Southern Copper Aims for 7% Production Increase in 2024 Amid Market Surplus
2024-10-27
Southern Copper Corporation's Third Quarter and 9 Months 2024 Results Conference Call offered a deep dive into the company's operational performance, future strategies, and key focal points. The conference call was spearheaded by prominent figures such as Mr. Raul Jacob, Vice President, Finance, Treasurer, and CFO, Mr. Oscar Gonzalez Rocha, CEO of Southern Copper and Board member, and Mr. Leonardo Contreras, shedding light on crucial aspects of the business.
The session kicked off with an insightful overview of the copper market, emphasizing a notable 10% surge in the London Metal Exchange copper price from the third quarter of 2023 to the most recent quarter. Despite an anticipated slight market surplus of approximately 100,000 tons of copper for 2024, the long-term copper demand is projected to receive a boost from factors like economic growth initiatives in China and the resilience of the U.S. economy.
Southern Copper set its sights on achieving a 7% uptick in copper production for 2024, driven by factors such as the recovery at the SX-EW facilities at Buenavista and enhanced production levels in Peru. Moreover, molybdenum accounted for 10% of the company's sales value in the third quarter, with a projected production increase for the upcoming year.
From a financial standpoint, the company disclosed an adjusted EBITDA of $1,685 million for the third quarter of 2024, marking a substantial 31% surge from the corresponding period in 2023. Emphasis was also placed on maintaining operating cash costs per pound of copper and optimizing by-product credits to bolster margins.
In terms of projects and operations, Southern Copper outlined its plans for the approved CapEx budget of $363 million for 2025, encompassing activities like updating the topographic network and initiating earth-moving operations. The company also addressed efforts to combat illegal mining activities at the Los Chancas project in Apurimac, Peru, and the advancements made in the Michiquillay project in Cajamarca, Peru.
The company's dedication to responsible production was underscored through the certifications bestowed upon the Cuajone, Toquepala, and Ilo operations in Peru. Despite challenges such as the gap between copper production and sales and protests linked to the Tia Maria project, Southern Copper remains steadfast in its commitment to operational efficiency, debt management, dividend disbursements, and production projections for copper, molybdenum, zinc, and silver.
Looking ahead, Southern Copper intends to tap into the debt markets to secure funding for major projects, reassess CapEx estimates for endeavors like Tia Maria, and address water requirements for operations in Mexico. The company retains an optimistic outlook regarding its production forecasts, cost management strategies, and anticipated regulatory shifts in mining jurisdictions like Peru and Mexico.
In conclusion, Southern Copper's conference call delivered a comprehensive overview of the company's performance, strategies, and future prospects, underscoring its resilience and adaptability in the ever-evolving mining sector.