Improved price buoys SPC

Higher copper prices lifted fourth-quarter earnings for Southern Peru Copper (PCU-N) in 1999.

The company posted net earnings of US$9.7 million (or 12 per share), compared with earnings of US$3.4 million (4 per share) for the corresponding period in 1998.

The average copper price on the London Metals Exchange was US79 per lb., up from US70 a year earlier. However, the average price in 1999 remained below that of the previous year: US71 per lb., compared with US75.

This is reflected in lower earnings of US$29.4 million (37 per share) for the year, versus US$54.6 million (68 per share) in 1998.

Production grew 3.4% to 203.2 million lbs. in the fourth quarter as a result of higher throughput at the Cuajone mine and greater solvent extraction-electrowinning production. For the year, production increased 11.9% to 745.6 million lbs.

The fourth quarter marked a transition for the company as Grupo Mexico completed its takeover of Asarco. Asarco’s 54.3% interest in SPC allowed Grupo Mexico to elect a new board of directors. German Larrea Mota-Valesco took over as chairman and CEO; Oscar Gonzalez Rocha became president; and Daniel Tellechea Salido was elected vice-president of finance.

Under new management, the company will continue modernizing the Ilo smelter in compliance with environmental regulations.

Meanwhile, SPC is still exploring the Las Chancas porphyry deposit, south of Cuzco. To date, results from 15,000 ft. of drilling indicate potential for 200 million tons of mineralized material averaging 1% copper, with some molybdenum and gold values.

Also, the company increased reserves at the Toquepala mine by 161% to 770 million tons of sulphide ore grading 0.74% copper. Leachable reserves increased to 1.93 billion tons grading 0.2% copper. Resources at the mine stand at 247 million tons grading 0.68%, though drilling planned for 2000 should convert much of this to reserves.

With low copper prices persisting, the company expects to continue cutting costs. Savings of US$29.2 million were realized in 1999, and, for 2000, SPC anticipates US$40 million in pretax savings.