Southern Copper Q3 2026 Call: Record Profit on Copper Prices, Falling Output and a Delayed Tia Maria

Southern Copper posted record sales, EBITDA and net income as copper prices rose 44%, while copper output fell 1%. Analysts pressed management on Tia Maria's delay and project capex.

Maz Vantage ·

Southern Copper (NYSE: SCCO) is in the news because it reported third-quarter 2026 results on 22 October 2026, and Nasdaq published a summary titled "What Southern Copper (SCCO) Said on Its Q3 Earnings Call" on 23 October 2026. This analysis draws on the call transcript. The call was led by CFO Raul Jacob, with CEO Leonardo Contreras present.

Key takeaways

  • Management reported record net sales, adjusted EBITDA and net income for a second straight quarter: sales of $4.7 billion (up 39%), adjusted EBITDA of $3 billion (65% margin) and net income of $1.8 billion.
  • Higher metal prices drove the result. LME copper averaged $6.41 per pound, up 44% year on year, while copper production fell 1% to 232,396 tons.
  • Operating cash cost per pound of copper, net of by-product credits, was $0.09, versus $0.42 a year earlier. Before credits it was $2.46, up 10%.
  • Analysts pressed on Tia Maria: start-up is now scheduled for the first half of 2028, and management did not commit on capex. El Pilar's cost estimate also rose.
  • Management said the Cuajone concentrator expansion to 120,000 tons per day is the most likely scenario, with a 150,000 tons per day option under study.

Bull case

  • Mr. Jacob said the company has posted record sales, EBITDA and net income for two consecutive quarters, with a 65% adjusted EBITDA margin against 59% a year earlier.
  • Operating cash flow was $2.2 billion in the quarter (up 43%) and $5.9 billion for nine months (up 81%), per Mr. Jacob.
  • By-product prices helped: molybdenum averaged $32.93 per pound (up 36%), silver $62.80 per ounce (up 59%) and zinc $1.74 per pound (up 36%). By-product credits reached $1.2 billion.
  • The growth pipeline is large: a capital program above $21 billion this decade, with Tia Maria and El Pilar expected to add 156,000 tons of refined copper.
  • Mr. Jacob said the company's position is "very favorable" for shareholder returns. A quarterly cash dividend of $1.30 per share plus a 0.0106-share stock dividend was announced on 15 October.
  • Management expects 2026 copper production of 918,000 tons, 0.7% above its initial plan, and molybdenum output 12% above plan.

Bear case

  • Copper production is falling: down 1% in the quarter and 2.9% year to date, with Peru down 6% on lower ore grades and recoveries at Toquepala and Cuajone.
  • Zinc mine output fell 8% and refined silver fell 6%.
  • Total operating costs and expenses rose $223 million (17%), driven by diesel and fuel, workers' participation, power, labor and other items. Cash cost before credits rose 10%.
  • The net cash cost of $0.09 depends heavily on by-product prices. Mr. Jacob called cash cost "very difficult to predict".
  • Carlos de Alba (Morgan Stanley) questioned the Tia Maria delay and whether capex would rise. Matheus Moreira (Bradesco BBI) asked about inflation risk to capex across projects.
  • Alfonso Salazar (Scotiabank) noted that Cuajone has sat in the pipeline for years. Mr. Jacob attributed the delay to the time needed to identify water sources.
  • Mr. Jacob did not answer whether El Pilar's budget includes transmission lines.

What management said

  • "We're very pleased to report strong third quarter performance." (Raul Jacob, CFO)
  • "The most likely scenario is 120,000." (Raul Jacob, on the Cuajone milling capacity)
  • "Cash cost is very difficult to predict." (Raul Jacob, CFO)

Risks

  • Project capex and timing: Tia Maria start-up moved to the first half of 2028. Mr. Jacob attributed it to longer mechanical assembly and engineering work, and the project was 50% complete at end-September. He said capex is under review, and that no change is reported yet.
  • Inflation: El Pilar's budget rose, which management linked to a recovery challenge and equipment inflation. Its prior budget was more than five years old.
  • Illegal mining at Los Chancas: just over 200 illegal miners are on the concession. Mr. Jacob said they must leave before the environmental impact assessment and permitting can advance.
  • Peru permitting and policy: management welcomed the government's streamlining efforts but said it needs to see the specific procedures.
  • Climate: responding to a question on a possible strong El Nino, Mr. Jacob said the southern Peru operations may face drought. He said the company is evaluating its water sources and has a reasonable supply.
  • Smelting economics: negative treatment and refining charges in China make a new smelter hard to justify, according to Mr. Jacob.
  • Price dependence: the cash cost outcome depends on by-product prices.

Outlook

  • 2026 production is expected at about 918,000 tons of copper (the CFO described it on the Q&A as a little under 920,000), 29,000 tons of molybdenum, 24 million ounces of silver and 163,400 tons of zinc (1% below plan).
  • Fourth-quarter cash cost before credits is expected in line with, or slightly better than, the third quarter. Mr. Jacob said 2027 cash cost should be similar or a little better.
  • A firmer 2027 production, capex and Tia Maria update is promised for the January 2027 call. Analysts cited 2027 capex of about $2.5 billion, which the CFO did not confirm.
  • Los Chancas: construction could begin in the second half of 2028 with production in 2031. Michiquillay: production in 2032. El Pilar: construction in Q1 2027 and production in the second half of 2029.
  • Management did not commit to a Cuajone capex figure beyond the $680 million estimate for 120,000 tons per day, to a 150,000 tons per day decision date, or to changes in shareholder distributions, which depend on the Board.
  • A note on the transcript: it contains some garbled figures, such as an EBITDA comparison and a Tia Maria start date in the Q&A, which are marked as corrections in the transcript. This article uses the corrected or prepared-remarks figures.

Sources