What Southern Copper (SCCO) Said on Its Q3 Earnings Call

Key Points

• Record financial results: Third-quarter net sales rose 39% year over year to $4.7 billion, while adjusted EBITDA increased 54% to $3 billion and net income climbed 63% to $1.8 billion. Higher copper and by-product prices drove the gains despite largely stable production.
• Production and costs: Copper production fell 1% year over year to 232,396 tons, but stronger by-product credits reduced net operating cash costs to $0.09 per pound from $0.52. Southern Copper still expects 2026 production of about 918,000 tons.
• Expansion plans: Projects at Tía María in Peru and El Pilar in Mexico are expected to add 156,000 tons of annual refined copper capacity, helping the company exceed 1 million tons of yearly production. The company also declared a $1.30-per-share cash dividend and a 0.0126-share stock dividend.

Southern Copper NYSE: SCCO reported record quarterly net sales, adjusted EBITDA and net income for the second consecutive quarter, supported by substantially higher copper and by-product prices, while production was broadly stable and the company advanced several expansion projects in Peru and Mexico.

Vice President of Finance, Treasurer and CFO Raul Jacob said third-quarter net sales rose 39% year over year to $4.7 billion. Copper accounted for 74% of sales, while molybdenum, silver and zinc represented 12%, 7% and 4%, respectively.

The company reported record adjusted EBITDA of $3 billion, up 54% from the third quarter of 2025, with an adjusted EBITDA margin of 65%, compared with 59% a year earlier. Net income reached a record $1.8 billion, a 63% increase from $1.1 billion in the prior-year quarter. The net income margin expanded to 38% from 33%.

“We are very pleased to report strong third quarter performance as we hit record highs for net sales, adjusted EBITDA, and net income for the second consecutive quarter,” Jacob said.

Higher Prices Offset Production Pressures

Copper production totaled 232,396 tons during the quarter, down 1% from a year earlier. Production in Peru declined 6%, reflecting lower ore grades and recoveries at the Toquepala and Cuajone mines. That decline was partly offset by a 2.5% increase in Mexico, driven largely by higher output from Buenavista and IMMSA operations.

For the first nine months of 2026, copper production declined 2.9% to 693,602 tons. Southern Copper expects to produce 918,000 tons of copper during 2026, 0.7% above its initial plan.

Market pricing was a significant contributor to the company’s results. The average London Metal Exchange copper price rose 44% to $6.41 per pound from $4.24 per pound in the third quarter of 2025. The average COMEX copper price increased 34% to $6.48 per pound, Jacob said.

Southern Copper estimated that global copper inventories totaled 1.105 million tons as of Oct. 9, covering approximately 14 days of global demand. Based on prevailing supply-and-demand conditions, the company expects either a slight deficit or slight surplus in the copper market during 2026.

By-product prices also rose sharply. Molybdenum averaged $32.93 per pound, up 36% year over year, while silver averaged $62.80 per ounce, up 59%. Zinc prices increased 36%, according to the company.

Cash Costs Fall as By-Product Credits Rise

Total operating costs and expenses increased 17%, or $223 million, from the prior-year quarter. Jacob cited higher diesel and fuel costs, worker participation, inventory consumption, depreciation, power and labor costs. Those increases were partially offset by a $22 million translation difference and exchange-rate effects on local-currency costs.

Operating cash cost per pound of copper, net of by-product credits, fell 77% to $0.09 in the third quarter from $0.52 a year earlier. The company attributed the decline primarily to a 31% increase in by-product revenue credits, which totaled $1.2 billion, or $2.36 per pound.

Cash costs before by-product credits were $2.46 per pound, up 10% from the comparison period cited by the company, as higher production and administrative costs were partly offset by premiums and treatment and refining benefits. Jacob said Southern Copper expects fourth-quarter cash costs before by-product credits to be in line with or slightly better than the third-quarter level, though he noted that costs remain difficult to forecast.

Expansion Projects Target More Than 1 Million Tons of Copper

Southern Copper’s capital investment program for the decade exceeds $21 billion. The company said projects under construction at Tía María in Peru and El Pilar in Mexico are expected to add a combined 156,000 tons of refined copper production annually, allowing the company to surpass 1 million tons of annual copper production.

Tía María is expected to produce 120,000 tons of SX-EW copper cathodes annually in its early years. Operations are scheduled to begin in the first half of 2028. As of Sept. 30, the project was 50% complete, with $884 million invested and $1.1 billion committed. Jacob said the revised timing reflected the additional time needed for mechanical assembly and engineering work. He did not provide an updated capital-cost estimate during the call.

El Pilar, in Mexico’s Sonora state, is expected to produce 36,000 tons of copper cathodes annually. The $551 million project began early site preparation in September, with construction expected to begin in the first quarter of 2027 and production targeted for the second half of 2029.

The company also outlined longer-term Peruvian projects:

• Los Chancas: Expected annual production of 130,000 tons of copper and 7,500 tons of molybdenum, with estimated capital investment of $2.6 billion and a planned 2031 start. The company said illegal miners must be removed from its concession before development can proceed at a faster pace.
• Michiquillay: Expected to produce 225,000 tons of copper annually, along with molybdenum, gold and silver by-products. Southern Copper estimates investment of approximately $2.5 billion and expects production by 2032.
• Cuajone expansion: The company is evaluating an increase in milling capacity from 90,000 to 120,000 tons per day, requiring estimated capital spending of $680 million. The expansion could add average annual production of 55,000 tons of copper and 1,400 tons of molybdenum. Southern Copper is also studying a potential expansion to 150,000 tons per day.

Dividend Declaration

Southern Copper announced a quarterly cash dividend of $1.30 per common share and a stock dividend of 0.0126 common shares per share. Both are payable Nov. 19 to shareholders of record as of Nov. 3, 2026.

About Southern Copper (NYSE:SCCO)

Southern Copper Corporation NYSE: SCCO is a mining and metals company engaged primarily in the exploration, development, extraction, processing and production of copper. The company also produces molybdenum, zinc, silver and lead, along with related byproducts. Its operations include open-pit mines, underground mines, concentrators, smelters, refineries and other processing facilities.

Southern Copper operates mainly in Peru and Mexico. Its Peruvian assets include the Toquepala and Cuajone copper mines, while its Mexican operations include the Buenavista del Cobre and La Caridad mines, as well as associated processing and infrastructure facilities.

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