Southern Copper Forecasts 17% Growth in Peru’s Copper Production
Southern Copper, controlled by Grupo Mexico (GMEXICOB.MX), anticipates a 17% increase in its copper production in Peru this year, totaling 400,000 metric tons, according to a senior executive's statement to Reuters. This growth is expected to drive the company's overall copper output expansion.
As Peru's third-largest copper producer, the mining firm experienced a decline in copper output, which dropped to 342,000 tons last year from just over 398,000 tons the previous year due to disruptions caused by nearly two months of community protests at its Cuajone mine. Despite ongoing political tension, these protests have subsided this year.
This robust production forecast highlights how mining companies in the Andean region are bucking the trend of falling output, in contrast to the broader regional trend. Concerns have been raised about protests and political uncertainty potentially impacting the sector, including the possibility of Peru losing its position as the world's second-largest copper producer.
Raul Jacob, Southern Copper's vice president of finance, stated in an interview with Reuters that Peru's strong rebound in copper production would enable the company to increase its overall copper production to 932,000 tons this year, a 4% increase compared to 2022. He also mentioned that the company could add approximately 470,000 tons of copper production in the country over the next decade if projects in the pipeline proceed as planned.
"We are going to more than double copper production in Peru," said Jacob.
Southern Copper operates the Cuajone and Toquepala mines and a smelter in Peru. Government data indicate that its peak production in the country was around 424,000 tons in 2020. In Mexico, the company operates the La Caridad and Buenavista fields.
Jacob highlighted several projects driving increased production, including the long-delayed Tia Maria project in Peru, set to begin production in 2026, the Los Chancas project scheduled for 2030, and Michiquillay in 2032. These projects involve a combined investment of $6.5 billion.
Regarding the Tia Maria project, Jacob noted significant progress and reduced opposition, particularly concerning environmental concerns. In the case of Los Chancas, the company is working with authorities to address "illegal" miners who have occupied the mine. Additionally, there is a $700 million investment plan to increase Cuajone's annual production, currently at 140,000 tons, by one-third.
Discussing mining investment in Peru, which is expected to decline significantly in the coming years, Jacob cited factors such as an uncertain political environment, subdued Chinese demand, and rising interest rates as challenges affecting project cash flows.
