SOUTHERN COPPER CORP/ (SCCO)

Southern Copper Corporation is one of the largest integrated copper producers in the world, and it believes it holds the largest copper reserves in the world. Its major products are copper, molybdenum, zinc and silver. It mines, mills, smelts and refines metals at facilities located in Peru and Mexico, and it explores in those two countries as well as in Argentina and Chile. The company was incorporated in Delaware in 1952, has mined copper since 1960, and has been listed on the New York and Lima Stock Exchanges since 1996. It is a majority-owned indirect subsidiary of Grupo Mexico, which owned 88.9% of its capital stock through Americas Mining Corporation at December 31, 2024.

The company reports three segments. The Peruvian operations include the Toquepala and Cuajone open-pit mine complexes, smelting and refining plants at Ilo, a precious metals plant, and the industrial railroad and port facilities that serve the mines. They produce copper with molybdenum, silver and other by-products. The Mexican open-pit operations include the La Caridad-Pilares and Buenavista mine complexes, concentrators, SX-EW plants, a smelter, a refinery, a precious metals plant and a copper rod plant. They produce copper and zinc, with molybdenum, silver and other by-products. The Mexican underground operations, known as the IMMSA unit, consist of five underground mines producing zinc, lead, copper, silver and gold, plus a zinc refinery. Mexican operations are conducted through Minera Mexico, which the company acquired in 2005 and owns 99.96% of. Peruvian operations are run through a registered branch. Products include copper concentrates, blister and anode copper, copper cathodes, copper rod, molybdenum concentrate, sulfuric acid, and refined silver and gold.

Copper is used mainly in building and construction, power generation and transmission, and electrical and electronic products, and to a lesser extent in industrial machinery, consumer products and transportation. Molybdenum is used to toughen alloy steels and in fertilizers, dyes and enamels. Silver is used in electrical and electronic products, and zinc mainly as a corrosion-resistant coating on iron and steel. The company emphasizes long-term customer relationships and focuses on end-user customers rather than spot-market sales or trading companies. Generally 80% to 90% of its metal production is sold under annual or longer-term contracts. It also works to diversify sales by region and customer base. Revenues come primarily from Peru and Mexico.

The company has a high level of vertical integration, managing the process from ore mining through refined copper rod and handling most related transport and logistics. It uses modern mining methods, including GPS and computerized mining processes. Because prices are largely set by market forces, management focuses on cost control and production enhancement. Prices are set on COMEX and the LME, except molybdenum, which is priced by reference to Platt's Metals Week. The company has occasionally hedged against price declines. Competition in the copper market is based mainly on price and service, with price the most important factor when supplies are ample.