The Real Engine Driving Southern Copper Stock Isn’t Copper

While investors fixate on the company’s primary metal, a surge in zinc production is quietly rewriting its profitability and offering a surprising answer to the market’s biggest concern.

When you look at a mining giant like Southern Copper (SCCO), it’s natural to focus on, well, copper. The price, the production volume, the grade of the ore – that’s the main story. And right now, that story has a worrying chapter: management has guided for a drop in copper production next year.

But fixating on that one headline figure means missing a more powerful, and far more positive, development happening just beneath the surface. The number that arguably matters more to the company’s resilience right now isn’t about copper at all. It’s about zinc.

A By-Product No More

In 2025, Southern Copper’s mined zinc production surged. It wasn’t a small bump. Production rose 36% year-over-year, an increase driven by a huge new contribution from one specific asset: the Buenavista zinc concentrator.

Beyond being a curiosity for metal traders, this is a direct lever on the company’s bottom line. For a miner like Southern Copper, by-products such as zinc, silver, and molybdenum generate revenue credits. These credits are subtracted from the cost of producing copper, lowering the all-in expense. The more valuable the by-products, the cheaper it is to mine your main metal. And that is exactly what’s happening. The company’s net cash cost for copper in 2025 was just $0.58 per pound, a sharp reduction from the year before. Management stated this was mainly attributable to a $0.34 increase in byproduct revenue credits. The zinc surge is a primary driver of that improvement.

The Answer To Weaker Copper Grades

This brings us back to the market’s main worry. Skeptics rightly point out that the company expects to produce 4.7% less copper next year, a drop primarily attributable to lower ore grades at our Peruvian operations. In a normal scenario, lower volume means higher per-unit costs and squeezed margins.

But the zinc boom provides a powerful counter-balance. Management has been clear this is a deliberate strategy. At the Buenavista mine, they found a pocket of very good ore grades for both zinc and silver, and made a conscious choice to focus the new concentrator on zinc instead of copper because it was more profitable. This isn’t a company suffering from operational missteps; it’s one optimizing its assets to produce the most value. The rising by-product credits from zinc help insulate the company’s profitability from the temporary dip in copper grades.

While the market is pricing in the risk of lower copper output, it appears to be giving less credit to the powerful, and intentional, expansion of a secondary metal that directly lowers costs. For investors, while the copper production forecast is relevant, the crucial question is whether this booming zinc output continues to keep net cash costs firmly under control.

Own The Edge, Not The Single-Stock Risk

Here is the part worth sitting with. The number above is real, but telling a durable strength from a fragile one takes work most investors never have time for, the patient digging that turns a frightening headline into a credible case. Doing that once is hard; doing it across the whole market, every quarter, is a full-time job.

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