ANNUAL REPORT
TOTALLY SOLID
MINING
TRANSPORTATION
INFRASTRUCTURE
Index
LeTTeR TO SHAReHOLdeRS
FInAnCIAL HIGHLIGHTS
02
08
AnALYSIS And dISCUSSIOn OF COnSOLIdATed ReSULTS GRUPO MÉxICO
10
MInInG dIVISIOn
GeOGRAPHIC LOCATIOn
ReLeVAnT FIGUReS
AMeRICAS MInInG CORPORATIOn
BYPROdUCTS
PROJeCTS And InVeSTMenTS
exPLORATIOnS
HeALTH And SAFeTY
TRAnSPORTATIOn dIVISIOn
GeOGRAPHIC LOCATIOn
TRAnSPORTATIOn dIVISIOn
ReLeVAnT FIGUReS
InFRASTRUCTURe dIVISIOn
GeOGRAPHIC LOCATIOn
MÉxICO PROYeCTOS Y deSARROLLOS
ReLeVAnT FIGUReS
GRUPO MexICO FOUndATIOn
enVIROnMenTAL And SOCIAL ACTIOnS
BOARd OF dIReCTORS And SenIOR MAnAGeMenT
24
26
28
29
36
48
52
62
70
74
76
77
86
88
90
91
102
130
148
2
complex year for metal prices.
3
LETTER TO SHAREHOLDERS
during 2016, our company reported sound performance and obtained outstanding
results despite the complex macroeconomic environment worldwide, which was mar-
ked by high volatility in the markets. The peso suffered an 18% depreciation against
the dollar, international stock markets experienced political uncertainty, and it was a
nonetheless, our organization’s financial strength allows it to be well positioned to face
variations in the exchange rate and the challenges posed by the current scenarios.
Grupo Mexico is the fourth largest company in the country in terms of market capita-
lization and it remains the leader in copper extraction, with the largest reserves in the
world, the lowest extraction costs worldwide, and the best organic growth portfolio. In
addition to having world-class assets in investment grade countries, we are the largest,
most profitable transportation company with the most extensive coverage in Mexico.
Accrued consolidated sales in 2016 totaled US$8.173 billion, in line with 2015, as
lower copper prices compensated for an increase in low-cost production. eBITdA, on
the other hand, reached US$3.362 billion—11% higher than in the previous year. The
Mining division reported an eBITdA margin of 37%, growing 13%, while the Transporta-
tion division reported a 44% margin, growing 12%. The Infrastructure division achieved
a 46% eBITdA margin.
Sunset at
La Caridad,
Sonora, Mexico.
GRUPO MEXICOANNUAL REPORT / 2016 TOTALLY SOLID Thanks to our experience and track record, Grupo Mexi-
Likewise, we achieved a historical record in the auto-
co’s investments have historically stood out for their pru-
motive segment hauling 163,245 railroad cars and over
dence, long-term vision, and strategic focus. Capital in-
1.9 million vehicles, so we once again ranked as the
vestments in 2016 accrued US$1.584 billion, translating
largest automobile transporter in the world. We also re-
into an investment of US$10.5 billion among our various
mained as the n° 1 railroad in international traffic, and
divisions over the last five years. And these large invest-
began a new service on the Inter-Pacific corridor.
ments are already bearing fruit.
In our infrastructure division, in 2016 we celebrated the
We are happy to report that, during 2016, we concluded
80th anniversary of Mexico Compañía Constructora,
the expansion program for Buenavista del Cobre, on time
which has significantly contributed to the development
4
and below budget. The startup of new projects increased
of the country through the construction of over 200
copper production by 57%, leading us to achieve a new
works projects. The drilling division maintained a 97%
all-time high of 1,054,414 tons, which translates into a
operating efficiency in the platforms; thus, we remain
15% increase vs. 2015. Likewise, our gold and silver pro-
the leaders in the industry. The energy division, throu-
duction increased 68% and 20%, each.
gh its two combined cycle plants (500 MW) and the el
Retiro wind farm (74 MW), generated 3,137 gigawatt
We should note that the Mining division continues to
hours (GWh), translating into a 14% increase from the
show growth. We expect a 53% increase in production
production of the previous year. The Salamanca-Leon
to over 1.6 million tons of copper over the next seven
highway reported an Annual Average daily Traffic (AAdT)
years, which will be driven by the various projects that we
of 10,338 vehicles, translating into a historical record
are developing in Mexico, Spain, and Peru. In the latter,
both in terms of traffic and revenues.
we are currently working on five copper projects, and by
2019, with the start of operations at Toquepala, we ex-
Grupo Mexico is a leading company whose performan-
Over the years, we have proven our capacity to generate value and wellbeing for our
pect a production of 1,145,000 tons.
ce is not only measured on the operating and financial
collaborators, their families, the communities where we are present, and the environ-
side. We also strive to deliver more and better results in
ment surrounding us. We have a firm commitment to improve the quality of life of all
Year after year, Grupo Mexico has become more and more
social, economic, and environmental aspects, conside-
those who have some connection to our activities, and we know that respect for the
competitive in every sector where it participates. Accor-
ring the expectations of our interest groups and betting
environment is the basis to achieve responsible progress.
ding to the Organization for economic Cooperation and
decidedly on sustainability.
development (OeCd), we operate the most competitive
railroad on the American continent. In 2016, our Trans-
portation division hauled 54.445 billion tons–km, gene-
rating a record eBITdA of US$775 million; that is, seven
percentage points above the figure reported in 2015.
Through our various programs and social investments executed via our Community
development, environmental Care, and ecology areas, as well as Fundación Grupo
México, each year we succeed in benefiting more and more people, both directly
and indirectly.
5
Combined cycle
energy plants
Nacozari, Sonora,
Mexico.
GRUPO MEXICOANNUAL REPORT / 2016 TOTALLY SOLID
Wind farm,
Juchitán, Oaxaca, Mexico.
6
On the other hand, it is very satisfying for us that Grupo Mexico has been chosen to be part
of the Mexican Stock exchange’s IPC Sustainability index for the sixth consecutive year.
7
This acknowledges our ongoing commitment to environmental sustainability, social res-
ponsibility, corporate governance, and in general, to the country.
Last, we must acknowledge the dedication and hard work of each of the over 30,000
collaborators who make up Grupo Mexico, because they were a key factor in the
achievements made throughout the year. Our human talent is, undoubtedly, our most
valuable asset.
Metal prices rebounded towards the end of 2016, and are currently on an upward cycle.
This recovery, as well as the results obtained and the new projects we are undertaking,
make us feel optimistic and confident regarding 2017.
We remain committed to ensure sustained growth, striving to increase our productivity,
achieve greater efficiencies, and control costs, to always generate greater value for
our investors.
GERMÁN LARREA MOTA VELASCO
CHAIRMAn OF THe BOARd
GRUPO MEXICOANNUAL REPORT / 2016 TOTALLY SOLID FINANCIAL HIGHLIGHTS
2013
2014
2015
2016
Real Var. %
2016 / 2015
2013
2014
2015
2016
Real Var. %
2016 / 2015
Volumes sold *
Copper
Zinc
Silver
Gold
Molybdenum
Average Price (dollars)
Copper (COMEX)
Zinc (LME)
Silver (COMEX)
Gold (LF)
(tons.)
(tons.)
799,159
826,839
903,259
1,032,347
99,127
91,387
100,769
105,415
(thousands oz.)
16,429
14,554
14,802
17,255
(ounces)
(tons.)
(lb.)
(lb.)
(oz.)
(oz.)
51,058
59,498
154,757
165,587
19,940
23,301
23,233
21,731
3.34
0.87
3.12
0.98
2.51
0.88
2.20
0.95
23.82
19.04
15.68
17.10
1,411.03
1,266.19
1,160.11
1,248.34
14
5
17
7
(6)
(12)
8
9
8
Molybdenum (MW DEALER OXIDE)
(lb.)
10.26
11.30
6.59
6.42
(3)
Figures per Share ** **
Total Shares Outstanding
(thousands)
7,785,000
7,785,000
7,785,000
7,785,000
EBITDA per Share
Cash Flow per Share
Earnings per Share
Book Value
Financial Ratios
Operating Margin
EBITDA Margin
Current Assets to
Current Liabilities
Total Liabilities to Total Assets
Debt / Total Equity + Debt
(times)
0.53
0.36
0.24
1.21
35%
44%
4.3
44%
34%
0.49
0.32
0.22
1.26
32%
41%
2.4
44%
34%
0.39
0.23
0.11
1.25
26%
37%
3.0
49%
41%
7.15
0.43
0.23
0.14
1.32
28%
41%
2.8
46%
38%
7.37
Railway Division Statistics
EBITDA / Interest
(times)
12.29
10.84
Ton-km net
Cars Hauled
Balance
Current Assets
Fixed Assets
Total Assets
Bank Liabilities
Total Liabilities
Total Equity
Results
Total Sales
Cost of Sales
Current Taxes
EBITDA
Net Profit
Cash flow
Generated from Operations
Dividends Paid
Taxes Paid
Applied to Financial Activities
Used for Investments
Cash flow after investments and
Financial Activities
(million tons)
51,054
51,704
54,221
54,445
(thousands units)
1,114.2
1,164.4
1,210.1
1,231.5
(million dollars)
(million dollars)
(million dollars)
5,341
4,332
4,161
11,682
12,938
13,622
20,209
20,651
21,593
5,811
8,735
5,913
9,044
7,560
10,493
11,474
11,607
11,101
9,357
5,061
966
4,147
1,845
2,882
(729)
964
(69)
9,286
5,095
954
3,833
1,705
2,468
(752)
991
(607)
8,179
4,824
943
3,017
866
1,647
(548)
921
576
4,104
13,922
21,945
7,332
10,147
11,798
8,173
4,642
883
3,366
1,102
1,773
(292)
879
(212)
(2,858)
(2,433)
(1,689)
(1,590)
0
2
(1)
2
2
(3)
(3)
6
(0)
(4)
(6)
12
27
8
(47)
(5)
137
(6)
(774)
(1,324)
(38)
(354)
831
Employees
Annual Inflation
Mexico
USA
Peru
Exchange Rate at Each Year End
Mexico
Peru
Average Exchange Rate
Mexico
Peru
(pesos/dollar)
(soles/dollar)
(pesos/dollar)
(soles/dollar)
29,980
29,998
30,271
30,657
4%
1%
3%
4%
1%
3%
2%
1%
4%
3%
2%
3%
13.08
2.80
14.72
2.99
17.21
3.41
20.66
3.40
12.77
2.70
13.30
2.84
15.85
3.18
18.66
3.38
Expressed per US Generally Accepted Accounting Principles (US GAAP)
* Throughout the report, tons are metric and ounces are troy.
** Regarding 7,785,000,000 shares
-
12
(3)
27
5
9
12
(7)
(5)
(5)
3
1
50
100
(25)
20
(0)
18
6
10
Team working
in caliche fields,
Mission, Arizona, USA.
11
Analysis and
Discussion
Of Results
THE COMPANY’S FINANCIAL SOUNDNESS ALLOWS FOR ONGOING
GROWTH. During 2016, grupo Mexico MaintaineD a low-leverage,
soliD balance sheet with a net Debt to ebitDa ratio of 1.9x anD
Debt Maturities of over 20 years.
FOR THE SIXTH CONSECUTIVE YEAR, GRUPO
MEXICO WAS CHOSEN TO BE A MEMBER OF THE
MEXICAN STOCK EXCHANGE’S IPC SUSTAINABILITY
INDEX, AND OBTAINED ONE OF THE HIGHEST RATINGS
AS A SUSTAINABLE COMPANY, ACCORDING TO ESG
(ENVIRONMENT, SOCIAL, GOVERNANCE)
METHODOLOGY, DESIGNED AND RATED BY
ANAHUAC UNIVERSITY.
12
ANALYSIS AND DISCUSSION OF RESULTS
GMEXICO RELEVANT FIGURES
(US$ Thousands)
2015
2016
VARIANCE
Sales
8,178,888
8,173,492
(5,396)
Cost of Sales
4,774,696
4,591,462
(183,235)
Operating Profit
2,182,416
2,298,569
116,153
EBITDA
3,016,952
3,366,000
344,742
(0.1)
(3.8)
5.3
11.4
13
EBITDA Mg. (%)
36.9%
41.1%
Net Profit
865,784
1,222,670
356,886
41.2
Profit Margin (%)
10.6%
15.0%
RELEVANT CONSOLIDATED FIGURES OF GRUPO MEXICO
Investments - (Capex)
1,689,451
1,590,000
(105,212)
Accrued consolidated sales in 2016 totaled US$8.173 billion, in line with
2015, as the lower copper prices were compensated by the increase in
low-cost copper production thanks to the Buenavista expansion. In the
Transportation division, despite an 18% depreciation of the peso vs. the
dollar, we experienced a drop of only 7% in sales. In the Infrastructure
division, sales decreased 1% to US$608 million, given lower rates from
Pemex, and the peso depreciation.
Employees
30,264
30,657
393
during 2016, eBITdA reached US$3.3 billion, 11% higher compared
with 2015 mainly due to a higher copper production. The Mining di-
(6.2)
1.3
On the other hand, the accrued cost of sales in 2016 reached
vision reached US$2.3 billion which implies a 13% growth over the
US$4.591 billion, 4% less than in 2015. In the Mining division, costs
previous year, with a 37% eBITdA margin. The Transportation division
decreased 1%, given higher production volumes, while in the Trans-
achieved US$775 million, translating into 12% growth vs. 2015, with
portation division, they decreased 8% due to greater productivity. In
a 44% margin. The Infrastructure division achieved US$279 million in
the Infrastructure division, cost of sales increased 11% vs. 2015, par-
eBITdA with a 46% margin.
ticularly because of the price hike in gas, the startup of the Veracruz
modular platform, and the operation of the second stretch of the
Consolidated net profit accrued in the year reached US$1.223 billion,
Salamanca-Leon Highway.
with a net margin of 15%.
GRUPO MEXICOANNUAL REPORT / 2016 TOTALLY SOLID
GRUPO MEXICO IS IN A PRIVILEGED SITUATION
TO FACE F/X RATE FLUCTUATIONS. OUR
REVENUES ARE RELATED TO COMMODITY
PRICES, WHICH ARE DOLLARIZED; THUS, 84%
OF OUR REVENUES ARE IN DOLLARS.
14
SALES
PRODUCT
Mining Division
VOLUME IN TONS
THOUSANDS OF DOLLARS
2015
2016
Var. %
2015
2016
Var. %
Copper
903,259
1,032,347
Silver (thousand ounces)
14,802
17,255
Molybdenum
23,233
21,731
Zinc
100,769
105,415
Sulfuric Acid
1,927,029
1,934,927
Gold (ounces)
154,757
165,587
14
17
(6)
5
0
7
$ 4,940,009 $ 5,032,227
227,553
294,797
239,233
268,050
210,702
234,348
2
30
12
11
134,708
95,390
(29)
177,958
207,364
19,130
23,706
24
34,358
43,124
17
26
Lead
Others
TOTAL SALES
TOTAL SALES
COPPER PRICES
9,286
3.61
8,179
3.12
8,179
8,173
2.50
2.20
3.50
3.00
2.50
2.00
Per lb.
0.00
2013
2014
2015
2016
10,000
9,000
8,000
7,000
6,000
5,000
4,000
3,000
2,000
1,000
0
Millions
of
Dollars
15
ZN SUAU PB
AG
DI
MO
Transportation
Division
21%
SHARe OF SALeS
BY PROdUCT 2016
Copper
62%
MO - 3% / Molybdenum
DI - 3% / Infrastructure division
AG - 4% / Silver
ZN - 3% / Zinc
SU - 1% / Sulfuric Acid
AU - 2% / Gold
PB - 1% / Lead
44,168
34,657
(22)
Europe
12%
Transportation Division
1,210,057
1,231,539
2 *
1,854,878
1,722,507
(7)
Infrastructure Division
Total Sales
* loaded cars (thousands of units)
315,322
241,028
(24)
$ 8,178,888 $ 8,173,492
(0)
Asia
15%
Latin America
8%
United States
24%
Mexico
40%
SHARe OF SALeS
BY COUnTRY 2016
GRUPO MEXICOANNUAL REPORT / 2016 TOTALLY SOLID
16
During 2016, we completed the
expansion of Buenavista with an
investment of US$3.50 billion,
increasing this mine’s copper
production capacity by 155%.
Panoramic view,
Buenavista del Cobre,
Sonora, Mexico.
CONSOLIDATED DEBT
Grupo Mexico maintains a low-leverage, solid balance
sheet with a net debt to eBITdA ratio of 1.9x. 94% of
the debt is denominated in USd and 6% in pesos. 92%
of the debt has a fixed rate. Moreover, the company has
a comfortable debt maturities calendar; it has no signifi-
cant capital payments until 2035.
17
IN 2016, CAPITAL INVESTMENTS
TOTALED US$1.584 BILLION. THUS,
GRUPO MEXICO HAS INVESTED OVER
US$10.5 BILLION AMONG ITS VARIOUS
DIVISIONS OVER THE LAST 5 YEARS.
Grupo Mexico’s financial soundness enables it to be well
positioned to face the difficult economic environment
that affects its various divisions, even as it maintains its
commitment to continue with its aggressive expansion
program, and to analyze possible opportunities that may
arise in the market.
CAPITAL INVESTMENTS
Capital investments in 2016 accrued US$1.584 bil-
In the Transportation division, capital investments
MINING DIVISION
TRANSPORTATION DIVISION
INFRASTRUCTURE DIVISION
GRUPO MEXICO MATURITIES AT DECEMBER 31, 2016
lion. Thus, Grupo Mexico has invested more than
reached US$360 million, which included the purchase
US$10.5 billion among its various divisions over the
of 50 locomotives and the development of infrastruc-
last five years.
ture and telecommunications projects, all of which will
generate greater operating efficiencies.
We invested US$1.21 billion in the Mining division, 76%
of our annual budget. US$532 million was allocated
In the Infrastructure division, investments totaled
to our projects in Mexico, and US$519 million to the
US$15 million. Among the investments, we should note
projects in Peru. We must note that we have completed
US$5 million in the Tamaulipas platform, and US$3 mil-
the US$3.5 billion expansion program at Buenavista del
lion in the Salamanca-Leon Highway (recorded as an
Cobre on time and below budget.
intangible asset).
1,600.0
1,400.0
1,200.0
1,000.0
800.00
600.00
400.00
200.00
17’ 18’ 19’ 20’ 21’ 22’ 23’ 24’ 25’ 26’ 27’ 28’ 29’ 30’ 31’ 32’ 33’ 34’ 35’ 36’ 37’ 38’ 39’ 40’ 41’ 42’ 43’ 44’ 45’ 44’ 45’
GRUPO MEXICOTOTALLY SOLID
Campeche
Jack-up
night view.
GMEXICO HISTORICAL STOCK PRICE IN DOLLARS
4.5
4.0
3.5
3.0
2.5
2.0
1.5
1.0
0.5
0.0
18
JAN-00 JAN-01 JAN-02 JAN-03 JAN-04 JAN-05 JAN-06 JAN-07 JAN-08 JAN-09 JAN-10 JAN-11 JAN-12 JAN-13 JAN-14 JAN-15 JAN-16 JAN-17
19
NATURAL DOLLAR HEDGE
In a year of high volatility in the currency market, it is important to note that Grupo Mexico holds a
privileged position to face F/x fluctuations. Our revenues are related to commodity prices (metals
and energy) which are dollarized. Thus, 84% of these revenues are in dollars. With operations in
Mexico and Peru, only 47% of our costs are in US dollars. Therefore, our company has a natural
US dollar hedge with a positive impact on results, given the current dollar appreciation.
PERFORMANCE OF GRUPO MEXICO’S STOCK
Year after year, Grupo Mexico has become a more competitive organization in every
segment where it participates. We are maintaining our commitment to ensure sus-
tained growth, striving to increase our productivity and control costs, to constantly
generate greater value for our shareholders. That’s why we feel proud to see that
the stock price in dollar terms has increased over 821% since 2000 (IPC return of
+301% in the same period).
SALeS
USD
100%
35%
60%
84%
Mxn
-
65%
40%
16%
COST OF SALeS
Mxn
31%
81%
62%
44%
SOLES
13%
-
-
9%
USD
56%
19%
38%
47%
Mining division
Transportation division
Infrastructure division
Weighted Total
GRUPO MEXICOANNUAL REPORT / 2016 TOTALLY SOLID
CREDIT PROFILE
during 2016, rating agencies Fitch and S&P confirmed
Other positives were the geographic diversification, our
Grupo Mexico’s BBB+ and BBB ratings, respectively,
position as the fourth largest copper producer in the
with a stable outlook.
world, our vertical integration and long-lasting reserves,
as well as the additional cash flows that will be generated
The rating agencies highlighted the company’s low-cost
by the start of production of the Buenavista del Cobre
structure, as well as its solid balance sheet with low
expansion, and the assets of our Infrastructure division.
leverage levels.
20
MOODY´S
STAndARd & POOR’S
FITCH
Grupo México
International Rating
Americas Mining Corporation
International Rating
Southern Copper Corporation
International Rating
Issuer Rating
Minera México
International Rating
Covered Bond
México Generadora de Energía
International Rating
Issuer Rating
Ferromex
-
-
Baa2
Baa2
Baa2
Baa2
Baa2
Baa2
BBB
BBB
BBB
BBB
BBB
BBB
BBB
BBB
BBB+
BBB+
BBB+
BBB+
BBB+
BBB+
-
-
Local Long-Term Rating
-
MXAA+
AA+(Mex)
21
In the
Transportation
Division, we
invested over
US$360 million,
including the
purchase of 50
locomotives.
“Casa Redonda”
Maintenance yard,
Guadalajara,
Mexico.
GRUPO MEXICO IS PART
OF THE IPC SUSTAINABILITY INDEX
For the sixth consecutive year, Grupo Mexico was chosen to be part of the Mexican
Stock exchange’s IPC Sustainability index.
We should note that our company has been part of this index since it was created
in 2011, and that in the last assessment, it obtained one of the highest ratings ac-
cording to the eSG (Environment, Social, Governance) methodology, designed and
rated by the Anahuac University. Thus, we reiterate our commitment to environmen-
tal sustainability, social responsibility, and corporate governance.
GRUPO MEXICOANNUAL REPORT / 2016 TOTALLY SOLID
CORPORATE STRUCTURE
GRUPO
MexICO’S
STOCK HAS
Been LISTed
SInCe 1966.
22
MInInG
TRAnSPORTATIOn
InFRASTRUCTURe
23
AMERICAS MINING CORPORATION
(AMC)
GRUPO MéXICO TRANSPORTES
MéXICO PROYECTOS Y DESARROLLO
(MPD)
100%
75%
100%
25%
Ferromex
Ferrosur
IMEX
26%
74%
100%
100%
Southern
Copper
Corporation
ASARCO
100%
88.9%
Minera
Los Frailes
(Spain)
97.3%
Minera México
Southern Peru
Perforadora
México
Grupo México
Energía
100%
100%
México
Compañía
Constructora
100%
Grupo México
Autopistas
100%
Grupo México
Engineering
Services
100%
AMOnG THe LARGeST
THe MOST COMPeTITIVe
80 YeARS OF exPeRIenCe
PROdUCeRS OF COPPeR,
TRAnSPORTATIOn
MOLYBdenUM, SILVeR, And
COMPAnY In MexICO.
ZInC In THe WORLd, WITH
THe GReATeST COPPeR
ReSeRVeS WORLdWIde.
In InFRASTRUCTURe
And COnSTRUCTIOn
PROJeCTS.
The power used
by billboards
use is fed by
solar panels.
Solar panel,
Salamanca-Leon
highway, Mexico.
GRUPO MEXICO IS THE FOURTH LARGEST
COMPANY IN TERMS OF MARKET CAP IN
MEXICO.
GRUPO MEXICOTOTALLY SOLID 24
Workers at the construction site
of the geodesic dome. This dome has
a storage capacity of 300,000 tons of mineral.
Buenavista del Cobre, Sonora, Mexico.
Mining
Division
25
IN 2016, COPPER PRODUCTION REACHED A NEW ALL-TIME
HIGH OF 1,054,414 TONS, TRANSLATING INTO A 16% INCREASE
OVER 2015.
the increase in low-cost proDuction not only has an
effect on our voluMes, but it also favors our cost
structure, which helps us to strengthen our privilegeD
position as low-cost proDucers.
5
3
23
4
2
7
14
6
10
9
17
13
21
20
1
16
GEOGRAPHIC LOCATION
MInInG dIVISIOn - GRUPO MexICO
11
12
19
18
8
22
15
GULF OF
MEXICO
LOCATION
ASARCO
AMARILLO
HAYDEN
MISSION
RAY
SILVER BELL
TUCSON
MINERA MÉXICO
AGUA PRIETA
ANGANGUEO
BUENAVISTA ZINC
1
2
3
4
5
6
7
8
9
10 BUENAVISTA DEL COBRE
11 CHALCHIUITES
12 CHARCAS
13 EL ARCO
14 LA CARIDAD
15
MEXICO CITY
16 NUEVA ROSITA
17 PILARES
18 SAN LUIS POTOSI
19
SAN MARTIN
20 SANTA BARBARA
21 SANTA EULALIA
22 TAXCO
23 EL PILAR
PACIFIC
OCEAN
SPCC
24 CATANAVE
25 CHAUCHA
26
CUAJONE
27 ILO
28 LIMA
29 LOS CHANCAS
30 TANTAHUATAY
31 TIA MARIA
32
TOQUEPALA
AMC
33 AZNALCOLLAR, SPAIN
LEGEND
1 MINES
2
PLANTS
3 OFFICES
4
FUTURE MINING PROJECTS
MINERA MÉXICO
S
E
N
M
I
MEXICANA DE COBRE
La Caridad, Sonora
Copper, Molybdenum,
Gold, and Silver
BUENAVISTA DEL COBRE
Cananea, Sonora
Copper, Gold, Molybdenum,
and Silver
INDUSTRIAL MINERA
MÉXICO
Charcas, San Luis Potosi
Silver, Copper, Lead, and
Zinc San Martin, Zacatecas
Silver, Lead, Zinc, and
Copper Santa Eulalia,
Chihuahua Silver, Lead
and Zinc Santa Barbara,
Chihuahua Gold, Silver,
Copper, Lead, and Zinc
Taxco, Guerrero Gold,
Silver, Lead, and Zinc
Nueva Rosita, Coahuila
Coal and coke
SPCC
CUAJONE
Copper, Silver,
Molybdenum, and Gold
TOQUEPALA
Copper, Silver,
Molybdenum, and Gold
ASARCO
MISSION, ARIZONA
Gold, Silver, Copper, and
Molybdenum
SILVER BELL, ARIZONA
Copper
RAY, ARIZONA
Gold, Silver and Copper
AMC
AZNALCOLLAR, SPAIN
Polymetallic project
Zinc, Copper, Lead, Silver
S
T
N
A
L
P
R
E
H
T
O
D
N
A
S
E
I
R
E
N
I
F
E
R
,
S
R
E
T
L
E
M
S
MEXICANA DE COBRE
La Caridad, Sonora
Copper Smelter
Electrolytic copper
Refinery Copper
Electrowinning Plant
Sulfuric Acid Plant
Rod Plant
Precious Metal
Plant Selenium
and Tellurium
Agua Prieta, Sonora
Lime Plant
BUENAVISTA DEL COBRE
Cananea, Sonora
Copper Electrowinning
Plants
INDUSTRIAL MINERA MÉXICO
San Luis Potosi, San Luis Potosi
Sulfuric Acid Plant Electrolytic
Zinc Plant, Cadmium
Nueva Rosita, Coahuila
Washing and Coker Plant
SPCC
ILO
Copper Smelter
Sulfuric Acid Plant
Electrolytic Copper Refinery
Precious Metals Plant
TOQUEPALA
Copper Electrowinning Plant
ASARCO
HAYDEN, ARIZONA
Copper Smelter and Sulfuric
Acid Plant
RAY, ARIZONA
Copper Electrowinning Plant
SILVER BELL, ARIZONA
Copper Electrowinning Plant
AMARILLO, TEXAS
Copper, Nickel,
Selenium, Tellurium
Refinery Rod Plant
Slab Plant
SPAIN
33
ECUADOR
25
30
PERU
28
29
31
26
32
32
27
24
28
AMERICAS MINING CORPORATION (AMC)
(US$ Thousands)
2015
2016
VARIANCE
Sales
6,008,688
6,209,957
201,269
Cost of Sales
3,783,133
3,751,103
(32,030)
Operating Profit
1,372,839
1,531,006
158,167
EBITDA
2,026,461
2,287,903
261,441
3.3
(0.8)
11.5
12.9
EBITDA Margin (%)
33.7%
36.8%
Net Profit
406,798
955,749
548,951
134.9
29
Profit Margin (%)
6.8%
15.4%
Investments - (CAPEX)
1,222,075
1,209,579
(12,496)
(1.0)
RELEVANT FIGURES AND BYPRODUCTS
RELEVANT FIGURES FOR AMERICAS MINING
Since 2010, when our expansion program was ap-
Sales in the Mining division during 2016 were US$6.209
CORPORATION (“AMC”)
proved, we have invested over US$8 billion to more than
billion, 3% greater than in 2015, thanks to higher cop-
Copper rod.
Grupo Mexico’s Mining division is represented by its subsidiary AMC,
double our copper production and achieve 1,250,000
per production.
Metallurgical Complex,
whose main subsidiaries in Mexico and Peru are Southern Copper
tons by 2020.
Nacozari, Sonora,
Corporation (SCC), and ASARCO in the US.
Mexico.
These
investments and our ongoing
improvement
duction, given greater efficiencies and savings in our
The cost of sales decreased 1%, despite higher pro-
AMC is the leading company in copper extraction, with the greatest
program, with a strong focus on cost control, are improving
operations.
reserves worldwide, the lowest extraction costs in the world, and the
the Company’s performance through an increase in our
best organic growth portfolio.
production and cost savings. Throughout 2016, these
eBITdA totaled US$2.287 billion, equivalent to 37% of
improvements were reflected in a 16% increase in
sales, and represents 13% growth from the previous
AMC has world-class assets in investment grade countries: 14
copper production, a 20% rise in silver production, and a
year, given the low-cost production and operating effi-
mines, as well as exploration projects in Mexico, Peru, the US, Chile,
68% hike in gold production. They were also reflected in
ciencies achieved.
ecuador, and Argentina.
a 15% improvement in extraction costs.
Our investment program to optimize the company and increase pro-
We believe that, with the current upward cycle of the
duction capacity has continued throughout the negative cycle of the
metals market, our investment program will further im-
metals market.
prove returns for our investors.
WE ARE THE
LEADING COMPANY
IN COSTS IN THE
INDUSTRY WITH AN
EXTRACTION COST OF
US$1.08 PER POUND
OF COPPER.
GRUPO MEXICOANNUAL REPORT / 2016 TOTALLY SOLID
PRODUCTION
• El Pilar (Sonora, Mexico). Open-pit mine with an an-
In 2016, copper production reached a new record of
nual production capacity of 35,000 tons (Sx/eW).
1,054,414 tons, which translates into a 16% increase
from 2015, driven by the Buenavista del Cobre mine
• El Arco (Baja California, Mexico). Open-pit mine with an
expansion, which increased production by 57%.
annual production capacity of 200,000 tons of copper
and 105,000 ounces of gold (Sx/eW and concentrator).
However, the Mining division continues to grow. By
2019, we expect production to reach 1,145,000 tons
• Los Chancas (Apurimac, Peru). Open-pit mine with
with the start of operations of our Toquepala expansion.
an annual production capacity of 100,000 tons of
copper and 4,500 tons of molybdenum (Sx/eW and
30
We also expect production to increase by 53% to over
concentrator).
31
SX/EW Plant
with capacity to
produce 120,000
tons of copper
annually.
Buenavista del
Cobre, Sonora,
Mexico.
COPPER
1.6 million tons of copper in the next 7 years. This grow-
th will be driven by the following projects:
• Buenavista Zinc (Sonora, Mexico). Buenavista del
Cobre Complex. Open-pit mine with an annual pro-
• Toquepala (Peru). Annual increase of 100,000 tons in
duction capacity of 60,000 tons of zinc.
copper production to total 217,000 in 2018, 230,000
tons in 2019, plus 3,100 tons of molybdenum.
OPERATING CASH COST
Once more, we consolidated as the world leader in pro-
• Tía María (Arequipa, Peru). Open-pit mine with an
duction costs. In 2016, according to Wood Mackenzie,
annual production capacity of 120,000 tons of copper
Southern Copper Corporation was the leader in low-cost
(Sx/eW).
production, followed by Americas Mining Corporation.
• Aználcollar (Seville, Spain). Underground polymeta-
during 2016, operating cash cost per pound of co-
llic mine with an annual production capacity of 67,000
pper, excluding byproducts, was US$1.51—below the
Copper is the third most used metal in the world, and an essential component for infra-
tons of zinc equivalent.
US$1.73 cost accrued in 2015 (-13%). This improve-
structure and growth worldwide. It has exceptional chemical and physical properties, such
ment was mainly due to lower fuel costs, as well as
as high electric conductivity, corrosion resistance, and excellent malleability and ductility,
• Pilares (Sonora, Mexico). Open-pit mine, with an an-
greater low-cost production, thanks to the expansions
making it an optimal material for industries related to electric energy, telecommunications,
nual production capacity of 35,000 tons, which will
at Buenavista del Cobre, and operating efficiencies at
computers, cell phones, construction, transportation, and industrial machinery. Copper is
use La Caridad’s infrastructure.
our mines.
also a very important material for non-electrical applications, such as plumbing and roofing,
and when alloyed with tin, it forms bronze and brass. Likewise, it is used to manufacture
fungicides, in water treatment, and in various chemical products.
GRUPO MEXICOANNUAL REPORT / 2016 TOTALLY SOLID
32
COPPER PRODUCTION
IN REFINERIES YEAR 2016
THOUSAnd TOnS
Mexico
Ref. La Caridad
SX/EW
Sub-Total
Peru
Ref. Ilo
SX/EW
Sub-Total
U.S.A.
Ref. Amarillo
SX/EW
Sub-Total
Total
224.2
159.7
383.9
270.2
24.9
295.1
131.6
39.7
171.3
850.3
SEMI-FINISHED COPPER
PRODUCTION YEAR 2016
THOUSAnd TOnS
Wire rod
Mexico
La Caridad
U.S.A.
Amarillo
Total
Slab
U.S.A.
Amarillo
Total
33
144.5
151.3
295.8
11.2
307.0
Copper
concentrate
thickeners,
Buenavista
del Cobre,
Sonora,
Mexico.
Operating cash cost per pound, net of byproducts, was US$1.08, compared to US$1.28
in the previous year.
In the future, we expect a more significant reduction in our costs, thanks to the start of
operations of the concentrator at Buenavista and our expansion in Toquepala, as well
as the shutdown of Hayden. All this will result in a decrease in our operating cash cost
per pound, net of byproducts, from US$1.08 to US$0.86 by 2019.
COPPER PRODUCTION
AT SMELTERS YEAR 2016
RAW MINED COPPER
(Concentrates plus Sx/eW)
Thousand Tons
THOUSAnd TOnS
SX/EW
CONCENTRATORS
Mexico
La Caridad
Peru
Ilo
U.S.A.
Hayden
Total
267.8
323.5
125.2
716.5
224,4
221,3
191,8
167,4
2016
2015
2014
2013
830,0
684,4
655,6
625,1
GRUPO MEXICOANNUAL REPORT / 2016 TOTALLY SOLID
CAST COPPER
Thousands of Tons
2016
2015
2014
2013
669,2
716,5
721,6
705,2
WE HAVE THE BEST
ORGANIC GROWTH
PORTFOLIO.
WE EXPECT A 53%
INCREASE IN PRODUCTION
TO OVER 1.6 MILLION
TONS OF COPPER IN THE
NEXT 7 YEARS.
34
REFINED COPPER
(Refineries and Sx/eWs)
Thousands of Tons
SX/EW
REFINERIES
224,4
221,3
221,3
625,9
619,2
605,2
191,8
586,2
2016
2015
2014
2013
COPPER PRICES AND INVENTORIES
COMEX N.Y. INVENTORY
PLUS LME
COMEX N.Y. PRICES
400.00
350.00
300.00
250.00
200.00
150.00
100.00
50.00
-
USD
cents/lb.
361,45
509,0
312,00
228,0
250,81
369,0
402,0
219,73
2013
2014
2015
2016
600.00
500.00
400.00
300.00
200.00
100.00
-
Thousands
of Metric
Tons
PRIMARY MINING PRODUCTION AND COPPER RESERVES YEAR 2016
PRODUCTION
PROCESSED
MINERAL
COPPER
CONTENT
ORE
ORE RESERVES
COPPER
CONTENT
ORE
GRADE %
YEARS IN
OPERATION
84
56
4 a 16
35
16
25
96
59
23
-
22
34
45
18
0.24
0.48
0.50
0.18
0.19
0.56
0.52
0.19
0.63
0.38
0.51
0.25
0.28
THOUSAnd TOnS
MILLIOn TOnS
MEXICO
Concentrator:
La Caridad
Buenavista del Cobre
Underground Mines
34,539
66,113
3,032
104.9
316.0
6.4
2,887.1
6.81
3,692.9
17.73
45.9
0.23
Subtotal
103,684
427.3
6,625.9
24.78
SX/EWs
La Caridad
41,342
Buenavista del Cobre
123,738
Sub-Total
165,080
28.3
131.4
159.7
671.9
3,034.7
3,706.6
1.19
5.61
6.80
PERU
Concentrator:
Toquepala
Cuajone
Sub-Total
SX/EWs
Toquepala
Cuajone
20,071
30,681
50,752
116.5
171.4
287.9
1,928.9
10.74
1,806.2
9.32
3,735.1
20.06
78,485
24.9
1,785.6
-
-
4.8
Sub-Total
78,485
24.9
1,790.4
U.S.A.
Concentrator:
Mission
Ray
Sub-Total
SX/EWs
Ray
Silver Bell
Sub-Total
18,003
13,656
31,659
8,064
10,255
18,319
68.2
46.5
114.7
20.7
19.0
39.7
395.0
469.7
864.7
366.0
183.6
549.6
Total Concentrator
186,095
Total SX/EWs
261,884
829.9
224.3
11,225.7
6,046.6
Grand Total
447,979
1,054.2
17,272.3
3.32
0.03
3.36
1.49
2.37
3.88
0.92
0.51
1.42
48.71
11.59
60.30
* Project reserves totaling 9.3 million tons are not included to reach a total 75.2 million tons of reserves.
** The reserves are valued at $2.90 dollars per lb. of copper.
GRUPO MEXICOANNUAL REPORT / 2016 TOTALLY SOLID
BYPRODUCTS
MOLYBDENUM
Molybdenum is maily used to manufacture stainless and
pply on the market and a complex situation in the steel
special steels. It is also used as a catalyst in the oil and
industry—the main consumer of molybdenum.
gas industry, and in fertilizers, dyes, glazes, reagents, and
lubricants. Its most remarkable property is that it adds
Molybdenum production in 2016 decreased 7% to
hardness and corrosion resistance to alloys.
21,736 tons vs. the previous year, given lower production
at Toquepala (-20%) and Cuajone (-12%) due to lower
The average price of molybdenum in 2016 was US$6.42/
ore grades.
36
lb., equivalent to a 3% decline vs. 2015, due to oversu-
MINING PRODUCTION AND MOLYBDENUM RESERVES YEAR 2016
PRODUCTION
MINES
MEXICO
La Caridad
Buenavista del Cobre
Sub-Total
PERU
Toquepala
Cuajone
Sub-Total
Total
PROCESSED
ORE
MOLYBDENUM
CONTENT
ORE RESERVES
THOUSAnd TOnS
MILLIOn TOnS
GRADE %
34,539
66,113
100,652
20,071
30,681
50,752
151,404
9.9
1.6
11.5
6.3
3.9
10.2
21.7
2,887.1
3,692.9
6,580.0
1,928.9
1,806.2
3,735.1
10,710.1
0.029
0.009
0.034
0.020
Ball mill.
Buenavista
del Cobre,
Sonora,
Mexico.
37
GRUPO MEXICO’S MINING DIVISION IS A
LEADER IN CASH FLOW GENERATION, EVEN
AT THE LOW PART OF THE CYCLE OF
METAL PRICES.
PRIMARY MINING MOLYBDENUM
(Thousands of Tons)
MOLYBDENUM PRICES AND
INVENTORIES
MW DEALER OXIDE PRICES
2016
2015
2014
2013
21,7
23,4
23,3
12.0
10.0
8.0
6.0
4.0
2.0
-
19,9
10,26
11,30
6,59
6,42
2013
2014
2015
2016
GRUPO MEXICOANNUAL REPORT / 2016 TOTALLY SOLID
38
Interior of the geodesic
dome at Buenavista
del Cobre. Its function
is to store ore lumps
and prevent the
spreading of dust
into the environment.
39
ZINC PRODUCTION AT REFINERY
THOUSAnd TOnS
Refineries
Mexico
San Luis Potosi
106.1
ZINC PRICES AND INVENTORIES
LME INVENTORY
LME PRICES
120,00
100,00
80,00
60,00
40,00
20,00
1,224.0
98,07
86,65
692.0
94,83
87,66
464.0
427.9
USD
cents/lb.
-
2013
2014
2015
2016
1,400.0
1,200.0
1,000.0
800.0
600.0
400.0
200.0
-
Thousands
of Metric
Tons
ANNUAL REPORT / 2016 TOTALLY SOLID Electrolytic zinc plant,
San Luis Potosi, Mexico.
AT GRUPO MEXICO,
WE HAVE WORLD-CLASS
ASSETS IN INVESTMENT
GRADE COUNTRIES.
PRIMARY MINED ZINC
(Thousands of Tons)
REFINED ZINC
(Thousands of Tons)
2016
2015
2014
2013
74,0
61,9
66,6
2016
2015
2014
2013
99,4
41
106,1
100,6
92,1
97,7
PRIMARY MINING PRODUCTION AND ZINC RESERVES YEAR 2016
PROCESSED
ORE
ZINC
CONTENT
ORE RESERVES
THOUSAnd TOnS
MILLIOn TOnS
GRADE %
YEARS IN
OPERATION
PRODUCTION
MINES
MEXICO
Charcas
1,229.2
40
Santa Barbara
1,524.5
San Martin
-
28.8
29.1
-
Santa Eulalia
278.1
16.1
Total
3,031.8
74.0
4.5
23.7
12.9
2.9
44.0
3.55
2.55
2.14
6.90
4
16
28
10
ZINC
Zinc is used for a wide range of applications, given its
There is a positive view for zinc prices in the next few
high resistance to atmospheric corrosion; thus, its main
years, sustained by sound fundamentals. It is estimated
application is galvanization in the automotive industry,
that there was a deficit of 500,000 tons during 2016,
construction, and household appliances. Given its low
and that it will amount to 150,000 tons in 2017.
melting point, malleability, and high resistance, it is also
used to manufacture pressure casting parts. It is also
Zinc production in the year increased 20% to 73,984
the base to obtain zinc oxide, used to manufacture ti-
tons compared to 61,905 tons in 2015. This increase
res, paint, and cattle fodder, among other products.
resulted from the start of operations of the Santa eu-
lalia mine following the flood that affected production
during 2016, prices averaged US$0.95/lb., which
last year.
translated into an 8% hike in zinc prices vs. 2015. This
increase was due to sound fundamentals in the zinc
market, given lower supply.
GRUPO MEXICOANNUAL REPORT / 2016 TOTALLY SOLID
DURING 2016, OUR GOLD AND SILVER PRODUCTION
INCREASED BY 68% AND 20%, RESPECTIVELY, DUE TO
THE NEW PRODUCTION AT BUENAVISTA DEL COBRE.
42
PRECIOUS METALS
SILVER
Silver is used to manufacture electric, electronic, and photographic products.
Likewise, it is used in jewelry, ornamental items, coin minting, and catalysts.
After 12 years of continuous growth, silver mining production in 2016 was
lower than in the previous year. Thus, the average price was US$17.10/oz—
9% higher than in 2015 (US$15.68/oz).
In 2016, silver production increased 20% to 17,855 thousand ounces com-
pared to 2015, mainly explained by greater production at Buenavista del
Cobre (+103%).
GOLD
Inflation expectations should continue to increase in 2017, and improve de-
mand for precious metals, since metals are considered a hedge against infla-
tion. The performance of gold prices showed volatility in 2016. Average prices
increased 8% vs. 2015, from US$1,160/oz to US$1,248/oz.
Gold production increased 68% to 68,651 ounces, thanks to greater produc-
tion at Buenavista del Cobre (+126%).
MINING PRODUCTION AND RESERVES OF SILVER AND GOLD YEAR 2016
PRODUCTION
MINES
IN CONCENTRATES:
MEXICO
COnTenTS OZ
SILVER ORE RESERVE
GOLd
SILVeR
MILLIOn TOnS
ORE GRADE
GRS / TON
43
La Caridad
8,460
1,966,542
2,887.1
Buenavista del Cobre
46,279
4,819,457
3,692.9
Underground Mines
6,420
5,622,056
45.9
Sub-Total
61,159
12,408,055
6,625.9
PERU
Toquepala
Cuajone
Sub-Total
U.S.A.
Mission
Ray
Sub-Total
Total
2,312
5,180
7,492
-
-
-
1,585,520
1,928.9
2,178,180
1,806.2
3,763,700
3,735.1
1,308,180
375,276
1,683,456
395.0
469.7
864.7
68,651
17,855,211
11,225.7
3.8
4.1
94.0
4.9
5.0
5.3
1.5
GRUPO MEXICOANNUAL REPORT / 2016 TOTALLY SOLID PRODUCTION AT SILVER AND GOLD SMELTERS YEAR 2016
OUNCES
GOLD
45,985
9,022
5,385
SILVER
7,782,779
4,601,267
1,713,147
La Caridad
Ilo
Hayden
GOLD PRICES AND INVENTORIES
COMEX N.Y. INVENTORIES
COMEX N.Y. PRICES
11.056,0
1.266,19
1.160,11
1.160,11 1.248,34
10.000,0
12.000,0
7.895,0
9.158,9
6.353,0
1.400,00
1.200,00
1.000,00
800,00
600,00
400,00
200,00
8.00,0
6.000,0
4.000,0
2.000,0
Million Troy
ounces
-
Total
60,392
14,097,193
USd/oz.
-
2013
2014
2015
2016
44
45
REFINED SILVER AND GOLD PRODUCTION YEAR 2016
SILVER PRICES AND INVENTORIES
COMEX N.Y. INVENTORIES
COMEX N.Y. PRICES
OUNCES
GOLD
SILVER
REFINERIES
La Caridad
154,507
8,259,922
San Luis Potosi
3,608
3,640,518
Ilo
6,749
3,295,316
Amarillo
-
-
Total
164,864
15,195,756
176,0
161,0
147,0
180,00
150,00
120,00
90,00
60,00
183,5
200,0
160.0
120.0
80.0
40.0
-
Million Troy
ounces
30,00
19,04
15,68
15,68
17,10
USd/oz.
-
2013
2014
2015
2016
PRIMARY MINED GOLD
(Thousand ounces)
REFINED GOLD
(Thousand ounces)
PRIMARY MINED SILVER
(Million ounces)
REFINED SILVER
(Million ounces)
2016
2015
2014
2013
41,0
36,6
35,5
68,7
2016
2015
2014
2013
164,9
155,2
59,3
51,7
2016
2015
2014
2013
17,9
2016
2015
2014
2013
14,5
14,9
14,9
15,2
13,6
13,3
15,6
GRUPO MEXICOANNUAL REPORT / 2016 TOTALLY SOLID
46
Inside SX/EW III,
Buenavista del Cobre, Sonora, Mexico.
MINING PRODUCTION SUMMARY*
DISTRIBUTION 2016
TONS
2016
2015
2014
2013
2012
Copper concentrates
3,341,903
2,770,966
2,653,044
2,529,015
2,603,914
Copper content in concentrates
830,047
684,430
655,576
625,105
650,846
Copper content SX/EWs (Cathode)
224,366
221,261
191,812
167,364
175,362
Total copper content of mine
1,054,413
905,691
847,388
792,469
826,208
Copper content of smelter
716,541
721,610
705,187
669,240
703,301
Refinery copper
625,924
619,163
605,197
586,207
578,366
47
Refined copper (refineries + SX/EWs)
850,290
840,424
797,009
753,571
753,728
Refined copper turned into rod
295,800
286,635
280,996
276,326
289,865
Refined copper turned into slap
11,202
16,210
11,345
11,494
6,911
Zinc concentrates
139,697
115,031
123,955
185,254
166,952
Zinc content in concentrates
73,984
61,905
66,614
99,372
89,884
Refinery Zinc
106,093
100,576
92,133
97,692
93,542
Lead concentrates
40,737
32,769
36,105
40,077
35,345
Lead content in concentrates
24,385
20,693
22,286
23,918
19,978
Gold content in concentrates (ounces)
68,651
40,995
36,593
35,544
43,959
Refinery gold (ounces)
164,864
155,180
59,332
51,718
64,076
Silver content in concentrates (ounces)
17,855,211 14,912,611 14,542,464 14,933,798 15,034,604
Refinery silver (ounces)
15,195,756 13,637,723 13,348,048 15,572,552 15,974,465
Molybdenum content in concentrates
21,736
23,368
23,290
19,897
18,297
Coal
Coke
Sulfuric acid
Cadmium
Lime
194,285
248,527
276,082
291,505
325,308
71,701
97,544
96,086
93,214
91,263
2,691,371
2,703,588
2,650,031
2,365,051
2,539,794
664
637
607
584
622
271,560
251,928
165,698
133,568
136,970
* Figures in metric tons except where otherwise stated.
GRUPO MEXICOANNUAL REPORT / 2016 TOTALLY SOLID The Quebalix will reduce the
processing time and improve mining
and hauling costs. It will also
increase production by improving
our SXEW recovery
Quebalix IV, Buenavista del Cobre,
Sonora, Mexico.
48
49
PROJECTS AND INVESTMENTS
PROJECTS IN MEXICO
BUENAVISTA DEL COBRE
Crushing, Conveying, and Spreading System for
Toquepala Expansion Project. This project worth
ral. The budget for this project totals US$40 million and
Leachable Ore (Quebalix IV).- The main goal of this
US$1.2 billion includes a new concentrator with ad-
we have invested US$21.9 million through december
We are very proud to have completed the US$3.5 billion
project is to reduce processing times, as well as mining
vanced technology that will increase annual production
31, 2016. The project should be completed by 4Q17.
investment program at Buenavista del Cobre, on time
and hauling costs through its 7km-long conveyor belt.
capacity by 100,000 tons of copper to 235,000 tons in
and US$100 million below budget.
It will also increase production by improving Sx/eW co-
2018. It will also increase molybdenum production by
Cuajone’s Heavy Mineral Management Optimizing
pper recovery. At yearend 2016, the project had achie-
3,100 tons. At december 31, 2016, we have invested
Project. The project consists of installing a primary in-
Concentrator II is working at 105% of its total design
ved 98% progress with a US$311 million investment
US$550.4 million with 53% progress, and we expect to
pit crusher at the Cuajone mine with a conveyor system
capacity of 188,000 tons of copper content. This con-
out of an approved budget of US$444 million.
complete it by 2Q18.
to transport the ore to the concentrator. The project will
cludes our 2 main expansions in Mexico: Sx/eW III plant
optimize the hauling process, substituting rail haulage,
(solvent extraction and electrowinning plant), and the
PROJECTS IN PERU
Toquepala High Pressure Grinding Roller System
and thus reducing operating and maintenance costs, as
Concentrator II plant. All projects will be working at full
We are currently working on five copper projects in
(HPGR). The main goal of this project is to ensure that
well as the environmental impact of the mine. The crus-
capacity in 2017, including Quebalix IV (crushing and
Peru, with a capital investment of US$2.9 billion.
the current concentrator operates at its full grinding ca-
her will have a processing capacity of 43.8 million tons
leaching systems).
pacity, which is 60,000 tons per day, given the increase
per year. The main components, including the crusher
in the hardness of the material. Moreover, recoveries
and the 7 km conveyor belt, have been acquired and we
and production will improve with a better ground mine-
are going ahead with the electromechanical assembly.
ANNUAL REPORT / 2016 TOTALLY SOLID
Through december 31, 2016, we have invested US$150.9 million out of
an approved capital budget of US$215.5 million, with 80% progress. We
expect to conclude in 2Q17.
50
Tailings Thickeners at Cuajone Concentrator. In this project, two of the
three existing thickeners will be replaced by a new high-capacity thicke-
ner. The purpose is to optimize the concentrator’s flotation process and
improve water recovery efficiency, increasing the content of solid tailings
from 54% to 61%. This will reduce fresh water consumption, replacing it
with recovered water.
At december 31, 2016, we have nearly completed the engineering and ac-
quisition process, and have begun the excavations and civil works. We have
invested US$14.4 million out of an approved budget of US$30 million, with
62% progress. We expect it to be completed in 2017.
Tia Maria. We have concluded all the engineering and have obtained appro-
val of the environmental Impact Assessment. We are currently working to
obtain the construction license for this greenfield project, which will have an
Sx/eW production of 120,000 tons per year, with a total capital investment
of US$1.4 billion.
Aerial view
of La Caridad mine,
Sonora, Mexico.
51
GRUPO MEXICOTOTALLY SOLID EL ARCO IS A COPPER DEPOSIT THAT
COULD HAVE AN ANNUAL CAPACITY OF
200,000 TONS OF COPPER AND 105,000
OUNCES OF GOLD, ONCE THE PROJECT
IS DEVELOPED.
MEXICO
EL ARCO
53
el Arco is a copper, gold, molybdenum, and silver porphyry
The results obtained allowed us to confirm reserves of
deposit located in the middle of the Baja California penin-
379.8 million tons with copper ore grades of 0.26%,
sula. during July 2015 and February 2016, we executed
translating into an increase of 20.6 million tons of the
a 20,170-meter drilling program to define the deposit at a
mineral resource compared to the information available
depth of 300 to 600 meters. The highly favorable results
at the time of the acquisition.
obtained in this campaign have enabled us to increase the
estimated resources to 923.7 million tons with ore grades
Moreover, the results have made it possible to identify
of 0.50% of copper, 0.01% of molybdenum, 0.12 g/t of
and define areas of interest with potential for both oxi-
gold, and 1.7 g/t of silver. This resource is added to the
des and sulfides.
existing reserves of 2.2 billion tons (previously estimated).
EL PILAR
during 2017, we plan to carry out a geochemical
survey covering 4,000 hectares and an additional
52
EXPLORATIONS
We have carried out broad exploration activities to locate the greatest mineral resour-
ces in our current concessions, maintaining our focus on the ongoing discovery of
new deposits in Peru, Mexico, Chile, Argentina, ecuador, the US, and Spain.
Aerial view
of El Arco
exploration
project,
Baja California,
Mexico.
We also carried out explorations in our current mining operation areas. We inves-
el Pilar is an exotic copper project constituted by co-
20,000-meter drilling campaign.
ted US$40.1 million in exploration programs in 2016, US$48.8 million in 2015, and
pper oxides, located 40 km to the north of our Buena-
US$74.6 million in 2014, and expect to spend around US$50.8 million in 2017.
vista del Cobre operation. This project was acquired by
BUENAVISTA - ZINC
We currently have direct control of 332,694 hectares of concessions for exploration,
navista del Cobre porphiric deposit, at the northeast end
80,979 of which are in Peru and 154,937 in Mexico. We also hold 58,138 hectares of
during 2016, we carried out a confirmatory exploration
of the pit.
exploration concessions in Argentina, 36,097 hectares in Chile, and 2,543 hectares
campaign of 15,316 meters to confirm the deposit’s
Southern Copper in 2015.
Buenavista del Zinc is a project located within the Bue-
in ecuador.
mineralization. Once completed, it was complemented
This is a Skarn-type deposit consisting of a mineralization
with a second additional campaign of 3,700 meters
of sulfurs with zinc, copper, silver, and lead. It has 158
and a 40-km geophysical survey in 4Q16.
million tons in ore reserves, with zinc ore grades of 1.76%,
GRUPO MEXICOANNUAL REPORT / 2016 TOTALLY SOLID
The ore body has potential for continuity; thus, to fina-
obtained indicate the presence of five different areas
lize the delimitation of its morphology, we will continue
with potential.
the drilling works throughout 2017. The project consi-
ders the generation of an aerial hyperspectral image that
In 2017, we plan to carry out a geophysical survey to
will span 40,000 square km. and a drilling campaign of
refine drilling targets and confirm their existence throu-
15,000 meters.
gh a 5,000-meter exploration campaign.
CHALCHIHUITES
ALFAREÑA PROJECT
Chalchihuites is a Skarn-type deposit consisting a sul-
Alfareña is a silver, gold, lead, zinc, and copper vein
fide mineralization with zinc, lead, silver, and copper. It is
project within the Santa Barbara district, located 6 km.
located in the north of the state of Zacatecas, very close
from the concentrator plant. It has reserves of 21.1 mi-
to the San Martin mining unit. Based on the information
llion tons of ore, with average contents of 3.46% of
55
obtained in various exploration campaigns carried out
zinc, 0.38% of copper, 2.44% of lead, and 100 gr/ton
between 1980 and 2014, totaling 68,000 meters dis-
of silver. 2011 and 2014 have implied a total of 140
tributed among 144 bore holes, reserves of 12.6 million
bore holes.
tons with ore grades of 110 g/t of silver, 2.66% for zinc,
0.37% for copper, and 0.67% for copper have been es-
The development of this project probably requires the
timated. Results to date report that the mineralization
construction of a new mine and possibly of a new con-
consists of a complex mix of oxides and silver, lead, and
centrator plant to process the ores in the Santa Barbara
zinc sulfides; thus, additional work focused on metallur-
unit. In 2017, we are considering a drilling program of
gical research is still required.
15,000 meters to raise resources to reserve status and
proceed to develop the project.
In 2017, an exploration campaign of 21,000 meters is
planned, in order to obtain material that will enable us to
PERU
advance on the testing and metallurgical research.
LOS CHANCAS
CAMPO MEDIO PROJECT
This property is a copper and molybdenum porphyry de-
Campo Medio is immediately to the west of the Santa
posit located in the Apurimac department, in southern
eulalia unit. The area shows evidence of the possible
Peru. Current estimates indicate the presence of 545 mi-
54
0.54% copper and 21 gr/ton of silver. In 2016, we worked on revising the deposit’s
geological model. Moreover, the lithological description of old blast holes was chec-
ked and analyzed through infrared ray spectrometry. With the new information obtai-
ned, we updated the database for reserve estimations.
At present, the basic engineering has been completed and we are working on a revised
mining plan which should be completed during the first quarter of 2017. Moreover, works
continue on the flotation metallurgical testing to optimize ore recovery.
Drill cores
at 600 meters
deep in the
El Arco
exploration
project, Baja
California,
Mexico.
BELLA UNION (LA CARIDAD)
Bella Union is a mineralized breccia with copper and molybdenum located less than
presence of limestone replacement bodies, similar to
llion tons of mineralized material with average contents
1 km from the current limit of the La Caridad pit. In 2016, 2,1730 meters were drilled
those currently exploited in the mine. during 2016, the
of 0.59% of copper, 0.04% of molybdenum, 0.039 g/t,
to define the geometry of the ore body. With this successful exploration program, total
geological and geochemical survey of 800 hectares lo-
and 181 million tons of leachable mineralized material
reserves of roughly 63.3 million tons with an average ore grade of 0.43% for copper
cated between the two operating mines in the district
with a total copper content of 0.357%. during 2016,
and 0.04% for molybdenum were defined.
and those that have historically extracted more than 25
the social and environmental sustainability with the local
million tons of ore was completed. The promising results
communities was continued and optimized.
GRUPO MEXICOANNUAL REPORT / 2016 TOTALLY SOLID In 2017, we are considering beginning the preparation
the existence of mineralization of a copper-molybde-
and presentation of the environmental Impact Assess-
num porphyry system. This campaign will be executed
ment, as well as continuing our social responsibility
during 2017. We also expect to execute a 20,000-me-
and relationships.
ter diamond drilling program in areas with evidence of
ARIKEPAY
copper porphyry systems, located in the metallogenic
strip of southern Peru, between Tacna, Moquegua, and
This project is located in Arequipa. In 2016, we comple-
Arequipa. Last, we will continue with the prospecting
ted a 3,500-meter drilling program. The results obtained
program in various metallogenic environments around
indicated evidence of mineralization in irregular sections
the country.
56
of the deposit. In 2017, we are planning a 4,000-meter
drilling campaign to determine the continuity of the de-
CHILE
posit’s mineralization.
EL SALADO (MONTONERO)
OTHER PROJECTS
el Salado is an IOCG-type copper-gold project lo-
during 2016, we completed the exploration works at the
cated in the Atacama region in Chile. In 2016, a
Lana project located in Arequipa, in the sourth of Peru,
12,169-meter exploration campaign was carried
where 2,105 meters were drilled. The drilling began in
out to define the classification of the existing ore. In
April 2015, and ended in May 2016. Unfortunately, the
2017, we are considering a 4,000-meter diamond
results obtained have not been favorable, and no further
drilling program to define the project’s profile and its
exploration works will be carried out.
preliminary prefeasibility.
different targets have been explored on the southern coast
RESGUARDO DE LA COSTA
of Peru to locate copper porphyry systems. For this purpo-
Resguardo de la Costa is an epithermal gold deposit lo-
se, a total of 22,087 meters were drilled, but the results
cated to the south of Chañaral, where we are conside-
were not satisfactory. Thus, no additional exploration pro-
ring a 3,000-meter drilling program throughout 2017.
grams are considered here for 2017.
Moreover, we will continue with the prospecting of
We obtained environmental permits to carry out a
areas with promising indicators of mineralization pre-
5,000-meter diamond drilling program in the Tambillo
sence with copper porphyry systems in the Antofa-
project, located on the central coast of Peru, to confirm
gasta region.
57
Blast hole drill,
Cuajone, Peru.
ANNUAL REPORT / 2016 TOTALLY SOLID 58
The Toquepala
expansion will
ECUADOR
CHAUCHA – RUTA DEL COBRE
Likewise, we completed certain evaluations on third-party properties in the San Juan provin-
ce. We found targets with potential epithermal gold and silver systems in Cerro Abanico and
Cerro Las Minas, located in the Rio negro province. In 2017, we have considered continuing
the exploration of these systems.
Moreover, in 2017, we will begin exploration activities at the Marisa I property, located in
the San Juan province. These exploration concessions were awarded through a resolution
in favor of Southern Copper Argentina by the mining authorities of San Juan. Preliminary
evidence suggests the possible existence of a copper and molybdenum system.
SPAIN
LOS FRAILES
59
Los Frailes is located in the Aznalcóllar municipality, only 35 km. from the city of Seville,
Spain. After the project was won in a public bidding in May 2015, in July 2015, the regional
authorities granted us permission to begin exploration activities on 2,160 concessioned
hectares. We immediately began to carry out various works: a photogrammetric restitution,
a topographic survey, and geological cartography of all the concessioned surface. We also
carried out a drilling campaign of 56 bore holes totaling 27,200 meters. Moreover, 3,000
meters were drilled and piezometers and inclinometers were installed to perform the geote-
result in an annual
increase of 100,000
tons of copper
and 3,100 tons of
molybdenum.
Night view of
the Toquepala
expansion, Peru.
Ruta del Cobre is located to the west of the city of Cuenca and to the south of the
chnical and hydrogeological research.
Guayaquil locality. The deposit offers a mineralization system of copper and molyb-
denum porphyries. In 2016, we executed 25,081 meters of diamond drilling, in com-
With the material obtained through drilling, we began the first phase of the metallurgical
pliance with ecuador’s socio-environmental management regulation. This drilling has
testing by differential flotation and bulk flotation. We hope to complete this initial exploration
enabled us to consolidate the information obtained to date for a better geological and
campaign by mid-March 2017.
economic interpretation.
In 2017, we are planning to carry out a 12,000-meter diamond drilling program to
UNITED STATES
CHILITO
perform geotechnical and metallurgical studies, as well as to prepare a conceptual
Chilito is in Gila County, Arizona. In 2016, we acquired 62 mining concessions covering the
study for an initial economic assessment of the project.
northern part of the project, in order to investigate certain geophysical anomalies that could
ARGENTINA
during 2016, the prospecting and geological assessment works were completed at
the La Voluntad and Cochico prospects (copper-gold systems), located in the neuquen
province. Unfortunately, the results obtained were not satisfactory.
increase the mineral resource. A geological mapping and sample collection is being carried
out with favorable results so far. In 2017 we will continue these studies.
GRUPO MEXICOANNUAL REPORT / 2016 TOTALLY SOLID N° 1 IN COPPER RESERVES WORLDWIDE:
OVER 75 MILLION TONS.
60
61
75.2
74.3
COPPeR ReSeRVeS BY COMPAnY
Million tons
Grupo México / AMC
Codelco
Freeport Mc Moran
BHP
Glencore / xstrata
Fisrt Quantum
Anglo American
Rio Tinto
Antofagasta
Vale
49.6
35.9
26.9
23.5
23.3
22.1
16.2
13.1
Warehouse of copper cathodes
ready to be transported.
GRUPO MEXICOANNUAL REPORT / 2016 TOTALLY SOLID IN THE LAST 5 YEARS, THE MINING
DIVISION HAS MANAGED TO
REDUCE ITS ACCIDENT RATE BY
40%, AND THEIR SEVERITY BY 60%.
THE WELLBEING OF OUR COLLABORATORS
IS A TASK THAT CONCERNS US ALL. WE KNOW
THAT CARING FOR OUR TEAM BRINGS PEACE
OF MIND TO THEIR FAMILIES.
Workers at underground mine
Santa Barbara, Chihuahua, Mexico.
62
63
OCCUPATIONAL HEALTH AND SAFETY
MINING DIVISION
For Grupo Mexico, caring for the lives, health, and wellbeing of our collaborators and
their families is the number one priority in all our operations. no task is more important.
Our main commitment is to create optimal and safe work environments for our co-
llaborators, applying the highest occupational health and safety standards. Our goal:
ZeRO accidents.
The Mining division’s Integrated of Labor Health and Safety Management System allows
us to implement effective processes and provide our collaborators with the necessary
knowledge and skills to identify, control, and mitigate risks, prioritizing the necessary
measures and care to prevent accidents.
GRUPO MEXICOANNUAL REPORT / 2016 TOTALLY SOLID ACTIVITIeS AIMed AT:
COMPANY PERSONNEL
WORKERS’ FAMILIES AND
COMMUNITIES
Safety conferences and courses
Guided tours “Meet my company”
Safety Expo
Health race
Internal Safety Cells Forum
Value promotion family contests
Healthcare fair
Health race
64
Awards to workers or departments
with ZERO INCIDENTS
Fire-fighting courses
Family get-togethers and parades
Healthcare fair
In 2016, we maintained 12 units in Mexico and Peru
• In Peru, we continue to work on the Safety Based
with the Occupational Health and Safety Advisory Ser-
Behavior program, hoping that the first results will
vices certification, per OHSAS 18001:2007 standard. In
enable us to enrich the culture of prevention among
addition, in Mexico, we have 18 units accredited by the
our collaborators.
Ministry of Labor’s Health and Safety at Work program
(PASST for its Spanish acronym), thus consolidating our
• Our US mining operations once again achieved the
commitment to implement the best practices in health
lowest incidents and severity indices in their his-
and safety in the workplace. during 2016, we reported
tory, with an incident rate that is 57% below the
the following achievements in Health and Safety:
national average.
• Mexico’s Mining Chamber (Camimex) awarded the
• In Mexico, we held the sixth Forum on Safety Cells,
Silver Helmet, a “Jorge Rangel Zamorano” Award,
where our collaborators present projects to carry out
to Mexicana del Cobre’s Sx/eW plant, as well as to
their activities more safely and productively.
the Lime Plant and the Santa eulalia Mine, as they
reported the lowest incident rates in the industry,
as well as for their efforts in accident prevention.
65
Thanks to our collaborators’ work and commitment, we have managed to re-
duce the accident rate by 40% and their severity by 60% in the last 5 years.
These efforts are a result of actions aimed to improve our processes to care
for the physical integrity of our collaborators.
InCIdenT RATe (IR)
MINING DIVISION, 2012-2016
2016
2015
2014
2013
2012
0.75
0.69
0.84
0.94
1.06
IR =
no. of incapacitating accidents
Total no. of man-hours worked
x 200,000
SeVeRITY RATe (SR)
MINING DIVISION, 2012-2016
0.30
0.23
0.19
2016
2015
2014
2013
2012
0.49
0.61
SR =
no. of days lost
Total no. of man-hours worked
x 1,000
GRUPO MEXICOANNUAL REPORT / 2016 TOTALLY SOLID
66
Personal protection
gear in central
repair shop for
underground
mine equipment,
Chihuahua, Mexico.
OCCUPATIOnAL dISeASe RATe
MINING DIVISION, 2012 - 2016
0.37
0.32
0.12
2016
2015
2014
2013
2012
0.47
0.61
67
ODR =
Number of cases
of occupational diseases
Total man-hours worked
x 200,000
OCCUPATIONAL HEALTH
INVESTMENT IN HEALTH & SAFETY
during 2016, we invested nearly US$133 million in occupational health and
Healthy environments are part of our organizational culture and management system, as a
safety, representing a 14% increase over 2015. These investments were
responsibility of the company, which establishes a culture of involvement, participation, and
made primarily in engineering works, purchasing personal protective gear,
commitment, to generate better health conditions that lead to an increase in the quality of
training and industrial hygiene studies. In occupational health, we invested
life of our collaborators, their families, and the communities where we operate.
in raising awareness, promotion and health protection, and early detection,
treatment and rehabilitation in the company’s hospitals.
Over the last 5 years, we have managed to reduce our occupational disease rate by 56%,
thanks to various education, prevention, and risk control programs, as well as illness treat-
ment. These programs are provided to our collaborators and, in some cases, family mem-
bers, contractors, suppliers, institutions, and the public.
GRUPO MEXICOANNUAL REPORT / 2016 TOTALLY SOLID Female mining truck
operators, Buenavista
del Cobre, Sonora, Mexico.
69
68
INVESTMENT IN WORKPLACE SAFETY
(US$ millions)
Administrative costs
Training
Personal protective gear
Industrial hygiene studies
engineering works
Total
MINING DIVISION
$
$
$
$
$
$
5.43
5.01
10.28
18.56
86.81
126.10
INVESTMENT IN WORKPLACE HEALTH
(US$ millions)
Health awareness, promotion and protection
detection and prevention
Treatment
Rehabilitation
Total
MINING DIVISION
$
$
$
$
$
0.99
2.30
3.31
0.03
6.64
GRUPO MEXICOANNUAL REPORT / 2016 TOTALLY SOLID 70
71
Transportation
Division
IN 19 YEARS OF OPERATION, WE HAVE CONSOLIDATED AS
THE LEADING CARGO TRANSPORTATION COMPANY IN MEXICO.
During 2016, we hauleD 54.445 billion tons-KM, thus
enabling the railroaD to gain MarKet share within the
total voluMes hauleD nationwiDe, froM 19% to 26%.
Bulk hoppers.
Although the results in US dollar terms were
affected by the peso depreciation (17.7% in the
year), operating results rose 0.6%, and eBITdA
11.5% over the previous period. The same concepts
expressed in pesos show 18% and 31% growth,
respectively.
Intermodal train
in rail corridor in the
Cuyutlan Lagune,
Colima, Mexico.
72
eBITdA US 2016
eBITdA US 2015
eBITdA Mxn 2016
eBITdA Mxn 2015
$ 774,961
$ 695,154
VAR: 11.5%
$ 14, 441
$ 10,992
VAR: 31.4%
In 2016, we remained the n° 1 railroad in interna-
tional traffic, thanks to the sharp increase in border
crossings, with a 56% share of railway exchange
traffic with the US.
Mexican freight trains remain the most competitive
and productive in America.
After the startup of operations of two assembly plants
in 2016, vehicle production nationwide grew 1.95%.
Out of every ten vehicles produced in Mexico, seven
are hauled by our Transportation division.
73
GRUPO MEXICOANNUAL REPORT / 2016 TOTALLY SOLID
F.T. WORTH
DALLAS
LONGVIEW
SHREVEPORT
FT. STOCKTON
32
SAN ANGELO
33
34
SAN ANGELO JCT
SPOFFORD
EAGLE PASS
HOUSTON
IOWA
MOBILE, AL
NEW ORLEANS
EL PASO
11
31
ALPINE
30
SAN DIEGO
1
WELLTON
PHOENIX
PICACHO
TUCSON
CLIFTON
2
3
4
5
6
74
GEOGRAPHIC LOCATION
TRAnSPORTATIOn dIVISIOn - GRUPO MÉxICO
12
18
13
19
15
16
14
8
9
20
29
21
17
23
24
25
7
PACIFIC
OCEAN
LEGEND
RAILWAYS
GRUPO MEXICO
1 MEXICALI
2 NOGALES
3
4
5
6
7
8
9
10
11
12
13
14
B. HILL
HERMOSILLO
GUAYMAS
TOPOLOBAMPO
MAZATLÁN
GUADALAJARA
COLIMA
MANZANILLO
CD. JUÁREZ
CHIHUAHUA
ESCALÓN
TORREÓN
15 FELIPE PESCADOR
16
AGUASCALIENTES
17 IRAPUATO
18
19
20
21
PIEDRAS NEGRAS
CD. FRONTERA
PAREDÓN
MONTERREY
10
RIGHT OF WAY
OTHER RAILWAYS
22
23
24
25
26
ALTAMIRA
VIBORILLAS
HUEHUETOCA
VALLE DE MÉXICO
VERACRUZ
27 COATZACOALCOS
28 SALINA CRUZ
29 SALTILLO
30 PRESIDIO OJINAGA
31 ALPINE
32 FT. STOCKTON
33 SAN ANGELO
34 SAN ANGELO JCT
SAN ANTONIO
CORPUS
CHRISTI
22
GULF OF
MEXICO
26
27
28
75
RAIL FERRY
CENTRAL AMERICA
GRUPO MEXICOANNUAL REPORT / 2016 TOTALLY SOLID RELEVANT FIGURES GMEXICO TRANSPORTES
(Millions of USd)
2015
2016
VARIANCE
Vol. Transported
(million tons-km)
Cars hauled
54,220
54,445
225
1,210,057
1,231,539
21,482
Sales
1,890,863
1,767,303
(123,560)
Cost of Sales
1,126,522
1,032,752
(93,770)
Operating Profit
528,326
(7,134)
0.4%
1.8 %
(6.5%)
(8.3%)
(1.4%)
EBITDA
695,154
774,961
79,807
11.5%
777 7
EBITDA Mg (%)
36.8%
43.8%
Net Profit
303,955
357,020
53,065
17.5%
Profit Margin (%)
16.1%
20.2%
Investments (Capex)
377,842
359,830
(18,012)
(4.8%)
Since the beginning of its operations, the Transportation division has im-
plemented new operating practices, and carried out significant capital
investments to reduce long-term risks and improve operating efficiency.
The Transportation division offers railway cargo services in the segments
of agriculture, automotive, minerals, energy, chemicals, steel, cement,
and consumer goods.
Regardless of the 0.4% increase in tons per kilometer hauled and a better
rate mix, revenues accrued at december 2016 reported a 6.5% decrease
in US dollar terms vs. the previous year, affected by the peso depreciation
(17.7%). Revenues in peso terms showed a 9.8% rise, in line with volume
and rate increases.
IN 19 YEARS OF
CONCESSION, WE HAVE
INVESTED US$5.95 BILLION
IN THE TRANSPORTATION
DIVISION, ALLOCATED TO TO
RAILWAY INFRASTRUCTURE,
LOCOMOTIVES, AND RAILWAY
MAINTENANCE, AMONG
OTHERS.
76
TRANSPORTATION DIVISION
Grupo Mexico’s Transportation division is represented by its subsi-
diary, Grupo México Transportes, S.A. de C.V. (GMxT). Its main subsi-
Bulk hoppers,
Culiacan, Sinaloa,
diaries are Grupo Ferroviario Mexicano, S.A. de C.V. (GFM), Ferrocarril
Mexicano, S.A. de C.V. (Ferromex), Infraestructura y Transportes Ferro-
Mexico.
viarios, S.A. de C.V. (ITF), Ferrosur, S.A. de C.V. (Ferrosur), Intermodal
México, S.A. de C.V. (IMex), and Texas Pacifico, LP, Inc. (TxP).
GMxT is the largest railway company with the most extensive coverage
in Mexico. It has a network of over 10,500 km of rails through 24 states
in Mexico, and the state of Texas in the US. GMxT’s lines connect at five
border points with the US, as well as at five ports on the Pacific Coast,
and four more on the Gulf of Mexico. GMxT is controlled by Grupo Mexi-
co (75%) and Grupo Carso-Sinca Inbursa (25%). Ferromex is controlled
by GMxT (74%) and Union Pacific (26%). Ferrosur is fully controlled by
GMxT, which holds 100%.
GRUPO MEXICOANNUAL REPORT / 2016 TOTALLY SOLID
WE HAVE 2.7 MILLION HORSE POWER
TO HAUL 1.5 MILLION CARS PER YEAR.
TRANSPORTATION DIVISION 2016
SALES DIVERSIFICATION BY SEGMENT
The contribution to revenues of each segment at december 31, 2016, is displayed below:
Containers,
Intermodal Terminal, Silao,
Guanajuato, Mexico.
78
79
Cement
4.1%
Other revenues
5.2%
Metals
6.6%
Agriculture
29.5%
ReVenUeS
BY SeGMenT
Energy
7.8%
Intermodal
7.8%
Chemicals
8.4%
Minerals
8.6%
Industrial
9.9%
Automotive
12.0%
Industrial
2,891
Automotive
2,809
Cement
3,028
Energy
3,781
Intermodal
4,312
Chemicals
4,857
Agriculture
20,063
54,445
TOnS-KM
Steel
5,292
Minerals
7,412
Volumes transported during 2016 reached 54.445 bi-
After the increase of operations of two assembly plants
llion net tons per kilometer. The segments with the most
in 2016, vehicle production nationwide grew 1.95%.
growth were: steel (12%) due to greater penetration in
Since 2015, the Transportation division has consolida-
the traffic of the segment and a decrease in steel prices,
ted as the largest automobile transporter in the country,
which has increased exports and imports of both raw
hauling 62% of the exports from the plants it serves,
materials and finished products; Intermodal (7%), due
particularly towards the US.
to the increased traffic at the Manzanillo and Veracruz
ports, as well as in the cross-border corridors of Piedras
In the intermodal segment, we continued to grow with
negras and Ciudad Juarez, which connect to north Ame-
a 5.3% expansion in the volume of containers hauled,
rican railroads; agriculture (3%), given the increase in the
totaling 395,363.
traffic of both national and imported harvests; and auto-
motive (2%), given the increase in vehicle transportation,
due to greater production by assembly plants.
GRUPO MEXICOANNUAL REPORT / 2016 TOTALLY SOLID RAILROAD TRANSPORTATION HELPS TO
CONSIDERABLY REDUCE POLLUTION, AS A
SINGLE TRAIN IS EQUIVALENT TO OVER 300
TRUCKS DRIVING ALONG THE ROAD NETWORK.
IT ALSO REDUCES AUTOMOTIVE TRAFFIC AND
THE NUMBER OF ROAD ACCIDENTS.
AC Locomotive.
80
IN 2016, WE GENERATED A RECORD EBITDA
OF US$775 MILLION, WITH A RECORD MARGIN
OF 44%.
The cross-border service increased container volumes by 23%,
thanks to new traffic of auto parts and household appliances, mainly.
In July 2016, a new service began on the Inter Pacific corridor with a
81
terminal in Culiacan.
Significant achievements were made throughout the year in other
segments as well, such as the hauling of 25 million tons of agricultu-
ral products, thus guaranteeing supply in the country.
TRANSPORTATION DIVISION
MARKET SHARE
LAND TRANSPORTATION
MARKET SHARE
TRUCK
OTHERS
FERROMEX
80%
20%
*TKN’S expressed in billions
%
5
6
%
5
3
75%
25%
*TKN’S expressed in billions
%
5
6
%
5
3
1999
239
TKN’S
2015
328
TKN’S
GRUPO MEXICOANNUAL REPORT / 2016 TOTALLY SOLID
Automaxes
in San Jose Chiapa,
Puebla, Mexico.
82
CAPITAL INVESTMENTS
TRANSPORTATION DIVISION
The Transportation division invested US$360 million in 2016.
Among other segments, the investments were allocated to
the acquisition of 50 locomotives, infrastructure improve-
ments, repairing railroads, expanding and building sidings
and yards, and purchasing railway machinery, increasing ca-
pacity, speed, service, and efficiency.
GMéXICO TRANSPORTES, S.A. DE C.V.
MAINTENANCE INVESTMENTS
Millions of USd
Railway Maintenance and Improvement
$ 4,146
equipment
Others
Telecommunications
Total
$ 1,237
$
342
$
222
$ 5,947
83
GRUPO MEXICOTOTALLY SOLID Bulk Train.
TRANSPORTATION DIVISION RESOURCES
FERROMEX
FeRROSUR
TXPT
IMex
TOTAL
Railway network (Km)
8,131
1,823
616
Engines
Cars
Workers/Employees
Productivity (million of TKN/worker)
612
23,983
7,570
6.1
200
4,674
1,930
4.4
20
-
55
10,570
832
28,657
629
10,184
84
85
SALES BY SEGMENT
(Million USd)
Agriculture
Automotive
Industrial and Others
Minerals
Chemicals
and Fertilizers
Intermodal
Energy
Steelmakers
Cement
2016
29.5%
12.0%
9.9%
8.6%
8.4%
7.8%
7.8%
6.6%
4.1%
2015
28.2%
12.0%
10.6%
9.7%
2016
2015
VAR %
$
$
$
$
521,771
212,924
175,117
152,255
$
$
$
$
532,375
(2.0%)
227,454
(6.4%)
200,411
(12.6%)
184,274
(17.4%)
8.5%
$
148,234
$
159,806
(7.2%)
7.4%
7.8%
6.2%
4.4%
$
$
$
$
138,393
137,181
116,965
71,969
$
$
$
$
139,364
(0.7%)
148,026
(7.3%)
117,267
(0.3%)
83,033
(13.3%)
Subtotal freight
94.7%
94.7%
$ 1,674,809
$ 1,792,010
66.5%
Other income
5.2%
5.2%
$
92,494
$
98,853
(6.4%)
Total income
100.0%
100.0%
$ 1,767,303
$ 1,890,863
(6.5%)
TRANSPORTATION DIVISION
eBITdA Margin
%
2016
2015
2014
2013
2012
43.8%
36.7%
34.5%
34.1%
34.1%
GRUPO MEXICOANNUAL REPORT / 2016 TOTALLY SOLID 86
87
Infrastructure
Division
WITH 80 YEARS OF TRACK RECORD, THE INFRASTRUCTURE
DIVISION HAS CONSIDERABLE EXPERIENCE REFLECTED
IN ITS GROWTH. the Division’s ebitDa increaseD 4.4x in
the last four years froM us$63 Million in 2012
to us$279 Million in 2016.
Sunset at combined cycle energy plant
Nacozari, Sonora, Mexico.
1
2
88
89
GEOGRAPHIC LOCATION
InFRASTRUCTURe dIVISIOn - GRUPO MexICO
ASSETS
1
2
3
4
5
6
7
8
9
CANANEA
COMBINED CYCLE PLANTS, 500 MW
LEON-SALAMANCA HIGHWAY
HEADQUARTERS, MEXICO CITY
LAND-DRILLING BAZE, POZA RICA, VERACRUZ
EL RETIRO, WIND FARM, 74 MW
ZACATECAS JACK-UP
CHIHUAHUA JACK-UP
VERACRUZ JACK-UP
10 SONORA JACK-UP
11 TABASCO JACK-UP
12 OFFSHORE DRILLING RIG. CD. DEL CARMEN, CAMPECHE
13 CAMPECHE JACK-UP
14
GUADALAJARA
15 IRAPUATO
16 MONTERREY
PACIFIC
OCEAN
LEGEND
1
PEMSA
2 MGE
3 MCC
4
ROAD
16
14
3
15
5
GULF OF
MEXICO
8
13
4
9
7
12
11
10
6
CENTRAL AMERICA
GRUPO MEXICOANNUAL REPORT / 2016 TOTALLY SOLID Campeche Jack-up
structure.
FINANCIAL HIGHLIGHTS
(MPd)
90
INFRASTRUCTURE DIVISION
Sales
Cost of Sales
Operating Profit
EBITDA
EBITDA Mg (%)
Net Profit
Profit Margin (%)
Investments- (Capex)
2015
616,183
283,723
218,857
308,922
50.1%
128,710
20.9%
89,534
2016
608,265
315,645
167,644
278,631
45.8%
94,287
15.5%
14,830
VARIANCE
(7,918)
31,922
(51,213)
(30,291)
(1.3)
11.3
(23.4)
(9.8)
(34,424)
(26.7)
91
(74,704)
(83.4)
THE DIVISION’S EBITDA
HAS HAD A 30% CAGR
FROM 2012 TO 2016.
The Infrastructure division is represented by México Proyectos y de-
Sales in the Infrastructure division in 2016 totaled US$608 million, 1.3 lower than in
sarrollos, S.A. de C.V. (MPd). Its main subsidiaries are: Controladora
2015. This decrease was mainly due to the rise in Fx throughout the year. Sales in
de Infraestructura Petrolera, S.A. de C.V. (CIPeMe), Controladora de
peso terms showed a 15% increase from the previous year.
Infraestructura energética México, S.A. de C.V. (CIeM), México Com-
pañía Constructora, S.A. de C.V. (MCC), Concesionaria de Infraestruc-
eBITdA totaled US$279 million, translating into a 10% decrease from 2015. This
tura del Bajío, S.A. de C.V. (CIBSA) and Grupo México Servicios de
decrease is explained, among other reasons, by the adjustment in PeMSA’s rates,
Ingeniería, S.A. de C.V. (GMSI). Grupo Mexico controls 100% of all
the increase in gas prices, the lower revenues from the Sonora platform, and the de-
these subsidiaries.
creased volume of work to complete the Salamanca-Leon Highway in 2015.
CIPeMe offers marine drilling services for oil production and explora-
In 2016, we invested US$26.5 million in the Infrastructure division. The investments
tion, as well as comprehensive drilling services, including cementation
include US$10.1 million for the optimization of the Zacatecas platform, and the Tam-
engineering, and directional drilling. CIeM produces energy, mainly for
aulipas modular platform. Likewise, US$11.6 million was invested in the last works
self-consumption. MCC and GMSI offer engineering, procuring, and in-
for the Salamanca-Leon Highway, which was reported as an intangible asset as it is
frastructure construction services, as well as specialized engineering
a concession.
services to develop projects. CIBSA is the concessionaire that runs the
Salamanca-Leon superhighway.
This year, we will consolidate the operations of the assets developed in the last
few years.
GRUPO MEXICOANNUAL REPORT / 2016 TOTALLY SOLID 92
OIL AND GAS SECTOR
Veracruz modular platform.
93
CONTROLADORA DE INFRAESTRUCTURA PETROLERA
MÉXICO, S.A. DE C.V. (CIPEME).
In 2016, Controladora de Infraestructura Petrolera Mexico obtained
US$174 million in revenues and US$90 million in eBITdA, with a net
profit of US$18 million.
Although in 2016 two of our drilling rigs underwent suspensions in
two periods, while we experienced an additional reduction in sales, we
achieved 52% eBITdA.
MARINE DRILLING
As a result of the low oil prices, we ended the year with six active
contracts, three of them in continuous operation (Campeche, Tabas-
co, and Chihuahua platforms), two temporarily suspended (Zacatecas
and Veracruz platforms), and one awaiting structure from Pemex to
be installed (Tamaulipas platform). Only the Sonora platform is under
no contract.
The platforms’ operating efficiency during 2016 was 97%.
GRUPO MEXICOTOTALLY SOLID
THROUGHOUT 2016, WE MAINTAINED AN AVERAGE
EFFICIENCY OF 97% IN OUR PLATFORMS,
THUS REMAINING AS THE INDUSTRY LEADERS.
94
third party immediately.
95
The Sonora platform completed its major maintenance to preserve its
class certificate and be suitable for leasing to Pemex or some other
The Chihuahua platform reached 98.94% productivity, standing out
as reporting the best performance among our platforms. This resulted
in a contract extension to September 1st, 2017. Moreover, its tech-
nological capacity to operate with 18-3/4” preventers and 15,000 psi
gush control system was increased.
The Zacatecas platform had 97.18% productivity. On november 16,
2016, it entered suspension and is currently awaiting workload.
The Tabasco platform increased its productivity to 98.67% and has
an active contract ending March 16, 2022.
The Campeche platform achieved 97.25% productivity and has an
active contract ending August 11, 2021.
The Veracruz modular platform achieved 97.27% productivity with an
active contract ending September 5, 2020.
The contracting of the Tamaulipas modular platform was postponed by
Pemex until mid-2017, and the contract will end January 6, 2021.
Veracruz modular platform.
GRUPO MEXICOANNUAL REPORT / 2016 TOTALLY SOLID THROUGH TWO COMBINED CYCLE PLANTS (500 MW)
AND THE EL RETIRO WIND FARM (74 MW), THE ENERGY
DIVISION GENERATED 3,137 GIGAWATT HOURS
(GWH), TRANSLATING INTO A 14% INCREASE VS.
THE PREVIOUS YEAR’S PRODUCTION.
ENERGY
LAND DRILLING
CONTROLADORA DE INFRAESTRUCTURA
during 2016, a contract for comprehensive services
ENERGÉTICA MÉXICO, S.A. DE C.V. (“CIEM”)
96
was signed with Geodesa, in alliance with Weatherford,
As for production and sales, 2016 was a record year for
under which we drilled three geothermal wells and re-
the energy division. The generation plant’s operational in-
paired two others, with 95% productivity.
crease in nacozari, Sonora, given higher demand from
EVALUATION OF NEW OPPORTUNITIES
hike. This translates into a 6.3% increase compared to
Throughout 2016, the opportunities in the bidding
2015. In addition, we achieved US$117 million in eBITdA.
our self-supply partners, resulted in a US$256 million
rounds of the national Hydrocarbons Commission (CnH
in Spanish) were assessed, as were the biddings for
Grupo Mexico energia focused on the construction of a
Pemex farmouts. We decided not to participate in the
portfolio of assets under development that will enable it
biddings of round 1.4 (deepwater), given the high level
to invest in the short and medium term. Currently, we
of risk and ratings required. In 2017, we will consider
are working on the initial development stages of solar
MÉXICO GENERADORA DE ENERGÍA (MGE)
participating in rounds 2.1, 2.2, and 2.3 (land and wa-
projects, and analyzing opportunities to acquire renew-
The generation plant increased its production by 14% vs. 2015, equivalent
ter fields), and present our bids in June.
able energy project portfolios.
to 3,137 GWh, given the increased consumption by the Buenavista del
Cobre mine. This translated into a record US$244 million and US$100
Regarding off-shore operations, the strategy is to di-
The energy division is preparing itself with technical and
million in eBITdA.
versify our client base; thus, we have presented com-
human capital resources to be able to participate in the
prehensive drilling proposals for several new operators,
new Wholesale electricity Market. Thus, in 2017, we are
The combined cycle generation plants have proven that they can operate
which we expect to complete during 2017.
projecting using growth opportunities.
above their design capacity. Thus, we expect the excess capacity to be traded
on the new market during the second half of 2017 to increase revenues and
operating efficiency.
97
View of
combined cycle
plants Nacozari,
Sonora, Mexico.
GRUPO MEXICOANNUAL REPORT / 2016 TOTALLY SOLID
We have a capacity
of 574 (MW) of energy
generation, with state
of the art technology.
Wind farm,
Juchitan, Oaxaca, Mexico.
98
By the second quarter of 2017, we expect to begin sell-
Mexicana de Cobre, S.A. de C.V.
ing energy at 45 more points of sale to increase the wind
during the year, we worked on the construction of rais-
farm’s profitability; this would translate into a portfolio with
ing the levee of tailings dam no. 7 at the La Caridad
350 points of sale.
mine in the nacozari de Garcia municipality in Sonora,
reaching the safety height of 875.0 for the levee.
In 2016, we strengthened our relations with the commu-
nity where we operate, fostering 17 productive projects,
Ferrocarril Mexicano, S.A. de C.V.
which benefited over 3,000 individuals in La Ventosa, Oax-
In 2016, we completed the first stage of the expan-
aca. This effort ensures the wind farm’s continuing oper-
sion of the 15-tunnel gauge on the T Line, in the
ation in the area.
Guadalajara division, consisting of in the topograph-
CONSTRUCTION
ic, geological, and geophysical studies, as well as the
99
executive project, and the construction works. In May
2017, we will complete the expansion works on all the
MÉXICO COMPAÑÍA CONSTRUCTORA, S.A.
tunnels, enabling double-stack trains to pass on
DE C.V. (MCC)
the Guadalajara-Tepic stretch.
In 2016, Mexico Compañía Constructora celebrated 80
years of uninterrupted work, reporting US$122.5 mil-
MANAGEMENT OF QUALITY, OCCUPATIONAL
lion in revenues and US$37 million in eBITdA.
SAFETY, AND ENVIRONMENTAL CARE
Throughout 2016, MCC achieved the rectification of its
MAIN WORKS UNDER DEVELOPMENT:
comprehensive management systems
in compliance
Secretaría de Comunicaciones y Transporte (SCT).
with current national and international legislation; Quali-
We worked on the Leon and Silao’s Puerto Interior branch
ty ISO9001:2015, Workplace Health and Safety OHSAS
We should note that, in terms of safety, by the end of 2016, we had accrued 1,192 days
lines, both in Guanajuato, in the right-of-way areas that
18001:2007, and environmental ISO 14001:2015, which
without incidents. Moreover, during the year, MGe received an acknowledgement from the
the SCT was able to release. We expect to complete them
backs the company until 2019. This certification has been
Federal environmental Protection Agency (PROFePA in Spanish) and Civil Protection of the
in 2017.
held since 2007.
State of Sonora, for participating in activities designed to foster the creation of the national
Preparedness and Response for Chemical Contingencies day (dInAPReQ in Spanish).
Buenavista de Cobre, S. A. de C. V.
The performance in workplace health and safety is in full
EL RETIRO WIND FARM (ERSA)
ings dam no. 3, and we continued the works on stage 2
The wind farm’s production reached 214,000 megawatts-hour (MWh), translating into
of the new tailings pond, guaranteeing an overflow ca-
• In our operations, we had a monthly workforce of
US$11.7 million in revenues, thanks to the incorporation of higher consumption clients.
pacity in the 10-meter levee. We completed the works
1,805 collaborators, accruing 5,120,754 man-hours
This translated into a US$16.5 million eBITdA.
on the Quebalix IV dam, as well as the construction of
per year, achieving the goal of zero fatal incidents.
Work was done to reinforce and give maintenance to tail-
legal compliance, and we can note that:
the contingency dam, and of the recovered water dam.
GRUPO MEXICOANNUAL REPORT / 2016 TOTALLY SOLID
IN OUR OPERATIONS AT MéXICO COMPAñíA
CONSTRUCTORA, WE HAD AN AVERAGE MONTHLY
WORKFORCE OF 1,805 COLLABORATORS, WITH
AN ANNUAL ACCRUED FIGURE OF 5,120,754
MAN-HOURS, MANAGING TO ACHIEVE THE
GOAL OF ZERO FATAL INCIDENTS.
Toll-road
Salamanca - Leon,
Guanajuato,
Mexico.
100
101
GRUPO MéXICO AUTOPISTAS
• Additionally, we achieved accident rates below the
• Railway construction to service the new Mexico City
In 2016, sales in peso terms grew 15% to Mxn$312
averages reported by OSHA (US) and the Mexican
International Airport (nAICM in Spanish).
million, given the progress on the engineering works of
CONCESIONARIA DE INFRAESTRUCTURA DEL
Chamber of Construction Industry (CMIC).
• Possibility of obtaining a state concession for a
the Toquepala expansion in Peru.
12.5-kilometer road stretch, from the Silao road
BAJÍO, S. A. DE C. V. (CIBSA)
during 2016, the Salamanca-Leon Highway reported
environmental and quality performance audited and cer-
junction of the Salamanca-Leon highway to connect
For 2017, we expect to continue the Toquepala expan-
over $535 million pesos in revenues, and achieved a
tified by third parties is in compliance with all regulation
with highway 45.
sion project which, through december 2016, reported
weighted traffic rate of 11,633 vehicles per day, trans-
and specifications of the company’s construction projects.
87.3% progress; the remainder will be completed in
lating into an increase of slightly over 50%.
POSSIBLE PROJECTS 2017
• Expansion of the levee of the No. 7 tailings dam in
GRUPO MéXICO SERVICIOS
DE INGENIERíA
the first months of 2017.
POSSIBLE PROJECTS 2017
and a slightly higher advance in revenues, given that
In 2017, we expect a moderate 10% increase in traffic,
nacozari.
GRUPO MÉXICO SERVICIOS DE INGENIERÍA
• Engineering for petrochemical complexes.
the vehicle mix is starting to include a greater number
• Construction of the Celaya railway bypass.
S.A. DE C.V. (GMSI)
• Engineering for new production plants in the food
of trucks. We also expect to obtain the necessary per-
• Construction of railways and supply zone of the
during 2016, sales totaled US$16.8 million, 1% less
industry.
mits for the last stretch to reach the south side of the
new Rio escondido yard, km 21, R Line, Piedras
than in 2015, given the effect of the Mexican peso
• Engineering for gasoline, diesel, and wholesale prod-
city of Leon, and the branch line to Puerto Interior. The
negras - Ramos Arizpe.
depreciation.
uct terminals.
Highway is operated through a subsidiary of the Group:
• Engineering for mining projects.
Operadora de infraestructura del Bajío, registered be-
fore the SCT and certified with iSO 9001-2015.
ANNUAL REPORT / 2016 TOTALLY SOLID
102
103
Fundación
Grupo México
AT FUNDACIÓN GRUPO MéXICO, WE FOCUS OUR EFFORTS ON
PROJECTS THAT WILL IMPACT SOCIETY, AND WILL ALSO TACKLE
THE PROBLEMS THAT OUR COUNTRY FACES.
this is why we are very prouD to announce in each annual
report the start of a new proJect.
Girls in Oaxaca benefited
through the World Food Day event.
EDUCATION AND ENVIRONMENT
104
Educational material on sexuality,
nutrition, addictions, and violence for children,
adolescents, elementary school teachers.
105
HEALTH AND LIFE EDUCATION
It is well known that on the topic of education, Mexico has faced many
difficulties; the current administration has proposed a complete structural
overhaul. Thereby, Fundación Grupo México has taken advantage of this
juncture to develop and propose, with great acceptance, the Health and
Life Education materials and educational platform.
The goal of these materials is to complement the educational support
provided in elementary schools around the country, to assist in solving
various social issues experienced in our society. The contents of the edu-
cational materials cover topics of greater interest and conflict among chil-
dren and teenagers. Therefore, we have developed two versions—one for
elementary school children and teachers, and one for middle school kids
and their teachers.
Elementary:
1. I eat, nourish myself, and have fun
2. I learn to protect myself from violence
3. What are addictions? How to decide
4. My body is to be respected!
GRUPO MEXICOANNUAL REPORT / 2016 TOTALLY SOLID ONLY TWO WEEKS SINCE ITS LAUNCH, TWO THOUSAND
PROFESSORS HAVE SIGNED UP, WHICH IS A RECORD
FIGURE, PARTICULARLY IF WE NOTE THERE IS NO
OTHER MATERIAL OR DIGITAL PLATFORM LIKE IT.
Middle school:
Together with the national educators Union (SnTe in
1. I identify violence and protect myself
Spanish), Fundación Grupo Mexico made a topic guide
106
2. Addictions? Maximum alert!
of each educational material to match it to the annual
3. To eat better
planning guide from the Ministry of education (SeP).
4. Regarding my body, I decide!
This alliance offers all teachers the possibility of using
these materials within their teaching guide, and it can
General for parents and teachers
help and guide them so they can have the necessary
1. I eat, enjoy, and nourish myself
tools to properly use the contents in the classroom,
know which of the students’ abilities is favored, and in
Our educational platform www.educacionsaludyvida.org
what subjects they can provide the information proper-
became operational in October this year. Only two weeks
ly and precisely. We are very pleased that, after only 3
after its launch, two thousand teachers have registered,
months, the response has been so great that we ended
which is a record figure, particularly if we note that there
the year with 4,938 active users.
Animal Heroes, Sura, Fundación Posadas, and Hogan Lovells. These actions impacted
is no material or digital platform like it in our country.
It is a very important achievement for us to be the first
REFORESTATION
192,000 inhabitants of the neighboring areas.
to directly impact the whole country’s educational com-
during 2016, we carried out the 6th Fundación Gru-
Through our support of the Made in Mexico program with the “Mexico in 1 image, 1
munity on matters unrelated to academics. Through the
po Mexico Tree Planting day in Huixquilucan, State of
Photo=1 Tree” Contest, 40,000 trees were planted in Metepec, State of Mexico. This
platform, visitors can download educational material, and
Mexico. during this event, 6,000 trees were planted on
project, which encourages participants to take quality pictures and “trade” them for a
be active on the various forums, where they can discuss
4 hectares. As in the last 6 years, we had 608 volun-
tree, has had a significant response since its first edition some time ago. now, in 2016,
their questions, experiences, or request legal, psycholo-
teers including employees and family members of Grupo
the family members of participants and people from the communities to be reforested
gical, or judiciary assistance. Likewise, we have experts
Mexico, Intermodal, Ferromex, Ferrosur, and Cinemex.
joined the contest; thus, the number of trees planned for reforestation was doubled.
on the various fields that we cover, who write articles of
This year we added new allies who are interested in
interest and provide knowledge for all platform users.
building a community with environmental awareness:
The goal of the contest is to express through photos: Why are you proud of being
Mexican? And it is divided into three categories: Professional, amateurs, and a special
category for, people with down syndrome.
107
Sixth Fundación
Grupo México
Tree Planting
Day in Huixquilucan,
State of Mexico,
Mexico.
GRUPO MEXICOANNUAL REPORT / 2016 TOTALLY SOLID
For every photo registered, Fundación Grupo México dona-
2,810 students in the states of Sonora and Colima. In
tes a tree. The 50 photos with the most votes are currently
2016, 613 students graduated (413 high school stu-
on display at the Soumaya museum and will later be dis-
dents in Sonora, 100 university students in Sonora, and
played in Puebla, Monterrey, and the State of Mexico.
100 high school students in Colima).
In parallel with the work performed by our volunteers and
WORKSHOPS
through the Made in Mexico program, we have created
Together with Fundación nemi, 129 workshops, which
various alliances with municipal and state governments
currently have a greater social impact, have been offe-
and institutions committed to the environment, impac-
red in 61 middle and high schools in Sonora, Baja
ting 3,427,725 people in 9 states around the Republic,
California Sur, Zacatecas, and Chihuahua, assisting and
High school students benefited
from financial education workshops
in Guerrero Negro, Baja California Sur, Mexico.
108
planting 400,900 trees on 403 hectares in:
guiding 11,629 students:
109
1. State of Mexico
2. nayarit
3. Puebla
4. Veracruz
5. Michoacan
6. San Luis Potosi
7. Chihuahua
8. Mexico City
9. Jalisco
1. Violence
2. Sexuality
3. nutrition
4. Addictions
5. Financial education
6. Life Plan
7. Intelligent communication
FREE TRANSPORTATION
SIERRA TARAHUMARA
Through all the above, the reforestation actions carried
With the assistance of Ferromex, this year 860 tons
out translate into 3,619,725 people impacted through
of goods were transported free of charge, impacting
the planting of 410,990 trees on 411 hectares in 9 sta-
17,230 people in 3 Tarahumara communities: Cre-
tes around the Mexican Republic.
el, Cuauhtemoc, and Temoris, Chihuahua, through our
collaboration with Banco de Alimentos de Cuauhtemoc
SCHOLARSHIP PROGRAM
A.C., Comunidad educativa Yermista, Fundación educa-
Through the alliance created 6 years ago with Fun-
tiva Marista Tarahumara A.C., Casa Misión Sta. María de
dación Televisa, scholarships have been awarded for
Guadalupe, Santa Teresita clinic, and Tewecado Santa
high school and public and technological universities to
María de Guadalupe.
GRUPO MEXICOANNUAL REPORT / 2016 TOTALLY SOLID 110
Chiapas community
benefited through
the World Food
Day event.
In Chihuahua, 60,492 people are illiterate and 772,000
The states that dr. Wagon visited are: Sinaloa, nayarit,
have not completed their elementary education. Thus,
Jalisco, Colima, Guanajuato, Querétaro, Hidalgo, Puebla,
jointly with the Chihuahua Institute for Adult education
Veracruz, Coahuila, nuevo León, Zacatecas, and Sono-
(ICHeA in Spanish), the Chihuahua entrepreneur Foun-
ra. They served the following communities: Sinaloa de
dation (FeCHAC in Spanish), and Proeduca Chihuahua
Leyva, Guasave, Salvador Alvarado, Acaponeta, Ruíz,
A.C., we began the “Plaza Movil Parral” program in April;
Compostela, Tequila, Sayula, Tuxpan, Colima, Coquimat-
this is a bus that visits 40 communities around Parral,
lan, Tecoman, Celaya, Silao, Apaseo el Grande, Tequis-
Chihuahua, to assist adults over 15 years old to begin
quiapan, Huicha pan, San Martin Texmelucan, San Jose
or complete their elementary or middle schooling. In 8
Guerrero, Cañada Morelos, Jose Azueta, Cordoba, Acul-
months of operation, we have provided 1,280 adults
tzingo, nava, Muzquiz, San Pedro, Hidalgo, Monte More-
with ongoing literacy and elementary and middle school
los, Linares, Calera, Fresnillo, Felipe Pescador, Benjamín
111
certifications vouched by the Ministry of education.
Hill, Carbo, and Guaymas.
Thanks to this project, in only 8 months of operation,
Thanks to the alliance with Fundación Farmacias del
650 adults have completed their elementary ed-
Ahorro, 64,741 medicines were provided free of
ucation and 350 their middle school. The commit-
charge to patients served by the Health Train to begin
ment of the institutions participating in this project is to
a timely medical treatment. Likewise, with the assis-
help 18,000 adults certify their elementary and middle
tance of Fundacion MVS Radio and the “Ponte Oreja”
school education over the next 15 years.
program, 200 hearing aids were provided to people
HEALTH TRAIN
who, during their hearing checkup, were found to have
some hearing “problem”. Simultaneously, our optome-
try service performed visual checkups and diagnoses
WORLD FOOD DAY INVITATION
dr. Wagon, the Health Train, has been operating for two
and delivered 7,249 eyeglasses.
Through the alliance formed with Fundación CMR and HSBC years ago, Fundación
years, providing comprehensive medical services free
Grupo Mexico is part of the “World Food day” event, a project whose goal is to
of charge to highly marginalized communities in the vi-
The Health Train’s operation seeks to cover all the fields
eliminate child malnutrition in children under 5. This program benefited four insti-
cinity of Ferromex’s tracks. during 2016, the Health
that will help to strengthen the health of all its patients.
tutions, jointly serving 728 children suffering from malnourishment.
Train offered 184,928 free medical assessments to
Our Health and Life education workshops offered to
PLAZA MOVIL PARRAL
45,573 people including children, women, men, and
patients while they wait for their appointment have been
senior citizens.
very well received. People participate, ask questions,
This project has filled us with satisfaction. education is not only the key to many doors,
and show interest. Many people approach our workshop
but also to the “world of knowledge and learning, and this “world” can provide us with
during 2016, our Train covered 12,796 km in 13 states of
instructors requesting psychological and emotional
the opportunity to live a different life, as it gives us tools for wellbeing.”
the Mexican Republic, serving patients in 35 communities.
assistance. The workshops offered cover not only self-
GRUPO MEXICOANNUAL REPORT / 2016 TOTALLY SOLID
112
Dr. Vagón
The Health Train.
113
care and prevention, but this year we also included
dental emergencies, Lactation, Child nutrition and growth,
28,000 Grupo Mexico volunteers participated in this program on a
workshops covering the sanitary contingencies that
effective education, and Sexuality, HIV and AIdS prevention.
national level, in Peru, and in the US, benefiting schools, public spac-
have been present lately: zika, dengue, chikungunya,
and rickettsia viruses. during 2016, 22,975 people
SOCIAL LIAISON
es, and social institutions through some of the following activities:
Volunteers participating in
Fundación Grupo Mexico’s
Volunteer Day.
attended the 803 workshops offered.
For the fourth consecutive year, the employees of Gru-
• Outdoor and indoor painting
po Mexico’s member companies and their families par-
• Infrastructure improvement
At Fundación Grupo Mexico, we are interested in
ticipated as volunteers, channeling their selfless work,
• Rehabilitation of recreational areas
providing knowledge, skills, and attitudes for an efficient
joining forces, and multiplying efforts to benefit those in
• Outdoor and indoor cleaning
performance by the medical personnel who collaborate
most need in the communities where they operate.
• Reforestation of green areas
with the Health Train. In 2016, we carried out a program
of 10 monthly conferences with relevant healthcare topics,
As of 2016, given the success and impact of this pro-
attended by 333 participants. Some of the conferences
gram, these social activities were extended to commu-
offered were: Alcohol Myths and Realities, Palliative Care
nities in Peru and the US, through the participation of
and Thanatology, Physical Activity and Health, How to have
collaborators from Grupo Mexico’s companies: Southern
a healthy and adequate nutrition, early child development,
Copper Corporation and ASARCO.
28,000 GRUPO MEXICO VOLUNTEERS
PARTICIPATED THROUGH THIS
PROGRAM NATIONWIDE, IN PERU,
AND IN THE US.
ANNUAL REPORT / 2016 TOTALLY SOLID Volunteers participating in
Fundación Grupo Mexico’s
Volunteer Day.
114
115
The benefited communities were:
MEXICO
1.- Baja California Sur: Guerrero negro
2.- Campeche: Ciudad del Carmen
3.- Coahuila: Torreon, nueva Rosita
4.- Chihuahua: Chihuahua, Santa Barbara,
Santa eulalia, Parral
5.- Guanajuato: Irapuato, Leon
6.- Guerrero: Taxco
7.- Jalisco: Guadalajara
8.- Michoacán: Angangueo
9.- Oaxaca: Juchitán de Zaragoza
10.- San Luis Potosí: Charcas, San Luis Potosi
11.- Sonora: Guaymas, Agua Prieta, Hermosillo
Cananea, nacozari, esqueda
12.- Zacatecas: Sombrerete
13.- Veracruz: Veracruz
14.- Mexico City
UNITED STATES
1.- Texas: Amarillo
2.- Arizona: Tucson, Sahuarita, Marana, Kearny, Hayden
PERU
1.- Moquegua: Ilo
GRUPO MEXICOANNUAL REPORT / 2016 TOTALLY SOLID
A YEAR SINCE THE NETWORK PLATFORM
HAS BEEN FUNCTIONAL, WE HAVE 51 MEMBERS
INCLUDING BUSINESS FOUNDATIONS AND
SOCIALLY RESPONSIBLE ENTREPRISES.
1.
Fundación Herdez
2. Anáhuac Querétaro
26. Gas Natural Fenosa
27. Asociación de Bancos de México
3.
4.
5.
6.
Fundación Farmacias del Ahorro
(ABM)
Fundación CMR
Volaris
28. Ford Motors
29. Hogan Lovells BSTL, S.C.
Fundación del Empresariado
30. Fundación ABC
117
Chihuahuense (FECHAC)
7. Universidad la Salle México
31. Fundación Axa
32. Fundación Acir
8.
9.
Fundación Gigante
Fundación Helvex
10. KPMG
33. Nacional Monte de Piedad
34. Teletón
35. Appleseed México
11. Centro Mexicano Pro bono
36. Fundación Grupo Posadas
(CEMPRO)
12. Danone/Bodafont
13.
IBM
14. Pfizer
37. Deloitte
38. Sura
39. Fundación Proempleo
40. Fundación del Empresariado
15. Fundación Social del Empresariado
Yucacateco (FEYAC)
Jalisciense (FEJAL)
41. Fundación Televisa
16. Dentalia
17. Fundación MVS
18. Banco HSBC
19. Nestlé
20. Restaurantes Toks
21. Fundación Chedraui
22. Fundación Kalúz
23. Fundación GIN
42. Fundación Motorola México
43. Fomento Cultural Banamex
44. Red Probono México
45. Fundación Mapfre
46. Fundación Paloma
47. VINOMEX / FECHAC
48. Fundación Gentera
49. Samsung México
116
NETWORK OF BUSINESS
ASSOCIATIONS AND FOUNDATIONS
The network is an alliance among Business Foundations
• Civil Associations
and companies with social activities who join to align the
• Public Charities
options of assistance and thus achieve a unification of
• Private Welfare Institutions
social work in our Country. Likewise, within the network,
• NGOs
all the Charity Organizations registered find a unique
space to become professional and get training under
On the network’s digital platform: www.RedAsocia-
the international criteria that guide social activity. Affili-
ciones.com, Charity Organizations create sinergies
ation to the network is absolutely FRee. The network is
with other organizations, receive legal and tax advice,
open to:
receive constant on-line training, and attend the mul-
tiple workshops that the network offers. All this, under
• Business Foundations
international standards and free for the 985 nGOs that,
• Companies with Social Activity
so far, are members of the network.
24.
Instituto Tecnológico de Monterrey
50. Conservation International
• Charity Organizations
campus Monterrey ITESM
Mexico A.C.
25. Fundación José Cuervo
51. Corresponsables
GRUPO MEXICOANNUAL REPORT / 2016 TOTALLY SOLID
118
PACIFIC
OCEAN
GULF OF
MEXICO
In some of the most outstanding segments, we find that 31% are organizations related to
the environment, animal protection, and community development, 27% are organizations
related to citizen participation, research, human rights, indigenous rights, consulting, legal
attention; 24% are organizations related to education, healthcare, and nutrition, philanthro-
py, and sports; and the remaining 18% are organizations in various sectors, such as legal
counseling, art and culture, and services for the disabled.
SPAIN
Valuable information for the business organizations and foundations is offered on matters
of social responsibility, fiscal reforms, calls for funds, and news on relevant social issues.
119
each month, the organizations receive in their email the monthly newsletter listing the
most important events of the month within the network: Upcoming workshops, invita-
tions, events, etc. Business Foundations and companies with social activity that are part
of the network shared over 12 calls for funds, sustainable, or social projects of interest
CENTRAL
AMERICA
for the organizations.
THIS YEAR, THE NETWORK SUPPLIED
48 FREE LEGAL COUNSELING
SESSIONS PROVIDED BY OUR ALLIES TO
THE ORGANIZATIONS IN THE NETWORK.
PRESENCE
NETWORK OF BUSINESS ASSOCIATIONS AND FOUNDATIONS
CHILE
ARGENTINA
Likewise, through the network, 41 national and international invitations from various insti-
tutions such as the embassies of Japan, new Zealand, Canada, or Germany, and interna-
tional institutions like USAid, Un Americas, Wingu Argentina, and Ford Foundation, among
others, were announced.
This year, the network provided to its organizations 48 free legal counseling sessions via
our allies AppleSeed México, Red Pro bono México, Centro Mexicano Pro bono (ceMPRO),
and important firms such as Hogan Lovell’s BSTL, Fundación Basham, and others. These
institutions offer free legal advice to the organizations on various matters such as: fiscal,
labor, and notary matters, changes in their corporate purpose, changes in powers, CLUnI
processing, procedure to set up as an authorized tax-exempt organization, counseling on
establishing a foundation or society, among others.
GRUPO MEXICOANNUAL REPORT / 2016 TOTALLY SOLID
120
121
EDITORIAL FUNDACIÓN GRUPO MéXICO
gory, for the Gourmand World Cook Awards 2017, to be
during 2016, 29 premieres were held and the 26 participating institutions thus
“Chiles”
Chili was the ingredient we chose to continue with our
held in Yantai, China, in May 2017. We would like to note
directly benefited 53,498 people.
collection of ingredients of Mexican origin. This book, as
that our books are already for sale in various bookstores,
all the previous ones, aims firmly to safekeep in a mem-
as the purchase serves to aid various institutions in con-
Most distributors have supported the program from the start, and some new ones have
orable document the cultural and gastronomic wealth of
tinuing their social work.
joined recently. The trust given is a result of the care that Fundación Grupo Mexico and Cin-
seventh book
in the Xocoyo
collection.
this ingredient, used in many cuisines around the world.
Through this edition, we assisted Centro de Atención a
CINEMEX AWARENESS
niños de la Calle Betesda I.A.P., which provides shel-
emex place in the handling of their titles and the program itself. We are constantly working
with other distributors to develop new alliances, and thus have more titles to hold premieres.
ter and a family environment and care for boys aged 3
Charity Premieres
SOCIAL MESSAGING “CINEMINUTO”
to 17, who have been abandoned and live in extreme
As is known, together with various allied film distrib-
Through this program, we spread and promote the organizations’ social work. during
poverty in the communities of the navojoa municipality
utors, through this program we provide a fundraising
2016, 13 organizations displayed the Cineminuto of their cause over 4 weeks at
in Sonora. In addition to a safe home, Bestesda, I.A.P,
tool so the participating nGOs can carry out a specific
220 theaters. Thus, we posted 2,786 copies reaching 26,189,152 spectators. The
provides these boys with clothing, food, education, and
project to further their cause. Through this program, we
Cineminutos displayed this year:John Landon down, Children International, Hábitat
medical and psychological care, to help them achieve
encourage their active work, as these organizations are
para la Humanidad, Únete, Fundación Luis Pasteur, Olimpiadas especiales, ORT Méxi-
a healthy physical and mental development. The book
in charge of the sale of the premiere assigned, while
co, Fundación Clínica Médica Sur, expo Fundación y Congreso, Convivencia sin Violen-
“Chiles” is nominated under the Historical Recipes cate-
Fundación Grupo México also doubles the sum raised.
cia, Fundación cMR, TeCHO México and FeCHAC.
ANNUAL REPORT / 2016 TOTALLY SOLID Seventh Cinemex Race
In benefit of the Special Olympics.
122
123
CINEMEX RACE
The Cinemex Race is an event with a cause that benefits an organi-
zation that we select carefully each year. This year, thanks to all the
runners of our race, we provided assistance to Olimpiadas especiales
de Mexico A.C. to carry out the “Somos más que deporte” project. This
project will benefit 28,309 people with various intellectual disabil-
ities, and ongoing free training for a year in Olympic sports, such as
gymnastics, swimming, and figure skating, among others. Thorugh this
program, participants can develop physically, display valor, experience
joy, and participate in an exchange of gifts, skills, and comradeship with
their families, other athletes, and the overall community, simultaneously
fostering their inclusion as useful and productive citizens of society
in a framework of acceptance, equality, and respect. Simultaneously,
their participation in national and international competitions, such as
the World Winter Games in Austria 2017; with the view that sports will
open hearts and minds towards people with intellectual disabilities to
create inclusive communities around the world.
GRUPO MEXICOANNUAL REPORT / 2016 TOTALLY SOLID Marco Antonio Regil,
Fundación y Congreso 2016
Expo at Cinemex Patriotismo.
125
CONVIVENCIA SIN
VIOLENCIA FORUM
In an alliance begun in 2013 with Convivencia sin Vio-
lencia, FGM has participated in the annual forum “Mex-
ico empiezo yo, me sigues tu, cambiamos todo”, where
high school students are shown “options” of success
through well-known speakers who highlight leadership,
124
self-esteem, the value of talent, and determination to
succeed against adversities, so they will value and rec-
THE EVENT WAS ATTENDED
BY 176 INSTITUTIONS, WHICH
REPLICATE THE LEARNING
ACQUIRED IN THEIR ORGANIZATIONS
AND SOCIAL PROGRAMS.
ognize the opportunities that life is currently offering.
México, Mexico City Citizen Council, Fundación CMR,
Taiyari, and Museo Memoria y Tolerancia.
Held in October 2016, this forum was an absolute suc-
cess, gaining the participation on-site of 2,209 teen-
FOUNDATION AND CONGRESS EXPO
agers, and with a total impact on 646,632 people,
through live streaming online and social media. Un-
In June, the Foundation and Congress expo was held
doubtedly, the Convivencia sin Violencia forum inspires
for the third time. Its goal is to provide a space for
young people to achieve anything they set out to do,
training, exchanging information, and understanding
that no obstacle is too great for success if you base it
the social work of Charity Organizations. Among our
on work, constancy, discipline, and effort, encouraging
speakers we included dr. denise dresser, who offered
them to be better citizens.
a keynote speech under the topic “What can I do? 10
proposals to change Mexico”, creating awareness in
SOCIAL CAMPAIGN THROUGH BILLBOARDS
the institutions about generating a deeper change in
This relatively new program has proven its success and
society with a direct impact on the country. Speakers
impact. Organizations are avid to promote and broad-
Annette Candanedo, Marco Antonio Regil, Pau Vidal,
cast their work, and there are also many people who
and norma Galafassi, among others, filled the forum
don’t know about them but can receive the assistance
with innovative knowledge and provided attendees
they need from these Organizations. This year, 1,514
with practical tools to improve the handling of their
posters were displayed at 220 theater complexes for
institution. 176 institutions attended the event, who
4 consecutive weeks. The benefited organizations were
replicate what they learned in their organization and
The Mexican Red Cross, Olimpiadas especiales de
their social programs.
GRUPO MEXICOANNUAL REPORT / 2016 TOTALLY SOLID COMPARISON 2015 VS 2016
DR. WAGON, THE HEALTH TRAIN
Project
States
Increase 2015-2016
Dr. Vagón,
The Health Train
2015
2016
12
13
8%
126
127
Concession stand campaign
in benefit of Christel House
Mexico 2016.
SOCIAL MARKETING CAMPAIGNS
CAI MONTERREY
Simultaneously, through the concessions stands at all
The assistance provided to CAI Monterrey by equipping
its theaters nationwide, Cinemex offers its guests the
the styling shop in 2012 has trained 1,440 people
option to supersize their popcorn bucket from large to
through various workshops: styling, barbering, colorim-
jumbo, and the difference in price is donated to the ben-
etry, nail care and decoration, and professional makeup,
efited organization. This program was made possible
aiming to offer opportunities to people with limited op-
thanks to the generosity of the “Cinemex guests”. The
tions of formal employment, so they can improve their
organizations benefited this year by this program were:
level of life through training for work, in line with em-
Christel House, with 211 children benefited, Olimpiadas
ployment demand and entrepreneurship.
especiales, with 28,309 special athletes benefited, and
nutre a Un niño, with 1,009 people benefited.
Project
Communities
Patients
Increase 2015-2016
2015
2016
2015
2016
36
35
32,408
45,573
41%
Project
Medical Services
Increase 2015-2016
2015
2016
148,756
184,928
24%
Workshops offered
Increase 2015-2016 Attendance at Workshops
Increase 2015-2016
2015
598
2016
803
34%
2015
2016
19,775
22,975
16%
Medicines
Increase 2015-2016
Kilometers
2015
2016
39,880
64,741
62%
2015
2016
13,859
12,796
GRUPO MEXICOANNUAL REPORT / 2016 TOTALLY SOLID COMPARISON 2015 VS 2016
SOCIAL LINKAGE
Project
States
Countries People Impacted
Increase
2015-2016
FGM
Volunteer
Day
2015
2016
2016
2015
2016
14
14
3
43,000
70,000
6,325 7,020
63%
11%
Increase
2015-2016
Volunteers
2015
2016
COMPARISON 2015 VS 2016
NEW PROJECTS AND ASSOCIATION NETWORK
128
Project
States
number of companies benefited
Increase 2011-2016
Red de Asociaciones
y Fundaciones
Empresariales
2015
2016
32
32
2015
625
2016
985
57%
COMPARISON 2015 VS 2016
EDUCATION AND ENVIRONMENTAL MANAGEMENT
Project
States
People Impacted
Increase 2015-2016
Delivering
foodstuffs to the
Sierra Tarahumara
2015
2016
2015
2016
1
1
11,400 people
17,230 people
51%
COMPARISON 2015 VS 2016
CINEMEX AWARENESS AND INSTITUTIONAL SUPPORT
Project
Benefit
Premieres
2015
17,996
People
Impact
53,498
People
2016
Increase 2015-2016
17,520,000
Animals
197%
24 Premieres
29 Premieres
Project
events
States
Impact
2015
2016
2015
2016
2015
2016
ExpoFundación
1
1
1
1
157 Institutions
174 Institutions
Increase
2015-2016
11%
Project
Cineminutos
Sociales
Impact
Increase 2015-2016
2015
2016
22,249,745
26,189,152
18%
12 institutions
13 institutions
Project
Impact
Increase 2015-2016
Social Marketing
Campaigns
2015
178,862
2016
250,000
2 Institutions
3 Institutions
129
40%
Project
Increase 2015-2016
2015
2016
Carrera Cinemex
215 people
28,309 people
13067%
1 Institution
1 Institution
Project
Marquee
Campaign
Project
CAI MTY
Increase 2015-2016
2015
2016
Visual impact
4,007,520
28,052,637
Marquees
540
1,514
600%
180%
2015
212
2016
476
1 Institution
1 Institution
Increase 2015-2016
125%
GRUPO MEXICOANNUAL REPORT / 2016 TOTALLY SOLID
130
131
Environmental
and Social
Actions
TO CONSOLIDATE THE TRUST OF OUR STAKEHOLDERS,
we worK harD to incluDe theM in the ManageMent anD Keep
theM inforMeD of the coMpany’s perforMance, always
consiDering their expectations.
Grupo Mexico is a leading company whose innovation does
not depend exclusively on the progress of more efficient pro-
cesses and new technologies, but also on working day by day
so our operations will have more and better results, always
aiming for the organization’s sustainability over time. We stri-
ve constantly so the company’s perofrmance in the social,
economic, and environmental aspects will consider the ex-
pectations of our stakeholders.
132
Our business focus is development with Purpose , to which we
align our actions and investments for the distribution of eco-
nomic value. To consolidate the trust of our interest groups,
we work hard to include them in the management and keep
them informed of the company’s performance, always consi-
dering their expectations.
In the current world context, there is growing interest among
all types of investors to work together with sustainable com-
panies. Thus, it is very satisfying and rewarding for us that
Grupo Mexico has been chosen to be part of the Mexican
Stock exchange’s IPC Sustainability index for the sixth conse-
cutive year. This financial indicator recognizes the Mexican
companies with the highest commitment related to envi-
ronmental performance, social responsibility, and corpora-
te governance. This achievement is a faithful reflection of
Grupo Mexico’s actions and commitment to development
with Purpose.
The production
of renewable
energy from
our wind farm
“El Retiro” is
equal to taking
21,307 cars
off the road.
133
GRUPO MEXICOTOTALLY SOLID IN 2016, WE HAD 8 UNITS CERTIFIED UNDER
ISO 14001:2004, IN ADDITION TO THE
29 CLEAN INDUSTRY AND ENVIRONMENTAL
QUALITY CERTIFICATIONS.
134
135
OUR ENVIRONMENTAL COMMITMENT
ENVIRONMENTAL BALANCE IN DETAIL
To continue our commitment to the environment, we are not satisfied with merely com-
1. Rational use of water and natural resources
plying with regulations, but we go above and beyond all regulatory requirements. Thus,
we work to the strictest quality standards to optimize our performance and identify,
2. Prevention, control, and mitigation of emissions into the atmosphere
assess, and mitigate the effects that our activities have on the environment. We per-
manently move forth in harmony with the environmental, expansion, and modernization
3. efficient use of energy
challenges of the industries where we participate.
4. Reduction of GHG per ton produced
To make all this possible, we have strategies that meet the specific environmental
needs of each region, and operate through 9 lines of action that make up our system
5. Minimization in the generation of waste and better comprehensive management
of environmental management.
These lines of action are carried out within the framework of the international and
local certifications that our operating units have in all three countries where we
7. Preservation of biodiversity
are present. In 2016, we held 8 units certified under ISO 14001:2004, together
with the 29 Clean Industry and environmental Quality certificates, resulting from
8. Reforestation
the efforts of each of our collaborators, and the transversal application of our
environmental practices.
9. Compliance with environmental regulation
6. Shutdown of operations
GRUPO MEXICOTOTALLY SOLID ENERGY AND CLIMATE CHANGE
At Grupo Mexico, we know that the fight against climate
environmental impact. The wind turbines of the wind farm
change is everyone’s responsibility, including the priva-
allowed us to produce a total of 220 gigawatt hours
te sector and all the industries in it. Moreover, we are
(GWh) of energy in 2016 from fully renewable sources.
well aware of the possible impacts that it may have on
By substituting traditional sources of energy with those
our operations; therefore, we have identified the possi-
which use natural gas and wind energy efficiently, in
ble risks linked to the global temperature change to be
able to anticipate any situation that could have adverse
2016 we avoided emitting 242,278 tons of CO2eq., or
the equivalent of recycling 76,888 tons of trash.
effects for the company.
136
As part of our strategy for climate change, and given the
Faced with the challenges of climate change, at Grupo
opening of the energy market in Mexico, we are betting
Mexico we are working on:
on more clean energy generation projects. Grupo Mexi-
• Making a more efficient use of energy.
co’s goal is not only to produce renewable energy for our
• Diversifying our energy matrix.
operations, but to supply the market and contribute to
• Developing and using renewable energy sources.
the development of a sustainable energy infrastructure
• Reusing 100% of industrial water.
in the country.
• Promoting activities to capture greenhouse gas emis-
sions (GHG).
With the growth of the infrastructure division, Grupo
Mexico intends to consolidate slowly as a relevant pla-
137
By participating
in initiatives for
transparency
regarding climate
change, we
consolidate our
role as leaders
in sustainability.
Combined cycle
energy plant,
Sonora, Mexico.
Thus, we are betting on diversification towards cleaner
yer in the energy industry in Mexico and the world.
particularly relevant if we consider that 99% of the energy supply of the Transportation division is based
and renewable energy generation sources for our su-
on diesel consumption.
pply, and exploring business models that will be com-
Regarding fuel savings, in the Transportation division
patible with the generation of energy through renewa-
we strive to make diesel consumption per ton-km of
Through these and other actions, Grupo Mexico confirms its commitment to reduce its greenhouse gas
ble sources.
product hauled more efficient, as well as to achieve
emissions and perform as a sustainable company, both on a national and international level, improving
considerable savings that benefit the operation, ena-
its competitiveness and helping in the transition towards a green economic development.
In addition, through its subsidiary Mexico Generadora de
bling us to reduce the amount of emissions released
energía (MGe), the Company has two combined cycle
into the atmosphere. Thus, the constant implemen-
Last, we must note that regarding climate change, Grupo Mexico has begun to work together with nGOs
plants—“La Caridad I and II”—and one wind farm called
tation of Automatic equipment Start Stop (AeSS) has
to contribute to the fight against climate change. Such is the case of our first report in 2016 to the Car-
“el Retiro”. Through these facilities, we take advantage of
enabled our engines to be more energy efficient when
bon disclosure Project, through which we have doubled efforts to be even more transparent regarding
the energy content of natural gas, and use wind energy
they are stopped or idling. Thanks to this mechanism,
the actions that the Company performs to measure, verify, and mitigate its carbon footprint, as well as to
to feed our operations with green energies that have little
we saved 12.25 million liters of diesel in 2016. This is
work towards a green economic development.
GRUPO MEXICOANNUAL REPORT / 2016 TOTALLY SOLID 138
endangered species, including the Mexican Gray Wolf
by other parties.
139
WATER
As part of our effort to preserve the biodiversity, we have
For our mining operations, water is the most import-
an environmental Management Unit (UMA in Spanish)
ant resource; thus, to preserve it, we have devel-
with enclosures totaling 5.7 hectares, which have been
oped projects to keep gaining greater efficiency in
conditioned to replicate the habitats of threatened and
its use, boost reutilization, and use water discarded
and the Wild Turkey, among others, that are part of our
important program.
The efficient use of water and the water-saving pro-
grams are based on the implementation of recovered
The UMA has a clear strategy focused on the reproduc-
water pumping systems, the ongoing recovery of pro-
tion and release of species, as well as ecosystem regen-
cess water, the implementation and maintenance of
eration. In addition, this work clearly reflects our efforts
closed circuits for total water use, and a zero-discharge
to involve the community in the common challenge of
program for wastewater, which seeks to achieve a
protecting our environment, and specifically the biologi-
more efficient management of water resources. These
cal diversity of Sonora. This can be expanded to include
programs have allowed a large part of our total water
the UMA’s ecological path that offers educational and
consumption to come from recovered water. In 2016,
recreational activities along 1.8 km, visited by around
71% of the total water consumption at our mining op-
5,000 people and an average of 52 schools per year.
erations was recovered water, which is the result of
In Peru, we continue to carry out significant investments
good management.
and maintenance actions under the remediation program
At Grupo Mexico, by being constant in our commitments,
BIODIVERSITY
Our operating units have tree nurseries and greenhouses whose production of regio-
for Ite Bay, in Tacna. This work translates into the fact
we continue to perform environmental and sanitary mon-
nal species is aimed at ecosystem reforestation and rehabilitation, including areas
that Ite now has the broadest wetland with the greatest
itoring of the Sonora and Bacanuchi rivers to ensure the
that are not adjacent to our operations. On the one hand, these nurseries contribute
diversity of water birds.
ecosystem’s stability.
to the biological diversity and enrichment of plant and animal life; on the other, they
are natural carbon sinks, capturing CO2 from the environment.
GRUPO MEXICOANNUAL REPORT / 2016 TOTALLY SOLID THROUGH PROJECTS BY INVITATION, SEED CAPITAL
AND COMMUNITY COMMITTEES, WE FOSTER THE CREATION
OF DEVELOPMENT GENERATORS AND PROACTIVE
LEADERS THAT WILL STRENGTHEN THE WELLBEING
OF THEIR COMMUNITIES.
140
OUR COMMUNITIES
Our community development model is based on a view
In 2016, we should note the participation of 13,397
whose main goal is to favor the triggering of endoge-
community volunteers who were key in increasing the
nous transformation processes that will generate op-
social capital of the communities where we operate.
portunities in the communities where we participate.
With projects developed through invitations, seed cap-
This model is implemented through various tools, such
ital, and summer camps, we foster the creation of de-
as community committees in the places where we op-
velopment generators and proactive leaders who will
erate, Casa Grande, social investment funds, invita-
strengthen the wellbeing of their communities. This
tions for projects, and corporate volunteer teams.
generates dynamics of shared responsibility between
the company, society, and the environment.
At Grupo Mexico we understand social wellbeing as the
synergy of various factors, which we seek to strength-
during 2016, 108 projects by invitation were active at the
en through a multifocal strategy, in close dialogue with
16 operations and explorations in Mexico. These projects
the communities. This is why we are constantly seek-
foster capacity installation, and make it possible to bol-
ing to strengthen healthcare, education, culture, and
ster our long-term view and create strategic alliances to
INVESTMENTS IN COMMUNITY DEVELOPMENT
(Millions of dollars)
PROGRAM
Community development
Community development programs
Sponsoring and donations
Infrastructure and equpping at nearby neighborhoods
Employees and communities Investment in education
Sports and cultural promotion
sports in each community where we participate.
strengthen each of the communties where we are present.
Infrastructure investment in GMexICO neighborhoods
Total
141
The “The Path
to Life” program
of Grupo Mexico
provides
transportation
to bring health
services closer to
the communities.
Grupo México
$
$
$
$
$
$
$
10.59
6.01
28.91
1.67
1.04
14.05
62.27
GRUPO MEXICOANNUAL REPORT / 2016 TOTALLY SOLID
An example of this can be the improvement of educational environ-
ments and infrastructure construction in San Martin, Zacatecas, or the
invitation to “Participate for Cananea”, at Buenavista del Cobre.
AT GRUPO MEXICO,
WE ARE COMMITTED
TO PROVIDING EQUAL
OPPORTUNITIES. THUS,
MEN AND WOMEN
ARE AT THE CORE OF
OUR ACTIONS TO
DRIVE DEVELOPMENT
WITH PURPOSE.
142
In Peru, our operations are located in a place where water is a key
143
Casa Cien, our community
development center in
Nacozari, Sonora, is a
meeting point. Interaction
between families and
collaborators is a pillar
in Development with
Purpose.
resource, as this is a region where farming and cattle are key elements
for economic dynamics. Thus, at Grupo Mexico, we seek to expand on
communities’ development and self-management capacities. There-
fore, we contribute to the expansion of water supply infrastructure and
automation of irrigation in the areas where we operate. An example of
this is the work throughout 2016 to improve the irrigation infrastruc-
ture at Torata, in the Moquegua region. The works included improve-
ments to the water reservoirs, pipe installation, construction of support
walls, and other maintenance works for the water infrastructure.
Backing women’s enterprises is also one of our goals, creating op-
portunities for their professional development and contributing to
strengthen families’ economy. In the Peruvian province of Mariscal
nieto, the Torateñas emprendedoras program has been a success
through the creation of the company Frutylac SAC. The enterprising
women in this program make preserves, regional breads, and other
local products. To expand their horizons, the women of this successful
program participated in the International Fair of Tacna, FeRITAC 2016,
displaying their achievements and promoting their regional products.
GRUPO MEXICOANNUAL REPORT / 2016 TOTALLY SOLID
WITH 33,958 PEOPLE BENEFITED IN 2016
THROUGH THE REDUCED FARE PROGRAM,
“EL CHEPE” HAS CONSOLIDATED AS THE BACKBONE OF
DEVELOPMENT IN THE MOUNTAIN COMMUNITIES
OF CHIHUAHUA.
144
el Chepe, the Chihuahua-Pacific train, is a strategic form of transportation
145
for the residents of Chihuahua and Sinaloa, and particularly the mountain
municipalities of these states. Thus, in the Transportation division, we have
implemented a reduced fare program jointly with the government of the
State of Chihuahua, designed for the Tarahumara, and low-income pop-
ulation whose only transportation is this train. during 2016, the el Chepe
reduced fare program benefited a total of 33,958 people.
In addition to the reduced fare program, the Transportation division sup-
ports the mountain communities and religious orders of Chihuahua by
transporting goods free of charge, so the residents will have access to
food and several basic products. In 2016, we assisted the transportation
of potatoes and other farm products to feed children who live in the Sierra
Tarahumara. The Transportation division is proud to be part of the regional
development of the states where it operates.
In 2016, dr. Wagon continued to operate offering free, comprehensive
healthcare services to marginalized communities close to the railway, and
thanks to the joint work of Fundación Grupo Mexico and Ferromex, dr.
Wagon continues to bring hope to every corner of the country it visits.
GRUPO MEXICOANNUAL REPORT / 2016 TOTALLY SOLID 146
147
The Transportation Division supports
the mountain communities and religious
orders of Chihuahua with free
transportation of goods.
At Grupo Mexico, our business model is focused on
continuously improving the quality of life of the com-
munities where we operate, fostering development
with purpose, and strengthening the collective par-
ticipation that will trigger common wellbeing, always
making people the key generators of development.
The efforts mentioned in this report reflect Grupo
Mexico’s commitment to a sustainable way of doing
business. For further information regarding our per-
formance and activities in terms of sustainability, we
invite you to view our Sustainable development Re-
port 2016 at our website: www.gmexico.com.
GRUPO MEXICOANNUAL REPORT / 2016 TOTALLY SOLID
GRUPO MÉXICO
MAnAGeMenT BOARd
Germán Larrea Mota Velasco
Oscar González Rocha
PRESIDENT
PATRIMONIAL ADVISOR
xavier García de Quevedo Topete
Alfredo Casar Pérez
VICE-PRESIDENT
PATRIMONIAL ADVISOR
148
Luis Castelazo Morales
PATRIMONIAL ADVISOR
daniel Muñiz
SECRETARY OF THE BOARD
Prudencio López Martínez
INDEPENDENT DIRECTOR
emilio Carrillo Gamboa
INDEPENDENT DIRECTOR
Fernando Ruiz Sahagún
INDEPENDENT DIRECTOR
Rolando Vega Sáenz
INDEPENDENT DIRECTOR
Antonio del Valle Ruiz
INDEPENDENT DIRECTOR
Carlos Prieto Sierra
INDEPENDENT DIRECTOR
Claudio x. González Laporte
Carlos Rojas Mota Velasco
INDEPENDENT DIRECTOR
INDEPENDENT DIRECTOR
Antonio Madero Bracho
INDEPENDENT DIRECTOR
AMERICAS MINING CORPORATION
MInInG dIVISIOn
MAnAGeMenT TeAM
Germán Larrea Mota Velasco
daniel Chávez Carreón
Vidal Muhech dip
CHAIRMAN OF THE BOARD
DIRECTOR OF OPERATIONS MINERA MEXICO
DIRECTOR OF ENGINEERING AND CONSTRUCTION
Oscar González Rocha
EXECUTIVE PRESIDENT
daniel Muñiz Quintanilla
EXECUTIVE VICE-PRESIDENT
Jorge Hugo Meza Viveros
Jaime Ramírez del Villar
DIRECTOR OF OPERATIONS SOUTHERN PERU
PROCUREMENT DIRECTOR
Manuel Ramos Rada
Rodrigo Sandoval navarro
DIRECTOR OF OPERATIONS ASARCO
CHIEF OF CORPORATE FINANCE
Oscar González Barrón
Raquel Tobar Sáiz
DIRECTOR OF ADMINISTRATION AND CONTROL
DIRECTOR OF NEW BUSINESS DEVELOPMENT
Jorge Jáuregui Morales
Francisco López Guerra
DIRECTOR OF HUMAN RESOURCES
PROJECT DIRECTOR
149
Jorge Lazalde Psihas
GENERAL COUNSEL
Aldo Massa Peschiera
MARKETING DIRECTOR
René Verde Guzmán
IT DIRECTOR
MAnAGeMenT TeAM
SOUTHERN COPPER CORPORATION
MInInG dIVISIOn
MAnAGeMenT BOARd
Germán Larrea Mota Velasco
xavier García de Quevedo Topete
EXECUTIVE PRESIDENT
CHIEF FINANCIAL AND ADMINISTRATIVE OFFICER
Germán Larrea Mota Velasco
emilio Carrillo Gamboa
Luis Miguel Palomino Bonilla
CHAIRMAN OF THE BOARD
INDEPENDENT DIRECTOR
INDEPENDENT DIRECTOR
AND CHAIRMAN OF
THE BOARD
Mauricio Ibañez Campos
GENERAL COUNSEL
Rafael Ríos García
DIRECTOR OF SECURITY
Guillermo Barreto Mendieta
DIRECTOR OF AUDIT
Miguel Valdés neaves
DIRECTOR OF ADMINISTRATION AND CONTROL
Marlene Finny de la Torre
HEAD OF INVESTOR RELATIONS
Alfredo Casar Pérez
PATRIMONIAL ADVISOR
Gilberto Perezalonso Cifuentes
INDEPENDENT DIRECTOR
enrique Castillo Sánchez Mejorada
Carlos Ruiz Sacristán
INDEPENDENT DIRECTOR
INDEPENDENT DIRECTOR
xavier García de Quevedo Topete
Jorge Lazalde Psihas
PATRIMONIAL ADVISOR
SECRETARY
Oscar González Rocha
PATRIMONIAL ADVISOR
daniel Muñiz Quintanilla
PATRIMONIAL ADVISOR
ANNUAL REPORT / 2016 TOTALLY SOLID
ASARCO, LLC. INC.
MInInG dIVISIOn
MAnAGeMenT BOARd
Germán Larrea Mota Velasco
CHAIRMAN OF THE BOARD
Oscar González Rocha
150
EXECUTIVE PRESIDENT
GRUPO MÉXICO TRANSPORTES
TRAnSPORTATIOn dIVISIOn
MAnAGeMenT BOARd
Bernardo Ayala Yáñez
Alfredo Casar Pérez
Jaime Corredor esnaola
Arturo elías Ayub
xavier García de Quevedo Topete
Robert M. Knight Jr.
Roberto Slim Seade
Cristian Lippert Helguera
SECRETARY
Alfredo Casar Pérez
xavier García de Quevedo Topete
Oscar González Barrón
daniel Muñiz Quintanilla
Manuel Ramos Rada
Jorge Lazalde Psihas
SECRETARY
MAnAGeMenT TeAM
Germán Larrea Mota Velasco
CHAIRMAN OF THE BOARD
Alfredo Casar Pérez
EXECUTIVE PRESIDENT
Fernando López Guerra
CHIEF FINANCIAL AND ADMINISTRATIVE OFFICER
Hugo Rafael Gómez díaz
OPERATIONS DIRECTOR
Lorenzo Reyes Retana Padilla
PROJECT DIRECTOR
MÉXICO PROYECTOS Y DESARROLLOS
InFRASTRUCTURe dIVISIOn
MAnAGeMenT BOARd
MAnAGeMenT TeAM
Alfredo Casar Pérez
Julio Francisco Larrea Mena
Vidal Muhech dip
daniel Muñiz Quintanilla
Octavio J. Ornelas esquinca
Javier Gómez Aguilar
SECRETARY
151
Germán Larrea Mota Velasco
CHAIRMAN OF THE BOARD
xavier García de Quevedo Topete
EXECUTIVE PRESIDENT
Octavio J. Ornelas esquinca
CHIEF FINANCIAL AND ADMINISTRATIVE OFFICER
Rogelio Vélez López de la Cerda
DIRECTOR OF PERFORADORA MEXICO
Gustavo Ortega Gómez
ENERGY DIVISION DIRECTOR
Julio Francisco Larrea Mena
DIRECTOR OF CONSTRUCTORA MÉXICO
Juan Francisco Bueno Zirion
DIRECTOR OF GRUPO MEXICO AUTOPISTAS
Antonio Martínez
DIRECTOR OF GRUPO MÉXICO SERVICIOS DE INGENIERÍA
GRUPO MEXICOANNUAL REPORT / 2016 TOTALLY SOLID FUNDACIÓN GRUPO MÉXICO
MAnAGeMenT BOARd
Alfredo Casar Pérez
Luis Castelazo Morales
xavier García de Quevedo Topete
Oscar González Rocha
daniel Muñiz Quintanilla
SECRETARY
152
MAnAGeMenT TeAM
Germán Larrea Mota Velasco
PRESIDENT
ximena Ugarte Luiselli
GENERAL DIRECTOR
Karla Guadalupe díaz Castro
ADMINISTRATIVE MANAGER OF DR. WAGON, THE HEALTH TRAIN
Adriana Hernández Rojas
OPERATIONS MANAGER DR. WAGON, THE HEALTH TRAIN
Gardenia Lemmen-Meyer Valero
SOCIAL LIAISON MANAGER
Jessica Pons Fernández
MANAGER OF NETWORK OF ASSOCIATIONS AND NEW PROJECTS
Yazmín Torres Martínez
MANAGER OF EDUCATION AND ENVIRONMENT
Lucero Vallejo durán
MANAGER OF CINEMEX AWARENESS AND SUPPORT FOR INSTITUTIONS
TOTALLY SOLID