Southern Copper Q3 copper, zinc silver output down; molybdenum up

Lima — Southern Copper saw third-quarter output of copper, zinc and silver drop, while molybdenum production rose.

Copper output dropped 1.4% to 259,038 mt in the quarter from 261,570 mt a year ago and silver fell 1.3% to 5.32 million oz due to lower ore grades at its Peruvian mines, the Phoenix-based company said in a statement Oct. 27. Zinc slid 0.4% to 17,198 mt, while molybdenum production rose 7.8% to 7,685 mt after completing its $1.4 billion Toquepala expansion in Peru last year.

Southern sold copper at $2.94/lb on COMEX, up 12.2% from a year earlier, while molybdenum plunged 35.6% to $7.57/lb. Silver jumped 44.8% to $24.59/oz and zinc was unchanged at $1.06/lb.

The company saw cash costs, net of by-products, drop to $0.65/lb in the quarter from $0.82/lb the previous year, while the company halved capital expenditure to $134.5 million in the quarter.

The company, which has lined up $2.8 billion in copper projects in Peru and $880 million in Mexico, "doesn't expect any significant delays" despite problems caused to the mining industry by the COVID-19 pandemic, CFO Raul Jacob said on a conference call Oct. 27. Southern also expects the Peruvian government to support progress made on community relations at its long-delayed $1.4 billion Tia Maria project, he added.

The $413 million, 80,000 mt/year Buenaventura zinc project has completed 75% of its detailed engineering stage and equipment orders have been placed, while a road is being built to the $159 million, 35,000 mt/y Pilares copper project, according to Jacob. Along with the $310 million El Pilar copper project, all three projects in Mexico are expected to be operating by 2023. A baseline study is also underway for the $2.9 billion, 190,000 mt/y El Arco copper project,

Southern posted a $506 million third-quarter profit compared with a 389.6 million profit a year ago as sales rose 14.5% to $2.13 billion from $1.86 billion a year earlier. The company is counting on expansions at three of its mines to boost annual copper production to 1.5 million mt by 2025.