Southern Copper Corporation (SCCO Quick QuoteSCCO - Free Report) emphasized production expansion, disciplined spending and operational efficiency during its third-quarter 2026 earnings call. Management outlined progress across major copper projects while addressing construction delays, capital expenditure pressures and near-term production expectations.

SCCO reported earnings of $2.15 per share, beating the Zacks Consensus Estimate of $2.04. Revenues of $4.7 billion surpassed the consensus estimate of $4.5 billion. Earnings increased 62.9% year over year, while revenues rose 39.1%.

Southern Copper Corporation Price, Consensus and EPS Surprise

Southern Copper Corporation price-consensus-eps-surprise-chart | Southern Copper Corporation Quote

Although stronger metal prices supported record quarterly results, analysts focused on project timelines, cost sustainability and the company's ability to execute its investment pipeline.

SCCO Revises Tia Maria Timeline Amid Construction Challenges

Raul Jacob, vice president of finance, treasurer and CFO, confirmed that the Tia Maria project in Peru is now scheduled to begin operations in the first half of 2028, compared with the previously anticipated fourth quarter of 2027.

Jacob attributed the revised timeline to additional time required for mechanical equipment assembly and engineering activities. As of September 2026, construction was 49.6% complete, with $884.3 million invested.

During questioning from Morgan Stanley, Jacob declined to confirm potential capital expenditure increases. Management is reviewing project budgets and expects to provide updated spending projections during its January 2027 earnings call.

Southern Copper Maintains Production Expectations

Jacob reiterated Southern Copper's 2026 copper production forecast of 918,000 tonnes, approximately 0.7% above its initial plan. Management expects fourth-quarter copper production to improve modestly year over year.

Third-quarter mined copper production declined 1.1% year over year to 232,396 tonnes. Lower ore grades and recoveries at Peruvian operations offset improvements at Mexican mines.

For 2026, management anticipates molybdenum production of 29,000 tonnes, silver production of 24 million ounces and zinc production of 163,400 tonnes. A comprehensive 2027 production outlook will follow the ongoing review of mining plans.

SCCO Addresses Cash Costs and Commodity Price Trends

Jacob highlighted operating cash costs of $0.09 per pound of copper after by-product credits, compared with $0.42 in the year-ago quarter. Higher by-product prices helped offset rising production expenses.

Before by-product credits, cash costs reached $2.46 per pound, reflecting higher production and administrative expenses. By-product credits increased 31% to approximately $1.2 billion.

Responding to Wells Fargo, Jacob indicated that fourth-quarter costs before by-product credits should remain broadly stable or improve slightly from third-quarter levels. He emphasized that future cost performance depends partly on production volumes and by-product prices.

Southern Copper Weighs Cuajone Expansion Options

Southern Copper is evaluating increasing Cuajone's milling capacity from 90,000 to 120,000 tonnes per day, requiring an estimated investment of $680 million.

Jacob told Goldman Sachs that technical studies are advanced and board approval is approaching. Management is also examining a larger expansion to 150,000 tonnes per day.

During UBS questioning, Jacob identified the 120,000-tonne option as the more probable scenario. He declined to estimate spending for the larger alternative pending technical studies. Management also indicated that water requirements for the smaller expansion have been addressed.

SCCO Faces Permitting and Capital Allocation Questions

The El Pilar project in Mexico carries an estimated investment of $551 million, with production expected during the second half of 2029. Jacob attributed higher project costs to equipment inflation and efforts to improve mineral recovery.

At Los Chancas, approximately 200 illegal miners remain an obstacle to development. Jacob told UBS that their removal would allow environmental assessments and permitting to advance toward the targeted 2031 production start.

Capital allocation also drew scrutiny. Following a Bradesco BBI question about additional shareholder distributions, Jacob reiterated that dividend decisions remain subject to board approval. Management continues evaluating inflationary pressures across its investment portfolio.

Southern Copper Balances Expansion With Execution Risks

Management's outlook combines long-term production growth with near-term operational discipline. Tia Maria and El Pilar are expected to contribute approximately 156,000 tonnes of additional annual refined copper production.

Jacob also emphasized that project spending forecasts remain under review. Construction schedules, permitting progress and cost control will remain central to Southern Copper's execution priorities heading into 2027.

SCCO's Zacks Rank and Style Scores Signal

SCCO currently carries a Zacks Rank #2 (Buy), indicating favorable near-term earnings estimate revision trends. Its Growth Score of A and Momentum Score of A highlight attractive growth characteristics and price momentum, respectively. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

However, its Value Score of F indicates comparatively weak valuation characteristics. The VGM Score of B reflects a favorable overall combination of value, growth and momentum factors. Together, the Zacks Rank and VGM Score represent a constructive screening combination for near-term performance potential, although these indicators do not guarantee returns.

The Zacks Rank remains sensitive to changes in analysts' earnings estimates and could shift as revisions incorporate the latest quarterly results and management's updated outlook.