| Edited Transcript of GMEXICOB.MX earnings conference call or presentation 26-Feb-20 7:00pm GMT |
..."Now Mr. Xavier Garcia de Quevedo is going to comment on the Mining Division.
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Xavier Garcia de Quevedo Topete, Grupo México, S.A.B. de C.V. - Director of Finance & Administration and VP of Board of Directors [3]
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Thank you, Marlene. Hello, everybody. Thank you for your participation. Moving to the Mining Division's financial highlights on Slide 12. 2019 has been a remarkable year for Southern Copper Corporation products production-wise. We are very proud of what we have been able to achieve this year. Sales reached $7.9 billion, which translates into a 1% yearly increase despite the decline in copper and zinc prices. In the fourth quarter of '19, sales totaled $1.9 billion, 2.7% higher than fourth quarter of the year in 2018. EBITDA was USD 3.5 billion with a margin of 44.7% during 2019. EBITDA for the fourth quarter of '19 reached $809 million, in line with the fourth quarter 2018.
Copper production reached 1,119,000 tons in 2019, 11.7% higher than in 2018, given the Toquepala expansion and Buenavista higher production. In Mexico, production increased 4.8% yearly. And in Peru, the Toquepala expansion supported the 25.3% increase. In the U.S., production rose by 6%. And cost -- cash cost decreased minus 8.6% yearly.
The fourth quarter production reached 283,000 tons of copper, 5.5% higher year-on-year. During 2019, we achieved a consolidated cash cost of $1.07, a 3.7% decrease compared to 2018. During 2019, investments in the Mining Division totaled USD 757 million.
Moving on to Slide 15 (sic) [Slide 13], our copper market outlook for this year. During the fourth quarter of '19, the LME copper price decreased from an average of $2.80 per pound in the fourth quarter '18 to $2.67, minus 4.6%. As of today, we are seeing prices in the range of $2.55, $2.60 per pound as a reflection of the worldwide concern regarding the effect of COVID-19 or coronavirus. The world is now starting to feel the financial and economic impacts from the outbreak, but at this point, it's difficult to assess the full effect of this event on copper demand.
If timely continued (sic) [contained], the outbreak would have a milder impact on the global economy, ending in a V shape recovery for copper demand. On the supply side, our view is that it will be growing at about 2% to 2.5% for 2020, contingent of being -- of not being affected significantly by this disease. If so, we would expect a mild copper market surplus for this year.
On Slide #14, we show our projects update. I'm sure you will familiar with all our group profile. So I will run through it very quickly. The Toquepala expansion has been operating at full capacity since the second quarter of last year, and we are happy to say that we were able to complete the significant expansion on time and in Peru. Then we started San Martín mine. Marlene has already commented on the progress for this operation that we were able to restart after a long period of time. In the first quarter of this year, we have started the new projects of the machine concentrator plant in the Buenavista facility and the opening of the Pilares copper mine in Nacozari, close to the La Caridad mine.
Lastly, I would like to comment on the Asarco operation in Arizona. In spite of the strike of the unions in the Arizona operations, Asarco managed to produce 125,000 tons of copper, translating into a 6% increase and achieving a 9% reduction in costs versus the previous year. Due to the strike, the Hayden concentrator and smelter units as well as the Amarillo refinery were temporarily shut down. The remaining units, Mission, Silver Bell and Ray, are operating at capacity, given workers' individual decision to continue working and some new hires.
As a result of the Asarco unions' decisions to go on a strike, for this year, we expect the copper production to reach 120,000 tons, in line with 2019 production with a reduction of $100 million in operating and administrative costs, to reach a cost per pound of copper of around $2.40.
I would like to reiterate our commitment to continue working to guarantee a long-term sustainable operation that will generate greater value for our shareholders as well as our commitment to the economies of Arizona and Texas through competitive jobs and direct participation with the local communities.
Moving on to Slide 15, you can see our short-term growth profile. That includes 3 interesting projects that add 90,000 tons of copper, as I mentioned before, in the next 4 years with significant improvement in our cost structure.
I would like to close reflecting on the year for the Mining Division. It has been a complicated year for the copper market. But in spite of that, we were still able to pursue growth and achieve higher sales and EBITDA. We will continue to focus on maintaining the operational efficiency and control cost strategy that has characterized us through the years.
I will now pass it on to Fernando, who will comment on the Transportation Division. Thank you.
