Matheus Moreira

Mateus Moreira sought Southern Copper's overview of the copper markets, specifically whether the current price momentum is sustainable given strong prices but deteriorating demand in China's real estate sector. He also questioned if the strategy of prioritizing zinc production over copper at the Buenavista concentrator would continue in 2026, and if there's a specific copper price level that would incentivize a shift back to copper production.

Answer

Raul Jacob, Vice President, Finance, Treasurer, and CFO, indicated an expected copper market deficit of 320,000 tons for 2026, with demand supported by electric vehicles and AI power centers, despite weakness in China's real estate. He emphasized that the company focuses on cost control and competitive production, not price forecasting. For Buenavista, Mr. Jacob clarified that the company has two copper concentrators and one zinc concentrator (which can switch). The current strategy to focus on zinc (with silver content) is based on an ongoing analysis of relative prices, aiming for the best value for shareholders, and would be reviewed if relative prices significantly change.

Mateus Moreira sought Southern Copper's overview of the copper markets, particularly the interplay between supportive prices and deteriorating demand in China, and whether the current price momentum is sustainable. He also asked about the Buenavista concentrator strategy for 2026, specifically if the prioritization of zinc over copper would continue, and if there's a copper price level that would prompt a shift back to copper production.

Answer

Raul Jacob, VP of Finance, Treasurer, and CFO, stated that the company expects a copper market deficit of about 320,000 tons for 2026. He noted that copper demand is supported by electric vehicles and AI power centers, despite weaknesses in China's real estate market. Mr. Jacob emphasized that forecasting copper prices is not the company's business, but rather focusing on cost control and competitive production. Regarding Buenavista, he clarified that the company has two copper concentrators and one zinc concentrator (which can switch). An analysis determined that focusing on zinc production, which also yields significant silver, was in the best interest of shareholders given the relative prices of zinc, silver, and copper. This strategy is continuously reviewed, and a significant change in relative prices would lead to a re-evaluation.

Matheus Moreira from Bradesco BBI asked for the company's outlook on zinc supply-demand dynamics, given recent price strength and supply tightness.

Answer

CFO Jose Carlos del Valle Castro explained that the zinc market is a supply-driven story with a very tight concentrate market. He noted that 2024 concentrate production is expected to be lower than 2023, which should continue to provide strong support for prices and make a return to the low levels seen in 2023 unlikely.