Peru Mining Companies Seen Posting Lower 2nd-Quarter Earnings

07/20/2012| 01:12pm US/Eastern

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LIMA, Peru--The second-quarter financial results of mining companies in Peru are expected to come in lower than the year-ago period due to lower base-metal prices, higher costs and strikes at some operations, brokerage Inteligo SAB said.

Southern Copper Corp. (SCCO, SCCO.VL), one of the world's biggest producers of copper, is expected to post net earnings of $591.3 million in the second quarter, which would be a decrease of 10.1% compared with same period last year, Inteligo said in a report sent by email Friday.

Southern Copper's results are expected to be hurt by lower copper prices, though an increase in output at its units in Peru and Mexico should offset that somewhat, Inteligo said.

Southern Copper operates mines, smelting and refining facilities in Mexico and Peru. Grupo Mexico (GMEXICO.MX) has a controlling stake in Southern Copper.

Sociedad Minera Cerro Verde SAA (CVERDEC1.VL), another major copper producer in Peru, is expected to report a 21.5% decline in net earnings to $269.3 million due to lower copper prices and production, Inteligo said.

Cerro Verde is 53.56%-owned by Freeport-McMoRan Copper & Gold Inc. (>> Freeport-McMoRan Copper & Gold Inc.). Freeport has already released its results, reporting that Cerro Verde produced 151 million pounds of copper in the second quarter, down from 170 million pounds in the year-ago period.

Compania de Minas Buenaventura SAA (BVN, BUENAVC1.VL), Peru's largest publicly traded precious-metals miner, is expected to report net earnings of $190.4 million, which would be a 6.7% decrease from the year-ago period, Inteligo said.

"Buenaventura's net earnings will drop as the mild increase in revenues will be offset by lower margins," Inteligo said. It added that a strike at Buenaventura's Orcopampa gold mine last quarter isn't expected to have a significant impact on production.

Buenaventura said it will release its results July 31 after the market closes.

Volcan Compania Minera SA's (VOLCABC1.VL) net profit is forecast to decline 57.2% in the second quarter to $43.2 million, Inteligo said. "Volcan's net earnings will suffer from the strike at its Cerro de Pasco unit, lower base-metal and silver prices and higher personnel expenses," Inteligo said.

Peru is the world's second-biggest producer of copper and silver. It also is a major producer of gold, lead and zinc.

Write to Ryan Dube at ryan.dube@dowjones.com.

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