Myles Allsop

Myles Allsop inquired about the lead time for the Tia Maria SX-EW operation and the key risks to achieving the mid-2027 first production timeline. He also asked about the local sentiment surrounding Tia Maria, given past protests and upcoming elections, and whether the atmosphere for obtaining mining licenses and approving open-pit projects in Mexico has improved.

Answer

Raul Jacob, VP of Finance, Treasurer, and CFO, stated that Southern Copper has extensive experience with SX-EW operations and has selected state-of-the-art technology for Tia Maria. He expects plant assembly and operation in the second half of 2027, with testing initiated by May or June 2027, and no delays anticipated. Regarding local sentiment, Mr. Jacob highlighted positive engagement with local communities, noting the creation of over 3,589 jobs (with an expectation of 5,000 at peak construction) and significant investments through Peru's 'Works for Taxes' mechanism, which he believes has fostered local understanding of the project's opportunities. For Mexico, he observed a generally better environment in relations with the government, which he hopes will expedite project movement, but had nothing specific to report on new license approvals or open-pit projects.

Myles Allsop inquired about the lead time for the SX-EW operation at Tia Maria and the key risks to achieving the mid-2027 first production timeline. He also asked about the local sentiment regarding Tia Maria, given past protests and planned demonstrations, and whether the atmosphere for obtaining mining licenses and advancing projects in Mexico has improved.

Answer

Raul Jacob, Vice President, Finance, Treasurer, and CFO, explained that with five existing SX-EW operations, Southern Copper has selected state-of-the-art technology for Tia Maria, expecting plant assembly and operation in the second half of 2027, with tests beginning by May or June 2027. He reported positive local sentiment around Tia Maria, with over 3,589 jobs created (aiming for 5,000 at peak construction) and significant community investments through 'Works for Taxes' programs. Regarding Mexico, Mr. Jacob noted a generally better environment in relations with the government, which he hopes will expedite project movement, but had no specific approvals to report.

Myles Allsop of UBS inquired about production guidance for 2026-2027, the reason for the Tia Maria financing delay, the status of protests at Tia Maria, and updates on the El Pilar and Los Chancas projects.

Answer

Raul Jacob (executive) indicated a potential small production dip in 2026 before growth resumes in 2027 with Tia Maria. He stated the financing delay for Tia Maria is due to market conditions, not project issues, and confirmed that local support for the project is strong with minimal protest activity. He also noted that the company has acquired most of the land for Los Chancas and is working with authorities to remove illegal miners.

Myles Allsop of UBS inquired about the production outlook for 2026-2027, the timing of financing for the Tia Maria project, the status of El Pilar, and progress in resolving issues with illegal miners at Los Chancas.

Answer

Executive Raul Jacob projected a slight production dip in 2026 before growth resumes in 2027 with Tia Maria. He stated that Tia Maria financing is pending better market conditions, not project viability, and noted the project has strong local support. He added that progress is being made on securing the Los Chancas site from illegal miners.

Myles Allsop from UBS asked about the level of social acceptance for the Tia Maria project, M&A's place in capital allocation priorities, and the potential impact of Mexico's new government on operations, including the El Pilar and El Arco projects.

Answer

Executive Raul Jacob reported "much better" local acceptance for Tia Maria, citing high interest in job offerings. He reiterated that organic growth is the priority but the company remains open to M&A. Regarding Mexico, he stated they are awaiting the new government's policies and are currently addressing technical recovery issues at the El Pilar project.

Myles Allsop from UBS Group questioned if the current, relatively high net debt level is a new reset for the company or if lower leverage is preferred going forward. He also sought clarity on the dividend policy, specifically whether the full-year payout is likely to remain at 60% or could revert to the 50% minimum.

Answer

CFO Peter Cunningham and CEO Jakob Stausholm both expressed comfort with the current debt level, noting the balance sheet and cash flows are larger and that long-maturity bonds have been secured at low rates. On the dividend, Stausholm stated that while it's a Board decision, the Board has been unwavering in its practice of a 60% full-year payout, which is supported by growing earnings from new projects.

Myles Allsop of UBS Group AG sought clarification on the company's net debt level, asking if it was considered the high end of a target range, and questioned the Board's commitment to the 60% full-year dividend payout policy.

Answer

CFO Peter Cunningham and CEO Jakob Stausholm confirmed they are comfortable with the current debt level, viewing it as appropriate for the company's larger scale. On the dividend, Stausholm stated that while it is a Board decision, the Board has been 'unwavering' in its support of the 60% payout practice, which is supported by growing earnings from new projects.

Myles Allsop of UBS Group AG sought clarification on whether the current net debt level represents a new normal and asked about the commitment to the 60% full-year dividend payout policy.

Answer

CFO Peter Cunningham described the current net debt as a comfortable level that enables strategy, not a specific 'reset'. CEO Jakob Stausholm added that the Board has been unwavering in its support of the 60% payout practice and that profitable growth from new projects will increase future dividend capacity.

Myles Allsop of UBS Group AG asked about the status of discussions regarding potential synergies between QB and Coyoacci. He also questioned the lengthy repair timeline for the new ship loader and when the tailings facility issues are expected to be fully resolved.

Answer

President & CEO Jonathan Price confirmed that confidential discussions about QB/Coyoacci synergies are ongoing but emphasized that the immediate priority is ramping up QB to steady-state production. Regarding the operational issues, Price reiterated the expectation that the TMF challenges are a one-time ramp-up event to be resolved this year. EVP & Chief Commercial Officer Ian Anderson explained the ship loader repair timeline into H1 2026 is a cautious estimate, reflecting the need for a thorough structural assessment and navigating maritime authority permits.

Myles Allsop of UBS Group asked about the status of discussions regarding potential synergies between QB and Coyoacán, questioned the lengthy repair timeline for the new ship loader, and sought clarity on when the tailings issue would be fully resolved.

Answer

President & CEO Jonathan Price stated that discussions on QB/Coyoacán synergies are confidential and ongoing, but the immediate priority is the QB ramp-up. He reiterated the tailings issue is a one-time event expected to be resolved this year. EVP & CCO Ian Anderson added that the ship loader repair timeline is cautious, accounting for thorough structural assessments and maritime authority permits.

Myles Allsop of UBS Group AG asked about the status of discussions regarding potential synergies for QB with adjacent assets and questioned the extended timelines for fixing the QB ship loader and tailings facility.

Answer

President & CEO Jonathan Price confirmed confidential discussions about QB synergies are ongoing but emphasized the immediate priority is ramping up QB to steady state. He reiterated the tailings issue is a one-time ramp-up event expected to be resolved this year. EVP & Chief Commercial Officer Ian Anderson explained the ship loader timeline is cautious, accounting for thorough structural assessments and maritime authority permits.

Myles Allsop of UBS Group AG asked about the status of discussions regarding potential synergies between QB and Collahuasi, and also questioned the lengthy repair timeline for the new QB ship loader.

Answer

President & CEO Jonathan Price confirmed that confidential discussions about QB-Collahuasi synergies are ongoing but emphasized that the immediate priority is ramping up QB to steady-state production. EVP & Chief Commercial Officer Ian Anderson clarified the ship loader repair timeline is cautious, accounting for structural assessments and maritime permits, and does not necessarily mean it will take a full year.

Myles Allsop from UBS inquired about the status of synergy discussions with Coyoacci for the QB asset. He also questioned the lengthy repair timeline for the new ship loader and asked for confirmation that the tailings facility issues would be resolved by year-end.

Answer

President & CEO Jonathan Price confirmed confidential discussions regarding QB-Coyoacci synergies are ongoing but emphasized the immediate priority is ramping up QB. He reiterated the expectation to resolve the TMF issues by the end of the year. EVP & Chief Commercial Officer Ian Anderson explained the ship loader timeline is cautious, accounting for structural assessments and maritime permits to ensure a safe and complete repair.

Myles Allsop of UBS asked about the QB2 optimization timeline, specifically when a license to increase throughput might be obtained. He also inquired about a dispute at Highland Valley and its potential to delay the life extension project, and sought reassurance on the 2025 QB2 production guidance.

Answer

CEO Jonathan Price explained that the current permit allows for 10% optimization, while a new permit application for further debottlenecking would likely take 12 months for approval after a mid-year submission. He expressed optimism that the Highland Valley dispute would be resolved by mid-2025 and reiterated confidence in the existing 2025 QB2 production guidance range.

Myles Allsop asked for clarification on what costs are still being capitalized at QB and when that will cease. He also questioned the future of the Trail smelter, asking what it would take to close the facility given its negative cash flow and strategic importance.

Answer

CFO Crystal Prystai clarified that QB ramp-up costs and project interest were capitalized in 2023, but in 2024, costs were expensed normally. CEO Jonathan Price addressed the Trail smelter, stating that a focus on cost reductions, adjusted production rates, and other commercial levers is improving its profitability. He stressed its strategic importance for integrating with Red Dog and as a key North American producer of critical minerals like germanium, making it a valuable asset in the current geopolitical context.

Myles Allsop from UBS inquired about the pace of the share buyback program and asked when the company would provide more clarity on the potential for optimization and debottlenecking at the QB2 project.

Answer

CEO Jonathan Price stated the share buyback is value-driven, not maxed out, and could accelerate in Q4. He indicated that more detail on QB2's optimization path, which could add 10-15% throughput, would be provided at the upcoming Investor Day, but the immediate focus remains on achieving consistent nameplate capacity.

Myles Allsop questioned the decision to issue a special dividend instead of executing a larger buyback given the low share price. He also asked for a timeline on when to expect permitting and final investment decisions (FIDs) for the copper growth projects in Carajás.

Answer

Executive Marcelo Bacci responded that Vale seeks a balanced approach between dividends and buybacks, noting buybacks were favored in the recent past. Executive Shaun Usmar stated the immediate copper focus is on the Bacaba project, with permits expected in Q2. Executive Gustavo Duarte Pimenta added that the new dedicated 'Novo Carajás' team and increased investment are designed to accelerate the development of the broader copper endowment.

Myles Allsop of UBS Group AG inquired about Vale's M&A appetite for nickel assets in Brazil and asked at what price point the company would consider curtailing iron ore production to support prices under a 'value over volume' strategy.

Answer

Executive Gustavo Duarte Pimenta stated Vale is not looking at the specific nickel assets mentioned, preferring to develop its own endowment, citing the Minas-Rio deal as an example of preferred opportunities. Executive Marcello Spinelli explained that prices dropping to the $90-$100 range would likely take 100 million tons of production out of the market, providing a cost curve support level.

Myles Allsop of UBS asked for an update on the working capital reversal, questioned if recent M&A activity signaled a strategic pivot towards growth, and inquired about the fundamental outlook for coal prices over the medium term.

Answer

CFO Steven Kalmin explained that the majority of the cyclical working capital build has already reversed, with the remainder being more structural. CEO Gary Nagle asserted this is not a "new Glencore," but rather a continuation of their opportunistic M&A strategy with strict capital discipline. Nagle also noted that a lack of new investment in high-quality coal supply, coupled with persistent demand from developing nations, should support prices.

Myles Allsop inquired about the operational challenges impacting coal production in Australia, South Africa, and Colombia, and sought views on the potential price floor for Newcastle coal. He also asked about the expected recovery of working capital in the coming months.

Answer

CEO Gary Nagle detailed the coal challenges, citing weather in Australia, transport logistics in South Africa, and community issues in Colombia. He noted that at $200/ton, the coal price remains strong and competitive with LNG. CFO Steven Kalmin addressed working capital, explaining that a lack of recovery could signify strong marketing returns and that he would prefer to run the balance flat and monitor performance rather than predict a specific unwind.

Myles Allsop from UBS asked about the sustainability of the price gap between high- and low-calorific value coal and questioned the thought process for allocating future returns between dividends and buybacks.

Answer

CEO Gary Nagle explained the price dislocation is due to a very tight high-CV market driven by specific utility needs, with differentials expected to remain dynamic. CFO Steven Kalmin detailed that while cash distributions are favored, buybacks are a key tool when the share price is attractive, and the current 57/43 split is a reasonable framework for the future.

Myles Allsop asked about the near-term risk of tax increases in the DRC. He also questioned the balance between M&A and dividends, given management's significant equity ownership, and requested the strategic rationale for the previously discussed interest in Bunge.

Answer

CEO Ivan Glasenberg suggested that higher commodity prices and the resulting increase in government tax revenue should mitigate the need for tax hikes in the DRC. He affirmed that management's interests are aligned with all shareholders for long-term value creation, not just short-term dividends. Regarding the agriculture business, he reiterated the strategy to grow the Glencore Agriculture vehicle, particularly by building an infrastructure footprint in the United States.

Myles Allsop asked about BHP's capital allocation priorities, specifically how it will balance growth, shareholder returns, and the balance sheet, and inquired about the potential for increased CapEx in onshore U.S. assets and the firmness of future CapEx guidance.

Answer

CFO Peter Beaven reiterated the company's commitment to its capital allocation framework, prioritizing business integrity and a strong balance sheet with a current bias towards debt reduction. He noted shale's flexibility allows for nimble quarterly capital allocation. CEO Andrew Mackenzie added that small-scale asset trades are ongoing in the shale business to consolidate acreage for more efficient drilling.