The company has increased its copper sales guidance for 2009 from 470,000 tonnes to 490,000 tonnes and also expects higher zinc sales during the year. LME copper spot prices have risen by 27.3% over the last 3 months supported by strong Chinese demand for the metal.
We believe that China is overstocked with respect to consumption levels and will therefore reduce purchases going forward, leading to a short term price correction. Southern copper is concentrating its efforts in reducing its overall operating costs. We expect the trend to continue, thereby benefiting the operating margins in the H2 of the year.
Over the longer term, top line is expected to benefit from development projects such as Tia Maria and Toquepala which will increase copper production by 120,000 tonnes per annum and 100,000 tonnes per annum respectively.
