Southern Copper (NYSE, LON: SCCO) is evaluating a $680-million expansion of its Cuajone mine in southern Peru to counter declining ore grades and improve efficiency as the copper industry faces growing pressure to develop new supply.
The proposal would increase milling capacity by 33%, from 90,000 to 120,000 tonnes per day, with projected average annual production of 55,000 tonnes of copper and 1,400 tonnes of molybdenum. The company is also studying a further increase to 150,000 tonnes per day.
“There’s real scarcity of supply,” Anglo American CEO Duncan Wanblad said at a mining conference last week. He pointed to limited resources, lengthy permitting processes and rising development costs as obstacles to expanding copper production.
Analysts have highlighted in recent weeks the disconnect between potential mine expansions and production that companies have committed to deliver. BloombergNEF (BNEF) estimates the industry needs $332 billion in new mine investment to avert a supply shortage likely to begin in 2028. The researchers expect the deficit to widen to 3 million tonnes, or 8% of consumption, by 2035, before reaching 20 million tonnes, or 44%, by 2050.
Adding to those concerns, geopolitical disruptions and soaring electricity demand driven by artificial intelligence (AI) are putting increasing pressure on global metals supplies, particularly copper, as mining investment struggles to keep pace, Wood Mackenzie said in a report Thursday.
Southern Copper’s Cuajone proposal underscores the challenge of turning potential capacity into actual supply. The company has outlined preliminary production targets but has yet to announce a final investment decision or timetable, leaving the project’s contribution to future output uncertain.
Production pressures
Southern Copper’s copper production fell 2.9% to 693,602 tonnes in the first nine months of 2026, largely because of lower ore grades at its Peruvian mines, according to its third-quarter results released Oct. 20.
Cuajone produced nearly 163,000 tonnes of fine copper in 2025. Together with the nearby Toquepala operation, it remains central to Southern Copper’s Peruvian business. Both mines received The Copper Mark accreditation last year for meeting sustainability standards, including requirements related to tailings management.
The company has forecast copper production of 911,400 tonnes in 2026 and about 900,000 tonnes in 2027, compared with 954,270 tonnes in 2025. Its longer-term ambition is to lift annual output to 1.6 million tonnes by 2033, supported by investments across Peru and Mexico.
Permitting progress
Southern Copper’s $1.8-billion Tia Maria project, also in Peru, is advancing after a permitting dispute earlier this year. In April, the energy and mines ministry reinstated its exploitation licence after briefly revoking the authorization and ordering a technical review amid political turmoil surrounding the presidential election.
Tia Maria was 49.6% complete as of Sept. 30, with $884.3 million invested and another $1.1 billion committed to contracts and related activities. The company expects the mine to begin operating in the first half of 2028, producing 120,000 tonnes of copper cathodes annually in its early years.
Southern Copper’s wider capital investment program exceeds $15 billion this decade, including more than $10.3 billion potentially directed towards Peruvian projects. Its development pipeline includes Los Chancas, where production is targeted for 2031, and Michiquillay, scheduled to begin operations in 2032.
