, we'll certainly report that to the market. For now, we don't have nothing to report on this.

[Emerson Vieira, Analyst at Goldman Sachs]

All right. Thank you. Just a second one right now on sales. There was a gap this quarter. Sales was a little bit below prediction. Just trying to understand if you guys expect to see a reversal in the second half. I don't know, maybe inventories being consumed so that we see sales coming above production for the second half of this year. Thank you.

[Raúl Jacob Ruisánchez, VP of Finance, Treasurer, and CFO at Southern Copper]

No, I think we should do a little bit better, in terms of volume in the second half. The reason for that is that we have been increasing a little bit our material process at our operations in the first half of the year.

[Raúl Jacob Ruisánchez, VP of Finance, Treasurer, and CFO at Southern Copper]

I expect that metal to show up and be available for sale at certain point in the second half of this year. That's my personal view. For now, we are advising the market on 917,000 tons of total production for the year. That's basically what we're thinking now.

[Emerson Vieira, Analyst at Goldman Sachs]

Okay, thank you.

[Raúl Jacob Ruisánchez, VP of Finance, Treasurer, and CFO at Southern Copper]

You're welcome.

[Operator]

Thank you. Our next question comes from Rafael Barcellos with Bradesco BBI. Please proceed.

[Rafael Barcellos, Analyst at Bradesco BBI]

Good morning, thanks for taking my questions. The first question, I just wanted to get your views on the overall political environment in Peru. I mean, we are about to start a new government, if you can give your broad view on what can change going forward on the regulatory backdrop.

[Rafael Barcellos, Analyst at Bradesco BBI]

On top of that, if you can comment specifically about two projects, of course. The first one, Tia Maria, what any change for the project. I understood from the last question that you see Tia Maria on track. I just wanted to get more insights on where are the main risks for us to keep an eye on here on the execution of the project. Particularly because 2027 is a key year in terms of CapEx disbursement. I just wanted to understand where do you see the risks.

[Rafael Barcellos, Analyst at Bradesco BBI]

In the case of Los Chancas, also in this context on the political environment. You've been facing these illegal mining activities. Just wanted also to understand how can those things change given the new government.

[Rafael Barcellos, Analyst at Bradesco BBI]

As a second question, can you comment a bit more on the outlook that you see for copper and by-products production for the second half of the year and 2027? I'm understanding that you have a chance to beat the previous guidance for the year, which was 911,000 tons. I just wanted to understand how does it change your view for 2027 as well. Thank you.

[Raúl Jacob Ruisánchez, VP of Finance, Treasurer, and CFO at Southern Copper]

Okay. Thank you for your questions, Rafael. On the political environment, well, we have to review the plan that was presented by the elected president for the elections, Keiko Fujimori. It was very few. They are considering several initiatives that we believe will be positive for the mining industry in Peru. In general for the economy, but particularly in the mining industry.

[Raúl Jacob Ruisánchez, VP of Finance, Treasurer, and CFO at Southern Copper]

I think that at the same time, the priorities that the incoming administration have mentioned are important because one of them is the fight to illegal mining, which is something that is affecting us. We believe that some initiatives that are twofold. A new law for artisan mining, which is something that is widespread in Peru, and has centuries of activities being true, a strong mining country. For that, I think that we'll see some positive developments.

[Raúl Jacob Ruisánchez, VP of Finance, Treasurer, and CFO at Southern Copper]

Some of them will be favorable. We believe so. For the Tia Maria project deployment, I think that the risks are the usual ones that you may expect for a project under construction, even though we have reviewed very strong detail all the matters that may impact the project. Well, sometimes things are not as expected, but for now, we don't see anything like that showing up.

[Raúl Jacob Ruisánchez, VP of Finance, Treasurer, and CFO at Southern Copper]

The social environment is positive for the project. We are working with the local population in several initiatives. There are, as we reported, a significant amount of people from the area, that in many cases were former protesters of the project or family of those persons. They are okay. We are fine in that regard. I already comment on what we are seeing, how we're seeing right now the project.

[Raúl Jacob Ruisánchez, VP of Finance, Treasurer, and CFO at Southern Copper]

On the outlook for copper and by-products for the second half, I mentioned already for this year our goals for the four materials that we copper, moly, silver, zinc and sulfuric acid. You already have this information. For next year, for copper, we're expecting to produce more or less the same that we have for this year.

[Raúl Jacob Ruisánchez, VP of Finance, Treasurer, and CFO at Southern Copper]

For now, that's what we have to report. We expect to have some help from Tia Maria's tonnage, hopefully in the later part of 2027. For 2028 and on, we expect Tia Maria to fill in and increase our production level to about 970,000 tons. In 2029, our copper production should be over 1 million tons, 1,060,000 tons. That's our current expectation.

[Raúl Jacob Ruisánchez, VP of Finance, Treasurer, and CFO at Southern Copper]

A portion of that will come from Tia Maria and from recoveries in all grades at Toquepala and Huaj Mark. Basically, in 2029, we will have the positive benefit of Pillap and some other better ore grades at the Mexican operations.

[Raúl Jacob Ruisánchez, VP of Finance, Treasurer, and CFO at Southern Copper]

We are very positive. As you know, our goal is to be over 1.6 million tons of copper by 2033, 2034. That's what we are heading towards with organic growth in projects pretty much fully owned by the company.

[Rafael Barcellos, Analyst at Bradesco BBI]

Thank you. Just as a follow-up, can you be more specific when you say about expectations for a new or revision on the mining law in Peru, which sort of aspects you believe could improve in the medium term?

[Raúl Jacob Ruisánchez, VP of Finance, Treasurer, and CFO at Southern Copper]

No, it's more than reviewing the mining law. It's improving the safety, the security environment in the country. That by itself will be very useful for mining projects in Peru. Besides that, we expect the government to maintain the fiscal accounts in order. On top of that, there have been some changes in the institutional arrangement of the country.

[Raúl Jacob Ruisánchez, VP of Finance, Treasurer, and CFO at Southern Copper]

We will have a senate in Peru that we haven't had for over 30 years. Some other changes that will make the political environment much more stable. That's our expectations. We have to see what the elected president, Fujimori, proposes in her speech, in July 28th when she will take over the position of president. That's when we'll see specifically what their goals are and have more clarity on this. The general view is a positive one, as I mentioned.

[Rafael Barcellos, Analyst at Bradesco BBI]

Okay, very clear. Thank you.

[Raúl Jacob Ruisánchez, VP of Finance, Treasurer, and CFO at Southern Copper]

Thank you very much.

[Operator]

Thank you. Our next question is from David Zeng with CICC. Please proceed.

[David Zeng, Analyst at CICC]

Hi. Good morning, Raúl and team. Thanks for answering our question. My first question is a follow-up question on the new administration. We saw that the incoming administration has proposed distributing up to 40% of the canon minero directly to the residents in producing areas.

[David Zeng, Analyst at CICC]

Based on your experience in local communities in Peru, do you believe this would materially improve community acceptance, or could it make the existing community agreements more complicated?

[Raúl Jacob Ruisánchez, VP of Finance, Treasurer, and CFO at Southern Copper]

In this case, David, we will not comment on this until we see specifically what's the proposal. If it holds, that's the very first thing, if it will hold or they have to review it, and we will know that as the policies of the new administration are deployed. For now, we don't have anything to comment on this.

[David Zeng, Analyst at CICC]

Okay, understood. I have another question on Tia Maria. We saw that you have provided a cash cost estimate of $1.16 per pound. Just would like to double confirm if it's after by-product credits and if so, what by-product price assumptions underpin this estimate. Should we expect it to be a lot of my average cost or cost can be reached at the initial years of the project, let's say, 2008 or 2009?

[Raúl Jacob Ruisánchez, VP of Finance, Treasurer, and CFO at Southern Copper]

Okay. Well, Tia Maria has no by-products. It's just copper, what we will be producing. As you mentioned, the cash cost estimate that we have is $1.16. It's 1.16. That's the cash cost that we have as an estimate right now. Hopefully, well, we have seen some changes in the fuel prices and some other materials, but so far, this is the estimate that we're looking at right now.

[David Zeng, Analyst at CICC]

Thank you so much. I'll pass it now.

[Raúl Jacob Ruisánchez, VP of Finance, Treasurer, and CFO at Southern Copper]

You're welcome.

[Operator]

Thank you. Our next question is from John Tumazos with John Tumazos Very Independent Research. Please proceed.

[John Tumazos, Analyst at John Tumazos Very Independent Research]

Thank you very much. I want to try to understand a little better some of the project delays, and maybe El Pilar is a simple one, just 36,000 tons copper production, smaller open pit. The predecessor, Mercator, bought it in 2009 for $40 million from Stingray.

[John Tumazos, Analyst at John Tumazos Very Independent Research]

You bought it out for $100 million in 2015 from the Mercator bankruptcy. It's now 11 years that you've had it. Please explain the delays in engineering and permitting and why it takes so long. This seems to be much easier than Tia Maria or Michiquillay or El Arco or some of the other projects.

[Raúl Jacob Ruisánchez, VP of Finance, Treasurer, and CFO at Southern Copper]

Thank you for your question, John. Well, each project has its own challenges. In the case of El Pilar, we had an in-depth technical review in order to be absolutely sure that we were getting the recovery from copper that we were expecting for the project.

[Raúl Jacob Ruisánchez, VP of Finance, Treasurer, and CFO at Southern Copper]

That was something that took us a little bit longer than what we believed when we acquired the project, and you mentioned already the year. Besides this, in the meantime, we had to renew some of the permits that we have for the project, and we have finishing this process recently, and that's why our last board meeting, the project was presented for approval, and we got it. That's why we are moving forward with it. Usually projects have different challenges.

[Raúl Jacob Ruisánchez, VP of Finance, Treasurer, and CFO at Southern Copper]

In this case, it was the very beginning, as I say, some technical issues that have to be quite clear before we go into the investment. The second point is some permitting that given the time that we spent in solving those technical issues, took a little bit longer as well.

[John Tumazos, Analyst at John Tumazos Very Independent Research]

How much was the impact when Obrador wanted to halt the open pits in Mexico? Did that delay it?

[Raúl Jacob Ruisánchez, VP of Finance, Treasurer, and CFO at Southern Copper]

For us, it has no impact since we already have our concessions, including the open pit ones. There's no point on this. For instance, El Pilar is open pit, and we are fine moving forward with it with all the permitting for the project.

[John Tumazos, Analyst at John Tumazos Very Independent Research]

Thank you. I wait many years, and I hope God gives me enough years to see everything get built.

[Raúl Jacob Ruisánchez, VP of Finance, Treasurer, and CFO at Southern Copper]

We hope so.

[John Tumazos, Analyst at John Tumazos Very Independent Research]

Thank you.

[Operator]

Thank you. This concludes our Q&A session. I will pass it back to Raúl Jacob for closing comments.

[Raúl Jacob Ruisánchez, VP of Finance, Treasurer, and CFO at Southern Copper]

Thank you, Carmen. With this, we conclude our conference call for Southern Copper's Q2 2026 results. We certainly appreciate your participation and hope to have you back with us when we report the Q3 of this year's results. Thank you very much for being with us today, and have a nice day.

[Operator]

This concludes today's conference. Thank you for participating, and you may now disconnect.

Participants

Executives

• Raúl Jacob Ruisánchez, VP of Finance, Treasurer, and CFO

Analysts

• Richard Garchitorena, Analyst at Barclays
• Emerson Vieira, Analyst at Goldman Sachs
• Rafael Barcellos, Analyst at Bradesco BBI
• David Zeng, Analyst at CICC
• John Tumazos, Analyst at John Tumazos Very Independent Research