The U.S. copper industry is valued at around $20 billion, and is one of the key market indicators many market participants watch closely.
Why is that?
Well, copper is heavily used in industry, and the rise or fall of this particular commodity can portend a great deal for where the economy is headed.
However, I think one of the most important numbers that’s also within this sector is negative eleven cents. That is what it cost Southern Copper (NYSE:SCCO | SCCO Price Prediction) to produce a pound of copper in the first quarter of 2026, on a net basis after by-product credits. The largest publicly traded pure-play copper miner reported an operating cash cost of -$0.11 per pound, down from +$0.77 a year earlier.
Southern Copper flagged the swing as a -114% year-over-year improvement in its Q1 2026 release filed April 29, 2026.
What It Means
A negative cash cost carries real weight. It means silver, molybdenum, and zinc pulled from the same ore body generated enough revenue to more than cover the full cost of mining, milling, and refining the copper. Southern Copper earned that outcome in a quarter when silver prices ran +157.9% year over year, molybdenum climbed +24.2%, zinc rose +14.0%, and copper itself gained +37.5%. Sales volumes of silver (+11.6%) and zinc (+16.4%) amplified the effect.
The company posted net income of $1.577 billion, up 66.7% year over year, on revenue of $4.251 billion, up 36.2%. Additionally, Southern Copper’s adjusted EBITDA reached $2.71 billion at a 63.8% margin, which supported operating cash flow more than doubling to $1.695 billion. CEO German Larrea called it a “record-breaking quarter” in prepared remarks.
Market Reaction
SCCO stock started the year at $144.57 and closed at $172.01 on July 2, 2026, a 23.31% year-to-date gain. Over the trailing twelve months the stock is up 72.32%. Recent action has cooled, evidenced by shares sinking nearly 15% over the past month from a June 2 level of $201.37, giving long-term holders a pullback inside a longer uptrend.
Bull Case
I think Southern Copper’s bull case starts at the cost line and radiates outward. A cash cost below zero means Southern Copper prints cash even if copper retraces from current levels. It also means the company can absorb the operational grind of lower Peruvian ore grades, which pushed Q1 copper output down 4.0% year over year, without ceding margin. That is what a low position on the industry cost curve buys.
The setup extends past one quarter. The Tia Maria project in Peru was 32.5% complete as of Q1, with first production targeted for Q3 2027 and a $1.8 billion budget. Management is committing more than $20.5 billion in capital across the decade to lift output toward 1.6 million tonnes of copper by 2033. Copper itself is providing the tailwind. FRED’s global copper price benchmark reached $13,483.75 per metric ton in May 2026, the top of the 12-month range and the 90.9th percentile of that window.
Holders get paid to wait. The board declared a $1.00 per share cash dividend plus a 0.0100 stock dividend, record date May 13, payable May 29, 2026. Cash and equivalents sat at $4.915 billion at quarter end, with shareholders’ equity up 23.19% year over year.
Sector confirmation runs across the metals complex. Freeport-McMoRan (NYSE:FCX) posted its fourth straight EPS beat with Q1 net income up 154.62% year over year. Newmont (NYSE:NEM) delivered record FY2025 free cash flow of $7.299 billion. MP Materials (NYSE:MP) beat EPS estimates by 182.19% in Q1 with magnetics revenue up 306%. The metals complex is earning its keep.
Bottom Line
For a long-term investor, -$0.11 per pound reframes Southern Copper’s risk profile. When the swing metal in the cost structure is a by-product credit, downcycles hurt less and upcycles compound harder. With Tia Maria targeted for Q3 2027 first production and a decade of capital already committed, the next twelve to eighteen months mark the handoff from cost discipline to volume growth.
Keep an eye on copper realizations and Peruvian ore grades in the company’s next earnings report.
Contact [email protected] for any questions or corrections.
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