Is SCCO Poised for a Major Copper Production Upswing This Decade?

Southern Copper Corporation SCCO is laying the groundwork for a multi-year copper growth story, even as near-term production shows modest moderation. For 2025, the company guided copper output at 958,800 tons, implying a 2% dip from the 973,900 tons produced in 2024. Looking beyond 2025, SCCO expects production to steadily build toward 1,084,000 tons by the end of this decade. 

Growth is projected to accelerate meaningfully from 2031 onward, with copper output envisioned to reach around 1,536,000 tons by 2034. This represents a 5% CAGR over 2024, underscoring SCCO’s confidence in its extensive project pipeline across Peru and Mexico.

The company’s capital investment program for this decade runs to more than $15 billion, with the major portion (around $10.3 billion) earmarked for Peru.
The long-awaited Tia Maria project, located in Arequipa, Peru, with an annual capacity of 120,000 tons of SX- EW copper cathodes, is expected to start in 2027. This project will use state-of-the-art SX-EW technology with the highest international environmental standards.

In Mexico, El Pilar, which is expected to start in 2028, will contribute around 36,000 tons of copper cathodes annually. This operation will use highly cost-efficient and environmentally friendly SX-EW technology. 

By 2030, El Arco in Mexico is expected to become operational. It is a world-class copper deposit located in the central part of the Baja California peninsula with ore reserves of more than 1,230 million tons with an average ore grade of 0.40% and 141 million tons of leach material with an average ore grade of 0.27%. The project includes an open-pit mine with a combined 120 ktpd concentrator and 28 ktpy SX-EW operations.

Peru’s Los Chancas project is slated to add 130,000 tons of copper starting in 2031. This will be followed by Michiquillay in 2032 with an expected 225,000 tons of copper. Michiquillay is expected to become one of Peru's largest copper mines with an expected mine life of more than 25 years. 

Taken together, SCCO’s diversified and phased project pipeline suggests that short-term production dips may be overshadowed by a powerful and sustained growth phase in the next decade.

Peer BHP Group BHP reported record copper output of 2,017 kt for fiscal 2025, up 8% year over year, crossing the 2,000 kt mark for the first time. BHP has delivered a 28% increase in copper output over the past three years, reflecting its ongoing investments to build its copper portfolio. 

BHP expects copper production to range between 1,800 and 2,000 kt in fiscal 2026. The company has copper projects under execution and a pipeline that could deliver around two Mtpa of attributable copper production during this decade.

Another peer, Teck Resources TECK, has entered into a merger agreement with Anglo American plc to form the Anglo Teck group. Anglo Teck will have more than 70% exposure to copper and is set to be among the top five global copper producers. The new company will boast an industry-leading portfolio, consisting of six world-class copper assets and premium iron ore and zinc operations. The combined annual copper production of 1.2 million tons is projected to grow 10% to 1.35 million tons by 2027.

SCCO’s Price Performance, Valuation & Estimates

Southern Copper shares have gained 55.9% in the past year compared with the industry’s 42.4% growth.

SCCO is trading at a forward 12-month price/sales multiple of 8.84X, a significant premium to the industry’s 3.93X.

The Zacks Consensus Estimate for Southern Copper’s 2025 earnings is pegged at $5.27 per share, suggesting 21.7% year-over-year growth. The same for 2026 indicates growth of 17.3%.

Here is how the EPS estimates for 2025 and 2026 have been revised over the past 60 days.

SCCO currently carries a Zacks Rank #3 (Hold).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
 

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This article originally published on Zacks Investment Research (zacks.com).

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