Southern Copper's Silver Bullet: Record Quarter as Copper and Silver Surge
Copper price +40% YoY, silver +118% drive record sales and EBITDA; Tia Maria and El Pilar on track.
SCCO · Earnings Call · 2026-07-22
A Blowout Quarter on the Back of Copper and Silver
Southern Copper Corporation (SCCO) delivered a quarter for the ages. Management opened the Q2 2026 call with a bold statement:
Southern Copper delivered another exceptional quarter, registering record-breaking results in sales, adjusted EBITDA and net income.
The numbers back it up: sales hit $4.3 billion, a 41% increase year-over-year, while adjusted EBITDA soared 60% to $2.856 billion, and net income rose 72% to $1.67 billion. The company’s higher net sales were fueled by a 40% jump in the LME copper price to $6.04/lb, and a staggering 118% surge in silver prices to $73.49/oz. “The London Metal Exchange copper price increased 40% from an average of $4.32 per pound in the second quarter of 2025 to $6.04 this past quarter.” — Raul Jacob, Vice President, Finance, Treasurer and CFO · 2026-07-22 This is not just a copper story—by-products have become the margin engine. Silver prices alone contributed a 118% price increase, while molybdenum and zinc rose 43% and 31% respectively. As a result, operating cash cost per pound after by-product credits was a mere $0.05, down from $0.11 in Q1. The company’s net income margin expanded to 39%, and operating margin reached 58.3% per the latest fundamentals, a clear testament to operational excellence.
By-Products: The Hidden Multiplier
While copper remains king at 73% of sales, the by-product portfolio is delivering outsized returns. Silver now represents 9% of sales, molybdenum 11%, and zinc 4%. The silver price surge is particularly notable—a 118% year-over-year increase—and management highlighted that “Silver is currently our second by-product.” — Raul Jacob, Vice President, Finance, Treasurer and CFO · 2026-07-22 This dynamic has a direct impact on cash costs: “Southern Copper operating cash cost, including the benefit of by-product credits, was $0.05 per pound in the second quarter of 2026.” — Raul Jacob, Vice President, Finance, Treasurer and CFO · 2026-07-22 The sulfuric acid by-product also remains a contributor, with total by-product credits reaching $2.24 per pound. This diversification not only cushions copper price volatility but also makes SCCO one of the lowest-cost producers globally, a competitive moat that is increasingly valuable in a tightening copper market.
Tia Maria and El Pilar: Execution and Permits
The growth pipeline is advancing on multiple fronts. Tia Maria, the flagship Peruvian project, is now 42% complete with $693 million already invested. The company recently issued $1.25 billion in 10-year notes at 5.35% to fund the project, and management noted that “we are putting purchase orders and doing the proper contacts to different suppliers of the major parts of equipment, among them, the desal plant. For now, we don't expect a delay in the project.” — Raul Jacob, Vice President, Finance, Treasurer and CFO · 2026-07-22 This is a critical reassurance given the project’s 2027 startup target. Meanwhile, El Pilar in Mexico has cleared its final hurdle: the water license has been renewed, and construction will begin in September 2026. As management stated, “We already have the license -- the water license renewed. So we're ready to go, and that's why we are reporting it, beginning initial works of construction in September.” — Raul Jacob, Vice President, Finance, Treasurer and CFO · 2026-07-22 With a $551 million investment and 36,000 tons of annual cathode capacity, El Pilar is a low-risk, high-return addition to the Mexican portfolio.
Peru's Political Tailwind
A new political chapter is opening in Peru with the election of Keiko Fujimori. Management expressed optimism about the incoming administration’s stance on mining. “The social environment is positive for the project. We are working with the local population in several initiatives,” — Raul Jacob, Vice President, Finance, Treasurer and CFO · 2026-07-22 said Raul Jacob, referencing Tia Maria’s community relations. The broader political shift could also benefit Los Chancas, where illegal mining has been a persistent headwind. The company is already seeing early signals of a more favorable regulatory backdrop, which is crucial for the $10.3 billion combined investment in Tia Maria, Los Chancas, and Michiquillay. This incoming administration could be the catalyst that unlocks long-stalled projects.
Valuation and Price Action
SCCO’s stock has responded strongly, up 25.5% over the last 90 days, reflecting the fundamental improvement. The company now trades at 9.7x trailing revenue and 28.3x net income, a premium justified by record margins and a clear growth trajectory. With copper inventories covering just 15 days of global demand and a projected market deficit for 2026, the pricing environment remains supportive. Combined with the silver windfall and a disciplined expansion pipeline, Southern Copper is positioned to deliver sustained shareholder value. As one analyst noted on a prior call, “the company has been increasing the cash portion of the dividend” (quote from 2026-01-28, component 2683582430068814925). Management’s ability to convert this supercycle into structural growth is what makes this quarter truly extraordinary.