SOUTHERN COPPER CORPORATION
CORPORATE OFFICES
UNITED STATES
11811 North Tatum Blvd.
Phone. +(602) 494-5328
Fax +(602) 494-5317
Suite 2500, Phoenix, AZ 85028, U.S.A.
MEXICO
Campos Eliseos No. 400 9th floor
Col. Lomas de Chapultepec, Mexico D.F.
Phone. +(52-55) 1103-5000, Ext. 5855
Fax +(52-55) 11 03 55 83
PERU
Av. Caminos del Inca No. 171 (B-2)
Chacarilla del Estanque, Santiago de Surco
Lima 33 - Peru
Phone. +(511) 512-0440, Ext. 3211
Fax +(511) 512-0486
Symbol: SCCO
Web Page
www.southerncoppercorp.com
E-mail
southerncopper@southernperu.com.pe
Annual Report 2010
Tuning musical
instruments
S Y M P H O N Y T O G R O W
STATEMENT OF RESPONSIBILITY
“To the best of our knowledge this document contains truthful and sufficient information regarding the development of the
business of Southern Copper Corporation (“SCC”) during 2010. SCC takes responsibility for its contents according to
applicable requirements”.
Hans A. Flury Royle
Assistant Secretary
Jose N. Chirinos Fano
Comptroller
CONVERSION INFORMATION: All tonnages in this annual report are metric tons unless otherwise noted. To convert to short
tons, multiply by 1.102. All distances are in kilometers, to convert to miles, multiply by 0.62137. All ounces are troy ounces.
U.S. dollar amounts represent either historical dollar amounts, where appropriate, or U.S. dollar equivalents translated in accor-
dance with generally accepted accounting principles in the United States. “SCCO”, “SCC”, “Southern Copper” or the “Com-
pany” includes Southern Copper Corporation and its consolidated subsidiaries. As a way to reflect the beginning of a new era
for developing the Cananea property to its full potential, on December 11, 2010, we have changed the name of the company
operating it to Buenavista del Cobre (“Buenavista”).
DISEÑO: DESIGN CENTER ™
CONTENTS
Letter to the Shareholders
Production Statistics
Copper Reserves
Selected Financial and Statistical Data
Expansion and Modernization Program
Exploration
Development - Community Outreach
Results of Operations for the years ended
December 31, 2010, 2009 and 2008
Commitment - Environmental Affairs
General Information
Description of Operations and Development regarding the Issuing Entity
Members of the Board of Directors
02
06
08
09
10
18
28
48
54
64
75
112
Annual Report 2010
1
Letter to
SharehoLderS
2010 was an outstanding year for Southern Copper Corporation, during which the
Company continued with its consolidation process and its continued improvement
policy. This success is reflected in a net income of $1,554.0 million, 67.2% higher
than 2009, while the change in the average price of our main product, copper,
increased 46%. Net income in 2009 was $929.4 million.
Our principal operations are in Peru and Mexico and we conduct exploration programs
in those countries and in Chile. Our focus is on remaining profitable during periods of
low copper prices; expand our production facilities and maximizing results in periods
of high copper prices.
Our greatest strength lies in our copper ore reserves, which at December 31, 2010
totaled 69.3 million tons of contained copper, calculated at a copper price of $2.971
per pound (as of December 31, 2010 the LME and COMEX copper price were $3.42
and $3.43, respectively). In terms of copper reserves, we believe we hold the world’s
largest reserve position which guarantees the Company’s long-term sustainability
and a satisfactory return on investment.
Our other strengths include high quality of assets, low cost leadership in the industry
and our prudent financial policies which are reflected in our financial performance.
22
Letter to the Shareholders
Operating cash cost per pound of copper, net of by-product credit, was 16.8
cents per pound in 2010, compared with 35.8 cents per pound in 2009. This
improvement was the result of higher by-product credits, principally from
higher prices for molybdenum, zinc and silver as well as higher molybdenum
volume.
In addition to copper we produce significant amounts of other metals, either as by-
product of the copper process or at a number of dedicated mining facilities. Our
metal production is diversified. In 2010, copper represented approximately 73%
of our revenues, molybdenum 13%, silver 6%, and other minerals 8% (including
zinc, gold and other minerals).
In 2010, sales were $5,149.5 million, 37.9% higher than the $3,734.3 million in
2009. This increase was mainly the result of higher metal prices as well as higher
molybdenum production.
In 2010, the Company reached a new molybdenum production record of 20,519
tons, 9.8% higher than the 18,687 tons produced in 2009. Refined silver production
increased 1.2% in 2010 compared to 2009 principally due to higher silver content
in our IMMSA operations and in third-party material processed at Ilo.
Annual Report 2010
3
In 2011, we will continue with our aggressive mining and metallurgical capital
investment projects. The Company intends to allocate $1.7 billion for this year, of
which approximately $881 million would be invested in Mexico and $862 million in
Peru. This investment intends to increase our copper and molybdenum production
capacity maintaining our low cost leadership.
Capital and exploration expenditures in 2010 were $443.0 million, which were
invested in our Mexican operations as well as in Peru, through the expansion of the
Toquepala and Cuajone concentrators and the Tia Maria project.
The financial publication Latin Finance awarded our April 2010 $1.5 billion bond
issue the prize “Best Corporate Bond of 2010”, which resulted in a subscription
demand of over $9 billion.
Social programs of the Company continue running on all of our operational areas,
especially for the benefit of the surrounding population. In Mexico we rebuilt the
hospital, paved streets, and modernized the library, for the community next to the
Buenavista mine. In Peru, we continued with our improvement program for the f
irrigation infrastructure in the highlands; this enhances the use of the water and
the quality of pastures, livestock feed, and the production of fodder and milk, all of
which impacts favorably on a better life quality of these populations.
Regarding the environment, in Mexico, the Company decided to remedy and
promote the urban development of the site where the San Luis Potosi copper
smelter formerly operated, which will generate a profit for the city. In Peru, we
finished the last component of the Ilo smelter modernization project, by putting into
service the maritime trestle to download directly onto ships at sea the sulfuric acid
produced in this plant, avoiding crossing the city with the acid.
4
Letter to the Shareholders
On behalf of Southern Copper Corporation’s Board, we express our thanks to all
our personnel for their effort, work and dedication, to our clients for their continued
trust and loyalty, and to you, our shareholders, for your permanent support.
GERMAN LARREA MOTA VELASCO
Chairman of the Board
OSCAR GONzALEz ROChA XAVIER GARCIA DE QuEVEDO
President and Chief Executive Officer
President and Chief Executive Officer
Annual Report 2010
5
SOuThERN COPPER CORPORATION AND SuBSIDIARIES
Production Statistics
Five-year Production Statistics
Copper production Mines (tons)
Mined Material (thousand)
Copper in concentrates
Copper SX/EW
Total Copper
Molybdenum in concentrates
zinc in concentrates
Silver in concentrates (thousand ounces)
2010
2009
2008
2007
2006
398,953
397,030
81,497
355,727
424,199
61,177
343,762
418,726
70,203
406,059
498,207
93,976
409,625
506,084
99,575
478,527
485,376
488,929
592,183
605,559
20,519
99,194
12,646
18,687
16,390
16,208
11,837
110,430
106,920
121,013
136,592
13,202
12,316
15,229
16,171
Smelter/refineries production
Copper
zinc
Silver (thousand ounces)
Toquepala
Mined Material (thousand)
Copper in concentrates
Molybdenum in concentrates
Cuajone
Mined Material (thousand)
Copper in concentrates
Molybdenum in concentrates
Fundicion/refinerias Peru
SX/EW
Smelt concentrates
Blister produced
Anode produced
Cathode produced
429,899
505,088
497,494
465,005
588,986
95,072
13,243
98,688
13,089
95,420
10,841
90,766
10,001
51,035
12,379
179,313
131,518
4,828
149,287
127,125
3,598
131,646
114,147
4,667
130,267
140,868
6,228
131,607
151,775
5,813
126,144
164,968
5,259
117,939
188,950
5,293
118,054
196,065
4,442
116,438
182,117
3,821
112,410
174,404
3,523
37,938
37,961
38,799
36,670
35,805
997,933
1,127,455
1,003,311
846,245
1,107,458
-
312,478
255,505
8,741
336,781
262,220
-
306,585
248,742
9,283
232,197
178,397
30,556
297,564
273,299
6
Letter to the Shareholders
Mexicana de Cobre - Caridad
Mined Material (thousand)
Copper in concentrates
Molybdenum in concentrates
Buenavista
Mined material (thousand)
Copper in concentrates
Smelter/Refineries in Mexico
SX/EW
Smelt concentrates
Anode produced
Cathode produced
Rod produced
underground Mines
Contents in concentrates (tons)
zinc
Lead
Copper
Silver (thousand ounces)
Gold (thousand ounces)
2010
2009
2008
2007
2006
84,163
94,871
10,432
6,439
-
43,559
416,730
116,534
84,626
57,264
99,194
20,240
5,673
6,549
5,023
85,491
102,501
9,796
85,739
96,929
7,281
80,819
102,259
6,159
46,606
58,071
2,501
-
-
4,820
6,165
74,672
63,909
114,595
111,280
23,216
465,992
139,652
117,134
60,072
31,403
574,573
171,912
140,326
76,283
57,305
684,806
202,708
173,341
96,607
63,770
723,984
240,673
200,357
96,582
110,430
106,920
121,013
136,592
22,492
20,445
19,382
5,623
6,778
3,136
5,420
6,366
2,789
9,054
8,272
4,174
19,081
10,555
9,276
4,484
Annual Report 2010
7
SOuThERN COPPER CORPORATION AND SuBSIDIARIES
Copper Reserves
The table below details our proven and probable copper and molybdenum reserves as estimated at December 31, 2010 calculated based on a copper
price of $2.971 per pound and a molybdenum price of $18.587 per pound.
PERuVIAN
OPEN-PIT uNIT
MEXICAN
OPEN-PIT uNIT
TOTAL
OPEN-PIT INES
MEXICAN
IMMSA uNIT
TOTAL
RESERVAS
Cuajone
Toquepala
Buenavista
La Caridad
Mineral reserves
Metal prices:
Copper ($/lb.)
Molybdenum ($/lb.)
Cut-off grade
Proven
Sulfide ore reserves (kt)
Average grade:
Copper
Molybdenum
Lead
zinc
Leachable material (kt)
Leachable material grade
Probable
Sulfide ore reserves (kt)
Average grade:
Copper
Molybdenum
Lead
zinc
Leachable material (kt)
Leachable material grade
Total
Sulfide ore reserves (kt)
Average grade:
Copper
Molybdenum
Lead
zinc
Leachable material (kt)
Leachable material grade
Waste (kt))
Total material (kt)
Stripping ratio
Leachable material
Reserves in stock (kt)
Average copper grade
In pit reserves:
Proven (kt)
Average copper grade
Probable (kt)
Average copper grade
2.971
18.587
0.149%
2.971
18.587
0.157%
2.971
18.587
0.114%
2.971
18.587
0.126%
2.971
18.587
0.131%
2.971
18.587
1,195,706
2,822,600
4,647,837
3,699,834 12,365,977
18,104
0.559%
0.019%
0.508%
0.027%
0.398%
0.227%
0.028%
0.387%
0.016%
10,374
0.559%
388,423
0.143%
1,320,057
0.138%
267,858
0.200%
1,986,712
0.150%
0.470%
1.180%
2.830%
1,430,472
707,868
1,885,048
934,057
4,957,445
29,422
0.399%
0.016%
0.311%
0.008%
0.355%
0.198%
0.028%
0.332%
0.011%
7,220
0.357%
1,110,184
0.100%
487,435
0.118%
50,986
0.175%
1,655,825
0.109%
0.510%
0.800%
3.050%
2,626,178
3,530,468
6,532,884
4,633,891 17,323,421
47,526
0.472%
0.017%
0.468%
0.023%
0.385%
0.221%
0.028%
0.371%
0.015%
17,594
0.476%
1,498,607
0.111%
1,807,492
0.133%
318,844
0.196%
3,642,537
0.131%
0.495%
0.945%
2.966%
6,456,790 11,048,815
6,904,373
9,100,562 16,077,890 15,244,749
1.33
3.55
2.47
2,799,636 27,209,614
7,752,371 48,175,572
1.78
0.67
47,526
17,289
0.509%
1,168,584
0.151%
711,412
0.124%
597,977
0.249%
2,495,262
0.169%
10,374
0.559%
7,220
0.357%
388,423
0.143%
1,110,184
0.100%
1,320,057
0.138%
487,435
0.118%
267,858
0.200%
50,986
0.175%
1,986,712
0.150%
1,655,825
0.109%
34,883
0.493%
2,667,191
0.128%
Total leachable reserves (kt)
Average copper grade
Copper contained in ore reserves
in pit (kt) (1)
kt = Thousand tons
(1) Copper contained in ore reserves for open-pit mines is (i) the product of sulfide ore reserves and the average copper grade proven plus (ii) the product
of sulfide ore reserves and the average copper grade probable plus (iii) the product of in-pit leachable reserves and the average copper grade. Copper
contained in ore reserves for underground mines is the product of sulfide ore reserves and the average copper grade.
6,137,799
0.147%
2,518,904
0.131%
916,821
0.231%
27,556
10,866
12,479
18,186
69,087
69,322
235
8
Letter to the Shareholders
SOuThERN COPPER CORPORATION AND SuBSIDIARIES
Selected Financial and Statistical Data
For the years ended December 31 (in millions except per share amounts,
employee data and stock and financial ratios)
2010
2009
2008
2007
2006
Consolidated Statement of earnings
Net sales
Operating costs and expenses
Operating income
Non-controlling interest of investments shares on
Peruvian Branch Income
$ 5,150
2,545
2,604
$ 3,734
2,249
1,485
$ 4,851
2,649
2,202
$ 6,086
2,588
3,497
$ 5,460
2,406
3,054
9
5
8
10
9
Net earnings attributable to SCC
Per share amount (1)
Net earnings attributable to SCC – basic and diluted
Dividends paid
Consolidated balance sheet
Total assets
Cash and cash equivalent
Total debt
Total equity
Consolidated statement of cash flows
Cash provided from operating activities
Dividend paid
Capital expenditures
Depreciation & depletion
$ 1,554
$ 929
$ 1,407
$ 2,216
$ 2,038
$ 1.83
$ 1.68
$ 1.09
$ 0.44
$ 1.60
$ 1.94
$ 2.51
$ 2.27
$ 2.31
$ 1.71
$ 8,128
2,193
2,760
$ 3,910
$ 6,058
772
1,280
$ 3,894
$ 5,764
717
1,290
$ 3,395
$ 6,581
1,409
1,450
$ 3,865
$ 6,376
1,023
1,528
$ 3,681
$ 1,921
1,428
409
$ 323
$
963
376
415
$ 323
$ 1,728
1,711
524
$ 327
$ 2,703
2,002
316
$ 328
$ 2,059
1,509
456
$ 275
Capital stock (1)
Common shares
outstanding (in millions)
NYSE price – high
NYSE price – low
Book value per share
P/E ratio
Financial ratios
Current assets to current liabilities
Net debt as % of capitalization (2)
Employees (at year end)
850
$ 48.84
$ 26.19
$ 4.58
26.66
850
$ 36.40
$ 12.74
$ 4.56
30.12
854.9
$ 41.34
$ 9.19
$ 3.96
10.03
883.4
$ 47.12
$ 16.84
$ 4.36
14.05
883.4
$ 19.37
$ 11.55
$ 4.15
7.79
3.25
12.7%
11,126
2.97
11.5%
11,510
2.11
14.4%
11,494
2.84
1.0%
12,268
2.84
12.1%
12,225
(1)The number of shares and values per share has been adjusted to reflect the 2008 and the 2006 stock splits.
(2) Represents net debt divided by net debt plus equity. Net debt is total debt minus cash and cash equivalents balances.
Annual Report 2010
9
E x p a n s i o n a n d M o d e r n i z a t i o n
P r o g r a m
$1,700
million in investment
As part of its five year investment program, in 2011, SCC has budgeted $1.7
billion in spending for the year, in Mexico is estimated to be $881 million and
in Peru $862 million.
10
Expansion and Modernization
Annual Report 2010
11
expanSion and
Modernization
prograM
We are committed to continuing the growth of our Company. In 2011 we will
continue with our capital investment program. We have budgeted $1.7 billion in
spending for the year. Spending in Mexico is estimated to be $881 million and
in Peru $862 million. This investment is part of our five year capital investment
program to increase production of copper and molybdenum. In general, the capital
expenditures and investment projects described below are intended to increase
production and/or decrease costs. Capital spending plans will continue to be
reviewed and adjusted in response to changes in the economy or market conditions.
We expect to meet the cash requirements for these projects from cash on hand,
internally generated funds and from additional external financing, if required.
Mexican operations
Buenavista SXEW plant III: In the second half of 2010, we restarted the project
and in December 2010 we completed a review of the basic engineering. We have
started the detailed engineering in January 2011 and, when completed, we will
begin the acquisition of major equipment and construction of the plant and new
infrastructure. The total budget for this project is $216 million, of which we have
spent $1.9 million through December 31, 2010.
Crushing, conveying and spreading system (“Quebalix III”): In 2010 the project
has also been restarted. We have almost completed the acquisition of the project
equipment and will begin construction of the crusher building and the conveying
12
Expansion and Modernization
En este proyecto esperamos invertir $70 millones de dolares
and spreading systems for the leachable ore. We expect a total investment of $70
million, of which we have spent $32.9 million through December 31, 2010.
Buenavista molybdenum plant: The basic engineering for the project is in process
and we expect it to be completed during the first quarter of 2011. Further, we
will complete the metallurgical testing and start the detailed engineering and the
procurement of the main equipment.
Pilares project: The Pilares mine site is located close to the La Caridad mine and
is being evaluated. As of December 31 2010, 13,700 meters of drilling have been
performed, access roads developed and metallurgical testing and preliminary mine
planning have begun.
Social programs for the Buenavista community are underway. The local hospital
has been reconstructed, two new water wells for the community have been
completed, as well as a street paving program, and the town library was provided
with modern technology to improve reference search capabilities.
Peruvian Operations
Tia Maria project: This project located in the Peruvian region of Arequipa, is
expected to produce about 260 million pounds of SXEW copper cathodes per year.
In connection with obtaining approval of the environmental impact study (“EIA”) of
the project, additional information, including the use of sea water, was submitted to
Annual Report 2010
13
the government. On December 1, 2010, MINEM approved a communication plan
with new options to use to inform the details of EIA to the local communities. We
completed the communication plan in January 2011, which included the opening of
three information offices in the communities that would be mostly impacted by the
project and we held four informative meetings with citizens of the local communities.
In addition, advertisements explaining the project were placed in local newspapers
as well as on local television and radio stations. On February 1, 2011, we filed a
report with MINEM indicating full completion of the program. The observation and
comment period for the local and community members and other stakeholders,
including environmentalist and non-governmental organizations, expires on March
2, 2011 and we expect to receive approval of the EIA during the second quarter of
2011. Construction work is scheduled to begin in the second quarter of 2011 and
copper production will start by the fourth quarter of 2012. Current investment in the
project is focused on the development of engineering studies for the mine facilities
and on the purchase of equipment for copper extraction processes. We estimate
a total investment of $934.0 million of which $432.5 million was spent through
December 31, 2010.
14
Expansion and Modernization
Toquepala concentrator expansion: Through 2010, we have spent a total of $123.1
million on the Toquepala concentrator expansion. The approval of the use of high
pressure grinding rolls (hPGR) and wet screening at the tertiary crushing stage
will reduce capital and operating cost. The scope of the project is currently under
review as we are evaluating an increase in milling capacity to 60,000 tons per day
from the 40,000 tons per day originally planned. As a result of this review, the EIA
is expected to be presented during the second quarter of 2011 and the project start-
up in the first half of 2013.
Cuajone concentrator expansion: This project will expand the concentrator to process
105,000 metric tons per day and has a total capital budget of $301 million, of which
we have spent $41.3 million through December 31, 2010. Increased production from
this expansion project will begin in the second half of 2011. The purchase of mine
and auxiliary equipment to support the work to optimize the Cuajone mine plan is in
progress. As part of the expansion plans, the project contemplates a variable cut-off
grade methodology, which will increase copper and molybdenum production by a
total of 147,000 tons and 3,000 tons, respectively, in the next 10 years.
Annual Report 2010
15
Tailings disposal at Quebrada honda: This project will increase the height of the
existing Quebrada honda dam to impound future tailings from the Toquepala and
Cuajone mills and will extended the expected life of this tailings facility by 35 years.
The first stage of the tailings disposal project was completed. Construction of the
drainage system for the lateral dam started in June 2010. The project has a total cost
of $66 million with $47.0 million expended through December 31, 2010.
Ilo smelter modernization: In May 2010, the Ilo smelter marine trestle, with a total
cost of $25.3 million, started operation. We now offload directly to offshore ships
the sulfuric acid produced at the Ilo smelter, avoiding hauling cargo through the city
of Ilo. The 500 meter long marine trestle is the last component of the Ilo smelter
modernization project.
OThEr CaPiTal ExPENdiTurES
Tantahuatay: The construction of the Tantahuatay gold project, in which we have an
44.25% participation with Compania de Minas Buenaventura, has advanced and is
expected to start dore gold production by June 2011. The project is expected to have
16
Expansion and Modernization
an average annual production of 90,000 ounces of gold and about 426,000 ounces of
silver, for five years. It will require a total investment of $110 million. During 2011, we
will continue to assess the underlying copper deposit for possible future development.
El Arco: El Arco is a world class copper deposit in the central part of the Baja
California peninsula, with estimated mineralized material of over 1.0 billion tons
with an ore grade of 0.51% and 14 grams of gold per ton. This project is expected
to produce 190,000 tons of copper and 105,000 ounces of gold annually. We
continue to invest in land acquisition required for the project. In 2010, the project
feasibility study was completed at a cost of $15.0 million.
POTENTial PrOjECTS
We have a number of projects that we may develop in the future. We evaluate
new projects on the basis of our long-term corporate objectives, expected return,
environmental needs, required investment and estimated production, among other
considerations. All capital spending plans will continue to be reviewed and adjusted
to respond to changes in the economy or market conditions.
Annual Report 2010
17
E x p l o r a t i o n
$34.3
million in exploration
El Arco, in 2010, a deep drilling program of 1,214 meters indicated
approximately 390 million tons of mineralized material with 0.62% ore
grade.
18
Exploration
million in exploration
Annual Report 2010
19
expLoration
We are engaged in ongoing extensive exploration to locate additional ore bodies in
Peru, Mexico and Chile. We also conduct exploration in the areas of our current
mining operations. We invested $34.3 million in 2010, $24.6 million on exploration
programs in 2009 and $37.0 million in 2008 and we expect to spend approximately
$14.7 million in exploration expenditures in 2011.
Currently in Peru, we have direct control of 170,846 hectares of mineral rights. In
Mexico, we currently hold 174,887 hectares of exploration concessions. We also
currently hold 35,958 hectares of exploration concessions in Chile.
Mexican Operations
In addition to exploratory drilling programs at existing mines, we are currently
conducting explorations to locate mineral deposits at various other sites in Mexico.
The following are some of the more significant exploration projects:
El Arco. The El Arco site is a copper deposit located in the state of Baja California
in Mexico. Exploration works at the site indicate approximately 1,207 million tons
of mineralized sulfide material with an average copper content of 0.5% and 0.125
grams of gold per ton and 290 million tons of copper oxide with a 0.35% copper
grade. In 2010, a deep drilling program of 1,214 meters indicated approximately
390 million tons of mineralized material with 0.62% of copper content below the
current pit limits. During 2011, we expect to increase the estimated mineralized
material with a diamond drilling program of 5,000 meters.
Water source for the leaching operation was identified in 2009 and in 2010 four
new production wells were drilled and confirmed an underground water availability
of 300 liters per second in the area.
20
Exploration
The feasibility study performed in 2010 was concluded and during 2011 we will
evaluate the results to define the next steps of the project.
Angangueo. The Angangueo site is located in the state of Michoacan in Mexico.
A deposit of 13 million tons of mineralized material has been identified with
diamond drilling. Testing indicates that the deposit has mineralized material
containing 0.16 grams of gold and 262 grams of silver per ton, with 0.79%
lead, 0.97% copper and 3.5% zinc. In 2005, we received the approval for our
environmental impact study and we are in the process of obtaining land use
approval. During 2009 and 2010, we continued negotiating with the state of
Michoacan, Mexico to purchase various properties essential to our operations.
We expect to obtain a final agreement with state government in 2011. A
prefeasibility study, commissioned in 2009, indicated that the Angangueo
project needs to upgrade the Descubridora vein with more drilling. In 2010 we
started the feasibility study that we expect to complete in 2011 to evaluate the
construction of the project.
Buenavista-zinc (formely named Buenavista). The Buenavista-zinc site is
located in the state of Sonora, Mexico and forms part of the Buenavista ore
body. Drilling and metallurgical studies have shown that the zinc-copper deposit
contains approximately 36 million tons of mineralized material containing 29
grams of silver per ton, 0.69% copper and 3.3% zinc. A new “scoping level”
study indicates that Buenavista-zinc may be an economic deposit. Due to the
now settled labor strike at the Buenavista mine no work was performed from
2008 through 2010. In 2011 we expect to resume the project, complete the
feasibility study and evaluate starting the initial stripping and the construction of
the concentrator.
Annual Report 2010
21
Carbon Coahuila. In Coahuila, an intensive exploration program of diamond drilling
has identified two additional areas, Esperanza with a potential for more than 30
million tons of “in place” mineralized coal and Guayacan with a potential for 15
million tons of “in place” mineralized coal, that could be used for a future coal-fired
power plant. During 2010, 1,213 meters of diamond drilling were completed at the
Rosita pit area and with this drilling, 10,100 tons of mineralized coal were added
to the mineralized material estimates for this open pit project. In 2011 we plan to
continue the exploration of the open pit coal project between the Conquista and La
Caballada pits.
The Chalchihuites. The Chalchihuites site is located in the state of zacatecas. It is a
replacement deposit with mixed oxides and sulfides of lead, copper, zinc and silver.
A drilling program, in the late nineties, defined 16 million tons of mineralized material
containing 95 grams of silver, 0.36% lead, 0.69% copper and 3.08% zinc per ton.
Preliminary metallurgical testing indicates that a leaching precipitating-flotation
recovery process can be applied to this ore. In 2009, we started a prefeasibility
study which is expected to be completed by the end of 2011. In 2010 we signed an
agreement for the Cronos claims and plan to add the Guadalupe de Guantes claim
in early 2011. Exploration at these claims will be done in 2011 and is expected to
add at least 10 million tons to the current mineralized material estimates.
22
Exploration
Pilares. In 2008, we bought Freeport-McMoran’s 49% interest in Minera Pilares,
S.A. de C.V. (“Pilares”), giving us 100% ownership. Pilares is located in the state
of Sonora, ten kilometers from the town of Nacozari de Garcia and six straight line
kilometers from our La Caridad mine. The work to clear and prepare the access to
the Porvenir tunnel started at the end of 2008 was suspended the same year due to
unexpected difficulties in crossing a fault. It was replaced by superficial drilling.
Calculations using Mine-Sight software indicated 52.9 million tons of estimated
mineralized material, with 0.92% copper content. Because all previous mineralized
material calculations were based on rotary drilling, a diamond drilling program of
13,200 meters was performed in 2010 which confirmed these estimates of mineralized
material. A “heavy medium” metallurgical test was also conducted on core from this
drilling. Preliminary results indicate that this method may be feasible for the Pilares
ore. The feasibility study started in 2010 and we expect to complete it by the end of
the second quarter 2011. As part of the feasibility study, we will perform metallurgical
testing in a pilot plant to confirm the laboratory results.
Sierra de Lobos. This project is located southwest of the city of Leon, Guanajuato.
Our target is to identify a copper and zinc deposit with mineralized material with
average grades between 0.5% and 1.0% copper and between 5% and 7% zinc
including a small contribution of gold and silver. In 2008, 1,636 meters were drilled.
Annual Report 2010
23
Results confirm the presence of copper and zinc mineralization, but an economical
deposit has not yet been identified. Due to the changes in our investment program
priorities no work was performed in 2009 and 2010. We expect to resume the
drilling work on this project in the second half of 2011.
Peruvian Operations
Los Chancas. The Los Chancas project, located in the department of Apurimac in
southern Peru, is a copper and molybdenum porphyry deposit. As a result of the
pre-feasibility studies and after the preliminary design of the pit, estimates show
355 million tons of mineralized material with a copper content of 0.62%, 0.05% of
molybdenum and 0.039 grams of gold per ton. In 2010, 9,944 meters of diamond
drilling were performed thus concluding the complementary studies geared to
define the mineralized material of the deposit. Likewise, as part of the feasibility
study, the geotechnical studies were concluded. The Company plans to conduct
the feasibility study of the project in 2011.
Tantahuatay. The Tantahuatay project is located in department of Cajamarca in
northern Peru. In 2010, we began development of this project to exploit the gold
“cap.” There are estimated resources of 27.1 million tons of mineralized material,
with an average silver content of 13 grams per ton and 0.89 grams of gold per ton.
We expect to start dore gold production by June 2011 and the project is expected to
have an annual production of 90,000 ounces of gold and 425,000 ounces of silver
for five years. We have a 44.25% participation in this project.
24
Exploration
hay recursos estimados de 27,1 millones de toneladas de material mineralizado
During 2011 we will continue to assess the underlying copper deposits for possible
future development.
Other Peruvian Prospects
As part of the 2010 exploration program, we concluded a program of 8,000
meters of diamond drilling in the central coast of Peru and started the drilling
work at the huallas project located in the department of Ayacucho (a skarn
of copper-lead-zinc) and at the Clara project (copper porphyry) located in the
department of Arequipa, where the Company has a 15,000 meter diamond
drilling program.
Additionally, for 2011 we are considering developing a diamond drilling program
of approximately 10,000 meters for some prospects located in the northern and
southern parts of Peru. We will continue with the regional exploration program of
the various mineral deposits in Peru.
Chile
Ticnamar. The Ticnamar prospect, located in northern Chile, has been explored
as a deposit with copper-molybdenum porphyric veins. In 2010, 1,431 meters of
diamond drilling were completed. For 2011 we have planned geophysical studies
geared to locate new drilling targets.
Annual Report 2010
25
Catanave. Located in northern Chile (Arica), Catanave belongs to a mineralized
epithermal system of gold and silver. In 2010, the environmental impact study
was approved and for 2011 we have planned a diamond drilling program of 5,500
meters.
Santa Marta. Located in the Atacama region, Santa Marta is being explored for
copper and molybdenum porphyry. During 2010 we diamond drilled 3,318 meters.
Exploration will continue in 2011.
San Benito. Located in the Atacama region, San Benito is being explored for copper
and molybdenum porphyry. In 2010 a diamond drilling program of 3,241 meters
was completed. In 2011 we are planning geophysical studies geared towards
locating new drilling targets.
El Salado y Resguardo de la Costa. During 2010 we evaluated the results of the
exploration stage of these two copper-gold prospects located in northern Chile
(Atacama area) and decided to put on hold temporally these prospects for further
evaluation.
Other Chilean Prospects
For 2011 we plan to continue with a regional exploration program oriented to locate
systems mainly of porphyrycs of copper and molybdenum.
26
Exploration
Annual Report 2010
27
C o m m u n i t y O u t r e a c h
13,397
benefit
Thirty five educational infrastructure projects, and development of
knowledge were considered benefit by 90% of the participants.
28
Community Outreach
benefit
Annual Report 2010
29
CoMMUnitY oUtreaCh
Mexican Operations
Southern Copper, through its subsidiary, Minera Mexico, develops various social action programs in the
surrounding areas of its mining and metallurgical operations, such as:
San luis Potosi Bicentennial Park
With an investment of $47.5 million, Minera Mexico built the 5.5 hectare Bicentennial Park. The Park has
a sustainable design that includes irrigation from recycled waste water from a treatment plant constructed
in 2009. The park also includes the latest generation lighting based on solar energy photovoltaic and
leds, native vegetation and a water-saving drip irrigation system.
Support in natural disasters
In Angangueo, Michoacan, we participated in supporting plans to meet the emergency caused by the
heavy rains of February, 2010. We also helped in the reconstruction phase. The assistance included
providing food pantries, personal protective equipment, equipment for debris removal and the clean-up.
We also provided units for the handling of food, fuel, and offices for the assistance of the community.
Pinacate
We built a square in the heart of Nacozari de Garcia, aiming to stimulate integration and healthy
development of the population through education, culture, and recreation.
In all of the Company’s business centers the consolidation of the community development centers was
achieved. This strengthens human capital, creation of productive projects, drug addiction prevention
programs, sports promotion and environmental, cultural and human development.
30
Community Outreach
Participate for Cananea
“Participate for Cananea” is an ongoing initiative of the Company to stimulate Cananea’s economy and
restore the population’s confidence after the depression caused by the prolonged period of labor strife.
"Participate for Cananea" consists of a two-year investment program for which the economic development
of Cananea includes the participation of local suppliers. A community committee was formed with
responsibility for monitoring the process and its transparency. The Casa de Encuentro, (the Meeting
house) a community center, was created.
The program includes:
Thirty five educational infrastructure projects, consisting of the rehabilitation of sports, health, and
recreational facilities; safety (floors, windows, perimeter fences); quality (ceiling, technology, and
equipment) and development of knowledge (support to libraries). Beneficiaries are 13,397 people,
including children, teachers, and their families. 90% of the participants consider that the projects benefit
themselves, their families or their community. (The total population of Cananea is 33,000).
57 social development projects aimed at young people, children, women, suppliers, people with
disabilities, elders, and other social groups. These projects generate community spaces for social
gatherings, including cultural, sporting, environmental, recreational, strengthening of skills and
leadership development, wellbeing, health, and social networking. They have benefited 11,380 people.
The support of local suppliers was obtained and their economic contribution has benefited more than 40
businesses in the city to date.
Annual Report 2010
31
The Cananea project seeks the generation of a new relationship between the Company and the community.
During 2010, the Company committed to the State and Federal Government to perform a series of works
in different industries, with the aim of contributing to the improvement of the city, sustainability of the
community, and to the strengthening of current relationship of the Company with its inhabitants.
With an investment of approximately $0.6 million, five of the city’s most important streets have been
paved, which has provided the community with better channels of communication and transport. It also
improves the access way to the Cananea Industrial Park.
To improve the drinking water supply for the city, Minera Mexico drilled two water wells that will be
connected to the local drinking water system, to benefit the community because each of them contribute
with a flow 80 liters per second.
Medical service. $0.8 million were invested for the remodeling the Cananea General hospital. The
improvements include a new drainage network, repairs of the electrical system, the heating and air
conditioning equipment and carpentry and key locker work.
The library of Cananea was modernized with the installation of a new computer to provide a better service
to the library users.
A new entertainment center is planned which will have four theaters each with seating for 120 people,
commercial and food court areas as well as a mining museum. Land for the center has already been
purchased.
32
Community Outreach
Se firmo la tercera etapa del Programa de Desarrollo de Capacidades
To support the child population and provide a healthy space for recreation, the
Company will rehabilitate the playground for basketball, will improve existing
facilities and will completely reconstructe other areas.
Promoting the education of the Sonora population, the Company and the Becalos
Foundation have awarded 120 scholarships in Cananea and 40 in the city of
Nacozari.
The development of suppliers in the city is also very important for the development
and economic recovery of Cananea and the surrounding region. For this reason,
we plan to contract 30 companies to provide services and materials for the
reconstruction of the mine. With this action, the Company is encouraging the
stimulation of the economy and the improvement of the region.
Annual Report 2010
33
CoMMUnitY
oUtreaCh
Peruvian Operations
Southern Copper promotes sustainable development projects for Tacna, Moquegua,
Arequipa, and Apurimac regions, located close to our operating areas, by means
of voluntary contributions made through the “Asociacion Civil Ayuda del Cobre”,
as part of the Mining Program of Solidarity with the People (“Programa Minero de
Solidaridad con el Pueblo”), signed with the Peruvian government.
These projects are ongoing in co-participation with public and non-governmental
organizations to achieve the best benefit for the surroundings localities, taking
into account the legislation and the historical and cultural characteristics of each
locality.
Southern Copper conducted the following programs and/or projects during 2010:
WaTEr rESOurCES
› Minor irrigation infrastructure work continued in partnership with the farmers from
Candarave, with an investment of approximately $0.4 million. Also, we completed
the enhancement of the Patapatani-Santa Cruz hydraulic canal with the lining of
5.75 kilometers, improving water resources by 70 liters per second; as well as
the lining of 6.2 kilometers of the Tacalaya-Camilaca hydraulic channel. Also,
34
Community Outreach
we rehabilitated the Santa Cruz reservoir, whose storage capacity is 17,280 cubic
meters of water, optimizing water resources by 8 liters per second. The investment
amounted approximately to $0.4 million.
› Through the “Asociacion Civil Ayuda del Cobre” and in agreement with the National
university of Engineering (universidad Nacional de Ingenieria – uNI) the Callazas
dam’s feasibility study is in process with an investment of $0.8 million. The study
includes Component 1, the study of the dam and complementary works; Component
2, major infrastructure work for the transmission and distribution, irrigation and
agricultural development; and Component 3, the study of the environmental and
social impact of the Callazas river regulation system. The Company expects to
invest approximately $1.3 million. This project will ensure optimal and rational use
of water resources by storing 10 million cubic meters of water per year to be used
during the low-water mark season.
› The program to improve the irrigation infrastructure in the Ilubaya Annex, located in
Torata district (Moquegua region) was completed with an investment of $0.8 million
to rehabilitate 4.9 kilometers of canals to benefit the farmers of that district. This work
optimized the use of water resources by 8 liters per second. Also, the intake area was
built to capture the Torata river water and send it efficiently to agricultural land.
Annual Report 2010
35
› Southern Peru, through the “Asociacion Civil Ayuda del Cobre” signed an
agreement with the National Cooperation Fund for Development (FONCODES) for
the improvement of water infrastructure and sanitation treatment plants, which will
promote socioeconomic development in Candarave through construction and/or
the rehabilitation of canals and reservoirs for agricultural use. By this agreement,
the Company will invest approximately $0.7 million and FONCODES $2.8 million.
This agreement also involves the Candarave, Cairani, huanuara and Quillahuani
municipalities.
› The profile of the pre-investment study for the construction of the Cularjahuira
dam and supplemental irrigation system were conducted to extend the water
storage capacity of the regulatory reservoir of Cularjahuira dam. The investment
of approximately $0.1 million will have impact on the communities Camilaca and
Candarave, as it will help to improve the quality and quantity of production of
typical agricultural products in these areas.
agronomy
› Oregano, main marketable crop in Candarave is being enhanced with the
implementation of the extension of the project: Strengthening of the Competitiveness
of Producers of oregano in Candarave Province, in partnership with the non-
governmental organization “El Taller” from November 2010 to May 2011. This
extension of the project will allow improved levels of productivity, as well as
processing and marketing. The investment planned for this project amounts to
$28,900.
› Ten producer associations of this aromatic species from the Cairani, Candarave,
huanuara and Quilahuani districts, who have a view to forming an organization
to unify the production and market in order to obtain the benefit of size, has been
involved. This initiative receives support from the Provincial Municipality of
Candarave, who participates in the working meetings promoted by Southern Peru
and the non-governmental organization “El Taller”.
36
Community Outreach
Annual Report 2010
37
›
›
In Candarave the thyme crop continued. Thyme is a product used as a condiment
and in the pharmaceutical industry. In agreement with the non-governmental
organization “El Taller, a installation of a canola field, a seed that contains Omega
3 and Omega 6 and which produces vegetable oil, was successfully completed.
Also rosemary, other aromatic herb, with local and international demand, is being
developed.
In addition, aiming to improve forage production and to increase the crops
productivity in the area, the sowing of cereals (oats, corn and wheat) continued
through the agreement signed with the Agricultural Development Foundation
(Fundacion para el Desarrollo Agrario) and the National Fund for Job Training
and Employment Promotion (FONDOEMPLEO). The main production areas are
Aricota and Yucamani, where forage is marketed to the most part of the Candarave
province.
› The implementation of the technical training and agricultural mechanization project,
in Candarave, (Tacna region), allowed to have agricultural machinery in the service
of farmers in the districts of Cairani, huanuara and Quilahuani, who benefit in their
work of preparing the soil for their crops with tractors donated last year by the
Company.
›
In the Torata district, there was the donation of a farm tractor plus a reversible disk
plow to the board of irrigation users. The total value of the donated equipment
amounts to approximately $0.1 million, which will allow reducing the current deficit
of mechanization for the farmlands (1,491 hectares).
38
Community Outreach
Stockbreeding
› The Climate Risk Prevention program continued helping with the cattle emergency, which was due to the
shortage of forage in four districts of Candarave province. Attention was given to the cattle producers
affected by the drought, through the delivery of packed hay of alfalfa and forage oats, grown in producing
areas at low cost. This measure reduced the shortage of food for cattle and contributed to maintain
productivity levels and avoided an excessive loss of cattle.
› The Animal health program is one of the technical assists most demanded by livestock producers
in 17 communities, located in the districts of Cairani, Candarave, huanuara and Quilahuani, through
personalize technical assistance to producers, using preventive medicines and treatment for diseases
prevalent in the province. The average annual care amounts to 3,000 cases.
› The Genetic Improvement program for milk cattle and hampshire sheep continues its activities in five
communities in the District of Quilahuani, through its two breeding centers in the Aricota communities
and Quilahuani, the capital of the district of the same name. There are services of artificial and natural
insemination with hampshire registered sheep, and holstein and Brown Swiss cattle milk for artificial
insemination with frozen semen, in agreement with the Quilahuani Municipality. The total investment
of the project was $34,848.20. Similarly, in the districts of huanuara and Cairani - under the same
modality - two breeding centers have been implemented to provide services to livestock producers in the
communities of those districts with an investment amount of $41,973.11.
› Promoting the efforts of the agricultural producers, agricultural fairs were supported in Aricota,
province of Candarave, and in the district of huanuara (in terms of organization, logistics and awards).
Events included the exhibition of the best specimens of the various breeds of cattle, South American
camelids, sheep and Peruvian Paso horses, as well as the most representative agricultural products
in the area.
Annual Report 2010
39
› Selection of Alpaca with phenotypic and genotypic characteristics suitable for
controlled mating assured huaytire Alpaca farmers a new generation of 283 animals
of greater economic value. Thus an alpaca in the area is valued in approximately
$50, but the same improved animal costs approximately $250. The two controlled
mating facilities built, along with the purchase of 42 improved male breeding
alpacas, between 2008 and 2009, facilitated the implementation and use of the
methodology, besides the collection of field information.
› Livestock fairs were supported in Tacalaya and huaytire, where the best domestic
specimens of South American camelids were shown, stimulating the participation
of the main alpaca producers of the area and showing the benefits of controlled
mating methodology.
Nutrition
› The successfully "Southern Forming healthy Communities" (PRONuT) nutrition
program, continued through the installation of improved stoves (EcoCocinas), that
contribute to improve housing health and to prevent respiratory and gastrointestinal
diseases, mainly in pregnant women and children under five years old.
›
In the communities of Ancocala, huanuara, Patapatani and Quilahuani, 433 clean
stoves were distributed. These stoves have the quality certification of the National
Service Training for Construction Industry. At the beginning of 2011, 267 stoves
will be distributed increasing the total to 700 clean stoves with a total investment
of $54,200, thus avoiding the carbon dioxide pollution from traditional fuel wood
stoves.
› Twelve wawa wasis (temporary childcare hostels that support working mothers or
families) were introduced under an inter-institutional agreement signed between
Southern Peru and the Ministry of Women and Social Development (MIMDES),
and the district municipalities of huanuara and Quilahuani. In accordance with the
40
Community Outreach
framework agreement, the Company participated with the amount of $34,114 from
a total of $0.4 million, for equipment and extension of the premises of the wawa
wasis.
Strengthening of Productive Capacities
› The Alpaca Genetic Improvement Project continues in the community of huaytire,
through the application of controlled mating methodology, getting 283 improved
animals that benefit the textile production chain for alpaca in the highland
community. For this purpose, 966 female alpacas at breeding stage were selected,
qualifying because of phenotypic characteristics appropriate to race (shape, size,
presence, general appearance, fiber density, presence of curls, consistency and
fineness). The average of fiber microns in the selected female breeding alpacas
was 23; also 21 male breeding alpacas from Puno were acquired, according to the
above mentioned criteria, hose microns averaged 21.6 (thinner). Two controlled
mating facilities for the application of the methodology were built.
› Veterinary technical assistance in Japopunco, huaytire and Tacalaya continues,
supporting the livestock development of South American camelids in the area.
› Additionally, the construction of the new facility for hat workshop production
improvement project continues in the community of Tacalaya. It seeks to achieve
the mass production of hats, fur fiber products and derivatives for their sale in local
markets and abroad.
›
Incentive to the best senior students of the town of huaytire continues with
scholarships of $1,400 for each beneficiary.
› The second phase of the agreement of the Project for Efficient Water Management
Resources in Torata was completed. This project was carried out in co-participation
with the Irrigation Commission of Torata (Moquegua region). This program
Annual Report 2010
41
optimizes the management and use of water among farmers, as well as strengthens
the institutional and administrative operation of the beneficiary board. The cost of
the program in its second stage amounted to $29,100.
› One of the most outstanding results was the obtaining of 48.26% in the collection
of water usage fees for the period 2009-2010, that mostly exceeds past records
of 15% (2005), 34% (2007) and 65.16% (2008). This demonstrates the
sustained growth of this sector in recent years thanks to the program. Also a
final management index of 70.31 points was achieved by processing indicators
on technological, operational and financial management capacity. This scale of
measurement represents the quantification of results, to set more ambitious goals
in the following steps.
› Also important were the organization of training programs and public dissemination,
through publications and conferences, of “The New Water Resources Law"
(No. 29338), which called the attention of farmers and settlers of Torata. Similar
attention obtained the courses "Distribution of Water in Torata" and "Strengthening of
Administrative and Financial Management Capacities” for the benefit of those farmers.
› Also to be mentioned are the internship granted to target users in the traditional
Colca Valley, Arequipa Region, where they shared experiences with the Colca Valley
Board of users. Also there were irrigation practices in Torata Alta and Yacango,
which result extremely useful and successful.
42
Community Outreach
› With the same program resources, the people that collected information dealing
with the Planting and Irrigation Plan of the Agricultural Campaign 2009-2010 were
paid.(95% of users expressed their intention to work the land in this period).
›
In addition, it has to be considered the installation of meters in calibrated sections of
the canals Alegoma, Cala Cala, Chacane, Coplay, Ilubaya, and Torata Alta and Yarane,
› Based on these results, the third phase of the Capacity Development Program
2010-2011 was signed. The contribution of Southern Peru will amount to $24,600,
aiming to consolidate the Board of users strengthening it as an institution.
› Also, in Torata, the Agricultural house was put into operation, with a contribution
of $20,800, through an agreement of co-partnership with the District Municipality
of Torata and the Irrigation Board of users of Torata. This project will provide
farmers with agricultural products (pesticides, fertilizers) and cattle producers with
medicine at low-cost, as well as will contribute to the economic strengthening of
the Board with a new source of income.
Education
› A total of $4.2 million was used through 2010 in the Teacher Training Project for the
benefit of the Moquegua Region. This project includes training of 2,902 teachers
in information technology and curricular areas.
Annual Report 2010
43
› By investing $0.4 million, 420 young people were trained in the province of Islay
in specialties such as front-end loader operator, backhoe operator, port operator,
monitor operator, industrial electricity operator, metal construction, planting and
harvesting operator and shrimp harvesting.
› A total of $0.3 million was used in the project of Technical Training Association of
Commissions of users and Farmers of Tambo, in the province of Islay, Arequipa
Region, allowing the equipment with agricultural machinery such as 1 backhoe, 1
excavator and 1 dump truck.
› The Technical Training and Agricultural Mechanization Project in Candarave
(Tacna Region) allowed the donation of 3 tractors and an equal number of units
with reversible plow system, with an investment of approximately $0.2 million,
benefiting the Cairani, huanuara and Quilahuani communities. The same project
was applied to the province of Islay (Arequipa Region), with the donation of 1 tractor
with reversible plow system ($65,000) for the farmers of the district of Punta de
Bombon.
› A scholarship program started with the non-governmental Instituto Tecnologico –
TECSuP. Beneficiaries are young people of the Province of Islay. The total program
investment is $46,000.
› The delivery of computer equipment, school furniture, blackboards and libraries
continued, and benefited 1,273 students, from 27 schools in the province of
44
Community Outreach
Se firmo la tercera etapa del Programa de Desarrollo de Capacidades
Candarave (Tacna Region) and 1,937 students from 39 schools in the province of
Mariscal Nieto (Moquegua Region).
› The National Program of Mobilization for Literacy was completed; it required a total
investment of $23,100. The objective was to reduce the current rate of illiteracy of
the adult population in six districts in the province of Islay (Arequipa Region), to
promote their socio-economic development. The program benefited 443 illiterate
persons and instructed 1,732 persons of the province, with the teaching of reading,
writing and mathematics.
health
› The Company, through the “Asociacion Civil Ayuda del Cobre”, invested $0.2
million in the implementation of an integrated health campaign in the districts of
Cocachacra, Punta de Bombon and Dean Valdivia, in the province of Islay (Arequipa
Region). The campaign was carried out by the Catholic university Santa Maria of
Arequipa (universidad Catolica Santa Maria de Arequipa - uCSM), and served
1,080 people of the 3 above mentioned districts.
infrastructure
› The roads were asphalted and the sidewalks culminated in Pueblo Nuevo (district
of Pacocha, Ilo province) with the construction of flexible pavement in an area
of 37,766.17 square meters with horizontal signaling, concrete works (rowlocks,
Annual Report 2010
45
retaining walls, sidewalks); an improvement of 631.07 square meters of asphalted
roads (including repaving), as well as reconstruction, improvement and rethinking
of the electrical system within the urban area. The investment totaled $2.7 million.
› The feasibility study for the improvement of the Ilabaya-Cambaya-Camilaca road,
whose two sections total 41.7 kilometers of widening, burdened, surface treatment
and berms, started. Also it will include the construction work for the stabilization
of slopes with an investment of $0.5 million.
› We extended our social contribution to the Apurimac region, where the Company is
development the Los Chancas project. Three classrooms of elementary education
were built in the Ccoriray School, in the district of Tapayrihua, Apurimac. The
construction with noble material, reinforced concrete, masonry and first line finish
will contribute to the development of abilities of pupils and teachers of the place
and 200 beneficiaries in the jurisdiction. The investment was $0.1 million.
Southern Copper promotes better quality of life in communities located in its
neighboring communities through the “Asociacion Civil Ayuda del Cobre”, which
manages and invests the funds of the voluntary contribution in social projects of
sustainable development. During 2010, the Company constituted a Local Fund of
$12.1 million and a Regional Fund of $46.3 million, for the benefit of the regions of
Tacna, Moquegua, Arequipa and Apurimac.
46
Community Outreach
Table Nº 01
FuNDS SET
ANNuAL AMOuNTS DEPOSITED ($ ,000)
Period
Regional Fund
Local Fund
Comision de la Verdad (CVR)
Total Funds
2007
2008
2009
2010
12,741.10
14,071.65
9,798.23
7,153.89
3,318.00
3,664.49
2,551.62
1,862.99
TOTAL
43,764.87
11,397.10
Source: Asociacion Civil Ayuda de Cobre (ACAC)
530.88
586.32
408.26
298.08
1,823.54
16,589.98
18,322.45
12,758.11
9,314.96
56,985.50
Informe Anual 2010
47
R e s u l t s o f O p e r a t i o n s
$5,149.5
million net sales in 2010
Net sales in 2010 were $5,149.5 million, compared with $3,734.3 million in 2009.
The increase was principally a result of higher average metal prices and higher
molybdenum sales volume.
48
Results of Operations
Annual Report 2010
49
The Company’s operating cash cost, as previously defined, for the three years ended December 31, is as follows:
Cash cost per pound of copper produced
Cash cost per pound of copper produced, (excluding by-products revenue)
2010
2009
2008
(cents per pound)
16.80
150.9
35.8
135.9
21.8
157.1
reSULtS of
operationS
for the years ended
december 31, 2010, 2009
and 2008.
SCC reported 2010 net income attributable to SCC of $1,554.0 million or diluted
earnings per share of $1.83, compared with net income attributable to SCC of
$929.4 million or diluted earnings per share of $1.09 in 2009, $1,406.6 million
or diluted earnings per share of $1.60 in 2008.
The increase in 2010 net income attributable to SCC, is mainly due to higher
metal prices and higher volume of molybdenum sales.
The increase in metal prices was a result of improvements in the global economy
and in copper case was helped by increased demand from China. During 2010,
average copper price was $3.42 per pound, compared with $2.34 per pound in
2009.
The Company presents its operating costs both including and excluding the
revenues of its byproducts (molybdenum, silver, zinc, etc.) and net revenue on
sale of purchased concentrates. Excluded from its calculation of operating cash
cost are the cost of purchases of third parties metal, depreciation, amortization
and depletion, exploration, workers participation provisions and other items of
non-recurring nature, and the royalty charges.
As seen on the chart above, our cash cost per pound for 2010 when calculated
with by-products revenue is 16.8 cents per pound compared with 35.8 cents per
50
Results of Operations
pound in 2009. The increase in the by-products credit in the 2010 period was
largely due to higher sales prices for molybdenum, silver and zinc and a record
molybdenum production in 2010. The increase in the credit for molybdenum
was 29.0 cents per pound in 2010, of which 19.0 cents was due to the higher
prices.
Our per pound cash cost, excluding by-product revenues, was higher by 15.0
cents per pound in 2010 compared with 2009 principally due to a increase of 13.5
cents per pound in production cost mainly power and fuel cost due to increased
market prices, labor due to salary increases, local currency appreciation and
repair costs.
Net sales: Net sales in 2010 were $5,149.5 million, compared with $3,734.3
million in 2009. The increase was principally a result of higher average metal
prices and higher molybdenum sales volume.
Molybdenum sales volume increased 10.3%, following a production record
in 2010 due primarily to grade and recovery increases at the La Caridad and
Toquepala mines.
The increase in metal prices was a result of improvements in the global economy
and, in the case of copper, was helped by increased demand from China.
Annual Report 2010
51
Price / volume data
Average metal prices
Copper (per pound – LME)
Copper (per pound – COMEX)
Molybdenum (per pound)
zinc (per pound – LME)
Silver (per ounce – COMEX)
Sales volume (in thousands)
Copper (pounds)
Molybdenum (pounds) (1)
zinc (pounds)
Silver (ounces)
2010
2009
2008
$
$
$
$
$
3.42
3.43
15.66
0.98
20.18
$
$
$
$
$
2.34
2.35
10.91
0.75
14.67
$
$
$
$
$
3.16
3.13
28.42
0.85
14.97
2010
2009
2008
1,106,067
1,117,774
1,114,521
45,213
207,151
15,450
40,984
228,927
18,169
36,396
221,161
15,000
(1) The Company’s molybdenum production is sold in the form of concentrates. Volume represents pounds of molybdenum contained in concentrates.
Net sales in 2010 include a loss of $41.9 million on copper hedges. There was
no copper derivative activity in 2009.
Prices: Sales prices for the Company’s metals are established, mainly by
reference to the prices quoted in the London Metal Exchange (LME) and The
New York Commodity Exchange (COMEX), or published in the Platt’s Metals
Week, for dealer oxide mean prices for molybdenum.
52
Results of Operations
Annual Report 2010
53
E n v i r o n m e n t a l M a t t e r s
$13.3
in environmental capital expenditures
The Company has instituted extensive environmental conservation
programs at its mining facilities in Mexico and Peru. In 2010, SCC invested
$10.2 million in Mexico y $3.1 million in Peru.
54
E n v i r o n m e n t a l M a t t e r s
in environmental capital expenditures
Annual Report 2010
55
Environmental capital expenditures in the year 2010, 2009 and 2008 were as
follows (in millions):
Peruvian operations
Mexican operations
2010
2009
2008
$
3.1
$
10.2
$
2.4
25.1
0.5
13.1
$
13.3
$
27.5
$
13.6
environMentaL
MatterS
The Company has instituted extensive environmental conservation programs at
its mining facilities in Peru and Mexico. The Company’s environmental programs
include, among other features, water recovery systems to conserve water and
minimize impact on nearby streams, reforestation programs to stabilize the surface
of the tailings dams and the implementation of scrubbing technology in the mines
to reduce dust emissions.
Mexican Operations
The Company’s operations are subject to applicable Mexican federal, state and
municipal environmental laws, to Mexican official standards, and to regulations for
the protection of the environment, including regulations relating to water supply,
water quality, air quality, noise levels and hazardous and solid waste.
The principal legislation applicable to the Company’s Mexican operations is the
Federal General Law of Ecological Balance and Environmental Protection (the
“General Law”), which is enforced by the Federal Bureau of Environmental Protection
(“PROFEPA”). PROFEPA monitors compliance with environmental legislation and
56
E n v i r o n m e n t a l M a t t e r s
enforces Mexican environmental laws, regulations and official standards. PROFEPA
may initiate administrative proceedings against companies that violate environmental
laws, which in the most extreme cases may result in the temporary or permanent
closing of non-complying facilities, the revocation of operating licenses and/or other
sanctions or fines. Also, according to the federal criminal code, PROFEPA must
inform corresponding authorities regarding environmental non-compliance.
Mexican environmental regulations have become increasingly stringent in recent
years , and this trend is likely to continue and has been influenced by the environmental
treaty entered into by Mexico, the united States and Canada in connection with
NAFTA in 1999.
In relation the aforementioned, on January 28, 2011, Article 180 of the General
Law was amended. This amendment gives an individual or entity the ability to
contest administrative acts, including environmental authorizations, permits
or concessions granted, without the need to demonstrate the actual existence
of harm to the environment, natural resources, flora, fauna or human health,
because it will be sufficient to argue that the harm may be caused.
Annual Report 2010
57
As a result of the amendment, more legal actions supported or sponsored by non-
governmental groups, interested in halting projects, and not necessarily in protecting
the rights of affected communities may be filed against companies operating in all
industrial sectors, including the mining sector.
Another initiative that has not entered into force, but is being analyzed by the Chamber
of Deputies is the one related to amendments to the Civil Federal Procedures Code
(CFPC). This initiative consists of establishing three categories of collective actions,
by means of which 30 or more people claiming injury derived from environmental,
consumer protection, financial services and economic competition issues will be
considered to be sufficient in order to have a legitimate interest to seek through a
civil procedure restitution or economic compensation or suspension of the activities
from which the alleged injury derived. The initiative is expected to be approved by
the Chamber of Deputies this year and the related provisions to enter into force six
months afterward. The amendments to the CFPC may result in more litigation with
plaintiffs seeking remedies, including suspension of the activities alleged to cause
harm.
58
E n v i r o n m e n t a l M a t t e r s
El 28 de enero de 2011, se modifico el articulo 180 de la Ley General
On March 16, 2010, the Company announced to the Mexican federal environmental
authorities the closure of the copper smelter plant at San Luis Potosi. The
Company has initiated a program for plant demolition and soil remediation with
a budget of $35.7 million, of which the Company has spent $7.1 million as of
December 31, 2010. The Company expects to remediate the site and promote an
urban development to generate a net gain in the disposal of the property.
Although the Company believes that all of its facilities are in material compliance
with applicable environmental, mining and other laws and regulations, the
Company cannot assure that the above mentioned or future laws and regulations
would not have a material adverse effect on the Company’s business,
properties, results of operations, financial condition or prospects. however,
the Company’s management does not believe that continued compliance with
the federal environmental law or Mexican state environmental laws will have
a material adverse effect on the Company’s business, properties, results of
operations, financial condition or prospects or will result in material capital
expenditures.
Annual Report 2010
59
SCC programs on the Environment and Ecology
The program undertaken with the Federal Bureau of Environmental Protection was
strengthened ending the year with 14 Certifications and Corrections as a Clean
Industry; therefore, we did not have non-compliance reports with the environmental
authorities. Also, the Company had an important participation in the development
and/or modification of the environmental regulations applicable to mining.
We continued with a harmonious relationship with the personnel of the natural
protected areas close to our operations, Mariposa Monarca, Ajos-Bavispe, Alamos-
Cuchujaqui, Valle de los Cirios y Vizcaino.
The equivalent to reforesting 900 hectares, 1'679, 000 trees, was produced and
planted; the trend of production in our nursery is to increase our production of
trees 15% additionally every year.
Our participation in environmental education at schools, communities, and our
plants has also increased significantly, including forums, seminars and mining
environmental events.
60
E n v i r o n m e n t a l M a t t e r s
Minera Mexico’s presence in the environmental programs of several Chambers
of Commerce, associations and committees has been remarkable and highly
participatory, including bi-national committees as Frontera 2012.
It started the Project for the Disposal and Appropriate Control of Tailings
generated by the copper and arsenic plants in San Luis Potosi, according to legal
regulations. Certified leader auditors are conducting certification ISO-14000 in
the plants, considered as the challenge of 2011.
For the sixth consecutive year, the Greenhouse Gas Generation inventory and its
reduction programs were presented.
Recycling PET, paper, and paperboard programs were recognized by the
Environment Secretariat; the profit is donated to social benefit institutions.
Annual Report 2010
61
Peruvian Operations
The Company’s operations are subject to applicable Peruvian environmental laws and
regulations. The Peruvian government, through the Environmental Ministry conducts
annual audits of the Company’s Peruvian mining and metallurgical operations.
Through these environmental audits, matters related to environmental commitments,
compliance with legal requirements, atmospheric emissions, and effluent monitoring
are reviewed. The Company believes that it is in material compliance with applicable
Peruvian environmental laws and regulations.
Peruvian law requires that companies in the mining industry provide for future closure
and remediation. In accordance with the requirements of this law the Company’s
closure plans were approved by the Peruvian Ministry of Energy and Mines (“MINEM”).
As part of the closure plans, commencing in January 2010 the Company is required to
provide annual guarantees of $2.6 million over a 34 year period to furnish the funds for
the asset retirement obligation. In the near-term future the Company has pledged the
value of its Lima office complex as support for this obligation. The accepted value of the
Lima office building, for this purpose, is $17 million.
In 2009, the Company adjusted its original asset retirement obligation the liability
established in the mine closure plans. In 2010, the closure plan for the new marine
trestle for the sulfuric acid shippment was added to the asset retirement obligation.
The closure cost recognized for this liability includes the cost, as outlined in
its closure plans, of dismantling the Toquepala and Cuajone concentrators, the
62
E n v i r o n m e n t a l M a t t e r s
smelter and refinery in Ilo, and the shops and auxiliary facilities at the three
units.
The process for the obtaining the approval of the Environmental Impact
Assessment (“EIA”) of the Tia Maria project, located in the Arequipa region,
continues. , additional information, including the use of sea water, was submitted
to the government. On December 1, 2010, MINEM approved a communication
plan with new options to use to inform the details of EIA to the local communities.
We completed the communication plan in January 2011, which included the
opening of three information offices in the communities that would be mostly
impacted by the project and we held four informative meetings with citizens of
the local communities. In addition, advertisements explaining the project were
placed in local newspapers, as well as on local television and radio stations. On
February 1, 2011, we filed a report with MINEM indicating full completion of the
program. The observation and comment period for the local and community
members and other stakeholders,
including environmentalist and non-
governmental organizations, expires on March 2, 2011 and we expect to receive
approval of the EIA by the end of April 2011. Construction work is scheduled to
begin in the second quarter of 2011 and copper production is expected to start
by the fourth quarter of 2012.
In addition, the Company has started the EIA for the Toquepala concentrator
expansión.
Annual Report 2010
63
G e n e r a l I n f o r m a t i o n
1.237
common shares of AMC for each of SCC
AMC, offering to effect an all-stock business combination of Southern Copper
and AMC, in which all stockholders of Southern Copper would receive 1.237
common shares of AMC.
64
General Information
Annual Report 2010
65
General
InformatIon
Information related to
its constitution and their
inscription in the Public
Registry:
Brief Description: Southern Copper Corporation is one of the largest integrated
copper producers in the world. We produce copper, molybdenum, zinc, lead,
coal and silver. All of our mining, smelting and refining facilities are located
in Peru and in Mexico and we conduct exploration activities in those countries
and Chile. Our operations make us one of the largest mining companies in Peru
and also in Mexico. We are one of the largest copper mining companies in the
world with significant copper reserves. We were incorporated in Delaware in
1952 and have conducted copper mining operations since 1960. Since 1996,
our common stock has been listed on both the New York and the Lima Stock
Exchanges.
Our Peruvian copper operations involve mining, milling and flotation of copper
ore to produce copper concentrates and molybdenum concentrates, the
smelting of copper concentrates to produce anode copper, and the refining of
anode copper to produce copper cathodes. As part of this production process,
we also produce significant amounts of molybdenum concentrate and refined
silver. We also produce refined copper using SX/EW technology. We operate
the Toquepala and Cuajone mines high in the Andes mountains, approximately
860 kilometers southeast of the city of Lima, Peru. We also operate a smelter
and refinery west of the Toquepala and Cuajone mines in the coastal city of
Ilo, Peru.
See: “Brief historical review from the
constitution of the Company” on page 75.
66
General Information
Our Mexican operations are conducted through our subsidiary, Minera Mexico
S.A. de C.V. (“Minera Mexico”), which we acquired on April 1, 2005. Minera
Mexico engages principally in the mining and processing of copper, molybdenum,
zinc, silver, gold and lead. Minera Mexico operates through subsidiaries that are
grouped into three separate units. Mexicana de Cobre S.A. de C.V. (together with
its subsidiaries, the "Mexcobre unit") operates La Caridad, an open-pit copper
mine, a copper ore concentrator, a SX/EW plant, a smelter, refinery and a rod plant.
Buenavista del Cobre S.A. de C.V., formerly named Mexicana de Cananea S.A. de
C.V. through December 11, 2010, (together with its subsidiaries, the “Buenavista
unit”) operates an open-pit copper mine, which is located at the site of one of the
world's largest copper ore deposits, a copper concentrator and two SX/EW plants
. Industrial Minera Mexico, S.A. de C.V. and Minerales Metalicos del Norte, S.A.
(together with its subsidiaries, the "IMMSA unit") operate five underground mines
that produce zinc, lead, copper, silver and gold, a coal mine and a zinc refinery.
We utilize modern/state of the art mining and processing methods, including global
positioning systems and computerized mining operations. Our operations have a
high level of vertical integration that allows us to manage the entire production
process, from the mining of the ore to the production of refined copper and
other products and most related transport and logistics functions, using our own
facilities, employees and equipment.
Annual Report 2010
67
Economic Group
SCC, indirectly, makes part of “Grupo Mexico S.A.B. de C.V.” who owns 100% of
Americas Mining Corporation (“AMC”) AMC.
Name of the company
Location
Inscription
%
in the RPMV
SEVERAL ACTIVITIES
Grupo Mexico, S.A.B. de C. V.
Grupo Mexico Servicios, S.A. de C.V.
RAILROAD ACTIVITIES
Infraestructura y Transportes Mexico, S.A. de C. V.
MINING ACTIVITIES
Americas Mining Corporation (“AMC”)
Southern Copper Corporation (SCC)
Americas Sales Company, Inc.
Minera Mexico, S. A. de C. V.
Industrial Minera Mexico, S.A. de C. V.
Buenavista del Cobre, S.A. de C. V.
Mexicana de Cobre, S.A. de C. V.
Southern Peru Limited
Southern Peru Copper Corporation, Agencia en Chile
Southern Peru Copper Corporation, Sucursal del Peru
Compañia Minera Los Tolmos, S.A.
1
2
3
4
5
6
7
8
9
10
11
12
13
14
Mexico
Mexico
Mexico
EE.UU.
EE.UU.
EE.UU.
Mexico
Mexico
Mexico
Mexico
EE.UU.
Chile
Peru
Peru
100
100
99.99
80.0
100
99.95
99.99
99.99
99.98
100
100
99.291
97.3
√
√
Note:
1. Includes 82.69% of patrimony and 16.60% of Investment shares.
Corporate Capital and Common Stock
The authorized number of shares
Issues an Paid Capital: Common Shares
Nominal Value of Common Shares
shares
2,000,000,000
884,596,086
$
0.01
Total number and percent of shares
Shares
Americas Mining Corporation
Common Shares
Total
680,000,000
170,000,000
850,000,000
Interest
80.0%
20.0%
100.0%
68
General Information
authorizations obtained for the Development of the Business
Operations in Mexico
Caridad Mine
“La Caridad Concentrator” started operations in 1979, with a milling capacity of
90,000 tons per day.
“Molybdenum Plant” started operations in 1982, with a production capacity of
2,000 tons of copper-molybdenum concentrate per day.
“La Caridad SX-EW” started operation in 1995 and has a daily production capacity
of 60 tons of copper cathodes. Approximately 602.3 million tons of leach ore with
an average grade of approximately 0.208% copper have been extracted from the
La Caridad open-pit mine and deposited in leaching dumps from May 1995 to
December 31, 2010.
La Caridad Metallurgic Complex
La Caridad Smelter started operations in July, 1986, with a production capacity of
493 tons of anode per day and was expanded to 822 tons in March, 1997.
“La Caridad Refinery” started operations in July, 1997, with a production capacity
of 493 tons of copper cathode per day and was expanded to 822 tons in January,
1998.
“La Caridad Precious Metals Plant” started operations in May, 1999, with a
production capacity of 43,836 ounces of silver per day, 247 ounces of gold per day
and 342 kilograms of selenium per day.
“La Caridad Wire Rod Plant” started operating in April, 1998, with a production
capacity of 300 tons of wire rod per day and was expanded to 411 tons in March1999.
Buenavista Mine
“Buenavista Concentrator” started operating in September, 1986, with a capacity
of 62,500 tons per day, the capacity was expanded to 70,000 tons in 1988 and to
76,700 tons in 1998.
Annual Report 2010
69
“Buenavista SX/EW I Plant” started operating in 1980, with a capacity of 30 tons
per day.
“Buenavista SX/EW II Plant” started operating in 1989, with a capacity of 60 tons
per day and was expanded to 120 tons in 2001.
Underground Mines
1. The Santa Barbara Unit has milling capacity of 5,800 tons of ore per day.
2. The Santa Eulalia Unit has a milling capacity of 1,450 tons of ore per day.
3. The San Martin Unit has a milling capacity of 4,400 tons of ore per day.
4. The Charcas Unit has a milling capacity of 4,100 tons of ore per day.
5. The Taxco Unit has a milling capacity of 2,000 tons per day.
6. The Coquizadora Coal Plant, in Coahuila Unit, has a capacity of 105,000 tons of
coke per year.
7. The Zinc Refinery has capacity to produce 288 tons of refined zinc per day.
Peruvian Operations
Toquepala
1. Toquepala Concentrator. Directorial Resolution No.455-91-EM/DGM/DCM dated
July 5, 1991 approved the operation of the Toquepala Concentrator. The resolution
granted 240 hectares of surface land and authorized a throughput of 39,000 Tons/
Day.
Based on Report No. 413-97-EM/DGM/DPDM dated July 7, 1997 the “Director
General de Mineria” authorized the expansion of the Toquepala Concentrator to a
43,000 Tons/Day throughput.
70
General Information
Based on Report N° 547-2002-EM/DGM/DPDM, dated November 6, 2002,
the “Director General de Mineria” authorized the expansion of the Toquepala
Concentrator to a capacity of 60,000 TM/Day.
2. Toquepala Leaching Plant (SX/EW). Directorial Resolution No. 166-96-EM/DGM
dated May 7, 1996, approved the operation of the Toquepala SX/EW plant. The
resolution granted 60 hectares of surface land and authorized a throughput of
11,850 tons/day.
Based on Report No. 663-98-EM-DGM/DPDM dated November 10, 1998 the
“Director General de Mineria” authorized construction and expansion of Toquepala
SX/EW plant to 18,737 tons/day throughput. Directoral Resolution dated May 19,
2003, based on Report No. 291-2003-EM-DGM/DPDM, authorized operation of
the SX/EW plant to a throughput of 18,737 tons/day.
Cuajone
1. Botiflaca Concentrator in Cuajone: Directorial Resolution No. 150-81-EM/DCM
dated August 14, 1981 approved the operation of Botiflaca Concentrator. The
resolution granted 56 hectares of surface land.
Based on Report No. 266-99-EM/DGM/DPDM dated July 20, 1999 the “Director
General de Mineria” authorized the expansion of Botiflaca Concentrator to 87,000
tons/day throughput.
Resolution N° 379-2010-MEM-DGM/V dated October 7, 2010, based on Report
N°312-2010-MEM-DGM-DTM/PB, authorized construction and expansion of
Botiflaca Concentrator to 90,000 tons/day throughput.
Annual Report 2010
71
2. Cuajone Leaching Plant (LX/EW). Directorial Resolution No.155-96-EM/DGM
dated May 6, 1996 approved the operation of the Cuajone Leaching plant. The
resolution granted 400 hectares of surface land and authorized a throughput of
2,100 tons/day. Based on Report No. 988-2009-MEM-DGM/V, dated December
16, 2009, Cuajone SX plant operation was approved and authorized the of the, with
a capacity of 3100 tons/day.
Ilo
1. Ilo Smelter: Authorized (definitely) by Directorial Resolution No. 078-69-EM/DGM
dated August 21, 1969 approved the operation of the Ilo Smelter. The resolution
authorized a production of 400 Short tons/day of blister copper.
Based on Report No.204-2000-EM-DGM-DPDM dated June 20, 2000 the “Director
General de Mineria” authorized the expansion of the Ilo Smelter to a 3,100 tons/day
throughput of copper concentrates.
On February 4, 2010, the Company began the process to obtain authorization from
the MINEM to operate a capacity of 3,770 tons/day, which is included as an ancillary
facility to Acid Plant No. 2, with a capacity of 2,880 tons /day or 1,051, 200 tons/year.
72
General Information
2. Ilo Refinery: Authorized by Report No. 056-94-EM/DGM/DRDM dated May 27,
1994 the “Director General de Mineria” authorized the operation of the Ilo Copper
Refinery at 533 tons/day throughput of blister copper.
Based on Report No. 506-97-EM/DGM/DPDM dated September 2, 1998 the
“Director General de Mineria” authorized the expansion of Ilo Copper Refinery to a
capacity of 658 tons/day throughput.
Based on Report N° 080-2002-EM-DGM/DPDM, dated March 14, 2002, the
“Director General de Mineria” authorized the expansion of the Ilo Copper Refinery
to a capacity of 800 tons/day.
Resolution N°520-2010-MEM-DGM/V dated December 30, 2010, based on
Report N° N°414-2010-MEM-DGM-DTM/PB, authorized changes in Ilo copper
refinery without expanded its capacity throughput.
3. Sulfuric Acid Plant: Authorized by Directorial Resolution No. 024-96-EM/DGM
dated January 19, 1996, approved the operation of the sulfuric acid plant, installed
at the smelter, at a production rate of 150,000 tons/Year.
Annual Report 2010
73
Based on Report No. 313-98-EM/DGM/DPDM dated May 21, 1998 the “Director
General de Mineria", authorized the expansion of the Ilo Sulfuric Acid Plant to a
capacity of 300,000 tons/year production.
4. “Coquina Wash Plant and Sea shell Concentrates” authorized to operate by Directorial
Resolution Nº 110-93-EM/DGM of August 3, 1993. The plant processes 95 TC/h of
raw material (coquina) recovered from nearby mines. Seashell is produced separating
sand and other materials from the coquina using sea water washing screens.
Resolution N°038-2011-MEM-DGM-DTM/PB dated February 2, 2011, based on
Report N°035-2011-MEM-DGM-DTM/PB, authorized modification in the concession
of “Coquina Wash Plant and Sea shell Concentrates” to a classified dry sea shell plant
without expanded its capacity throughput, which represents 2,068 tons/day.
Description of operations and Development regarding
the issuing entity
Purpose
The purpose of Southern Copper Corporation (SCC) is to engage in activities allowed
by the laws of the State of Delaware. Its main activity is to extract, mill, concentrate,
smelt, treat, prepare for market, manufacture, sell, exchange and, in general, to produce
and negotiate for sales of copper, molybdenum, gold, silver, lead, zinc, iron and any
other class of minerals and materials or other materials, effects and goods of any nature
or description; as well as to explore, exploit, sample, examine, investigate, recognize,
locate, appraise, buy, sell, exchange, etc., mining concessions and mining deposits.
SCC belongs to the CIIU 1320 group.
The term of duration of the Company is indefinite.
74
General Information
Brief historical review from the constitution of the company:
The Company was organized on December 12, 1952, according to the Laws
of the State of Delaware of the United States of America, under the original
denomination of Southern Peru Copper Corporation (“SPCC”), which was
renamed on October 11, 2005, to Southern Copper Corporation (SCC).
In 1954, SCC established a Branch in Peru to carry out mining activities in this
country. The Branch was established under public instrument certified by Public
Notary from Lima, Dr. Ricardo Fernandini Arana, on November 6, 1954.
The Branch is registered in the Electronic Record Nº 03025091 of the Juridical
People of the Registry Office of Lima and Callao.
Actions following company incorporation:
Capital increase:
By Public Deed dated May 31, 1995, signed before notary public of Lima, Dr.
Carlos A. Sotomayor Bernos, the Branch capital increase was formalized. It was
made through money contribution by the Company in favor of its Peru Branch and
by the owners of labor shares, pursuant to Legislative Decree No. 677. The capital
contribution made by the Company was aimed at increasing the capital allotted to
the Branch by the headquarters and registered in Peru. The capital contribution
made by the Labor Shares (today Investment Shares) owners was assigned to the
Labor Shares account of the Branch for issuing new Labor Shares.
Part of the money contribution made by the Company in favor of its Branch and by
the Labor Shares owners was applied as a capital premium to the Resident account
as Additional Capital.
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Exchange of Investment Shares (Labor Shares) for Common Shares:
Dated September 7, 1995, “Southern Peru Copper Holding Company” was also
incorporated pursuant to the Laws of the State of Delaware, aiming at acting as a
holding company that owns all Southern Peru Copper Corporation shares, and at
performing an exchange of the shares that were then called “Labor Shares” (today
Investment Shares) issued by the branch in Peru, delivering the owners of labor
shares a certain number of common shares issued by SPCC in the United States.
As a consequence of this share exchange, former owners of Labor Shares acquired
17.31% of SPCC’s Capital, and this company acquired ownership of 80.77% of
Labor Shares (today Investment Shares).
On December 31, 1995, Southern Peru Copper Corporation changed its corporate
name to “Southern Peru Limited”, and “Southern Peru Copper Holding Company”
changed its corporate name to Southern Peru Copper Corporation.
As a consequence of this corporate name change, the mining activities of the
Company in Peru started being performed under the name of Southern Peru
Limited, Peru Branch (SPL).
On December 31, 1998, the merger between Southern Peru Copper Corporation
and Southern Peru Limited was agreed. The first company absorbed the second
one and assumed all its assets and liabilities, including the Branch in Peru. This
merger did not imply any change to the share percentage in the corporate capital
or in the Net Worth Share Account (investment shares), which were kept the
unchanged.
As a consequence of the merger, the mining activities of the corporation in Peru
were again carried out under the name of Southern Peru Copper Corporation,
Peru Branch, or the abbreviated name of “Southern Peru” and/or the acronym
SPCC.
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Change of Economic Group:
In November 1999, Grupo Mexico S.A.B. de C. V., a firm incorporated pursuant
to the Laws of the Republic of Mexico, acquired in the United Stated 100% of
ASARCO Incorporated, the main shareholder of Southern Peru Copper Corporation
at that time. In this way, SPCC became a subsidiary of Grupo Mexico, who keeps
its shareholding through Americas Mining Company (AMC).
Acquisition of Minera Mexico, S.A. de C.V. (“MM”) and other corporate changes:
SCC shareholders, in a shareholder extraordinary meeting dated March 28, 2005,
approved issuance of Common Shares and required actions related to the acquisition
of MM, a firm incorporated pursuant to the Laws of the Republic of Mexico. This
transaction was approved by more than 90% of the stocks and circulating capital
of SCC. To acquire MM, SCC issued 67,207,640 shares in exchange for MM
shares. Once the shares related to the acquisition were issued, Americas Mining
Corporation increased its share in SCC from 54.2% to approximately 75.1%.
SCC $500 Million Share Repurchase Program
In 2008 the Company’s Board of Directors authorized a $500 million share repurchase
program. During 2008 the Company purchased 28.5 million shares of its common
stock at a cost of $384.7 million. During 2009, the Company bought 4.9 million
common shares by $71.9 million. The Company may purchase additional shares
from time to time, based on market conditions and other factors. This repurchase
program has no expiration date and may be modified or discontinued at any time.
Americas Mining Corporation Increased its Participation in SCC
In 2008 and 2009 Grupo Mexico, through its wholly owned subsidiary AMC,
purchased 11.8 million and 4.9 million shares of the Company’s common Stock,
respectively. With this purchase and the Company’s repurchase of shares described
above, the indirect ownership of Grupo Mexico increased to 80.0% at December
31, 2010 and remained at December 31, 2010.
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Americas Mining Corporation Business Combination Proposal
On July 22, 2010, we received a non-binding proposal from our parent company,
AMC, offering to effect an all-stock business combination of Southern Copper and
AMC, the parent company of Asarco, LLC (“Asarco”), in which all stockholders
of Southern Copper would receive 1.237 common shares of AMC in exchange
for each share of SCC. Under the proposal presented by AMC the stock of AMC
would be registered and listed on the New York, Mexico and the Lima stock
exchanges. Once the listing and registration of the AMC shares are completed,
SCC’s shares would be delisted from the exchanges.
In August 2010, we formed a special committee of independent directors to evaluate
AMC’s proposal. The special committee has engaged independent legal, financial
and technical advisors to assist in the evaluation. There is no specific deadline to
complete this evaluation.
Change in the Certificate of Incorporation:
On March 28, 2005, following Board of Directors recommendations, SCC
shareholders approved in an extraordinary meeting the amendments to the Articles
of Incorporation Deed, changing the composition and obligations of some Board
committees.
Special Independent Director:
The changes to the Articles of Incorporation Deed require the Board to include a
certain number of special independent directors. A special independent director
is a person who (i) complies with the independence standards of the New York
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Stock Exchange (or any other stock exchange or association in which Common
Shares are listed) and (ii) is appointed by the Special Appointment Committee of
the Board. A special independent director may only be removed from the Board
upon a justified cause.
The number of special independent directors in that Directory at any time shall
equal (a) the total number of directors in the Board multiplied by (b) the percentage
of Common Shares all the shareholders (that are not Grupo Mexico and its
affiliates) have, rounding up to the following integer number. Notwithstanding
the abovementioned, the total number of people appointed as special independent
directors (not belonging to Grupo Mexico) cannot be less than two or more than
six.
Special Nominating Committee
The Special Nominating Committee functions as a special committee to nominate
special independent directors to the Board. Pursuant to our Amended and Restated
Certificate of Incorporation, as amended, a special independent director is any
director who (i) satisfies the independence requirements of the New York Stock
Exchange or NYSE (or any other exchange or association on which the Common
Stock is listed) and (ii) is nominated by the Special Nominating Committee. The
Special Nominating Committee has the right to nominate a number of special
independent directors based on the percentage of our Common Stock owned by all
holders of our Common Stock, other than Grupo Mexico and its affiliates.
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The Special Nominating Committee consists of two directors (2) of whom are Luis
Miguel Palomino and Carlos Ruiz Sacristan (each an "Initial Member" and, together
with their successors, "Special Designees") and such other director, currently Xavier
Garcia de Quevedo Topete, as may be appointed by the Board of Directors or the
"Board Designee". The Board Designee will be selected annually by the Board of
Directors. The Special Designees will be selected annually by the members of
the Board who are special independent directors or Initial Members. Only special
independent directors can fill vacancies on the Special Nominating Committee. Any
member of the Special Nominating Committee may be removed at any time by the
Board of Directors for cause. The unanimous vote of all members of the nominating
committee will be necessary for the adoption of any resolution or the taking of any
action.
Our Amended and Restated Certificate of Incorporation, as amended, provides that the
number of special independent directors on the Board of Directors at any given time
shall be equal to (a) the total number of directors on the Board of Directors multiplied
by (b) the percentage of Common Stock owned by all of the stockholders (other than
Grupo Mexico and its affiliates), rounded up to the next whole number. Notwithstanding
the foregoing, the total number of persons nominated as special independent directors
cannot be less than two or greater than six.
Notwithstanding the foregoing, the power of the Special Nominating Committee to
nominate special independent directors is subject to the rights of the stockholders to
make nominations in accordance with our by-laws.
The provisions of the Amended and Restated Certificate of Incorporation, as amended,
relating to special independent directors may only be amended by the affirmative vote
of a majority of the holders of shares of Common Stock (calculated without giving
effect to any super majority voting rights) other than Grupo Mexico and its affiliates.
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Transactions with affiliates:
Amendments to the Deed also prohibit the Company to commit in important
transactions with the affiliates, except if the transaction has been revised by a
committee of at least three Board members, each one of which will comply with
the New York Stock Exchange (or any other stock exchange or association in which
Common Shares are listed) independence regulations. An important transaction
of the affiliate is defined as an important transaction, commercial negotiation or
financial share in any transaction, any series of transactions between Grupo Mexico
or one of its affiliates (different from the Company or any of the subsidiaries), on
the one hand, and to the Company or one of the subsidiaries, on the other hand,
comprising a total consideration of more than $10,000,000.00.
The Company submitted the Amendment of its Articles of Incorporation Deed to
the Secretary of State in the State of Delaware, and it came into effect as from
March 31, 2005 at 11:59 P.M.
Change of corporate name and other corporate changes:
On September 20, 2005, by written consent instead of an extraordinary shareholder
meeting, the majority shareholder approved the corporate name change of Southern
Peru Copper Corporation to Southern Copper Corporation or SCC. The change was
adopted because the new corporate name reflects more precisely the Company’s
operations reach outside the Republic of Peru after its acquisition of Minera Mexico
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and the latter’s presence in the Republic of Chile through the acquisition of some
mining exploration concessions.
Additionally, on the same date, the majority shareholder approved an amendment
of our Articles of Incorporation Deed to remove others’ provisions in our Deed
related with our Class A Common Shares that were formerly in circulation, which
were converted to Common Shares on May 19, 2005, and to change the number
of Corporate directors from fifteen to a number that will be regularly established
following agreement of most of Board members stipulating the number of directors
will not be less than six or more than fifteen.
The Deed amendment was submitted to the Secretary of State of the State of
Delaware, and came into effect on October 11, 2005.
Peru Branch Name:
Generally, the change of headquarters corporate name should comprise the
corresponding name of the ancillary organizations linked to it, as is the case of the
Peru Branch through which the Corporation develops its mining activities in Peru.
After consulting with Peruvian lawyers, the Board of Directors, taking into
consideration the net worth and assets importance of the Branch, the need to
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83
continue acknowledging the position of the Peruvian Branch with its local and
international copper clients, the need to preserve its proceeds and its position
in good name in the copper market, and the need to prevent any possible client
loss, as well as to guarantee the revenue flow from sales, its financial and
economic revenues and its solvency, the Board of Directors agreed to maintain
the original corporate name to the Peru Branch, that is, Southern Peru Copper
Corporation, Peru Branch, or the abbreviated name “Southern Peru” and/or the
acronym SPCC.
Changes in the Certificate of Articles of Incorporation and Bylaws:
Dated January 26, 2006, the Board approved amendment to Southern Copper
Corporation’s bylaws (i) aiming at removing the provisions related to Class A
Common Shares among other changes.(ii) adding a new provision for advance notice
to shareholders seeking to nominate directors or to propose other business at annual
or special meetings of the Common Stockholders (as applicable) (iii) substitute
Grupo Mexico for ASARCO Incorporated in the “Change in Control” definition in the
Corporation’s by-laws (iv) and eliminate the 80% supermajority vote requirement for
certain corporate actions. The modification of the Modified Certificate of Incorporation
increased the capital stock from 167,207,640 shares to 320,000,000 shares. These
modifications were submitted for approval of the shareholders at the shareholders
annual meeting held on April 27, 2006 which was adjourned and reconvened for May
4, 2006, and later on adjourned and reconvened for May 11, 2006.
At the annual meeting, on April 27, 2006, the proposal to amend the by-laws to
eliminate certain extraneous provisions relating to the retired series of Class A
Common Stock had an affirmative vote of 79.85% of the required votes. Because
the required vote for the approval of this proposal was 80% and because there were
still votes that needed to be tabulated, the annual meeting for this proposal was
adjourned until May 4, 2006. On May 4, 2006, at the adjourned and reconvened
meeting the stockholders approved the proposal with an affirmative vote of 80.61%
of the required votes.
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On April 27, 2006, stockholders approved (i) the amendment to the by-laws
to introduce a new provision for advance notice to shareholders seeking to
nominate directors or to propose other business at annual or special meetings
of the Common Stockholders (as applicable); (ii) the amendment to the by-laws
to substitute Grupo Mexico for ASARCO Incorporated in the “Change in Control”
definition in the Corporation’s by-laws; (iii) the amendments to the Amended and
Restated Certificate of Incorporation to increase the number of shares of Common
Stock, which the Corporation is authorized to issue from 167,207,640 shares to
320,000,000 shares; and (iv) the selection of the independent accountants.
On April 27, 2006, the proposal to amend the by-laws to eliminate the 80%
supermajority vote requirement for certain corporate actions had received
preliminary votes, representing an affirmative vote of 78.35% of the required
votes. Because the required vote for the approval of this proposal was 80% and
because there were still votes that needed to be tabulated, the annual meeting for
this proposal was adjourned first until May 4, 2006, and subsequently until May 11,
2006. On May 11, 2006, at the adjourned and reconvened meeting stockholders
did not approve the proposal having received an affirmative vote of 79.61% of the
required votes.
SCC is indirectly, part of Grupo Mexico S.A.B. de C.V. which owns 100% of
Americas Mining Corporation (AMC) shareholding, owner of 80.0% of SCC shares.
Information about plans and investment policies:
See Expansion and Modernization Program on page 10.
Relationship between the Issuer and the Government
On November 20, 1996, SCC and the Peruvian Government (Ministry of Energy and
Mines) signed a contract that will remain effective until the year 2010 and guarantees
the tax stability and the availability of exchange to foreign currency of the Branch's
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85
earnings related to the operation of the SX/EW plant at Toquepala and the Solvent
Extraction (SX) operation in Cuajone. Also, on April 18th, 1995, SCC and the Peruvian
Government (CONITE) signed a contract that will remain effective during ten years and
guarantees the availability of foreign currencies, free remittance of dividends to the
exterior, among other guarantees related to the acid plant of the Ilo Smelter.
SCC obtains revenues for tax credits in Peru for the general sales tax (IGV) paid in
connection with the acquisition of capital goods and other goods and services used
in its operations, counting these credits as a paid expense in advance. By virtue of
this refund, SCC is entitled to credit the amount of the IGV against its Peruvian tax
obligations or to receive a refund.
mining Safety:
Mexican Operations
Southern Copper is pleased to inform that its subsidiary, Minera Mexico, has
become the only mining company certified on OHSAS 18001: 2007.
OHSAS 18001: 2007 is an internationally accepted specification that defines the
requirements for the setting up, implementation, and operation of an effective
Management System on Safety and Health.
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Currently, 10 business units of Minera Mexico (Santa Barbara, Santa Eulalia, Planta
Nueva Rosita, Taller Central, Charcas, La Caridad, Complejo Metalurgico, Planta
de Cal, Terminal Guaymas y Refineria de Zinc) have such certification endorsed by
the companies: British Standard Inc. Lloyds Quality Assurance Register, and SGS.
Self Safety and Health Program at Work of the Labor and Social Insurance Secretariat,
known by its Spanish acronym PASST.
This program, managed by the Labor and Social Insurance Secretariat, allows
advice for the establishment of safety and health management systems, assessment
of safety and health management systems, identification of the Mexican official
standards applicable to each business units and the evaluation of compliance with
Mexican regulations on safety and health.
During 2010, Minera Mexico acquired the voluntary commitment of joining the
program 10 of its business units, 4 of which have obtained the certification at first
level (Chacras, Planta de Zinc, Planta Nueva Rosita, Complejo Metalurgico) and
the remaining are in process of obtaining this document.
Awards
During the XI Crews Rescue Miner 2010 National Competition, organized by the
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Mexico Mining Camera (CAMIMEX), Santa Barbara unit won the first place in the
"Underground Rescue Miner” test and the second in the test “Bio marine” test.
Award to Planta de Nueva Rosita as safe company
In April 2010, Planta de Nueva Rosita obtained the recognition of "Safe Company"
from the Labor and Social Insurance Secretariat by having distinguished in
compliance with regulations on safety and health at work.
Peruvian Operations
The Safety and Health results in 2010, for the open pit mining operations in
Toquepala and Cuajone mines, metallurgical operations in Ilo Unit, which
includes a smelter and refinery plants, were as follows: Frequency Index 2.2,
Severity Index 759.1 and Accidentability rate 1.7; these indicators correspond to
20 lost time accidents and a fatal accident was registered I Cuajone mine. The
Ilo Unit received in 2010, for the third year consequently, the “John T. Ryan”
Award from MSA, offered to the best security indicators in smelters & refineries
category in Peru.
Descripcion Generica de los Principales Activos
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Annual Report 2010
89
GenerIC DeSCrIPtIon of maIn aSSetS
meXICan oPeratIonS
1. The Buenavista production unit has 46 mining concession titles with a total area of
BUENAVISTA
13,282 hectares.
2. The Buenavista concentrator plant, with a milling capacity of 76,700 tons per
day, consists of, 2 primary crushers, 4 secondary crushers, 10 tertiary crushers,
10 primary mills, one expert control system, 5 mills for regrinding, 103 primary
flotation cells, 10 column cells, 70 exhaustion flotation cells, 7 thickeners, 3
ceramic filters. In addition, the facility has 48 wells and a pumping station for fresh
water supply, a tailings dam and reclaims water pumping station.
3. Major Buenavista mine equipment includes 43 trucks for ore hauling with individual
capacities ranging from 240 to 360 tons.
4. For ore loading there are 8 shovels with individual capacities ranging from 30 to 70
cubic yards.
5. The mine auxiliary equipment including has 7 drillers, 5 front loaders, 5 motor
graders and 24 tractors.
6. In the Solvents Extraction and Electro winning (SXEW) I and II Plants of
Buenavista, The N°1 crushing system has a capacity of 32,000 tons per day, and
includes an apron feeder, a conveyor belt feeder, 8-Converyor Belt systems and
a distributing bar.
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7. Crushing system No.2 has a capacity of 48,000 tons per day and includes one
crusher, a conveyor belt feeder, four conveyor belts and a distributing bar. There
are 3 irrigation systems for the dumps and eleven dams for the pregnant leach
solutions (PLS). Plant I has four solvent extraction tanks with a nominal capacity
of 16,000 liters per minute of PLS, and 52 electrowinning cells. Plant I has a daily
production capacity of 30 tons of copper cathodes with 99.999% purity. Plant
II has 5 trains of solvent extraction with a nominal capacity of 55,000 liters per
minute of PLS and 216 cells distributed in two bays. Plant II has a daily production
capacity of 120 tons of copper cathodes with 99.999% purity.
We intend to increase the Buenavista unit’s production of copper cathodes with two
new SXEW plant, (SXEW III and SXEW IV), each of them with an annual capacity
of 44,000 tons. The plants would produce copper cathodes of ASTM grade 1 or
LME grade A. In the second half of 2010, we restarted the project and in December
2010 we completed a review of the basic engineering. We have started the detailed
engineering in January 2011 and, when completed, we will begin the acquisition of
major equipment and construction of the plant and new infrastructure.
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la CarIDaD
1. La Caridad Production Unit has 51 mining concession titles with a total area of
86,529.26 hectares.
2. La Caridad concentrator plant has a milling capacity of 90,000 tons per day and
consists of two primary crushers, six secondary crushers, twelve tertiary crushers,
twelve ball mills, a master milling control system, 100 primary flotation cells, four
re-grinding mills, 96 cleaning flotation cells, twelve thickeners and six drum filters.
Major mine equipment includes twenty-seven trucks for ore hauling with
capacity of 240 tons, six shovels with a capacity of 43 cubic yard. Loading and
auxiliary equipment include six drillers, five front loaders, three motorgraders
and eighteen tractors.
Approximately 602.3 million tons of leaching ore with an average grade of
approximately 0.208% copper have been extracted from the La Caridad open-pit
mine and deposited in leaching dumps from May 1995 to December 31, 2010.
All copper ore with a grade lower than the mill cut-off grade 0.30%, but higher
than 0.15% copper, is delivered to the leaching dumps. In 1995, we completed
the construction of a SXEW facility at La Caridad that has allowed processing
of this ore and certain leach ore reserves that were not mined and has resulted
in a reduction in our copper production costs. The SXEW facility has an annual
capacity of 21,900 tons of copper cathodes.
3. The La Caridad SX-EW plant has nine irrigation systems for the dumps and two PLS
dams, a container of heads that permits the combination of the solutions of both
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dams and feeds the SX/EW plant with a more homogenous concentration. The
plant has three trains of solvent extraction with a nominal capacity of 2,070 cubic
meters per hour and 94 electrowinning cells distributed in one single electrolytic
bay. The plant has a daily production capacity of 62 tons of copper cathodes with
99.999% purity.
Copper concentrates from Buenavista, Santa Barbara, Charcas and La Caridad
la CarIDaD metallUrGIC
are transported by rail and truck, respectively, to the La Caridad smelter where
faCIlItIeS
they are processed and cast into copper anodes of 99.2% purity. Sulfur
dioxide off-gases collected from the flash furnace, the El Teniente converter and
conventional converters are processed into sulfuric acid, at two sulfuric acid
plants. Approximately 2% to 3% of this acid is used by our SXEW plants and the
balance is sold to third parties.
Almost all of the anodes produced in the smelter are sent to the La Caridad
copper refinery. The actual installed capacity of the smelter is 1,000,000
tons per year, a capacity that is sufficient to treat all the concentrates of the
La Caridad and Buenavista and starting in 2010, the concentrates fron the
IMMSA mines, as we closed the San Luis Potosi smelter. The smelter includes
a flash type concentrates drier, a steam drier, a flash furnace, one El Teniente
modified converter furnace, two electric slag-cleaning furnaces, three Pierce-
Smith converters, three rafinnate furnaces and two casting wheels. The anode
production capacity is 300,000 tons per year.
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Refinery
La Caridad includes an electrolytic copper refinery that uses permanent cathode
technology. The installed capacity of the refinery is 300,000 tons per year. The
refinery consists of an anode plant with a preparation area, an electrolytic plant
with an electrolytic cell house with 1,115 cells and 32 liberator cells, two cathode
stripping machines, an anode washing machine, a slime treatment plant and
a number of ancillary installations. The refinery is producing grade A copper
cathode of 99.99% purity. Anodic slimes are recovered from the refining process
and sent to the slimes treatment plant where additional copper is extracted. The
slimes are then filtered, packed and shipped to the La Caridad precious metals
refinery to produce silver and gold.
The operations of the precious metal refinery are divided into two stages: (i) the
antimony is eliminated from the slime, and (ii) the slime is dried in a steam dryer.
After this the dried slime is smelted and a gold and silver alloy is obtained, which
is known as dore. The precious metal refinery plant has a hydrometallurgical
stage and a pyrometallurgical stage, besides a steam dryer, dore casting system,
Kaldo furnace, 20 electrolytic cells in the silver refinery, one induction furnace
for fine silver, one silver ingot casting system, two reactors for obtaining fine
gold. The process ends with the refining of the gold and silver alloy.
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Copper Rod Plant
A rod plant at the La Caridad complex was completed in 1998 and reached its full
annual operating capacity of 150,000 tons in 1999. The plant is producing eight
millimeter copper rods with a purity of 99.99%. The rod plant includes a vertical
furnace, one retention furnace, one molding machine, one laminating machine,
one coiling machine and one coil compacter.
Other facilities include a lime plant with a capacity of 132,000 tons per year; two
sulfuric acid plants, one with a capacity of 2,625 tons per day and the second
with a capacity of 2,135 tons per day; three oxygen plants, each with a production
capacity of 275 tons per day; and two power turbo generators, one of them uses
residual heat from the flash furnace, the first with a 11.5 megawatt capacity and
the second with a 25 megawatt capacity.
UnDerGroUnD mIneS (ImmSa)
meXICan UnIt ImmSa
Our IMMSA Unit (underground mining poly-metallic division) operates five
underground mining complexes situated in central and northern Mexico and
produces zinc, lead, copper, silver, gold and has a coal mine. These complexes
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include industrial processing facilities for zinc, lead, copper and silver. All
of IMMSA’s mining facilities employ exploitation systems and conventional
equipment. We believe that all the plants and equipment are in satisfactory
operating condition. IMMSA’s principal mining facilities include Charcas, Santa
Barbara, San Martin, Santa Eulalia and Taxco.
Charcas
The Charcas mining complex is located 111 kilometers north of the city of San
Luis Potosi in the State of San Luis Potosi, Mexico. Charcas is connected to
the state capital by a paved highway of 130 kilometers. 14 kilometers from the
southeast of the Charcas complex is the “Los Charcos” railroad station which
connects with the Mexico-Laredo railway. Also, a paved road connects Charcas
to the city of Matehuala via a federal highway and begins at the northeast of
the Charcas townsite. The complex includes three underground mines (San
Bartolo, Rey-Reina and La Aurora) and one flotation plant that produces zinc,
lead and copper concentrates, with significant amounts of silver. The Charcas
mining district was discovered in 1573 and operations in the 20th century began
in 1911. The Charcas mine is characterized by low operating costs and good
quality ores and is situated near the zinc refinery. The Charcas mine is now
Mexico's largest producer of zinc.
The Charcas complex’s equipment includes fourteen jumbo drilling tools,
nineteen scoop trams for mucking and loading, ten trucks and six locomotives
for internal ore haulage and four hoists. In addition, the mill has one primary
crusher, one secondary crusher and two tertiary crushers, four mills and three
flotation circuits.
Santa Barbara
The Santa Barbara mining complex is located approximately 26 kilometers
southwest of the city of Hidalgo del Parral in southern Chihuahua, Mexico. The
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area can be reached via paved road from Hidalgo del Parral, a city on a federal
highway. Chihuahua, the state capital is located 250 kilometers north of the
Santa Barbara complex. Additionally, El Paso on the Texas border is located
600 kilometers north of Santa Barbara. Santa Barbara includes three main
underground mines (San Diego, Segovedad and Tecolotes) and a flotation plant
and produces lead, copper and zinc concentrates, with significant amounts of
silver. Gold-bearing veins were discovered in the Santa Barbara district as early
as 1536. Mining activities in the 20th century began in 1913.
The major mine equipment at Santa Barbara includes eighteen jumbo drilling
tools, one Simba drilling tools, thirty-nine scoop trams, thirteen trucks and eleven
locomotives for internal ore haulage, seven trucks for external haulage and six
hoists. For treating the ore, there are six primary jaw crushers, one secondary
crusher and two tertiary crushers, three mills and three flotation circuits. The
concentrator plant has a milling capacity of 5,800 tons of ore per day.
San Martin
San Martin has been on strike since July 2007. The San Martin mining complex
is located in the municipality of Sombrerete in the western part of the state
of Zacatecas, Mexico, approximately 101 kilometers southeast of the city of
Durango and nine kilometers east of the Durango State boundary. Access
to the property is via a federal highway between the cities of Durango and
Zacatecas. A paved six kilometer road connects the mine and town of San
Martin with the highway. The city of Sombrerete is about 16 kilometers east of
the property. The complex includes an underground mine and a flotation plant
and produces lead, copper and zinc concentrates, with significant amounts
of silver. The mining district in which the San Martin mine is located was
discovered in 1555. Mining operations in the 20th century began in 1949.
San Martin lies in the Mesa Central between the Sierra Madre Occidental and
the Sierra Madre Oriental.
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The major mine equipment at San Martin includes eight jumbo drilling tools,
thirteen scoop trams, nine trucks and three hoists. For treating the ore, there
are two primary jaw crushers, two secondary crushers and one tertiary crusher,
two mills and three flotation circuits. The concentrator plant has a mill capacity
of 4,400 tons of ore per day.
Santa Eulalia
The mining district of Santa Eulalia is located in the central part of the state of
Chihuahua, Mexico, approximately 26 kilometers east of the city of Chihuahua.
This district covers approximately 48 square kilometers and is divided into three
fields: east field, central field and west field. The west field and the east field, in
which the principal mines of the complex are found, are separated by six kilometers.
The Buena Tierra mine is located in the west field and the San Antonio mine is
located in the east field. The mining district was discovered in 1590, although
exploitation did not formally begin until 1870.
Major mine equipment at the Santa Eulalia mine include five Jumbo drilling
tools, eleven scoop trams for mucking and loading, two trucks and two hoists.
For treating the ore, there are two primary crushers, one secondary crusher and
one tertiary crusher, two mill crushers, one mill and two flotation circuits. The
concentrator plant has a milling capacity of 1,450 tons of ore per day.
98
General Information
Taxco
Taxco has been on strike since July 2007. The Taxco mining complex is located
on the outskirts of the city of Taxco in the northern part of the State of Guerrero,
Mexico, approximately 71 kilometers from the city of Cuernavaca, Morelos,
where access through the highway to the complex is possible. The complex
includes several underground mines (San Antonio, Guerrero and Remedios) and
a flotation plant and produces lead and zinc concentrates, with some amounts
of gold and silver. The mining district in which the Taxco mines are located was
discovered in 1519. Mining activities in the 20th century commenced in 1918.
The Taxco district lies in the northern part of the Balsas-Mexcala basin adjacent
to the Paleozoic Taxco-Zitacuaro Massif.
The major mine equipment at the Taxco complex include four Jumbo drilling tools,
ten scoop trams for mucking and loading, five trucks and three locomotives for
internal ore haulage and three hoists. For treating the ore, there are two primary
crushers, one secondary crusher and two tertiary crushers, three mills and two
flotation circuits. The concentrator plant has a milling capacity of 2,000 tons of
ore per day.
The Nueva Rosita coal and coke complex
The Nueva Rosita coal and coke complex, which began operations in 1924, is
located in the state of Coahuila, Mexico on the outskirts of the city of Nueva
Annual Report 2010
99
Rosita near the Texas border. It includes a) an underground coal mine, which
has been closed as a result of an accident in 2006; b) an open-pit mine with a
yearly capacity of approximately 350,000 tons of coal; c) a coal washing plant
completed in 1998 with a capacity of 900,000 tons per year that produces clean
coal of a higher quality; and d) a re-engineered and modernized 21 coke oven
facility capable of producing 100,000 tons of coke (metallurgical, nut and fine)
per year of which 95,000 tons are metallurgical coke. There is also a by-product
plant to clean the coke gas oven in which tar, ammonium sulfate and light crude
oil are recovered. There are also boilers to produce 80,000 steam pounds that
are used in the by-products plant. The re-engineering and modernization of
21 ovens was completed in April, 2006 and it is presently operating with no
problems to report.
At present, the coke oven installation supplies coke to Peñoles and other Mexican
consumers in northern Mexico. We expect to sell 65,700 tons of metallurgical
coke in 2011.
Zinc Refinery
The San Luis Potosi electrolytic zinc refinery was built in 1982. It was designed
to produce 105,000 tons of refined zinc per year by treating up to 200,000 tons
of zinc concentrate from our own mines, principally Charcas, which is located
100
General Information
113 kilometers from the refinery. The refinery produces special high grade zinc
(99.995% zinc), high grade zinc (over 99.9% zinc) and zinc-based alloys with
aluminum, lead, copper or magnesium in varying quantities and sizes depending
on market demand. Refined silver and gold production is obtained from tolling
services provided by Peñoles.
The electrolytic zinc refinery’s major equipment includes a roaster with 85
square meters of roasting area, a steam recovery boiler and an acid plant.
There is a calcine processing area with five leaching stages: neutral, hot acid,
intermediate acid, acid, purified fourth and jarosite, as well as two stages for
solution purifying. Additionally, the equipment includes a cell house with two
electrowinning circuits to finally obtain metallic zinc; an alloy and molding area
with two induction furnaces and four molding systems, two of them with chains
to produce 25 kilogram ingots; and two casting wheels to manufacture one ton
Jumbo pieces.
Copper Smelter
Our San Luis copper smelter, which was in operation since 1925, was closed in 2010,
and copper concentrates previously smelted at this plant are now sent to La Caridad
for smelting. We believe operating efficiencies will increase with La Caridad replacing
the copper smelting capacity of San Luis Potosi.
Annual Report 2010
101
We have initiated a program for plant demolition and soil
rotary drills, 3 BUCYRUS 49 HR, 1 Down the Hole Drill
remediation with a budget of $35.7 million, of which we have
BIP TITON 600, 1 LE TOURNEAU 1400 front-end loader
spent $7.1 million at December 31, 2010. By remediating
with a capacity of 36.4 tons (21.4 m3.).
the site and promoting an urban development we expect to
generate a net gain in the disposal of this property.
Auxiliary equipment, 1 crawler CAT D11-R, 1 crawler
PerUVIan oPeratIonS
D375A; 1 motor grader CAT 16 H; 2 CAT motor grader
CAT D10-N, 2 crawler CAT D10-R, 3 crawler KOMATSU
TOQUEPALA
24-H, 1 CAT 24 M motor grader, 3 KOMATSU WD600
wheel tractors, 2 wheel tractors CAT 844C, 2 CAT
1. The Toquepala Production Unit comprises
three
834H wheel tractor; 4 irrigation tanks with a capacity of
Economic Administrative Units: TOQUEPALA 1
20,000 gallons, 1 front loader CAT 992D.
comprising 24 mining concession over a 6,218
hectares surface. SIMARRONA including 14 mining
3. Haulage equipment includes,19 KOMATSU 930E trucks,
concession over 5,516 hectares, and TOTORAL with 21
each with a capacity of 283 tons, 5 CAT 793C trucks
mining concession distributed over 5,384 hectares. In
each one with a capacity of 231 tons, 18 KOMATSU
addition, the Toquepala Production Unit owns 16 mining
830E trucks each with a capacity of 218 tons. 6 TITAN
concession over 8,089 hectares outside the above
2200 trucks each with a capacity of 181 tons
Economic Administrative Units.
Overall the Toquepala Production Unit holds 75 mining
capacity of 60,000 tons per day, consists of 1 primary
concession over 25,207 hectares.
crusher, 3 secondary crushers, 6 tertiary crushers, 8 rod
4. “Toquepala Concentrator” Beneficiation Plant, with milling
mills, 24 ball mills, 8 ball mills for re-crushing, 1 ball mill
2. Major mine drilling equipment includes, two P&H
9500 HP, 1 distribute control system (DCS), 1 optimizing
4100A shovels with a capacity of 73 tons (42.8 m3),
control system (SGS), as well as, 6 WEMCO-130 flotation
1 P&H 4100A shovel with a capacity of 78 tons (45.9
cells, 4 OK-100 flotation cells, 3 OK-50 flotation cells,
m3), 1 P&H 2100BL shovels with a capacity of 20 tons
5 WEMCO-60 flotation cells, 15 column cells and 24
(11.5 m3), 1 BUCYRUS 495BI shovel with a capacity of
WEMCO 42.5 cubic meter flotation cells, 72 AGITAIR 1.13
73 tons (42.8 m3), 3 BUCYRUS 495 HR shovels with a
cubic meter cells, 2 LAROX filter presses (PF60 & PF96),
capacity of 105 tons, (55.81 m3), 1 P&H 120A electric
5 middling thickeners, 2 tailings thickeners, 3 high-rate
drill, 2 P&H 100XP electric drills, 2 BUCYRUS 49RIII
tailings, 1 “Tripper Car”, 1 track tractor CAT D10-R and
102
General Information
a recycled water pipe line. A molybdenum plant with a
end loaders with 6.1 cubic meters of capacity, 4 CAT-
capacity of 2,000 tons per day, equipment is as follow:
824 wheel tractors, 2 CAT-834 wheel tractor, 1 CAT
35 INERTGAS MOD. 66-D, EINCO (100 ft3), 42 AGITAIR
844 wheel tractor, 1 KOMATSU WD600 wheel tractor,
1.13 cubic meter cells, 4 Column Cells and 1 LAROX filter
6 CAT-D10 dozers, 1 CAT-D9 dozer, 1 CAT-16H motor-
press (PF6). This plant uses nitrogen gas.
graders , 2 CAT-24H motor-graders, 3 water trucks with
a 20,000 gallon capacity, 1 water truck with a 30,000
CUAJONE
gallon capacity.
1. The Cuajone Production Unit comprises
two of
3. Haulage equipment includes,15 KOMATSU 930E trucks
Economic Administrative Units: CUAJONE 1, with 22
each with a 290 ton capacity, 20 KOMATSU 830E trucks
mining concessions over 7,810 hectares; and COCOTEA
each with a capacity of 218 ton and 7 CAT 793C trucks
with 17 mining concessions over 7,691 hectares.
each one with a capacity of 231 ton.
Additionally, the Cuajone Production Unit has 4 mining
concessions over 1,391 hectares, outside the above two
4. “Cuajone Concentrator” Beneficiation plant with a
Economic Administrative Units.
milling capacity of 87,000 tons per day, consisting of
1 primary crusher, 3 secondary crushers, 7 tertiary
Overall, the Cuajone Production Unit comprises of 43
crushers, 11 primary ball mills, 4 ball mills for re-
mining concessions over a 16,892 hectare surface.
crushing, 1 vertical mill, as well as 4 flotation cells
OK-160, 30 OK-100 flotation cells, 8 column cells,
2. Mine drilling equipment includes, 2 P&H 4100A
14 WEMCO 300 (ft3) flotation cells, 6 WEMCO-60
shovels with a capacity of 73 tons (42.8 m3), 1
metric cubic flotation cells, 1 LAROX filter press
BUCYRUS electric shovel 495BII with a capacity of 73
PF96,1FLSmidth filter press M1500FBM, 2 middling
tons (42.8 m3), 1 BUCYRUS electric shovel 495 HR with
thickeners, 3 tailings thickeners, 1 high-rate tailings,
a capacity of 95 tons, 1 P&H 2800XPB shovel with a
1 VOLVO FM12 truck, recycled water pipe line. The
capacity of 54 tons, 1 LE TOURNEAU 1800 front-end
molybdenum plant with a capacity of 2358 tons / day,
loader with a capacity of 43 tons, 2 P&H 120A electric
its equipments are as follow: 8 cells with a capacity of
drills, 1 P&H 100XP electric drill, 1 BUCYRUS BE49RIII
400 DENVER FT3, 6 cells OK-8 with a capacity of 25
electric drill, 1 BUCYRUS BE49HR electric drill, 1 Diesel
HP, 16 cells GALIGHER with a capacity of 800 FT3, 16
ROCK-L8 pre-cut drill, 3 CAT 966 front-end loaders
cells DENVER with a capacity of 100 FT3, and other
with of 3.8 cubic meters of capacity, 2 CAT 988 front-
equipments. This plant uses nitrogen gas.
Annual Report 2010
103
OTHERS
ILO METALLURGICAL COMPLEX
One SX/EW plant in Toquepala and one SX plant in Cuajone.
1. The Ilo metallurgical complex has one Administrative &
Economic Unit named ILO with 16 non-metallic mining
The SX Cuajone Plant has 1 primary jaw crusher and
concessions over 2,518.97 hectares. Additionally, the
1 secondary cone crusher HP-500 with a capacity of
metallurgical complex has 23 mining concessions
390 ton/H, to process Cuajone’s oxides. In addition, 1
over 7,504.4 hectares, making a total of 39 mining
agglomeration mill, one front end loader, three 109-ton
concessions with a total area of 14,724 hectares.
capacity trucks for hauling to the leach dumps. Copper in
solution produced at Cuajone is sent to Toquepala through
2. Ilo Smelter with a smelting capacity of 1,200,000 tons
an eight-inch pipe laid alongside the Cuajone - Toquepala
of concentrate, one Isasmelt furnace, 2 Rotary Holding
railroad track.
Furnaces, 4 Pierce Smith converters, 2 slag cleaning
furnaces, 2 anode furnaces and 2 casting wheels.
In Leaching Toquepala,
there are
irrigation systems
The ISASMELT Furnace is a bath concentrate smelting
distributed in the south dump and for the northwest dump.
technology, uses a oxygen enriched air lance that is
The percolation solution, or PLS, of the dumps are stored
immersed in a volume of molten slag, The matte-slag
in 5 collection dams from which the solutions are pumped
mixture is tapped to the Rotary Holding Furnaces to
into a plant feed pond.
separate the matte and slag. The matte with 62 % of
copper is processed in the Peirce Smith converters to
The feed pond receives the percolation solutions from
produce a 99.3% blister copper. The blister copper is
the different collection ponds through the PLS pumping
treated in the refining furnaces to produce the anodic
systems. The PLS contained in the feed pond is transferred
copper which is cast like plates of 440 kg in the twin
by gravity to the solvent extraction plant (ES) where the
casting wheel. The final product of the Smelter is the
PLS is concentrated and purified obtaining electrolyte. The
99.7% copper anode. The Ilo Smelter also has a sea
plant has 3 solvent extraction trains each with a nominal
water pumping plant which is used in the furnace jacket
capacity of 1,068 cubic meters per hour of PLS and 162
water cooling system. Additionally the Smelter has two
cells of electrodeposits distributed in two electrolytic
desalination plants (110 m3 / h), a potable water plant
ships, one with 122 cells and the other one with 40 cells.
and a sewage treatment plant.
Electrodeposition (DE) has 4 rectifiers with a capacity of
23,000 amps each that provides the necessary current to
3. Two sulfuric acid plants with a total capacity of 1'144,000
convert the electrolyte ionic copper to metallic copper.
tons /year. The smelter gases are processed in acid plants
104
General Information
to produce 98.5% sulfuric acid. The smelter sulfur capture is above 92%. The
acid production process has the following steps: cooling and cleaning of the
smelter gas, drying, gas conversion of the SO2 and SO3 absorption. Sulfuric
acid is stored in tanks for final transportation to different consumers.
4. Two cryogenic oxygen plants with a total capacity of 1317 tons of 95% oxygen
per day. The oxygen is used in the ISASMELT furnace, separation furnaces
and Peirce Smith converters.
5. Ilo refinery and Electrolitic Plant: with a capacity of 280,000 ton per year
(cathodes), 926 commercial cells and 52 starting cells, and 16 primary liberator
cells, 24 secondary liberator cells, a precious metals plant with 1 Wenmec selenium
reactor, 1 Copella furnace, 26 silver electrorefining cells and 1 hydrometallurgical
system for gold recovery.
6. Coquina plant with a production capacity of 200,000 tons per year of
seashells. Coquina Mining Plant extracts seashells to supply the raw material
to the Lime Plant located in Ilo smelter The mining ratio is 25:100, the sea
shell product has a content above 80% of CaCO3
7. Lime plant with a capacity of 80,000 tons per year. Processes seashells
received from Coquina plant obtaining 80% CaO Lime through the
decomposition of the calcium carbonate. Lime is used in Toquepala and
Cuajone concentrators and in effluents plants associated to acid plant.
OTHERS
Industrial railroad to haul concentrates and supplies between Toquepala, Cuajone
and Ilo with 15 locomotives, 264 dump cars, 91 flat cars, 254 boxcars, 8 closed
boxcars, 11 closed hopper-type cars, 34 open hopper-type cars, 36 various tank
wagons, 49 sulfuric acid tanks, 6 patrol cars.
Annual Report 2010
105
employees
MEXICAN OPERATIONS
At december 31
Employees
Workers
Total
PERUVIAN OPERATIONS
At december 31
Employees
Workers
Total
CHILEAN OFFICE
At december 31
2010
2009
2008
2007
2006
1,919
5,257
7,176
1,735
5,851
7,586
1,836
5,973
7,809
2,108
6,404
8,512
2,142
6,512
8,654
2010
2009
2008
2007
2006
1,999
2,003
4,002
1,941
1,976
3,924
1,912
1,756
3,668
1,895
1,702
3,597
1,839
1,715
3,554
2010
2009
2008
2007
2006
Total
10
11
10
10
10
CORPORATE OFFICE
At december 31
2010
2009
2008
2007
2006
Total
1
1
7
7
7
TOTAL EMPLOYEES IN SCC
At december 31
Total Mexico
Total Peru
Total Chile
Total Oficina Corporativa
2010
2009
200 08
2007
2006
7,176
4,002
10
1
7,586
3,924
11
7
7,809
3,668
10
7
8,527
3,597
10
7
12,141
8,654
3,554
10
7
12,225
Total
11,189
11,522
11,494
106
General Information
Principles of Corporate Governance
General Management Resolutions the National Commission for Corporate and
Securities Supervision (CONASEV, by its acronym in Spanish) Nº 096-2003-
EF/94.11 y N° 140-2005-EF/94.11
The information referred to both resolutions will be submitted to the CONASEV
of the Republic of Peru, together with the Annual Report.
Economic relations with other companies due to loans that commit
more than 10% of the stockholder’s equity of the issuing entity.
To date, there are no loans with other companies that compromise more than
10% of SCC’s property.
ADMINISTRATIVE JUDICIAL OR ARBITRATION PROCESSES
LITIGATION
See Note 15 of the Company’s consolidated financial statements.
Changes of those responsible for the preparation and revision of
the financial information
Mr. Jose N. Chirinos acts as Director of Comptroller and Finance and Mr. Marco
A. Garcia acts as Finance Manager.
Information related to the stock entered in the Stock Market Public
Annual Report 2010
107
Common stock
On November 29, 1995 the Company offered to exchange the
Climax Molybdenum B.V., subsidiaries of two of SCC’s
recently issued common shares for all and any labor shares
founding shareholders and affiliates, sold their share in SCC.
of the Peruvian Branch of the Company, at a ratio of one
common share per four S-1 shares and one common share
On August 30, 2006 the Executive Committee of the Board
per five S-2 shares. The exchange expired on December
of Directors declared a two-for-one split of the Company’s
29, 1995, with 80.8% of the total labor shares in circulation
outstanding common stock. On October 2, 2006 common
exchange for 22,959,334 common shares. These common
shareholders of record at the close of business on September
shares are quoted in New York Stock Exchange and the
15, 2006, received one additional share of common stock
Lima Stock Exchange and are entitled to one vote per share.
for every share owned. The Company’s common stock
Along with the exchange of labor shares the holders of
The split increased the number of shares outstanding to
began trading at its post-split price on October 3, 2006.
common shares of the Company exchanged their shares for
294,460,850 from 147,230,425.
Class A common shares, with the right to five votes per share.
On June 19, 2008 the Executive Committee of the Board of
In connection with the Minera Mexico acquisition (April 1,
Directors declared a three-for-one split of the Company’s
2005), 134,415,280 new common shares were issued and
outstanding common stock. On July 10, 2008 common
class A common shares of the Company were converted to
shareholders of record at the close of business on June
common shares, and preferential votes were eliminated. On
30, 2008, received two additional shares of common stock
June 9, 2005, Cerro Trading Company, Inc., SPC Investors
for every share owned. The split increased the number of
L.L.C., Phelps Dodge Overseas Capital Corporation and
shares outstanding to 883,410,150 from 294,470,050.
108
General Information
All share and per share amounts were retroactively adjusted
registered these notes under the Securities Act of 1933, as
to reflect the stock splits.
amended.
At December 31, 2010, there were of record 850,000,000
Interest on the notes will be paid semi-annually in arrears.
shares of common stock of the Company, par value $0.01
The notes will constitute the Company’s general unsecured
per share, outstanding.
obligations and the series of notes will rank pari passu with
CORPORATE BONDS:
all of the Company’s other existing and future unsecured
each other and will rank pari passu in right of payment with
and unsubordinated indebtedness.
On April 16, 2010, the Company issued $1.5 billion in
fixed-rate unsecured notes with a discount of $10.3 million,
In connection with the transaction, on April 16, 2010 the
which is being amortized over the term of the related
Company entered into a base indenture with Wells Fargo
debt. Net proceeds will be used for general corporate
Bank, National Association, as trustee, as well as a first
purposes, including the financing of the Company’s capital
supplemental indenture and a second supplemental
expenditure program.
indenture which provide for the issuance, and set forth
the terms of, the two tranches of notes described above.
The $1.5 billion fixed-rate senior unsecured notes were
The indentures contain covenants that limit the Company’s
issued in two tranches, $400 million due in 2020 at an
ability to, among other things, incur certain liens securing
annual interest rate of 5.375% and $1.1 billion due in 2040
indebtedness, engage
in certain sale and
leaseback
at an annual interest rate of 6.75%. The Company has
transactions, and enter into certain consolidations, mergers,
Annual Report 2010
109
conveyances, transfers or leases of all or substantially
The net proceeds from the issuance and sale of the notes
all the Company’s assets. If the Company experiences
were principally used to repay outstanding indebtedness
a Change of Control Triggering Event (as defined in the
of SCC, and the balance was used for general corporate
indentures governing the notes), the Company must offers
purposes. SCC filed a registration statement on Form S-4
to repurchase the notes at a purchase price equal to 101%
with respect to these Notes in October 2005.
of the principal amount thereof, plus accrued and unpaid
interest, if any. A Change of Control Trigger Event also
In January 2006, SCC completed an exchange offer for $200
includes a rating decline, that is, if the rating of the notes,
million, 6.375% Notes due 2015 and $600 million, 7.5%
by at least one of the rating agencies shall be decreased by
Notes due 2035. In the exchange offer, $197.4 million of the
one or more gradations.
6.375% old notes due 2015 were tendered in exchange for
an equivalent amount of new notes and an ag¬gregate of
The Company may issue additional debt from time to time
$590.5 million of the 7.5% old notes due 2035 were tendered
pursuant to the base indenture.
in exchange for an equivalent amount of new notes. The
indentures relating to the notes contain certain covenants,
Changes in Credit Risk Rating: In connection with the
including limitations on liens, limita¬tions on sale and
issuance of the $1.5 billion new notes, on April 1, 2010
leaseback transactions, rights of the holders of the notes
Moody’s investor service upgraded to Baa2 from Baa3
upon the occurrence of a change of control triggering event,
the Company’s senior unsecured ratings and the rating
limitations on subsidiary indebtedness and limitations on
on its Yankee bonds. Also on April 5, 2010 Fitch and
consolidations, mergers, sales or conveyances. All of
Standard & Poor'’s (“S&P”) ratings services assigned
these limitations and restrictions are subject to a number
ratings of ‘BBB’ and '‘BBB-'’, respectively, to the new notes
of significant exceptions, and some of these covenants will
issued. At the same time, these credit rating agencies
cease to be applicable before the notes mature if the notes
confirmed their long-term corporate credit rating on SCC
attain an investment grade rating. At December 31, 2010,
(‘Baa2’, ‘BBB and '‘BBB- for Moody’s, Fitch and S&P,
SCC is in compliance with these covenants.
respectively).
The notes issued in July 2005 and the new notes issued in
On May 9, 2006, SCC issued $400 million 7.5% Notes
May 2006 are treated as a single series of notes under the
due 2035. In July 2005, SCC issued $200 million 6.375%
indenture, including for purposes of covenants, waivers and
Notes due 2015 and $600 million 7.5% Notes due 2035.
amendments. SCC has registered these notes under the
The notes are senior unsecured obligations of the Company.
Securities Act of 1933, as amended.
110
General Information
In 1999, SCC entered into a $100 million, 15-year loan agreement with Mitsui. The interest rate for
this loan is the Japanese LIBO rate plus 1.25% (Japanese LIBO for this loan at December 31, 2010
was 0.45631%). The Mitsui credit agreement is collateralized by pledges of receivables on 31,000
tons of copper per year. The Mitsui agreement requires SCC to maintain a minimum stockholders’
equity of $750 million and a ratio of debt to equity. Reduction of Grupo Mexico’s direct or indirect
voting interest in SCC to less than a majority would constitute an event of default under the Mitsui
agreement. At December 31, 2010, SCC is in compliance with these covenants.
In January 2005, the Company signed a $200 million credit facility with a group of banks led by
Citibank, N.A. Proceeds of this credit facility were used to prepay $199 million the outstanding bonds
of the Company’s Pe¬ruvian bond program. On July 28, 2005, a portion of the proceeds from the
financing, noted above, were used to repay this facility.
In 1998, Minera Mexico issued $500 million of unsecured bonds, which we referred to as Yankee
bonds. These bonds were offered in two series: Series A bonds which were fully repaid in 2008
with a payment of $150 million, and Series B for $125 million, with an interest rate of 9.25% and a
2028 maturity date. In 2007, SCC repurchased $68.6 million of the Series B bonds at a premium of
$16.6 million, which is included in the consolidated statement of earnings on the line “Loss on debt
prepayments”. The bonds contain a covenant requiring Minera Mexico to maintain a ratio of EBITDA
to interest expense of not less than 2.5 to 1.0, as such terms are defined by the facility. At December
31, 2010, Minera Mexico is in compliance with this covenant.
We expect that we will meet our cash requirements for 2011 and beyond from internally generated funds,
cash on hand and from additional external financing if required.
Annual Report 2010
111
members of the Board of Directors at December 31, 2010
German Larrea Mota-Velasco, Director.
Mr. Larrea has been Chairman of the Board since December 1999, Chief Executive Officer from
December 1999 to October 2004, and a director of the Company since November 1999. He has been
Chairman of the Board of Directors, President and Chief Executive Officer of Grupo Mexico, S.A.B. de
C.V. (“Grupo Mexico”) (holding) since 1994. Mr. Larrea has been Chairman of the Board of Directors
and Chief Executive Officer of Grupo Ferroviario Mexicano, S.A. de C.V. (railroad company) since
1997. Mr. Larrea was previously Executive Vice Chairman of Grupo Mexico, and has been member of
the Board of Directors since 1981. He is also Chairman of the Board of Directors and Chief Executive
Officer of Empresarios Industriales de Mexico, S.A. de C.V. (“EIM”) (holding), Compañia Perforadora
Mexico, S.A. de C.V. (drilling company), Mexico Compañia Constructora, S.A. de C.V. (construction
company), and Fondo Inmobiliario (real estate company), since 1992. He founded Grupo Impresa, a
printing and publishing company in 1978, remaining as the Chairman and Chief Executive Officer until
1989 when the company was sold. He is also a director of Banco Nacional de Mexico, S.A. (Citigroup),
which forms part of Grupo Financiero Banamex, S.A. de C.V. since 1992, Consejo Mexicano de
Hombres de Negocios, and Grupo Televisa, S.A.B. since 1999. He and Mr. Genaro Larrea Mota-
Velasco are brothers.
Mr. Larrea, our Chairman, presides over every Board meeting and has been contributing to the
Company since 1999 his education, his leadership skills, industry knowledge, strategic vision,
informed judgment and business experience of more than 16 years, especially in the mining sector.
As Chairman and Chief Executive Officer of Grupo Mexico, of Grupo Ferroviario Mexicano, S.A. de
C.V. and of EIM, a holding company engaged in a variety of business, including mining, construction,
railways, real estate, and drilling, he brings to the Company a valuable mix of business experience in
different industries. His serving as a director of a bank, a professional Mexican organization and a
media company provides a valuable diversified business experience that enhances his leadership role
in the Company.
Oscar Gonzalez Rocha, Director.
Mr. Gonzalez Rocha has been our President since December 1999 and our President and Chief Executive
Officer since October 21, 2004. He has been a director of the Company since November 1999. Mr.
Gonzalez Rocha has been Chief Executive Officer and director of Asarco LLC, an affiliate of the Company,
112
General Information
since August 2010. Previously, he was the Company’s President and General Director and Chief Operating
Officer from December 1999 to October 20, 2004. Mr. Gonzalez Rocha has been a director of Grupo
Mexico since 2002. He was General Director of Mexicana de Cobre, S.A. de C.V. from 1986 to 1999 and
of Buenavista del Cobre, S.A. de C.V. (formerly Mexicana de Cananea, S.A. de C.V.) from 1990 to 1999. He
was an alternate director of Grupo Mexico from 1998 to April 2002. Mr. Gonzalez Rocha is a civil engineer
with a degree from the Autonomous National University of Mexico (UNAM).
Emilio Carrillo Gamboa, Director.
Emili 30, 2003 and is our fourth independent director nominee. Mr. Carrillo Gamboa is a prominent
lawyer in Mexico and has been the Senior Partner of the law firm Bufete Carrillo Gamboa, S.C., a law
firm specializing in corporate, financial, commercial, and public utility issues, for the last five years.
Mr. Carrillo Gamboa has extensive business experience and currently serves on the boards of many
prestigious international and Mexican corporations, as well as charitable organizations. Since March
9, 2005, he has been Chairman of the Board of The Mexico Fund, Inc. (NYSE—mxf), a non.diversified
closed-end management investment company. Mr. Carrillo Gamboa held various offices with Telefonos
de Mexico, S.A. de C.V. (“TELMEX”) from 1960 to 1987, the most recent being that of President and Chief
Executive Officer from June 1975 to June 1987. He later served as Mexico’s Ambassador to Canada from
July 1987 to February 1989. Mr. Carrillo Gamboa served from 2002 through March 2010 on the board
and on the Audit Committee of Empresas ICA, S.A.B. de C.V. (NYSE-ica), an engineering, procurement
and construction company. He is a member of the Valuation, Contract Review and Nominating and
Corporate Governance Committees of The Mexico Fund, Inc. and a member of its Audit Committee
since 2002. Mr. Carrillo Gamboa has a law degree from the Autonomous National University of Mexico
(UNAM). He also attended a continuous legal education program at Georgetown University Law School,
and practiced at the World Bank.
Alfredo Casar Perez, Director.
Mr. Casar Perez has been a director of the Company since October 26, 2006. He has been a member
of the Board of Directors of Grupo Mexico since 1997. He is also a member of the Board of Directors
of Ferrocarril Mexicano, S.A. de C.V., an affiliated company of Grupo Mexico, since 1998 and its
Chief Executive Officer since 1999. From 1992 to 1999, Mr. Casar Perez served as General Director
Annual Report 2010
113
and member of the Board of Directors of Compañia Perforadora Mexico, S.A. de C.V. and Mexico
Compañia Constructora, S.A. de C.V., two affiliated companies of Grupo Mexico. Mr. Casar Perez
served as Project Director of ISEFI, a subsidiary of Banco Internacional in 1991 and Executive
Vice President of Grupo Costamex in 1985. Mr. Casar Perez also worked for the Real Estate Firm,
Agricultural Ministry, and the Mexican College. Mr. Casar Perez holds a degree in Economics from the
Autonomous Technological Institute of Mexico, ITAM, and one in Industrial Engineering from Anahuac
University. He also holds a Master’s degree in Economics from the University of Chicago.
Luis Castelazo Morales, Director.
Mr. Castelazo Morales was elected to the Company’s Board of Directors on September 20, 2010.
Mr. Luis Castelazo Morales has been the General Director of EIM since 2008. Mr. Castelazo
Morales was previously Chief Executive Officer of Desarrollo de Ingenieria S.A. de C.V. (DISA), a
Mexican construction company, for more than ten years. Mr. Castelazo Morales also participated in
different projects in Mexico via joint ventures with Raytheon Engineers and Constructors and also
with the McCarthy Construction Group. Later he, along with two colleagues, founded AGBC S.C.,
a firm dedicated to financial consulting and advising for investments in the Mexican stock market,
where he worked for more than 15 years. Mr. Castelazo Morales holds the recognition of the AMIB
(Asociacion Mexicana de Intermediarios Bursatiles) as a certified “Advisor in Investment Strategies”
for the Mexican stock market. Mr. Castelazo Morales holds a degree in Civil Engineering from the
Universidad Iberoamericana in Mexico City and a Master’s degree in Business Administration from
the University of Texas in Austin, TX.
Enrique Castillo Sanchez Mejorada, Director.
Mr. Castillo Sanchez Mejorada was elected to the Company’s Board of Directors on July 26, 2010
and is our fifth independent director nominee. Since October 2000, Mr. Castillo Sanchez Mejorada
has been the Chairman of the Board of IXE Grupo Financiero, S.A.B. de C.V. (“IXE GF”), a Mexican
financial holding company. He was also Chief Executive Officer of Ixe GF from October 2000 to
December 2008. In addition, from March 2007 to March 2009, Mr. Castillo Sanchez Mejorada was
the President of the Mexican Banking Association (Asociacion de Bancos de Mexico). Currently,
Mr. Castillo Sanchez Mejorada serves as an independent director on the boards of Grupo Herdez,
S.A.B. de C.V., a Mexican holding company for the manufacture, sale and distribution of food
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General Information
products; Alfa S.A.B. de C.V., a Mexico-based holding company that, through its subsidiaries, is
engaged in the petrochemical, food processing, automotive and telecommunication sectors; Grupo
Embotelladoras Unidas, S.A.B. de C.V., a Mexico-based holding company primarily engaged in the
beverages industry; Grupo Azucarero Mexico, S.A.B. de C.V., a Mexico-based company engaged
in the production, distribution, processing, manufacture and sale of sugar-based products and its
derivates; and Grupo Casa Saba, S.A.B. de C.V., a Mexican wholesale distributor of pharmaceutical,
health, beauty and other consumer products. Mr. Castillo Sanchez Mejorada holds a Bachelor’s
degree in Business Administration from the Universidad Anahuac in Mexico City, Mexico.
Alberto de la Parra Zavala, Director.
Mr. de la Parra has been a director of the Company since July 26, 2007. He has been the General
Counsel of Grupo Mexico since February 2007. He was a partner of Galicia y Robles, S.C., a prominent
Mexican law firm, from February 2002 to January 2007. Mr. de la Parra was a partner of Santamarina
y Steta, S.C., one of the largest law firms in Mexico, from 1997 to 2002. He also worked for one year
as a foreign associate with the law firm White & Case LLP in New York City. Mr. de la Parra is an
accomplished Mexican attorney with broad experience in corporate and financial matters, including
mergers and acquisitions. He has represented Mexican and international clients before Mexican
authorities, including the Banking and Securities Exchange Commission, and the Stock Exchange.
Additionally, Mr. de la Parra is the Corporate Secretary of the Board of Directors of Grupo Mexico,
and of some of its subsidiaries. Mr. de la Parra was a member of the board of Grupo Aeroportuario del
Sureste, S. A. B. de C. V. (airport services) from 2000 to 2007. Mr. de la Parra has a law degree from
the Escuela Libre de Derecho of Mexico.
Xavier Garcia de Quevedo Topete, Director.
Mr. Garcia de Quevedo has been a director of the Company since November 1999. He has been the President
of Minera Mexico since September 2001 and the President and Chief Executive Officer of Southern Copper
Minera Mexico and our Chief Operating Officer since April 12, 2005. He has been the President and Chief
Executive Officer of Americas Mining Corporation (“AMC”) since September 7, 2007. From December 2009
to June 2010, he was Chairman and Chief Executive Officer of Asarco LLC. He was previously President
of Asarco LLC from November 1999 to September 2001. Mr. Garcia de Quevedo initiated his professional
career in 1969 with Grupo Mexico. He was President of Grupo Ferroviario Mexicano, S.A. de C.V. and
Annual Report 2010
115
of Ferrocarril Mexicano, S.A. de C.V. from December 1997 to December 1999, and General Director of
Exploration and Development of Grupo Mexico from 1994 to 1997. He has been a director of Grupo Mexico
since April 2002. He was also Vice President of Grupo Condumex, S.A. de C.V. (telecommunications,
electronic and automotive parts producer) for eight years. Mr. Garcia de Quevedo is the Chairman of the
Mining Chamber of Mexico. He is a Chemical Engineer with a degree from the Autonomous National
University of Mexico (UNAM). He also attended a continuous business administration and finance program
at the Technical Institute of Monterrey in Mexico.
Genaro Larrea Mota-Velasco, Director.
Mr. Larrea was our Vice President, Commercial from December 1999 until April 25, 2002, and has been a
director since November 1999. From April 1983 to August 2002, Mr. Larrea held several positions in the
areas of finance, commercial and logistics with Grupo Mexico. He has been a director of Grupo Mexico
since 1994. He is currently Chairman of the Board of Directors of Corporacion Scribe, S.A.B. Mr. Larrea has
a Bachelor’s degree in Business Administration from Newport University and a Global Leadership Program
certificate from Thunderbird University. He and Mr. German Larrea Mota-Velasco are brothers.
Daniel Muñiz Quintanilla, Director.
Mr. Muñiz has been a director of the Company since May 28, 2008. Mr. Muñiz has been the Chief Financial
Officer of Grupo Mexico since April 2007. Prior to joining Grupo Mexico, Mr. Muñiz was a practicing
corporate-finance lawyer from 1996 to 2006. During this time he worked at Cortes, Muñiz y Nuñez Sarrapy;
Mijares, Angoitia, Cortes y Fuentes; and Baker & McKenzie (London and Mexico City offices). He holds
a Master’s degree in Financial Law from Georgetown University, and a Master’s degree in Business
Administration from Instituto de Empresa in Madrid.
Luis Miguel Palomino Bonilla, Director.
Dr. Palomino has been a director of the Company since March 19, 2004 and is a special independent
director nominee. Dr. Palomino has been Chairman of the Board of Aventura Plaza S. A. (commercial
real estate developer and operator) since January 2008, Manager of the Peruvian Economic Institute
(economic think tank) since April 2009, Managing Partner of RMG Consultores (a financial consulting
firm) since July 2007, director of the Master in Finance Program at the University of the Pacific in Lima,
Peru since July 2009, and a member of the board of various organizations. He was a member of the
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General Information
of directors of Access SEAF SAFI from December 2007 to April 2010. Dr. Palomino was previously
Principal and Senior Consultant of Proconsulta International (financial consulting) from September
2003 to June 2007. Previously he was First Vice President and Chief Economist, Latin America, for
Merrill Lynch, Pierce, Fenner & Smith, New York (investment banking) from 2000 to 2002. He was
Chief Executive Officer, Senior Country and Equity Analyst of Merrill Lynch, Peru (investment banking)
from 1995 to 2000. Dr. Palomino has held various positions with banks and financial institutions as
an economist, financial advisor and analyst. He has a PhD in finance from the Wharton School of the
University of Pennsylvania, Philadelphia, and graduated from the Economics Program of the Universidad
del Pacifico, Lima, Peru.
Gilberto Perezalonso Cifuentes, Director.
Mr. Perezalonso has been a director of the Company since 002 and is a special independent director nominee.
He was Chief Executive Officer of Corporacion Geo S.A. de C.V. (housing construction) from February 2006
to February 2007. Mr. Perezalonso was the Chief Executive Officer of Aeromexico (Aerovias de Mexico, S.A.
de C.V.) (airline company) from 2004 until December 2005. From 1998 until April 2001, he was Executive
Vice President of Administration and Finance of Grupo Televisa, S.A.B. (media company). From 1980 until
February 1998, Mr. Perezalonso held various positions with Grupo Cifra, S.A. de C.V. (department stores),
the most recent position being that of General Director of Administration and Finance. Now he is a member
of the advisory council of Banco Nacional de Mexico, S.A. de C.V. (banking), the board and the investment
committee of Afore Banamex (banking), the board and the investment committee of Siefore Banamex No.
1 (banking), and is a member of the boards of Gigante, S.A. de C.V. (retail), Masnegocio Co. S. de R.L.
de C.V. (information technology), Telefonica Moiles Mexico, S.A. de C.V. (wireless communication), and
Construction Company Marhnos (housing construction). Mr. Perezalonso was a director of Cablevision,
S.A. de C.V., Grupo Televisa, S.A.B. and a member of the Audit Committee of Grupo Televisa, S.A.B. from
March 1998 to September 2009. Mr. Perezalonso has a law degree from the Iberoamerican University and
a Master’s degree in Business Administration from the Business Administration Graduate School for Central
America (INCAE). Mr. Perezalonso has also attended the Corporate Finance program at Harvard University.
Juan Rebolledo Gout, Director.
Mr. Rebolledo has been a director of the Company since May 30, 2003. Mr. Rebolledo has been International
Vice President of Grupo Mexico since 2001 . He was Deputy Secretary of Foreign Affairs of Mexico from
Annual Report 2010
117
1994 to 2000 and Deputy Chief of Staff to the President of Mexico from 1993 to 1994. Previously, he
was Assistant to the President of Mexico (1989-1993), director of the “National Institute for the Historical
Studies of the Mexican Revolution” of the Secretariat of Government (1985-1988), Dean of Graduate
Studies at the National Autonomous University of Mexico (UNAM), Political Science Department (1984-
1985), and professor of said university (1981-1983). Mr. Rebolledo holds a law degree from UNAM, an MA
in philosophy from Tulane University, and an LLM from Harvard Law School.
Carlos Ruiz Sacristan, Director.
Mr. Ruiz Sacristan has been a director of the Company since February 12, 2004 and is a special
independent director nominee. Since November 2001, he has been the owner and Managing Partner of
Proyectos Estrategicos Integrales, a Mexican investment banking firm specialized in agricultural, transport,
tourism, and housing projects. Mr. Ruiz Sacristan has held various distinguished positions in the Mexican
government, the most recent being that of Secretary of Communication and Transportation of Mexico from
1995 to 2000. While holding that position, he was also Chairman of the Board of Directors of the Mexican-
owned companies in the sector, and member of the Board of Directors of development banks. He was also
a director of Asarco LLC. Mr. Ruiz Sacristan is a member of the Board of Directors since 2007 and of the
Audit, and Environmental and Technology Committees of Sempra Energy (energy services). He has been
a member of the Board of Directors of Constructora y Perforadora Latina S.A. de C.V. (Mexican geothermal
exploration and drilling company), of Banco Ve Por Mas S.A. (Mexican bank), and of OHL Concesiones
Mexico (a construction and civil engineering company) since 2010. Mr. Ruiz Sacristan holds a Bachelor’s
degree in Business Administration from the Anahuac University of Mexico City, and an MBA degree from
Northwestern University of Chicago.
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General Information
Annual Report 2010
119
EXECUTIVE OffICERS
German Larrea Mota-Velasco
Chairman of the Board
Oscar Gonzalez Rocha
President and Chief Executive Officer
Xavier Garcia de Quevedo Topete
President and Chief Executive Officer Southern Copper Minera Mexico and our
Chief Operating Officer
Genaro Guerrero Diaz Mercado
Vice-President, Finance and Chief Financial Officer
Jose de los Heros Ugarte
Vice-President, Commercial
Vidal Muhech Dip
Vice-President, Projects
Jose N. Chirinos Fano
Comptroller
Remigio Martinez Müller
Vice-President, Explorations
120
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General Information
Next of kin
Messrs. German Larrea Mota-Velasco, Chairman of the Board of the Company and Genaro Larrea Mota-
Velasco, a Director of the Company are brothers or kindred in second degree of consanguinity.
A company of which more than 50% of the voting power is held by a single entity, a "controlled company",
need not comply with the requirements of the New York Stock Exchange (“NYSE”) corporate governance rules
requiring a majority of independent Directors and independent compensation and nomination/corporate
governance committees. SCC is a controlled company as defined by the rules of the NYSE. Grupo Mexico
owns indirectly 80.00% of the stock of the Company. The Company has taken advantage of the exceptions
to comply with the corporate governance rules of the NYSE. The Board of Directors of the Company
determined that Messrs. Luis Miguel Palomino Bonilla, Gilberto Perezalonso, and Emilio Carrillo, the three
members 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 Exchange Commission (“SEC”), as
such qualifications are interpreted by the Company's Board of Directors in its business judgment. In 2009
we had three special independent directors nominated by the Special Nominating Committee, Messrs.
Harold S. Handelsman, Luis Miguel Palomino Bonilla, Gilberto Perezalonso Cifuentes, and Carlos Ruiz
Sacristan. In 2009, Mr. Emilio Carrillo Gamboa was our fourth independent director. At its meeting on
January 28, 2010, the Board of Directors determined that Messrs. Luis Miguel Palomino Bonilla, Gilberto
Perezalonso Cifuentes, Carlos Ruiz Sacristan and Emilio Carrillo Gamboa were independent of management
in accordance with the requirements of the NYSE as such requirements are interpreted by our Board of
Directors in its business judgment.
To the best of the Company’s knowledge, no other relationship of affinity and/or consanguinity exists
among the other members of the Board, and between them and the Executive Officers of Southern Copper
Corporation.
Informe Anual 2010
121
Special Committees of the Board
SCC’s Board of Directors has organized the following Special
Committees:
1. Executive Committee, sitting five members who substitute
5. Corporate Governance Committee,
Its
four Board
for the Board when sessions or decisions are required
members have as their principal role to advise the Board
concerning urgent matters, or which the Board would
on its functions and needs, develop and recommend the
have expressly delegated its mandate.
approval of the Company’s good governance principles,
and overseeing the evaluation of the Board’s and
2. Audit Committee, sitting
three
independent Board
Management’s performance.
members who are knowledgeable in accounting and
financial matters. Its main purpose is to (a) assist the
6. Administrative Committee, Designated by the Board for
Board in monitoring (i) the quality and integrity of the
(Employee Retirement Income Security Act – ERISA -
Company’s financial statements; (ii) the qualifications
USA) Benefits Plans. The Vice-President for Finance and
and independence of the independent auditors;(iii) the
Chief Financial Officer is the Board-appointed Trustee for
appropriate performance of the internal audit function; and
the Company’s Benefits Plans subject to US regulations,
(iv) the Company’s compliance with legal and regulatory
including ERISA. This Officer will appoint an Administrative
provisions; and (b) prepare the report requirement by
Committee sitting four management members whose
SEC rules.
purpose is to administrate and manage those plans and
to oversee the performance of the trust agents and others
3. Compensation Committee, comprising of four Board
charged with investing the plans’ monies.
members, its principal objective is to evaluate and establish
the remunerations of senior officials and key employees at
the Company and its subsidiaries, and eventual raises in
remuneration.
4. Special Committee Nominees, comprising of 2 independents
Board members and, one nominees by the Board, its
principal objective is to promote and evaluate people who
are propose as Special and Independents Directors.
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General Information
administration and Board Income
Total remunerations of Board and Administration members, in relation to the Company´s gross income is 0.29%.
annual meeting
The annual stockholders meeting of Southern Copper Corporation will be held on Thursday, April 28, 2010 at 09:00 hours.
Mexico City time, at Edificio Parque Reforma, Campos Eliseos No. 400, 9th Floor, Colonia Lomas de Chapultepec, Mexico
City, Mexico.
Corporate offices:
United States
Mexico
Peru
11811 North Tatum Blvd.
Campos Eliseos No. 400 9th floor
Av. Caminos del Inca No. 171
Suite 2500
Col. Lomas de Chapultepec
Chacarilla del Estanque
Phoenix, AZ 85028 U.S.A.
Mexico D.F.
Santiago de Surco Lima 33, Peru
Phone. +(602) 494-5328
Phone. +(52-55) 1103-5000, Ext. 5855
Phone. +(511) 512-0440, Ext. 3211
Fax +(602) 494-5317
Fax +(52-55) 11 03 55 83
Fax +(511) 512-0486
transfer agent, registrar and Stockholder Services
The Bank of New York Mellon Corporation (BONY)
Shareowner Services
480 Washington Boulevard
Jersey City, NJ 07310-1900-0286
Phone +1(800) 524-4458
Dividend reinvestment Program
SCC stockholders can have their dividends automatically reinvested in SCC
common shares. SCC pays all administrative and brokerage fees. This plan is
administered by The Bank of New York Mellon Corporation. For more information,
contact The Bank of New York Mellon Corporation at phone +1(80 0) 524-4458.
Annual Report 2010
123
Stock exchange listing
Southern Copper Corporation
The principal markets for SCC’s Common Stock are the
USA: 11811 North Tatum Blvd., Suite 2500,
New York Stock Exchange and the Lima Stock Exchange.
Phoenix, AZ 85028, U.S.A.,
Effective February 17, 2010, SCC’s Common Stock changed
Phone: 1(602) 494-5328,
its symbol from PCU to SCCO on both the NYSE and the
Fax: 1(602) 494-5317.
Lima Stock Exchange.
others
NYSE Symbol: SCCO
MEXICO: Campos Eliseos No. 400, 9 floor,
Col. Lomas de Chapultepec
The Branch in Peru has issued, in accordance with Peruvian
Mexico D.F.
law, ‘investment shares’ (formerly named labor shares) that
Phone +(52-55) 1103-5000, Extension 5855
are quoted in the Lima Stock Exchange under the symbol
Fax +(52-55) 11 03 55 83
SPCCPI1 and SPCCPI2. Transfer Agent, registrar and
stockholders services are provided by Banco de Credito of
PERU: Avenue Caminos del Inca 171 (B-2),
Peru at Avenue El Derby 055, Tower 4th, 10th floor, Centro
Chacarilla del Estanque, Santiago de Surco
Empresarial Cronos, Lima 33, Peru. Phone +(511) 313-2478,
Lima 33 - Peru/ Lima Stock Exchange Symbol: PCU.
Fax +(511) 313-2556.
Phone. +(511) 512-0440, Ext. 32112
Fax +(511) 512-0486
other Corporate Information
Web Page: www.southerncoppercorp.com
For other information on the corporation or to obtain
Email address: southerncopper@southernperu.com.pe
additional copies of the annual report, contact the Corporate
Communications Department at our corporate offices.
form 10-K3
Attached Form 10-K contains Management’s Discussion and
Analysis of Financial Condition and Results of Operations,
Consolidated Combined Financial Statements and the ac-
companying notes are an integral part of these Annual Report.
2Proxy Statement, Ext. 3325
3Form 10-K, phone +(511) 512 0440, Ext. 3354
124
General Information
Annual Report 2010
125
members of the Board of Directors
German Larrea Mota-Velasco
Oscar Gonzalez Rocha
Emilio Carrillo Gamboa
Alfredo Casar Perez
Alberto de la Parra Zavala
Xavier Garcia de Quevedo Topete
Genaro Larrea Mota-Velasco
Daniel Muñiz Quintanilla
Luis Miguel Palomino Bonilla
Gilberto Perezalonso Cifuentes
Juan Rebolledo Gout
Carlos Ruiz Sacristan
Luis Castellazo Morales
Enrique Castillo Sanchez Mejorada
audit Committee
Emilio Carrillo Gamboa, Chairman
Luis Miguel Palomino Bonilla, and
Gilberto Perezalonso Cifuentes
126
Members of the Board of Directors
executive officers
German Larrea Mota-Velasco
Chairman of the Board
Oscar Gonzalez Rocha
President and Chief Executive Officer
Xavier Garcia de Quevedo Topete
President and Chief Executive Officer Southern Copper Minera Mexico and our
Chief Operating Officer
Genaro Guerrero Diaz Mercado
Vice-President, Finance and Chief Financial Officer
Jose de los Heros Ugarte
Vice-President Commercial
Vidal Muhech Dip
Vice-President, Projects
Jose N. Chirinos Fano
Comptroller
Remigio Martinez Müller
Vice-President, Explorations
Annual Report 2010
127
STATEMENT OF RESPONSIBILITY
“To the best of our knowledge this document contains truthful and sufficient information regarding the development of the
business of Southern Copper Corporation (“SCC”) during 2010. SCC takes responsibility for its contents according to
applicable requirements”.
Hans A. Flury Royle
Assistant Secretary
Jose N. Chirinos Fano
Comptroller
CONVERSION INFORMATION: All tonnages in this annual report are metric tons unless otherwise noted. To convert to short
tons, multiply by 1.102. All distances are in kilometers, to convert to miles, multiply by 0.62137. All ounces are troy ounces.
U.S. dollar amounts represent either historical dollar amounts, where appropriate, or U.S. dollar equivalents translated in accor-
dance with generally accepted accounting principles in the United States. “SCCO”, “SCC”, “Southern Copper” or the “Com-
pany” includes Southern Copper Corporation and its consolidated subsidiaries. As a way to reflect the beginning of a new era
for developing the Cananea property to its full potential, on December 11, 2010, we have changed the name of the company
operating it to Buenavista del Cobre (“Buenavista”).
DISEÑO: DESIGN CENTER ™
SOUTHERN COPPER CORPORATION
CORPORATE OFFICES
UNITED STATES
11811 North Tatum Blvd.
Suite 2500, Phoenix, AZ 85028, U.S.A.
Phone. +(602) 494-5328
Fax +(602) 494-5317
MEXICO
Campos Eliseos No. 400 9th floor
Col. Lomas de Chapultepec, Mexico D.F.
Phone. +(52-55) 1103-5000, Ext. 5855
Fax +(52-55) 11 03 55 83
PERU
Av. Caminos del Inca No. 171 (B-2)
Chacarilla del Estanque, Santiago de Surco
Lima 33 - Peru
Phone. +(511) 512-0440, Ext. 3211
Fax +(511) 512-0486
Symbol: SCCO
Web Page
www.southerncoppercorp.com
E-mail
southerncopper@southernperu.com.pe
Annual Report 2010
Tuning musical
instruments
S Y M P H O N Y T O G R O W