What does it mean that Southern Copper and Vale reported negative copper production costs, and what caused this phenomenon?

Negative copper production costs mean that the revenue generated from selling byproducts—such as gold, silver, molybdenum, and zinc—exceeds the direct cash expenses of extracting and processing copper ore. For Southern Copper, this resulted in a cash cost of minus 11 cents per pound in Q1, down from 77 cents a year earlier; Vale also saw its all-in copper production cost turn negative. This rare outcome stems from sharply rising prices for those byproducts—silver more than doubled and gold rose ~40% over the past year—combined with the fact that Southern and Vale operate large, multi-metal deposits where such byproducts are abundant. As Southern’s CFO Raul Jacob stated, their $1.2 billion in byproduct revenue fully covered copper production costs. Additionally, both companies are net sellers—not buyers—of sulfuric acid, a key leaching agent, insulating them from supply disruptions like those caused by the Iran war.

Why do Southern Copper and Vale benefit more from byproduct revenues than other copper producers?

Southern Copper and Vale benefit more because their copper ore deposits naturally contain unusually high concentrations of valuable byproducts—including gold, silver, molybdenum, and zinc—generating outsized byproduct revenue relative to peers. This compositional advantage, combined with their large-scale, integrated operations that keep underlying costs structurally low, allows them to fully offset copper production expenses—and even achieve negative cash costs—when byproduct prices surge. As the article notes, 'Southern Copper and Vale benefit more than most peers because their deposits tend to be comprised of many different metals, generating significant byproduct revenue.' Furthermore, their status as net sellers of sulfuric acid adds another layer of cost resilience not shared by all competitors.

Copper Costs Turn Negative for Southern, Vale as Gold and Silver Byproducts Soar

May 1, 2026

Southern Copper and Vale reported negative cash costs for copper production as soaring gold and silver byproduct revenues offset expenses. This allows them to fully benefit from record copper prices amid growing global demand from electrification.

bloomberg

2026-05-01

Copper Costs Turn Negative for Southern, Vale as Gold and Silver Byproducts Soar

Copper Costs Turn Negative for Southern, Vale as Gold and Silver Byproducts Soar

FAQ