Grupo Mexico profit jumps 35% on higher production

Major copper producer Grupo Mexico reported a 35% jump in first-quarter profit, helped in part by higher mine production numbers.

The higher profit- $709 million compared to $524 million a year ago- came despite a 14% drop in copper prices, an 18% fall in molybdenum and a 16% slide in zinc. Grupo Mexico, which has mines in Mexico, the US and Peru, sold more copper, moly, silver and gold compared to a year ago, with the biggest increase in gold, a 42% lift. The only metal to decline in terms of sales was zinc, a 0.1% drop.

The group's mining division, Americas Mining Corporation, reported the following highlights from Q1:

  • Mine Production.- In addition to Buenavista operating at full capacity, we had significant  recovery in our ore grades in the 1Q12 in all of our mines, and as a result, copper production increased 20%, silver 17%, gold 37%, and sulfuric acid 20%, when compared to 1Q11.
  • Capital Expenditures.- During the 1Q12, the Mining Division invested US$199 million, mainly in the operations at Buenavista and Cuajone.
  • Industry Ethics and Values Award.- On January 20, Minera México received the ethics and values award given by the Mexican Confederation of Industrial Chambers (CONCAMIN), for excellence in social responsibility and sustainable development practices.
  • Minera México installs the largest photovoltaic cell system in Mexico.- The largest photovoltaic cell system in Mexico was installed, and it will supply clean energy to Minera México’s corporate regional offices in Hermosillo, Sonora. The system will prevent the release of 118 tons of carbon dioxide (CO2) into the atmosphere.

Grupo Mexico said it is bullish on the price of copper despite lower prices due to poor economic news and a stronger dollar. It bases that assessment on tighter supply due to anticipated bad weather, strikes, lower ore grades, delays in startups of new projects and better economic growth coming in the second half. The company also expects demand from China, the world's largest copper consumer, to increase in Q2 and to hold steady for the rest of the year as the country makes necessary investments in energy and infrastructure.

Link to the full news release