Overview
S&P Global Ratings upgraded Hudbay Minerals Inc. to BB- from B+, assigning a stable outlook and citing a combination of better cash generation and lower leverage following 2025 financial results that outperformed expectations. The ratings action hinges on improved operating cash flow and a reduction in the companys adjusted debt metrics.
2025 performance and balance sheet moves
Hudbays EBITDA rose 22% in 2025, which underpinned $174 million in adjusted free operating cash flow. The companys earnings were supported by higher realized prices for copper and gold - up 11% and 47% respectively versus 2024 - even as production volumes declined. Management allocated part of the cash flow to repurchase roughly $185 million of unsecured notes, a move that lowered Hudbays adjusted debt to EBITDA ratio to 1.6x from 2.1x.
Copper World transaction and funding profile
In January 2026 Hudbay received $420 million from Mitsubishi Corp. in exchange for a 30% interest in the Copper World development project in Arizona, with an additional $180 million expected to be received over the next 18 months. Hudbay expects to finish a definitive feasibility study for Copper World within the next several months and to decide on construction later in the year. S&Ps analysis assumes cumulative spending on a 100% basis could reach $2 billion over the next three years, an increase from Hudbays 2023 estimate of $1.5 billion for the first phase.
Liquidity and production outlook
As of Dec. 31, 2025, Hudbay held $569 million in cash and, when including the Mitsubishi proceeds, had nearly $1 billion in available liquidity. S&P projects consolidated copper production will remain near 260 million pounds in 2026, with a rise expected in 2027 driven by optimization work at the Copper Mountain mine.
Rating outlook and downside triggers
S&P indicated it expects Hudbay to maintain adjusted debt to EBITDA below 2x through 2028 despite elevated capital expenditures tied to development. The ratings firm signaled a potential downgrade if adjusted debt to EBITDA were to exceed 3x for a sustained period - a scenario it tied explicitly to risks such as lower metal prices, operational setbacks, or higher-than-anticipated capital costs at Copper World. Conversely, S&P said an upgrade within the next 12 months is unlikely, citing Hudbays limited operating breadth and execution risks associated with the development project.
Implications
The credit move reflects a constructive near-term liquidity and leverage profile for Hudbay, supported by commodity price gains and strategic capital allocation. At the same time, the company faces a material funding and execution timetable around Copper World, and S&Ps outlook balances the current improvement against those ongoing project risks.