Southern Copper Corporation (SCCO) | The Buildout — AI Infrastructure
The Verdict
Southern Copper mines, smelts, and refines copper and by-product metals across integrated facilities in Peru and Mexico. Its copper concentrate, cathodes, and rod feed the wire, cable, busbars, transformers, and switchgear that power and connect data centers, making it an indirect, commodity-level supplier to the AI buildout.
| Market Cap | — |
| Revenue (TTM) | $15.8B |
| Revenue Growth | +32.8% |
| EBITDA Margin (TTM) | 62.5% |
| Net Debt | $1.2B |
| Earnings Beats | 6 of 7 |
| P/E (TTM) | — |
| EV/EBITDA (TTM) | — |
What We Like
- FY2025 was a record: net sales $13.4B, adjusted EBITDA $7.8B, and net income $4.3B.
- H1 2026 operating cash flow was $3,683M, up 117% y/y.
- By-product leverage is exceptional: Q2 2026 by-product credit was $2.24/lb, yielding net cash cost of $0.05/lb.
- Tia Maria reached 42% completion at June 30, 2026, with first production targeted for H2 2027 and full capacity of 120,000 tons/year from 2028.
- El Pilar is fully permitted, with early works starting September 2026, construction Q1 2027, and production expected H2 2029.
What We’re Watching
- Tia Maria desalination plant procurement is a critical path item; management says it would disclose any perceived delay.
- Los Chancas remains occupied by illegal miners as of June 30, 2026, with no resolution timeline.
- Cuajone's ore-grade decline is structural, costing about 35,000 tons of copper; the expansion is still under study and not board-approved.
- Peru's proposed 40% mining canon distribution is unresolved; clarity is expected after the July 28 inaugural speech.
The thesis is intact but mixed: record price-led and by-product-led earnings plus tangible Tia Maria progress strengthen the near-term case, while flat-to-down copper volumes, Los Chancas blockage, and a pushed-out long-term target weaken the longer-term case. The key open question is whether the 2028–2029 project ramp arrives on time to convert a price-led story into a volume-led one.
Earnings Beat
Southern Copper reported Q2 FY2026 net sales of $4,289.0M, gross margin of 62.0%, and EBITDA of $2,849.2M (66.4% margin). Net income was $1,670M, and free cash flow reached $2,430.4M. The standout was by-product leverage: after $2.24/lb of by-product credits, net cash cost was $0.05/lb.
| Metric | Q2 FY2026 | Q1 FY2026 | Q2 FY2025 | YoY |
|---|---|---|---|---|
| Revenue | $4.3B | $4.3B | $3.1B | +40.6% |
| Gross margin | 62.0% | 64.7% | 53.1% | +890bps |
| EBITDA | $2.8B | $2.7B | $1.8B | +58.9% |
| EPS | $2.01 | $1.92 | $1.21 | +67.1% |
| Copper production | 230,662 tons | 232,748 tons | n/a | -3.5% y/y |
| Net cash cost after by-products | $0.05/lb | -$0.11/lb | n/a | — |
Southern Copper delivered another exceptional quarter, registering record-breaking results in sales, adjusted EBITDA and net income.— Raul Jacob, CFO, July 22, 2026
Management tone: Management's tone on the July 22 call was confident on record results and Tia Maria execution, openly direct about lower ore grades at Toquepala and Cuajone, and more optimistic on Peru following the election of President-elect Fujimori. On the Q4/FY2025 call, management declined to comment on COMEX sales percentage; on the July 22 call it declined to comment on the proposed mining canon distribution until policy specifics are clear.
Management Guidance
Management guided 2026 copper production to 917,000 tons, molybdenum to 27,900 tons, silver to 24 million ounces, and zinc to 163,900 tons. It expects 2027 copper production to be "more or less the same" as 2026, about 970,000 tons in 2028, over 1,060,000 tons in 2029, and a long-term goal above 1.6 million tons by 2033–2034.
Trajectory
Revenue is accelerating on a trailing basis, with Q2 FY2026 revenue of $4,289.0M up about 41% from Q2 FY2025, while gross margin expanded to 62.0% and EBITDA margin to 66.4%. The driver is price and by-product credits, not physical output: Q2 copper production fell 3.5% y/y and copper sales volume fell 1.5%. By-product credits of $2.24/lb pushed net cash cost to $0.05/lb.
The Model
The model's locked projections are FY+1 revenue of $16,042M and EBITDA of $9,946M (62.0% margin), and FY+2 revenue of $16,920M and EBITDA of $10,406M (61.5% margin). The FY+1 top line is modestly above TTM revenue of $15,787.5M, and FY+2 adds about 5.5% revenue growth from FY+1 with EBITDA margin essentially flat at 61.5% versus 62.0%.
| Metric | FY2025 | Next FY (E) | Following FY (E) |
|---|---|---|---|
| Revenue | $13.4B | $16.0B | $16.9B |
| YoY Growth | — | +19.5% | +5.5% |
| EBITDA | $7.9B | $9.9B | $10.4B |
| EBITDA Margin | 58.6% | 62.0% | 61.5% |
Projections are the median of 5 independent model runs. The model’s revenue sits 6.0% above analyst consensus.
Management guided 2026 copper production to 917,000 tons, molybdenum to 27,900 tons, silver to 24 million ounces, and zinc to 163,900 tons. It expects 2027 copper production to be "more or less the same" as 2026, about 970,000 tons in 2028, over 1,060,000 tons in 2029, and a long-term goal above 1.6 million tons by 2033–2034.
What Could Go Right — and Wrong
- Copper and by-product prices hold or rise, keeping net cash costs near zero; silver is up 118% y/y and could become the main by-product.
- Tia Maria stays on schedule: first production of about 30,000 tons in H2 2027 and full 120,000 tons/year from 2028.
- El Pilar advances as dated: early works September 2026, construction Q1 2027, production H2 2029.
- Los Chancas access is restored by Peruvian state action, returning a deferred growth option.
- The 2028–2029 ramp materializes, lifting total copper output toward about 970,000 tons in 2028 and over 1,060,000 tons in 2029.
- Copper or by-product prices reverse; Q2 net cash cost of $0.05/lb depended on $2.24/lb of by-product credits.
- Tia Maria slips, particularly the desalination plant, delaying the first material volume growth.
- Los Chancas remains occupied by illegal miners, keeping a key long-term growth option stalled.
- Cuajone expansion is not approved, leaving its structural grade decline of about 35,000 tons unresolved.
- Peru's proposed 40% mining canon distribution or broader geopolitical disruptions raise costs or complicate operations.
Looking Ahead
The next twelve months hinge on Peru's policy direction, project execution, and production. Management expects second-half 2026 sales to catch up as first-half material in process becomes available, with El Pilar early works starting September 2026 and Tia Maria construction completion targeted for H1 2027 before first production in H2 2027.
- July 28, 2026Fujimori inaugural speech — Tests Peru mining security, artisanal mining law, and canon policy.
- September 2026El Pilar early site prep — Tests execution of the newly approved 36,000 t/y project.
- Q1 2027El Pilar full construction — Tests construction start and Mexican permitting follow-through.
- H1 2027Tia Maria construction completion — Tests H1 2027 finish and May/June assembly readiness.
- H2 2027Tia Maria first production — Tests first ~30,000 tons and path to 120,000 t/y in 2028.
Financials
Annual Summary
| Metric | FY2024 | FY2025 | TTM | YoY |
|---|---|---|---|---|
| Revenue | $11.4B | $13.4B | $15.8B | +17.4% |
| Gross Margin | 49.5% | 56.3% | 62.3% | +673bps |
| EBITDA | $6.4B | $7.9B | $52.4B | +23.0% |
| EBITDA Margin | 56.0% | 58.6% | 62.5% | +266bps |
| Net Income | $3.4B | $4.3B | $5.7B | +28.4% |
| Free Cash Flow | $3.4B | $3.4B | $23.8B | — |
| Net Cash | — | — | — | — |
Key Ratios (Trailing)
- P/E TTM—
- EV/EBITDA TTM—
- EV/Revenue TTM—
- Price/FCF TTM—
- Gross Margin (TTM)62.3%
- EBITDA Margin (TTM)62.5%
- Net Margin (TTM)35.9%
- ROIC51.3%
- FCF Conversion60.4%
- SBC / Revenue0.0%
The Company
Southern Copper is an integrated copper producer. It mines, smelts, and refines copper, molybdenum, zinc, silver, gold, lead, and sulfuric acid across facilities in Peru and Mexico, with exploration in Argentina and Chile. Its copper concentrate, cathodes, and rod feed wire, cable, busbars, transformers, switchgear, and other electrical infrastructure used in data centers and grid buildout.
Operations are organized into three segments: Peruvian operations, Mexican open-pit operations, and Mexican underground mining operations. The Peru complex includes Toquepala, Cuajone, and the Ilo smelter/refinery plus railroad and port facilities; Mexico includes Buenavista and La Caridad open pits, a rod plant, SX-EW plants, and five underground mines with a zinc refinery.
Business Segments
Competitive Landscape
The source describes Southern Copper as one of the largest integrated copper producers in the world. Its competitive position sits inside a global copper market that management estimates is in a slight deficit for 2026. The provided record does not identify named competitors with financial detail.
Supply Chain
SCCO sits at the mine-to-metal stage of the copper chain in Peru and Mexico, selling copper and by-product metals into global electrical, wire, cable, and grid markets. No downstream neighbor in the provided record is documented as mentioning SCCO by name; downstream ties are inferred.
More on SCCO: Earnings recap