SCCO Guides Lower Output For 2026: Is a Strong Rebound Ahead?

Core Insights - Southern Copper Corporation (SCCO) reported copper production of 956,270 tons in 2025, reflecting a 1.8% year-over-year decline and falling 1% short of its guidance [1][11] - The company expects weaker ore grades at its Peruvian mines, projecting 2026 copper production at around 911,400 tons, suggesting a 4.7% decline from 2025 levels [1][2] Production and Growth Outlook - Despite near-term challenges, Southern Copper maintains a strong long-term outlook, targeting a significant ramp-up in output to roughly 1.6 million tons by 2035, implying a compound annual growth rate (CAGR) of approximately 5.3% from 2025 levels [2] - To support this growth plan, the company intends to invest nearly $19.9 billion over the next decade, with the majority allocated to projects in Peru [3] - Production is expected to increase to about 1.15 million tons by 2031, surge to roughly 1.476 million tons in 2032, and continue rising steadily to reach the 1.6 million ton target by 2035 [4] Key Projects - Among the key projects, the Tia Maria project in Arequipa, Peru, is expected to start in 2027 with an annual capacity of 120,000 tons of SX-EW copper cathodes [4] - In Mexico, the El Pilar project is expected to start in 2029, contributing around 36,000 tons of copper cathodes annually [4] - The El Arco project in Baja California is projected to come online by 2030, contributing around 190,000 tons of copper [5] - Peru's Los Chancas project is slated to add 130,000 tons of copper starting in 2031, followed by Michiquillay in 2032 with an expected 225,000 tons of copper [5] Market Performance - Southern Copper shares have gained 126.5% in the past year compared to the industry's 102.8% growth [10] - The company is trading at a forward 12-month price/sales multiple of 11.95X, a significant premium to the industry's 5.49X [12]