Image: Grupo Mexico
Last year the company, controlled by diversified resource and infrastructure giant Grupo Mexico, produced 906,000 tonnes of the red metal but according to company CFO Raul Jacob that could grow to 1.5 million tonnes on the back of a more than $5.6 billion capital spending program.
Southern Copper, worth some $30 billion on the NYSE after a 20% jump in the share price year to date, has already spent some $1 billion expanding its flagship Buenavista copper-molybdenum-zinc-silver mine in Mexico and most of the outlay will occur before the end of the decade.
Projects include the massive El Arco property in Baja California which has the potential to become a 190kt copper and 105kt gold mine, and two other projects in the country called El Pilar and Pilares. In Peru, the $1.2 billion Toquepala concentrator expansion will add 100kt per year by mid-2018 while additional Cuajone expansions is planned for after 2020.
The brownfield 120kt Tia Maria project which has run into fierce community opposition requires $1.4 billion in capex while the Los Chancas projects in Peru is a $1.8 billion undertaking that could produce 100kt per year. The company is also spending more than $1 billion on a copper smelter and refinery in Mexico.
Southern Copper claims the world’s largest copper reserves pegged at just over 70 million tonnes (Chilean state-owned Codelco is second at 57 million tonnes and US-based Freeport McMoRan a distant third). Cash costs for the company are a mouth-watering $1.49 a pound copper and less than $1 taking into account byproducts. Copper was last trading at $2.65 a pound in New York.
