Southern Copper (SCCO) Q4 2025 Earnings Transcript

Core Insights - Southern Copper reported a record high EBITDA of $7.8 billion for 2025, a 22% increase from 2024, and a net income of $4.3 billion, which is 28% higher than the previous year [2][16] - The company anticipates a copper market deficit of approximately 320,000 tons for 2026, driven by current supply and demand dynamics [1][52] - The company aims to produce 1.6 million tons of copper at the lowest competitive cost per pound, with a focus on enhancing productivity and cost efficiency [2] Production and Sales - Copper production for 2025 was 956,270 tons, a decrease of 1.8% compared to the previous year, with expectations of further decline to 911,400 tons in 2026 [5][6] - Molybdenum production increased by 10% in Q4 2025 compared to Q4 2024, with an average price of $22.75 per pound, reflecting a 5% increase [6][15] - Silver production reached 24 million ounces in 2025, a 15% increase over 2024, with expectations to maintain similar levels in 2026 [8][16] Financial Performance - Total sales for Q4 2025 were $3.9 billion, a $1.1 billion increase from Q4 2024, with copper sales up 39% [11][12] - The adjusted EBITDA margin for Q4 2025 was 60%, up from 54% in Q4 2024, while the full-year adjusted EBITDA margin was 58% [13][16] - Operating cash cost per pound of copper before by-product credits was $2.29 in Q4 2025, reflecting a 3% increase from the previous quarter [14][15] Capital Investments and Projects - The company has committed over $20.5 billion for capital investments this decade, with $1.3 billion spent in 2025, a 29% increase year-on-year [17] - The Tia Maria project in Peru is currently 24% complete, with an estimated capital budget of $1.8 billion, expected to generate $20.2 billion in exports over its first 20 years [19][20] - The company is also facing challenges with the Los Chancas project due to illegal mining activities, which have hindered progress [21][49] Environmental, Social, and Governance (ESG) Initiatives - Southern Copper's Buenavista, Toquepala, and Cuajone mines received accreditation from The Copper Mark for compliance with global tailings management standards [22][23] - The company has invested over $400 million in infrastructure projects in Peru to bridge social gaps, benefiting more than 5,000 residents [24][61] Market Outlook - The copper market is expected to face a deficit, influenced by demand from electric vehicles and other technologies, despite challenges in the Chinese real estate market [52][53] - The company remains focused on controlling costs and maximizing production efficiency to enhance shareholder returns [53][56]