Story behind numbers
Higher metal prices and copper sales helped Southern Copper register a 38% rise in revenue at $1.7 billion. Peer Newmont Mining
Like Newmont, Southern didn't let production disturbances derail its sales performance too much. Production was affected by factors such as labor unrest, adverse weather, and ore grade declines. Still, the overall production of Southern for the quarter increased compared with the year-ago period thanks to higher production at the Buena Vista mine. Three-quarters of the company's sales came from copper, which showed a healthy growth of 19% over the same period last year.
Supply issues seem to be pervasive, with even Freeport-McMoRan Copper and Gold
For the long run, Southern looks to have placed its bets right. Its output is expected to increase significantly with most of its projects in different mines on track, including Buena Vista, La Caridad, Toquepala, Cuajone, and Tantahuatay. This takes care of the supply side. Meanwhile, demand for copper and two more metals Southern deals in -- silver and molybdenum-- is also expected to improve in 2012. With copper stocks of different companies decreasing, demand for it is expected to grow at 2% in key markets such as Asia. The demand for silver, another of Southern's products, is expected to go up not just for industrial purposes but also as a safe haven for investors in a wobbly economy.
The market is promising to generate more demand for basic materials, and Southern Copper is geared up to deliver the goods by hiking production through the development of new projects. The stock is worth watching. To stay updated on Southern Copper and the metal industry, click here to add the stock to our watchlist service. It's free, and it helps you stay updated on news and analysis on your favorite companies.