Southern Copper Annual Report 2004

← All annual reports

FY2004 Annual Report · Southern Copper

Loading PDF…

CONTENTS

OPERATING HIGHLIGHTS

MAIN SPCC STATISTICAL DATA

LETTER TO THE SHAREHOLDERS

PRODUCTION STATISTICS

FIVE-YEAR

SELECTED FINANCIAL AND STATISTICAL DATA

FIVE-YEAR

EXPANSION AND MODERNIZATION PROGRAM

EXPLORATION

COMMUNITY OUTREACH

RESULTS OF OPERATIONS

FOR THE YEARS ENDED DECEMBER 31, 2004, 2003 AND 2002

DIVIDENDS AND CAPITAL STOCK

ENVIRONMENTAL AFFAIRS

GENERAL INFORMATION

DESCRIPTION OF OPERATIONS AND DEVELOPMENT

Cover page: Preparing explosive for blasting at Toquepala mine

MEMBERS OF THE BOARD OF DIRECTORS

N
O

I
T
A
R
O
P
R
O
C

R
E
P
P
O
C

U
R
E
P

N
R
E
H
T
U
O
S

Operating highlights
(tons)

Operating area or plant

Toquepala

Total material moved (000’s)

Ore milled (000’s)

Concentrate produced
Copper in concentrate

Molybdenum produced

Cuajone

Total material moved (000’s)

Ore milled (000’s)
Concentrate produced

Copper in concentrate

Molybdenum produced

N
O

I
T
A
R
O
P
R
O
C

R
E
P
P
O
C

U
R
E
P

N
R
E
H
T
U
O
S

SX/EW

Treated solutions (thousands of cubic meters)

Cathodes produced

Smelter
Concentrates smelted

Blister produced

Refinery

Cathodes produced

Total Cu SPCC

Total Cu SPCC (000’s of pounds)

Total Mo

R: Production records

2004

115,120 R

21,807 R

580,110 R
160,852 R

6,004 R

101,265

29,319
752,941 R

194,389 R

4,657

45,903 R

42,125

1,213,030 R

320,722

280,679

387,870 R

855,106 R

10,661 R

2003

105,242

21,208

505,236
142,373

4,153

97,471

29,798
710,004

184,528

4,867

43,604

47,756

1,182,870

314,920

284,006

366,890

808,853

9,020

Copper Reserves

Unit

Toquepala

Sulfides

Leachable

Cuajone

Sulfides

Leachable

2004

2003

MINERAL RESERVES

(000’s TONS)
DECEMBER 31, 2004

AVERAGE COPPER

CONTENT (%)
DECEMBER 31, 2004

597,817

1,732,229

1,093,883

57,348

0.73

0.18

0.64

0.40

N
O

I
T
A
R
O
P
R
O
C

R
E
P
P
O
C

U
R
E
P

N
R
E
H
T
U
O
S

Anode casting at the Ilo Refinery

N
O

I
T
A
R
O
P
R
O
C

R
E
P
P
O
C

U
R
E
P

N
R
E
H
T
U
O
S

Tailings disposal at Quebrada Honda Dam

Main SPCC Statistical Data

Productivity

Tons of copper per employee

Copper Sales

Thousands of tons

SX/EW Production

Thousands of tons

105

109

354.183

370.643

365.433

375.160

392.083

56.065

54.428

52.854

47.756

42.145

120

100

400
350
300
250
200
150
100
50

2000

2001

2002

2003

2004

2000

2001

2002

2003

2004

2000

2001

2002

2003

2004

Copper Production

Thousands of tons

Refinery Production

Thousands of tons

340.665

342.264

346.486

374.656

387.870

264.743

277.260

281.669

284.006

280.679

400
350
300
250
200
150
100
50

300

250

200

150

100

2000

2001

2002

2003

2004

2000

2001

2002

2003

2004

N
O

I
T
A
R
O
P
R
O
C

R
E
P
P
O
C

U
R
E
P

N
R
E
H
T
U
O
S

Letter to the Shareholders

of Americas Mining Corporation (AMC), the holding of

Southern Peru foresees the investment projects it carries

On behalf of Southern Peru’s Board of Directors, we want

Grupo Mexico engaged in mining operations. After eight

out will further consolidate its position among the main

to express our gratitude to the workers and employees

2004 was an outstanding year for Southern Peru Cop-

growth also resulted from higher mined ore grades and

to estimates, the pre-feasibility study will continue dur-

months of comprehensive work, the Special Committee

producers of metals worldwide, therefore signaling a

for their effort and dedication, to our clients for their

per Corporation (SPCC). In addition to the substantial

recoveries in 2004.

ing 2005.

of Disinterested Directors advised the Board to accept

positive economic return for our shareholders, a contri-

trust and loyalty, and to you, our shareholders, for your

rise in the price of metals produced by the Company,

the offer. The proposal was approved by a majority of

bution for the relevant countries and their communities,

long-term support.

SPCC’s output and sales reached unprecedented levels.

Greater output at Cuajone mine in 2004 also resulted

Southern Peru launched major projects in 2004, such as

the Board and, once authorized by the relevant regulat-

and a benefit for SPCC workers.

The production of copper, molybdenum, and silver in-

from higher ore grades in 2004 and improved recovery

the one related with the Leaching Dums Project, where

ing authorities, the shareholders will vote on the matter

creased 6.06%, 17.79%, and 6.0%, respectively, as

in grinding that resulted in 752,941 tons of concentrate,

conveyor belts will be replaced with haulage trucks to

during the first quarter of 2005.

compared to 2003. Company products sold (copper,

also an unprecedented production level. SX/EW cop-

transport minerals at the Toquepala mine. Construction

molybdenum, silver) also increased 115%.

per output decreased 12.4 million pounds due to lower

works are scheduled to conclude in June 2005.

grades in the pregnant leaching solutions (PLS). The

Price hikes were outstanding during 2004 as compared

smelter also attained a new record by smelting 1,213,030

Also in 2004, as part of the Environmental Compliance

to the previous year. Average price of products was:

tons of concentrate.

copper, $1.30 per pound, that is, 60% higher than in

and Management Program agreed with the government

of Peru, SPCC began to upgrade the Ilo smelter. The up-

2003; molybdenum, $16.21 per pound, a 300% in-

Net income was an outstanding item in 2004: it reached

graded smelter will use Australian Isasmelt technology to

crease; silver, $6.68 per ounce, as compared to $4.87

$597 million, or 400% higher than in 2003. Operating

process 1.2 million tons of copper annually, with anodes

in 2003.

cash cost per pound of copper decreased from $0.399

as the final product instead of the blister bars produced at

to $0.046 due mainly to high price of molybdenum, a

present. Sulfur capture will be of the order of 95%, well

With respect to 2004 production, mined copper totaled

by-product of copper mining.

over the standards required by environmental regulations

876 million pounds in 2004. Higher copper output at

in force. The smelter upgrading is the largest environ-

SPCC resulted mainly from expanded production at the

At present, SPCC has mining operations in Peru, Mexico

mental project undertaken by our Company in Peru, and

Toquepala mine and higher treated volumes after pro-

and Chile, with beds to be explored that might increase

once it is completed, it will mean the conclusion of SPCC’s

cessing capacity increased at the concentration plant.

the Company’s reserves and future profile. SPCC also

environmental commitments in the country.

The Toquepala concentration plant produced 580,111

maintained its prospecting program in all of Peru, mainly

tons of concentrate, a new production record. Further-

in the south, focusing in the finding of copper and gold

SPCC continued its globalization efforts during 2004. The

more, Toquepala mine also produced more molybdenum:

resources. With respect to Los Chancas project, the drill-

Board of Directors appointed a special committee to ana-

output increased from 4,153 tons to 6,004 tons. This

ing program was maintained during 2004 and, according

lyze the proposal to acquire Minera Mexico, a subsidiary

N
O

I
T
A
R
O
P
R
O
C

R
E
P
P
O
C

U
R
E
P

N
R
E
H
T
U
O
S

GERMÁN LARREA MOTA-VELASCO

Chairman of the Board

OSCAR GONZÁLEZ ROCHA

President and Chief Executive Officer

N
O

I
T
A
R
O
P
R
O
C

R
E
P
P
O
C

U
R
E
P

N
R
E
H
T
U
O
S

N
O

I
T
A
R
O
P
R
O
C

R
E
P
P
O
C

U
R
E
P

N
R
E
H
T
U
O
S

Large flotation cells at Cuajone Concentrator

N
O

I
T
A
R
O
P
R
O
C

R
E
P
P
O
C

U
R
E
P

N
R
E
H
T
U
O
S

Five-year Production Statistics
Southern Peru Copper Corporation and Subsidiaries

Five-year Selected Financial and Statístical Data
Southern Peru Copper Corporation and Subsidiaries

Copper production

2004

2003

2002

2001

2000

Mines (copper content in thousands of pounds)
Toquepala
Cuajone
SX/EW
Total mines

Smelter (copper content in thousands of pounds)
SPCC concentrates
Purchased concentrates
Total smelter

Refineries (thousands of pounds of copper)
Ilo
SX/EW
Total refineries

Copper sales (thousands of pounds)
Refined
In blister
In concentrates
SX/EW
Rod
Total sales of copper

Molybdenum (thousands of pounds of concentrate content)
Mines
Toquepala
Cuajone
Total produced
Sales of molybdenum in concentrate

Silver (thousands of ounces)

Smelter (in blister)
Ilo SPCC concentrates

Refinery
Ilo

Sales of silver
Refined
In blister
In concentrates
Total sales of silver

354,618
428,553
92,869
876,040

707,071
-
707,701

618,790
92,869
711,659

498,535
65,442
63,294
79,832
157,292
864,395

13,237
10,267
23,504
23,503

4,523

3,823

3,820
414
364
4,598

313,878
406,814
105,283
825,975

687,727
6,552
694,279

626,126
105,283
731,409

625,266
61,863
35,586
104,371
-
827,086

9,156
10,731
19,887
19,953

4,270

3,599

3,615
365
212
4,192

276,513
370,834
116,524
763,871

632,910
64,836
697,746

620,974
116,524
737,498

621,197
68,619
-
115,826
-
805,642

9,292
9,049
18,341
18,178

3,710

3,661

3,645
389
-
4,034

270,619
363,951
119,993
754,563

636,845
86,801
723,646

611,254
119,993
731,247

612,138
84,302
-
120,688
-
817,128

9,035
9,377
18,412
18,511

3,829

3,452

3,498
453
-
3,951

232,886
394,548
123,602
751,036

606,965
45,267
652,232

583,658
123,602
707,260

582,724
57,775
17,083
123,258
-
780,840

8,243
7,638
15,881
16,043

4,188

3,343

3,454
411
220
3,975

10.

N
O

I
T
A
R
O
P
R
O
C

R
E
P
P
O
C

U
R
E
P

N
R
E
H
T
U
O
S

For the years ended December 31,
(in millions, except per share and employee data)

Consolidated statement of earnings

Net sales
Operating costs and expenses (1)
Operating income
Minority interest of investment shares in

income of Peruvian branch

Extraordinary loss

Net earnings

Per share amount

Net earnings - Basic and diluted
Dividends paid
Consolidated balance sheet

Total assets
Cash and marketable securities
Total debt
Stockholder’s equity

Consolidated statement of cash flows

Cash provided from operating activities
Dividend paid
Capital expenditures
Depreciation & depletion

Capital stock

Common shares outstanding
NYSE Price – high
Price – low

Class A common shares outstanding
Book value per share
P/E ratio

Financial ratios

Current assets to current liabilities
Debt as % of capitalization
Employees (at year end)

2004

2003

2002

2001

2000

$ 1,703
787
916

5
-
597

$
$

7.23
2.39

$ 2,597
591
289
1,712

717
191
172
78

14.1
$ 54.10
$ 26.53

65.9
$ 21.40
6.53

$
$

798
581
217

1
-
119

1.49
0.57

1,931
295
349
1,315

191
45
50
74

14.1
48.85
14.42

65.9
16.44
31.65

$
$

665
546
119

1
(9)
61

0.76
0.36

1,752
148
299
1,241

130
21
77
68

14.1
15.54
10.82

65.9
15.71
20.67

$
$

658
568
89

1
(2)
47

0.58
0.36

$ 1,823
213
396
1,209

$
$

151
29
117
76

14.1
15.10
8.42

65.9
15.12
26.07

711
561
150

2
-
93

$
$

1.16
0.34

$ 1,771
149
347
1,192

161
27
113
77

14.1
$ 16-7/16
$ 11.00

65.9
$ 14.90
12.84

2.2
14.4%

3,544

2.5
20.9%
3,566

3.1
19.3%
3,575

1.9
24.5%
3,726

3.3
22.4%
3,682

11.

N
O

I
T
A
R
O
P
R
O
C

R
E
P
P
O
C

U
R
E
P

N
R
E
H
T
U
O
S

Notes to Five-year Selected Financial and Statistical Data:
(1) Includes provision for worker’s participation of $78.8 million, $16.8 million, $8.9 million, $5.9 million and $12.1 million in the years ended December 31, 2004, 2003, 2002, 2001 and 2000.

12.

N
O

I
T
A
R
O
P
R
O
C

R
E
P
P
O
C

U
R
E
P

N
R
E
H
T
U
O
S

EXPANSION AND MODERNIZATION PROGRAM

a fixed crusher at the exit of the mine, 6.5 km of conveyors

ready on their way to the field. Earth movement works

On the other hand, it is being developed the Engineer-

to the plant, purchases for the power substation started

conclude in 2005 to define the method that will be used

In reference to the Expansion and Modernization

downstream to the south dumps and a system of stacking that

done in collaboration with Mine Operations concluded

ing for the Construction of the New PLS Dams Project,

during the third quarter of 2004 and the works for such

in tailings disposal in Toquepala and Cuajone in the next

Program announced in previous years, we continued their

will allow to place leachable ore in dumps of low height (no

after moving 1.4 million cubic meters to the large ditch

this project is complementary with the Leaching Dumps

power substation, at the end of 2004. It is estimated that

35 years.

implementation:

more than 30-50m). The ore size will be such that all of ith will

and work to prepare the platform for equipment assembly

Project, given that, throughout the increase of the new

the works will be completed by July 2006.

pass through the 9-inch mesh. The annual treatment capacity

started. Civil work for the crusher facility has accomplished

dumps, new collection dams are required because during

In 2004 we did the engineering studies and procure-

In Toquepala, engineering was concluded and the construction

will be 50.2 million metric tons of leachable ore.

88% progress. By year end, electromechanical assembly

the construction of the new dumps a moment will arrive

The Location Studies for Tailings Disposal continued with

ment for a new Copper Filter and ancillary equipment for

of the Leaching Dumps Project began. This project consists

started and should conclude by June 2005, to then start

where the deposited mineral would cover current PLS

evaluations to replace the conventional tailings treatment

operations. Civil work started in December and the new

in the replacement of the carriage of leachable ore through

As of December 2004, 70% of the Project had already

with commissioning and startup tests before building the

dams, located in the Quebrada Toquepala. This Project

systems using cyclones with others like state of the art

filter should start operating in the second quarter 2005.

truck by conveyor belts, which will require the installation of

been completed with the main pieces of equipment al-

ramp to start laying down the mineral for leaching.

also includes pumping stations and PLS conveyance pipes

flocculants and double cyclones. Studies and tests should

Progress so far has reached 51%.

13.

N
O

I
T
A
R
O
P
R
O
C

R
E
P
P
O
C

U
R
E
P

N
R
E
H
T
U
O
S

Mill Site sunset at Cuajone Concentrator

The Ilo Smelter Modernization Project. The new smelter

Towards the end of 2004, contractors were chosen for

community environment. Resources would be 27.1 million

southern area and is particularly involved in the sustain-

proving water use, and promoted planting of oat for

will use an Isasmelt furnace and two rotatory furnaces

the Ocean Water Intake and for Underground Services.

tons with an average of 0.89 Au grams per ton and 13.0

able development and wellbeing of the people of Tacna

cattle feed. In Tarata, construction of a nursery is under

to skim matte from slag in the fusion stage, the con-

Construction is expected to conclude in June 2006, with

Ag grams per ton. A drilling program of 2,500 m. has

and Moquegua, where it promotes and directly conducts

way to support fruit growing, and we are also providing

verter stage will be done in four Peirce Smith converters

commissioning and startup commencing one month

been planned for 2005. SPCC has a 44.245% share in the

social investment initiatives in the neighboring communi-

training for other local produce. In Locumba, Sama and

15 feet of diameter by 35 feet long, three of which will

later. The new Smelter should become operational in

Tantahuatay Proyect.

ties. These initiatives take place in jointly managed efforts

Ite valleys, works focused on irrigation infrastructure

be refurbished and one will be new; also, a new anode

November 2006 to allow us meeting our Environmental

with various public agencies and the people themselves.

and business management training. In Huaytire, a new

plant, a new acid plant and a new oxygen plant will be

Conformance and Management Program (PAMA) ahead

As part of the comprehensive exploration plans within

SPCC is also deeply committed to fulfill its social responsi-

study on pasture productivity will determine the conve-

installed, as well as other auxiliary facilities.

of the January 2007 deadline.

the Peruvian territory for 2005, a program of 15,000

bility principles. Its social responsibility philosophy directs

nience of introducing cultivated grasses. To determine

Processing capacity will be 1.2 million tons of concen-

EXPLORATION

exploration prospects, considering porphyry copper sys-

environment in its role as facilitator of socioeconomic de-

ated the extension and strength of pastures.

trated copper per year. Levels of SO2 collection will

During 2004, the Company completed the final phase of

tems and epithermal gold systems.

velopment. Southern Peru is a good corporate, social and

reach 95%, a level which exceeds the environmental

Los Chancas Project diamond drilling program with a total

environmentally responsible neighbor, an approach that

• Livestock: We continued to provide support to sheep

legislation in force. The final product of the new

of 10,400 meters. Second phase of metallurgical test was

We actually have in Peru direct control of 131,831.59

was fulfilled in its co-participatory projects.

breeding, sustainable vicuna breeding, enhanced cat-

smelter will be anodes instead of the blister currently

also completed during the year. Process for estimation of

hectares of mining properties.

tle livestock raising, and dairy processing. A cattle arti-

produced.

probable and proved mineral reserves has begun and pre-

In 2004, SPCC carried out the following main projects:

ficial insemination and stabling program was launched.

feasibility studies will soon start. Analysis at this point in-

In Chile, during 2004, the Company initiated explora-

In Torata, we started a veterinarian assistance plan. In

meters of diamond drilling will be executed in different

the Company’s community outreach to the geographical

the condition of pastures, an agristologic census evalu-

14.

N
O

I
T
A
R
O
P
R
O
C

R
E
P
P
O
C

U
R
E
P

N
R
E
H
T
U
O
S

In 2004, Fluor started developing the engineering

dicate resources amounting to 200 million tons with values

tion work on the acquired mining properties executing

• Water management. Phase V of the Chilligua Canal con-

Suches Huaytire we continued improving alpaca breed-

and procurement, and has reached 66% progress.

of 1.0% copper, 0.07% Mo, and 0.12 Au grams per ton.

diamond drilling programs in two prospects located in

cluded in Torata Valley in Moquegua. Small irrigation in-

ing. In Tacalaya, Candarave, we started alpaca breed-

Purchase orders were placed for the main pieces of

the III Region, which are being explored for copper-gold.

frastructure improvements were made in four valley areas.

ing and control of sarcocystosis in domestic camelids.

equipment taking the longest time for manufacturing.

We are exploring a porphyry copper system in the

We will continue our exploration program extending our

The Water Users Board in Torata received our logistic and

In Higuerani, Ilabaya, Tacna, we started a guinea pig

Also starting in the third quarter, Fluor will start the

south of Peru, which is in its evaluation stage. We have

work to the I Region.

technical support. In Candarave, Tacna, we built the Mari-

breeder’s pilot program. The communities engaged

Project’s construction management. Site preparation

completed a diamond drilling program of 21,792 meters

sol Water Divide to benefit the Cairani, Huanuara, Canda-

in these activities are provided ongoing technical as-

for the new plants has already started and is 70%

and plan to continue an additional program of 20,000

The Company owns 35,258 hectares of mining rights

rave and Quilahuani districts. In Higuerani we improved

sistance in health and animal husbandry. Arondaya,

complete. Demolition, reinforcement and foundation

meters in order to determine the existing resource.

within the I and III Regions in Chile.

the canals and installed advanced irrigation systems.

in Cuajone, started a program to support subsistence

work for the new anode plant is 35% complete. Work

animal husbandry to improve camelid, sheep and goat

at the anodes plant is expected to conclude in the third

No drilling program was executed in the Tantahuatay

COMMUNITY OUTREACH

• Agriculture: In Candarave we assisted potato and garlic

farming by providing veterinarian training to young lo-

quarter 2005.

Proyect. All efforts were oriented to social issues and

Southern Peru is a major economic engine in Peru’s

seed areas, continued enhancing alfalfa fields by im-

cal residents.

15.

N
O

I
T
A
R
O
P
R
O
C

R
E
P
P
O
C

U
R
E
P

N
R
E
H
T
U
O
S

State of the art GPS system
in use at drilling

• Marketing: In Candarave, we contributed to organiz-

study was completed in the Sama river in Yarascay,

molybdenum, and a significant hike in the price of copper

ing and providing the equipment for a meat marketing

in Tacna, to determine the feasibility of building a

and molybdenum.

association of farmers who receive training and tech-

reservoir.

nical assistance from SPCC technical experts. Man-

Price of copper during 2004 in the London Metal Ex-

agement so far has proven successful and the farm-

• Other activities: In Candarave and Torata we fostered

change (LME) and the New York Commodity Exchange

ers own a refrigerated truck and two fully equipped

the organization of agricultural fairs.

(COMEX) was of 130 and 129 cents per pound of copper

facilities, one in Toquepala and another in Cuajone. In

respectively, compared to 81 cents in 2003.

Torata, construction of a Stockpiling Center is under

The Social Responsibility program achieved highly

way. In Higuerani, a channel was created for directly

satisfactory results in 2004, thanks to our technicians

The recent surge in the price of molybdenum has had a

marketing guinea pigs from farms to the Toquepala

sharing the neighboring communities’ daily activities.

significant effect on the Company´s traditional calcula-

soup kitchens.

This allowed for leveraging their strengths, setting pri-

tion of cash cost and comparisons between periods. Ac-

ority needs, identifying and mitigating deficiencies, and

cordingly, the Company is presenting cash costs with and

• Basic infrastructure: Colocaya river in Ilabaya was

generally contributing to improved living standards. Our

without the inclusion of all revenues from byproducts.

canalized and levees built along its banks. Oconchay

company was therefore able to efficiently manage its

When calculating operating cash, SPCC excludes cost

in Ilabaya and Nuevo Camilaca in Candarave were

relations with the environment around it.

depreciation, amortization and depletion, exploration,

16.

N
O

I
T
A
R
O
P
R
O
C

R
E
P
P
O
C

U
R
E
P

N
R
E
H
T
U
O
S

breeding area, sleeping enclosures, breeding modules

RESULTS OF OPERATIONS FOR THE

recurring nature.

for mating and fenced fields will provide advanced

YEARS ENDED DECEMBER 31,

pasture management.

2004, 2003 AND 2002

• Capacity building: Torata started a pilot project for

diluted earnings of $7.46 per share, compared to net

capacity building in schools and production organi-

earnings of $119.2 million or diluted earnings of $1.49

zations.

per share in 2003, and $60.6 million or diluted earnings

SPCC reported 2004 net earnings of $596.8 million or

• Large projects: A pre-feasibility study of the water

flow in the Callazas river in Candarave will deter-

The improvement in the Company´ s results for 2004 is

mine a likely dam construction, while a sediments

due mainly to a production increase of mined copper and

of $0.76 per share in 2002.

Cathodes dispatch at the SWEW
Plant in Toquepala

“Net sales of Southern
Peru were $1,715.9 million in
2004, the highest sales in the past
five years.”

The Company´s operating cash cost, as defined, for the three years ended December 31, is as follows:

Cash cost per pound of copper produced (without

byproduct revenue)

2004

2003

2002

(in cents per pound)

4.5

68.3

39.9

58.1

45.6

57.8

Net Sales: Net sales in 2004 were $1,715.9 million, compared with $798.4 million in 2003 and $664.6 million in 2002.

Sales increased in 2004 by $917.5 million, a 114.9% increase over the previous year, mainly due to higher copper and

molybdenum sales and higher sales of the Company´ s byproduct metals, molybdenum and silver.

Prices: Sales prices for the Company´s metals are established principally by reference to prices quoted in the London Metal

Exchange (LME), the New York Commodity Exchange (COMEX) or published in Platt´s Metals Week, for dealer oxide aver-

age prices for molybdenum.

connected to the power grid. In the Huaytire alpaca

workers´ participation provisions and items of a non-

Cash cost per pound of copper produced

17.

N
O

I
T
A
R
O
P
R
O
C

R
E
P
P
O
C

U
R
E
P

N
R
E
H
T
U
O
S

“By the end of 2003, thirty-one
of PAMA proyects were already completed,
including all commitments related to the
Company’s operations in Cuajone and
Toquepala.”

Cathodes washing at the SWEW
Plant in Toquepala

Cathodes handling at the SWEW
Plant in Toquepala

Price/Volume data

Average Metal Prices

Copper (per pound – LME)

Copper (per pound – COMEX)

Molybdenum (per pound)

Silver (per ounce – COMEX)

Sales volume (in thousands)

Copper (pounds)

Molybdenum (pounds) (1)

Silver (ounces)

18.

N
O

I
T
A
R
O
P
R
O
C

R
E
P
P
O
C

U
R
E
P

N
R
E
H
T
U
O
S

(1) The Company’s molybdenum production is sold as concentrates.
Volume represents pounds of molybdenum contained in concentrates.

2004

2003

2002

1.30

1.29

16.21

6.68

0.81

5.32

4.89

0.71

0.72

3.77

4.60

DIVIDENDS AND CAPITAL STOCK

The Company paid dividends to stockholders of $191.4

million or $2.39 per share in 2004, compared to $45.4

million or $0.57 million per share in 2003, and $28.7

million (including $7.2 million used by the Company

to honor an overdue receivable) or $0.36 per share

in 2002.

864,395

23,503

4,597

827,086

19,953

4,192

Distributions to the investment shares minority interest

were $1.5 million, $0.4 million and $0.3 million in 2004,

805,642

2003 and 2002, respectively.

18,178

4,034

On January 31, 2005, a transaction dividend of $1.25

per common share, totaling $103.4 million, was declared

payable March 1, 2005.

The Company´ s dividend policy continues to be re-

erations (smelter and refinery) are audited three times a

established by the government, and (2) identify areas af-

viewed during the Board of Directors´ meetings, taking

year, and the operations at the Toquepala and Cuajone

fected by inactive operations which needed remediation.

into consideration the current intensive capital invest-

mines, twice a year at each mine. The Company has not

ment program, including the smelter modernization,

incurred in material breach of environmental laws and

By the end of 2003, 31 of such projects were already

and the expected future cash flow generated from

regulations.

operations.

completed, including all PAMA commitments related to

the Company’s operations in Cuajone and Toquepala.

ENVIRONMENTAL AFFAIRS

Environmental Compliance and Management Program

smelter operations. The primary areas of environmental

The Company’s activities are subject to Peruvian laws

(known by its Spanish acronym, PAMA) to the Peruvian

concern are: (1) Smelter reverberatory slag eroded from

and regulations. The Peruvian government, through its

government. A thorough third party environmental audit

the slag deposits up until 1994, and (2) Atmospheric

As part of these regulations, SPCC submitted in 1996 the

The three pending PAMA projects are related to the Ilo

Ministry of Energy and Mines (MEM), conducts seven

was conducted in order to elaborate the PAMA. The

Emissions from the Ilo smelter.

annual audits of SPCC’s mining and metallurgical opera-

PAMA covered all current operations that did not have an

tions. Through these environmental audits, all matters

approved environmental impact study at the time. SPCC’s

The slag remediation program is progressing as sched-

related to environmental commitments, compliance

PAMA was approved in January 1997 and contains 34

uled and should be completed by 2007. Once the pro-

with legal requirements, as well as atmospheric emis-

mitigation measures and projects necessary to: (1) adapt

gram is completed, no environmental risks are foreseen

sions and effluent monitoring are reviewed. The Ilo op-

the existing operations to the environmental standards

regarding this issue.

19.

N
O

I
T
A
R
O
P
R
O
C

R
E
P
P
O
C

U
R
E
P

N
R
E
H
T
U
O
S

Regarding the smelter emissions, the third phase

The Company has sufficient funds at hand to com-

The law was amended on May 28, 2004. The amended

of the Ilo smelter modernization has started and

mence the project, but significant additional funds will

law, as published, announced a requirement for exist-

is scheduled for completion by 2007. In July 2003,

be necessary for its completion. The Company has an

ing mining operations to present the MEM with a Mine

the Company awarded Fluor/Xstrata the contract to

approved Peruvian bond program of $750 million, of

Closure Plan, within one year, or before October 15,

provide the technology and basic engineering for the

which $199 million have been issued. There can be

2004. Since the regulations have not been approved,

The third phase of the Ilo
smelter modernization has started
and is scheduled to be completed
by 2007.

expansion and modernization of the Ilo smelter. The

no assurance that the entire Ilo smelter project can be

on October 15, 2004, SPCC submitted the MEM a no-

selected proposal meets SPCC’s requirements, i.e., us-

financed with Peruvian resources. The Company plans

tice stating that based on current legislation the Com-

ing proven technology (ISASMELT from Australia) and

to finance the portion of the cost that is not financed in

pany was unable to make a reasonable estimate of its

complying with the current environmental regulations.

Peru with funds from operations or by placing additional

closure obligation. It is expected that final regulations

It is estimated that the construction of the project

financing in the international market.

detailing requirements will be published by the second

sees significant environmental capital expenditures in

will be completed before January 2007, the deadline

quarter of 2005, and the Company will be required

2005. Approximately $171 million have been budgeted

established in the PAMA. This represents the largest

Two major remediation projects were identified in the

to submit its Mine Closure Plan thereafter. The law

for the smelter project in 2005.

capital investment project for SPCC. The cost of the

PAMA. One related to the old tailings conveyance and

requires companies to provide financial guarantees to

project was previously estimated to exceed $600 mil-

disposal sites, and the other, to the smelter reverberato-

insure that remediation programs are completed. The

lion. The new estimated cost to complete this project

ry slag mentioned above. Environmental commitments

Company anticipates that, when in force, this law will

is $320 million.

regarding the tailings remediation have been fulfilled,

increase its asset retirement obligations and require

and the slag program has an 88% completion, as re-

future expenditures and amortizations over the life of

Since 1995, and while this project is under construc-

ported by the government auditors. In the foreseeable

the mine to satisfy its requirements. The liability for

tion, SPCC is applying an emissions curtail program that

future, the only reclamation/remediation plans concur-

these asset retirement obligations cannot be presently

has allowed it to comply with the annual SO2 air qual-

rent with operations are the ones already included in

measured, or reasonably estimated, based on the pro-

ity standard (established by the MEM in 1996) in the

the PAMA.

densely populated areas whithin the city of Ilo, and has

posed generalities of this law. The Company is study-

ing the impact of the law on its results, but it cannot

been able to reduce breaches to the 24-hr air quality

On October 14, 2003, the Peruvian Congress published

reasonably estimate the effect until final regulations

standard for the year 2004 to four episodes. Once the

a new law announcing future closure and remediation

are published.

modernized smelter starts operating, no environmental

obligations for the mining industry. On March 14,

risks are foreseen regarding this issue.

2004, the Peruvian Ministry of Energy and Mines

Environmental capital expenditures for the period

(MEM) published proposed regulations for this law.

2000-2004 exceeded $81 million. The Company fore-

21.

N
O

I
T
A
R
O
P
R
O
C

R
E
P
P
O
C

U
R
E
P

N
R
E
H
T
U
O
S

20.

N
O

I
T
A
R
O
P
R
O
C

R
E
P
P
O
C

U
R
E
P

N
R
E
H
T
U
O
S

Skilled personnel working at the Maintenance
Workshops and mines

22.

N
O

I
T
A
R
O
P
R
O
C

R
E
P
P
O
C

U
R
E
P

N
R
E
H
T
U
O
S

Ball mills at Cuajone Concentrator

GENERAL INFORMATION,
DESCRIPTION OF OPERATIONS AND
DEVELOPMENT

INFORMATION RELATED TO INCORPORATION

the Toquepala mine since 1960 and the Cuajone mine

AND INSCRIPTION IN THE PUBLIC REGISTRY

since 1976, both in southern Peru’s Andes highlands,

SPCC is a business entity incorporated according to the

approximately 612 miles southeast of Lima, in the de-

laws of the State of Delaware, United States of America.

partments of Tacna and Moquegua, respectively. It also

It operates in Peru through a branch, established under

operates a smelter and refinery located west of the mines

public instrument certified by Public Notary from Lima,

on the Pacific Ocean coast, close to the city of Ilo, depart-

Dr. Ricardo Fernandini Arana, on the 6th of November,

ment of Moquegua.

1954. By public instrument dated April 6, 1998, certified

by Public Notary from Lima, Dr. Carlos A. Sotomayor

SPCC, one of Peru’s leading companies, is among the

Bernós, the Company complied with the provisions

10 largest private-sector copper mining firms in the

of Law Nº 26887, the General Corporation Law, and

world.

was recorded under Electronic Record Nº 3025091 for

Business Entities, Registration Office in Lima and Callao

SPCC, indirectly, is part of Grupo México, S.A. de C.V.,

(previously, Entry N° 384 of Record N° 2447, Mining

owner of 100% of Americas Mining Corporation (AMC).

Individuals and Corporations Registry, Public Mining

AMC in turn owns 100% of Southern Peru Holdings II In-

Registry).

corporated, which holds 54.2% of Southern Peru Copper

Corporation’s shares. The purpose of Grupo México S.A.

See also “Brief historical review of the Company’s incor-

de C.V.’s companies comprises mining and rail transpor-

poration”.

tation activities.

Brief description: Southern Peru Copper Corporation

The Group related to SPCC operations includes the fol-

(SPCC) is an integrated copper producer. It has operated

lowing subsidiaries:

23.

N
O

I
T
A
R
O
P
R
O
C

R
E
P
P
O
C

U
R
E
P

N
R
E
H
T
U
O
S

Name of Company % (*)

Grupo México, S.A. de C. V.

RAILROAD ACTIVITIES:

Infraestructura y Transportes México, S.A. de C.V.

Grupo Ferroviario Mexicano

MINING ACTIVITIES:

Grupo Minera México Internacional, S.A. de C.V.

Americas Mining Corporation (AMC)

Minera México, S. A. de C. V.

Industrial Minera México, S.A. de C. V.

Mexicana de Cobre, S.A. de C. V.

Mexicana de Cananea, S.A. de C. V.

ASARCO, Incorporated

SPHC II, Incorporated

SOUTHERN PERU COPPER CORPORATION (SPCC)

Southern Peru Limited

Logistics Services Incorporated (LSI)

Global Natural Resources, Inc.

Multimines Corporation

Multimines Insurance Company, Ltd.

SOUTHERN PERU COPPER CORPORATION, SUCURSAL DEL PERU

Compañía Minera Los Tolmos S.A.

Southern Peru Copper Corporation, Agencia Chile

Location Inscription in the RPMV

México

99.99

74.00

99.99

100.00

99.14

98.12

94.59

98.49

100.00

54.20

100.00

82.40

100.00

Mexico

USA

Mexico

USA

Bermuda

Peru

Chile

24.

N
O

I
T
A
R
O
P
R
O
C

R
E
P
P
O
C

U
R
E
P

N
R
E
H
T
U
O
S

NOTES:
1.- Common Shares
2.- Labor Shares

CORPORATE CAPITAL AND COMMON STOCK

Corporate Capital and Common Stock

The authorized number of shares are:

Issued an Paid-in Capital:

Class A Common shares

Common Shares outstanding

Nominal Value of Common Shares

100,000,000

65,900,833

14,116,952

US$ 0.01

Total number and percentage of shares

Interest

Southern Peru Holdings Corporation (*)

Cerro Trading Company, Inc.. (*)

Phelps Dodge Overseas Capital Corporation (*)

Common Shares

Total

43,348,949

11,378,088

11,173,796

14,116,952

80,017,785

63.1%

16.6%

16.3%

4.0%

100.0%

(*) Class A common shares are entitled to five votes per share. Common shares are entitled to one vote per share.

Based on Report N° 547-2002-EM/DGM/DPDM,

dated November 6th, 2002, the “Director General de

Minería” authorized the expansion of the Toquepala

Concentrator to a capacity of 60,000 MT/Day.

2. Botiflaca Concentrator in Cuajone: Authorized by

Directorial Resolution No. 150-81-EM/DCM, dated

August 14, 1981, which approved the operation of

the Cuajone Concentrator. The resolution granted 56

hectares of surface land.

Based on Report No. 266-99-EM/DGM/DPDM, dat-

ed July 20, 1999, the “Director General de Minería”

authorized the expansion of the Cuajone Concentra-

tor to a 87,000-Metric Ton/Day throughput.

3. Toquepala Leaching Plant (SX/EW): Authorized by

Directorial Resolution No. 166-96-EM/DGM, dated

AUTHORIZATIONS OBTAINED FOR THE

ares of surface land and authorized a throughput of

May 7, 1996, which approved the operation of the

DEVELOPMENT OF BUSINESS

39,000 Metric Tons/Day.

Toquepala SX/EW plant. The resolution granted 60

hectares of surface land and authorized a throughput

1. Toquepala Concentrator: Authorized by Directorial

Based on Report No. 413-97-EM/DGM/DPDM dated

of 11,850 Tons/Day.

Resolution No. 455-91-EM/DGM/DCM, dated July

July 7, 1997, the “Director General de Minería” au-

5, 1991, which approved the operation of the Toque-

thorized the expansion of the Toquepala Concentra-

Based on Report No. 663-98-EM/DGM/DPDM,

pala Concentrator. The resolution granted 240 hect-

tor to a 43,000-Metric Ton/Day throughput.

dated November 10, 1998, the “Director General de

25.

N
O

I
T
A
R
O
P
R
O
C

R
E
P
P
O
C

U
R
E
P

N
R
E
H
T
U
O
S

Minería” authorized the expansion of the Toquepala

Based on Report No. 506-98-EM/DGM/DPDM,

separating sand and other materials from the co-

of Delaware, United States of America, under the name

Nº 3025091 for business entities, Registry Office of Lima

which are accounted for as expenses paid in advance. By

SX/EW Plant to a 18,737-Metric Ton/Day throughput.

dated September 2, 1998, the “Director General de

quina using sea water washing screens.

of Southern Peru Copper Corporation (SPCC). In 1954,

and Callao (formerly, Entry N° 384 under Record N°

virtue of this rebate, SPCC is entitled to credit the any IGV

Minería” authorized the expansion of the Ilo Cop-

SPCC established a branch in Peru to carry out mining

2447, Mining Individuals and Business Entities of the

amount against its Peruvian tax obligations or to receive

4. Cuajone Leaching Plant (LX/EW): Authorized by Direc-

per Refinery to a capacity of 658 Metric Tons/Day

DESCRIPTION OF OPERATIONS AND

activities in this country.

Public Mining Registry).

a rebate.

torial Resolution No.155-96-EM/DGM, dated May 6,

throughput of blister copper.

DEVELOPMENT REGARDING THE

1996, which approved the operation of the Cuajone

ISSUING ENTITY

On September 7, 1995, Southern Peru Copper Holding

INFORMATION ABOUT PLANS AND

GENERIC DESCRIPTION OF MAIN ASSETS

leaching plant. The resolution granted 400 hect-

Based on Report N° 080-2002-EM-DGM/DPDM,

Company was incorporated, also in accordance with the

INVESTMENT POLICIES

ares of surface land and authorized a throughput

dated March 13th, 2002, the “Director General de

PURPOSE

laws of the State of Delaware, with the purpose of acting

See “Expansion and Modernization Program” on page 12.

TOQUEPALA

of 2,100 Tons/Day.

Minería” authorized the expansion of the Ilo Cop-

The purpose of Southern Peru Copper Corporation (SPCC)

as a holding company of 100% of Southern Peru Copper

1. The Toquepala Production Unit comprises three

per Refinery to a capacity of 800 MT/Day.

is to engage in activities allowed by the laws of the State

Corporation’s shares (SPCC). By the end of 1995, SPCC

SPECIAL RELATIONSHIPS BETWEEN

ISSUER

Economic Administrative Units: TOQUEPALA 1

5. Ilo Smelter: Authorized (definitely) by Directorial

of Delaware. Its main activity is to extract, mill, concen-

changed its name to Southern Peru Limited, and South-

AND THE STATE

comprising 30 mining claims over a 7988 hectare

Resolution No. 0078-69-EM/DGM, dated August

7. Sulfuric Acid Plant: Authorized by Directorial

trate, smelt, treat, prepare for market, manufacture, sell,

ern Peru Copper Holding Company changed its name to

On November 20th, 1996, SPCC and the Peruvian gov-

surface. SIMARRONA, including 14 mining claims

21, 1969, which approved the operation of the Ilo

Resolution No. 024-96 -EM/DGM, dated January

exchange and, in general, to produce and negotiate the

Southern Peru Copper Corporation.

ernment (Ministry of Energy and Mines) signed a contract

over 7800 hectares, and TOTORAL, with 18

Smelter. The resolution authorized a production of

19, 1996, the “Director General de Minería” au-

sale of copper, gold, silver, lead, zinc, iron and any other

that will remain effective until the year 2010 and which

mining claims distributed over 7320 hectares. In

400 Short Tons/Day of blister copper.

thorized the operation of the sulfuric acid plant at

class of minerals and materials or other materials, effects

Both companies agreed, effective December 31, 1998,

guarantees tax stability and the availability of foreign

addition, the Toquepala Production Unit owns 35

Based on Report No. 204-2000-EM-DGM-DPDM,

on Report No. 313-98-EM/DGM/DPDM, dated

explore, exploit, sample, examine, investigate, recognize,

with Southern Peru Limited, the former absorbing the

the operation of the SX/EW plant at Toquepala and the

above Economic Administrative Units. Overall, the

dated June 20, 2000, the “Director General de Min-

May 18, 1998, the “Director General de Minería”

locate, appraise, buy, sell, exchange, etc., mining conces-

latter and with SPCC assuming all assets and liabilities,

Solvent Extraction (SX) operation in Cuajone. Also, on

Toquepala Production Unit holds 97 mining claims

a production rate of 472 Metric Tons/Day. Based

and goods of any nature or description; as well as to

to the merger of Southern Peru Copper Corporation

currency to exchange the Branch’s earnings related to

mining claims over 23,244 hectares outside the

ería” authorized the expansion of the Ilo Smelter

authorized the expansion of the Ilo Sulfuric Acid

sions and mining deposits. SPCC belongs to the CIUU

including the branch in Peru. This merger did not imply

April 18th, 1995, SPCC and the Peruvian Government

over 46,353 hectares.

to a 3,100-Metric Ton/Day throughput of copper

Plant to a capacity of 300,000 Metric Tons/Year

1320 group.

any modification to the participation percentages in

(CONITE) signed a contract that guarantees the avail-

concentrates.

production.

the equity stock or the Patrimony Participation Account

ability of foreign currency, free remittance of dividends

2. “Toquepala Concentrator” Beneficiation Plant, with

6. Ilo Refinery: Authorized by Report No. 056-94-EM/

8. “Coquina Wash Plant and Sea shell Concentrates,”

of the Ilo Smelter.

DGM/DRDM, dated May 27, 1994, the “Director

authorized to operate by Directorial Resolution Nº

BRIEF HISTORICAL REVIEW THE COMPANY’S

Mining activities in Peru are carried out under the name

1 Primary Crusher, 2 Secondary Crushers, 4 Tertiary

Crushers, 8 Bar Mills, 24 Ball Mills, 8 Ball Mills for

General de Minería” authorized the operation of

110-93-EM/DGM dated August 3, 1993. The plant

INCORPORATION

of Southern Peru Copper Corporation, abbreviated as

SPCC’s tax credit revenues in Peru derive from the general

Re-crushing, 1 control milling system, sections 3

the Ilo Copper Refinery at a 190,000 Metric Ton/

processes 2068 MT/day of raw material (coquina)

The Company was incorporated on December 12, 1952,

Southern Peru or the initials SPCC, through its branch

sales tax (IGV) paid on the acquisition of capital goods

and 4, as well as 4 OK-100 Flotation Cells, 3 OK-50

Day throughput of blister copper.

recovered from nearby mines. Seashell is produced

fifty-two years ago, according to the Laws of the State

in Peru. The branch is registered under Electronic Record

and other goods and services used in its operations,

Flotation Cells, 13 Column Cells and 4 130m3 Flota-

The term of duration of the Company is indefinite.

(investment stock), which remained unchanged.

abroad, among other guarantees related to the acid plant

Milling capacity of 60,000 tons per day, consists of

27.

N
O

I
T
A
R
O
P
R
O
C

R
E
P
P
O
C

U
R
E
P

N
R
E
H
T
U
O
S

26.

N
O

I
T
A
R
O
P
R
O
C

R
E
P
P
O
C

U
R
E
P

N
R
E
H
T
U
O
S

tion Cells , 24 Flotation Cells WEMCO with a capacity

new tailing distributor tank which replaced the

each, and 4 Wabco trucks with a capacity of 109

send the solution to the SX/EW Plant. The plant has 3

13. Oxygen Plant with a production capacity of 100,000

of 42.5m3, 1 Track tractor CAT D10-R, 2 Komatsu

existing tank; enlargement of the pumping house,

tons each.

lines of SX, each with a nominal capacity of 1,068 m3

tons per year (average 272 x day).

wheel tractors and a recycled water pipe line.

1 pump of recover water, 1 transformer of 33/40

/ h of pregnant solution and 162 electrowinning cells

MVA, 138/38 Kv., DCS system.

9. 2 4100A Shovels with a capacity of 66 tons, 1

arranged in two lines: one with 122 cell and the other

14. “Coquina” Plant with a seashell production capacity

3. 22 trucks with a capacity of 218 tons each. 11 trucks

with a capacity of 181 tons each. 12 trucks with a

CUAJONE

2800XPB Shovel with a capacity of 49 tons, 1

2100BL Shovel with a capacity of 21 tons, 1 Le

capacity of 109 tons each.

6. The Cuajone Production Unit comprises two Eco-

Tourneau 1800 front-end loader with a capacity of

with 40.

ILO

of 200,000 tons per year.

15. Burnt Lime Plant with a capacity of 80,000 tons per

nomic Administrative Units: CUAJONE 1, comprising

38 tons, 2 120A electric drills, 1 100XP electric drill,

10. “Ilo Smelter” with a smelting capacity of 1,120,000

year, 1 Dust extraction system, 1 16v industrial en-

4. 2 4100A shovels with a capacity of 66 tons (43 m3),

23 mining claims over 7390 hectares; and CO-

4 front-end loaders 966 of 3.8 m3 capacity, 3 front-

tons of concentrate per year. It has 2 reverberatory

gine with DDEC.

4 2100BL shovels with a capacity of 21 tons (11.4

COTEA, with 15 mining claims over 7711 hectares.

end loaders 950 of 3.1 m3 capacity, 3 front-end

furnaces, 7 Peirce-Smith converters, 1 “El Teniente”

m3), 1 495BI shovel with a capacity of 66 tons (43

Additionally the Cuajone Production Unit has claims

loaders 988 of 6.1 m3 capacity, and 1 wheel tractor

Modified Converter and 2 casting wheels.

OTHERS

m3), 1 56 yd3 dipper, 1 120A electric drill, 2 100XP

for mining 20,093 hectares outside the above two

Komatsu.

electric drills, 1 49RIII rotary drill. 1 front-end loader

Economic Administrative Units. Overall, the Cuajone

992d, 1 Komatsu wheel tractor.

Production Unit comprises 70 mining claims over a

OTHER

11. “Ilo Refinery” – Anode Plant: 2 Basculant Maerz Ov-

tween Toquepala, Cuajone and Ilo, with 30 locomotives,

ens, each with a 400-MT capacity, 1 casting wheel

256 dump cars, 92 flat cars, 254 boxcars, 8 closed boxcars,

Industrial railroad to haul concentrates and supplies be-

total 35,194-hectare surface.

One SX/EW plant in Toquepala and one SX plant in

(70 MT / hour) – Electrolitic Plant with a 280,000

11 closed hopper-type cars, 34 open hopper-type cars, 31

5. Additionally, new equipment for the concentrator

Cuajone. The SX Cuajone plant has 1 primary jaw crusher

MT / year capacity (Catodes), 926 commercial cells

various tank wagons, 23 sulfuric acid tanks, 5 patrol cars,

had been incorporated with the expansion and

7. “Cuajone Concentrator” Beneficiation Plant with

and 1 secondary cone crusher with a capacity of 4,300

and 52 starting cells. – Precious Metals Plant with 1

17 dump cars, 1 front-end loader CAT 966G, used for

modernization: 1 secondary crusher, 2 tertiary

Milling capacity of 87,000 tons per day, consisting

tons per day to process Cuajone’s oxides. In addition, 1

Wenmec Selenium Reactor, 2 cupel furnace, 22 silver

maintenance components and equipment transportation,

crushers, enlargement of the ore milled deposit, 1

of 1 primary crusher, 3 secondary crushers, 7 tertiary

agglomeration mill, 1 front-end loader, and 3 109-ton

refining cells and 1 hydrometallurgical system for

a new mobile system of classification and shell loading, 1

tripper car, 1 ball mill 6.4 x 10.2 m, 2 cells of 130

crushers, 10 ball mills, 4 ball mills for re-crushing, 1

trucks for agglomerated ore hauling to the leach dumps.

gold recovery.

m3 y 4 of 60 m3 for flotation rougher, 4 pre-classi-

vertical mill, as well as 30 OK-100 flotation cells, 6

Copper in solution produced in Cuajone is sent to To-

track tractor D9R for handling slag, 1 console DCS for the

acid plant and reverberator furnace, 1 power factor trans-

fier cyclones, 1 cell of cleaning, 1 cell scavenger of

column cells, 28 Wemco flotation cells, 48 Denver

quepala through an 8” pipe laid alongside the Cuajone

12. Sulfuric Acid Plant with production capacity of

former equipment, oil heater, COEN, and 1 dragshovel for

60 m3, 1 line of 24 cells for cleaning and re-clean-

flotation cells, 1 truck Volvo FM12, and recycled wa-

- Toquepala railroad track.

300,000 tons per year (average 1,000 x day).

smelter, 1 south bar casting system.

ing, 6 cells of 2.8 m3 changing the existing line of

ter pipelines.

14 cells to 2 lines of 10 cells each one for molybde-

The Toquepala lant has 2 spray systems: 1 for the south

num plant, 1 pressure filter for copper concentrate,

8. 18 Dresser 830E trucks with a capacity of 218 tons

dump and 1 for the northwest dump, and 4 pregnant

1 thickener high-rate of 43 meters of diameter, 1

each, 8 Cat 793C trucks with a capacity of 218 tons

solution ponds, each with its own pumping system to

28.

N
O

I
T
A
R
O
P
R
O
C

R
E
P
P
O
C

U
R
E
P

N
R
E
H
T
U
O
S

29.

N
O

I
T
A
R
O
P
R
O
C

R
E
P
P
O
C

U
R
E
P

N
R
E
H
T
U
O
S

EMPLOYEES

As of December 31st

Staff

Employees

Workers

Total

COMMON SHARES OUTSTANDING

Participation

Less than 1%

Between 1% - 5%

Between 5% - 10%

More than 10%

Total

INVESTMENT SHARES OR LABOR SHARES

Participation

Less than 1%

Between 1% - 5%

Between 5% - 10%

More than 10%

Total

2004

723

1,081

1,740

3,544

2,738

2,741

2,490

2,492

30.

N
O

I
T
A
R
O
P
R
O
C

R
E
P
P
O
C

U
R
E
P

N
R
E
H
T
U
O
S

2003

726

1,089

1,751

3,566

2002

724

1,075

1,776

3,575

2001

765

1,116

1,845

3,726

2000

744

1,047

1,891

3,682

Percent of Shares

4.1%

0.0%

95.9%

100.0%

Percent of Shares

4.1%

0.0%

95.9%

100.0%

Principles of Corporate Governance

GENERAL MANAGEMENT RESOLUTIONS

096-2003-EF/94.11

I. SECTION ONE

PRINCIPLE

1. Agendas should not include general points. The

issues to be discussed must be specified, and

each topic will be discussed independently for

easier analysis and to prevent addressing jointly

issues about which there may be various view -

points.

(Principle I.C.1, second paragraph)

2. The place for holding the General Meetings will be

determined in advance for easier shareholder atten-

dance.

(Principle I.C.1, third paragraph)

COMPLIANCE

REASONS FOR THE CHOSEN OPTION

The Board’s and Shareholders’ agendas will list and

identify in detail the issues for debate. The agenda is

sent in advance to each shareholder or Board member

including background or supporting information. Each

topic is reviewed and addressed independently.

The Corporation will make it as easy as possible for

shareholders to attend the General Meetings called for

in advance.

A letter sent to all shareholders will request voting

at the General Meetings. The meeting will take place

at the location where most of the issued shares are

represented.

31.

N
O

I
T
A
R
O
P
R
O
C

R
E
P
P
O
C

U
R
E
P

N
R
E
H
T
U
O
S

PRINCIPLE

3. Shareholders will be able to include within rea-

sonable limits issues for debate in the General

Meetings.

Issues so introduced will address corporate con-

cerns and fall within the Meeting’s legal and

statutory jurisdiction. The Board will not reject

these requests without providing the shareholder a

reasonable cause.

(Principle I.C.2)

4. Bylaws should not limit shareholders entitled to

participate in the General Meeting from being repre-

sented by a person designated by them.

(Principle I.C.4.i).

5. Companies issuing investment grade or other non

voting shares should give their stockholders the op-

tion to exchange them for ordinary voting shares or

to offer this option at the time of issuance.

(Principle II.A.1, third paragraph)

32.

N
O

I
T
A
R
O
P
R
O
C

R
E
P
P
O
C

U
R
E
P

N
R
E
H
T
U
O
S

COMPLIANCE

REASONS FOR THE CHOSEN OPTION

PRINCIPLE

COMPLIANCE

REASONS FOR THE CHOSEN OPTION

The Company will announces its General Meetings with

due anticipation so shareholders can introduce new issues

for debate in the agenda. Procedures will be enforced to

ensure the issues for debate relate to corporate concerns

and fall within the company’s legal and statutory jurisdic-

tion. Company bylaws determine the mechanisms giving

each shareholder the option to propose candidates to a

Board position.

Corporate bylaws do not limit participation, representa-

tion or voting rights.

At the end of 1995, the company exchanged investment

grade stock for ordinary shares. At present, investment

grade shares owned by third parties account for 0.7% of

SPCC’s total equity.

6. The number of elected board members should al-

low providing an independent judgment on issues

involving a conflict of interest. Shareholders without

control may also be called to participate in these

debates.

Independent Board members are chosen for their

professional reputation and are not related to the

company’s management or its main shareholders.

(Principle II.B)

The term “relationship” is defined in the Regula-

tions on Indirect Ownership, Relations and Economic

Group approved by CONASEV Resolution

722-97-EF/94.10 and its subsequent general rules.

Main shareholders are individuals or corporations

who own five percent (5%) or more of the issuing

company’s capital stock.

The Board will sit three independent members who will

crucially take part in the decisions involving conflict of

interests.

SPCC’s independent board members are renowned inter-

national professional executives, unrelated to the major-

ity stockholder.

Independent Board members comply with the regulations

approved by the Securities and Exchange Commission

(SEC) similar to CONASEV’s to qualify as independent

directors.

33.

N
O

I
T
A
R
O
P
R
O
C

R
E
P
P
O
C

U
R
E
P

N
R
E
H
T
U
O
S

COMPLIANCE

PRINCIPLE

7. Although

independent audits provide financial

opinion, they may also provide specialized reports or

opinion on accounting inspections, operative audits,

systems audits, project evaluations, cost system

assessments or introductions, tax audits, portfolio

assessment, valuations

for asset adjustments,

portfolio evaluations, inventories and other special

services.

Different auditors should perform these assessments

or, if performed by the same auditors, their indepen-

dence of opinion should not be affected. The com-

pany will disclose all the audits and special reports

prepared by the auditor.

All services provided by the auditing firm or indepen-

dent auditor will be disclosed, with specific mention

of their percentage in the total services provided and

the latter’s share in the auditing company’s or inde-

pendent auditor’s revenues.

(Principle IV.C, second, third and fourth paragraphs)

34.

N
O

I
T
A
R
O
P
R
O
C

R
E
P
P
O
C

U
R
E
P

N
R
E
H
T
U
O
S

REASONS FOR THE CHOSEN OPTION

PRINCIPLE

COMPLIANCE

REASONS FOR THE CHOSEN OPTION

All accounting or financial studies and audits must be ap-

proved by SPCC’s Audit Committee who evaluate in detail

the involved costs and subject matter. The corporation

will favor retaining independent third party auditors bear-

ing no relation to the Company for performing financial

audits as an indirect control practice and in compliance

with the United States Sabarnes-Oxley Act.

Operational, computer system, tax, project feasibility,

process evaluation or introduction, asset valuation and

other audits have been performed in recent years.

8. Requests for information filed by individual share-

holders, investors in general, and stakeholders in

relation to the company will be filed with the office

and/or company official specially designated for that

purpose.

(Principle IV.D.2)

Our Company honors these requests through the Con-

trol and Finance Directorate officials who are in charge

of relationships with shareholders, investors and other

groups.

9. Doubts concerning the confidential nature of the in-

The Company has in place an internal procedure to de-

formation requested by shareholders or stakeholders

will be properly addressed. The corresponding crite-

ria will be adopted by the Board and confirmed by

the General Meeting, and included in the company’s

bylaws or internal regulations. However, disclosure

of information will not jeopardize the company’s

competitive standing nor affect the normal conduct

of the company’s business.

(Principle IV.D.3)

termine confidentiality levels for corporate information.

This procedure implies a certain degree of sensitivity to

the Company’s information. A review of each particular

case determines the likely impact on SPCC’s competitive

position.

In view that SPCC is a corporation organized under the

regulations of the State of Delaware, United States of

America, its bylaws are not required to include this prin-

ciple, which is instead regulated by management.

10. The company will hire an internal auditor. The inter-

The Company has in place an Independent Audit area

nal auditor will discharge his functions with profes-

sional independence from the company retaining its

services, and guided by the principles of diligence,

loyalty and reserve that the company requires from

that operates independently from other functional areas

in our corporation. It direclty reports to the Executive

President, and the Company’s Audit Committee.

35.

N
O

I
T
A
R
O
P
R
O
C

R
E
P
P
O
C

U
R
E
P

N
R
E
H
T
U
O
S

PRINCIPLE

COMPLIANCE

REASONS FOR THE CHOSEN OPTION

PRINCIPLE

COMPLIANCE

REASONS FOR THE CHOSEN OPTION

its Board and Management.

(Principle IV.F, first paragraph)

The Company has prepared a Code of Conduct and Eth-

ics and Internal SPCC Conduct Regulations dealing with

Major Events, Reserved Information and other Communi-

cations. These regulations were approved by the Board of

Directors and apply also to our Internal Audit Manage-

ment Office.

13. The Board will perform certain key functions,

namely:

Evaluate senior management’s and Board mem-

bers’ compensation, and ensuring the procedure

for appointing Board members will be both formal

and transparent.

(Principle V.D.3)

The number of Board members and their appointment

are clearly set forth in the Company’s bylaws. A formal

procedure is in place to appoint and decide the Board’s

allowance. To this end, the Board has created the

Appointments/Corporate Governance Committee.

11. The Board will perform certain key functions,

The Board approves the corporation’s development

namely:

Evaluating, approving and guiding the corporation’s

strategy; determining the company’s main action

plans, risk follow-up, monitoring and management

policies; design its annual budgets and business

plans, and monitor their implementation; oversee the

company’s main expenses, investments, acquisitions

and sales.

(Principle V.D.1)

36.

N
O

I
T
A
R
O
P
R
O
C

R
E
P
P
O
C

U
R
E
P

N
R
E
H
T
U
O
S

strategy, objectives, annual goals and action plans. Every

quarter the Board reviews the Company’s progress in

meeting its objectives, although Management performs

this function on a daily and monthly basis. Every year, the

Board approves the expenditures budget and operation

expenses, and the capital investments for operations and

projects alike.

14. The Board will perform certain key functions,

The Company’s Code of Conduct and Ethics establishes

namely:

Monitor and follow up likely conflicts of interest be-

tween management, Board members and sharehold-

ers, including fraud in using corporate assets and

abuse in transactions amongst stakeholders.

(Principle V.D.4)

the guidelines to address conflicts of interest.

In addition, likely conflicts of interest or transactions

amongst stakeholders are reported by Management

to the Board’s Audit Committee, which in turn will

evaluate and monitor them, and report to the Board on

37.

12. The Board will perform certain key functions,

The Chairman of the Board, in coordination with Man-

namely:

Screening, monitoring and, if needed, replacing se-

nior management and fix their remuneration.

(Principle V.D.2)

agement or the Compensations Committee, will establish

15. The Board will perform certain key functions,

The Board meets this requirement fully through its de-

the remuneration of senior management and evaluate

their performance. If appropriate, it will take the mea-

sures aimed at replacing them with professionals with the

competencies needed to manage the Corporation.

namely:

To ensure the Company’s accounting system and

financial statements are independently audited, and

that the appropriate control systems–in particular

tailed monitoring of the status and appropriateness of

the Company’s accounting systems and Financial State-

ments.

these eventual conflicts. The Committee has in place a

procedure for filing complaints open to any shareholder,

worker or stakeholder group wishing to use it.

N
O

I
T
A
R
O
P
R
O
C

R
E
P
P
O
C

U
R
E
P

N
R
E
H
T
U
O
S

PRINCIPLE

COMPLIANCE

REASONS FOR THE CHOSEN OPTION

PRINCIPLE

COMPLIANCE

REASONS FOR THE CHOSEN OPTION

The Board members sitting in the Audit Committee pe-

18. The Board may create special bodies to fit the

its financial and non-financial management sys-

tems–are in place and conform to the law.

(Principle V.D.5)

riodically advise on the appointment of the independent

auditors and constantly assess the risks to which our

Company may be exposed. Management is in charge of

establishing an internal control system. SPCC’s General

Shareholders’ Meeting annually approves or rejects the

appointed Independent Auditors.

company’s needs and size, in particular as concerns

the audit function. Additionally, these special bodies

may concern themselves with functions relating to

appointments, remunerations, control and planning,

among others.

These special bodies will be organized within the

Board to support its role, and will preferably include

independent directors who may thus make impartial

decisions about matters where conflicts of interest

may emerge.

(Principle V.E.1)

16. The Board will perform certain key functions,

In the past, the Board has occasionally introduced or sug-

namely:

Monitor the soundness of the company’s governance

practices and introducing the required changes.

(Principle V.D.6)

gested the General Meeting to approve changes to the

Company’s governance bodies. All these changes have

contributed to enhancing good practices and transpar-

ency in corporate governance at SPCC.

17. The Board will perform certain key functions,

The Chief Executive Officer and the Board have approved

namely:

Monitoring the company’s information policy.

(Principle V.D.7)

the Company’s information policy. It seeks to provide

shareholders, workers and stakeholders complete infor-

mation about SPCC’s operations and its economic re-

sults. This policy is available at www.southernperu.com

38.

N
O

I
T
A
R
O
P
R
O
C

R
E
P
P
O
C

U
R
E
P

N
R
E
H
T
U
O
S

The Board has set up several committees that perform

special functions. They include the Audit Committee, sit-

ting independent Board members who are responsible for

appointments, establishing remuneration of the indepen-

dent auditors, and control and planning.

Specialized committees mostly sit independent Board

members and discharge their roles particularly in situa-

tions involving potential conflicts of interest.

These special Committees include: (i) Executive Commit-

tee, (ii) Audit Committee, (iii) Compensation Committee,

(iv) Share Incentive Plan Committee, (v) Appointment

Committee, (vi) Corporate Governance Committee, (vii)

Special Committee for Divested Board Members and (viii)

Trust Committee for the ERISA United States Plan.

39.

N
O

I
T
A
R
O
P
R
O
C

R
E
P
P
O
C

U
R
E
P

N
R
E
H
T
U
O
S

19. The number of Board members of a company should

The Board sits professionals from various fields with vast

ensure a diversity of viewpoints so decisions are the

result of appropriate debate, with due consideration

paid to the best interest of both the corporation and

its shareholders.

(Principle V.E.3)

knowledge of the mining, metallurgical and commercial

fields. This setup provides a diversity of viewpoints and

opinions when making corporate decisions. Independent

Board members contribute to these decisions.

PRINCIPLE

20. Information referred to issues for debate at each

meeting will be made available to Board members

sufficiently in advance to allow their review, unless it

concerns strategic matters requiring confidentiality. In

this latter case, it will be necessary to put in place the

mechanisms Board members need to properly evalu-

ate the issues at hand.

(Principle V.F, second paragraph)

21. The Board will follow clearly defined policies when

retaining specialized advice services needed by the

company to ensure appropriate decision-making.

(Principle V.F, third paragraph)

22. New Board members will be informed of their pow-

ers and responsibilities, and about the company’s

structure of organization and characteristics.

(Principle V.H.1)

40.

N
O

I
T
A
R
O
P
R
O
C

R
E
P
P
O
C

U
R
E
P

N
R
E
H
T
U
O
S

COMPLIANCE

REASONS FOR THE CHOSEN OPTION

PRINCIPLE

COMPLIANCE

REASONS FOR THE CHOSEN OPTION

Information discussed by the Board is properly document-

ed and sent to Board members seven days before their

meeting or earlier to permit a detailed review. Corporate

staff is available to the Board to address their concerns

about the reported information.

23. Procedures must be in place for the Board to elect

one or more substitute members, should there be no

alternate Board members already and one or more

Board positions are declared vacant, so the cor-

responding terms are completed, unless otherwise

determined in the company bylaws.

(Principle V.H.3)

Corporate bylaws

include a clear procedure

fill vacant Board positions. The number of Board

members

is kept at a

level that allows meeting

good corporate governance needs and provide ad-

equate knowledge needed in SPCC’s mining operations.

24. The functions of the Chairman of the Board, and

These functions are defined in the corporation’s bylaws,

When deemed appropriate, the Board will approve at

its sole discretion, the hiring of specialized companies

to provide advice on the best course of action to be fol-

lowed when making major decisions.

All Board members have been instructed about their

powers and responsibilities. In addition, they were

explained the Company’s organizational structure and

characteristics. The Company has carried out induction

programs on the Company’s operations for the members

of the Board.

those performed by the Executive President and the

General Manager’s as required, will be clearly stated

in the company’s bylaws or internal regulations,

in order to prevent duplicate functions and likely

conflicts.

(Principle V.1, first paragraph)

its internal policies and job descriptions that clearly dif-

ferentiate the attributions under each such position.

25. The company’s organizational structure shall avoid

These powers and attributions are clearly defined in

concentrating functions, attributions and respon-

sibilities on the Chairman of the Board, the Chief

Executive Officer, the General Manager and other

company senior management officials, as the case

may be.

(Principle V.I, second paragraph)

SPCC’s bylaws and by Management. The Board and Man-

agement have avoided concentrating decision-making in

these positions by establishing limits to their attributions

and responsibilities.

41.

N
O

I
T
A
R
O
P
R
O
C

R
E
P
P
O
C

U
R
E
P

N
R
E
H
T
U
O
S

PRINCIPLE

COMPLIANCE

REASONS FOR THE CHOSEN OPTION

To date, there are no loans with other companies that

Stock Exchange and the Lima Stock Exchange, and are

interest rate equivalent to Libor + 3.00%. In July and De-

compromise more than 10% of SPCC’s property.

entitled to one vote per share.

cember 2000, the Company placed $30 millions and $20

millions in corporate bonds; both issues mature in 2007

26. It seems advisable management receives compensa-

Part of management’s compensation is linked to the

ADMINISTRATIVE, JUDICIAL OR

Along with the exchange of labor shares, the holders of

and generate a nominal interest rate of 8.75%.

ECONOMIC RELATIONS WITH OTHER COMPANIES DUE TO LOANS THAT COMMIT MORE THAN 10% OF THE
STOCKHOLDER’S EQUITY OF THE ISSUING ENTITY

tion that is at least partly determined by the compa-

ny’s results, so as to ensure they meet the goal of

maximizing value for the company’s shareholders.

(Principle V.I.5.)

42.

N
O

I
T
A
R
O
P
R
O
C

R
E
P
P
O
C

U
R
E
P

N
R
E
H
T
U
O
S

Mineral transfer hopper in Cuajone

corporation’s results through a profit sharing and perfor-

ARBITRATION PROCEEDINGS

common shares of the Company exchanged their shares

mance bonds program.

for class A common shares, with the right to five votes

In January 2005, the Company opened a credit line worth

LITIGATION: See Note to Consolidated Financial State-

per share.

ments.

US$200 million with a group of banks syndicated by Ci-

tibank. On January 27, 2005, the Company paid US$150

The class A common shares and the common shares have

million to repay bonds worth that amount issued in 2001,

CHANGES OF THOSE RESPONSIBLE FOR

a nominal value of $0.01 per share.

2002 and 2003. In addition disbursements for US$20

THE PREPARATION AND REVISION OF THE

millions and US$30 millions were made as prepayment

FINANCIAL INFORMATION

CORPORATE BONDS:

on the balance of prior bond issues. The new credit line

José N. Chirinos acts as Director of Comptroller and Fi-

In November 2001, the Company was authorized by

was opened for 5 years at LIBOR plus 1.25% on the first

nance, and Marco A. García acts as Finance Manager.

CONASEV to increase the $200 million program, approved

year; the spread will start increasing on the third year,

INFORMATION RELATED TO STOCK EXCHANGED

2003, the Company placed $25 millions in corporate bonds

amortization will start on the third loan year. The Com-

IN THE STOCK MARKET

with a face value of $1,000 each, with investors in Peru.

pany will pay bondholders a 1% or US$2 million penalty

in 2000, to $750 million; as part of this program, on April,

and will increase 0.125% every year thereafter. Principal

This issue matures in 2010 and has a floating interest rate

on advance repayment.

Common Stock:

equivalent to Libor + 2.375%. In addition, on May, 2003,

On November 29, 1995, the Company offered to ex-

the Company placed $25 million in corporate bonds with

As of December 31, 2004, $199.0 millions out of the

change the recently issued common shares for all and any

a face value of $1,000 each, with investors in Peru; this

$750-million program have already been issued.

labor shares of the Peruvian Branch of the Company, at a

issue matures in 2010 and has a floating interest equiva-

ratio of one common share per four S-1 shares and one

lent to Libor + 2.3125%. On February 2002, the Company

In the month of June 1997, the Company placed $50 mil-

common share per five S-2 shares. The exchange expired

placed $25.9 million in corporate bonds; this issue ma-

lions in corporate bonds with the same face value and

on December 29, 1995, with 80.8% of the total labor

tures in 2012 and has a floating interest rate equivalent to

the same market as the issues mentioned in the previ-

outstanding stock exchanged for 11,479,667 common

Libor + 3.00%. On December 2001, the Company placed

ous paragraph. Nominal interest rate was set at 8.01%

shares. These common shares are quoted in New York

73.1 millions; this issue matures in 2011 and has a floating

(8.25% effective), and will mature in June of 2004.

43.

N
O

I
T
A
R
O
P
R
O
C

R
E
P
P
O
C

U
R
E
P

N
R
E
H
T
U
O
S

In all cases, corporate bonds were placed at par value and interests are paid quarterly starting from the date of issue. The Company has the option to redeem all or part of the issue ac-

cording to the following chart. Par

Mnemonic

Period

Open

Low

High

Average

Issue

$30.0 million

$20.0 million

$73.1 million

$25.9 million

$25.0 million

Froml

Year 4

Any time

From month 18

Amount

$10 million

No minimum

Conditions

To be determined

Requirements

At least with a 30 day notice

Par value plus premium

At least with a 10 day notice

Par value plus premium

At least with a 10 day notice

QUOTATIONS OF CORPORATE BONDS ISSUED BY SOUTHERN PERU

PCU1BC12

200401

200402

200403

200404

200405

200406

200407

200408

200409

200410

200411

200412

112.18

112.36

112.18

112.36

112.24

107.03

Mnemonic

Period

Open

Low

High

Average

Mnemonic

Period

Open

Low

High

Average

97.50

111.18

97.50

111.18

97.50

111.18

97.50

111.18

97.50

111.18

PCU1BC11

44.

N
O

I
T
A
R
O
P
R
O
C

R
E
P
P
O
C

U
R
E
P

N
R
E
H
T
U
O
S

200401

200402

200403

200404

200405

200406

200407

200408

200409

200410

200411

200412

PCU1BC21

200401

200402

200403

200404

200405

200406

200407

200408

200409

200410

200411

200412

101.00

45.

N
O

I
T
A
R
O
P
R
O
C

R
E
P
P
O
C

U
R
E
P

N
R
E
H
T
U
O
S

Mnemonic

Period

Open

Low

High

Average

Mnemonic

108.00

109.25

108.00

109.25

108.63

PCU1BC22

200401

200402

200403

200404

200405

200406

200407

200408

200409

200410

200411

200412

Mnemonic

Period

Open

Low

High

Average

PCU1BC32

Open

100.15

Low

100.15

High

100.15

Average

100.15

102.83

102.82

102.83

Period

200401

200402

200403

200404

200405

200406

200407

200408

200409

200410

200411

200412

96.11

98.12

96.11

98.12

97.11

`PCU1BC31

PCU1BC31

46.

N
O

I
T
A
R
O
P
R
O
C

R
E
P
P
O
C

U
R
E
P

N
R
E
H
T
U
O
S

200401

200402

200403

200404

200405

200406

200407

200408

200409

200410

200411

200412

47.

N
O

I
T
A
R
O
P
R
O
C

R
E
P
P
O
C

U
R
E
P

N
R
E
H
T
U
O
S

Trucks at the dumping zone in Cuajone

Mining operations, detail

MONTLY QUOTATIONS 2004

COMMON SHARES, MONTHLY STOCK PRICES 2003

LIMA STOCK EXCHANGE

ISIM CODE: US8436111046

SYMBOL: PCU

48.

N
O

I
T
A
R
O
P
R
O
C

R
E
P
P
O
C

U
R
E
P

N
R
E
H
T
U
O
S

Period

200401

200402

200403

200404

200405

200406

200407

200408

200409

200410

200411

200412

Open

$ 48.30

$ 41.60

$ 39.40

$ 40.60

$ 28.76

$ 31.80

$ 41.00

$ 39.50

$ 43.50

$ 52.35

$ 45.00

$ 47.65

$ 43.00

$ 38.97

$ 40.86

$ 28.90

$ 30.95

$ 41.00

$ 39.50

$ 44.05

$ 51.90

$ 43.45

$ 47.91

$ 46.70

Low

$ 41.97

$ 37.60

$ 36.00

$ 28.10

$ 26.50

$ 29.90

$ 36.40

$ 36.43

$ 43.50

$ 42.20

$ 44.05

$ 43.87

High

$ 50.80

$ 43.22

$ 40.86

$ 41.70

$ 32.50

$ 41.00

$ 41.75

$ 44.05

$ 52.00

$ 55.00

$ 48.50

$ 47.65

Average

$ 47.27

$ 40.09

$ 38.57

$ 35.91

$ 28.78

$ 38.93

$ 40.60

$ 39.89

$ 47.00

$ 46.60

$ 46.14

$ 45.66

COMMON SHARES

MONTHLY STOCK PRICES 2003

NEW YORK STOCK EXCHANGE

SYMBOL: PCU

Period

200401

200402

200403

200404

200405

200406

200407

200408

200409

200410

200411

200412

Open

$ 49.10

$ 40.76

$ 40.00

$ 40.45

$ 28.60

$ 31.70

$ 41.10

$ 39.40

$ 44.20

$ 52.84

$ 43.98

$ 47.19

$ 43.90

$ 37.80

$ 40.45

$ 29.03

$ 31.18

$ 41.33

$ 39.13

$ 44.50

$ 51.66

$ 43.18

$ 47.52

$ 47.21

Low

$ 42.20

$ 37.80

$ 36.16

$ 28.55

$ 26.53

$ 30.00

$ 36.41

$ 36.16

$ 43.55

$ 42.15

$ 43.98

$ 43.41

High

$ 50.50

$ 42.20

$ 40.45

$ 41.85

$ 31.80

$ 41.33

$ 41.86

$ 44.50

$ 51.66

$ 54.10

$ 48.16

$ 47.59

Average

$ 47.63

$ 39.98

$ 38.03

$ 36.19

$ 28.98

$ 35.24

$ 39.71

$ 39.69

$ 46.23

$ 48.02

$ 46.28

$ 46.05

49.

N
O

I
T
A
R
O
P
R
O
C

R
E
P
P
O
C

U
R
E
P

N
R
E
H
T
U
O
S

MANAGEMENT

years. Mr. Carrillo Gamboa has extensive business

companies: Empresas ICA Sociedad Controladora,

tration from the Instituto Tecnológico y de Estudios

Director of Grupo Mexico since May 2002. Director

ASARCO Incorporated from November 1999 to Sep-

experience and has served or currently serves on

S.A. de C.V. since 2001, Cementos Holcim-Apasco,

Superiores de Monterrey.

of ASARCO Incorporated from November 1999 to

tember 2001.

Members of the Board of Directors as of Decem-

the boards of many prestigious Mexican businesses

S.A. de C.V. since 2002, Grupo Modelo, S.A. de C.V.

August 2003.

ber 31, 2003

and charitable organizations. He is Chairman of the

since 2002, Kimberly-Clark de México, S.A. de C.V.

4.- XAVIER GARCÍA DE QUEVEDO TOPETE.

8.- ARMANDO ORTEGA. Director of SPCC since

1.- GERMÁN LARREA MOTA-VELASCO. Chairman

Board of Cementos Apasco, S.A. de C.V. (cement

since 2002, San Luis Corporacion, S.A. de C.V. since

Director of SPCC since November 1999. President

6.- HAROLD HANDELSMAN. Director of SPCC since

August 2002. Legal Vice-President and Secretary

of the Board since December 1999, Chief Executive

company). In 1957 and 1958, he worked for the

2002, The Mexico Fund, Inc. since 2002, and Grupo

of Minera México, S.A. de C.V. since September 1,

August 2002. Executive Vice-President and General

of SPCC since April 25, 2002, has been General

Officer from December 1999 to October 2004, and

Internal Revenue Service of the Ministry of Finance

Mexico, S.A. de C.V. since 2003. Of these compa-

2001, Managing Director of Grupo Ferroviario Mexi-

Counselor of The Pritzker Organization LLC, a private

Counselor since October 2003. Previously, he was

Director of SPCC since November 1999. Chairman of

and Public Credit of Mexico. On August 15, 1960, he

nies, only two are public companies: The Mexico

cano, S.A. de C.V. and Ferrocarril Mexicano, S.A. de

investment firm, since 1998. Mr. Handelsman has

Assistant Secretary of the Company from July 25,

the Board of Directors, President and Chief Execu-

entered Teléfonos de Mexico as Head of the Financial

Fund Inc., and Empresas ICA Sociedad Controladora,

C.V. from December 1997 to December 1999. Direc-

also been a Senior Executive Officer of the Hyatt Cor-

2001 to April 25, 2002, and Assistant Secretary of

tive Officer of Grupo Mexico (holding). Chairman of

Studies Department, was appointed Secretary of the

S.A. de C.V. Mr. Carrillo Gamboa has a law degree

tor General of Exploration and Development at Gru-

poration since 1978, currently serving as Senior Vice-

Asarco Incorporated until August 2003. General

the Board of Directors and Chief Executive Officer of

Board of Directors in February 1962, Executive Vice

from the Autonomous National University of Mexico,

po Mexico, SA. de C.V. from 1994 to 1997, Alternate

President, Secretary and General Counselor, and is

Counselor of Grupo Mexico since May 2001, and,

Grupo Minero Mexico (mining division) since 1994,

President in February 1967, and President on June

attended a continuous legal education program at

Director of Grupo México from 1998 to April 2002,

Director of First Health Group Corp. (a managed care

previously, its Assistant Secretary. He headed the

and of Grupo Ferroviario Mexicano (railroad divi-

30, 1975, a position he held until his retirement on

Georgetown University Law School, and practiced at

Director of Grupo México since April 2002, Director

organization) and a number of private corporations.

International Trade Practices Unit of the Ministry of

sion), since 1997. Chairman of the Board and Chief

June 30, 1987. From July 1987 to February 1989

the World Bank.

of ASARCO Incorporated from November 1999 to

He received a B.A. degree from Amherst College in

Economy of Mexico with the rank of Deputy Vice-

Executive Officer of Empresarios Industriales de

he was Mexico’s Ambassador to Canada. Mr. Car-

August 2003 and its President from January 2000 to

1968 and a J.D. degree from Columbia University in

Minister from 1997 to May 2001, and was negotia-

Mexico (holding), since 1992. Previously Executive

rillo is a director of the following companies: Grupo

3. JAIME FERNANDO COLLAZO GONZÁLEZ.

September 1, 2001.

1973.

tor for international matters for said Ministry from

50.

N
O

I
T
A
R
O
P
R
O
C

R
E
P
P
O
C

U
R
E
P

N
R
E
H
T
U
O
S

Vice Chairman of Grupo Mexico and member of the

Modelo, S.A. de C.V. (beer brewing), Kimberly-Clark

Director, Vice-President, Finance and Chief Financial

1998 to May 2001.

Board of Directors since 1981. Chairman and Chief

de México, S.A. de C.V. (consumer products), San

Officer of SPCC since April 28, 2004. Managing

5.- OSCAR GONZÁLEZ ROCHA. Chief Executive Of-

7.- GENARO LARREA MOTA-VELASCO. Com-

Executive Officer of ASARCO Incorporated from No-

Luis Corporación, S.A. de C.V. (automotive parts),

Director of Grupo Mexico, S.A. de C.V. since March

ficer of SPCC since October 2004 and its President

mercial Vice-President of SPCC from December 1999

9.- LUIS MIGUEL PALOMINO BONILLA. Director

vember 1999 to August 2003, and its President from

Empresas ICA Sociedad Controladora, S.A. de C.V.

2004. Managing partner of Administration and Busi-

since December 1999. He has also been Director of

until April 2002, and Director since November 1999.

of SPCC since March 19, 2004. Principal and senior

November 1999 to January 2000.

(construction), Grupo México, S.A. de C.V., and the

ness Consulting, S.C. (a business consulting firm)

SPCC since November 1999. Previously, he was Gen-

Commercial Managing Director of Grupo Mexico

consultant of Proconsulta International, Maryland (a

Mexico Fund, Inc. (NYSE – mxf), a nondiversified

from 1999 to 2003. Previously, he held several posi-

eral Director and Chief Operating Officer of SPCC

from 1994 to August 30, 2001, and Director from

financial consulting firm) since 2003. Previously he

2.- EMILIO CARRILLO GAMBOA. Director of SPCC

closed-end management investment company. He is

tions with IBM de Mexico, S.A., the last one being

from December 1999 to October 20, 2004, Manag-

1994 to date. He was Director of ASARCO Incorpo-

was First Vice-President and Chief Economist, Latin

since May 30, 2003. A prominent lawyer in Mexico,

member of the Valuation, Contract Review and Ap-

Vice-President and Chief Financial Officer, prior to

ing Director for Mexicana de Cobre, S.A. de C.V.

rated from November 1999 to August 2003, and

America for Merrill Lynch Pierce Fenner & Smith,

he has been a partner of the law firm Bufete Carrillo

pointment and Corporate Governance Committees

his retirement in 1998. He holds a Bachelor’s degree

from 1986 to 1999, and for Mexicana de Cananea,

President of ASARCO Incorporated from September

New York (investment banking) from 2000 to 2002.

Gamboa, S. C., specializing in corporate, financial,

of the Mexico Fund. Mr. Carrillo is also a member

in Administration from Universidad Tecnológica de

S.A. de C.V. from 1990 to 1999. Alternate Director

1, 2001 until October 2003. Previously he was Direc-

Chief Executive Officer, Senior Country and Equity

commercial, and public utility issues, for the last five

of the Audit Committee of SPCC and the following

México and a Master’s degree in Business Adminis-

of Grupo Mexico from 1988 until April 2002 and

tor, Vice-President and Chief Commercial Officer of

Analyst at Merrill Lynch, Peru (investment banking)

51.

N
O

I
T
A
R
O
P
R
O
C

R
E
P
P
O
C

U
R
E
P

N
R
E
H
T
U
O
S

from 1995 to 2000. He held various distinguished

Master’s Degree in Business Administration from the

transport, tourism, and housing projects, since No-

EXECUTIVE OFFICERS

positions with banks and financial institutions as

Business Administration Graduate School for Central

vember 2001. Held various distinguished positions in

economist, financial advisor and analyst. He has a

America (INCAE). He has also attended the corpo-

the Mexican government, the last one being that of

GERMÁN LARREA MOTA-VELASCO

LUIS ECHEVARRÍA S.S.

Assistant Secretary

of the Company’s Audit Committee, are independent of

management and financially literate in accordance with

the qualifications of the NYSE and the Securities and

PhD in finance from the Wharton School of the Uni-

rate finance program at Harvard University.

Secretary of Communication and Transportation from

Chairman of the Board

ERNESTO DURÁN TRINIDAD

Exchange Commission (“SEC”), as such qualifications are

versity of Pennsylvania, Philadelphia, and graduated

1995 to 2000. While holding that position, he was

Comptroller

interpreted by the Company’s Board of Directors in its

from the Economics Program of the University of the

11.- JUAN REBOLLEDO GOUT. Director of SPCC

also Chairman of the Board of Directors of the Mexi-

OSCAR GONZÁLEZ ROCHA

business judgment.

Pacific, Lima, Peru.

since May 30, 2003. He has been International

can-owned companies in the sector, and member of

President and Chief Executive Officer

NEXT OF KIN

10.- GILBERTO PEREZALONSO CIFUENTES. Direc-

was Undersecretary of Foreign Affairs of Mexico

Ruiz holds a bachelor’s degree in business adminis-

JAIME FERNANDO COLLAZO GONZÁLEZ

Board of the Company, and Genaro Larrea Mota-Velasco,

lationship of affinity and/or consanguinity exists among

Vice-President of Grupo Mexico since 2001. He

the Board of Directors of development banks. Mr.

Messrs. Germán Larrea Mota-Velasco, Chairman of the

To the best of the Company’s knowledge, no other re-

tor of the Company and Member of the Board since

from 1994 to 2000, and Deputy Chief of Staff to

tration from the Anahuac University of Mexico City,

2002. Treasurer of Asociación Vamos México A.C.,

the President of Mexico from 1993 to 1994. Previ-

and an MBA degree from Northwestern University of

consultant to the Presidency of Grupo Televisa S.A.,

ously, he was Assistant to the President of Mexico

Chicago.

and member of its Board and Executive Committee

(1989-1993), Director of the National Institute for

since 1998. From 1980 until February 1998, he held

the Historical Studies of the Mexican Revolution of

various positions with Grupo Cifra, S.A. de C.V.,

the Secretariat of Government (1985-1988), Dean

the last position being that of General Director of

of Graduate Studies at the National Autonomous

Administration and Finance. From 1998 until April

University of México, Political Science Department

2001, Executive Vice-President of Administration

(1984-1985), and professor of said university (1981-

and Finance of Grupo Televisa S.A. He is also mem-

1983). Mr. Rebolledo holds a law degree from the

ber of the Investment Committee of IBM de Mexico,

National Autonomous University of Mexico, an MA

Member of the Advisory Council of Banco Nacional

in philosophy from Tulane University, and an LLM

de Mexico, S.A. de C.V., and member of the Board

from Harvard Law School.

and of the investment committee of Afore Banamex

Aegon, Siefore Banamex No. 1, Gigante S.A. de C.V.,

12.- CARLOS RUIZ SACRISTÁN. Director of SPCC

International Center for Human Development, Costa

since February 12, 2004. Owner and managing part-

Rica and Masnegocio Co. S. de R.L. de C.V. He has a

ner of Proyectos Estrategicos Integrales, a Mexican

law degree from the Iberoamerican University and a

investment banking firm specialized in agricultural,

52.

N
O

I
T
A
R
O
P
R
O
C

R
E
P
P
O
C

U
R
E
P

N
R
E
H
T
U
O
S

Vice-President, Finance and

Chief Financial Officer

MARIO VINAGERAS

Vice-President, Commercial

REMIGIO MARTÍNEZ

Vice-President, Exploration

VIDAL MUHECH

Vice-President, Projects

a Director of the Company, are brothers or kindred in

the other members of the Board, and between them

second degree of consanguinity.

and the Executive Officers of Southern Peru Copper

A company of which more than 50% of the voting power

Corporation.

is held by a single entity, a “controlled company”, need

SPECIAL COMMITTEES OF THE BOARD

not comply with the requirements of the New York Stock

SPCC’S BOARD OF DIRECTORS HAS ORGA-

Exchange (“NYSE”) corporate governance rules requiring

NIZED THE FOLLOWING SPECIAL COMMITTEES:

a majority of independent directors and independent

1) Executive Committee, sitting five members who

compensation and nomination/corporate governance

substitute for the Board when sessions or decisions

committees. SPCC is a controlled company as defined

are required concerning urgent matters, or which the

by the rules of the NYSE. Grupo Mexico owns indirectly

Board would have expressly delegated its mandate.

54.2% of the stock of the Company (63.1%, consider-

ARMANDO ORTEGA

ing Class A common shares are entitled to five votes per

2) Audit Committee, sitting three independent Board

Vice-President, Legal, General Counsel and Secretary

share.) The Company has taken advantage of the excep-

members who are knowledgeable in accounting

JOSÉ N. CHIRINOS

the NYSE. The Board of Directors of the Company de-

assist the Board in monitoring (i) the quality and

Treasurer and Assistant of Comptrollerr

termined that Messrs. Luis Miguel Palomino Bonilla, Gil-

integrity of the Company’s financial statements; (ii)

tions to comply with the corporate governance rules of

and financial matters. Its main purpose is to (a)

berto Perezalonso, and Emilio Carrillo, the three members

the qualifications and independence of the indepen-

53.

N
O

I
T
A
R
O
P
R
O
C

R
E
P
P
O
C

U
R
E
P

N
R
E
H
T
U
O
S

dent auditors;(iii) the appropriate performance of

recommend the approval of the Company’s good

ANNUAL MEETING

DIVIDEND REINVESTMENT PROGRAM

OTHER CORPORATE INFORMATION

FORM 10 -K. CERTIFICATION IS REQUIRED BY

the internal audit function; and (iv) the Company’s

governance principles, and overseeing the evaluation

The annual stockholders meeting of Southern Peru Cop-

SPCC stockholders can have their dividends automatically

For other information on the corporation or to obtain ad-

THE NEW YORK STOCK EXCHANGE.

compliance with legal and regulatory provisions; and

of the Board’s and Management’s performance.

per Corporation will be held on Thursday, April 29, 2005

reinvested in SPCC common shares. SPCC pays all admin-

ditional copies of the annual report, contact the Corpo-

Many of the Securities and Exchange Commission infor-

(b) prepare the report for the affidavit statement.

at 17:00 PM, Mexico City time, at Avenida Baja Califor-

istrative and brokerage fees. This plan is administered by

rate Communications Department at our headquarters.

mation requirements are contained in this 2000 Annual

7) The Special Committee for Divested Board Members

nia Nº 200, Fifth Floor, Colonia Roma Sur, Mexico City,

The Bank of New York. For more information, contact The

Report. A copy of SPCC’s 2000 Form 10-K (excluding ex-

3) Compensations Committee, comprising four Board

sits four Board members who are independent from

Mexico.

Bank of New York at 800/524-4458.

SOUTHERN PERU COPPER CORPORATION

hibits) will be available after May 1, 2001, upon request

members, its principal objective is to evaluate and

the Corporation’s main shareholders and are desig-

2575 E. Camelback Rd., Suite 500, Phoenix, AZ 85016,

to the Corporate Communications Department.

establish the remunerations of senior officials and

nated to evaluate the announced merger between a

CORPORATE OFFICES

STOCK EXCHANGE LISTING

U.S.A., Phone: (602) 977-6500, Fax: (602) 977-6700.

key employees at the Company and its subsidiaries,

company subsidiary and a Grupo México subsidiary,

2575 E. Camelback Rd., Suite 500,

The principal markets for SPCC’s Common Stock are the

NYSE Symbol: PCU.

and eventual raises in remuneration.

its main shareholder.

Phoenix, AZ 85016, U.S.A.,

Phone: (602) 977-6595,

New York Stock Exchange and the Lima Stock Exchange.

SPCC’s Common Stock symbol is PCU on both the NYSE

Avenida Caminos del Inca 171 (B-2), Chacarilla del Es-

violation of the corporate governance standards of the

The Company has filed with the NYSE the 2004 certifica-

tion that the Chief Executive Officer is unaware of any

4) Share Incentive Plan, consisting of three independent

8) Administrative Committee Designated by the Board

Fax: (602) 977-6700.

and the Lima Stock Exchange.

tanque, Santiago de Surco – Lima 33 - Peru./ Lima Stock

NYSE. The Company has also filed with the SEC the certi-

Board members who are knowledgeable in ac-

for (Employee Retirement

Income Security Act

Exchange Symbol: PCU.

fications required under Section 302 of the Sarbanes-Ox-

counting and financial matters. Their objective is to

– ERISA - USA) Benefits Plans. The Vice-President

Avenida Caminos del Inca No. 171,

OTHERS

ley Act of 2002, as exhibits to the 2003 Annual Report on

determine compensation schemes for senior officials

for Finance and Chief Financial Officer is the Board-

Chacarilla del Estanque, Santiago de Surco,

The Branch in Peru has issued, in accordance with Pe-

Web Page:

www.southernperu.com

Form 10-K. The Company anticipates filing, on a timely

and key employees at the Company through awards

appointed Trustee for the Company’s Benefits Plans

Lima 33, Peru

ruvian law, ‘investment shares’ (formerly named labor

Email address:

spcc@southernperu.com.pe

basis, the 2005 NYSE certification and the Section 302

54.

N
O

I
T
A
R
O
P
R
O
C

R
E
P
P
O
C

U
R
E
P

N
R
E
H
T
U
O
S

of ordinary Company stock as a way to improve

subject to US regulations, including ERISA. This

Phone (511) 372-1414, Ext. 3211,

management of corporate affairs and create a link

Officer will appoint an Administrative Committee

Fax (511) 372-0062

between their interest and that of the shareholders.

sitting four management members whose purpose is

to administrate and manage those plans and to over-

TRANSFER AGENT, REGISTRAR AND

5) Designations Committee, sitting four members of

see the performance of the trust agents and others

STOCKHOLDER SERVICES

the Board who propose and evaluate candidates to

charged with investing the plans’ monies.

The Bank of New York

represent the Company’s common stockholders.

101 Barclay Street

6) Corporate Governance Committee. Its four Board

Total remuneration of Board and Administration members

Phone 800/524-4458

ADMINISTRATION AND BOARD INCOME

New York, NY 10286

members have as their principal role to advise the

in relation to the Company´s gross income is 0.41%.

Board on its functions and needs, develop and

shares) that are quoted in the Lima Stock Exchange under

symbols S-1 and S-2. Transfer Agent, registrar and stock-

holders services are provided by Banco de Credito of Peru

at Avenida Centenario 156, La Molina, Lima 12, Peru.

Phone 51 (1) 348-5999, Fax 511-349-0592.

certifications as exhibits to the 2004 Annual Report on

Form 10-K.

55.

N
O

I
T
A
R
O
P
R
O
C

R
E
P
P
O
C

U
R
E
P

N
R
E
H
T
U
O
S

MEMBERS OF THE BOARD OF DIRECTORS

JAIME FERNANDO COLLAZO GONZÁLEZ

JOSÉ I. DE LOS HEROS

Germán Larrea Mota-Velasco

Emilio Carrillo Gamboa

Jaime Fernando Collazo González

Xavier García de Quevedo Topete

Oscar González Rocha

Harold Handelsman

Genaro Larrea Mota-Velasco

Armando Ortega G.

Luis Miguel Palomino Bonilla

Gilberto Perezalonso Cifuentes

Juan Rebolledo Gout

Carlos Ruiz Sacristán

Vice-President, Finance and

Chief Financial Officer

MARIO VINAGERAS

Vice-President, Commercial

REMIGIO MARTÍNEZ

Vice-President, Exploration

VIDAL MUHECH

Vice-President, Projects

ARMANDO ORTEGA

AUDIT COMMITTEE

Vice-President, Legal, General Counsel and Secretary

Emilio Carrillo Gamboa, Presidente del Comité

56.

Luis Miguel Palomino Bonilla, and

Gilberto Perezalonso Cifuentes

JOSÉ N. CHIRINOS FANO

Treasurer and Assistant Comptroller

EXECUTIVE OFFICERS

ADMINISTRATION OF THE BRANCH

Commercial Director

LUIS E. ECHEVARRIA

Legal Manager (a.i. Legal Director)

ALBERTO J. GILES

Human Resources Director

MANUEL A. PLENGE

Logistics Director

ELSIARIO ANTÚNEZ DE MAYOLO

Director of Cuajone Operations

EZIO BUSELLI

Director of Environmental Services

EDGARD CORRALES

Exploration Director

GERMÁN LARREA MOTA-VELASCO

OSCAR GONZÁLEZ ROCHA

FERNANDO MEJÍA

Chairman of the Board

President and Chief Executive Officer

Director of Toquepala Operations

OSCAR GONZÁLEZ ROCHA

JOSÉ N. CHIRINOS

WILLIAM E. TORRES

President and Chief Executive Officer

Director of Comptroller, Finance and Administration

Director of Ilo Operations

N
O

I
T
A
R
O
P
R
O
C

R
E
P
P
O
C

U
R
E
P

N
R
E
H
T
U
O
S