Southern Copper posted record quarterly revenue and surging EBITDA, but the stock already prices in a lot of copper strength. The report lands on Hold with a fair value of $185.
Southern Copper Corporation (SCCO) combines a large, integrated copper platform with exceptional current profitability and a substantial project pipeline. The investment case rests on three facts: 2Q26 revenue reached a quarterly record of $4.29B, adjusted EBITDA rose 59.5% year over year to $2.86B, and management expects copper production to rise from 917,000 tons in 2026 toward 1.06 million tons in 2029. The counterweight is valuation. At a cited share price of $213.75, SCCO trades at 29.8x trailing earnings, 38.8x forward earnings, and 5.4x PEG. That is a demanding price for a cyclical miner, even one operating in a tight copper market.
The moderate-risk conclusion is Hold. SCCO deserves a premium for its 64.5% gross margin, 61.2% operating margin, low reported cash cost after by-product credits, and long-life reserves. However, the 3.5% decline in 2Q26 copper production, lower ore grades in Peru, $7.99B of quarterly debt, and a consensus target of $169.06 limit the margin of safety. The report's fair-value estimate of $185 balances the company's strong operating performance against the price already assigned to that performance.
Southern Copper is a large copper mining and processing company incorporated in 1952 and based in Phoenix, Arizona. It operates in Mexico, Peru, Brazil, Chile, and other American countries, with 16,617 employees. The company's principal assets include the Toquepala and Cuajone mines, smelter, and refinery in Peru, along with Buenavista, La Caridad, IMMSA, and related processing facilities in Mexico.
SCCO controls more of the production chain than a simple mine operator. Its activities include mining, milling, flotation, smelting, refining, solvent extraction and electrowinning, rod production, and the recovery of molybdenum, silver, zinc, gold, lead, and sulfuric acid. This structure gives the company exposure to multiple metal prices while allowing it to capture value across mining and processing.
SCCO reports its economic exposure primarily by product rather than by classic operating segments. In 2025, copper generated $10.03B, or 74.8% of $13.42B in revenue. Molybdenum contributed $1.41B, or 10.5%, followed by silver at $973.9M, or 7.3%, zinc at $529.9M, or 3.9%, and other products at $477.2M, or 3.6%.
The 2Q26 sales mix was similarly concentrated. Copper represented 73% of sales, molybdenum 11%, silver 9%, and zinc 4%. Copper sales increased 38% even as copper sales volume fell 1.5%, showing that price, rather than volume, drove the quarter's revenue acceleration. Molybdenum sales rose 34%, zinc sales rose 24%, and silver sales rose 86%.
The by-product portfolio is economically important. In 2Q26, by-product credits totaled $1.11B, or $2.24 per pound of copper. That credit helped reduce operating cash cost to $0.05 per pound, compared with $2.29 per pound before by-product credits. The benefit is powerful, but it also introduces additional exposure to molybdenum, silver, and zinc prices.
Get AI research on any stock
Instant reports, daily intelligence, and an AI analyst in your pocket.
Copper is SCCO's flagship product and the central driver of its equity value. The company produced 230,662 tons of copper in 2Q26, a 3.5% decline from the comparable period. Peruvian production fell 12% because of lower ore grades and recoveries at Toquepala and Cuajone, while Mexican production rose 3.2% at Buenavista, La Caridad, and IMMSA.
The price environment more than offset the volume pressure. The average London Metal Exchange copper price increased from $4.32 per pound in 2Q25 to $6.04 in 2Q26, while the average COMEX price reached $6.16 per pound. Copper represented 73% of sales, so this price movement had an outsized effect on revenue, EBITDA, and earnings.
Management's production path provides the main volume catalyst. It expects about 970,000 tons in 2028, 1.06 million tons in 2029, and more than 1.6 million tons by 2033 or 2034. Those milestones depend on Tía María, El Pilar, improved ore grades, and successful execution across Peru and Mexico.
SCCO's competitive advantage is based on resource scale, processing integration, and cost structure rather than consumer branding. The company's 2025 10-K reported 108.955 billion pounds of contained copper reserves as of December 31, 2025. Large open-pit mines, established concentrators, smelters, refineries, and logistics assets create barriers that a new entrant cannot reproduce quickly.
El Pilar illustrates the company's preferred development model. The Sonora project has 317 million tons of proven and probable ore reserves at an average copper grade of 0.249%, an 18-year mine life, and planned annual production of 36,000 tons of copper cathodes. It will use solvent extraction and electrowinning, a process that produces cathodes directly from oxide ore and supports a compact production chain.
The project pipeline also includes Tía María, Los Chancas, Michiquillay, Angangueo, Chalchihuites, and an Empalme smelter expansion. Tía María reached 42% completion by June 30, 2026, while El Pilar has its water license renewed and is scheduled for early site work in September 2026. These projects give SCCO long-term growth optionality, though the $20.5B decade capital program raises the importance of execution discipline.
SCCO's operating footprint spans the Mexican copper circuit and the Peruvian Toquepala-Cuajone system. The company mines ore, concentrates it, smelts concentrates, refines anode copper into cathodes, and produces copper rod and sulfuric acid. This vertical structure reduces reliance on third-party processing and supports the strong operating margin reported in 2025 and 2Q26.
The near-term operating picture is mixed. Mexican mines increased copper output by 3.2% in 2Q26, but Peruvian output dropped 12%. Molybdenum production fell 11%, silver production fell 4%, and mine zinc production fell 14% to 39,257 tons. Lower ore grades affected several mines, making grade recovery a central operating variable for the next several years.
Tía María construction had moved 13.8 million metric tons of material from the La Tapada deposit, representing 71% progress on that earthworks activity. The project had $693M invested against $1.10B committed as of June 30, and major equipment orders, substations, transmission work, crushing circuits, and solvent extraction and electrowinning facilities were advancing. Los Chancas faced a separate operational obstacle because illegal mining remained inside the project area.
Copper demand has a broad industrial base that includes construction, electricity grids, industrial equipment, electric vehicles, renewable power, and data centers. The International Energy Agency projects total copper demand in its stated-policy scenario to rise from 24,928 kilotons in 2021 to 31,128 kilotons in 2030 and 36,379 kilotons in 2040. Clean-energy demand rises from 5,380 kilotons in 2021 to 12,001 kilotons in 2030.
The near-term market is also supportive. SCCO management estimated a slight copper deficit for 2026, while global warehouse inventories stood at 1.123 million tons on July 21, 2026, equal to approximately 15 days of global demand. Tight inventories give copper prices leverage when supply disruptions or demand acceleration occur.
The market is not risk-free. Aluminum substitution affects some power-grid applications, industrial demand can weaken during a manufacturing slowdown, and high copper prices can encourage scrap recovery and efficiency improvements. SCCO's 2Q26 results show the practical trade-off: revenue increased 40.6%, but copper volume declined 1.5% and production declined 3.5%.
Like what you're reading?
Get full access to AI-powered research reports, market analysis, and portfolio tools.
SCCO operates as a commodity producer, so its customer base is tied to industrial demand rather than a consumer brand. Copper cathodes, concentrates, rod, molybdenum, silver, zinc, and sulfuric acid serve fabricators, smelters, industrial manufacturers, utilities, construction companies, electronics producers, vehicle manufacturers, and infrastructure developers.
The demand mix is becoming more favorable for copper-intensive customers. The IEA projects electricity-grid copper demand to rise from 5 million tons in 2020 to 7.5 million tons by 2040 in its stated-policies scenario. Gartner also forecasts data-center electricity consumption of 565 TWh in 2026, up 26% from 2025. More grid capacity and data-center power infrastructure increase the importance of copper conductors, cabling, transformers, and related equipment.
SCCO's product mix gives it more than a single-customer exposure. Copper accounted for 74.8% of 2025 revenue, while molybdenum, silver, zinc, and other products supplied the remaining 25.2%. That mix does not eliminate commodity risk, but it gives the company several revenue streams tied to different industrial uses and price cycles.
SCCO competes with Freeport-McMoRan, Codelco, BHP, Rio Tinto, Glencore, Anglo American, Teck Resources, First Quantum Minerals, and Ivanhoe Mines. Freeport reported approximately 5% of global mined copper production in 2025, while Codelco produced 1.334 million metric tons of its own copper. SCCO reported 954,270 tons of copper production in 2025.
Relative to diversified miners such as BHP, Rio Tinto, and Glencore, SCCO offers more direct exposure to copper and its by-products. That creates greater upside leverage when copper prices rise, but fewer earnings offsets when copper prices fall. Codelco has greater production scale, while Freeport has a broader global footprint. SCCO's distinction is its combination of large reserves, Latin American operating depth, and integrated processing.
SCCO's cost position remains the main competitive defense. The 2Q26 operating cash cost after by-product credits was $0.05 per pound, and the company reported a 61.2% operating margin in its core valuation data. Those figures give SCCO more room than a high-cost producer when copper prices weaken, although the unusually strong by-product credits also contributed materially to the quarter.
Copper prices and policy in Peru and Mexico are the two major external variables for SCCO. The 2Q26 average LME copper price of $6.04 per pound was 40% above the comparable 2025 average. That price strength lifted 2Q26 net income to $1.67B, up 71.6%, but it also raises the risk that the stock price has capitalized a favorable part of the commodity cycle.
Peru presents both opportunity and execution risk. The incoming administration identified security and action against illegal mining as priorities, which management said could support Los Chancas and the broader mining industry. At the same time, illegal miners remained in the Los Chancas project area as of June 30, 2026, and Tía María requires continued local engagement despite reaching 42% completion.
Mexico provides a more developed operating base through Buenavista, La Caridad, IMMSA, and related processing assets. El Pilar has renewed its water license, with construction scheduled for the first quarter of 2027 and production targeted for the second half of 2029. The geographic concentration in two countries still exposes SCCO to tax, labor, permitting, water, and social-license changes.
Quarterly debt stood at $7.99B, and the report says that leverage is manageable but still a meaningful constraint for a cyclical miner.
Unlock the full analysis
Premium members get the complete breakdown — pick rationale, financial metrics, and recent earnings detail.
Get Full Access →2Q26 revenue hit a quarterly record of $4.29B while adjusted EBITDA jumped 59.5% year over year to $2.86B.
Unlock the full analysis
Premium members get the complete breakdown — pick rationale, financial metrics, and recent earnings detail.
Get Full Access →Management expects copper production to rise from 917,000 tons in 2026 toward 1.06 million tons in 2029, with bigger gains later in the decade.
Unlock the full analysis
Premium members get the complete breakdown — pick rationale, financial metrics, and recent earnings detail.
Get Full Access →At $213.75, SCCO trades at 29.8x trailing earnings, 38.8x forward earnings, and 5.4x PEG, leaving limited room for error.
Unlock the full analysis
Premium members get the complete breakdown — pick rationale, financial metrics, and recent earnings detail.
Get Full Access →The report’s fair value estimate is $185, below the $213.75 share price and under the $169.06 consensus target cited in the analysis.
Unlock the full analysis
Premium members get the complete breakdown — pick rationale, financial metrics, and recent earnings detail.
Get Full Access →Southern Copper is a high-quality copper operator trading like the market already knows the next favorable chapter. The company has the assets to support that confidence: 108.955 billion pounds of contained copper reserves, integrated Mexican and Peruvian infrastructure, record 2Q26 EBITDA of $2.86B, and a project path toward more than 1 million tons of annual copper production by 2029.
The investment risk is less about business quality than entry price and execution. A 3.5% production decline in 2Q26, lower ore grades in Peru, illegal mining at Los Chancas, $7.99B of quarterly debt, and a $20.5B-plus capital program all matter. The analyst consensus target of $169.06 reinforces the message that strong results do not automatically make the stock inexpensive.
The balanced conclusion is Hold, with $185 as the report's fair-value estimate. SCCO becomes more compelling near the Buy level of $165, while prices materially above $215 would demand stronger evidence that production growth, copper-market tightness, and capital execution can sustain the premium.
Get AI-powered research reports, daily market intelligence, and a personal analyst in your pocket.
Get Full Access →Not ready to subscribe? ·
Cancel anytime
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.
Southern Copper Corporation (SCCO) rises sharply as copper prices strengthen and the mining sector gains momentum. The stock is near its 52-week high after record quarterly earnings, but thin relative volume and a premium valuation suggest investors should stay selective.
Southern Copper posted record 2025 results and a strong 1Q26, but the stock already discounts a lot of copper-cycle strength. The report rates SCCO a Hold as excellent operations meet a demanding valuation.