Southern Copper : 1Q26 Conference Call transcript
SCCO
Published on 05/04/2026 at 05:28 pm EDT
Thursday, 30th April 2026
Raul Jacob
VP, Finance & CFO, Southern Copper Corporation
The information discussed on today's call may include forward-looking statements regarding the company's results and prospects, which are subject to risk and uncertainties. Actual results may differ materially, and the company cautions to not place undue reliance on these forward-looking statements. Southern Copper Corporation undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events, or otherwise. All results are expressed in full U.S. GAAP.
Now I will pass the call on to Mr. Raul Jacob.
At today's conference, I am accompanied by Mr. Leonardo Contreras, recently appointed by our Board as CEO of Southern Copper. Mr. Contreras has held significant leadership roles within the company. He is also a Board Member since 2021.
In our press release, we are reporting a record-breaking sales, EBITDA, and net earnings. Regarding net earnings, they were $1,577 million, which represented a 67% rise compared to the first quarter of last year. This positive result was driven by higher sales, volumes of silver that increased by 12%, zinc that increased by 16%, and better prices for our main products. In addition, we want to highlight that the company's cash costs dropped from $0.77 per pound to minus $0.11 per copper pound. This is a 114% reduction driven by a growth in revenues for all our byproducts and cost efficiencies across operations.
As the world continues to navigate the economic and inflationary impacts arising from current global conflicts, the company has remained resilient and committed to its operational objectives of increasing production to 1.6 million tons while maintaining the cost efficiency discipline that
defines it. This year, we will remain focused on achieving our operational targets and advancing the development of our projects.
Now, let us focus on the copper market.
London Metal Exchange
Turning to the copper market, the London Metal Exchange copper price increased 38% from an average of $4.24 per pound in the first quarter of 2025, up to $5.83 in the past quarter. In the COMEX market, we saw a 27% increase with an average of $5.80 per pound this past quarter.
Demand expectations
Based on current supply and demand dynamics, we estimate a copper market deficit of 315,000 tons for 2026. Copper inventories worldwide stood at 1.2 million tons as of April 21 of this year. We estimate that this inventory currently can cover approximately 16 days of global demand.
First quarter 2026 production
Now, let's look at Southern Copper's production for the past quarter. Copper represented 70% of our sales in the first quarter of this year. Copper production registered a decrease of 4% in the first quarter, and a quarter-on-quarter turned to stand at 230,544 tons. This outcome was primarily driven by lower production at our Peruvian operations that decreased by 10%, the production of the Peruvian operations. This reduction was resulting from lower ore grades and recoveries that are in line with the annual plan. We expect our ore grades and recoveries to be better by the end of this year. And these results were primarily offset by an increase in production at our La Caridad mine that increased its production by 6%. At this point, we expect to produce 915,000 tons of copper in 2026, which is 4,000 tons above our planned target for the year.
Silver represented 13% of the company's sales in the first quarter of 2026 and is currently our first byproduct. Silver prices averaged $83.33 per ounce in the quarter compared to $32.31 in the first quarter of last year. This represents an increase of 158%. Mine silver production increased 11% in the first quarter of 2026, driven primarily by higher production at La Caridad, Buenavista, and the IMMSA mines. These results were partially offset by a decrease in production at our Peruvian operations.
Refined silver production increased by 11% quarter-over-quarter, which was mainly driven by an increase in our La Caridad refinery that increased its volume by 18% this past quarter. In 2026, we now expect to slightly exceed our goal to produce 24 million ounces of silver by 300,000 ounces, or 1.3%.
Molybdenum represented 11% of our sales in the first quarter of this year, with an average price of $25.37 per pound this quarter. This represents an increase of 24% over the first quarter of last year's mark. After many years of leading our byproduct list, molybdenum was outpaced by silver, which rose on the back of higher production volumes and better prices. Molybdenum production dropped 2% in the first quarter vis-a-vis next year, and this was mainly driven by a decrease in production at the Buenavista mine and by lower ore grades. These results were
partially offset by an increase in production at the Toquepala and Cuajone operations. In 2026, we expect to produce 27,400 tons of molybdenum. This is 5% above our initial plan.
For zinc, it represented 3% of our sales in the first quarter, with an average price of $1.47 per pound in the quarter. This represents a 14% increase compared to the 2025 first quarter's figure.
Zinc production increased 2% quarter-on-quarter and totaled 40,164 tons. It was mainly due to higher production at San Martin, Charcas, and Santa Barbara operations, the IMMSA operations. Refined zinc production increased by 6% in the first quarter of this year. For 2026, we expect to produce 166,800 tons of zinc, which is 1% above our initial plan.
Financial results. For the first quarter of 2026, sales were $4.3 billion. This is $1.1 billion higher than sales for the first quarter of 2025, or 36% of increase. Copper sales increased by 23%, while volume decreased by 5% in a scenario of better prices.
Sales by product
Regarding our main byproducts, we registered growth in sales of silver by 201% due to an increase in volume of 12% and better prices. Molybdenum sales grew 48% due to better prices, partially offset by lower volume. Zinc sales increased by 30%, bolstered by a rise in volume of 16% and better prices.
Operating cost
Our total operating cost and expenses increased $185 million, or 12% when compared to the first quarter of last year. The main cost increments were in copper purchased from third parties, labor, workers' participation, lower capitalized leachable material, energy, and fuel. These cost increments were partially offset by a decrease in the foreign exchange variance effect and in inventory consumption.
EBITDA and margin
The company adjusted EBITDA for the first quarter of this year was $2,713 million, which represented an increase of 55% over the $1,745 million registered in the first quarter of 2025. The adjusted EBITDA margin in the first quarter was 64%. That compares to 56% in the same period of 2025.
Operating cash cost
For cash cost, Southern Copper's operating cash cost, including the benefits of byproduct credits, was minus $0.11 per pound in the first quarter of this 2026. This cash cost was $0.62 lower than the cash cost of $0.51 that we had in the fourth quarter of 2025. A negative cash cost means that our byproduct revenues of $1.2 billion more than cover our production costs for copper.
Operating cash cost per pound of copper before byproduct credits was $2.30 per pound in the first quarter of this year. This is $0.01 higher than the value for the fourth quarter of 2025 that was $2.29. This increase in the operating cash cost reflects higher costs per pound from production cost, which was partially offset by a decrease in administrative expenses, a better credit for treatment and refining charges, and growth in the premium for our refined or further process production.
Byproducts
Regarding byproducts, we had a total credit of $1,189 million or $2.41 per pound in the first quarter of 2026. These figures represent a 36% increase compared to the credit of $920 million
or $1.78 per pound that we had in the fourth quarter of 2025. Total credits have increased for molybdenum, silver, and sulfuric acid.
Net income
Our first quarter of 2026 net income was $1,577 million, which represented a new company record and an improvement of 67% compared to the $946 million registered in the first quarter of 2025. The net income margin in this past quarter was 37% versus 30% in the first quarter of 2025. Net income in the first quarter of this year increased by 21%.
Cash flow
Cash flow from operating activities in the past quarter was $1,695 million, which represented an increase of 135% versus the $721 million posted in the first quarter of 2025. This improvement was mainly attributable to strong cash generation at our operations, which was driven by higher sales and $449 million decrease in operating assets and liability requirements.
Capital investments
Our current capital investment program for this decade exceeds $20.5 billion and includes investment in projects in Peru and Mexico. Given that there is a description of our main capital projects in Southern Copper's press release, I'm going to focus on updating new developments for each.
Tia Maria
For the Peruvian projects, we have Tia Maria. As you know, this is a greenfield project in the Arequipa region in Peru, which will use state-of-the-art SX-EW technology with the highest international standards for environment and resource consumption. The project has the capacity to produce 120,000 tons of refined copper per year, and operations are expected to begin in the third quarter of 2027.
As of March 31 of this year, the company has committed $948 million across various projects and activities. Large-scale earthmoving works has moved already 7.5 million tons of material from the La Tapada deposit. Most purchase orders for major equipment have been issued. Regarding the SX-EW process, purchase orders have been placed for key equipment with state-of-the-art technology.
Regarding energy supply, foundation works at the main electrical substation, as well as work to build a 220-kilowatt transmission line are underway. In parallel, large-scale earthworks to grade the main dry and wet area components are in their final stage, setting the groundwork for civil construction in key areas for secondary and tertiary crusher, solvent extraction, and electrowinning.
At the end of the first quarter of 2026, progress at Tia Maria stood at 33%, and 4,200 new jobs have been generated, 815 of these positions were filled by local applicants. To the fullest extent
Disclaimer
Southern Copper Corporation published this content on May 04, 2026, and is solely responsible for the information contained herein. Distributed via Public Technologies (PUBT), unedited and unaltered, on May 04, 2026 at 21:25 UTC.