Southern Copper's Decade-Long Expansion Could Transform the Global Copper Landscape

Southern Copper Corporation (SCCO) is charting an ambitious expansion roadmap that positions the company as a major growth driver in copper supply over the next ten years. While 2025 sees a modest production pullback to 958,800 tons—a small decrease from 2024’s 973,900 tons—this near-term dip masks a far more compelling long-term narrative.

The Growth Trajectory: From Decline to Dominance

The real story unfolds from 2026 onward. SCCO projects copper output will climb toward 1,084,000 tons by decade’s end, with acceleration intensifying from 2031 onward, potentially reaching 1,536,000 tons by 2034. This represents a robust 5% compound annual growth rate since 2024, demonstrating management’s conviction in its sprawling project portfolio.

To fuel this expansion, SCCO is deploying more than $15 billion in capital investment throughout this decade, with Peru receiving the lion’s share at approximately $10.3 billion. This reflects the company’s confidence in South American resources and operational capabilities.

Peru: The Production Powerhouse

Peru stands as SCCO’s primary growth engine. The flagship Tia Maria project, situated in Arequipa, will begin operations in 2027 with an annual capacity of 120,000 tons of solvent extraction and electrowinning (SX-EW) copper cathodes. This facility will incorporate cutting-edge environmental technologies meeting the highest international standards.

Later in the decade, two additional Peruvian assets will come online:

• Los Chancas (2031): Contributing 130,000 tons annually
• Michiquillay (2032): A world-class mine expected to deliver 225,000 tons yearly with an anticipated operational life exceeding 25 years

These projects collectively represent a paradigm shift in Peru’s copper production capacity.

Mexico: Diversification and Efficiency

SCCO’s Mexican portfolio adds meaningful geographic diversification. El Pilar, launching in 2028, will produce roughly 36,000 tons of cathodes annually using highly efficient, environmentally sustainable SX-EW processes.

By 2030, El Arco transitions to production status. This central Baja California deposit boasts over 1,230 million tons of ore reserves averaging 0.40% grade, plus 141 million tons of leachable material at 0.27% grade. The operation combines an open-pit mine with integrated 120,000 tons-per-day concentrating capacity and 28,000 tons-per-year SX-EW facilities.

Market Context: Competition and Positioning

The broader mining sector reflects intensifying competition for copper market share. BHP Group achieved record copper output of 2,017 kilotons in fiscal 2025, representing 8% year-over-year growth and marking the first time the company surpassed the 2,000 kt milestone. Over the past three years, BHP has grown copper production by 28%, demonstrating the competitive intensity within premium copper developers.

BHP’s fiscal 2026 guidance suggests copper production between 1,800 and 2,000 kt, with an active pipeline potentially delivering around two million metric tons of attributable production this decade.

In related developments, Teck Resources merged with Anglo American to form Anglo Teck, a new entity with over 70% copper exposure and positioning among the global top five producers. The combined operation generates 1.2 million tons of annual copper production, with projections to reach 1.35 million tons by 2027—a 10% increase.

Financial Performance and Market Reception

SCCO shares have appreciated 55.9% over the past twelve months, outperforming broader industry gains of 42.4%. However, valuation metrics reveal complexity. The stock trades at a forward 12-month price-to-sales ratio of 8.84X, significantly above the industry average of 3.93X, suggesting premium pricing expectations.

Earnings projections support cautious optimism. Consensus 2025 earnings estimates stand at $5.27 per share, implying 21.7% year-over-year growth. For 2026, analysts project 17.3% earnings expansion, reflecting production ramps and operational efficiencies.

The company currently holds a Zacks Rank #3 (Hold) rating, reflecting mixed sentiment about near-term versus medium-term prospects.

The Decade Ahead: Production Philosophy

SCCO’s phased development strategy suggests that short-term production moderation pales against the prospect of sustained copper supply expansion. The company’s geographic diversification across Peru and Mexico, combined with technological sophistication in processing, positions it for meaningful market influence throughout this decade. Whether current valuation metrics fairly reflect this growth potential remains a key consideration for investors monitoring copper supply dynamics.