UBS Upgrades Southern Copper, Which Mines Copper in Mexico and Peru
The company, primarily owned by Grupo Mexico, reported record sales and profits for the second quarter in a row
UBS has upgraded Southern Copper, with the average growth potential of its shares in the valuation list estimated at 1%. The broker maintains a positive outlook on copper and believes that at the current price, the company's risks and potential returns are roughly balanced.
Southern Copper, primarily owned by Grupo Mexico, reported record sales and profits for the second quarter in a row. The growth was driven by higher metal prices: revenue increased by 39.1%, while copper production volume decreased by 0.4% due to lower ore grades at Peruvian mines.
After accounting for income from the sale of silver, molybdenum, and zinc, the production cost per pound of copper amounted to $0.09. Therefore, according to UBS, further business expansion should primarily occur through increased production.
The Tia Maria and El Pilar projects are expected to add 156,000 tons of annual production by 2029. The company is also considering expanding the concentrator plant at the Cuajone mine in Peru. The implementation of these projects will take several years and depends on obtaining local permits.
