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Q2 copper production down, byproducts rise

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Analysts praise lower mining costs

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US copper tariffs a growth opportunity, group says

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Shares up in midday trading

(Recasts; adds comment from analysts, share price, detail on

byproducts, Tia Maria mine and US projects)

By Sarah Morland

MEXICO CITY, July 29 (Reuters) - Mining and

transportation conglomerate Grupo Mexico reported net profit

rose 10% in the second quarter, helped by lower mining costs and

a good performance from its copper byproducts business even as

copper production edged down.

Net profit for the group, a leading copper producer, came in

at $1.23 billion from revenues that fell 4% to $4.24 billion,

according to a filing dated late Monday, the latter above a

$4.22 billion estimate of analysts polled by LSEG.

Earnings before interest, taxes, depreciation, and

amortization for the three months through end June rose 1.4% to

$2.36 billion. Analysts polled by LSEG had expected EBITDA to

land at $2.22 billion.

Grupo Mexico, controlled by billionaire German Larrea, ranks

among the world's largest copper producers by volume. At midday

in Mexico City, its shares were trading up 1.3%.

It maintained forecasts for an expected annual output of

1.08 million metric tons of copper, as output of the red metal

over the quarter reached 267,325 tons, 1.3% less than the same

period a year earlier, due to lower output at its Buenavista

mine in Mexico's northern Sonora state.

Although copper sales fell 2.9% from a year earlier, sales

of molybdenum - a metal used to strengthen steel and speed

petroleum refining - along with zinc and silver, rose.

The mining division's cash cost for its primary metal,

meanwhile, fell 10% from a year earlier, hitting $0.93 per pound

of copper versus an average price of $4.55 per pound.

Analysts at JPMorgan pointed to "a strategic decision to

prioritize zinc and silver production at Buenavista Zinc,

impacting copper production," and noted that Grupo Mexico had

touted "the lowest cash costs in the copper industry, benefiting

from higher byproduct credits."

Byproduct credits refer to revenue generated from secondary

metals extracted alongside a miner's main product.

Santander analysts highlighted the lower metal

extraction costs net of byproducts. "Grupo Mexico's balance

sheet remains strong," they said.

'OPPORTUNITY TO INVEST'

Earlier this month, U.S. President Donald Trump announced a

50% tariff on copper shipments starting August 1 in a bid to

promote domestic development.

The U.S., however, depends on imports for nearly half of its

refined copper needs, and homegrown projects often take years to

get off the ground. Chile, Canada and Mexico are currently its

main suppliers.

"There is an opportunity to invest up to $6.2 billion in

the reopening and expansion of projects that align with the new

mining and industrial policies of President Trump's

administration," Grupo Mexico said in a report.

It said it could expand production at its Ray and Silver

Bell copper mines as well as reopen its Hayden smelter, all run

by U.S. subsidiary Asarco, in Arizona. These proposals follow

years of negotiations with local unionized workers.

Construction of Grupo Mexico's Tia Maria project in

southern Peru is progressing as planned, it added, and should

launch in 2027.

Sales at Grupo Mexico's transport division slid due largely

to foreign exchange effects, the firm said, while its

infrastructure arm was hit by the suspension of four platform

projects on the part of state oil producer Pemex.