Southern Copper maps route to over 1M tonnes by 2029

Southern Copper (NYSE: SCCO) expects copper production to surpass one million tonnes by 2029 as its flagship Tia Maria project nears the halfway mark, reinforcing the miner’s confidence in a tightening copper market despite weaker output in Peru.

The company raised its 2026 production guidance to 917,000 tonnes, about 1% above its original target, and said output should remain broadly steady next year before climbing to about 970,000 tonnes in 2028 as Tia Maria ramps up. By 2029, annual production is expected to reach 1.06 million tonnes. Management also forecast a slight global copper deficit this year, saying exchange inventories represent only about 15 days of worldwide demand.

“For 2028 and on, we expect Tia Maria to fill in and increase our production level to about 970,000 tonnes,” vice-president of finance, treasurer and chief financial officer Raul Jacob said during the company’s second-quarter earnings call. “And in 2029 our copper production should be over 1 million tonnes.”

The outlook highlights Tia Maria’s importance to Southern Copper’s long-term growth. The company has committed $1.1 billion to Tia Maria, invested $693 million so far and recently issued $1.25 billion of 10-year senior unsecured notes to finance the project.

Record quarter

Southern Copper reported second-quarter sales of $4.3 billion, record adjusted EBITDA of $2.86 billion with a 67% margin and record net income of $1.67 billion. Operating cash flow reached $3.68 billion in the first six months of the year, while capital spending totalled $865 million over the same period.

Management attributed the strong quarter to higher metal prices despite a 12% production decline in Peru caused by lower ore grades and recoveries at the Toquepala and Cuajone mines. Increased output from the company’s Mexican operations partly offset the shortfall.

Despite execution risks surrounding Tia Maria and other development projects in Peru, Jacob said the company does not expect construction delays. He confirmed the project’s water licence has been renewed and said equipment procurement, including desalination infrastructure, remains on schedule. Material currently in process should also boost copper sales during the second half of the year, he added.

Southern Copper estimated Tia Maria’s cash cost at $1.16 per lb., noting the operation will not benefit from by-product credits. The company also approved a quarterly cash dividend of $1.10 per share and a stock dividend of 0.012 shares, for an estimated total distribution of $3.23 per share.

Ongoing challenges

The company acknowledged continuing challenges at its Los Chancas project, where illegal mining has slowed development, while uncertainty remains over mining policy under Peru’s incoming administration. Jacob said management would wait for the new government’s formal proposals before commenting on potential changes to the country’s mining canon. He added that proposed restrictions on new open-pit mines in Mexico are not expected to affect Southern Copper because its existing concessions remain valid.

With Tia Maria nearing the halfway point of construction and financing now secured, Southern Copper is positioning the project as the cornerstone of its next phase of growth. If the mine enters production on schedule, it would lift company output above one million tonnes annually at a time when management expects global copper supplies to remain tight.