Grupo México reported financial losses during 1Q22, mainly due to a 54-day production interruption at its Cuajone complex in Peru. The company announced that it expects better results in the coming quarters as the complex is already back to operating at full capacity.
In a press release, the company reported a 7.2 percent year-over-year drop in profit and a 9.9 percent drop in production caused mainly by a the blockade of the Cuajone complex. The mining giant was denied access on the back of a conflict caused by growing social unrest following the rising cost of living in Peru, which fueled protests against Southern Copper, Grupo México's company in Peru, demanding a better distribution of profits. After protesters took over facilities and blocked a railway, the Peruvian government declared a state of emergency in the region.
On April 30, the Peruvian government issued a resolution to establish a dialogue between members of the community, the authorities and company representatives. Currently, the Cuajone complex is once again operating at maximum capacity and expected to continue to do so in the coming quarters, reported Grupo México.
Before the blockade at the Cuajone complex, Southern Copper expected an annual production of 922,000 tons. Given the 54 days of lost production, annual production is now expected to be around 895,000 tons. However, Raúl Jacob, Southern Copper's CFO, said the company will seek to offset part of the production during the year. In addition, the company announced that by 2023 the annual production will recover to 971,000 tons.
Despite the production decrease, Grupo México said that it expects substantial results in 2022, especially since the market environment and inflationary pressures are causing upward cycles in metal prices.
Last year, Grupo México's revenue reached US$14.7 billion, a record for the company and 35.3 percent more than in 2020. Grupo México explained this figure resulted from its mining division achieving record revenues of US$12.09 million, 41.1 percent higher than in 2020. Last month, the company announced it will invest US$2.27 billion in 2022 to consolidate various projects.
Grupo México said its Mexican projects are going through new investment stages, valued at more than US$7.7 billion over the next 10 years. For instance, the Buenavista Zinc project has a budget of US$413 million. Up to December, the company had invested US$217 million. Meanwhile, the Pilares project has an investment budget of US$159 million, of which US$75.9 million have already been deployed. Much of the budget will be used this year to finalize details and start operations in 2H22.