SOUTHERN COPPER CORP/ SCCO

The copper market experienced significant price increases in Q2 FY26, with the LME copper price rising 40% YoY to $6.04 per pound and ComEx prices up 31% to $6.16 per pound. Global copper inventories, combining major exchanges, stood at 1,123,000 tons as of July 21, which is estimated to cover approximately 15 days of global demand. Based on current supply and demand, the company anticipates a slight copper market deficit for the full year 2026.

The Tia Maria project is 42% complete as of June 30, with $693 million invested out of $1,101 million committed, and mass work is 71% progressed. Procurement for key equipment, including the diesel plant, is ongoing, and electromechanical works are underway. The Los Chancas project continues to face challenges from illegal mining activities, hindering its progress. The Michiquillay project is advancing with mineral reserve studies and technical research. Management expressed optimism regarding the incoming Peruvian administration, expecting positive initiatives for the mining industry, including efforts against illegal mining, which could benefit projects like Los Chancas.

Southern Copper is in discussions with the Mexican administration regarding $10.2 billion in Mexican investments. The Pilar project, a greenfield copper oxide mine, has secured all necessary environmental permits, including water licenses. Early site preparation is scheduled to begin in September 2026, with full construction commencing in Q1 2027 and production targeted for H2 2029. The project, located near Buenavista, has estimated proven and probable reserves of 317 million tons at a 0.29% copper grade, an 18-year mine life, and an annual production capacity of 36,000 tons of copper, with a total investment of $551 million.

The company's capital investment program for the current decade exceeds $20.5 billion. In Q2 FY26, capital investments totaled $423 million, a 79% increase YoY, representing 25% of net income. For the first half of FY26, capital investments reached $865 million, a 56% increase YoY. To finance the Tia Maria project and other capital expenditures, Southern Peru Copper Corporation issued $1.25 billion in 10-year fixed-rate senior unsecured notes with a 5.35% annual interest rate, which were 3.2 times oversubscribed.

Southern Copper highlighted its ESG efforts, including the Curarairadam in Peru, which provides year-round water access to 18% of local farmers, leading to a 20% increase in crop yields. In Mexico, the company supports 3,000 students through 11 education centers, focusing on STEM skills. Community integration is promoted through sports and cultural programs, engaging 2,629 participants and 580 volunteers, covering approximately 41% of the population near Mexican operations.