SCCO - Earnings call transcript Q3 2018 | Southern Copper Corporation

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Operator

Good morning, and welcome to the Southern Copper Corporation’s Third Quarter and Nine Months 2018 Results Conference Call. With us, this morning, we have Southern Copper Corporation, Mr. Raul Jacob, Vice President of Finance, Treasurer and CFO, who will discuss the results of the company for the third quarter and nine months 2018 as well as answer any questions that you may have. The information discussed on today’s call may include forward-looking statements regarding the company’s results and prospects, which are subject to risks and uncertainties. Actual results may differ materially and the company cautions to not place undue reliance on these forward-looking statements.

no whether publicly new as events otherwise. undertakes any or information, Corporation or statements, forward-looking a Copper obligation update to revise future Southern result of in All full are expressed results U.S. GAAP.

on will I Raul turn call Now, to the Jacob. Mr.

You may proceed.

Raul Jacob

a morning, Copper. conference much, Copper’s to Garcia is XXXX conference Mr. good quarter me with Quevedo, and call. welcome Xavier Thank you Participating and board today everyone, Southern very earnings Victor, member Southern of third in de today’s

an result a the of the startup me XX% copper, of XXXXl our this first will as production, quarter Let XXXX the of and $XXX our XX% in zinc, in of million. expecting that of new annual in significantly the year, XX% production recovery increasing mark molybdenum. for production will silver, we’re prices to third over concentrator of in average we our San the XX% Toquepala in point represent say of of mine, and of which main an company, production increase enhancements compared sales another metals. of the inflection these the Martin production At When increase

Financial Mr. Victor? will call I the Manager Investor Pedraglio, and to pass Copper’s Southern of Now Planning Relations. Victor

Victor Pedraglio

key Raul. projects. Copper’s session the expansion of results update we we and related the operating questions. Thanks, In production, financial will will that, view results Southern call, to an on will copper then for our today’s begin with review market. cost, After We open sales,

business. market, core our the copper on focus us the let Now of

of in third fall We China. sentiment trade X.X% in of for the possible is that protectionism of XXXX decreased the quarter from between reflection the of of a market States in as copper decrease. average the pound XXXX $X.XX United quarter third quarter, price a prices and this last During to the escalation copper view $X.XX LME per a an

not will these detriment the are market be copper solid to and strongly market. disputes believe fundamentals copper that we a However, that long-term

We in recovery prices in months. expect a copper the coming

increasing economic demand at of growing world with our the a growth copper to the China’s experts XXXX, significant performance about are supply currently the X% currently have of leading economies, balanced growing of the demand for not Demand X.X%. X.X% we year. market forecast, forecasting refined outperforming year. major As and is an disruptions, at result In to a for initial about industry X.X% consumption worldwide, is had

the prices. have giving required production However, provide investments years materialized, coming due in now volatility, future better to to price new to support

greatest Peru. largest investment-grade know, Copper as the – the the such Mexico As world-class in sorry, copper high-quality, you has has in Southern reserves Operating and industry. countries, assets

million current Given on program, developing growth XX% by X.X is outlook, copper market a the production to milestone tons are capacity our next of a that very phase reach XXXX, with increase, aiming cost. a focusing cash the we of competitive

do enhanced superior performance, delivering and to expect We this value. sustainable growth

in grades of increased by the resulting XX.X%, quarter. us offset the lower Let by sales third on increase Buenavista operating partially last design operations is to fourth lower the to Copper production increases year, operations concentrator has increased by project to in our at the showing quarter. compared process SX-EW were, expansion of fourth Cuajone, facility’s which at in quarter higher increased started our higher XXX,XXX to expect have these to the principally, by quarter Peruvian the in results. of production we XX.X% facilities. Toquepala, and from capacity due of operations quarter, production ore ramping its production the These our third which Buenavista X.X% Continuing quarter year for of Copper’s production our both X.X%, this focus with SX-EW mines. at with production the initiated the XXXX. improve new this Copper past in this program, third Southern at positive plan Toquepala represented of with compared quarter. of up throughput due third And and to Peru, the year tons grade investment XX% The quarter we where now

at Our is forecast of copper in to XX,XXX tons current produce new facility. XXXX this

For this copper at production XXX,XXX total year, tons. our expected is

tons an cash tons the is per Toquepala XXXX, copper of pound cost X next to of million annual expansion production with capacity, annual copper For XXX,XXX reach even adding lower to us allowing production copper. our year

is our production XXXX XX% expectation increase current to Our by next year.

in of compares molybdenum, to the of quarter XXXX. sales the production the X.X% and by of with which also increased value $X.XX Buenavista, result by Toquepala, Molybdenum at of year. prior which it third mine of $XX.XX to in at Molybdenum represented concentrator, the XXXX XX.X% better company’s pound increase last average X.X% the third resulting a from in year, third year increased the prices the third per of higher in as the from previous Regarding ore compared X% at production grades. quarter production which increased quarter, higher quarter new quarter due a XX.X%, by

our from we XX,XXX we produce the X.X% to new plant XX,XXX with molybdenum an increase operations. molybdenum, expect of produce in to concentrate. production the tons from In production and due at contribution XXXX, partial significant recovery additional molybdenum of the of For tons Buenavista Peruvian Toquepala coming expect a of to XXXX,

our Mexico. of the Regarding quarter, Martin this due Eulalia, the at of this an of which value decreased resumed Santa last pound zinc quarter of at price San of recoveries. third was On Barbara, last X.X%, due year. partially quarter zinc, by with to compared control Zacatecas, increasing the lower Charcas, by to per year, by to Refined Zinc by X.X% in third third the and company due grades. higher in XX.X% lower with the from of XX.X%. production average production the which reduction of year tons decreased mine year increased higher it recoveries, XX,XXX lower in represented to quarter in grades to of offset located price $X.XX Santa X% due X.X% third by quarter, a decreased by at XX.X% XX production This August the mine, sales of production

ounces will As tons the during per major have for of facilities illegal to labor jobs X,XXX of operation, opportunities new in we XX in A indirect X,XXX of undertaking federal, restart we estimated this will years zinc, approximately capacity tons tons and copper capital governments. in operations approximately revenues believe million of currently to order generate direct stoppage, deteriorated Martin a an well of force with production million. as start San renovation and operation, XX,XXX San X.X of working are Martin Once Martin an of When annual value of X,XXX year. silver, as is labor XXX facility. contractors state and for lead San local $XX

of result produce XXXX, produce we In of zinc as an zinc, For of increase tons XX,XXX the with an X%, mine. expect the mines’ a and Martin largely from tons important XX,XXX production. expect the Barbara recovery Santa Eulalia of XXXX, of to to we San the Santa contribution

resulting Mined higher increased period and this from a quarter, last in the this in result production third Refined silver higher operations, by last Regarding of increased production at X.X% in quarter quarter as the year, with same year of third from year. Toquepala the our IMMSA with of grades. from price production of third quarter, sales XX.X% in comparison year. the the year decrease of quarter with third mainly value per by last our ounce average third silver X.X% the silver it of X.X% $XX.XX production, quarter an an represented of the of

of increase contribution result expect For silver, Martin of produce silver, the important in XXXX. to XXXX, from XXXX, XX.X as a million we San expect ounces an mine. In to XX.X ounces X% of of production produce of million we mainly

results. us financial go Let now to

year, For metal, of XXXX, that’s third third for than volume a the lower increase. quarter of $X.XX decreased slightly value result this sales X.X% million Copper which of sales increased were by decreased a by billion, prices while X.X% sales the of as quarter X%, $XX.X by X.X%. higher last

zinc, In were prices of the the prices. by by In decreased X.X% main And our higher had X.X% Also, XX.X%. by sales volume silver, sales and to were and were by by silver of offset lower increased volume sales cost. due up XX.X% was – prices. prices Regarding lower higher of due and X.X% partially case [indiscernible]. XX.X% X%. higher came volume prices offset improved to we and Prices Operating and volume, volume. zinc case to higher XX.X% volume higher which was molybdenum, by by by XX.X% lower better increasing partially products, due

is copper higher mainly operation, pound contractors compared refining operating year, third $X.XX cost expenses than last been expenses cash of X.X% Our third production and cost of per treatment copper. Operating the year. have million other quarter increments total of compared by the cost partially X.X% million second premium. the result cost, higher or year. value quarter cash XX.X% $XX.X services, were by with revenues offset operating diesel last of purchase in with this $XXX.X by-product is margin partially main quarter cost quarter margin by that inventory to the XX.X% and a pound XXXX or million for increase These was in third per this in from year. per the consumption, the increased Adjusted for fuel of This and administrative the $X.XX before $XXX.X increments when EBITDA pound quarter and factors. of lower cost a a third third costs of and of of in cost The was higher and XXXX quarter offset lower charges, the

pound third year, cash which Copper benefit quarter this including XX.X% a than was Southern $X.XXX the second the of higher of for the $X.XXX increase. was the $X.XXX by-product cost of year, per cash operating this this is cost, cost revenues of cash in

with year. These the third diluted is a third or share per SCC The lower figure shareholders per noncash higher this XX.X% and pound that $X.XX. Regarding represent in $XXX total or per quarter decrease X.X% million compared we this million $XXX a of per $X.XXX a million, third of quarter or sales of year or of to of metal year. share to the quarter credit liability. $XXX.X quarter the a by-products, of credit in while diluted $X.XXX have attributable for acid recognize silver when provision the figures for annual result mainly tax income had pound and gold XX% earnings tax SCC this is by was decrease XX.X%. XX.X% and $XXX.X in income molybdenum shareholders sales XX.X%, of sulfuric X.X% of decreased zinc for net Net $X.XX. the with attributable X%, increased credits of last compares for million of of earnings prices which Total by This of by by to year quarter second the by was our

expenditures, our to capital Copper’s discipline but copper has the Regarding not prices, we financial allowed consistently operate and us outlook of on strong invest is on philosophy the the Southern that quality investing develop. the of based continuous assets a basis million in the on $XXX.X in $XXX.X years, million the asset the in the first superior in the Capital first nine-month last portfolio. Capital for investment year Toquepala year. million includes expansion. investments nine were months of first with $XXX of compared our Throughout nine-month

reducing to capital are we billion and onwards. expenses $X.X to capital XXXX, our a For of as forecast result expenditure XXXX rescheduling our

billion, – program has Regarding $X.X billion $X.X billion. Peruvian the sorry, already billion, have of in Chancas projects, Los billion, investment had $X.X total to $X.X of country and Los billion this board-approved in Considering increases our of $X.X budget projects, Michiquillay Michiquillay total portfolio Chancas invested. $X.X capital Peru been which and our projects

million XXX,XXX the XXX,XXX will Regarding Toquepala tons that by concentrator at Toquepala’s state-of-the-art $X,XXX project, reach XX% a tons includes increase, XXXX. project increase expansion when annual by to compared this year next copper to production new production

and As million reached invested in The in we initiate quarter production XX, expansion. this has of progress XXXX, to is expected project have year. the fourth September this $X,XXX.X XX% of

after assessment. of completed impact Regarding Tia we we Maria, approval the environmental have have and the with complied requirements, having engineering obtained all environmental

a SX-EW copper working the Peruvian with license this project construction with XXX,XXX-ton for total million. obtain $X,XXX greenfield are capital annual to budget of We government the jointly

phase. be indirectly in license years jobs life, significant quarter operation, fourth construction We XXX directly during project the XX related to issued in expected region. will workers company create generate another opportunities Through will to When X,XXX. expect jobs expects Arequipa the employ this and Maria the its project the of year. business provide services the Tia to The X,XXX the during

operations additional of Regarding zinc copper tons in per located development zinc Mexican produce Sonora, is which facility and XX,XXX budget engineering we project have zinc new components. of When a and are project’s projects, expect new purchasing XX,XXX we the for is million, completed company’s tons zinc the project within main we have approximately double XXXX. capacity. includes Buenavista and year. concentrator the Buenavista to to The basic initiate of the Currently, will concentrator on the $XXX working the this and process completed, in production

La Regarding for open-pit mine $XXX The trucks. is La and XXXX. The located mineral from X from the the mining tons ore it crushers the grade Caridad. of new with capacity by the This current operation annual wide grade project million, in concentrator from copper to for at Caridad government’s production will it will with in of expected expect Pilares studies presented La improve pit Caridad, transported producing be ore an start overall a Environmental concentrates. we were Pilares the kilometers ore the authorities. project Pilares budget of Sonora to primary permit an the environmental XX-meter grade copper consists combining off-road facility to X.XX% of XX,XXX X.XX% significantly the through ore early

as of very Regarding financial you it of from a dividends, investment in the to joining gentlemen, authorized quarterly other to record XX order operations, the forum and XX to much Board in is cash for of as dividend. to needs flow on of at each share the stock Directors at to and Accordingly, questions. and shareholders thank the dividend meeting a board X, With determine capital review $X.XX XXXX. for business the resources, of company market this generation cash November you now we’ll per ladies payable October, appropriate expected know, close the like plan policy announced us, common November on mind, open on cash of

Operator

Thiago Instructions] [Operator first line from Bradesco. question And come our will the Lofiego from of

begin. may You

Thiago Lofiego

Thank gentlemen. questions. Two you, and afternoon, good

know the Do of that’s elections I’m press mentioned that, But December Maria. what’s project Tia assumption place how the it’s the expectation. your this mistaken. – likelihood approved take regional election, fourth I if the in you on the view, in in one the the think not being First – X, you on your quarter? is realistic release considering will

also the of what’s And the be for quarter question seems So fourth very the tight and assumption to approval rationale Tia in of the year, window then products Maria? the the considering we until of Buenavista that ramp-up of the Thank expect full ton could cost, Toquepala on cash and for per year end second XXXX? before of your XXXX behind terms cost next you. improvement cash what the in

Raul Jacob

Okay. Thank you for questions, Thiago. very much your

Maria that Arequipa. These well us Tia year-end, five can been way of The approval on significantly. them as the well, very districts Islay the We the construction On permit project. point. in the we’re have work or the we very that’s optimistic are locally new we new and had that that that – of province expectation for new diminished elected expect a for see area at project people for this provincial Islay the circumstances Islay the that has has it the authorities of as the that And in the we question, past believe the to with Mayor. that been at evolved resistance license encouraged expecting the positive progress our on of way before the are

mentioned We release has in the it. Martin from possibility cash we Martin production recovery what the at for San San the Regarding the announced mine. well, we expect of cost, press and

into equivalent idea, zinc silver of Just San zinc cetera, of XX,XXX give to new tons, the production. production, production, to of we convert an you if it’s copper et the Martin tons

a to – And range case that point, concentrators cost zinc et it our to with contribute silver been has the energy, it’s tons the XXX,XXX the or plus cost of us price labor that through molybdenum for have pound cash annual So for believe the tons certainly fuel, we per good Toquepala cost, cost will makes production X,XXX this the cash given should cost, XXXX. in new the structure and or of cost deck of cetera, a will $X.XX cash that capacity keep copper very expansion in the being decreasing has – copper or Toquepala and of our lead, XXXX. current copper expectation, of an that at our

Thiago Lofiego

Raul. Thank clear. very you, Very,

Raul Jacob

You’re welcome, Thiago.

Operator

Thank Carlos comes And the you. of line De question from our second from Morgan Stanley. Alba

You begin. may

Carlos De Alba

finally, the Thank you, then, San mines And Raul the how give company probably contribution San are by-products is and – cost operation? sense the released then, in question, but that equivalent those from on you completing time, quarter the of us would the EBITDA some also you of not cash particularly cost cash – fourth is for the – zinc concentrate what with continue third-party before what believe Martin of what I IMMSA Martin, guidance much company Victor. And do profitable bring not or could or company will this information Raul, purchases make that what is this the And unit just are And would I for the XXXX? of zinc or the finishing operations? the to response the from that expecting if has may, a year? for that recall, last

Raul Jacob

Okay.

on cost. cash question Let on your focus me first

per to our it expecting credits from right to is year. before cash We’re pound decrease $X.XX what cost next now

So $X.XX about cash cash per cost – – and pound. total at cost

Cash it’s in cost IMMSA, profitable don’t the of close it’s on me very is is by-product’s our contribution credit. low, I this have units, the business. mainly So very of zero. however, us, of the the In and of difference a very, EBITDA case the Its IMMSA, – operation; for with side to unit. contribution by-product contribution San zinc Martin, regarding

zinc silver, being that subtract operation the are metal measure If has when the et cetera, by-products lead, main of by-product the IMMSA and in case the gold you IMMSA. the you

of we regarding divide well. If purchases in as where Mexico. the our large want when the our we for at fourth operating concentrates are Mexican and see in you you segments the concentrate to – And operations Peruvian unit, the IMMSA we look in this operations, copper profit quarter, third-party’s XX-Q, open-pit can the operations for the well,

as in Peru. to expect well concentrate large be copper We in

vis-a-vis in purchase expecting be for case be our any to are Peru. because the additional smelting and we year in capacity for that’ll we buy will to So and now, not concentrates – concentrates next both Mexico large

Carlos De Alba

much – third-party company did company you the in the that in concentrates the quarter? was buy Thank Or for what Raul. strategic concentrates short? happened? Why very third Was or more

Raul Jacob

on, driven capacity. we you we’re by and the not in circuit we them. need From given very terms operations. It’s may reasons. at got buy acquired Basically, technical for smelting start In And year, year. to next that it commercial just more was running on do some having move some cases, concentrates advantage concentrate to as speed appropriate to that expecting from now through full some concentrates to fill you third-party the our

Carlos De Alba

quarter? not also in the fourth But

Raul Jacob

Yes.

Carlos De Alba

you. Okay, thank

Raul Jacob

Thank you much, very Carlos.

Operator

comes Scotiabank. And line Salazar question Alfonso our from the next from of

begin. may You

Alfonso Salazar

Raul. you. have two you, Victor I Thank questions. Thank and

that first same, legal what them? second there does the Mexico, and The always And is Mexico. social you. projects you And about the or one more board? news related is Do in the any impact pretty the other Thank study that for risks. to operations each much a in by your if has of is have to regarding been the Empalme approved projects ask, I any expansion

Raul Jacob

of well other news to applies company. the Empalme regarding as on report any investments some facilities No in other smelting, and that such operations Okay. Mexico as the to in or

presented not developed. different at Pilares. We’re, obviously, in projects, zinc But, the two the release. what that in on and Peru, invest Those Basically, it’s possibilities focusing being Mexico different this to we’re point, the the ones press in and looking at Buenavista locations, we are concentrator only were

doing of industry. impact specific Regarding part in Peru. have Yes, business, for some for is in speaking, board something forward study generally of each in a them. Well, moving other operations projects, with as that but our them, we’re is as this well key Mexico as we a don’t our we have do social in approval

are environmental and with regarding the community We most point. advanced techniques at complying this relations

Alfonso Salazar

you Thank sense. much. Make very

Raul Jacob

welcome. You’re

Operator

Thank you.

line Our next question of comes the from Grishchenko Petr from Barclays.

begin. may You

Petr Grishchenko

please And be for questions. Good lot afternoon up taking a a beyond? it year and my thanks may of kind you for guidance next Can provide break in for CapEx and the CapEx second, billion. billion full $X.X run XXXX, maintenance? think and for call year it were estimating and I rating you’re a expansion it $X.X with And staying for maybe around, you

Maria CapEx Tia for reason So was far? in so to delay, the addition what lower

Raul Jacob

Okay.

let this million CapEx. maintenance billion. at guidance mention guidance $XXX than this XXXX at $X.X $XXX that’s that higher is First, it’s slightly point Maintenance, point, me current million on our about our for

have we Now Tia a on other are well besides have the at expectations on we capital, our you have been decreasing why but And initial good money strong our them moving specific mentioned, – reasons projects to we to that, expected that you at as pace, beginning is year. nothing Maria, have budget where for year. of be we this the not the Tia just some Maria, mention

spend this but this permit moving being not getting are as construction can. to the soon product as able looking the forward we’re for forward and with money so in we We case far,

Petr Grishchenko

maybe line how what’s, pipeline you those specifically, Arco, take? think would you Got Los projects like El long Chancas, can start the And it And That’s very ramping it. the you time have; up? you and, specifically, comment Michiquillay, on helpful. your could largest

Raul Jacob

it impact the study. and to that of results better this we the end view feasibility case on if once up initiate of this are expecting us XXXX, may accelerate project way we by Sure. allow we’re well initiate expecting to Certainly. impact project to we XXXX, the believe with copper site, the have XXXX, as XXXX XXXX, over study of XXX,XXX environmental and of In as of significant on initiating finish the are a It of XXXX develop the in X,XXX assessment. is Michiquillay, Well, investments tons environmental And should finishing feasibility should production tons the in year, Los running initiate in of running point. exploration it’s to as Chancas, do Maria. we Tia we and XXXX, Maria copper as in as by from construction it’s In by-products, tons the finish that’s project the expect. expecting molybdenum to molybdenum the work mainly Los production. now that’s to be Los a Chancas, community at Michiquillay all more case exploration next investments year, our of by Tia by up and by-products much the as be with production where should accelerate and of should a we next be that exploration, – Michiquillay. important work – well if in the Los and we of Michiquillay, as aiming XXX,XXX XXXX and case assessment for Chancas, gold. in the have we well case

Petr Grishchenko

year, payments, very dividend you’re your you Got to the copper Do around but rating Board I the for run given average? what’s year? frequently the switching understand expectation expect And it the for revisits it. year same levels stay That’s this – $X dividend. be full assuming prices here helpful. to on gears I around guess, billion next

Raul Jacob

us, the It’s It’s on not to that’s to management comment Board. that. for up

cash However, that. copper about prices has been when this very allow rewarding our do you us and to can Board see forecast of that shareholders, flow keen

in quarters at can’t management outside we’re the decision, is approved what per comment currently been a $X.XX But quarter, reach. I share row. So that per on two that’s has

Petr Grishchenko

That’s very very Best Thank it. helpful. much. of you Got luck.

Operator

of next our from Itau And from line comes Marcos question Assumpcao the BBA.

begin. may You

Marcos Assumpcao

Good afternoon, everyone.

Historically, on been them second how more a copper forecast bullish if as and prices, bit First could you – Mexican copper be provide, please, it could levels? an you question your have helpful? well, at on if could prices. on long-term how have Peruvian comment been question, you contracts? your And do also – update And see price you current incentive you on a guys bit labor

Raul Jacob

two-year we’re contracts here you your the questions, we Well, Peru, let Peru. unions of company Certainly. Thank with currently for negotiating years much me already the with where labor with and very workforce the Marcos. three has. for our contracts signed start that Peru, six four in Mexico

expecting per for the – negotiating these the a the – that’s These We’re remaining, have years, each Peruvian that for operations. year increase three-year the years we call or are with finish contractors, to contract. of on already and And signed, of the the before three X% two basically, year-end.

We’re negotiation in the Mexico. unions we arrive salaries. what it’s review had I to They positive at of may And and – that shortly. this Peruvian the very case well, were a the optimist final In increased, we in that’s X% year. with case Mexico, think,

year, next You discuss have and to discuss salaries the one you benefits. year on

So this year was I mentioned already. as salaries and it was X%,

We the in our presentation view Victor it. to happening On that positive did. a of price view business, has Pedraglio is this the going copper been company, in the that I’m summarized in well, long-term the it. we – like what are we think business and has very, mention very long-term profile

the here the copper market five In incentive that, given the approved of XXXX, believe that were reflect the will the end in we of XXXX. initiated prices per current year, us prices, copper have as scarcity prior years key the few as that believe well price projects. trends in incentive $XXX than And supply. in face, range that $XXX production the the we we I had And new think being we after that year have eventually in We will we cycle think think as prices we’re pound. lower prices. the the that things super will that to be required years not new next had price for cycle is in for upside that demand of copper we is – a seeing we yet which for each

believe for few reality the For balance, will as outlook next but the the next we that this years. that the that not mentioned, is prices we few the reflecting quarters. market – case year, And this market we start see in or in

Marcos Assumpcao

you very much, Thank Perfect. Raul.

Raul Jacob

welcome. You’re

Operator

question Suisse. from Criscio next from the line of our Renan Credit comes And

may You begin.

Renan Criscio

an provide for first the Hi, on you everyone. My can update correction question’s program. questions. Thanks if Buenavista, the on,

can back how happen? already the is that concentrating, see all if And you the production when you the as is year? we on also, for expect Toquepala, And to plant year or of not that? you you can based seeing, And And provide can informations if expect evolving? combine copper question what is to if you operating? on next see So we been normalized or whenever and operation finally, on, levels these my you last ramp-up have it’s concentrator new – the what if next comment, can do

Raul Jacob

Certainly. Thank for you Renan. your questions,

the main program, or well, was plant working liquid into facilities. SX-EW been we the The solution on that or problems Buenavista One the we ore the correct. operations two correction have these hard. SX-EW the pregnant to that of grade goes need On have very grade

We liquid this expecting ore quarter solution. – these prior – grade third pregnant the been XX% are that’s increase ore why other of of quarter year. we a the SX-EW is or on better an we of And grade seeing the throughput are copper we’re liquid in mentioning about the vis-a-vis production solutions, have this that thing content in of pregnant

is in one Buenavista, full X at factor, SX-EW the operations our second For in relatively at have are the as southern SX-EW new plant capacity, which Buenavista plant well older the using we – Buenavista. as X, construction the in we have we or that a

more liquid of XXXX. of and order we We we we’re well, and – the actions working, these normalized some by different to throughput will in that is to direction in other trying this solution in the impact our through grade lower through the have. in the our right capacity the and that we’re view facilities. doing that’s This the think expectation get plants reduce restore having full So we’re that pregnant

progress, very We XXXX capacity this we doing full through be and to this and good are expect getting finishing plant. on

already lines. On X little of in Toquepala, a and quarter. the The year believe It’s the of into new we we of it’s we quarter ramp-up project. of total can X the mineral quarter has had about next delay small the – amounts concentrate, that facility through concentrator X point, Line bit we’re line at of a than concentrator is this do fourth first but well, recharged more and small this this the year. producing a

So getting the by or be year. quarter full first April, say, of end concentrator the most of by speed will new next at the likely

is slightly production, next terms tons. than producing copper of less be we million that view will In one year, our

current is that’s We tons. forecast the XXX,XXX has that’s engineers. to what – want Our been provided forecast our by –

want believe the view increase company. production for this to and landmark is we one over it’s that million Our we a tons to

tons. X,XXX,XXX For XXXX, it’s

Michiquillay, production tons basically For we XXXX, then it’s in Los that benefit get by arriving will and XXXX. tons tons. the some XXXX, over projects at X,XXX,XXX increase will of Chancas XXXX X,XXX,XXX that’s X.X other our and XXXX, to million

Renan Criscio

Thank Clear. That’s very helpful. you.

Raul Jacob

welcome. You’re

Operator

line from our of Pipes you. B. the from FBR. Thank question next Lucas And Riley

You may begin.

Lucas Pipes

has first Thank you can I in on a your everybody. few market you outlook good the elaborate afternoon follow-up wanted kind you one and little the bit itself. Raul, prior years, Would very to think your perspective? but it you supply-demand? Thank what much, questions of side? the copper and if Is next of really mentioned over summer, the And on demand supply How so, prices over much on here lower? appreciate happens you. much been driving exactly side? the the how what on

Raul Jacob

let to in in shareholders. to their even deserve copper shareholders control, we’re value parts and a me the copper that’s believing for believe certainly outlook is and being Well, though copper Obviously, different our that of where market, improvement a our more investment. return generated the has we in value that saying our something generate certainly is we cost helping Yes. is focused cost operations that good follow as us that

XXXX had – negotiations. speaking, the labor of happened Now possibly has the supply one – is been But total generally affected conflicting not that positively up for year about expecting I months. has of the beginning strikes, were labor in by were no that talks years, us. no past very end mean, very operation that worldwide the at is Even in for industry, was this have interferences. with third we we what through

We the X.X%. good were the worldwide. has very demand outlook beginning expected have a better supply even as demand what At year, expecting gone growth we regarding we of and of

year While X.X% demand sorry. for and copper now at for between X%, – we’re X.X% I’m looking growth the

than looking it equilibrium we’re have. much in been may is things is of have better-than-expected And fact the that year consistently that has sides market. market of in positive, we for both us next important at the are An higher here, So weeks. important also the what been before, commercial has a which for indication few very an decreasing inventory terms that strong two the are last

balanced we in same at market, And and XXXX market believe approved in on, project excess or as a said balance. new see say, the we at before, seeing deficit time, The we’re year, has I that point. we we view our is to encouraging developments. that’s for positive supply market. significant see an balance that with So but this a the what no It’s signs market very is have been and

Lucas Pipes

all mining something us appreciate changes I to you regulatory extent they are more can what the would the extent helpful. side, over Very what specifically? you color. there on remind affecting to Mexican the maybe Switching be in

Raul Jacob

us any Well, affect significant so this at seen far changes that point. we haven’t

Lucas Pipes

that high the Anything through has a over coming or so? year next of likelihood

Raul Jacob

don’t We on when to We to opinion we different information. changes No. in have we speculate make want an want -- will specific laws.

Lucas Pipes

been around your some And Got remind – of appreciate there maybe, on Buenavista. press regarding on thoughts? you court situation, your you. okay. Thank the us lastly, it, decision can would you the then update Can kind has I

Raul Jacob

has been that that. this disruption extra to Supreme are cost don’t production that We in point, we third-party this as taken that actions be has environmental Bacanuchi related company related different for a was community the The or say and decision have the It the by not ruling for to this of related Mexico was Court, of to process should government. at of ruling. Mexican request Certainly, us. in asked regarding Court well, and see, consulted taking Supreme agency this are and the the an by to actions we a the environmental that doing directly agency having risk involved was any the

and So current in we’re no we’re interference business. with seeing operating well our this

Lucas Pipes

hear That’s much. best and you good very Thank luck. to of

Raul Jacob

You are welcome.

Operator

Thank Research, And you line begin. from our Independent from the of Tumazos next Tumazos you. comes Very may question John Charles

Charles Tumazos

the a $X.XX is more The to a on in relation elaborate $X.XX current quarter in you little high relatively policy? earnings? dividend Could of payout the the

Raul Jacob

to The or up to loans review on it’s of a market, the review decide pay company the way has is on to that It’s specific Board copper up that dividend think capital to this pay. I them. investments. to the the by any Well, decision done is

Tia has and you in last been significantly the already cash operation. our are growth a finished know, we forward cycle to expansion recognized we as In we’re looking market few finishing low and years with big growing cost in the project. expansion And the been, the Buenavista have Peru, investment, the the company Mexico solid Toquepala by Maria of initiate We very very investments.

the of company during years ready said, of are prices, projects to go. amounts the I low significant has been As money in investing that

a facing point. better at new are copper cycle this We price

of in that hands So we decision that’s entirely I believe the But positive our mentioned is as dividend. in a that, is that is the being it this – outlook reflected before, Board.

will at pick that the per I meeting, as the each to a board review, has company pay is specific cents or Now as ratio no policy. specific The Board share policy a have position we said, And dividend considered. flow be the loans, that of any that to on related the cash cetera. et will to the company, fund, generation projects basis, payments cash

Charles Tumazos

Thank you very much.

Raul Jacob

welcome. are You

Operator

you Alba the next Carlos from of from line begin. Our Instructions] Stanley, may De question [Operator comes Morgan

Carlos De Alba

production missed restart Raul, reach production the San And company Raul could Martin XXXX? when full the the capacity? operation you you production? but think expect repeat will when just actually also, copper this, two And expected does – I in do to maybe

Raul Jacob

Yes.

will to we’re the be of initiating In fixed the mineral already first producing production. expecting expecting to and second second already the of San production initiating it. have are next storing for have concentrate year. But Martin quarter, the concentrator We by quarter quarter, and we

XXXX our guidance, it’s tons production For of copper. XXX,XXX

Carlos De Alba

XXX,XXX?

Raul Jacob

XXX,XXX

Carlos De Alba

XXX,XXX.

Okay thank you very much.

Raul Jacob

welcome. You’re

Operator

Thank this further time. And showing no I’m you. questions at

Raul Jacob

certainly thank nice in participation and With results. have Thank when you the much, conference a Copper’s third us we a hope you much. very So day. back for year you, January. and with call we Southern We report and our quarter have this, to your much, XXXX have conclude appreciate very

Operator

thank today’s disconnect. all gentlemen, in conference. and participating Everyone, you does and have Ladies day. the you This may great conclude for a program,

Southern Copper (SCCO) 24 Oct 182018 Q3 Earnings call transcript