Record prices and molybdenum buy time for Tia Maria
- Copper remains the core product, generating 72.7% of Q2 2026 sales.
- Molybdenum overtook silver as the top by-product at 11.1% of Q2 sales.
- Record-breaking metal prices offset a drop in copper production from lower ore grades.
- The Tia Maria growth project is 42% complete and expected to start in late 2027.
- The El Pilar project in Mexico received clearance to begin construction in early 2027.
A stronger bridge to future growth
Southern Copper is navigating a period of lower production with the help of historically high metal prices. In the second quarter of 2026, copper prices rose 40 percent year over year, while molybdenum jumped 43 percent and silver climbed 118 percent. This price surge drove record sales and profits, masking the impact of falling ore grades at older mines.
The cash generated right now is vital because Southern Copper is funding a massive capital pipeline. The Tia Maria project in Peru reached 42 percent completion by mid-year and is on track for a late 2027 launch. In Mexico, the El Pilar project received its water license and will begin full construction in early 2027.
The bear case centers on what happens if commodity prices cool down before those new projects start producing. Mined copper volumes remain stuck in a trough due to lower ore grades at Cuajone and Toquepala. If copper, molybdenum, or silver prices normalize, the company will face thinner margins while still spending heavily on construction.
Another open question involves the stalled Los Chancas project. Illegal miners have blocked progress there, making the company highly dependent on executing Tia Maria flawlessly.
Low-cost mines aided by by-product credits
Southern Copper explores, mines, smelts, and refines copper. Its main assets are large open-pit operations in Mexico and Peru. The company sells copper along with by-products such as molybdenum, silver, zinc, and gold.
The model works best when copper prices are healthy and by-products are valuable. By-products lower the reported cost of each pound of copper because their sales offset the costs of running the mines. In Q2 2026, operating cash costs net of by-products remained exceptionally strong at $0.05 per pound.
The company spends heavily to grow its production base organically. The strategy focuses on advancing a pipeline of large projects to reach 1.6 million tons of annual copper production by 2034.
The main vulnerability is commodity exposure paired with operational hurdles. Southern Copper has valuable assets, but it cannot control global metal prices and must constantly replace the declining ore grades of its older mines.
Copper leads, molybdenum steps up
Copper
Copper generated 72.7% of Q2 2026 sales. It is the core driver of revenue and the primary reason investors own the stock.
Molybdenum
Molybdenum surged to 11.1% of Q2 2026 sales, overtaking silver. It provides a massive offset to effective copper costs when prices are high.
Silver
Silver represented 8.8% of Q2 2026 sales. It remains a key profit swing factor thanks to a massive recent spike in prices.
Zinc
Zinc accounted for 3.5% of Q2 2026 sales. The company uses the Buenavista concentrator to capture extra value from zinc-rich ore zones.
Other products
Other products, including gold and sulfuric acid, made up 3.9% of Q2 2026 sales. They are minor but add useful cost credits.
Mexico and Peru operations
Segment shares are estimated based on historical net sales. Mexico is split into open-pit and underground operations, while Peru operates as one group.
What could go wrong
By-product prices fade
High impact · Medium oddsCurrent profits rely heavily on molybdenum and silver. If those prices fall while copper output remains weak, net cash costs will rise sharply.
Tia Maria slips
High impact · Medium oddsTia Maria is the main near-term growth project, sitting at 42 percent complete. Delays would push the growth lift further out while heavy capital spending continues.
Los Chancas stays blocked
Medium impact · High oddsLos Chancas is completely stalled because illegal miners remain in the project area. A permanent delay removes a key long-term growth option.
Ore grades keep falling
High impact · Medium oddsLower ore grades are causing a drop in production volumes across copper, molybdenum, and zinc. If grades disappoint further, by-products may not cover the weaker output.
Geopolitical and trade disruptions
Medium impact · Medium oddsThe company added geopolitical risks tied to military conflict, supply chains, and global commodity markets. U.S. copper tariffs and local politics are also factors.
In one breath
What does Southern Copper actually sell?
It mainly sells copper. In Q2 2026, copper was 72.7% of sales, while molybdenum, silver, and zinc made up most of the rest.
Why is molybdenum so important for SCCO?
Molybdenum prices rose sharply, making it 11.1% of Q2 2026 sales. That helped by-product credits push net operating cash costs down to just $0.05 per pound.
What is Tia Maria?
Tia Maria is Southern Copper's key Peru growth project. It was 42% complete at June 30, 2026, and operations are expected to begin in the second half of 2027.
What is the biggest risk for Southern Copper investors?
The biggest risk is that metal prices fall before production growth arrives. Lower ore grades could hurt more if molybdenum and silver stop offsetting costs.
