QUOTE AND NEWS
Wall Street Journal  Mar 27  Comment 
Southern Copper said it is canceling the $1.4 billion Tia Maria copper mine project in southern Peru due to ongoing protests and a lack of government support.
TheStreet.com  Mar 26  Comment 
NEW YORK (TheStreet) -- Southern Copper Corp.  stock is down 0.67% to $29.46 in afternoon trading Thursday after Brean Capital initiated coverage with a "hold" rating and a price target of $32. "While the name trades at a significantly richer...
TheStreet.com  Mar 13  Comment 
Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of Jim Cramer, TheStreet, Inc., or any of its contributors.  TheStreet Ratings quantitative algorithm evaluates over 4,300 stocks on...
Market Intelligence Center  Feb 20  Comment 
Southern Copper Corp. (SCCO) presents a trading opportunity that offers a 4.60% return in just 56 days. A covered call on Southern Copper at the $30.00 level expiring on Apr. '15 offers an assigned return rate of 4.60% or 30% annualized. This...
Wall Street Journal  Feb 4  Comment 
Southern Copper, one of the world’s largest copper producers, posted weaker fourth-quarter and full-year net income, mainly due to lower prices for copper.
Benzinga  Jan 16  Comment 
Barclays took a neutral position on the copper sub-sector in a report on U.S. Metals & Mining issued Thursday. Analyst Matthew J. Korn expected “the bullish impact of lower-than-expected metal supply to outweigh a slowdown in Chinese...
Wall Street Journal  Dec 3  Comment 
Strong demand from China for copper and an economic recovery in other parts of the world should help keep prices for the metal firm next year, Southern Copper’s CEO said.




 

Southern Copper Corporation (NYSE:SCCO) is one of the largest integrated producers of copper, molybdenum, zinc and silver.[1] The company operates in three segments: Peruvian operations, Mexican open-pit operations, and Mexican underground mining operations. The majority of Southern Copper's revenues come from copper sales.[2] As a metals producer, the company's earnings depend largely on the demand and price of its products. In addition, Southern Coppers operations are located in Peru and Meixco and exposed to country-specific political risks.[3]

Business Growth

Southern Copper reported net income of $1.5 billion on 2010 revenues of $5.15 billion, versus earnings of $929 million on $3.7 billion in 2009 revenues.[4] Growth can partially be attributed to growing demand from emerging market economies, particularly China. In addition, the company's exploration activities in Mexico, Peru and Chile have provided additional sources of production.[5]

Trends and Forces

Emerging economies provide growth in global demand for copper

China and other emerging markets have supported growth in the demand for and price of copper.[6] In fact, global demand for copper has outpaced global supply, which has also led to higher prices. While many other emerging markets are significant sources of demand, China is by far the largest (the country comprises 40% of global demand). As a result, Southern Coppers revenues depend on the demand for copper in China.[7]

Companies like Southern Copper are spending larges amount of capital to build production facilities capable of meeting China's copper consumption. In addition, copper prices depend heavily on demand from countries like China.[8] A significant drop off in demand from China has the potential of curtailing Southern Copper's long-term growth prospects. [9]

Southern Copper's locations expose the company to political risks

In Mexico and Peru, metal resources are owned by the state, with contracts awarded by the state to firms.[10] As a result, the company is exposed to significant political and currency risks with the the Mexican and Peruvian governments.[11] In addition, the Peruvian government has significant price controls, currency controls, and investment controls, which have the potential of restricting growth and new exploration projects. Labor unrest has the potential of halting production and hindering the company's ability to meet copper demand.[12]

Competition

Southern Copper's competes with global metals producers. Its competitors are as follows:[13]

Notes

  1. Reuters: SCCO Company Profile
  2. Reuters: SCCO Company Profile
  3. Reuters: SCCO Company Profile
  4. Morningstar.com: Financials for SCCO
  5. Southerperu.com: 2010 10-k
  6. WSJ: Southern Copper Aims to Double Copper Output by 2015
  7. WSJ: Southern Copper Aims to Double Copper Output by 2015
  8. WSJ: Southern Copper Aims to Double Copper Output by 2015
  9. WSJ: Southern Copper Aims to Double Copper Output by 2015
  10. Metalsplace.com: Southern Copper reaffirms its production targets despite labour dispute
  11. Metalsplace.com: Southern Copper reaffirms its production targets despite labour dispute
  12. Metalsplace.com: Southern Copper reaffirms its production targets despite labour dispute
  13. Yahoo! Finance: Competitors for SCCO
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