Southern Copper posts 54% decline in quarterly net income due to inflation, lower production and copper prices
(Kitco News) - Southern Copper (NYSE: SCCO), one of the largest copper producers worldwide, announced Wednesday that the company produced 208,428 tons of copper in Q2 2022, down 12.1% quarter-on-quarter.
The company explained that lower copper output was primarily driven by a 25.3% drop in production in Peru, which was triggered by a production stoppage at the Cuajone mine, as well as a decline in ore grades at both Toquepala and La Caridad operations.
According to a press-release, in order to avoid a force majeure event, production losses were temporarily offset with copper purchased from third parties, albeit at a higher cost.
Southern Copper added that its Q2 2022 net income was $432.3 million, which represented a 53.7% decrease with regard to the $932.7 million registered in Q2 2021. Adjusted EBITDA was $1,021.4 million, down 45.2% with regard to the $1,862.4 million registered in Q2 2021.
The company said that its quarterly financial results have been impacted by lower production, lower copper prices, as well as increases in costs for fuel, power and some other operating materials due to inflation.
Chairman German Larrea stated, "We believe the economic slowdowns in the U.S., China and Europe have temporarily weakened the demand for copper and are driving reductions in current prices. Nonetheless, we believe Southern Copper is well positioned to leverage our strengths in a challenging environment. Our strong financial position, low cash cost, operating costs efficiency programs and our significant copper reserve will help us weather both current and eventual circumstances."
Southern Copper is one of the largest integrated copper producers in the world. The company believes it currently has the largest copper reserves in the industry. The company is 88.9% owned by Grupo Mexico. The company operates mining units and metallurgical facilities in Mexico and Peru and conducts exploration activities in Argentina, Chile, Ecuador, Mexico and Peru.
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