Will SCCO's related-party transaction volume exceed $500M in FY2026?

RPTs grew from ~$367M to $473M (28.8%) in one year, tracking the 29% capex growth. The $20.5B capex program is ramping — FY2025 capex was $1,325M and Tia Maria construction is accelerating. If RPTs continue growing at even half the FY2025 pace (~14%), they reach $539M. The $500M threshold is only $27M above current levels, which is modest relative to the $800M+ being spent on Tia Maria construction alone. Captive power procurement ($248M/year) is contractually locked. The Asarco LLC surge from $4.7M to $71.5M suggests new RPT channels opening.

The FY2024-to-FY2025 RPT growth was exceptional partly due to the Asarco LLC surge ($4.7M to $71.5M). If Asarco stabilizes near the new level, the incremental growth comes from construction-related RPTs (freight, power for new projects). Captive power is contractually fixed at ~$248M. The question is whether construction and operational RPTs add another $27M+ above FY2025. Given Tia Maria is ramping from 24% toward 50%+ completion, construction-related affiliate spending should increase. However, some RPT categories could plateau or decline if commodity prices moderate (tolling, copper products).

The structural dynamics favor crossing $500M: (1) contractual power procurement alone is ~$248M and escalates with inflation, (2) Tia Maria construction spending inherently increases affiliated entity involvement in freight and construction, (3) the Asarco LLC channel appears to be a new, growing relationship. The counterargument is that management could strategically manage RPT optics given the $473M figure is already drawing scrutiny, but the Audit Committee is controlled by Grupo Mexico so there is no independent incentive to moderate RPTs. The $27M gap represents only 5.7% growth needed — well below the 28.8% trajectory.

RPTs grew 28.8% in FY2025 to $473M. The $500M threshold requires only 5.7% additional growth. With the $20.5B capex program ramping, Tia Maria construction accelerating, and no governance mechanism to restrain RPT growth, exceeding $500M appears more likely than not. The Asarco channel alone could contribute the additional $27M if it continues at FY2025 levels. Contractual power procurement provides a rising floor. The real question is not whether RPTs will exceed $500M but by how much.

The 28.8% RPT growth partially reflected the Asarco LLC surge which may have been a one-time catch-up. If Asarco normalizes at $30-40M rather than continuing to climb, and other RPTs grow at a more modest 10-15%, the total could land near $490-520M. Copper-linked RPTs (tolling, copper products) could decline if prices moderate. But the structural floor from power contracts ($248M+) and growing construction activity make it difficult for RPTs to decline. On balance, more likely to cross $500M than not.

Three structural factors favor crossing $500M: (1) inflation escalation on existing power contracts, (2) Tia Maria construction ramp requiring more freight, equipment, and services from affiliates, (3) the demonstrated willingness to expand RPT channels (Asarco LLC). The only realistic path to staying below $500M would require a commodity downturn reducing copper-linked RPTs while construction RPTs are not yet ramping. Given the narrow $27M gap and multiple growth drivers, this probability leans meaningfully toward YES.

RPTs at $473M need only $27M more to cross $500M. FY2025 growth was 28.8%. Even at one-fifth that rate, RPTs cross $500M. Capex is ramping, Tia Maria is accelerating, and power contracts escalate with inflation. Strong YES lean.

The Asarco surge was a one-time step change, not a growth trend. But even without Asarco growing further, the remaining RPT base ($401M ex-Asarco) growing at 10-15% plus Asarco maintaining near $71M puts total above $500M. Power costs alone are ~$248M and escalating. Likely to cross.

Simple math: $473M base + 5.7% growth needed. Three growth drivers (Tia Maria construction, power escalation, Asarco channel) vs. one potential headwind (commodity price decline affecting tolling RPTs). Growth drivers outweigh. Probability moderately above coin-flip toward YES.