Q3 2023 Southern Copper Corp Earnings Call
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Yeah.
Good morning, and welcome to Southern Copper Corporation's third quarter 2023 results conference call with US. This morning, we have southern Copper Corporation, Mr. Raul Jacob.
Vice President Finance, Treasurer, and CFO, who will discuss the results of the company for the third quarter 2023, as well as answer any questions you may have.
The information discussed on today's call May include forward looking statements regarding the company's results and prospects, which are subject to risks and uncertainties actual results may differ materially and the company cautions not to place undue reliance on these forward looking statements Southern Copper Corporation undertakes no obligation to.
Publicly update or revise any forward looking statements, whether as a result of new information future events or otherwise all results are expressed in full U S. GAAP now I will pass the call on to Mr. Raul Jacob.
Thank you very much Carmen good morning, everyone and welcome to Southern Copper's third quarter of 2023 and results conference call.
Before we go into today's agenda, let me mention that on October five of this year Southern copper lost one of the pillars of our organization Easter a year ago to see how they can either board member and executive Vice President of Grupo Mexico passed away.
Where our peers are spanning 50 years Javier exterior the company with the intelligence.
Judgment on hard work it took great pleasure and shared knowledge mentoring and developing talent as well as supporting multiple generations of employees at our organization, we will miss him.
Today's conference I'm joined by Mr. Oscar on Saturday, Roger C E O sovereign and corporate and board member as well as Mr. Leonardo can pay it off we sold as a board member.
In today's call, we will begin with an update on our view of the copper market and then review southern Copper's key results related to production sales operating costs.
Actual results expansion projects and after this we will open the session for questions now.
Now, let's focus on the copper market.
In the third quarter of this year, the London metal exchange copper price increased 8% from an average of $3 51.
Cents per pound in the third quarter of last year up to $3 79.
This year.
Even though D C said.
Price and what we had a year ago.
We're still see the market, reflecting the uncertainty that involves basically two basic metals.
The slow recovery of the Chinese economy.
A recession in Europe, and a soft landing or minor recession in the U S.
At this point, we see the following factors affecting the corporate market.
The most relevant marketing testing houses for the copper market are now expecting a market in surplus of about 170000 tons for this year.
Even though copper inventories are still at a very low level. They have to increase from 235000 tons in June up to 292000 tons. In September this is a 24% increase.
What we're looking at is the some of the London metal exchange, the Comex exchange, Shanghai exchange and the bonded warehouses in China.
On top of this we're seeing a stronger than expected U S dollar, which is reducing corporate ultimate on prices expressed in the green back.
It is important to emphasize that corporate plays a leading role in the global shift to clean energy, which correlates positively with our assertion that the underlying demand for copper will be strong in the long term in this scenario. We believe the current cycle of relatively low prices will be shortly.
Now, let's look at southern Copper's production for the past quarter.
Corporate represented 75% of our sales in the third quarter of 2023.
Corporate production registered a decrease of one 9% in the third quarter of this year.
Quarter on quarter terms to stand at 226120 tons per hour.
Our quarterly result reflects a two 1% decrease in production improve driven by our quant and marine which reported lower ore grades, but this was partially offset by higher production at toquepala do.
Due to better ore grade.
Production at our Mexican operations decreased one 8%.
Quarter on quarter terms, mainly due to lower production at our whenever you tomorrow.
Compared to the second quarter of this year copper production slightly decreased <unk>, 6%, which was mainly attributable to a reduction in production at the guacamole and Buena Vista mine.
For this year 2023, we expect to produce 917000 tons 700 tons of.
Copper an increase of two 6% over two.
2020 to find this spring.
For molybdenum it represented 40% of the company sales value in the third quarter of this year and is currently our first byproduct molybdenum prices average $23 59 per pound in the quarter compared to $16 in the third quarter.
Of 2022.
This represents an increase of 47, 4% in the molybdenum price molybdenum production increased also by 12, 6% in the third quarter of 2023.
This was mainly driven by an increase in production are they like how do you that took the pilot and we'll have Easter mines due to higher ore grades.
And these results were partially offset by lower production at the mine.
For 2023, we expect to produce 25900 tons of molybdenum.
Okay.
For the short term, we believe molybdenum prices will have good support due to a market deficit of higher demand coming from the aerospace and defense industries.
Silver represented 4% of our sales value in the third quarter of 2023 with an average price of $23 60 per ounce in the quarter.
This reflected an increase of 23, 5% compared to the third quarter of 2022.
Silver is currently our second byproduct.
Mined silver production decreased 10% in the third quarter versus the same period of 2022.
Third production decrease at our operations with the sole exception of the Toquepala mine.
Refined silver production felt by 11, 4% quarter over quarter.
Which was mainly driven by a drop in production at our <unk> refinery for commercial and operational reasons. The led concentrate is now being sold to the market as concentrate instead of being processed in the refinery.
In 2023, we expect to produce $19 3 million ounces of silver an increase of 4% compared to 2022.
Zinc represented 3% of our sales value in the third quarter of 2023 with an average price of $1.10 per pound in the quarter.
This represents a 26% decrease with regard to the third quarter of 2022 figures.
Zinc mine production increased nine 4% quarter on quarter and total 16281 tons.
Driven primarily by an increase in production at the Santa Rosa and charter cost mines.
Which was partially offset by lower production at the San Martin mine.
Refined zinc production decreased by 12% in the third.
Third quarter compared to the same period of 2020.
For this year 2023, we expect to produce 64200 tons of zinc, which represents an increase of 7% over our over our 2022 production level.
Yeah.
For our financial results in the third quarter of 2023 sales were $2 5 billion. This is 348 million higher than sales for the third quarter of 2022. It is a 16% increase in sales.
Corporate sales volume decreased by four 5% by value increased 16% and it's an area of better prices for this metal.
Regarding our main byproducts, we had higher sales of molybdenum that increased by 61% molybdenum sales and this was due to a combination of better prices and higher volume.
Silver sales increased 19% due mainly to better prices.
Same on zinc, we have lower sales by 31%, mainly due to lower prices and volumes.
Sure.
Our total operating cost and expenses increased by $67 million or 5% when compared to the third quarter of 2020.
The main cost increases has been in repair materials.
Workers' participation depreciation say.
<unk> expenses operations contractors and other factors.
These cost increases were partially compensated by lower energy costs and lower inventory consumption.
The third quarter of 2023, adjusted EBITDA was 1290 $1 million, which represented an increase of 27% with regard to the 1000 18 million registered in the third quarter of last year.
Adjusted EBITDA margin in the third quarter stood at 52% versus 47% in the same period of 2022.
Adjusted EBITDA for the nine months was 3970 4 million this is 7% higher than.
Then what we had in 2022 for the nine months the adjusted EBITDA margin in the nine months of 2023 stood at 52%, which compares with 51% in the same period of 2022.
Southern copper operating cash cost, including the benefit of byproduct credits was <unk> 98 per pound in the third quarter of 2023.
This cash cost was <unk> 14, lower than the cash cost of 112% that we had in the second quarter of this year.
Operating cash cost per pound of copper before byproduct credits was $2.24 per pound in the third quarter of this year.
That is five times higher than the value for the second quarter of 2023, which was $2 19.
Is 3% increase in operating cash cost before credits is there a sort of higher cost per pound from production.
<unk> expenses.
Ministry of Defense's two increases in cost were partially compensated by lower treatment and refining charges.
Higher premiums rigor.
Regarding by products, we had a total credit of $604 million or $1.26 per pound in the third quarter of this year.
These figures represent an 18% per pound increase in byproduct credits when compared to the trade we had in 2022, which works.
$517 million in total credit or a dollar and seven cents per pound that's for the second quarter of 2023.
Total credits have increased for molybdenum zinc and sulfuric acid and decrease for silver.
For net income net income in the third quarter of this year was $619 5 million, which represented a 19, 4% increase with regard to the $519 million release during the third quarter of 2022.
Net income margin.
In the third quarter of this year 24, 7% versus 24, 1% in the third quarter.
In the same period of 2020.
These improvements were mainly driven by an increase in sales.
Cash flow from operating activities in the nine months of this year last 3030 $2 million, which represented an increase of 76% over the 1000 720 million post in the nine months for 2020.
For capital.
<unk>, our current capital investment program for this decade exceeds $15 billion and includes investment in the eastern zinc Polaris, a pillar and electrical projects in Mexico and in the Tia Maria Luke China cost <unk>.
These capital forecast includes several infrastructure investments, including key investments to bolster the competitiveness.
Article for Ya.
In the nine months of the year, we spent $753 million from capital investments, which represent a 38% of net income and reflects a 14, 5% uptick in capital expenditure expense this year.
On year.
So in theory is a short description of our main capital projects in the FCC's press release, I'm going to update new developments for each.
For the Buenavista zinc concentrate are in Sonora.
The capital budget for this project is $413 million most of which has already been invested progress at 19, 9% and we have initiated the commissioning process ramping up of the plant initially skills to concluding this quarter has been pushed back to the <unk>.
First quarter of 2024, given that the concentrator requires some technical adjustments.
For the Polaris project gains on order.
This is a pretty good.
<unk> of $176 million of which $144 million has been invested.
<unk> is currently operating and delivery copper or to ekati that concentrate or.
We will report on Pilates, one more time, the closing of 2023 and after that we will remove it from the list of ongoing projects of the company.
For the <unk> on order.
We are having.
The results from experimental pads in the leaching process, that's half confirm adequate levels of corporate recovery and we're evaluating different options to improve the same basic engineering study has been completed and the companies engaging and project developing an onsite environment productivity.
<unk> engineering has been developed by an external engineering and Technology Company mine life as you know it's estimated at 13 years.
For a radical the company has completed the environmental baseline study for the mine concentrator and <unk> facilities and we proceed to submit the environmental impact statement.
Spanish manifest assumed impact ambient or EMEA.
To the secretary of environment and natural resources segment.
This is.
Perspective, environmental impact permits the company is currently preparing studies for the Port power lines town site.
Sure Larry services.
For the Peruvian projects, we have the Tia Maria <unk>, there to keep our reunion.
This is a greenfield project located in Arequipa, Peru that.
We use a state of the art Sx EW technology with the highest international environmental standards to produce 120000 tons of Sx EW corporate catalyst per year.
Estimated capital budget for this project is one $4 billion.
It's important to mention that the company is ready to undertake this project we have national reach.
Resources as well as all the all the engineering and ready to go for Tia Maria.
Southern copper has been consistently working to promote the worker of the population of the slight programs as part of these efforts we have implemented successful social programs in education health care and productive development to improve the quality of life in the region. We have also promoted a record keeper.
And livestock activities and the value in the Tambo Valley and supported growth manufacturing fishing and tourism slash.
Total a chunk.
India Perimetry game of Peru as of September 30 of this year. The company has held talks with representatives of the <unk> community.
Acquired part of the land required for the project.
Tenuously, we continue to work with the Peruvian authorities to eliminate illegal mining activities at our concession.
The SEC will initiate hydro.
I drove geological and technical studies soon to gather additional information on the characteristics of the last chunk of deposit.
<unk> in the America region, Peru.
In 2023, and according with our social agreements with <unk> and Lincolniana communities. The company has higher unskilled labor and is paying for the use of surface land. We're also supporting social programs in both communities.
Simultaneously exploration activities are underway.
As of September of this year, we have drill 46500 meters and obtained 14882 core samples, which are currently under evaluation.
Regarding environmental social and corporate governance practices.
It is known.
We're building drinking water infrastructure to remedy shortages in cannoneer unexercised communities and so on.
In Mexico, approximately 75000 residents will benefit from these initiatives. These airport is aligned with our policies and commitments for sustainable development and as part of the $77 million that we have invested in Mexico, and Peru over the last five years.
We're.
Doing some innovation and to use an efficiency of water.
We're currently recovering about 6000 cubic meters of water per day through the new tailings filter implant in caveat I wonder in payroll.
This is equivalent to six cubic meters of water per tonne of tailings.
With a design capacity of 10000 tons per day, and an investment to date of $27 million. These damn filter is the largest tailings processing Union unit of its kind in the world in the market.
We're continuing with focus on prevention and risk management in September of this year or whenever you start recovery unit insulin order received this safe and healthy work environment recognition from the Mexican government after successfully passing and audit conducted by the Mexican.
Social Security Institute.
All of our other Mexican units also whole district cognition, which is awarded to companies that implement effective strategies and preventative actions for occupational health and safety.
We continue to make progress with our critical risk registry and their performance levels of the controlling controls in place to prevent or mitigate undesirable events have improve.
<unk>, we have involved the heads of each operating unit in the process to establish and continuously monitor controls all results are reported to managing executive on a monthly basis too.
To facilitate supervision.
And soon sequence monitoring by the board of directors.
Innovation in climate change mitigation.
In September of this year also southern Peru received the 2023 National Mining award in the mining economy category within the framework of bromine 36 mining convention held in there to keep our reunion.
They are winning study integration scenarios of renewable electricity generation systems in the mining sector through by 2050 prepare by engineered Orlando faces Gladys from the power systems area of southern Peru, but posted the use of clean and renewable energy sources.
As part of the global energy transition process Southern copper aims to achieve net zero emissions by 2050.
For disclosure transparency and accountability to provide more clarity regarding southern copper's performance on ESG issues, we have published a supplement to the 2020 to sustainable development report.
And have also incorporate a new topics on our sustainable development page to address bio diversity, our people human rights and supply chain.
At the behest of our investors, we have to expand our responses to the CDP questionnaires to include the poorest questionnaire. This information complements responses to our climate change and water security questionnaires and has been available since 2016 and 2022.
Respectively.
From loss to me.
Our journey of environmental restoration year.
Year to date, we have to be forced three times the area of impact in the same period, we have to restore 1398 victories replanted versus 424 victories impact. Additionally, we have implemented the works to retain 10700 <unk>.
Two tons of soil that will have otherwise been lost to erosion in the state of Sonora, Mexico. These actions are between the framework, where we are.
Our strategy to achieve zero net deforestation and generate a net positive impact on biodiversity, particularly in areas close to our operations.
Okay.
You can have in terms of the communities near our operations are highly active in the social programs we offer.
Thus far this year, we have reported recorded 170 Towson participations in these programs, which is a 7% increase from the previous year one of our most noteworthy efforts.
Youth Orchestra on course program recently.
It is 50 year and is now present in 11 communities with 1596 students in Mexico, and Peru to date.
Eight out of 10 of our lumi pursue a bachelor's degree with 2% choosing music a third life Australia.
Yes.
Changing subjects regarding dividends as you know it is the company policy to review of our cash position.
Cash flow generation from operations capital investment plans and other financial needs in each for meeting to determine the appropriate quarterly dividend.
Accordingly.
Announced to the market on October 19.
Board of directors authorized a cash dividend of $1 per share of common stock.
Each will be payable on November 22nd to shareholders of record at the close of business on November eight of this year.
Ladies and gentlemen, with these comments, we will like to end our presentation today. Thank you very much for joining us.
We will like now to open up the forum for questions. Thank you.
A reminder to ask a question simply press star one on your telephone you were danaher message advising that your hand is traced and to withdraw your question simply press Star one again.
For our first question please.
And it is coming from the line of Gabrielle Cmos with Goldman Sachs Gambrill. Your line is open.
Hi, Thank you for the presentation. Thank you for taking my questions.
Two questions here the first one is about.
Capital allocation right, so <unk> was postponed.
Big basically.
The new regulatory process that you have to go through.
Get it approved in Mexico, and some issues with.
We've seen some issues with the other projects.
Advancing and the near term so.
We're at the point that it will be light at the last board approved projects. So I just wanted to have an idea of what we should expect in terms of capex and capital allocation for the coming years and when we should see new projects being taken to the board given the advancement that you guys are making on the other projects that you have on the pipeline.
And in the meantime, if you have any thoughts that you could share on dividend distribution thinking.
Thinking about the future distributions. So that's the first question.
Second question here is about the costs in the mining division here for the company. So at the beginning of the year, if I'm not mistaken we were at one nine.
Dollars per pound before byproducts for the cost.
And we're running at a much higher level. So just wanted to understand what was the main change this year versus the beginning of the year that would explain this difference and the fact that we are running at higher levels.
Should we think about the cost for the fourth quarter and for 2024.
And the main drivers for this in your opinion here. Thank you.
Yes. Thank you for your question Gabriel actually two question, but yeah.
<unk> four but im glad that you made them.
Okay.
No no no no problem at all.
On capital.
Allocation.
Well, we are working with we're still doing some engineering work for Polaris.
Some tests.
We wanted to be sure on the on the on the recovery and actually.
To get even an improvement of the current recovery rates that we're that we have.
In this period just to improve.
Its profitability for the future. This is the time, where you need to do this test not the one you have the full facility design and already built.
On the other projects are basically we will be.
Uh huh.
Informing to the market as we undertake the different protocols are in our pipeline.
We can give you always.
Forecast of our Capex considering.
The developing of the projects that I comment.
A few minutes ago.
Do that now for this year, we're expecting to finish the year.
About $1 billion in capital expenditures.
For 2024 number will be $1 3 billion for 2020 517 billion.
$2022 $1 billion.
In 2000 $27 billion to $6 billion.
Dividend, it's always up to the board.
The board approved a dividend of $1 per share for the last quarter.
And if you look at our track record, it's quite clear that the company will not or cash.
That has been our our <unk> and we expect that to be the case for the future as well.
Cash cost.
We have.
We have.
Some expenditures that were not.
Consider in terms of our operating costs and let me comment on that.
You may know in the Mexican exchange rate.
Appreciate it through the year that impact.
Our <unk>.
Peso denominated cost.
In the Peruvian case, we have no no significant variance in the exchange rate. So we didn't have that much of an effect on that.
Four four.
Some costs.
We're seeing now the reflect of inventory consumption and a practical examples what has happened with.
The tires for mining trucks.
When we had the beginning of the.
The war or the inflation to be more broker of Russia to crane.
We had the right away and increase in fuel and some other materials like ammonia that was used for explosives.
But certain costs such as the $1 four tires were not impact because we were consuming our stocks now where replenishes the stocks for some of these materials and that is.
Somehow affecting our cash cost per pound, even though we are producing a little bit more.
Copper and then next year.
But I'm, saying that we're also seeing some some reductions in some cost, particularly in three <unk>.
Items.
Our Q.
Where we have.
A small slight variance.
<unk>.
Explorer explosive also some reductions in costs as well as steel.
And.
We are also doing is cutting.
Catching up in certain maintenance expenditures that we couldnt make.
<unk>.
In the.
And through the Covid years.
And later on.
Last year.
Regarding.
What we are expecting for cash flow.
Four.
For this year, we believe we could we could close.
At about the level that we are now slightly better because we will have a little bit more production in the fourth quarter.
For 2024.
The dollar.
Very close to where we are now and then it depends on how the new projects are kicking into into our production profile for the next few years.
Yeah.
That's very clear. Thank you very much I just wanted to to do a follow up basically on the cash cost as youre going to understand.
If you have a guidance for the before byproduct cost as well.
That'd be helpful. Thank you.
At <unk>, we are now.
And the last quarter.
And the last quarter U S $2.24 per pound, we believe it could be lower than that for the next few quarters, but for now it will be.
A little bit more of $2 20.
Yeah.
Okay. Thank you very much.
Thank you one moment for our next question. Please.
Alrighty comes from the line of Sophie <unk> with GBM. Please proceed.
Hi, Thank you for taking my question and congratulations on Arizona.
Two main questions. My first one is could you give us any color on production for the rest of the year end 2024, and if you have any further guidance going forward.
My second question is related to copper prices and market dynamics.
Any color.
Heading into 2024.
Yes.
Thank you for your questions for Sofia.
<unk>.
For this year as I mentioned, we're expecting 917 918000 tons.
That's for 2023.
For next year, we expect to increase it for.
A few reasons, let me comment on that our goal is 946000.
700 for next year.
Hum.
We will have.
The contribution at full speed of Pilates Polaris. This year, we're getting about 23000 tons of copper from Polaris and the reason for that is that at the beginning of the project we had.
Hi.
That were sent to.
In the form of oxide.
Sent to our Sx EW plants, and they take a little bit longer to process than than the useful so weak.
Mineral.
For next year, we're expecting Polaris to increase from 23000 tons of copper to 30000 tons of copper.
We'll get the positive contribution of <unk> zinc, we're at about 30000 tonnes and we will have improvements in the in the pocket pylon for Hanmi.
The ore grades that will increase a little bit their production in the case of docket pilot out by 7000 in the case of <unk> by 9000. So when you have some some additions on that later on we will have for 2025, our expectation is 956.
500.
In that case, we're expecting the contribution of <unk> and <unk>.
Contribution of <unk> as well as.
We have Easter zinc.
<unk>.
Copper production at full speed.
For $2026 90 985400.
And for 2027 1 million tons of copper production.
For 2024, well, it's hard to say.
We're looking at.
At the market as I mentioned, even though we had an 8% increase in prices, we're still seeing a market that is still defining.
Sure.
It's a direction actually.
For now we are expecting prices in the range of where we are now maybe a little bit better if China.
Comps back.
Assuming more more basic materials and it has had in the past.
Through this year.
That is hard to predict at this point long term, we do see a very.
Strong demand coming from from.
The energy Revolution that includes electric vehicles and some other.
The important copper construction.
Consumption.
Transmission lines.
Ali.
Energy and so on.
Thank you very much.
Yes.
Thank you one moment for our next question. Please.
And it comes from the line of John Tumazos very independent research. Please proceed.
Thank you very much.
One.
Quarterly dividends. Thank you had been bigger than reported earnings in 2022 and 2023.
And the four very big capital projects are delayed and disciplined.
There are 7 billion of debt and lease.
For cash balances and investments.
Does the board twice a priority on.
Perhaps reducing the debt.
Just in case when feasibility studies are updated.
Capital costs rise there is other companies or projects where.
Capital cost of all kind of know that won't happen at southern copper pit.
Thank you.
Well.
I think that the let me comment on our debt position currently.
You indicated John that Youre, considering also lease included in that as part of our debt actually it's a long term contract is a pip P. A PPA that we have for power for.
For both the Peruvian and Mexican operations.
Accounting wise, we have to register that as a lease but actually that PPA.
Pre purchase agreement.
The power purchase agreement.
But our deposition its about $6 $2 billion.
The average rate is 6%.
The last few years with it.
Zero bond issues at our lowest to capture lower rates and that has improved our debt profile. We will not have to pay for any principal up to 225, when we have $500 million that are due.
Last year, we paid $300 million.
<unk>.
For now.
Unless we have a project going on and getting into the construction phase one.
One of the main projects that I mentioned already.
We believe that we will maintain the current cash position and debt position.
For dividends as I mentioned it.
A decision that always taken by the board.
But what we're seeing is that.
Generally speaking the company is not holding any any cash and I think that that will be our our behavior in the next few quarters.
Thank you.
Thank you and as a reminder, ladies and gentlemen to ask a question simply press Star one wanted to get into Q1 moment for our next question.
And it comes from the line of Timna Tanners with Wolfe Research. Please proceed.
Hey, good morning.
I know one of the other large copper producer CEO has mentioned that at current copper prices projects were no longer so attractive, especially given higher costs for.
For startups I'd like your thoughts on that I know you still have quite a few projects in your pipeline, but they have been delayed a bit and just wondering if you still find bill.
Building attractive or if there is a different approach to building versus buying and if M&A is interesting great to get your thoughts.
Oh, Thank you very much for your question Timna.
Okay.
On our projects.
The price that the current our current prices say 360.
Even though cost have increased for both capex as well as Opex, we see that they are attractive in terms of the returns that they are providing to the company.
I think that that cost increase for operating purposes.
We are seeing also an increase in the long term.
Price for four for the market and let me explain what I mean.
Usually.
Long term.
Single way to look at the long term price will be.
The average industry cost plus.
Maintenance capital for current towards the current operations worldwide.
As.
The long term price.
Used to be at about $3 32.
To promote the growth of our industry now you have to add to that whatever inflation.
<unk>, both capex as well as Opex.
And considering that I believe that we will be.
At about 360 or even higher than that for.
For the long run as a new price reference.
So.
<unk>.
I believe that the corporate prices decrease.
Further down from where they are which is not our base case, but that may happen.
We should see again, what we have seen some other copper price cycle, where we are.
Supplies somehow affected bye bye.
But yet.
Demand restriction now having said that I.
It seems important to me to consider that.
<unk> coming from Chile, and Peru has been affected by different circumstances in these two countries.
And that has somehow slow <unk>.
The development of new projects that should supply the Cooper for the future.
So my view is positive in the sense of mid term to long term.
But we still have to pass through these.
Exchange sees that we're seeing nowadays.
Okay. Thanks, that's helpful. And then just also do some headlines around your whenever you start operations.
Blockages that have been reported in the local press that have caused some concern I think that wasn't a cause of any disruption, but it would be great to get your perspective on that or how you see that getting resolved.
Well, if you will mentioned it has not affected our operations we're seeing.
Some may related to the political campaign that it's about <unk>.
Beginning or it's already under course in Mexico.
As you know there is we had.
<unk> can change in unions regarding the <unk> operation in the past decade, and I think that.
There are certain.
External forces or political forces that will like to affect our operations there haven't had.
Any success so far in these many years and I believe that that will be the case for the future as well.
Okay Super Thanks again.
Thank you very much for your question Tim Thank you.
Moment for our next question comes from the line of Alex Hacking with Citi. Please proceed.
Yes.
Hi, Raul Roland and thanks for the call I just wanted to clarify on the guidance you said 946000 tonnes next year in.
In my notes.
Had that last quarter that that guidance was $1 million.
26000 tons, which is a.
80000 ton cut to that guidance.
Mike correct, and if so I guess, what's driven that downgrade and expectation for next year. Thanks.
How long a tech please.
Okay.
The reference that you gave us Alex is correct. We have made an adjustment in our production for <unk> for the current operations, particularly have Easter and.
And we're gonna be zinc.
Those two has been has it reduced their forecast for next year. This number is still under review we will we will do.
A new set of.
<unk> forecast.
The beginning of next year in our January conference and currency <unk>.
Considering these.
We're going to improve the 946000 tons that I mentioned before.
Thanks, and then just a follow up.
The issue there, obviously, that's a little bit of timing slippage right on one of his to zinc.
But with the with the main issue B B grade.
Would that be the reason that.
Like the greatest effectively going to be a little bit lower than was previously forecast.
It's basically ore grade because the operations are at full speed all the time 24 seven.
So it's mainly ore grades recoveries, depending on the different phases that you are in the mines.
That changes a little bit.
That plus.
The startup of projects are the drivers of.
Changes in in production on yearly basis.
Okay. It makes sense thanks, Phil.
You're welcome. Thank you one moment for our last question. Please.
And it comes from the line of Carlos de Alba with Morgan Stanley. Please proceed.
Yes. Thank you very much good morning, everyone.
Any comments.
On how southern copper.
<unk> taken the plan proposed by the Mexican government to remediate what they claim is steel contamination in VSO not us from this feeling in 2014.
Very straightforward answer is no Carlos we are looking at.
The information and were starting need and will answer that.
When correspondence, but at this point, we would have no comments on this.
Okay.
That's clear.
The company.
I understand correctly has done.
Several analyses throughout the years and they don't show any contamination left is that is that fair.
That's how will review on the on the matter yes.
Alright, Thank you very much.
Karla.
Thank you, Sir and I'm not showing any further questions in the queue.
Okay. Thank you very much Carmen and with these we conclude our conference call for the third quarter of 2023, we certainly appreciate your participation and hope to have to back with us when we report the fourth quarter.
Of this year and the end of the year results in January. Thank you very much and have a nice day.
Thank you all for participating and you may now disconnect.
Okay.
Okay.
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Okay.
Okay.
Okay.
Sure.
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