Southern Copper (SCCO) Q3 2025 Earnings Transcript

Core Viewpoint - Southern Copper's third quarter results reflect strong performance driven by improved metal prices and production increases in byproducts, despite a slight decrease in copper production. The company remains optimistic about long-term copper market fundamentals and is focused on enhancing productivity and cost efficiency. Production and Sales - Copper production decreased by 7% year-over-year to 234,892 tons, primarily due to lower output from the Toquepala and Cuajone mines in Peru [5]. - The company expects to produce 960,000 tons of copper in 2025, slightly below the previous plan, with a year-to-date production of 714,098 tons, down 3% from 2024 [6]. - Molybdenum production increased by 8% to 30,000 tons in 2025, while silver production rose 16% to 23 million ounces, reflecting a 34% increase in average price [7][8]. Financial Performance - Net sales for the third quarter reached $3.4 billion, a 15% increase compared to the same period in 2024 [10]. - Adjusted EBITDA was $1,975 million, up 17% from $1,685 million in Q3 2024, with an adjusted EBITDA margin of 59% [11][12]. - Net income for the quarter was $1,108 million, representing a 23% increase year-over-year, with a net income margin of 33% [14][15]. Cost Management - Operating cash cost per pound of copper was $2.23, a 5% increase from the previous quarter, but the cash cost including by-product credits was $0.42, significantly lower than $0.63 in Q2 2025 [12][13]. - By-product credits totaled $895 million, a 22% increase compared to the previous quarter, driven by higher prices for molybdenum and silver [14]. Market Dynamics - The LME copper price increased by 7% to $4.44 per pound, while COMEX prices rose by 14% [2]. - A copper market deficit of nearly 400,000 tons is anticipated due to negative production effects in Indonesia and Chile [2]. Capital Projects and Investments - The Tia Maria project in Peru is progressing, with 23% completion and expected to generate significant employment upon operation in 2027 [16][18]. - Total capital investments in Peruvian projects could exceed $10.3 billion over the next decade [16]. Environmental, Social, and Governance (ESG) Initiatives - Southern Copper's sustainability ratings have improved, with a notable increase in transparency and environmental management [22]. - The company has made significant strides in reducing greenhouse gas emissions and restoring ecosystems in Mexico and Peru [23]. Future Outlook - The company forecasts copper production of approximately 911,000 tons for 2026, with ongoing evaluations to potentially improve this estimate [37]. - Capital expenditures are expected to reach around $2 billion in 2026, driven by the Tia Maria project and other initiatives [38].