SCCO or FCX: Which Can Offer Production Upside in 2017?



Production upside

Previously, we noted that Freeport-McMoRan (FCX), Rio Tinto (RIO), and Southern Copper (SCCO) reported year-over-year (or YoY) rises in their respective 2016 copper productions. 

In this article, we’ll analyze which copper miners can offer production upsides in 2017.

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Freeport’s production expected to fall

Freeport expects to ship 1.9 million metric tons of copper, 2.2 million ounces of gold, and 92 million pounds of molybdenum in 2017. The company expects its gold and molybdenum productions to rise YoY (year-over-year), and it expects its copper shipments to fall. Freeport’s lower expected 2017 copper shipments will likely be the result of the asset sales the company completed last year.

We should remember that Freeport’s 2017 production guidance would greatly depend on an early resolution of Indonesia’s export ban. If Freeport-McMoRan completely shuts down its Grasberg mine, there could be a significant impact on the company as well as the global copper market. Freeport is expected to produce ~590,000 metric tons of copper at Grasberg this year.

Southern Copper

Southern Copper expects to produce 0.9 million metric tons of copper in 2017, similar to its 2016 production. Southern Copper is investing in the development of its Tia Maria mine and the expansion of its Buenavista mine. The company expects to produce 1.5 million metric tons of copper in 2023, which is 67% higher than what it’s expected to produce this year.

Rio Tinto–owned (RIO) Turquoise Hill Resources (TRQ) is also expected to join the ranks of major copper producers in the next decade, once the company ramps up its underground operations.

In the next article, we’ll look at Glencore’s (GLNCY) 2017 production guidance.


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