SCCO = Southern Copper
48b market cap
4.4% = 2.80/62 = forward yield
$4.27 = 2021 EPS estimate.
10.5b$ 2021 revenue estimate
2.7b$ cash, 6.5b$ LT debt, as of 3/2021
BBB+ credit rating
773m shares, no change for many years
950,000 tons 2021 copper production
1,900,000 tons 2028 copper production (company guidance)
The dividend varies with EPS, which depends almost entirely on the price of copper, and how much copper they produce. Other things being equal, doubling copper production between now and 2028 should double the dividend.
Estimates from various sources say global copper production will increase 3%/y long term. SCCO is an outlier, in their guidance for production increase. It takes 10 years, from greenfield to full production, for new copper mines.
Estimates for global copper demand vary. If the world ignores global warming: 3%/y. If the world gets serious, and car companies build all the EVs they say they are, and solar/wind continues to build out, and the grid gets robustly upgraded, then demand will increase 6%/y long term.
If demand rises faster than supply, today’s high prices will be sustainable LT. Copper is an element, with elemental properties, so there is no good alternative. Aluminum is the best substitute, but it is less conductive, less ductile, and has different thermal expansion properties.
There are very few big unexploited hi-grade copper deposits left anywhere. Another one is Kamba-kakula, in the DRC. Ivanhoe, with a Chinese partner, owns it. But the DRC has been a failed state since forever, so this is a gamble. SCCO’s mines are in Mexico and Peru. It is almost impossible to permit new mines in politically stable places (example: Pebble mine mining-technology.com.
Disclosure: no position yet |
