Southern Copper Corp ((SCCO)) has held its Q2 earnings call. Read on for the main highlights of the call.

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Southern Copper Corp’s latest earnings call struck an upbeat tone, as management highlighted record financial results, powerful cash generation and strong support from higher copper and by‑product prices. While they acknowledged operational headwinds from lower grades, higher costs and local project risks, executives emphasized solid execution and reiterated confidence in a robust growth trajectory.

Record Sales and Strong Revenue Growth

Second quarter sales climbed to $4.3 billion, rising $1.2 billion or 41% versus Q2 2025 as better copper and by‑product prices flowed directly into the top line. Management framed this as clear evidence that the company is leveraging favorable market conditions and its asset base to drive meaningful revenue expansion.

Record Adjusted EBITDA and Improved Margins

Adjusted EBITDA reached a record $2,856 million in Q2, up 60% year‑on‑year, with the margin expanding to 67% from 59% a year earlier. Year‑to‑date adjusted EBITDA of $5,569 million, up 58%, underscores a sharp improvement in profitability and operating leverage even as some cost pressures persist.

Record Net Income and Margin Expansion

Net income surged to a record $1,670 million in the quarter, a 72% jump compared with $973 million in Q2 2025, lifting net margin to 39% from 32%. The company emphasized that earnings growth is not only price‑driven but also reflects disciplined cost control and a stronger overall financial profile.

Very Strong Operating Cash Flow

Operating cash flow for the first half reached $3,683 million, an increase of 117% versus $1,698 million in the same period of 2025. Higher sales and lower working capital needs were key drivers, giving Southern Copper more firepower to fund its expanding project pipeline and shareholder returns.

Copper Market Tailwinds

Management highlighted a supportive copper backdrop, with LME prices up 40% year‑over‑year to $6.04 per pound and COMEX averages up 31% to $6.16 per pound. The company sees a slight market deficit in 2026 and notes that global inventories cover only about 15 days of demand, reinforcing a constructive price outlook.

By-product Price Strength Supporting Results

Prices for key by‑products surged, with molybdenum up 43%, silver up 118% and zinc up 31%, materially boosting by‑product sales. Molybdenum revenues rose 34%, zinc 24% and silver 86%, providing a significant earnings tailwind and enhancing the economics of the company’s copper operations.

By-product Credits and Cash Cost Performance

By‑product credits totaled $1,106 million in Q2, equivalent to $2.24 per pound of copper, helping keep overall unit costs low. Operating cash cost before credits was $2.29 per pound, and just $0.05 per pound after credits, which management highlighted as evidence of a structurally competitive cost position.

Capital Deployment and Funding Success

Capital spending accelerated with Q2 capex at $423 million, up 79% year‑on‑year, and first‑half capex at $865 million, up 56%. The company also tapped debt markets successfully, issuing $1.25 billion in 10‑year notes at 5.35% amid $4.0 billion in demand to support Tia Maria and broader Peruvian investment.

Project Progress — Tia Maria and El Pilar

Tia Maria is 42% complete, with $1,101 million committed and $693 million already invested, and mass earthworks 71% finished as procurement advances for major equipment. El Pilar holds necessary permits and a renewed water license, with early site works slated for September 2026, construction in early 2027 and production targeted for the second half of 2029.

Long-term Investment Pipeline and Growth Targets

Southern Copper outlined a decade‑long capex program exceeding $20.5 billion, split roughly between Peru and Mexico, signaling a long runway for growth. Copper production guidance was nudged up to about 917,000 tons for 2026, with a long‑term goal to exceed 1 million tons by 2029 as new projects come on stream.

ESG and Community Initiatives

Executives emphasized ongoing social and environmental programs, including dam projects that lift crop yields by about 20% and education centers serving around 3,000 students. At Tia Maria alone, 5,817 jobs have been created and over 1,200 local residents hired, reinforcing the company’s push to secure community support for key projects.

Copper Production Decline in Q2

Despite strong financials, copper output dipped 3.5% year‑on‑year to 230,662 tons, mainly due to a 12% drop in Peru from lower ore grades and recoveries at Toquepala and Cuajone. Production in Mexico grew 3.2%, partly offsetting the Peruvian shortfall, but management acknowledged the operational challenge.

Declines in By-product Volumes

By‑product volumes softened, with molybdenum production down 11% year‑on‑year as ore grades slipped, and silver output down 4% alongside slightly lower refined silver at the Ilo refinery. Mine zinc production fell 14% quarter‑on‑quarter to 39,257 tons, while refined zinc declined 6% year‑on‑year, trimming some of the price‑driven benefit.

Rising Operating Costs

Total operating costs and expenses rose $202 million or 14% year‑on‑year as the company spent more on materials, purchased copper and diesel, and recognized higher worker participation costs. Currency translation effects also contributed, prompting management to stress ongoing efficiency efforts to protect margins.

Decrease in By-product Credits and Cash Cost Deterioration

By‑product credits slipped 7% versus Q1, falling from $1,189 million to $1,106 million and from $2.41 to $2.24 per pound. As a result, operating cash cost including credits worsened from a negative $0.11 per pound in Q1 to $0.05 per pound in Q2, though the company still sits at a very low absolute cost level.

Project Execution Risks and Critical Equipment

Management acknowledged execution risks at Tia Maria, notably the need to secure and install critical components such as the desalination plant. Procurement is underway and no delay is currently expected, but they cautioned that any slippage could affect project timing and cost, making careful oversight essential.

Local Security and Social Challenges at Los Chancas

The Los Chancas project continues to face the presence of illegal miners within the concession, despite state enforcement efforts, which is slowing progress. These social and security challenges could influence project timelines, and the company is working with authorities and communities to stabilize the situation.

Political and Regulatory Uncertainty in Peru

Executives flagged policy uncertainty in Peru as a new administration discusses changes to mining‑related fiscal and community arrangements. While they expect the overall stance toward mining to remain constructive, the lack of detail on proposals leaves some risk around future regulatory and tax frameworks.

Sales vs Production Timing Mismatch

The quarter saw sales slightly below production, leading to an inventory build and more material in process during the first half. Management sees this as a short‑term timing effect and expects sales volumes to normalize as inventories are drawn down in the second half of the year.

Forward-Looking Guidance and Growth Outlook

Southern Copper reaffirmed its 2026 production guidance of 917,000 tons of copper, marginally above its initial plan, alongside higher‑than‑planned molybdenum output and detailed targets for silver and zinc. With a capex plan above $20.5 billion, a fully funded Tia Maria schedule into 2027 and ambitions to reach about 1.6 million tons of copper by 2033–34, management painted a confident long‑term growth story supported by a strong balance sheet and ongoing dividends.

The earnings call ultimately underscored a company riding record prices and cash generation, yet candid about grade, cost and political risks that need monitoring. For investors, the key takeaway is a miner with substantial growth projects and resilient margins, positioning Southern Copper as a notable long‑term copper play despite near‑term operating volatility.