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Southern Copper’s Reserves Compared to Other Copper Producers

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Sep. 20 2015, Published 10:22 a.m. ET

Southern Copper’s copper reserves

Previously, we looked at Southern Copper’s (SCCO) current production profile. Southern Copper was the world’s fifth-largest copper producer in 2014. The top two producers were Codelco and Freeport-McMoRan (FCX). However, Southern Copper claims the highest copper reserves in the world. In this part, we’ll explore how SCCO’s mining assets stack up against its peer companies.

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Southern Copper has the highest reserves

Southern Copper had copper reserves of 69.9 million tons as of December 31, 2014, as you can see in the graph above. This makes Southern Copper the biggest copper company in terms of available reserves. Interestingly, Southern Copper’s available copper reserves are more than BHP Billiton’s (BHP), Rio Tinto’s (RIO), and Vale’s (VALE) combined.

BHP Billiton currently forms 5.04% of the SPDR S&P Global Natural Resources ETF (GNR).

Mine life

Southern Copper’s current mine life is 105 years. Mine life is expected to fall to 59 years once the planned expansions are completed. However, even after the expansions, Southern Copper’s mine life would be higher compared to other copper companies.

Higher copper reserves and mine life are competitive advantages for Southern Copper. This means less capital expenditure, as the company’s available reserves will last many years. In spite of this, Southern Copper has been conservative with its capital expenditure and capital structure. We’ll look at this more in the coming parts of this series.

The company’s four major copper mines are open pit. Open pit mines generally have less unit production costs. In the next part, we’ll analyze Southern Copper’s unit production costs and compare them with other major copper producers.

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