O U R C O N F I D E N C E I N T H E F U T U R E I S Employment, investment and sustainability Annual Report 2020 INDEX Letter to shareholders Grupo México Results Mining Division Transportation Division Infrastructure Division Fundación Grupo México Board and Management Team IA GMX 2020 – INDEX 4 8 28 64 86 110 132 IA GMX 2020 – LETTER TO THE SHAREHOLDERS LETTER TO THE SHAREHOLDERS In 2020, we faced unprecedented challenges that we were able to overcome through our unwavering commitment to maintain our investment levels, sources of employment, sustainability actions, and the support to all the communities where we are present. For Grupo México, it was a year of significant achievements, a year to be innovative, resilient, and able to protect our workers and their families, as well as to give continuity and greater efficiency to our operations, which turned out to be essential to overcome the onslaught of the pandemic and drive the economic recovery. Our confidence in the future was and is unwavering. Our investments in the last ten years surpassed US$20 billion, which enabled us to consolidate this year as the largest industrial conglomerate in México, with world-class assets and presence in four countries: México, Perú, the US, and Spain. During 2020, Grupo México’s shares appreciated by 62% in MXN and 54% in USD, given the expectation of better market returns, productive capacity growth through investment, division-wide operating efficiency, financial discipline, higher metals prices, and the industrial and commercial reactivation since the fourth quarter. Conveyor belts that transport the ore to the concentrator. 5 IA GMX 2020 – LETTER TO THE SHAREHOLDERS We confirm our commitment to the generation of well-paid, highly specialized In 2020, with solidarity actions, experience, and an unwavering desire to learn, we work for nearly 30 thousand employees in our three divisions. guaranteed safe environments, contributed to prevent infection, and helped to strengthen the social and hospital response capacity before the effects Sustainability consolidated as an essential component of our business model; of the virus in the countries where we operate were felt. we perfected four corporate policies in this area, focused on occupational health, workplace safety, and care of the environment and the communities. Fundación Grupo México donated 611 million pesos in kind for the medical staff and most vulnerable population; we accelerated the delivery of a hospital in Despite the complex scenario for this year, we obtained the following results: Oaxaca and assigned medical professionals from Doctor Vagón to the Cananea General Hospital, in Sonora. In Perú, we donated 18 temporary hospitals and two • We held our place as the fifth producer of copper in the world. oxygen plants. • We achieved record figures in the production of copper, molybdenum, and silver. At Grupo México, we now renew our unwavering trust in ourselves and in • We consolidated as the best cash-cost in the industry: -20.5% compared to the countries where we are present, to keep growing together and to build a 2019. better future. • Our exploration program confirmed that we still have the largest mining reserves in the world. • We completed the Buenavista del Cobre, Cananea, and Toquepala projects in Perú. We will continue our aggressive large-scale investment program in Buenavista Zinc and El Arco, Tía María, Michiquillay, and Los Chancas. • For yet another year, we were a driving factor behind economic and social development in the countries where we operate. We maintained uninterrupted operations in over 11 thousand kilometers of railroads in México and the US. Our cargo railway was crucial in guaranteeing the supply and activities of essential industries and businesses, even at the height of the health contingency. With strict sanitary measures, we achieved an all-time high of 99.5% in the operating efficiency of our oil rigs; we surpassed by 40% the sales levels of our engineering services, and made over 80% progress in the construction of our Fenicias Wind Farm in Nuevo León. Regards, Germán Larrea Mota Velasco 6 7 IA GMX 2020 – GRUPO MÉXICO RESULTS GRUPO MÉXICO RESULTS During 2020, a year full of challenges and adversities, at Grupo México, we maintained a solid balance sheet with a strong cash flow generation and a low leverage profile, a net debt to EBITDA ratio of 0.9x, and a comfortable debt maturities schedule. We maintain our unwavering commitment to continue with an important investment program for the company’s growth and the development of the countries where we work. Relevant consolidated figures Accrued sales during 2020 totaled US$10.90 billion, a record in Grupo México’s history, and 2.1% higher than in 2019. In the Mining Division, sales totaled US$8.56 billion, 7.5% higher than in 2019, given higher volumes produced, as well as a favorable price environment for Copper (+2.9%), Silver (27.6%) and Gold (+27.1%). We invested over US$20 billion in the last decade, which reflects our unwavering trust and commitment to the countries where we are present. 9 Panoramic view of the Cananea open pit, Sonora, México. GMXT Railroad Operations Control Center in Guadalajara, Jalisco, México. As a result of our intense investment program, this year we achieved record EBITDA of US$5.36 billion In the Transportation Division, sales declined 12.7% during 2020, reporting US$2.16 billion, mainly due to lower volumes transported as a result of the COVID-19 pandemic. In the Infrastructure Division, net sales accrued US$528 million, a 9.0% decrease, due to the decline in drilling quotas and a decrease in activity in the construction sector. Despite the difficulties faced, we achieved 8.4% EBITDA, above the figure for 2019. Fenicias Wind Farm, with a total installed capacity of 168 MW in Nuevo León, México. GRUPO MÉXICO Thousands of dollars Sales Cost of Sales Operating Profit EBITDA EBITDA Margin (%) Net Profit Profit Margin (%) Investments/Capex Employees 4Q Variation January - December Variation 2019 2020 2,634,663 1,395,348 818,845 1,160,900 44.1% 542,209 20.6% 290,242 30,263 3,216,954 1,473,147 1,314,842 1,734,915 53.9% 1,077,033 33.5% 402,597 29,169 Thousands of USD 582,291 77,799 495,997 574,015 % 22.1 5.6 60.6 49.4 534,824 98.6 112,356 (1,094) 38.7 (3.6) 2019 2020 10,680,649 5,514,115 3,479,725 4,945,274 46.3% 1,766,249 16.5% 1,124,646 30,263 10,909,181 5,297,736 3,958,016 5,362,988 49.2% 2,118,435 19.4% 1,114,693 29,169 Thousands of USD 228,531 (216,379) 478,291 417,714 % 2.1 (3.9) 13.7 8.4 352,185 19.9 (9,954) (1,094) (0.9) (3.6) 10 11 SALES Mining Division Copper Silver (Thousands of oz.) Molybdenum Zinc Sulfuric acid Gold (ounces) Lead Others Thousands of USD 2020 Var. % 2019 Volume in Tons 2020 Var. % 2019 6,522,655 318,760 549,369 277,779 169,239 67,521 41,670 18,614 7,094,322 460,290 510,311 249,344 127,694 83,117 31,261 9,871 9 44 (7) (10) (25) 23 (25) (47) (13) (9) 2 1,094,252 20,739 26,849 103,668 1,832,662 49,163 21,020 – 1,133,951 21,085 30,259 104,752 1,732,859 47,734 19,335 – 4 2 13 1 (5) (3) (8) – 1,887,766 1,753,069 (7) – – – – – – Transportation Division (cars) 2,473,004 2,158,312 Infrastructure Division 579,782 527,638 Total Sales* $10,680,649 $10,909,207 * Considering eliminated sums due to intercompany sales. EBITDA Millions of Dollars Division Mining Transportation Infrastructure 2019 2020 Var. % 3,564 1,096 272 4,155 944 267 17 (14) (2) (8) Consolidated $4,945 $5,363 Infrastructure 5% Transportation 18% Mining 77% 12 SHARE OF SALES BY CONTINENTS AND COUNTRIES IN 2020 ASIA 17% US 22% LATIN AMERICA 8% MÉXICO 31% EUROPE 22% TOTAL SALES Millions of Dollars 11,000 10,500 10,000 9,500 9,000 8,500 8,000 7,500 7,000 9,786 10,495 10,681 10,909 2017 2018 2019 2020 Combined cycle plant with annual capacity for 520 Mw in Nacozari de García, Sonora, México. IA GMX 2020 – GRUPO MÉXICO RESULTS Consolidated Debt Our total debt amounts to US$8.95 billion and our net debt amounts to US$4.9 billion, resulting in a net debt to EBITDA ratio of 0.9x. 82% of the debt contracts are dollar-denominated, and 18% are peso-denominated; 94% of the debt has a fixed rate. Furthermore, our maturities calendar has payments worth under US$1.0 billion Hoppers loaded with polyethylene in Nachital de Lázaro Cárdenas, Veracruz, México. annually up to 2035. Capital Investments In 2020, we invested US$1.11 billion in the three divisions. Growth project investments have been smaller than expected as a result of the COVID-19 pandemic. • • • Mining: US$628 million Transportation: US$269 million Infrastructure: US$218 million During 2021, we have scheduled the investment of $2.15 billion in different projects in the three division which, we believe, will enable the economic reactivation and generation of employment insofar as the pandemic allows. Consolidated net profit was 20% greater than in 2019, totaling US$2.12 billion. Grupo México maintains a solid balance sheet and strong free cash flow generation. GRUPO MÉXICO MATURITIES AS AT DECEMBER 31, 2020 1,600 1,400 1,200 1,000 800 600 3 6 5 6 1 5 400 4 2 3 200 1 4 1 6 5 1 0 0 5 1 , 0 0 2 1 , 0 1 1 1 , 5 1 0 1 , 0 0 0 1 , 8 2 7 8 5 3 5 0 1 6 4 6 5 0 6 4 6 5 1 6 1 6 1 7 1 8 1 9 1 0 0 0 0 0 0 0 0 1 2 0 2 2 2 0 2 3 2 0 2 4 2 0 2 5 2 0 2 6 2 0 2 7 2 0 2 8 2 0 2 9 2 0 2 0 3 0 2 1 3 0 2 2 3 0 2 3 3 0 2 4 3 0 2 5 3 0 2 6 3 0 2 7 3 0 2 8 3 0 2 9 3 0 2 0 4 0 2 1 4 0 2 2 4 0 2 3 4 0 2 4 4 0 2 5 4 0 2 6 4 0 2 7 4 0 2 8 4 0 2 9 4 0 2 0 5 0 2 1 5 0 2 MINING DIVISION TRANSPORTATION DIVISION INFRASTRUCTURE DIVISION 14 15 In 2020, we were the company that paid the most taxes in México and Perú. We have paid US$13 billion in taxes in the last 10 years. IA GMX 2020 – GRUPO MÉXICO RESULTS Performance of Grupo México’s stock Thanks to the operating efficiency displayed in all our divisions, the expansion projects, the increase in copper prices, and the sound fundamentals of the metal, Grupo México’s stock appreciated by over 62% in peso terms in 2020, thus surpassing market returns. GMEXICO STOCK PRICE AND DISCOUNT TO ITS SUM OF THE PARTS 142.62 41% 84.12 53.43 56.25 43.74 150 140 130 120 110 100 90 80 70 60 50 40 30 20 10 0 9 1 0 2 / 1 3 / 2 1 0 2 0 2 / 1 3 / 1 0 2 0 2 / 9 2 / 2 0 2 0 2 / 1 3 / 3 0 2 0 2 / 0 3 / 4 0 2 0 2 / 1 3 / 5 0 2 0 2 / 0 3 / 6 0 2 0 2 / 1 3 / 7 0 2 0 2 / 1 3 / 8 0 2 0 2 / 0 3 / 9 0 2 0 2 / 1 3 / 0 1 0 2 0 2 / 0 3 / 1 1 0 2 0 2 / 1 3 / 2 1 REAL PRICE % DISCOUNT THEORETICAL PRICE Despite the price growth during the year, Grupo México continued to trade at a huge discount. Drilling rig for blasting in Cananea, Sonora, México. 17 IA GMX 2020 – GRUPO MÉXICO RESULTS the unwavering conviction We maintain that constant investment growth, the excellence of our technical staff, and the state-of-the-art technology that we use enable us to provide sound results to our shareholders. Dividend payments per share During 2020, Grupo México paid 3.45 mexican pesos per share, a sum 8% higher than a year earlier, and maintained the annualized dividend yield above 5%, despite Fuel terminal at Cadereyta, Nuevo León. Natural hedging in US dollars the sharp hike in the stock price. Grupo México continues to build a solid track 89% of our sales are in US dollars, so we have a natural hedge in that currency, with record of transferring value to its shareholders through dividend payments. a positive result against the dollar’s appreciation. ANNUAL DIVIDEND RETURNS 2018 6.1% 2019 6.6% 2020 5.2% Sales Cost of Sales USD 100% 55% 74% 89% MXN – 45% 26% 11% USD 58% 27% 39% 50% MXN 28% 73% 61% 40% SOLES 14% – – 10% Mining Transportation Infrastructure Weighted total 18 19 IA GMX 2020 – GRUPO MÉXICO RESULTS Grupo México Transportes is a pioneer in the use of liquefied natural gas for railroad transportation to reduce polluting emissions even further. A traditional locomotive removes 300 trucks from the highways, reducing traffic and carbon emissions. During 2020, rating agencies Fitch and S&P confirmed the Group’s BBB+ rating, with a stable outlook. Tender with Liquefied Natural Gas for our hybrid locomotives emitting 60% less greenhouse gases into the atmosphere, compared to traditional diesel locomotives. Credit Profile Rating agencies noted Grupo México’s position as one of the largest copper producers worldwide, with one of the lowest extraction costs in the industry, the largest reserves, and the longest mine life, as well as a sustained growth profile and strategic synergies within its three divisions. Moreover, they emphasized the diversification of revenue sources through the Group’s three divisions and GMXT’s leadership position in the railroad industry. 20 21 HIGHLIGHTS 2017 2018 2019 2020 Real Var. % 2020/2019 2017 2018 2019 2020 Real Var. % 2020/2019 IA GMX 2020 – GRUPO MÉXICO RESULTS Volume Sold * Copper (tons) Zinc Silver Silver (tons) (thousands of ounces) (ounces) Molybdenum (tons) Average Price (USD) Copper (COMEX) Zinc Silver Gold (LME) (COMEX) (LF) (pound) (pound) (ounce) (ounce) Molybdenum (MW DEALER OXIDE) (pound) 1,024,952 1,001,388 1,094,252 107,572 16,843 54,223 21,358 2.80 1.31 17.03 1,257.13 8.21 106,483 103,668 19,477 55,938 22,055 2.93 1.33 15.65 1,269.14 11.94 20,739 49,163 26,849 2.72 1.16 16.16 1,392.17 11.35 1,133,951 104,752 21,085 47,734 30,259 2.80 1.03 20.62 1,769.59 8.69 Transportation Division Statistics Net ton kms Cars loaded (millions of tons) (millions of units) 59,078 1,730 64,809 1,962 65,444 1,888 62,823 1,753 4,859 16,786 25,745 8,550 12,185 13,560 9,786 5,010 1,591 4,531 1,522 4,789 17,146 25,805 8,384 12,196 13,609 10,495 5,419 983 4,889 1,147 5,908 17,084 27,566 9,377 13,320 14,246 10,681 5,514 1,268 4,945 1,766 7,325 17,100 28,608 8,952 13,364 15,244 10,909 5,298 1,370 5,363 2,118 Balance (millions of USD) Current Assets Fixed Assets Total Assets Banking Liabilities Total Liabilities Total Shareholder Capital Balance (millions of USD) Total Sales Cost of Sales Taxes Incurred EBITDA Net profit 22 4 1 2 (3) 13 3 (11) 28 27 (23) (4) (7) 24 0 4 (5) 0 7 2 (4) 8 8 20 Cash Flow (millions of USD) Generated by Operations Dividends Paid Taxes Paid Applied in Financial Activities Used in Investments Flow after investments and financial activities Financial Ratios Operating Margin EBITDA Margin Current assets to current liabilities (times) Total liabilities to total assets Debt/Shareholders' Equity total +debt EBITDA/Interest Personnel employed (times) Annual inflation México United States Perú Average exchange rate México (pesos/dollar) Perú (soles/dollar) 2,821 (673) 1,239 1,669 3,008 (1,352) 1,716 (186) (1,500) (1,686) 2,714 (1,591) 1,843 777 (1,125) 422 (290) 1,011 34% 46% 2.0 47% 39% 8.91 34% 47% 2.6 47% 38% 9.85 33% 46% 2.6 48% 40% 8.96 3,761 (1,328) 1,589 (476) (1,115) (1,127) 37% 49% 3.3 47% 37% 9.75 30,477 31,596 30,263 29,169 7% 2% 2% 5% 2% 2% 3% 2% 2% 3% 1% 2% 18.93 3.26 19.24 3.28 19.26 3.34 21.50 3.50 Stated in accordance with US Generally Accepted Accounting Principles (US GAAP) * Throughout the report, tons are metric and ounces are troy. 39 (17) (14) 161 (1) (11) 11 6 23 (3) (7) 9 (4) - (50) - 12 5 23 Inside of the Charcas mine, in San Luis Potosí, México. We have an unwavering will to generate well-paid jobs with a high training level. We are a primary company contributing over 200 thousand indirect jobs and 30 thousand direct jobs. In the countries where we operate, in the last 10 years, we have generated economic revenues of approximately US$77 billion. 24 Fuel storage terminal in Cadereyta, Nuevo León, México. IA GMX 2020 – GRUPO MÉXICO RESULTS We have seven greenhouses used to reforest and thus mitigate the effects of climate change and help to maintain ecosystem stability. In the last 10 years, we have invested over US$3 billion in environmental projects and in the protection of natural resources. We have invested over US$1.6 billion in workplace security, healthcare, and community development issues in the last 10 years. In the last 20 years, we closed and redressed six of our metal smelting and refining plants both in México and in the United States, and built new plants that comply with international environmental standards. 25% of our energy consumption is renewable. Our target is to reach 35% in 2022. The Ite wetlands in the south of Perú, repaired by Grupo México. Before the Group acquired Southern Peru, this was a tailings deposit. The wetlands have 1,600 hectares of water bodies, floating herbs, and grasslands, which are home to more than 126 species of birds. Our commitment to the environment and to the protection of natural resources is unwavering. 26 27 Copper is essential for various industries, as well as for everyday life. Its use provides great benefits for a greener, healthier, and more sustainable future. Panoramic view of the Cananea open pit, Sonora, México. IA GMX 2020 – MINING DIVISION MINING DIVISION AMERICAS MINING CORPORATION (AMC) Thousands of dollars Sales Cost of Sales Operating Profit EBITDA EBITDA Margin (%) Net Profit Profit Margin (%) Investments/Capex January - December 2020 2019 Variation Thousands of USD 7,965,608 4,278,189 2,610,338 3,564,166 44.7% 1,355,681 17.0% 757,696 8,566,209 4,323,484 3,173,980 4,155,134 48.5% 2,030,178 23.7% 627,951 600,601 45,295 563,642 590,968 674,497 (129,745) % 7.5 1.1 21.6 16.6 49.8 (17.1) Environmentally friendly warehouses and ore conveyor belts. 31 IA GMX 2020 – MINING DIVISION The Mining Division is represented by its subsidiary AMC, whose main affiliates are Southern Copper Corporation (SCC) in México and Perú, ASARCO in the US, and Minera los Frailes in Spain. We are the copper producer with the highest organic growth. • • • • Leader in copper mining Largest copper reserves in the world Lower production costs worldwide Portfolio of growth mining projects We have 14 mines, 5 metallurgical complexes, as well as exploration projects in México, Perú, the US, Spain, Chile, Ecuador, and Argentina. In the Mining Division, we have invested in 2020: • • • US$386 million in México US$206 million in Perú US$36 million in the US In 2020, the sales from the Mining Division totaled US$8.57 billion, 7.5% more than in 2019. EBITDA was US$4.15 billion, which is equivalent to 49% of sales. 32 Ball mills for the mineral crushing and grinding process. Arizona 1 2 4 3 6 9 14 8 12 10 11 Sonora 15 16 New Mexico Chihuahua 13 19 17 18 Baja California 7 5 Texas USA 21 20 Zacatecas 22 23 S.L. Potosí Gulf of México México Pacific Ocean 24 25 México City Michoacán 26 Guerrero 10 11 12 13 14 15 16 17 18 Metallurgical complex Plant La Caridad Mine and plant. Metallurgical complex Pilares Copper project Santa Eulalia Polymetallic underground mine Buenavista Zinc Zinc project Hermosillo offices Corporate offices Guaymas Terminal Plant Chihuahua offices Corporate offices Central workshop Plant 19 20 21 22 23 24 25 26 Santa Barbara Polymetallic underground mine Chalchihuites Polymetallic mine project San Martín Polymetallic underground mine Charcas Polymetallic underground mine Electrolytic Zinc Refinery Plant Angangueo Polymetallic mine project México City offices Corporate offices Taxco Polymetallic underground mine 1 2 3 4 5 6 7 8 9 Ray Mine and plant Hayden Plant Mission Mine Silver Bell Mine and plant Amarillo Plant El Pilar Copper project and plant El Arco Copper project Lime Plant Mine and plant Buenavista del Cobre Mine and plant MINING Spain Aznalcóllar Project Andalucía 1 2 3 4 5 6 7 8 9 10 Chaucha Copper project Tantahuatay Gold mine Lima offices Corporate offices Los Chancas Copper project Tía María Copper project Cuajone Copper mine Toquepala Copper mine Ilo Metallurgical complex Catanave Project Michiquillay Copper and gold project Ecuador 1 2 Perú 10 3 4 5 78 6 9 Chile IA GMX 2020 – MINING DIVISION COPPER PRODUCTION Thousands of Tons 1,200 1,100 1,000 900 800 700 600 500 400 300 200 100 1,119.2 1,128.9 1,010.6 1,002.1 811.8 822.4 930.2 947.1 198.9 179.7 189.1 181.8 2017 2018 2019 2020 SX/EW CONCENTRATORS The second largest mine in the world, Buenavista del Cobre In 2020, we produced over one million 120 thousand tons of copper, 40 thousand tons more than in 2019, mainly due to greater production in the Peruvian mines (+2.3%), higher ore grades and recovery in Cuajone, and greater production in our US plants (1.7%). We estimate that, by 2024, we will produce over one million 200 thousand tons with the start of operations of our growth projects in México: Pilares, El Pilar, and Buenavista Zinc, and in Perú: Tía María. 36 Refining plant in Nacozari de García, Sonora, México with annual production of 708,515 tons of refined copper. IA GMX 2020 – MINING DIVISION We were the mining company with the most copper production in México and Perú, and the third in the US. Welding shop. The best CASH-COST throughout the industry worldwide: 85 cents per copper pound. Metal mining pays salaries 16 times higher than the minimum wage. We reduced net cash-cost on a global level from $1.07 dollars to $0.85 dollars, -20.5% vs. 2019. Copper sales in 2020 represented 83% of AMC’s total sales and 65% of Grupo México’s total sales. 38 39 IA GMX 2020 – MINING DIVISION What do we produce? MOLYBDENUM 2% SILVER 2% GOLD 4% ZINC 8% COPPER 85% Copper Wound coils of copper rod at Rod plant, Esqueda, Sonora, México. USES Energy Clean Energy Manufacturing Construction • • • • Safe transmission and generation of electric energy Energy storage Distribution Substations • Wind and solar energy (electric energy wind and solar panels) • • • • • • • All household appliances Hybrid and electric cars Electric batteries Computers and peripherals Cell phones Microchips Engines • • • • • • • • • • Buildings Houses Industrial facilities Pipes Drinking water Rooftops Air conditioning and heating Window frames Cooling systems Surfaces for handrails and door handles Transportation • • • • • Cars and trucks Railroad industry Aircrafts Maritime transportation Aerospace industry PROPERTIES • • • • • Malleability, which makes it possible to create various tools. Conductibility, ductility, heat-resistance, which make it the perfect material for conveying electric energy and for electronics. Flexibility and corrosion-resistance make it ideal for plumbing. Its unparalleled antimicrobial properties have made it an essential material for the healthcare industry: medical and hospital equipment. Its various properties, together with its high recyclability make it the perfect ally for environmental protection. Healthcare industry • Medical and hospital equipment (ventilators, hearing devices, EEGs, MRIs) Aquaculture Chemical products Alloys • Nets for fish and seafood farms • • • Fertilizers Bactericides Pest control • • With tin and zinc, it produces bronze and other consumer products With zinc, it produces brass 41 IA GMX 2020 – DIVISIÓN MINERA Zinc Gold Silver Molybdenum S E S U • Automotive industry: galvanization of steel sheets. As zinc oxide, it is used to manufacture tires, paints, etc. • Telecommunications: global positioning system units (GPS). • Electronics: microchips, electronic and photographic equipment. • Industries and manufacturing: manufacturing of stainless and resistant steel. • Agribusiness: fodder for cattle. • Industry in general: pressure die casting. • Computer and server equipment. • Jewelry, minting, and decorative items. • Industrial: welding alloys. • Petrochemicals: catalysts for the oil and gas industry. • Jewelry, minting, and decorative items. • Chemical products: materials for the aviation industry, fertilizers, dyes, enamels, reagents and lubricants. S E I T R E P O R P • • • Its anti-rust and anti-corrosive properties make it ideal fo galvanizing steel sheets, used as a coating for iron and steel to protect them against corrosion. Energy storage; it can store six times more energy than other battery systems. Moreover, it is 100% recyclable. Its low melting point, malleability, and high resistance make it apt for manufacturing in pressure casting, as well as brass. 42 • Good heat and electricity conductor, does not tarnish. • Thermal and electric conductivity. • Given its thermal conductivity and high melting point, it is suitable for manufacturing more resistant steels. • Impermeable to moisture and acids; does not rust. • Resistant to oxidation. • It is the most ductile and malleable element. • Malleability and ductility make it perfect for welding alloys. • Super-alloy component. • Catalyst in the oil and gas industry. • It is present in the industries of: aviation, fertilizers, dyes, enamels, reagents, electronics, and lubricants. 43 IA GMX 2020 – MINING DIVISION PRODUCTION SUMMARY MINE Copper Content in Concentrates Copper Leachate Content 2017 811,771 198,859 2018 2019 2020 822,395 179,666 930,156 189,090 947,086 181,841 Total Copper Content 1,010,630 1,002,061 1,119,246 1,128,927 Zinc Content in Concentrates Lead Content in Concentrates Gold Content in Concentrates (oz.) 68,665 20,246 66,863 70,778 22,081 70,196 73,922 22,567 68,698 68,930 20,358 73,186 Silver Content in Concentrates (oz.) 17,657,006 18,303,215 21,315,505 22,810,470 Molybdenum Content in Concentrates 21,328 21,985 26,886 30,248 * Figures in metric tons except where otherwise stated. Leaching heaps in Cananea, Sonora, México. SMELTER AND REFINERY Copper anodes Refined Electrolytic Copper Refined Copper Cathodes (SX/EWs) Total high-purity refined copper Copper wire rod Refined copper slab Refined Zinc and Alloys Refined gold (oz.) Refined silver (oz.) Sulfuric Acid Cadmium Lime 2017 2018 2019 2020 742,620 643,122 198,859 841,981 269,834 12,431 104,402 50,835 722,071 630,390 179,666 810,056 266,180 7,790 107,536 49,731 683,698 582,736 189,090 771,826 244,070 6,050 633,801 526,674 181,841 708,515 199,427 – 104,977 102,440 45,690 42,229 13,688,184 13,582,751 12,587,711 13,887,942 2,717,210 608 275,683 2,716,985 632 254,596 2,612,097 609 274,056 2,352,409 640 279,626 44 45 IA GMX 2020 – MINING DIVISION Baja California Sonora 3 1 2 4 Zacatecas 5 6 Michoacán PROJECTS IN MÉXICO 2020 1 2 3 Buenavista Zinc Zinc project Pilares Copper project El Pilar Copper project 4 5 6 El Arco Copper and gold project Chalchihuites Underground polymetallic mine project Angangueo Underground polymetallic mine project Pilares, Sonora, México. Investments In México we are currently working on several mine projects with an investment of over US$10.80 billion. 46 47 IA GMX 2020 – MINING DIVISION PROJECT SUMMARY Investment (Millions of USD) Progress Operation starting date Jobs Capacity Mine years of life • • Detailed engineering in process. Purchase orders for machinery and equipment initiated. • Completed 10km road. • • • • • • The testing of the pilot plant was completed. The results obtained in the pads of the leaching process show copper recovery levels that confirm the sound profitability of the project. One of the largest undeveloped copper deposits in the world. The detailed engineering has been started. Environmental and social impact assessment under development. Exploration and metallurgic testing works have been completed and pilot plant. • Exploration concluded. • • Basic engineering completed. Environmental impact assessment has been requested. Buenavista Zinc Pilares El Pilar $413 $159 $310 El Arco $8,893 Chalchihuites Angangueo Total 48 $650 $400 $10,825 3Q 2023 2,500 2Q 2022 1,200 98,000 Tons of zinc 38,000 Tons of copper 4Q 2023 2,300 48,000 Tons of copper 190,000 Tons of copper 100,000 Ounces of gold 48,000 Ounces of zinc eq. 19,500 Tons of copper 2025 6,600 4Q 2024 2,900 2025 2,300 17,800 15 10 14 35 13 14 49 Amarillo Northern Copper Circuit California Baja California Ray Silver Bell Mission Hayden Arizona New Mexico El Pilar Buenavista La Caridad Pilares Esqueda El Arco Submarine connection Sonora Baja California Guaymas Sonora Chihuahua Electric transmission line Sinaloa Baja California Sur Transmission line Mine Smelter and refinery Marine terminal Combined cycle electric energy generation plant IA GMX 2020 – MINING DIVISION Baja California and Sonora Between 2021 and 2025, the group has scheduled an investment in mining totaling US$8.89 billion in Sonora and Baja California. Benefits: • Refined copper production • Gold production • Zinc production • • Total jobs Annual sales • Annual taxes 874 thousand tons annually 100,000 ounces annually 108,000 tons annually 42,721 US$8.84 billion US$1.58 billion • Percentage of national copper production 89% The project includes, in addition to mines, smelting plants and refineries: • A desalinating plant with a capacity of 25 million m3 / year, 100% of industrial consumption. • El Barril, Baja California, seaport and expansion of the Guaymas, Sonora, seaport. • Electric interconnection between Sonora and Baja California through submarine 500 MW cable and later in Mexicali. • Electric transmission line: 230 kV El Barril – La Paz – Los Cabos. • Two marine terminals: Sonora and Baja California. Arizona and Texas In Arizona and Texas, in the same period, the plan is to invest US$1.91 billion. • Copper production • • Total jobs Annual sales 120,000 annual tons 10,650 US$991 million New copper concentrator at Ray • US$450 million New copper concentrator at Silver Bell • US$900 million • 50 thousand tons of copper/year • 70 thousand tons of copper/year 50 51 Panoramic view of Cuajone mine in Moquegua, Perú. In Perú, we are working on investments totaling US$1.10 billion. Southern Copper Circuit 3 4 1 2 3 4 5 6 7 Tía María Copper projet Los Chancas Copper projet Michiquillay Copper and gold projet Tantahuatay Gold mine Cuajone Copper projet Toquepala Copper projet Ilo Metallurgical complex 2 1 56 7 52 53 IA GMX 2020 – MINING DIVISION PROJECT SUMMARY Investment (Millions of USD) Progress Operation starting date Jobs Capacity Mine years of life Tía María, located in the La Joya desert, to the north of Cocachacra, Islay, Perú. • • • • • • • Basic engineering, exploration and metallurgical testing completed. Construction permit pending. Generation of basic engineering and feasibility study. Pre-feasibility study under development. Exploration works underway. Social impact assessment underway. Two concentrator plants in operation. • Engineering started. • Engineering and pre-feasibility assessment started. $1,750 $2,600 $3,146 $1,350 $1,200 $1,200 $11,246 Tía María Los Chancas Michiquillay Toquepala expansion Cuajone expansion Ilo smelter Total 54 3Q 2024 4,800 2025 5,500 2027 6,200 In operation 2,000 2024 2,000 120,000 Tons of copper cathode 148,000 Tons of copper eq. 269,000 Tons of copper eq. 250,000 Tons of copper 80,000 Tons of copper 21 20 40 29 39 2Q 2025 1,500 950,000 Tons of concentrates 250,000 Tons of copper N/A 22,000 55 Zaragoza Barcelona Madrid Aznalcóllar Sevilla Projects in Spain Aznalcóllar municipality, Seville province, Andalucía Aerial view of the Aznalcóllar municipality, Seville, Spain. ZINC Project progress: • • Feasibility study completed with appealing results. New hydrogeologic model prepared, validated by the relevant water authorities. • We obtained a statement of Greater Public Interest Project from the Junta of Andalusia (Regional Government of Andalusia), ratifying the project’s relevance and positive socioeconomic and environmental impact. • Environmental assessments and securing of initial construction permits are being processed. Once in operation, Aznalcóllar will produce Roughly 125 thousand tons of zinc annually over the more than 20 years of the mine’s life. 56 57 IA GMX 2020 – MINING DIVISION Grupo México is the company with the largest reserves SEC-registered in the US. Other explorations CHILE Cobre Sol Project, Antofagasta Copper porphyry in the Atacama desert. • Exploration drilling has begun. Montonero Project, Atacama Copper and gold project. Aerial view of the Río Negro Province and Los Menucos in Argentina. ARGENTINA • The pre-feasibility study for the leaching and SX/EW project will be performed. Cañadón del Moro Project, Río Negro ECUADOR Ruta del Cobre Project, Cuenca Copper and molybdenum porphyry. • Under exploration since 2014, stage of the exploration program at 50%. Gold and silver deposit with 7.6 km veins and breccias with a thickness of 6 to 60 meters. • Silver ore grades of 9.4 oz. per ton. Esperanza, Los Menucos, Río Negro Project Gold deposit in exploration program at 20%. 58 58 59 Training in Charcas Underground Mine in San Luis Potosí, México. Safety and Occupational Health We ended the year with zero fatalities; accidents and days lost rates decreased by 44% and 78%, respectively, compared to 2019. Minera México obtained three Silver Helmets out of the six awarded by the Mexican Mining Chamber. We have three schools in México and seven in Perú, from kindergarden up to middle school, fully funded by the company. Soon, the schools will offer all grades through high school. Communities In 2020, our Community Development programs migrated to virtual mode as a result of the pandemic. • • • 4,634 workshops were held online. 290 thousand social media users, 63% more than in 2019. 3,667 students at educational centers sponsored by the company in México and Perú continued their school programs remotely. 60 61 IA GMX 2020 – MINING DIVISION Our commitment to build a better country for future generations is unwavering. We have invested over US$100 million in the last five years in projects that foster an increase in the quality and volumes of water available to the neighboring communities of our operations. We recycle 75% of the water we use in our operations. In 2020, the Mining Division paid US$53 million for water rights. Water 62 The Cularjahuira dam was developed together with the Peruvian government to supply water to over one thousand farmers in the Tacna region. 4400 HP locomotive with bulk hoppers. COVERAGE 24 Mexican states representing 86% of the GDP and Florida and Texas in the US. IA GMX 2020 – TRANSPORTATION DIVISION TRANSPORTATION DIVISION GRUPO MÉXICO TRANSPORTES (GMXT) Thousands of dollars Net ton kms (millions) Carloads Sales Cost of Sales Operating Profit EBITDA EBITDA Margin (%) Net profit Profit Margin (%) Investments / Capex January - December 2020 2019 Variation Thousands of USD % 65,444 1,887,766 2,473,004 1,331,524 693,063 1,096,148 44.3% 312,450 12.6% 342,663 62,823 1,753,069 2,158,312 1,119,200 605,341 944,211 43.7% 274,745 12.7% 268,979 (2,621) (134,697) (314,692) (212,324) (87,722) (151,937) (4.0) (7.1) (12.7) (15.9) (12.7) (13.9) (37,705) (12.1) (73,684) (21.5) Unit grain train in the La Barca district, Jalisco, México. 67 IA GMX 2020 – TRANSPORTATION DIVISION IA GMX 2020 – TRANSPORTATION DIVISION We have increased the percentage of carloads since 1998 by 420%. Grupo Mexico’s Transportation Division is represented by its subsidiary GMéxico Transportes, S.A.B. C.V. (GMXT). At GMXT, we provide logistics solutions for safe, efficient, and sustainable ground cargo transportation, that contribute to strengthen the connectivity and competitiveness of the markets where we participate. GMXT’s main subsidiaries are: • • • • • Ferrocarril Mexicano, S.A. de C.V. Ferromex Ferrosur, S.A. de C.V. Ferrosur Florida East Coast Railway, L.L.C (FEC) Texas Pacífico LP, Inc. (TXPF) Intermodal México, S.A. de C.V. (IMEX) Railroad cargo transportation, an essential activity, worked unwaveringly throughout 2020, transporting essential products during the pandemic. 68 Locomotive at the repair and maintenance workshop “Casa Redonda”, Guadalajara, Jalisco, México. IA GMX 2020 – TRANSPORTATION DIVISION CSX / NS Jacksonville Orlando Fort Pierce West Palm Beach Fort Lauderdale Miami UP Mexicali Pascualitos UP Nogales BNSF /UP Cd. Juárez El Paso Benjamín Hill Hermosillo Ft. Stockton Alpine Ojinaga Presidio BNSF / FWWR Coleman San Angelo BNSF / CN / CSX / NS Mobile Chihuahua Piedras Negras BNSP / UP Eagle Pass Guaymas Sufragio Cd. Frontera Topolobampo Culiacán Torreón Paredón R. Arizpe Monterrey Cd. Victoria Mazatlán Zacatecas Aguascalientes Tepic Guadalajara Silao Celaya Pénjamo Irapuato Colima Ajuno México City Manzanillo Altamira Tampico Veracruz Coatzacoalcos Puebla Sánchez Salina Cruz GMXT NETWORK SYMBOLOGY Rights of way Coatzacoalcos-Mobile Railferry Veracruz-Miami Railferry Project We connect the US and Canada through five border crossings. We serve five ports along the Pacific Coast and four in the Gulf of México. We offer competitive rates, 35% lower than trucks. Our network is supported by: • • • • Over 10,600 highly-trained employees. 816 locomotives. Over 11,136 km of track. Over 27,753 railroad cars. Since 1998, we have: • • Quadrupled our cargo capacity. Increased the share in the relevant ground cargo transportation vs. trucks. Find out more about GMXT, a leader in cargo transportation. IA GMX 2020 – TRANSPORTATION DIVISION Infrastructure crew checking a stretch of railroad on the Pacific to identify and fix defects and risks. SHARE OF CARGO TRANSPORTATION IN MÉXICO Relevant market Train 18.8% train 25.6% truck 81.2% 1999 Companies 2019 gmxt 35% KCSM 65% gmxt 64% 1999 2019 truck 74.4% KCSM 36% 72 73 IA GMX 2020 – TRANSPORTATION DIVISION In 2020 Our sales totaled US$2.16 billion. We transported 62.82 billion tons-km. We hauled 1,753,069 cars. Our EBITDA totaled US$944 million, with a 43.7% margin, mainly due to operating improvements, which resulted in a 15.9% cost reduction. In México, track maintenance is paid by the concessionaire, while federal highway maintenance is paid by the government. 74 The handbrake is a security device; it is used to: stop the locomotive when there is a downslope, for parking, or when the maintenance crew performs electromechanical tests. IA GMX 2020 – TRANSPORTATION DIVISION IA GMX 2020 – DIVISIÓN TRANSPORTES OPERATING METRICS TRAIN SPEED (Km/hr) DWELL TIME (Hours) +290% 38.2 9.8 35 30 25 20 15 10 5 -21% 28.0 22.2 1998 2020 2018 2020 TRAIN LENGTH (Meters) GROSS TONS PER TRAIN (Tons) 40 35 30 25 20 15 10 5 2,000 1,500 +51% +506% 6,061 7,000 6,000 5,000 4,000 3,000 2,000 1,000 1,000 1,227 1,857 500 1998 2020 1998 2020 1,000 77 We transport LP gas from the US and Canada through unit trains to meet the household and industrial needs of the states of Coahuila, Chihuahua, Sinaloa, and Sonora. Tank cars in railroad terminal. Industries served At GMXT, we provide logistic solutions for all types of industries. Our business portfolio is divided into nine subsegments: agricultural, intermodal, metals, minerals, automotive, chemicals, energy, industry, and cement. Automotive train, Puebla, México. 06 > 07 IA GMX 2020 – TRANSPORTATION DIVISION REVENUE DIVERSIFICATION BY PRODUCTS Cement 5% Others 5% Metals 5% Industrial 7% Energy 8% Automotive 8% AGRICULTURAL 28% intermodal 14% Chemicals 8% Minerals 12% We transport over 7.2 million finished consumer products per year in over 700 thousand containers for the domestic and international markets. Our network serves the 12 main automotive plants in México, which represent 80% of the market. We transport 60% of the country’s automotive export cargo. 79 IA GMX 2020 – TRANSPORTATION DIVISION Our Investments • • • • • Reconstruction and modernization of our network. Construction of new sidings, yards, and terminals. Process and telecommunication automation throughout the network. Level crossing signals. Bypass construction. Sustainable Vision In order to reduce GMXT’s carbon footprint by 10% by 2023: • We started the conversion of hybrid locomotives that use a larger share of gas than diesel. • Our locomotives have an intelligent system to optimize their performance and fuel management, which also makes the journeys safer. • We have achieved the maximum reduction in the time locomotives spend in yards, cutting dwell times and energy consumption. • We optimized railway traffic. Liquefied natural gas tank car for hybrid, environmentally-friendly locomotives. In 2020, despite the pandemic, we invested US$269 million. 40% of our energy consumption comes from our own sources. 80 81 IA GMX 2020 – TRANSPORTATION DIVISION Safety and Occupational Health Operational safety is a priority at every level of our organization, with the goal of operating with zero accidents and ensuring the integrity of our 10,683 employees. We offered courses to over 600 employees. During 2020, 8,870 employees received safety and occupational health training, totaling 136,700 man-hours. We have 37 medical care units across the country, staffed by 25 general practitioners and 140 nurses. 82 Welding of gondola. Level crossing, Lagos de Moreno, Jalisco, México. Aware of the importance of saving lives, and as no public budget had been allocated to level crossing signals, we voluntarily rehabilitated and installed electronic barriers to prevent the crossing of vehicles and pedestrians prior to the passing of the train at the crossings with the highest accident rates, considering that maintenance will be in charge of the federal, state and municipal governments, since 2018, we have signalized 66 crossroads; thanks to this project, accidents at level crossings have decreased by 36.1%. The Chepe Regional train did not suspend its services despite the pandemic. The Chepe Express train reactivated its services in July 2020. Health protocols approved by the governments of Chihuahua and Sinaloa were successfully implemented, helping us to receive the “Safe Travel” distinction awarded by the WTTC. 84 85 Chepe Express, Chihuahua, México. Tabasco Rig, México. OIL RIGS We ended 2020 with six operational rigs. IA GMX 2020 – INFRASTRUCTURE DIVISION INFRASTRUCTURE DIVISION MÉXICO PROYECTOS Y DESARROLLOS (MPD) Thousands of dollars Sales Cost of Sales Operating Profit EBITDA EBITDA Margin (%) Earnings before tax Taxes Deferred tax Net Profit Profit Margin (%) January - December 2020 2019 Variation Thousands of USD % 579,782 293,671 151,404 272,389 47.0% 91,519 46,604 249 44,666 7.7% 527,638 251,789 138,717 266,579 50.5% 84,074 32,245 11,770 40,058 7.6% (52,144) (41,882) (12,688) (5,810) (7,445) (14,359) 11,521 (4,607) (9.0) (14.3) (8.4) (2.1) (8.1) (30.8) 4,629.4 (10.3) Construction of Fenicias Wind Farm in Nuevo León, México. 89 IA GMX 2020 – INFRASTRUCTURE DIVISION Our Infrastructure Division is represented by subsidiary México Proyectos y Desarrollos, S.A. de C.V. (MPD), and it focuses on six business lines: • • • • • • Perforadora México México Generadora de Energía - Combined cycle plant in La Caridad, Sonora - El Retiro Wind Farm in Juchitán, Oaxaca - Fenicias Wind Farm, Nuevo León (under construction) Construction Engineering Salamanca - León Highway / Silao Bypass Fuel storage - Cadereyta, Nuevo León - Monterrey, Nuevo León (project under development) - Guadalajara, Jalisco (project under development) - Aguascalientes, Aguascalientes (project under development) Aerial view of the Salamanca-León highway, in the Bajío, México area. 91 1 Sonora 6 5 4 Nuevo León Pacific Ocean 3 9 8 Guanajuato 10 2 Jalisco INFRASTRUCTURE SYMBOLOGY Energy Highway Perforadora México Fuel Terminal IA GMX 2020 – INFRASTRUCTURE DIVISION Combined cycle plant Nacozari, Sonora Guadalajara Fuel Terminal Project under development Aguascalientes Fuel Terminal Project under development Cadereyta Fuel Terminal Nuevo León Monterrey Fuel Terminal Project under development Fenicias Wind Farm Project under development El Retiro Wind Farm Juchitán, Oaxaca Salamanca-León Highway Silao Bypass 1 2 3 4 5 6 7 8 9 Land Drilling Base Poza Rica, Veracruz Offshore Drilling Base Ciudad del Carmen, Campeche “Tamaulipas” Oil Rig “Veracruz” Oil Rig “Sonora” Oil Rig “Tabasco” Oil Rig “Zacatecas” Oil Rig “Campeche” Oil Rig “Chihuahua” Oil Rig 10 11 12 13 14 15 16 17 18 18 17 11 16 Campeche Gulf of México 14 15 13 12 Tabasco Veracruz 7 Oaxaca IA GMX 2020 – INFRASTRUCTURE DIVISION The investment in the new Fenicias Wind Farm totals US$250 million. Find out more about the Wind Farm. Despite the difficulties resulting from the pandemic, we invested US$218 million in 2020. • US$127 million: construction of the new Fenicias Wind Farm in the north of the country (total investment of US$250 million), expected to start operations in the first quarter of 2021. • • • US$13 million: highway projects (Salamanca-León and Silao Bypass). US$6 million: initial investment in Fuel Terminals. The rest was invested in the various business lines of the division. For 2021, investments totaling US$228 million are scheduled, mainly in: • US$90 million: Fuel Storage terminals in the various strategic points across México. • • • US$77 million: conclusion of the construction of the Fenicias Wind Farm. US$12 million: highway projects. Construction of the Playa del Carmen - Tulum tranche of the Mayan Train. 94 New Fenicias Wind Farm with 4 MW capacity per wind turbine. IA GMX 2020 – INFRASTRUCTURE DIVISION Perforadora México • • • • Sales: US$172 million. EBITDA: US$85 million. Historic operating efficiency at 99.5%. Uninterrupted operation of our oil rigs. MARINE DRILLING • On our six rigs, we work in what is known as ‘shallow water’ and we operate at ‘depth’, ranging from 20 to 90 meters. LAND DRILLING • • Sales: US$6 million. We completed the land drilling contract for geothermal wells at the San Pedro Dome, Nayarit. • We executed three service contracts for land cementations for various private clients. SUSTAINABILITY • The Clean Industry certificates issued by the Federal Environmental Protection Agency (PROFEPA) were renewed for all the offshore platforms. • We received the Self-management and Health at Work Program (PASST) level 2 acknowledgment from the Ministry of Labor and Social Welfare (STPS). • We obtained the certificate of compliance with standard NOM-035-STPS (Psycho- social risk factors). • We have international Environment certification ISO 14001 and and Occupational Health and Safety certification ISO 45001. 96 Veracruz Oil Rig control panel. Energy US$230 million, 2% more than in 2019 US$122 million in EBITDA, 4% more than in 2019 EL RETIRO WIND FARM: • • • • Wind turbines: 37 Capacity: 74MW EBITDA margin: 24% more than in 2019 Energy generated: 171,778 MWh, 7% more than in 2019 NEW FENICIAS WIND FARM, NUEVO LEÓN (UNDER CONSTRUCTION): IA GMX 2020 – INFRASTRUCTURE DIVISION IA GMX 2020 – DIVISIÓN INFRAESTRUCTURA Wind Farm in Juchitán, Oaxaca, México. • • • We achieved the goal of zero accidents among our in-house staff and contractors. Since 2019, we achieved the Clean Industry certifications. We have successfully passed Ecuador’s audit of principles, which includes Wind turbines: 42 • • • • • Capacity: 168 MW for the supply of electric energy in our mining and environmental topics and evaluates the interaction with our neighboring metallurgical operations in IMMSA Project progress: 83% Investment to date: US$177 million (71% of the project’s total cost) Start of operations: first quarter of 2021 communities, seeking the promotion and protection of human rights. The Energy division ended the year with a “zero” accidents index during 2020. 98 99 IA GMX 2020 – INFRASTRUCTURE DIVISION COMBINED CYCLE PLANT GENERATION IN LA CARIDAD, SONORA. US$217 million Sales Generator Plant, 4% higher than in 2019 US$112 million in EBITDA 3,437 GWh Total production • In the Caridad generator plant, we obtained the Great Place to Work ® certification, which assesses the work environment for employees as it relates to the company’s performance. • We have been recognized as a Safe Company (PASST, level 3) issued by the STPS. • We have the national Clean Industry certificate (PROFEPA). In terms of Health and Safety, the Caridad plant has achieved a record of seven years without incapacitating accidents. Combined cycle plant in La Caridad, Sonora, México. 101 IA GMX 2020 – INFRASTRUCTURE DIVISION IA GMX 2020 – DIVISIÓN INFRAESTRUCTURA MAIN WORKS • Celaya, Guanajuato, Railway Bypass for Ferromex, expected to be completed in 2021. • New tailings dam at Buenavista del Cobre, Sonora, estimated completion date March 2021. • With Mexicana de Cobre in Nacozari, Sonora, we concluded the superelevation of the curtain of Tailings Dam no. 7, as well as the additional construction works for the access road to the curtain and the spillway. • Construction of the road to haul materials from the Pilares Mine to the La Caridad Mine; estimated delivery by March 2021. • Expansion of Agua Prieta lime plant in Sonora. We are working on developing the detailed engineering, and soon we will start construction of the crushing and storage areas. It is estimated to be completed in September 2021. • With Operadora de Infraestructura del Bajío, we carried out maintenance works on the Salamanca-León Highway. We estimate completion by August 2021. SUSTAINABILITY We have valid certifications until 2022: Quality ISO 9001:2015, Environmental ISO 14001:2015, and Occupational Safety and Health ISO 45001:2018. Throughout 2020, the results of the index on incapacitating occupational accidents continued to improve, achieving a result of 0.31. This figure is well below the average Tailings dam at Buenavista del Cobre, Sonora, México. Construction Income US$77 million EBITDA US$23 million Revenues came mainly from the works hired throughout the year with the Ministry published by OSHA (5.4), and represents a 6% improvement in our performance; on of Communications and Transportation (SCT), Buenavista del Cobre, Mexicana de the other hand, the severity rate decreased by 59%. Cobre and Ferromex. 102 103 IA GMX 2020 – INFRASTRUCTURE DIVISION Highways US$34 million in Income WE CURRENTLY HAVE TWO HIGHWAY CONCESSIONS: 1) Salamanca-León Highway: Both tranches are in operation. 9,955 vehicles Daily traffic, 23% lower vs. 2019 17,138 units Daily traffic equivalent by type of vehicle 2) Silao Bypass: Tranche 2, spanning 11.6 km, started operations in September 2019. 1,574 vehicles Daily traffic, 12% lower vs. 2019 1,785 units Daily traffic equivalent by type of vehicle 104 Aerial view of the Salamanca–León highway. IA GMX 2020 – INFRASTRUCTURE DIVISION Engineering • • • Diversification of our client portfolio. Our workforce grew 36%, with 533 employees by the end of 2020. We obtained the Great Place to Work® certification, which is in charge of assessing the work environment for employees with regard to the company’s performance. Assembly of a wind turbine in the Fenicias Wind Farm in Nuevo León, México. In Engineering, we achieved 40% higher sales than in 2019, and we had the highest production in the company’s history. 106 06 > 07 107 IA GMX 2020 – INFRASTRUCTURE DIVISION Fuel Storage Over 715,000 liters shipped daily at the Cadereyta terminal (4 thousand 500 barrels or 6.8 gasoline and diesel tank cars), 10% of the total demand in Monterrey. We are developing two fuel storage terminals (Monterrey and Guadalajara, with capacities for 375 thousand and 505 thousand barrels, respectively), and a shipping terminal in Aguascalientes, with capacity for 12 thousand 500 daily barrels, which have contracts for 10 years, and 100% of their capacity allocated. They will become operational in 2022. Our operations adhere to the Industrial Safety, Operational Safety and Environmental Protection System (SASISOPA), overseen by the Safety, Energy, and Environment Agency (ASEA). Thus, we ensure the protection of our personnel and care of the environment. 108 Fuel storage terminal in Cadereyta, Nuevo León, México. Ongoing commitment In 2020, we donated over 1.9 million trees to municipalities in 20 states of México. Tree Nursery, San Luis Potosí, México. FUNDACIÓN GRUPO MÉXICO IA GMX 2020 – FUNDACIÓN GRUPO MÉXICO Fundación Grupo México (FGM) is a non-profit organization whose mission is to develop innovative and sustainable programs to contribute to the strengthening of the communities Dr. Vagón in Atoyac, Veracruz, México. and Civil Society Organizations. We work through four axes: • • • • Health Environment Support to Institutions Education and Culture Health Dr. Vagón, the Health Train, provides medical services, medicines, and treatment free of charge along three lines of action: This year, the Foundation prioritized the COVID-19 pandemic and devoted significant human and financial resources to support various institutions and communities where we are present, as well as vulnerable groups to mitigate the impact of the pandemic. • • • Disease prevention Early detection Early treatment The Foundation was confirmed as a member of the Mexican Network of the United Nations Given the COVID-19 pandemic and in observance of the health recommendations, Global compact, the largest corporate social responsibility network in the world, involving The Health Train suspended operations in March to prevent COVID infections. companies in all sectors and of all sizes. During January and February, Dr. Vagón served 14,201 patients in communities across Oaxaca and Veracruz. We appreciate and acknowledge the great work of our partners: Fundación Farmacias del Ahorro, Fundación MVS Radio, Audiotech, FUCAM, LAPI, Essilor and Grupo QP360. 112 113 IA GMX 2020 – FUNDACIÓN GRUPO MÉXICO SINCE ITS BEGINNINGS, DR. VAGÓN HAS PROVIDED: 1,518,306 patients with care 284,076 lab and clinical tests 174,474 attendants to workshops 594,603 free medicines 51,497 eyeglasses 2,185 hearing aids Professional medical team before Caleb’s surgery. 17,842 mammograms 250 Vasectomies1 867 IUDs1 Hearing Without Borders 1Started services in 2019 Over the last few months of this year, we finished putting together what is now known as the Hearing Without Borders program. Optometry checkup on Dr. Vagón. Through this program, we assist children of up to 24 months of age with severe and acute deafness (loss of hearing), donating surgically- placed cochlear implants. They are also given three years of monitoring with auditory-verbal therapy and calibration of the external processor, in order to achieve spoken language. Our goal is to support 52 children per year. 115 IA GMX 2020 – FUNDACIÓN GRUPO MÉXICO This would not be possible without the commitment, effort and selfless work of 2 Audiologists 3 Surgeons 1 Pediatrician 3 Therapists 2 Psychologists 1 Geneticist 4 Anesthesiologists 1 Ophthalmologist Caleb recovering after the implant surgery. What is a cochlear implant? It is an electronic medical device that improves the functioning of a damaged inner ear. Contrary to hearing aids, which amplify sound, cochlear implants perform the task of the damaged parts of the inner ear (cochlea) to send sound signals to the brain. It is possible to have implants in both ears when the hearing problem affects both ears (bilateral) or in a single ear (unilateral). Learn more on our web page. 116 117 Reforestation day. Environment Mexicanos Sembrando • We operate seven tree nurseries in México, located in Sonora, Coahuila, • • • Zacatecas, and San Luis Potosí. The nurseries produce over six million trees and plants annually. 90 different species. Goal: To reforest and thus mitigate the effects of climate change and help to maintain the stability of all ecosystems. Our nurseries save 70% of the water required for their production. We have reforested 1,900 hectares, generating awareness about the care and protection of the environment among children and teens throughout México. 119 Nursery in Cananea, Sonora, México. Associations Network Expo, 2019 Congress. Support to Institutions Within the area of Support to Institutions, we have two programs: Cinemex Awareness and the Network of Entrepreneurial Associations and Foundations, whose goal is to provide Civil Society Organizations (SCO) with tools to strengthen the social work they do in order to have a greater impact on their actions and on the country. IA GMX 2020 – FUNDACIÓN GRUPO MÉXICO IA GMX 2020 – FUNDACIÓN GRUPO MÉXICO Network of Entrepreneurial Associations and Foundations The Network promoted trainings, forums, workshops, spaces for engagement, conferences and seminars free of charge for the participating Civil Society Organizations. It has 277 allies including Entrepreneurial Foundations, Socially Responsible Enterprises, Social Agencies, Academia, and over four thousand organizations, both in México and abroad. Institutional Alliances: • • • 152 Entrepreneurial Foundations and Companies with Social Activity. 98 Social agencies and legal firms. 17 Academic Institutions. 120 121 IA GMX 2020 – FUNDACIÓN GRUPO MÉXICO Associations Network Expo In 2020, the Expored.org virtual platform was created, making it possible to achieve a greater impact and international visibility for the first time. • • • • • 40 experts from México, Spain, Colombia, Brazil, Argentina, and Italy. 1,221 people attended Expo Red virtually, 869 through the Expored.org platform, and 352 connected through Social Media; 230% more attendants than in 2019. 19 hours of training sessions. 4 expert panels; 8 master talks. Spokespersons gave a pro-bono talk at the event: Karla Iberia Sánchez, Marion Reimers and Ana Claudia Talancón. Conference to allies of the Network of Entrepreneurial Associations and Foundations. 157 Training sessions: 18 on-site and 139 online, 20% more than in 2019 437 Hours of learning 41 Allies to professionalize organizations 570 Counseling sessions through the online chat Out of the organizations trained in fundraising, 63% modified and innovated their financial campaigns 13,946 Employees trained; 163% more than in 2019 89 Fiscal and legal counseling sessions, channeling them to Centro Mexicano Pro-Bono, Barra Mexicana de Abogados, and Appleseed México The first generation of Fundraising Professionals of the Network was created, in alliance with the National Board for the Normalization and Certification of Work Skills (CONOCER) and La Salle International Foundation 122 123 IA GMX 2020 – FUNDACIÓN GRUPO MÉXICO IA GMX 2020 – DIVISIÓN INFRAESTRUCTURA IA GMX 2020 – GRUPO MÉXICO FUNDACIÓN Education and Culture Editorial Fundación Grupo México Colección Xocoyo The 2020 edition was dedicated to peanuts (“cacahuate” in spanish), given their relevance in Mexican cuisine and traditions. The book called “Cacahuate, golden seed of our land” will represent México in the Unique Topic category of the Gourmand World Cook Awards to be held in the city of Paris, France, in June 2021. The resources raised through the sale of this book will be destined to Fundación Vida Plena, I.A.P., an institution providing a better quality of life to low-income senior citizens. 124 06 > 07 Cover of the Peanuts book, published by Fundación Grupo México. IA GMX 2020 – FUNDACIÓN GRUPO MÉXICO IA GMX 2020 – FUNDACIÓN GRUPO MÉXICO VOLUNTEER WORK Día de Reyes Celebration In January, we held an event at Asilo Primavera I.A.P., to celebrate the Día de Reyes with the children who live there. We had 109 children present, who received a gift and ate Rosca de Reyes (a ring-shaped cake). This was possible thanks to the generosity of the volunteer employees of Grupo México. Virtual concert on behalf of indigenous families in the Tarahumara Sierra As part of the commemoration of the volunteer day, in collaboration with Cáritas Chihuahua and Banco de Alimentos Chihuahua, we organized a virtual concert including the artistic talent of the pianist “from the sierra” Romayne Wheeler. The concert was broadcast in 12 countries. Thanks to the participation of employees from the various divisions of Grupo México, Cinemex, allies, and public in general, we managed to raise $599,608 pesos to purchase groceries that benefited 8,820 families in the Raramuri communities. EFICINE In 2020, we supported the production of three films through the financial aid, EFICINE: 1. El extraño caso del fantasma claustrofóbico 2. La cura es la locura 3. Mi amigo el sol 126 Delivery of groceries in the Tarahumara Sierra. Donation of 23 respiratory support ventilators to the Sonora Government. COVID-19 Actions Fundación Grupo México had $611 million pesos to donate in kind to hospitals and vulnerable communities. At the request of President López Obrador, on April 6, 2020, Grupo México delivered to the federal authorities the Specialty Hospital in Juchitán, Oaxaca, to deal with the pandemic and meet the needs of the population in the region of the Tehuantepec Isthmus. Once the health contingency is over, the hospital unit will be, as originally planned, a Maternity and Child hospital. Find out what steps the company took to deal with the pandemic. 128 IA GMX 2020 – FUNDACIÓN GRUPO MÉXICO At over 200 hospitals, healthcare centers, and vulnerable communities in 21 states across México as well as in Perú, we delivered the following aids and materials: 639 ventilators Over 503 thousand personal protection kits for doctors Medical equipment and various materials for COVID hospitals • 135 monitors • 160 beds • 52 resuscitation units 107,510 grocery kits and 270 tons of food for vulnerable communities 2,150 kits for the implementation of family vegetable gardens We supported the operation of the Post-COVID-19 Comprehensive Lung Rehabilitation Center 318,000 liters of liquid oxygen 120,000 liters of antibacterial gel and protective gear for the National Guard 22 temporary hospital modules in México and Perú, adding to a capacity of 385 beds 60,000 meals prepared for doctors 120,000 quick tests and 10,000 molecular tests Two ambulances and two oxygen plants in Perú Medical and psychological support helpline and WhatsApp 24/7 129 IA GMX 2020 – GRUPO MÉXICO FUNDACIÓN IA GMX 2020 – DIVISIÓN INFRAESTRUCTURA Delivery of medical equipment to hospitals throughout the COVID-19 contingency. Donation of groceries to vulnerable communities. • Through the campaign “If you have, donate; if you need, take; if you want to help, share”, 15 companies and Entrepreneurial Foundations donated over $6 million pesos in kind to support over 20 thousand people in 15 states across México. This benefit was deployed by 91 organizations from the Network of Associations. We established prevention protocols and created informative campaigns to care for the health of our 29 thousand employees and their families. We donated 270 tons of perishable foods to over 240 thousand families across the country. Thanks to Grupo Cinemex, we donated perishable foods to assist the Mexican food bank, Banco de Alimentos de México. • We contributed to the food security of 10,574 people in a situation of vulnerability through the donation of 1 million pesos in groceries to the following organizations: Yolia Niñas de la Calle, Reinserta a un Mexicano, Asociación Mexicana de Banco de Alimentos, Comedor Santa María, and Fundación Comunitaria Oaxaca. 130 131 Grupo México Board Germán Larrea Mota Velasco CHAIRMAN Patrimonial Board Member Xavier García de Quevedo PRESIDENT Patrimonial Board Member Emilio Carrillo Gamboa Independent Board Member Alfredo Casar Pérez Patrimonial Board Member Luis Castelazo Morales Patrimonial Board Member Claudio X. González Laporte Independent Board Member Oscar González Rocha Patrimonial Board Member Fernando López Guerra Larrea Patrimonial Board Member Prudencio López Martínez Independent Board Member Antonio Madero Bracho Independent Board Member Carlos Prieto Sierra Independent Board Member Carlos Rojas Mota Velasco Independent Board Member Fernando Ruiz Sahagún Independent Board Member Antonio del Valle Ruiz Independent Board Member Rolando Vega Saénz Independent Board Member Mauricio Ibáñez Campos Secretary IA GMX 2020 – BOARD AND MANAGEMENT TEAM Management Team Germán Larrea Mota Velasco Executive President and Chairman of the Board Lourdes Aranda Bezaury Director of Communications and Institutional Relations Marlene Finny de la Torre Director of Administration and Finance Lillie Hernández Minor Legal Director Juan Carlos Jaques Garcés Audit Director Miguel Valdés Neaves Administration and Control Director 132 133 Mining Division Americas Mining Corporation Management Team IA GMX 2020 – BOARD AND MANAGEMENT TEAM Southern Copper Corporation Board Germán Larrea Mota Velasco Francisco López Guerra Larrea Germán Larrea Mota Velasco Rafael Mac Gregor Anciola Chairman of the Board Sustainability Director Chairman of the Board Independent Board Member Oscar González Rocha Vidal Muhech Dip Executive Vice-president Chairman of the Directors Committee Oscar González Rocha Chief Executive Officer Luis Miguel Palomino Bonilla Independent Board Member Xavier García de Quevedo Topete Executive Vice-president Daniel Chávez Carreón Operations Director Rafael Ríos García Director of Security Ernesto Ríos Patrón Vicente Ariztegui Andreve Gilberto Perezalonso Cifuentes Independent Board Member Independent Board Member Alfredo Casar Pérez Carlos Ruíz Sacristán Director of Engineering and Construction Patrimonial Board Member Independent Board Member Leonardo Contreras Lerdo de Tejada Raquel Tobar Sáinz Enrique Castillo Sánchez Mejorada Jorge Lazalde Psihas General Director of ASARCO and IMMSA Director of New Business and Finance Independent Board Member Secretary Xavier García de Quevedo Topete Patrimonial Board Member Director of Supply and Commercial AMC René Verde Guzmán Oscar González Barrón Director of Information Technology Director of Administration and Control Mauricio Ibáñez Campos Raul Jacob Ruisanchez Director of Administration and Legal Director and Corporate Governance Finance Southern Peru Jorge Jáuregui Morales Jorge Meza Viveros Director of Human Resources Director of Operations Southern Peru Jorge Lazalde Psihas Director of Legal and Institutional Relations 134 135 Transportation Division Grupo México Transportes Board Germán Larrea Mota Velasco CHAIRMAN Patrimonial Board Member Alfredo Casar Pérez Patrimonial Board Member Jaime Corredor Esnaola Patrimonial Board Member Arturo Elías Ayub Patrimonial Board Member Hugo Rafael Gómez Díaz Patrimonial Board Member Fernando López Guerra Larrea Patrimonial Board Member Carlos Noriega Arias Patrimonial Board Member Lorenzo Reyes Retana Patrimonial Board Member Roberto Slim Seade Eduardo Joaquín Gallástegui Armella Patrimonial Board Member Patrimonial Board Member Christian Lippert Helguera Xavier García de Quevedo Topete Secretary Patrimonial Board Member IA GMX 2020 – BOARD AND MANAGEMENT TEAM Management Team Germán Larrea Mota Velasco Chairman of the Board Alfredo Casar Pérez Chief Executive Officer Fernando López Guerra Larrea General Director Isaac Franklin Unkind General Director of Administration and Finance Hugo Rafael Gómez Díaz General Director of Operations Jorge Manuel Márquez Abreu General Commercial Director Lorenzo Reyes Retana General Projects Director 136 137 Infrastructure Division Management Team Germán Larrea Mota Velasco Jorge Agüero Navarro Chairman General Director Highways IA GMX 2020 – BOARD AND MANAGEMENT TEAM Fundación Grupo México Management Team Germán Larrea Mota Velasco Chairman Support to Institutions Lucero Vallejo Durán Conciencia Cinemex Manager Xavier García de Quevedo Topete Héctor Raúl Huerta Avendaño Jessica Pons Fernández Chief Executive Officer General Director of Engineering Services Francisco Zinser González Julio Francisco Larrea Mena General Director General Director of Constructora México Deputy Director-General, Environment and Network of Entrepreneurial Associations Education and Culture Beatriz Crispín Gámez and Foundations Education and Culture Manager Gustavo Ortega Gómez General Director Energy José Jaime González Acosta Director of Operations Oil Mario Fernando Chávez Galas General Director of Administration and Finance Javier Gómez Aguilar General Counsel Ricardo Arce Castellanos General Director Oil and Gas, Engineering and Construction Health Karla Díaz Castro Administrative Manager of Dr. Vagón, the Health Train Dr. Ricardo Reyes Díaz Medical Manager of Dr. Vagón, the Health Train Aura Patiño Lona Operations Manager of Dr. Vagón, the Health Train 138 139
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