Grupo México Sees Profits Tumble During 2Q22

Grupo México, one of the largest copper producers in the world and the leading producer in Mexico, reported a plummeting net profit 2Q22. The company pointed toward cost increases as sales fell, as well as extraordinary circumstances at its business branches. 

The company nevertheless reported net earnings of US$611 million, though this figure is 40.5 percent lower than 2Q21, when it reported a US$1.03 billion profit. The company’s mining branch was affected by a two percent decrease in copper prices and a decrease in production. Grupo México reported that between April and June 2022, production stood at 236,800t, which is 12 percent lower compared to the same period in 2021. 

Consolidated sales have also suffered from the threat of a global recession. The company reported that its sales were worth US$3.2 billion, an 18 percent decrease year-over-year. According to Grupo México, the reductions were caused by “uncommon” issues like protests. On February 28, 2022, local community inhabitants cut the company’s water supply for its Cuajone complex, located in Peru, which also affected the company’s operations at the Los Chancas project. Both incidents are expected to have repercussions on future production. 

Despite the negative results, the company said it aims to maintain its position as a major low-cost copper producer. During 2H22, the company will focus on concluding mining projects, with the aim to produce over 1,049t of copper throughout the year. recently, the Grupo México approved an investment program of US$7.2 billion, of which the company has allocated US$5.4 billion to Mexican and Peruvian projects. In Mexico, the company developed the Pilares project, located in Sonora. Pilares is expected to produce 35,000t of copper concentrates and is expected to go online by 4Q22.

According to the company, the environment is not likely to improve for its copper production, which it believes will continue its downward trend. This is especially the case in Chile and Peru. In the former country,  tensions with local communities near the Las Bambas project persist. In addition, the economic slump in the US, China and Europe will temporarily impact de copper demand.

Furthermore, the cancellation of the contract to construct a part of Section Five of the Mayan Train impacted the company’s profits. “We reached a neutral agreement with the government to hand over the Mayan Train project to the Ministry of Defense, SEDENA,” executives said in a statement. 

Grupo México is the third-largest publicly traded company in Mexico, the largest mining 
company in the country and the world’s third-biggest copper producer.