Southern Copper Corporation

Southern Copper Corporation (NYSE: SCCO) is an integrated copper producer. The Company is engaged in the production of copper, molybdenum, silver, and zinc. The Company’s mining, smelting and refining facilities are in Peru and Mexico and conducts exploration activities in those countries and in Argentina, Chile and Ecuador. Its segments include the Peruvian operations, Mexican open-pit operations and Mexican underground mining operations.

Recent Business and Financial Updates

• Financial Performance Overview: Southern Copper Corporation (NYSE: SCCO) reported first-quarter 2024 sales of USD2.6 billion, a 7% decrease from USD2.8 billion in Q1 2023, primarily due to lower copper and molybdenum prices, despite a 2.8% increase in copper sales volume. Adjusted EBITDA was USD1,417.7 million, down 9.6% from USD1,568 million in Q1 2023, with an adjusted EBITDA margin of 54.5%, slightly lower than 56.1% in the prior year, reflecting price pressures. Net income stood at USD736 million, a 9.5% decline from USD813.2 million in Q1 2023, with a net income margin of 28.3%. Operating cash flow increased 22% to USD659.9 million from USD540.9 million in Q4 2023, driven by strong operational performance and cost efficiencies, though it was 44% lower than Q1 2023 due to a USD311 million increase in working capital requirements.
• Operational Achievements: Southern Copper achieved a 7.6% increase in copper production, reaching 240,270 tons in Q1 2024, driven by a 19% production surge in Peru due to higher ore grades and recoveries, and a 0.5% increase in Mexico, bolstered by 2,158 tons from the new Buenavista zinc concentrator. Molybdenum production rose 9.5% year-over-year, supported by higher output at Peruvian operations and Buenavista, while silver production increased 8.4%, despite a 1.6% decline in refined silver output. Zinc production surged 75% to 26,366 tons, primarily due to the Buenavista zinc concentrator’s contribution of 9,695 tons. The company addressed water supply challenges at Buenavista, ensuring operational stability, and projects 2024 copper production to reach 948,800 tons, a 4.1% increase over 2023, with significant contributions from the Pilares and Buenavista zinc projects.
• Market Dynamics and Outlook: The copper market outlook has shifted from an anticipated 3.2% supply growth to a 1% decline in 2024 due to production cuts by several producers, potentially creating a deficit that supports attractive copper prices. Demand is expected to grow by 2.5%, driven by a resilient U.S. economy and increasing needs for decarbonization technologies and artificial intelligence applications. Despite a 5.4% drop in the London Metal Exchange copper price to USD3.83 per pound in Q1 2024, Southern Copper remains optimistic about sustained long-term demand. Molybdenum and zinc prices fell 38% and 22%, respectively, impacting by-product revenues, but higher production volumes and a 6% increase in by-product credits to USD532 million partially offset these declines.
• Capital Investment and Growth Strategy: Southern Copper’s capital investment program exceeds USD15 billion for the decade, targeting key projects in Peru (Tía María, Los Chancas, Michiquillay) and Mexico (Buenavista Zinc, Pilares, El Pilar, El Arco). In Q1 2024, capital expenditures totaled USD214 million, down 10% from Q1 2023, with USD383 million invested in the Buenavista zinc concentrator, which began operations and is expected to produce 54,500 tons of zinc and 11,900 tons of copper in 2024. The company is advancing the Los Chancas and Michiquillay projects, with ongoing efforts to address illegal mining in Peru and drilling programs to enhance resource evaluation. These investments aim to bolster production capacity and operational competitiveness, supporting long-term growth.
• Commitment to ESG and Shareholder Value: Southern Copper has strengthened its environmental, social, and governance (ESG) profile, achieving inclusion in the S&P Global Sustainability Yearbook for the third consecutive year and improving its Sustainalytics ESG risk rating from 27.5 in 2023 to 23.4 in 2024. The company sourced 100% of its 2023 Peruvian electricity from renewables, surpassing its 2027 target of 25% renewable energy, and reduced greenhouse gas emissions by 7.5% in 2023. Social initiatives include a USD26 million investment in a High-Performance School in Tacna, Peru, and recognition for educational programs in Mexico. Additionally, the company announced a quarterly stock dividend of 0.0104 shares per share, payable on May 23, 2024, reinforcing its commitment to delivering shareholder value through consistent dividends.

Technical Observation (on the daily chart):

The 14-day Relative Strength Index (RSI) is currently at 57.99, near mid-levels, with the expectations of consolidation or some upward momentum if an important resistance of USD 95-USD 100. In addition, the current price is above both the 50-day Simple Moving Averages (SMAs) and 200-day SMA, which may work as medium to long term support levels.

As per the above-mentioned price action, recent key business and financial updates, momentum in the stock over the last month, and technical indicators analysis, a ‘WATCH’ rating has been given Southern Copper Corporation (NYSE: SCCO) at the current price of USD96.65, as of June 25, 2025, at 10:20 am PDT. 

Individuals can evaluate the stock based on the support and resistance levels provided in the report in case of keen interest taking into consideration the risk-reward scenario. 

Markets are trading in a highly volatile zone currently due to certain macro-economic issues and prevailing geopolitical tensions. Therefore, it is prudent to follow a cautious approach while investing.

Related Risk: This report may be looked at from a high-risk perspective and a recommendation is provided for a short duration. This report is solely based on technical parameters, and the fundamental performance of the stocks has not been considered in the decision-making process. Other factors which could impact the stock prices include market risks, regulatory risks, interest rates risks, currency risks, social and political instability risks etc. 

Note 1: Past performance is not a reliable indicator of future performance.

Note 2: The reference date for all price data, currency, technical indicators, support, and resistance level is June 25, 2025. The reference data in this report has been partly sourced from REFINITIV.

Note 3: Investment decisions should be made depending on an individual's appetite for upside potential, risks, holding duration, and any previous holdings. An 'Exit' from the stock can be considered if the Target Price mentioned as per the Valuation and or the technical levels provided has been achieved and is subject to the factors discussed above.

Note 4: Target Price refers to a price level that the stock is expected to reach as per the relative valuation method and or technical analysis taking into consideration both short-term and long-term scenarios.

Note 5: ‘Kalkine reports are prepared based on the stock prices captured either from the New York Stock Exchange (NYSE), NASDAQ Capital Markets (NASDAQ), and or REFINITIV. Typically, all sources (NYSE, NASDAQ, or REFINITIV) may reflect stock prices with a delay which could be a lag of 15-20 minutes. There can be no assurance that future results or events will be consistent with the information provided in the report. The information is subject to change without any prior notice.