[SCCO] Southern Copper: Q3 2026 earnings preview, can copper prices offset Peru output declines?

Southern Copper is an integrated copper producer that mines, smelts and refines copper in Peru and Mexico and also produces molybdenum, silver and zinc[1]. According to the Drillr earnings calendar, the company will hold its earnings call on 2026-10-27 to report the third quarter of 2026, ending September 30, 2026[2]. In the latest disclosed quarter, the second quarter of 2026, revenue rose 40.6% year over year to $4.289 billion, operating income rose 65.3% to $2.623 billion, and net income attributable to the company reached $1.670 billion, or $2.01 per share, with an adjusted EBITDA margin of 66.6%[3]; over the same period, copper mine production fell 3.5% to 508.5 million pounds[4]. Analyst estimates compiled by Drillr put third-quarter consensus at $1.87 in earnings per share (five analysts, range $1.72-$2.02), $4.240 billion in revenue (three analysts, range $4.084-$4.395 billion) and $2.773 billion in EBITDA[5], while the earnings-calendar fields show $1.873 per share and $4.310 billion in revenue[2]. The company gives only full-year operating guidance: on July 22, management set 2026 copper production guidance at 917,000 tons, 1% above the initial plan, with 27,900 tons of molybdenum, 24 million ounces of silver and 163,900 tons of zinc[6].

Three things matter most in this Southern Copper earnings report. The first is output at the two older Peruvian mines: Toquepala and Cuajone produced a combined 204.0 million pounds in the second quarter, 5.0 million pounds less than the first quarter's 209.0 million and well below the 231.8 million of a year earlier[4][7], so the third-quarter mine-by-mine data will show whether the grade decline is stabilizing or continuing, and whether the 917,000-ton full-year guidance holds. The second is unit cash cost: cash cost before by-product credits was $2.29 per pound in the second quarter, up 8.3% year over year, while by-product revenue pushed net cash cost down to $0.05 per pound[8], even as the silver price fell from a first-quarter average of $83.33 per ounce to $73.49 in the second quarter[9][10]; the third quarter will show how much of the cost advantage comes from operations and how much from prices. The third is copper price pass-through and where the cash goes: at the end of June, 188.7 million pounds of copper were provisionally priced at $6.07 per pound[11], so the quarter-end remeasurement can amplify or offset weaker volumes; meanwhile Tía María has reached 42% completion[12], and whether operating cash flow can keep covering both project spending and the $1.10-per-share quarterly cash dividend once capital spending accelerates[13] will shape cash allocation over the next two years.

Company Background and Business Structure

Southern Copper is a long-established copper company under the firm control of Grupo México. The company was incorporated in Delaware in 1952, has mined copper since 1960, and has been listed in both New York and Lima since 1996[1]. At the end of 2025, Grupo México indirectly owned 88.9% of the company through Americas Mining Corporation, which lets it decide nearly every matter put to a shareholder vote, including dividends, the amount of debt and the approval of capital projects[14].

All of the company's production assets are in Peru and Mexico, while most of its products are sold to customers abroad. The company operates five open-pit copper mines, three underground poly-metallic mines, two smelters and nine refineries in the two countries, and it exports most of its output to the United States, Europe, Asia and South America[15]. By customer location, 2025 revenue of $13.420 billion included $3.252 billion from Mexico, $1.867 billion from the United States, $1.853 billion from Switzerland, $1.277 billion from China and $985 million from Japan[15], so customers are geographically diverse even though production is concentrated entirely in two countries.

The company reports three segments, with the Mexican open-pit operations as the largest source of profit and Peru second. In 2025, the Mexican open-pit segment (Buenavista and La Caridad) had external sales of $7.574 billion and operating income of $4.275 billion; the Peruvian operations (Toquepala, Cuajone, and the Ilo smelter and refinery) had external sales of $5.248 billion and operating income of $2.601 billion; and the Mexican underground IMMSA unit (five poly-metallic underground mines and a zinc refinery) had external sales of $598 million and operating income of $162 million[16]. All three segments are consolidated, owned operating assets, and the annual report does not place any material profit in equity-method investments.

The business chain runs from the mine all the way to copper cathodes and rod, and by-products arise along the way. Ore from the open pits is milled and floated into copper and molybdenum concentrates, or leached and processed through solvent extraction-electrowinning (SX-EW) directly into cathodes; concentrates are smelted into anodes at the company's own smelters and refined into cathodes, some of which become rod, while silver and gold are recovered from anode slimes and smelter gases are turned into sulfuric acid for sale[1]. Some copper and molybdenum contracts settle on the average price of a month after shipment, so the company first books revenue at a provisional price and then adjusts it each month to LME or COMEX forward prices until final settlement[17]. In the second quarter of 2026, copper made up 72.7% of revenue ($3.117 billion), molybdenum 11.1% ($476 million), silver 8.8% ($376 million) and zinc 3.5% ($152 million)[18].

Financial History and Current Position

The annual reports show that Southern Copper's revenue and profit have climbed with metal prices over the past three years. Revenue grew from $9.896 billion in 2023 to $11.433 billion in 2024 and a record $13.420 billion in 2025, a 17.4% increase that included $197.8 million of upward provisional-pricing adjustments[19]. Operating income over the same years was $4.192 billion, $5.555 billion and $7.002 billion, and net income attributable to the company was $2.425 billion, $3.377 billion and $4.335 billion[19][16]. The 2025 growth came from prices rather than copper volume: copper mine production fell 1.8% to 2,108.2 million pounds[20], cash cost was $2.17 per pound before by-product credits and $0.58 after[21], and capital investment for the year was $1.325 billion[16].

The first two quarters of 2026 extended the pattern of prices lifting profit, with profit growing clearly faster than revenue. In the first quarter, revenue was $4.251 billion, operating income $2.480 billion and net income attributable to the company $1.582 billion[3], with operating cash flow of $1.695 billion, capital expenditures of $442 million and cash dividends of $819 million[22]. In the second quarter, revenue rose 40.6% to $4.289 billion, operating income rose 65.3% to $2.623 billion, net income attributable to the company rose 71.6% to $1.670 billion, and adjusted EBITDA was $2.856 billion[3]; operating cash flow was $1.989 billion, capital expenditures $423 million and cash dividends $826 million[23].

First-half cash flow was more than enough to cover capital spending and dividends, yet the company still added long-term debt in June. In the first half of 2026, operating cash flow rose 117% year over year to $3.683 billion, against capital expenditures of $865 million and cash dividends of $1.645 billion[23]. In June the company issued $1.25 billion of 5.35% unsecured notes due 2036, with proceeds earmarked for Tía María, Peruvian capital expenditure and general corporate purposes[13]. At June 30, cash and cash equivalents stood at $5.665 billion and long-term debt at $7.994 billion[23].

Operating Model

Revenue equals the sales volume of each metal times its realized price, plus provisional-pricing adjustments, and copper volume depends on ore processed, ore grade and recovery. Second-quarter copper revenue was $3.117 billion, while molybdenum, silver, zinc and other products (gold, sulfuric acid, lead and others) together brought in about $1.172 billion[18]; copper sales were 486.6 million pounds, below mine production of 508.5 million pounds[10][4]. Prices are set on monthly LME averages (mainly Peru) or COMEX averages (mainly Mexico), and provisionally priced copper still unsettled at quarter end is remeasured at forward prices, so copper price changes enter revenue in the same quarter and unsettled volumes keep adjusting over the following three to six months[17][11]. Ore grade is set by mine geology and mining sequence, which the company cannot change in the short run, and a lower grade reduces copper and molybdenum output in the same quarter.

Operating income equals revenue minus cost of sales, depreciation, amortization and depletion, selling and administrative expenses and exploration, and because costs do not move with metal prices, nearly all of a price change flows into profit. In 2025, cost of sales excluding depreciation was $5.359 billion, depreciation, amortization and depletion $868 million, selling and administrative expenses $138 million and exploration $53 million, leaving operating income of $7.002 billion and an operating margin of about 52%[16]. Costs consist mainly of fuel and power, operating materials, maintenance parts, labor and statutory workers' profit sharing, and they follow the amount of material mined and processed; that is why operating costs rose only 13.8% when second-quarter revenue grew 40.6%[24]. The industry's standard unit cash cost is sensitive to volume and input prices: lower output spreads semi-fixed costs over fewer pounds, while higher fuel and materials prices raise unit cost directly. The Peruvian royalty and special mining tax are booked in income tax and rise with profit, reaching $156 million in the first half[25].

Operating cash flow roughly equals net income plus depreciation minus changes in working capital, and its use is set by capital spending and by dividends that the controlling shareholder directs. Second-quarter depreciation, amortization and depletion was $226 million, and receivables move with the copper price and provisional pricing, rising together with revenue when copper rises and turning into cash on settlement[23]. The 2026 capital plan is $1.9255 billion[26]; with $865 million used in the first half, about $1.061 billion remains for the second half, or roughly $530 million a quarter[23]. The lag between project spending and output is long: Tía María's civil works and equipment spending fall in 2026-2027, while new output appears only after start-up in the second half of 2027, and management anticipates copper production rising to about 970,000 tons in 2028 as the project ramps up[6].

Industry and Competitive Position

Southern Copper's competitive advantages are scale, integrated smelting and refining, and a high share of by-products. The company describes itself as one of the world's largest integrated copper producers and believes it holds the world's largest copper reserves, a scale that makes it one of the largest mining companies in Peru and Mexico[1]. By-product revenue from molybdenum, silver and zinc keeps its cash cost after by-product credits low: $0.58 per pound in 2025[21], falling to $0.05 per pound in the second quarter of 2026[8]. These comparisons, however, rest on the company's own statements and cost definitions; the cited material includes no peer cost or reserve data on the same basis, so a "low-cost position in the industry" should be read as the company's self-description.

The company's growth depends entirely on its own projects, which makes the medium-term production path clear but concentrated in the execution of a few projects. Management anticipates 2027 copper production roughly flat with 2026, a rise to about 970,000 tons in 2028 as Tía María ramps up, and more than 1 million tons (1,060,000 tons) in 2029, driven by Tía María, recovering ore grades at the existing Peruvian mines and the El Pilar project in Mexico[6]. The company says investment in Peruvian projects under construction or in engineering could exceed $10.3 billion over the next decade[26]; at Los Chancas, illegal miners in the project area continue to slow progress[27].

Core Debates

With ore grades still falling at its two Peruvian mines, can third-quarter output keep the 917,000-ton full-year guidance intact?

The two older Peruvian mines set the company's production floor until Tía María starts up, and they also set unit costs. The Peruvian business contributes about 37%-39% of revenue, with external sales of $5.248 billion in 2025, or 39.1%[16]; yet in the first half of 2026 output fell 11.5% at Toquepala and 9.9% at Cuajone, and company-wide copper mine production fell 3.8% year over year to 1,016.8 million pounds[4]. Higher copper prices masked the decline: second-quarter revenue grew 40.6% even as copper sales volume fell 1.5%[24]. The 917,000-ton full-year guidance requires output of about 502 million pounds in each second-half quarter[6].

The evidence for a bottom is thin, and the key is to separate consolidated output from Peruvian output. On the supportive side, company-wide output of 508.5 million pounds in the second quarter matched the first quarter's 508.3 million, the two Mexican mines produced a combined 298.7 million pounds, up 4.9 million sequentially[4][7], and the company raised its full-year guidance in the second quarter[6]. The opposing reading is that the two Peruvian mines produced another 5.0 million pounds less than in the first quarter, Toquepala fell 14.7% year over year, and lower ore milled added to the lower grades[4]; on the call, management said the decline was "entirely driven by lower ore grades," with about 40,000 tons less output across the Peruvian operations, but gave no second-half grade path[28]. The financial transmission is that lower grades yield less copper and molybdenum from the same ore processed, Peruvian copper sales fell 6.5% year over year in the second quarter[29], and Peruvian segment revenue and profit therefore lag the copper price; better SX-EW output and recoveries in Mexico can only partly offset this.

What remains unresolved is whether the Peruvian decline is a temporary mining-sequence issue or a structural problem that will ease only when grades recover around 2029. In the third quarter, watch Toquepala and Cuajone in the 10-Q mine-by-mine production table and how the company explains the change (grades, ore milled or maintenance), whether full-year guidance holds, and whether Peruvian copper sales and revenue growth lag the LME average materially. If the two Peruvian mines fall below 195 million pounds, company-wide output falls below 490 million pounds, or the company cuts full-year guidance, grades are falling faster than management expected; if Peru returns above 209 million pounds, the second-quarter decline more likely marked a temporary low caused by mining sequence. Meeting the consolidated target does not by itself prove Peru has stabilized, and if Peru keeps falling while Mexico fills the gap, the problem is more likely structural.

With lower output and higher fuel and materials costs pushing unit costs up, can by-product revenue keep net cash cost near zero?

A large part of Southern Copper's cost advantage comes from by-products rather than from the copper mines themselves. In 2025, by-product revenue offset $1.59 per pound, bringing a $2.17-per-pound cash cost down to $0.58[21]; in the second quarter of 2026 the silver price rose 118.6% year over year and net cash cost fell to $0.05 per pound[10][8]. But unit cost before by-product credits has risen from $2.17 per pound in 2025 to $2.29 in the second quarter, while molybdenum, silver and zinc sales volumes fell 13.1%, 8.7% and 8.8% year over year[24]. If precious metal and molybdenum prices fall back, the change on the cost side will show up directly in margins.

Whether costs are under control depends on whether one compares sequentially or year over year. On the supportive side, second-quarter unit cost before by-product credits of $2.29 per pound was slightly below the first quarter's $2.31[9], consolidated cost of sales fell from about $1.499 billion in the first quarter to $1.390 billion in the second[3], and lower treatment and refining charges (TC/RC) continued to provide an offset[8]. The opposing reading is that unit cost rose 8.3% year over year, with the company attributing 4.7 percentage points to production costs such as fuel and operating materials and another 3.4 points to lower output[8]; maintenance-parts spending was high in the first quarter, so the sequential decline may reflect only maintenance timing. The by-product credit has already fallen from $2.41 per pound in the first quarter to $2.24 in the second, consistent with silver falling from $83.33 to $73.49[9][10], which shows the improvement in net cash cost came mainly from prices rather than operations. The transmission path is that lower copper output spreads semi-fixed costs over fewer pounds, higher fuel, materials and workers' profit sharing raise unit cost before credits and cost of sales, and the prices and volumes of molybdenum, silver and zinc then set net cash cost through the by-product credit.

What remains unresolved is whether lower TC/RC can keep offsetting input inflation, and how much of the cost advantage falling by-product volumes will erode. In the third quarter, watch unit cost before credits in the 10-Q cash-cost table and the company's breakdown into volume effect, production costs and TC/RC, how the per-pound by-product credit tracks quarterly silver and molybdenum prices, and the changes in fuel, operating materials and workers' profit sharing in the cost-of-sales bridge. If unit cost before credits reaches $2.40 per pound or more and is attributed to input prices, cost inflation is not being offset by lower TC/RC; if net cash cost returns to $0.30 per pound or more while silver and molybdenum prices have not dropped sharply, falling by-product volumes are eroding the cost advantage.

With copper prices high, can third-quarter revenue meet consensus, and will the quarter-end provisional-pricing remeasurement amplify or offset lower volumes?

Southern Copper barely hedges copper, and its costs do not move with the copper price, so copper price changes flow almost entirely into profit. Second-quarter revenue rose 40.6% year over year while operating costs rose only 13.8% and operating income rose 65.3%[24][3]. Some contracts settle on the average price of a month after shipment, and at the end of June 188.7 million pounds of copper were provisionally priced at $6.07 per pound, settling from July through December 2026[11]; forward prices at the end of the third quarter will remeasure this revenue, which makes quarterly revenue more sensitive than the quarterly average price alone.

Second-quarter data show that prices fully covered the volume decline, while outside expectations for the third quarter imply modest price moves and continued soft volumes. Second-quarter copper sales fell 1.5% to 486.6 million pounds while the LME average rose 39.8% to $6.04 per pound[10], and copper revenue still reached $3.117 billion[18]. Drillr's compiled third-quarter consensus of about $4.240 billion in revenue and about $1.87 in earnings per share is roughly flat with, or slightly below, the second quarter's $4.289 billion and $2.01[5][3]; the earnings-calendar fields show a revenue estimate of $4.310 billion[2]. The alternative is that if third-quarter copper prices are clearly above the second quarter's and volumes do not fall further, revenue and profit would exceed these estimates; conversely, if shipments slip, a positive provisional-pricing remeasurement could be cancelled out by the volume shortfall. The transmission path runs from monthly LME/COMEX averages to the realized price of the quarter's shipments, and from the gap between quarter-end forward prices and provisional prices to the remeasurement of unsettled copper; because costs do not move with copper, nearly all of any price change reaches operating income.

What remains unresolved is whether any gap between third-quarter revenue and expectations will come from price or from volume. In the third quarter, watch the quarterly LME/COMEX averages, copper sales volume and revenue bridge in the 10-Q, the volume and provisional price of unsettled copper at September 30 (compared with 188.7 million pounds at $6.07 at the end of June), and the source of any gap between earnings per share and the roughly $1.87 consensus. If copper prices are above the second quarter's but copper revenue is below $3.117 billion, volumes or realized prices have a problem; if copper sales fall below 470 million pounds, lower output has begun to weigh visibly on revenue.

Can Tía María keep advancing by close to ten percentage points a quarter, and can cash flow still support the higher dividend once capital spending accelerates?

Tía María is the company's only clearly defined source of added output before 2029, and its progress is tied directly to cash allocation. The greenfield project in Arequipa, Peru, is designed to produce 120,000 tonnes of SX-EW copper cathodes a year on a $1.805 billion budget[26]; management anticipates 2027 output flat with 2026 and a rise to about 970,000 tons in 2028 as the project ramps up[6]. Meanwhile, the 2026 capital plan of $1.9255 billion is about 45% above 2025's $1.325 billion[26][16]; Grupo México holds 88.9%[14], and the company raised the third-quarter cash dividend to $1.10 per share plus a stock dividend of 0.012 shares, after issuing $1.25 billion of 10-year notes in June[13].

Project progress data support the view that Tía María is on schedule, but the ample cash comes mainly from copper prices rather than from the project itself. Completion rose from 24% at the end of 2025 to 32.5% at the end of March and 42% at the end of June[26][30][12]; mass earthworks are 71% complete, most major equipment has been ordered, and jobs created rose from 4,207 to 5,817[27][30]. First-half operating cash flow of $3.683 billion far exceeded the combined $865 million of capital spending and $1.645 billion of cash dividends[23]. The opposing reading is that orders for major components including the desalination plant were still being finalized in the second quarter, and the start-up wording shifted from "the third quarter of 2027" in the first-quarter 10-Q to "the second half of 2027" on the call[30][27]; first-half capital spending used only 45% of the annual plan, requiring about $530 million a quarter in the second half. The transmission path is that progress on earthworks, civil works and equipment orders drives completion and capital spending higher and increases investing cash outflows; what remains of operating cash flow after capital spending and cash dividends determines cash and new debt; and only an on-time start-up in the second half of 2027 lets 2028 output reach about 970,000 tons.

What remains unresolved is whether dividends and the project would compete for the same cash if copper prices fall once second-half capital spending accelerates. In the third quarter, watch Tía María's completion, job count and equipment procurement in the 10-Q (especially the desalination plant), quarterly capital spending and Peruvian segment capital investment ($246.9 million in the second quarter[31]), changes in operating cash flow, cash dividends and period-end cash and short-term investments, and the Los Chancas illegal-mining problem and policy statements from Peru's new government. If completion is below 48%, equipment deliveries slip or start-up moves later, 2028 production growth will be delayed; if third-quarter capital spending is below $400 million while progress also slows, the annual plan will not be fully used, which would not signal "greater efficiency."

Risks and Falsifiers

Control of cash allocation by the majority shareholder is a structural risk that minority shareholders cannot influence. Grupo México indirectly owns 88.9% and decides the board, dividends, debt and capital project approvals[14]; in 2026 the company has raised its cash dividend ($1.00 per share in the second quarter, with $1.10 plus a stock dividend declared for the third quarter) while also issuing new debt[13]. Cash and debt are exposed: first-half cash dividends paid of $1.6454 billion exceeded capital spending of $864.7 million, and long-term debt stood at $7.9944 billion at the end of June[23]. If operating cash flow still covers both capital spending and dividends without more borrowing when copper prices fall or capital spending rises, this concern weakens.

Policy and taxes in Peru and Mexico directly affect net income, and all of the company's mines, smelters and refineries are in those two countries. The Peruvian royalty and special mining tax accrued in the first half rose 86% to $156 million from $84 million a year earlier, rising with profit[25]; second-quarter income tax including royalties was $945.3 million[3]. The company is in talks with Mexico's current administration to continue rolling out a $10.2 billion investment program[12], and the direction of Peru's new government will become clearer only after the July 28 presidential inauguration[32]. If the third-quarter effective tax rate is broadly in line with the first half and neither country introduces new mining-specific taxes or permit restrictions, this risk has not materialized.

Continued grade decline in Peru would weigh on both 2026-2027 output and unit cost, because Toquepala and Cuajone have no replacement volume before Tía María starts up. Peruvian segment profit is exposed: Peruvian operating income was $2.601 billion in 2025, about 37% of the segment total[16], and Peruvian copper sales were 13.7 million pounds lower year over year in the second quarter[29]. Management already anticipates 2027 output roughly flat with 2026[6]. If third-quarter output at the two Peruvian mines returns above 209 million pounds and the company states that grades have stabilized, this assessment would need revising.

A simultaneous drop in by-product prices and volumes would push net cash cost up quickly. In the second quarter, molybdenum, silver and zinc sales volumes fell 13.1%, 8.7% and 8.8% year over year[24], the three together generated $1.004 billion in sales, about 23% of revenue[18], and the by-product credit was $2.24 per pound[8]. The improvement in net cash cost relies almost entirely on prices, so if silver keeps retreating from its highs, this credit will shrink. If the third-quarter by-product credit stays at or above $2.24 per pound and the year-over-year declines in molybdenum and silver volumes narrow, this risk has not materialized.

Lower copper prices would hit profit directly and would reach current-quarter revenue early through provisional pricing. The company barely hedges copper, and costs do not fall with prices; copper was 72.7% of second-quarter revenue[18], and 188.7 million pounds of copper were provisionally priced at $6.07 per pound at the end of June[11], so revenue on that volume would be marked down if quarter-end forward prices fall below the provisional price. If the third-quarter LME average is no lower than the second quarter's $6.04 per pound[10] and the September-end provisional price is above $6.07, this risk has not materialized.

A Tía María delay would push back both 2028 production growth and the recovery of upfront spending. Orders for key equipment including the desalination plant are still being finalized[27], and community and political conditions in Peru have long been the reason the project stalled. The exposure is the $1.805 billion project budget and 120,000 tonnes of annual design capacity[26], equal to about 13% of 2026 guided output[6]. If third-quarter completion is at least 50%, all major equipment orders are placed, and start-up stays in the second half of 2027, this risk weakens.

What to Watch Next

• Peruvian grades and output: Toquepala plus Cuajone output was 204.0 million pounds and company-wide output 508.5 million pounds in the second quarter of 2026. Watch mine-level output, the stated causes and whether 917,000-ton guidance holds. Peru below 195 million, the company below 490 million or a guidance cut would signal a worsening grade problem; Peru back above 209 million would point to a temporary low.
• Unit cash cost: second-quarter cost before credits, by-product credit and net cash cost were $2.29, $2.24 and $0.05 per pound. Watch the cost breakdown and how the credit tracks silver and molybdenum prices. Cost before credits at $2.40 or more driven by inputs, or net cash cost back at $0.30 or more without a sharp price drop, would signal an eroding cost advantage.
• Copper price pass-through: second-quarter copper sales were 486.6 million pounds, 188.7 million pounds were provisionally priced at $6.07 at the end of June, and revenue was $4.289 billion. Watch quarterly average prices, the volume and revenue bridge, and the September-end provisional price. Copper prices above the second quarter's with copper revenue below $3.117 billion, or copper sales below 470 million pounds, would show lower output starting to weigh on revenue.
• Tía María and cash: completion was 42% at the end of June, second-quarter capital spending $422.8 million and operating cash flow $1.9885 billion. Watch equipment procurement (the desalination plant), Peruvian capital investment and cash after dividends. Completion below 48% or a later start-up would delay 2028 growth; capital spending below $400 million with slower progress would mean the annual plan goes underused.

Conclusion

Southern Copper's profit is driven by the copper price while its output is shrinking, and the central relationship now is whether high prices can keep masking the Peruvian grade decline and rising costs. In the second quarter of 2026, revenue was $4.289 billion, operating income $2.623 billion and the adjusted EBITDA margin 66.6%[3], yet copper mine production fell 3.5% year over year and the two Peruvian mines produced only 204.0 million pounds[4]. Unit cost before by-product credits rose to $2.29 per pound, and net cash cost stayed at $0.05 mainly because of silver and molybdenum prices[8]. At the same time, first-half operating cash flow of $3.683 billion paid for both $865 million of capital spending and $1.645 billion of cash dividends[23], and Tía María spending will accelerate markedly in the second half.

Two outside analyses published after the latest results emphasize different sides, and both connect to the core debates. In an August 21 article, Sreeja Deb of Zacks Investment Research argued that margin expansion is not over: first-half adjusted EBITDA rose 57.5% year over year to $5.57 billion and the margin widened from 57.3% to 65.2%, which the author attributed to higher metal prices and the company's ongoing cost control, while noting that even after the small guidance increase, full-year copper output still implies a decline of about 5%[33]. In an August 28 article, Simply Wall St put more weight on risk: it attributed the 3.8% first-half decline in copper output to weaker Peruvian mines and lower grades and argued that the key risk is funding more than $15 billion of long-term projects such as Tía María while still supporting shareholder returns, a pressure that grows if low grades persist; the article also noted the company's plan to lift copper output to about 1.6 million tons by around 2033-2034[34]. Both acknowledge the output decline, but Zacks credits part of the margin expansion to cost control, which does not fully fit the 8.3% year-over-year rise in unit cost before credits shown in the 10-Q and sits closer to a price-driven explanation[8]; Simply Wall St focuses on the tension between Tía María funding and dividends, which maps directly onto the fourth debate. Both articles are outside interpretations, not facts, and they do not amount to a majority view.

What would materially change the current understanding is a combination of operating and financial data rather than any single metric. If third-quarter output at the two Peruvian mines returns above 209 million pounds, unit cost before credits falls back below $2.29 per pound, Tía María passes 50% completion, and operating cash flow keeps covering both capital spending and dividends, the view that the grade decline is temporary, costs are manageable and the project and dividend can coexist would strengthen. Conversely, if the Peruvian mines drop below 195 million pounds or full-year guidance is cut, net cash cost returns to $0.30 per pound or more without a sharp fall in silver and molybdenum prices, and capital spending accelerates while the company keeps relying on new debt to sustain the dividend, current profits would look more like a temporary result of prices, and the pressures from Peruvian output declines and project funding would surface sooner.

Sources

[1] SCCO 10-K filed 2026-02-27 · business overview · 2026-02-27 · 10-K · https://www.sec.gov/Archives/edgar/data/1001838/000110465926021492/

[2] Drillr earnings calendar (updated 2026-09-26) · SCCO 2026-10-27 call · 2026-09-26 · Drillr earnings calendar · https://gateway.drillr.ai/mcp/private

[3] SCCO 8-K filed 2026-07-22 · Q2 2026 results summary · 2026-07-22 · 8-K · https://www.sec.gov/cgi-bin/browse-edgar?action=getcompany&CIK=0001001838&type=8-K&dateb=20260722

[4] SCCO 10-Q filed 2026-07-31 · Q2 2026 mine production · 2026-07-31 · 10-Q · https://www.sec.gov/Archives/edgar/data/0001001838/000110465926089169/scco-20260630x10q.htm

[5] Drillr analyst_financial_estimates (updated 2026-09-25) · SCCO 3Q26 consensus · 2026-09-25 · Drillr analyst_financial_estimates · https://gateway.drillr.ai/mcp/private

[6] SCCO Q2 2026 earnings call (2026-07-22) · 2026 production guidance · 2026-07-22 · earnings-call · https://gateway.drillr.ai/mcp/private

[7] SCCO 10-Q filed 2026-04-30 · Q1 2026 mine production · 2026-04-30 · 10-Q · https://www.sec.gov/Archives/edgar/data/1001838/000110465926052647/

[8] SCCO 10-Q filed 2026-07-31 · Q2 2026 operating cash cost · 2026-07-31 · 10-Q · https://www.sec.gov/Archives/edgar/data/0001001838/000110465926089169/scco-20260630x10q.htm

[9] SCCO 10-Q filed 2026-04-30 · Q1 2026 operating cash cost and prices · 2026-04-30 · 10-Q · https://www.sec.gov/Archives/edgar/data/1001838/000110465926052647/

[10] SCCO 10-Q filed 2026-07-31 · Q2 2026 average metal prices · 2026-07-31 · 10-Q · https://www.sec.gov/Archives/edgar/data/0001001838/000110465926089169/scco-20260630x10q.htm

[11] SCCO 10-Q filed 2026-07-31 · provisionally priced sales at June 30 2026 · 2026-07-31 · 10-Q · https://www.sec.gov/Archives/edgar/data/0001001838/000110465926089169/scco-20260630x10q.htm

[12] SCCO 10-Q filed 2026-07-31 · Tia Maria progress at June 30 2026 · 2026-07-31 · 10-Q · https://www.sec.gov/Archives/edgar/data/0001001838/000110465926089169/scco-20260630x10q.htm

[13] SCCO Q2 2026 earnings call (2026-07-22) · cash, notes and dividend · 2026-07-22 · earnings-call · https://gateway.drillr.ai/mcp/private

[14] SCCO 10-K filed 2026-02-27 · controlling stockholder · 2026-02-27 · 10-K · https://www.sec.gov/Archives/edgar/data/1001838/000110465926021492/

[15] SCCO 10-K filed 2026-02-27 · 2025 sales by customer location · 2026-02-27 · 10-K · https://www.sec.gov/Archives/edgar/data/1001838/000110465926021492/

[16] SCCO 10-K filed 2026-02-27 · FY2025 segment results · 2026-02-27 · 10-K · https://www.sec.gov/Archives/edgar/data/1001838/000110465926021492/

[17] SCCO 10-K filed 2026-02-27 · revenue recognition and provisional pricing · 2026-02-27 · 10-K · https://www.sec.gov/Archives/edgar/data/1001838/000110465926021492/

[18] SCCO 10-Q filed 2026-07-31 · Q2 2026 sales by metal and segment · 2026-07-31 · 10-Q · https://www.sec.gov/Archives/edgar/data/0001001838/000110465926089169/scco-20260630x10q.htm

[19] SCCO 10-K filed 2026-02-27 · 2025 net sales and metal prices · 2026-02-27 · 10-K · https://www.sec.gov/Archives/edgar/data/1001838/000110465926021492/

[20] SCCO 10-K filed 2026-02-27 · 2025 mine production · 2026-02-27 · 10-K · https://www.sec.gov/Archives/edgar/data/1001838/000110465926021492/

[21] SCCO 10-K filed 2026-02-27 · 2025 operating cash cost · 2026-02-27 · 10-K · https://www.sec.gov/Archives/edgar/data/1001838/000110465926021492/

[22] SCCO 10-Q filed 2026-04-30 · Q1 2026 cash flows · 2026-04-30 · 10-Q · https://www.sec.gov/Archives/edgar/data/1001838/000110465926052647/

[23] SCCO 10-Q filed 2026-07-31 · Q2 2026 cash flows and debt · 2026-07-31 · 10-Q · https://www.sec.gov/Archives/edgar/data/0001001838/000110465926089169/scco-20260630x10q.htm

[24] SCCO 10-Q filed 2026-07-31 · Q2 2026 net sales drivers · 2026-07-31 · 10-Q · https://www.sec.gov/Archives/edgar/data/0001001838/000110465926089169/scco-20260630x10q.htm

[25] SCCO 10-Q filed 2026-07-31 · Peruvian royalty and special mining tax · 2026-07-31 · 10-Q · https://www.sec.gov/Archives/edgar/data/0001001838/000110465926089169/scco-20260630x10q.htm

[26] SCCO 10-K filed 2026-02-27 · 2026 capital plan and Tia Maria · 2026-02-27 · 10-K · https://www.sec.gov/Archives/edgar/data/1001838/000110465926021492/

[27] SCCO Q2 2026 earnings call (2026-07-22) · Tia Maria and El Pilar schedule · 2026-07-22 · earnings-call · https://gateway.drillr.ai/mcp/private

[28] SCCO Q2 2026 earnings call (2026-07-22) · Peruvian ore grades Q&A · 2026-07-22 · earnings-call · https://gateway.drillr.ai/mcp/private

[29] SCCO 10-Q filed 2026-07-31 · Q2 2026 copper sales volume by segment · 2026-07-31 · 10-Q · https://www.sec.gov/Archives/edgar/data/0001001838/000110465926089169/scco-20260630x10q.htm

[30] SCCO 10-Q filed 2026-04-30 · Tia Maria progress at March 31 2026 · 2026-04-30 · 10-Q · https://www.sec.gov/Archives/edgar/data/1001838/000110465926052647/

[31] SCCO 10-Q filed 2026-07-31 · Q2 2026 segment results · 2026-07-31 · 10-Q · https://www.sec.gov/Archives/edgar/data/0001001838/000110465926089169/scco-20260630x10q.htm

[32] SCCO Q2 2026 earnings call (2026-07-22) · Peru policy Q&A · 2026-07-22 · earnings-call · https://gateway.drillr.ai/mcp/private

[33] Zacks 2026-08-21 · Is Southern Copper Positioned for Further Upside in Adjusted EBITDA? · 2026-08-21 · Zacks Investment Research · https://finance.yahoo.com/markets/stocks/articles/southern-copper-positioned-further-upside-144200617.html

[34] Simply Wall St 2026-08-28 · Why Southern Copper (SCCO) Is Up 8.8% After Cutting 2026 Output But Lifting Long-Term Targets · 2026-08-28 · Simply Wall St · https://simplywall.st/stocks/us/materials/nyse-scco/southern-copper/news/why-southern-copper-scco-is-up-88-after-cutting-2026-output