(Bloomberg) — Southern Copper Corp. missed quarterly output expectations as the world's fifth-largest producer deals with the lingering effects of the pandemic.
While producer profits are booming thanks to high prices fueled by the pandemic recovery, their operations are paying the price of Covid-fighting measures. Southern had to process lower quality ore last quarter after undertaking earthworks and maintenance that had been postponed last year in a bid to maintain production with reduced staffing.
After an initial supply shock when the world went into lockdown early last year, copper suppliers largely bounced back by focusing on the bare essentials of churning out metal. Non-essential workers stayed home as mine preparation and upkeep efforts were delayed. But that was a short-term fix that carried risks for future output.
READ MORE: Future of Copper Production Thrown Into Doubt by Worker Cuts
Southern Copper's operations in Peru and Mexico produced 237,110 metric tons in the second quarter, down 6.3% from the previous quarter and falling short of the 241,630-ton average estimate among analysts tracked by Bloomberg. The giant Escondida mine in Chile is also playing catchup with mine development.
Still, Southern is targeting a recovery to 960,000 tons for the year and a 259% surge in quarterly net income from a year earlier helps dull the pain of operational headwinds. It also remains hopeful that the economic benefits of its Tia Maria project will help it secure permits under the incoming government of left-winger Pedro Castillo.
©2021 Bloomberg L.P.