Southern Copper hikes 2025 Tía María budget to over US$360mn

Southern Copper, a mining company owned by Grupo México with operations in Peru, is progressing well with its Tía María copper project, having increased the assigned budget to US$363mn for 2025 from the previous US$316mn.

“In the coming months, we expect to build roads and access points, update the topographical network, install and delineate the property along the perimeter and set up a temporary camp," Raúl Jacob, Southern Copper’s CFO and VP of finance, said during the company’s 3Q24 earnings call.

"For 2025, our board of directors has approved a budget of US$363mn for the project and its related activities,” he added.  

While the allocated budget has been raised, company executives had already anticipated this possibility during the 2Q24 earnings presentation. The start of construction remains scheduled for 2025.

Tía María is an open-pit project located in the Arequipa region in southern Peru that is expected to produce 120,000t annually over a 20-year lifespan. Despite complications and delays due to opposition to the project, which has held it back since 2011, this is the first time the initiative has moved forward without any major setbacks and the project timeline is now much clearer.

“We’ve seen that things are relatively calm around the project. Our workers – more than 400 of them – are operating without significant issues, so we want to make progress as quickly as possible,” Jacob added. Commercial production is expected to begin in the first half of 2027.

EVALUATION

In parallel with the preliminary work and construction planned for 2025, Southern Copper is updating the total capex for Tía María to include technological improvements. The company is also evaluating the best way to transport the copper concentrate, along with other infrastructure adjustments.

“The capex we're currently working with for Tía María was approved in 2016. Eight years have passed and there have been changes – technology, processes, relationships with communities – and we're assessing certain components to see if we should include them. For example, there’s the idea of incorporating a railroad to transport the ore, but we’re still determining the best route for it,” Jacob added.

Although the executive noted that the final cost is still under review, and thus was not included in the results, Jacob said that the estimated figure is around US$1.8bn. The updated figure is expected to be disclosed during the firm's 4Q24 earnings presentation.

PRODUCTION

According to Southern Copper, copper production from its units in Peru and Mexico totaled 252,219t in 3Q24, bringing cumulative production to 734,963t in January-September.

By the end of 2024, the company expects total production to reach 975,000t, higher than the previous estimate of 963,200t, significantly surpassing the 911,000t produced in 2023.

Looking ahead to 2025, the company no longer expects annual production to decline to 921,000t, but rather to increase to 978,000t, as indicated during the earnings call.