Southern Copper Corporation reported record third-quarter 2026 results, with net sales, adjusted EBITDA and net income all reaching quarterly highs, but its shares fell after the release. According to Investing.com, which published a transcript of the company's earnings call on October 22, 2026, the stock dropped 6.78% to $184.64 from $198.07. Investing.com attributed the sell-off to investor concern over a delayed start for the Tía María project, the lack of detailed 2027 guidance and doubts about how long copper prices can keep supporting profits.
Third-quarter net sales rose 39% year on year to $4.7 billion, driven mainly by higher commodity prices rather than higher volumes, according to Raul Jacob, Vice President of Finance, Treasurer and CFO, speaking on the call. Earnings per share of $2.15 beat the consensus estimate of $1.96 cited by Investing.com. Adjusted EBITDA climbed 54% to a record $3.0 billion, with a margin of 65% compared with 59% a year earlier.
Net income rose 63% to a record $1.8 billion. Operating cash flow reached $2.2 billion in the quarter and $5.9 billion for the first nine months of 2026. Cash costs were a key driver of profitability.
Operating cash cost per pound of copper, net of by-product credits, was $0.09 in the third quarter, down from $0.52 a year earlier, as by-product revenue credits rose 31% to $1.2 billion. Before by-product credits, the operating cash cost was $2.46 per pound, which management said reflected higher production and administrative costs, partly offset by premiums and treatment and refining benefits. Copper output in the quarter was 232,396 tons, down 1% from a year earlier.
Jacob said production in Peru fell 6% because of lower ore grades and recovery rates at the Toquepala and Cuajone mines, while Mexican output rose 2.5%, mainly due to higher production at the Buenavista and Encina mines. Year-to-date copper production fell 2.9% to 693,602 tons. For full-year 2026, the company expects to produce 918,000 tons of copper, about 0.7% above its initial plan.
Molybdenum, the main by-product, averaged $32.93 per pound in the quarter, up from $24.30 a year earlier, and the company expects 2026 output of 29,000 tons, 12% above plan. Silver averaged $62.80 per ounce, compared with $39.56 in the third quarter of 2025. On the copper market, Jacob said the LME copper price averaged $6.41 per pound in the third quarter, a 44% increase from $4.24 a year earlier, while the COMEX price averaged $6.48 per pound, up 34%.
Total copper inventories across LME, COMEX, Shanghai and London warehouses stood at 1,105,000 tons as of October 9, 2026, which the company estimated could cover approximately 14 days of global demand. Management described the 2026 market balance as either a slight deficit or a slight surplus, a formulation that left the direction of the balance unclear. The main concern for investors was the Tía María project.
Management said operations are now expected to begin in the first half of 2028, later than the previous target of the fourth quarter of 2027, citing longer mechanical assembly times and engineering work. The project, designed to produce 120,000 tons of SX-EW copper cathodes per year in its early years, was 50% complete as of September, with $884 million invested and $1.1 billion committed as of September 30. Asked by Morningstar analyst Carlos De Alba whether the delay would raise capital spending, Jacob said no CapEx changes had been reported yet and that the company would address capital expenditure and 2027 production in its January call.
Management also outlined other projects. El Pilar, in Sonora, Mexico, is expected to produce 36,000 tons of copper cathodes per year, with a $551 million investment, construction starting in the first quarter of 2027 and production in the second half of 2029. Los Chancas in Peru, with an estimated capital cost of $2.6 billion, is targeted to produce 130,000 tons of copper annually from 2031, although about 200 illegal miners remain on the concession and must leave before the environmental and permitting work can accelerate.
Michiquillay in Peru, with an estimated $2.5 billion investment, is expected to produce 225,000 tons of copper per year from 2032. The company is also evaluating an expansion of the Cuajone operation from 90,000 to 120,000 tons per day of milling capacity, at an estimated capital cost of $680 million, with a decision expected in early 2027. Studies for a 150,000-ton-per-day option are also under way.
Jacob said the company's capital investment program for this decade exceeds $21 billion. On costs, Jacob said fourth-quarter 2026 cash costs before by-products should be in line with or slightly better than the third quarter, and that 2027 costs should be about where they are now or slightly better, with detailed 2027 guidance to follow in January. Analysts also asked about negative treatment and refining charges in China.
Jacob said these conditions make new smelter investment difficult, although strong sulfuric acid prices help support revenue. Southern Copper also raised its quarterly cash dividend to $1.30 per share and declared a stock dividend of 0.0126 shares per share, payable on November 19 to shareholders of record on November 3, 2026. Investing.com, citing InvestingPro data, reported a dividend yield of 2.22% and 31 consecutive years of dividend payments.
The same source said that InvestingPro's fair value analysis suggests the stock currently appears overvalued, which it linked to some investor caution. Source: Investing.com earnings call transcript, October 22, 2026; statements by Raul Jacob, CFO of Southern Copper Corporation; questions from analysts at Morningstar, Bradesco BBI, Goldman Sachs, UBS, CICC, Scotiabank, Wells Fargo and HSBC during the call.
Source: investing.com