Southern Copper posted record Q3 2026 sales and earnings, powered by higher copper and by-product prices. The stock looks fairly valued near the report’s anchor price, but Peru-related execution risk and a rich earnings multiple keep it at Hold.
Southern Copper Corporation (SCCO) combines a large copper reserve base, integrated mining and refining assets, strong operating margins, and a sizeable project pipeline. The company produced record third-quarter 2026 sales of $4.7B, adjusted EBITDA of $3.0B, and net income of $1.8B. Revenue grew 39% year over year, while net income increased 63%.
The investment case rests on two opposing forces. Higher copper, molybdenum, silver, and zinc prices are driving exceptional cash generation, but copper production fell 2.9% year to date in 2026 because of lower ore grades in Peru. SCCO is also trading at 26.3 times trailing earnings and 28.1 times forward earnings, leaving less room for execution mistakes than the company's strong margins might imply.
For a moderate-risk investor with a medium-term horizon, SCCO merits a Hold rating. The report's central valuation anchor is $190.00 per share, modestly above the quoted price of $185.39 and the analyst consensus target of $178.68. The premium to consensus reflects record profitability, low cash costs, and the growth pipeline. The Hold rating reflects the high PEG ratio of 5.4, Peru-related execution risk, and a forward EPS estimate of $7.60 that is only slightly above trailing EPS of $7.52.
Southern Copper is a copper mining, smelting, and refining company incorporated in 1952 and headquartered in Phoenix, Arizona. It operates in Mexico, Peru, Brazil, Chile, and other American countries, with principal production assets in Mexico and Peru. The company had 16,617 employees and operates as a subsidiary of Americas Mining Corporation.
The operating model spans open-pit copper mines, concentrators, smelters, refineries, solvent extraction and electrowinning plants, rod production, and by-product operations. The portfolio produces copper, molybdenum, silver, zinc, gold, lead, sulfuric acid, and coal. This vertical integration gives SCCO control over more stages of the production chain than a pure concentrate producer.
SCCO reported 108.955 billion pounds of contained copper reserves as of December 31, 2025. Mexican assets accounted for 44.154 billion pounds, Peruvian operations held 45.527 billion pounds, and development projects represented 19.274 billion pounds. That reserve base supports a long operating life, although reserve value still depends on grades, metal prices, permitting, and project execution.
Copper is the economic engine. Copper revenue reached $10.03B in 2025, equal to 74.8% of total revenue. The share was 76.6% in 2024 and 76.7% in 2023, showing that SCCO remains highly exposed to the copper cycle despite its by-product portfolio.
Molybdenum was the second-largest revenue stream in 2025 at $1.41B, or 10.5% of total revenue. Silver contributed $973.9M, or 7.3%, while zinc generated $529.9M, or 3.9%. Other products supplied $477.2M. The by-products are financially important because their revenue credits reduce the effective cost of copper production.
Third-quarter 2026 mix was similar. Copper represented 74% of sales, molybdenum 12%, silver 7%, and zinc 4%. Molybdenum sales increased 31% year over year, zinc sales rose 36%, and copper sales increased 41% even though copper sales volume declined 0.4%. The pattern shows that price realization, rather than volume growth, drove the quarter.
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Copper remains SCCO's flagship product because it represents roughly three-quarters of revenue and determines the value of the company's large reserve base. Third-quarter LME copper averaged $6.41 per pound, up 44% from $4.24 per pound a year earlier. COMEX copper averaged $6.48 per pound, up 34%.
The company produced 232,396 tons of copper in the third quarter, down 1% year over year. Mexican production increased 2.5%, mainly because of Buenavista and IMMSA, while Peruvian production fell 6% because of lower grades and recoveries at Toquepala and Cuajone. Management expects 918,000 tons of copper production for 2026.
The by-products strengthen the flagship product economics. Molybdenum prices averaged $32.93 per pound, up 36% year over year. Silver averaged $62.80 per ounce, up 59%, while zinc averaged $1.74 per pound, up 36%. Third-quarter by-product credits reached $1.2B, or $2.36 per pound of copper, compared with $900M, or $1.81 per pound, in the prior-year quarter.
SCCO's advantage is industrial rather than software-like. Large mines, integrated processing, by-product diversity, and a deep reserve base create a cost structure that is difficult to replicate quickly. In the third quarter, operating cash cost before by-product credits was $2.46 per pound. After credits, it fell to $0.09 per pound.
The company's smelters increased production 18% year over year in the third quarter, while refineries increased production 16%. SCCO also produces sulfuric acid and consumes part of that output in its own operations. That internal loop helps reduce dependence on external inputs and gives the company another source of by-product credits.
Project technology provides another advantage. El Pilar is designed to produce 36,000 tons of copper cathodes annually through solvent extraction and electrowinning. Tia Maria is also being developed around SX-EW technology and is expected to produce 120,000 tons of refined copper annually in its early years. These projects extend SCCO's integrated production model rather than changing it.
S&P Global increased SCCO's 2026 Corporate Sustainability Assessment rating by two points from the prior year. The company ranked among the top three mining-sector performers, with especially strong ratings in reporting transparency, risk management, business ethics, energy, biodiversity, and community relations.
SCCO operates a geographically concentrated but vertically integrated supply chain. In Peru, the Toquepala and Cuajone open-pit mines feed concentrators, smelters, and refineries. In Mexico, Buenavista, La Caridad, IMMSA, and related facilities support mining, concentration, smelting, refining, and rod production.
The main operational weakness is grade variability. Peruvian copper production fell 6% in the third quarter, and year-to-date copper production declined 2.9% to 693,602 tons. Zinc mine production also fell 8% in the quarter to 41,880 tons. These declines were partly offset by higher Mexican copper production and stronger smelter and refinery output.
Input costs increased by $223M, or 17%, year over year in the third quarter. Diesel, fuel, labor, power, depreciation, and inventory consumption were the main contributors. Management cited favorable currency effects of $22M and said Mexican natural gas supply from the Permian Basin remains competitively priced.
Tia Maria was 50% complete as of September 2026, with electrical substations, a 220-kilovolt transmission line, crushing circuits, and SX-EW facilities under construction. The project has created 6,817 jobs, including 1,181 filled by local applicants. Construction timing moved toward the first half of 2028 because mechanical assembly and engineering work required more time.
Copper demand benefits from grid investment, electric vehicles, renewable power, energy storage, industrial electrification, and data centers. The IEA projects total copper demand to rise from 26.717 million tons in 2024 to 31.348 million tons in 2030 and 34.137 million tons in 2040 under its STEPS scenario.
The supply side remains difficult. The IEA estimates that the current project pipeline could leave the copper market facing a 30% supply deficit by 2035. Long permitting timelines, infrastructure requirements, technical challenges, and community opposition make new mines slow to develop. Existing producers with permitted assets therefore hold strategic value.
Near-term conditions are less one-sided. SCCO management estimates a slight copper surplus for 2026, with global inventories of 1.105 million tons as of October 9, equivalent to approximately 14 days of global demand. That balance limits the case for assuming that elevated copper prices will rise indefinitely.
Data-center electricity consumption is projected by Gartner to increase 26% in 2026, adding demand for copper-intensive power distribution equipment. This is a meaningful structural tailwind, but SCCO's earnings remain tied to benchmark metal prices rather than directly to data-center contracts.
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SCCO sells industrial commodities through a mix of market-based sales, spot transactions, and contracts. Its product portfolio includes copper concentrates, blister and anode copper, copper cathodes, copper rod, molybdenum concentrates, silver, zinc, sulfuric acid, gold, and lead.
The customer base is therefore linked to smelters, refiners, fabricators, industrial manufacturers, chemical users, and commodity traders rather than consumer brands. Management stated that part of the Peruvian production is sold into South American markets through spot and contract arrangements.
Customer pricing is primarily determined by global metal benchmarks. This gives SCCO exposure to strong pricing when supply is constrained, but it also means the company has limited control over the final selling price. The third quarter demonstrated this mechanism clearly: copper sales rose 41% while volume declined 0.4% because benchmark prices were much higher.
The main global comparison group includes Freeport-McMoRan (FCX), BHP (BHP), Codelco, Glencore (GLEN), Antofagasta (ANTO), Teck Resources (TECK), KGHM, Lundin Mining (LUN), Ivanhoe Mines (IVN), and First Quantum Minerals (FM). These companies compete through reserve quality, mine scale, operating costs, project execution, and access to processing infrastructure.
SCCO compares favorably on reserve depth and integration. Its 108.955 billion pounds of contained copper reserves and established Mexican and Peruvian infrastructure provide a substantial resource base. Its by-product portfolio also reduces effective copper costs when molybdenum, silver, zinc, and sulfuric acid prices are strong.
The trade-off is diversification. Larger global miners such as BHP and Glencore spread earnings across several commodities and jurisdictions. SCCO remains more directly tied to copper and more concentrated in Mexico and Peru. That concentration creates greater exposure to local political, social, permitting, and operating conditions.
SCCO's cost performance remains a key competitive asset. Third-quarter cash cost net of by-product credits was $0.09 per pound, and nine-month cash cost was $0.01 per pound. These figures were aided by unusually strong by-product prices, so they should not be treated as permanent normalized costs. They do show the earnings leverage embedded in the operating model.
The macro case for copper is anchored to electrification. The IEA expects copper demand to increase by about 30% by 2040, with energy-sector applications supplying the largest source of growth. Gartner's 26% 2026 data-center electricity growth projection adds a separate demand channel tied to artificial intelligence infrastructure.
The commodity cycle remains the immediate macro driver. Third-quarter LME copper prices rose 44% year over year, while SCCO's copper production declined 1%. That divergence explains the company's record profitability, but it also shows why earnings are vulnerable if prices retreat while costs remain elevated.
Peru presents the largest project and geopolitical risk. Los Chancas is expected to produce 130,000 tons of copper and 7,500 tons of molybdenum annually, but more than 200 illegal miners are reported within the project area. SCCO is working with Peruvian authorities to regain control before advancing environmental and development work.
Mexico and Peru also create concentration risk because a large share of the operating footprint sits in two jurisdictions. Tia Maria's construction progress and local hiring programs show an effort to strengthen social support, while the 2025 10-K identified political instability in Peru as a material risk.
Cash and equivalents rose to $3.1B while total debt stood at $8.3B, leaving SCCO with a manageable leverage profile and ample liquidity for its project pipeline.
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Get Full Access →Third-quarter 2026 revenue jumped 39% to $4.7B and net income rose 63% to $1.8B, with copper still driving roughly three-quarters of sales.
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Get Full Access →Management is guiding to 918,000 tons of copper production in 2026, but the report’s forward EPS estimate of $7.60 is only slightly above trailing EPS of $7.52.
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Get Full Access →SCCO trades at 26.3x trailing earnings and 28.1x forward earnings, a premium that reflects strong margins but leaves little room for Peru-related missteps.
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Get Full Access →The report’s central valuation anchor is $190 per share, above the $185.39 quote and the $178.68 analyst consensus target, which supports a Hold.
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Get Full Access →Southern Copper has the attributes of a high-quality copper producer: 108.955 billion pounds of contained reserves, integrated Mexican and Peruvian operations, strong by-product economics, and a balance sheet capable of funding growth. Third-quarter 2026 results confirmed that the operating model performs exceptionally well when metal prices are favorable.
The investment tension is valuation. Copper production declined year to date, operating costs increased 17% in the latest quarter, Tia Maria's schedule moved toward the first half of 2028, and the forward EPS estimate barely exceeds trailing EPS. Those facts argue for discipline even as the long-term copper market remains attractive.
A Hold rating at $185.39 balances an exceptional current earnings cycle against the cost of paying a premium for future growth. The risk-reward profile improves materially below $165.00 and becomes stretched above $215.00. At $190.00, SCCO remains a credible medium-term copper holding, but not a bargain.
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Southern Copper Corporation (SCCO) rises after copper prices climbed on Chinese restocking hopes and supply risks at major mines. The move reflects SCCO’s leverage to copper, though trading volume remains light and the stock already trades above consensus price targets.
Southern Copper Corporation (SCCO) drops sharply as tariff uncertainty triggers a broad selloff in copper miners. Despite the decline, the company’s latest earnings, sales growth, and low cash costs remain strong, suggesting today’s move is more about copper-market repricing and profit-taking than a new operational setback.
Southern Copper Corporation (SCCO) rises as copper prices hit record highs, lifting the miner near its 52-week peak. The move is driven by the commodity backdrop rather than a company-specific headline, while light relative volume and a rich valuation suggest investors should stay selective.