Southern Copper doubles 2018 earnings

Southern Copper, which has operations in Peru and Mexico, more than doubled its profits last year as higher metals prices and output pushed sales to a record and the company cut costs.

Southern posted a US$1.54bn profit in 2018 compared with US$728mn the year before as sales rose 6.6% to $7.097bn, the Phoenix-based company said in a statement.

The miner said copper prices rose 4.6% to US$2.93/lb on the Comex last year, while zinc gained 1.5% to US$1.33/lb and molybdenum jumped 45.9% to US$11.86/lb. Silver fell 8.1% to US$15.65/oz.

The company brought down cash costs net of byproducts to US$0.87/lb from US$0.92/lb, while capex was US$1.12bn, with US$334mn spent on the US$1.3bn Toquepala expansion in Peru.

Copper output climbed 0.8% to 883,689t as higher production in Peru offset declines at its Mexican operations, Southern said. Zinc and molybdenum output both rose 3.1% to 70,778t and 21,985t, respectively, while silver increased 8.7% to 17.31Moz.

PROJECTS

Southern Copper, which in 2016 completed a US$3.5bn expansion at its Buenavista mine in Mexico, said it completed basic engineering, requested water concessions and is acquiring equipment for a US$413mn, 80,000t/y zinc and 20,000t/y copper concentrator at the operation that is scheduled to start up in 2021.

The company added it is acquiring additional land for the US$159mn, high-grade Pilares project near its La Caridad mine in Mexico, which is expected to add 35,000t/y copper in 2020. Southern said it presented environmental studies to the Mexican government.

In Peru, Southern Copper completed an expansion of its 100,000t/d Toquepala concentrator plant to 245,000t/d. The project is scheduled to ramp up to capacity in Q2, while Toquepala is expected to produce 258,000t of copper this year, a 52% increase over 2018.

The company is hoping to secure a construction license in the first half of this year for its US$1.4bn, 120,000t/y Tía María copper project in Peru, which has been delayed by environmental opposition since 2011. Southern said it answered 14 environmental queries from the energy and mines ministry (MEM) and is training the local population to be able to apply for employment at the mine, which will create 9,000 jobs during the construction process.

Southern Copper, which is controlled by Grupo México, is counting on expansions in Peru and Mexico to help boost annual copper output to 1.5Mt by 2023.