Davis Index: Market Intelligence for the Global Metals and Recycled Materials Markets

Southern Copper expects a small copper market surplus in 2020 with just 2pc growth in supply as a consequence of COVID-19. 


Copper production this year is expected to be in line with 2019 at 905,733mt with no growth indications. Estimated copper production for 2021 and 2022 are 894,937mt and 861,916mt, respectively. Zinc production in 2020, on the other hand, is expected to grow by 9pc from 2019 to 73,119mt.


The company’s total capital budget estimate though 2024 is $2.3bn. Its estimated budget for this year is $1.1bn and $1.6bn for 2021.

Southern Coppers annual production in 2019 increased by 12.5pc to 901,580mt from 2018. A major reason for the significant increase is copper production at the company’s Toquepala mine surged by 51.5pc during the year. Copper output at its Buenavista mine also rose by 5.8pc, however, output at its Cuajone mine decreased because of lower recoveries. 


Copper production in Q4 2019 increased by 9.1pc to 323,375mt, compared to the same period in 2018. Again, this was the result of increasec production at Toquepala, which rose by 44.1pc during the quarter. The company also had a 1.5pc increase in copper production in Mexico in Q4 2019. Additionally, as a process of expansion, copper production was also initiated at the new Molybdenum plant which produced close 92,295mt of copper in Q4 2019.


Annual zinc production in 2019 increased by 4.4pc to 67,061mt, reflecting resumption of production at the San Martin mine. In Q4 2019, zinc production rose by 15.8pc to 18,474mt from Q4 2018. 


Total sales in 2019 increased by 2.7pc to $7.3bn from the year prior, which included copper sales volumes rising by 11.3pc, as did sales for molybdenum and silver. In Q4 2019 total sales were up by 9.4pc to $1.9bn from Q4 2018 because copper sales volumes surged 11.3pc. Zinc sales in Q4 2019 ere down by 10.2pc, mainly due to lower zinc prices. 


Southern Copper’s 2019 net earnings decreased by 3.7pc to $1.4bn from $1.5bn in 2018. However, net income in Q4 2019 increased by 4.3pc to $305.7mn from $293.2mn in Q4 2018. Annual net income margins in 2019 were 20.4pc, slightly below 21.7pc in 2018, while the company’s net income margin in Q4 2019 was 16.5pc, down from 17.3pc in Q4 2018. 


The adjusted EBITDA in 2019 was decreased by 1pc at $3.52bn in 2019 compared to $3.55bn in 2018. The adjusted EBITDA in Q4 2019 was $786.7mn compared to $793.1mn during the same period in 2018. 

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