Silver windfall buys time for Tia Maria
- Copper is still the core product, at 70.2% of Q1 2026 sales.
- Silver jumped to 12.5% of sales after a major price spike, making by-products central to the story.
- By-product credits pushed net operating cash cost to negative $0.11 per pound in Q1 2026.
- Tia Maria is 32.5% complete and is expected to start operations in Q3 2027.
- Los Chancas remains stalled because illegal miners are still in the project area.
A stronger bridge to growth
Southern Copper is in a strange but good spot. Copper output is in a soft patch, but silver and molybdenum prices are doing a lot of the heavy lifting. In Q1 2026, silver reached 12.5% of sales, and by-product credits helped push net operating cash cost to negative $0.11 per pound.
That cash matters because Tia Maria is now the main growth bridge. The project was 32.5% complete at March 31, 2026, and management expects operations to begin in Q3 2027. If construction keeps moving, the company can turn today's by-product windfall into a larger copper base later.
The bear case is still real. Lower ore grades are weighing on mined copper production, and the 2026 production guide is 915,400 tonnes, only slightly above the earlier plan. If silver and molybdenum prices cool off, the weaker volume period could look much tougher.
The biggest open question is durability. The market is rewarding today's cash flow, but Southern Copper still has to finish Tia Maria, solve the Los Chancas illegal mining problem, and explain how dividends will work as treasury shares fall.
Low-cost mines with by-product help
Southern Copper explores, mines, smelts, and refines copper. Its main mines are large open-pit operations in Mexico and Peru. The company sells copper, plus by-products such as silver, molybdenum, zinc, gold, and sulfuric acid.
The model works best when copper prices are healthy and by-products are valuable. By-products lower the reported cost of each pound of copper because their sales offset mining costs. In Q1 2026, that offset was unusually powerful.
The company also spends heavily to grow from its own project list. Tia Maria is the near-term project. Los Chancas, Michiquillay, and other projects are longer-term options, but they need permits, social support, and safe control of project areas.
Where it breaks is simple: metal prices fall, ore grades decline, or projects stall. Southern Copper has good assets, but it cannot control copper, silver, or molybdenum prices.
Copper leads, silver now matters
Copper
Copper made up 70.2% of Q1 2026 sales. It is the main driver of revenue and the reason investors own the stock.
Silver
Silver reached 12.5% of Q1 2026 sales after a sharp price increase. That makes it a key profit swing factor, not a side detail.
Molybdenum
Molybdenum was 10.5% of Q1 2026 sales. It helps reduce effective copper costs when prices are firm.
Zinc
Zinc was 3.4% of Q1 2026 sales. The Buenavista zinc concentrator is being used to capture more zinc and silver value from favorable ore zones.
Other products
Other products, including gold, sulfuric acid, and other materials, were 3.4% of Q1 2026 sales. These are small, but they add useful credits.
Mexico is the larger engine
Segment shares use Q1 2026 net sales to external customers from the latest 10-Q. Mexico is split into Mexican open-pit and IMMSA underground operations, while Peru is reported as one operating group.
What could go wrong
By-product prices fade
High impact · Medium oddsThe current profit story depends heavily on silver and molybdenum. In Q1 2026, silver was 12.5% of sales, up from 7.4% in Q3 2025. If those prices fall, net cash costs could rise fast.
Tia Maria slips
High impact · Medium oddsTia Maria is the main near-term growth project. It was 32.5% complete at March 31, 2026, with operations expected in Q3 2027. Delays would push the growth lift farther out while capital spending continues.
Los Chancas stays blocked
Medium impact · High oddsLos Chancas is not moving because illegal miners remain in the project area. That removes a key long-term growth option for now. A long delay could force management to lean harder on other projects such as Michiquillay or El Arco.
Ore grades keep falling
High impact · Medium oddsLower ore grades are the main reason 2026 copper production is in a trough. The latest guide is 915,400 tonnes for 2026, only slightly above the prior 911,400 tonne plan. If grades disappoint, by-products may not fully cover the weaker copper output.
Politics, trade, and conflict raise costs
Medium impact · Medium oddsSouthern Copper operates across Peru and Mexico and sells into global commodity markets. The company added a geopolitical risk factor tied to military conflict, supply chains, costs, and commodity markets. U.S. copper tariffs and Mexican mining law changes are also items to monitor.
In one breath
What does Southern Copper actually sell?
It mainly sells copper. In Q1 2026, copper was 70.2% of sales, while silver, molybdenum, zinc, and other products made up the rest.
Why did silver become so important for SCCO?
Silver prices rose sharply, and silver reached 12.5% of Q1 2026 sales. That helped by-product credits push net operating cash cost below zero for the quarter.
What is Tia Maria?
Tia Maria is Southern Copper's key Peru growth project. It was 32.5% complete at March 31, 2026, and management expects operations to begin in Q3 2027.
What is the biggest risk for Southern Copper investors?
The biggest risk is that metal prices fall before production growth arrives. Lower ore grades and stalled projects could hurt more if silver and molybdenum stop offsetting costs.