Southern Copper (NYSE: SCCO) expects its copper production to exceed one million tonnes by 2029 as development of its flagship Tia Maria project approaches the halfway point, reinforcing the company’s growth plan even as output in Peru has weakened.

The company raised its 2026 production guidance to 917,000 tonnes, about 1% above its previous target. It said production should remain broadly stable next year before increasing to about 970,000 tonnes in 2028 as Tia Maria ramps up. By 2029, Southern Copper expects annual output to reach 1.06 million tonnes.

Management also said it expects a slight global copper deficit this year, noting that exchange inventories represent only about 15 days of worldwide demand. That tight inventory backdrop gives added weight to Southern Copper’s production outlook, because the company is relying on a single major project ramp-up to move output above the one-million-tonne threshold.

“For 2028 and on, we expect Tia Maria to fill in and increase our production level to about 970,000 tonnes,” chief financial officer Raul Jacob said during the company’s second-quarter earnings call. “And in 2029 our copper production should be over 1 million tonnes.”

The forecast underscores the role of Tia Maria in Southern Copper’s long-term expansion strategy. The company has committed $1.1 billion to the project, has invested $693 million so far and recently issued $1.25 billion of 10-year senior unsecured notes to finance the development.

Record quarterly results

Southern Copper reported second-quarter sales of $4.3 billion, record adjusted EBITDA of $2.86 billion at a 67% margin and record net income of $1.67 billion. Operating cash flow reached $3.68 billion in the first six months of the year, while capital expenditures totalled $865 million over the same period.

Management attributed the quarter’s results to higher metal prices, despite a 12% production decline in Peru caused by lower ore grades and recoveries at the Toquepala and Cuajone mines. Higher output from the company’s Mexican operations partly offset the decline.

Jacob said Southern Copper does not expect construction delays at Tia Maria, even as execution risks remain around that project and other developments in Peru. He said the project’s water licence has been renewed and that equipment procurement, including desalination infrastructure, remains on schedule. Material currently in process is also expected to support copper sales in the second half of the year, he added.

Southern Copper estimated Tia Maria’s cash cost at $1.16 per lb., noting that the operation will not benefit from by-product credits. The company also approved a quarterly cash dividend of $1.10 per share and a stock dividend of 0.012 shares, for an estimated total distribution of $3.23 per share.

Policy and project challenges

The company also acknowledged continued difficulties at its Los Chancas project, where illegal mining has slowed development. Uncertainty remains over mining policy under Peru’s incoming administration. Jacob said management would wait for the new government’s formal proposals before commenting on potential changes to the country’s mining canon.

Those policy and permitting questions are central to the company’s growth plan because Southern Copper’s near-term production gains depend not only on financing and construction progress, but also on keeping major mine developments on schedule in Peru and Mexico.

He also said proposed restrictions on new open-pit mines in Mexico are not expected to affect Southern Copper because the company’s existing concessions remain valid.

With Tia Maria nearing the halfway point of construction and financing now secured, Southern Copper is presenting the project as the centrepiece of its next growth phase. If the mine begins production on schedule, it would lift the company’s annual copper output above one million tonnes at a time when management expects global copper supply to remain tight.