SOUTHERN COPPER CORPORATION
United States:
1440 E. Missouri Avenue, Suite 160,
Phoenix, AZ 85014, U.S.A.
Phone: +(602)264-1375
Mexico:
Campos Elíseos Nº 400, 11 floor
Col. Lomas de Chapultepec,
México D.F.
Phone: +(52-55) 1103-5000, Anexo 5855
Peru:
Avenue Caminos del Inca 171
Chacarilla del Estanque, Santiago de Surco
Lima 33 - Peru
Phone: + (511) 512-0440, Anexo 3442
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STATEMENT OF RESPONSABILITY
“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 2018. SCC takes responsibility for its contents according to
applicable requirements”.
ANDRES FERRERO GHISLIERI
Assistant Secretary
RAUL JACOB RUISANCHEZ
Vice President Finance and
Chief Financial Officer
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
accordance with generally accepted accounting principles in the United States. “SCCO”, “SCC”, “Southern Copper” or the
“Company” includes Southern Copper Corporation and its consolidated subsidiaries.
Letter to shareholders
Production statistics
Copper reserves
Selected and financial data
Capital investment program and exploration
(Expansion & modernization)
Development - community outreach
Results of operations
FOR THE YEARS ENDED DECEMBER 31, 2018, 2017 AND 2016
Commitment - environmental affairs
General information
DESCRIPTION OF OPERATIONS AND DEVELOPMENT REGARDING
THE ISSUING ENTITY
Members of the board of directors
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08
10
15
16
24
38
44
56
96
Index
Letter to Shareholders
2
Our expansion program
to fully develop our
whole potential is
ongoing.
Letter to shareholders
During 2018, Southern Copper Corporation continued seeing the benefit
of its expansion and cost reduction programs that allowed a 5.3% cash
cost reduction, from $0.92 to $0.87 per pound of copper produced.
We have the lowest cost in the industry, despite the 16.5% increase
in diesel prices and other materials. Considering last year´s average
prices for our main by-products, for 2019 we expect our cash cost to
average $0.80 per pound, a further reduction of 8.0% from the 2018
cost, reinforcing Southern Copper’s leadership as a low-cost producer.
Capital investments in 2018 were $1,121.4 million, 9.6% higher than
in 2017, equivalent to 72.4% of net income. Our expansion program to
fully develop our whole potential is ongoing.
2
3
Cuajone Heavy Mineral Management
Optimizing Project, Moquegua, Peru.
For 2019, the Board of Directors approved a $1,752.8 million capital
investment program. We are currently developing the next phase of a
growth program aiming to reach a milestone copper production capacity
of 1.5 million tons by 2025, through the development of new projects.
SCC believes that with these actions the Company is in a great position
to take advantage of favorable price environments.
During 2018, we completed the construction of the Toquepala concentrator
expansion, adding 100,000 tons to our annual copper production, allowing
us to reach one million tons of annual copper production capacity. This
$1.3 billion project includes a new concentrator with state-of-the-art
technology, which will increase Toquepala´s annual copper production
2018 Annual Report Letter to Shareholders
4
Southern Copper has solid foundations that guarantee
its business success, as well as a proper return that
allows us to finance the development of productive
projects and important social programs that we
execute in each of the countries where we are present.
to 258,000 tons in 2019, a 52% production increase compared with
2018. At December 31, 2018, we have invested $1,243.4 million in this
expansion. The construction of this project was completed in 4Q18. We
reached full capacity in the 2Q19.
With respect to the Tia Maria project, we expect to receive the construction
license for this 120,000 ton annual SX-EW copper greenfield project,
with a total capital budget of $1,400 million, in the first half of 2019.
In addition to our on-going social work with the communities of Valle
de Tambo, the Company is currently implementing its successful labor
program “Forge Your Future” to train 700 people from the Islay province
in 2019. After training, the participants will be eligible to apply for one
of the estimated 9,000 jobs (3,600 direct and 5,400 indirect) required
during the Tia Maria construction phase. We believe that the initiation of
construction activities for Tia Maria will generate significant economic
opportunities for the Islay province and the Arequipa region.
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We expect that Tia Maria will produce annually 120,000 tons of copper,
will generate a significant contribution through mining royalties and
taxes and will directly employ 600 workers and indirectly provide jobs to
another 4,200 people.
In 2019, in Mexico, we have our Buenavista zinc and Pilares projects,
both in Sonora. The former is located within the Buenavista facility and
includes the development of a new concentrator to produce approximately
80,000 tons of zinc and 20,000 tons of copper per year. The project´s
budget is $413 million, and we expect to initiate operations in 2021.
When completed, this new zinc concentrator will double the Company’s
zinc production capacity. The Pilares project is located 6 kilometers
from La Caridad and consists of an open-pit mine operation with an
annual production capacity of 35,000 tons of copper in concentrates.
This project will significantly improve the over-all mineral ore grade. The
budget for Pilares is $159 million and we expect production to start in
early 2020.
Our Company, Southern Copper, is uniquely positioned to continue
delivering enhanced performance, sustainable growth and superior
value. Our best-in-class low cost operations, coupled with a large, high-
quality reserve base in investment grade jurisdictions, continues to offer
highly attractive growth opportunities. In addition, our robust capital
2018 Annual Report Letter to Shareholders
6
structure provides the financial and strategic flexibility required for its
execution.
We believe that Southern Copper has a solid foundation that guarantees
its business success, as well as a proper return that allows us to finance
– simultaneously – both the development of productive projects and
important social programs that we execute in each of the countries
where we are present, benefiting neighboring towns to our operations
areas.
On behalf of Southern Copper Corporation’s Board, we express our thanks
to all our personnel for their effort, hard 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
CHIEF EXECUTIVE OFFICE
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Drilling worker at Buenavista del Cobre
open-pit mine.
$517
million invested in Sustainable
Development projects to
generate value and well-being
for our employees, their families
and the environment.
2018 Annual Report 8
Production Statistics
Production Statistics
Southern Copper Corporation and Subsidiaries
Five-year Production Statistics
2018
2017
2016
2015
2014
Copper production Mines (tons)
Mined Material
(thousands)
814,228
743,163
Copper in concentrates
Copper SX/EW
Total Copper
Molybdenum in concentrates
Zinc in concentrates
Silver in concentrates
Smelter/refineries production
741,488
711,720
142,201
165,259
883,689
876,979
21,985
70,778
17,308
21,328
68,665
15,926
(thousands ounces)
742,935
715,360
184,595
899,955
21,736
73,984
16,172
764,532
569,072
173,921
742,993
23,347
61,905
13,288
758,965
532,291
144,308
676,599
23,120
66,614
12,992
Copper
Zinc
Silver
633,630
617,853
107,536
104,402
(thousands ounces)
13,583
13,688
591,339
106,093
15,196
597,945
100,576
13,638
561,939
92,133
13,348
Toquepala
Mined Material
Copper in concentrates
Molybdenum in concentrates
Cuajone
Mined Material
Copper in concentrates
Molybdenum in concentrates
Smelter/refineries in Peru
SX/EW
Smelt concentrates
Blister produced
Anode produced
Cathode produced
Mexicana de Cobre – Caridad
(thousands)
241,514
203,778
143,720
122,949
4,159
4,184
209,064
116,525
6,324
193,013
119,427
7,924
211,202
114,828
6,100
(thousands)
175,177
160,579
149,265
158,105
3,099
3,746
175,009
171,448
3,926
191,651
178,187
4,444
182,812
178,337
4,001
26,526
25,093
24,880
24,167
25,675
1,187,710
1,153,486
1,070,588
1,143,682
1,022,536
2,630
1,793
344,758
345,847
292,654
291,373
929
322,567
270,183
2,800
338,893
291,373
-
303,939
257,926
Mined Material
(thousands)
96,541
98,534
Copper in concentrates
Molybdenum in concentrates
106,087
106,271
9,809
9,934
98,435
104,949
9,911
94,283
103,861
10,040
91,454
101,062
10,800
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Buenavista
Mined material
Copper in concentrates
Smelter/Refineries in Mexico
SX/EW
Smelt concentrates
Anode produced
Cathode produced
Rod produced
2018
2017
2016
2015
2014
(thousands)
297,718
288,716
139,157
135,690
257,395
140,661
282,954
142,025
271,026
132,853
115,675
140,166
159,715
1,041,663
997,657
1,004,829
286,242
270,213
239,185
228,062
147,147
133,100
267,843
224,158
144,516
149,754
933,403
256,252
213,360
138,180
118,633
926,427
258,000
204,302
129,078
Underground Mines
Contents in concentrates
(tons)
Zinc
Lead
Copper in concentrates
Silver
Gold
70,778
22,081
6,221
5,649
6,423
68,665
20,246
5,486
4,760
5,428
73,984
24,385
6,428
5,622
6,420
61,905
20,693
5,593
4,995
4,697
66,614
22,286
5,211
4,945
4,857
(thousands ounces)
(thousands ounces)
2018 Annual Report
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$2.96was the copper price in the LME 10
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One of our smelters is
located in Ilo, Moquegua,
south of Peru.
Copper
Reserves
2018 Annual Report Copper Reserves
12
Copper Reserves
We believe we hold the world’s largest copper reserve position. At
December 31, 2018, our copper ore reserves, calculated at a copper
price of $2.90 per pound, totaled 70.6 million tons of contained copper
(In 2018, the average LME and COMEX per pound copper prices were
$2.96 and $2.93), our internal ore reserve estimation value is as follows.
Copper contained in ore reserves
Thousands tons
Mexican open-pit:
Peruvian operations
IMMSA
Development projects
Total
31,396
23,516
231
14,567
69,710
For more information on ore reserves refer to
"Internal Ore Reserves Estimates", on page 60 in our
2018 Form 10-K.
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Aerial view of our Solvent Extraction/
Electrowinning III (SX-EW) plant,
Buenavista del Cobre, Sonora, Mexico.
2018 Annual Report Copper Reserves
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Workers in
Toquepala Mine,
Tacna, Peru.
Southern Copper Corporation and Subsidiaries
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Five-Year Selected Financial and Statistical Data
For the years ended December 31
(in millions, except per share amounts, employee
data and stock and financial ratios)
Consolidated Statement of Earnings
Net sales
Operating costs and expenses
Operating income
Net income attributable to
Non-controlling interest
Zinc en concentrados
2018
2017
2016
2015
2014
$7,096.7
$4,215.5
2,881.2
$6,654.5
$4,035.6
2,618.9
$5,379.8
$5,045.9
$5,787.7
3,815.6
1,564.2
3,631.5
1,414.4
3,555.0
2,232.7
5.2
3.9
2.3
4.7
4.9
Net earnings attributable to SCC
$ 1,543.0
$ 728.5
$ 776.5
$ 736.4
$1,333.0
Per share amount:
Earnings basic and diluted
Dividends paid
Consolidated Balance Sheet
Cash and cash equivalents
Total assets
Total debt
Total equity
Consolidated Statement of Cash Flows
Cash provided by operating activities
Dividends paid
Capital investments
Depreciation, amortization and depletion
Capital Stock
Common shares outstanding – basic and diluted
NYSE price – high
NYSE price – low
Book value per share
P/E ratio
Financial Ratios
Current assets to current liabilities
Net debt as % of Net capitalization (1)
Employees (at year end)
$ 2.00
$ 1.40
$ 0.94
$ 0.59
$ 1.00
$ 0.18
$ 0.93
$ 0.34
$ 1.61
$ 0.46
$844.6
$14,484.8
5,960.1
6,612.9
$1,004.8
$13,780.1
5,957.1
$6,149.4
$ 546.0
13,234.3
5,954.2
$ 274.5
12,593.2
5,951.5
$ 364.0
11,393.9
4,180.9
$5,870.9
$5,299.2
$5,836.6
2,235.1
1,082.3
1,121.4
674.3
1,976.6
456.1
1,023.5
671.1
$ 923.1
$ 879.8
$1,355.9
139.3
1,118.5
$ 647.1
271.2
1,149.6
381.0
1,529.8
$ 510.7
$ 445.0
773,044
$ 57.34
$ 29.78
8.50
15.42
773,028
$ 47.63
$ 32.38
7.90
50.35
773.0
$ 34.98
$ 22.29
7.54
31.82
775.9
$ 33.14
$ 24.40
6.78
28.19
812.6
$ 33.54
$ 26.08
7.14
17.52
2.61
42.6%
13,899
2.71
44.4%
13,135
2.57
47.7%
13,414
2.70
48.9%
13,024
2.07
37.3%
12,735
(1) Represents net debt divided by net debt plus equity. Net debt is defined as total debt minus cash, cash equivalents and short-term investments balance.
2018 Annual Report 16
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883,690 tons of copper produced in 2018. 16
17
Worker at Santa Barbara
underground mine, Chihuahua,
Mexico
C A P I T A L E X P E N D I T U R E S A N D E X P L O R A T I O N
expansion &
modernization
2018 Annual Report Expansion & Modernization
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Dump truck entering Cuajone Mine,
Moquegua, Peru.
This year we have
finished Toquepala
expansion that adds
100,000 tons of copper
per year to reach a
production of 258,000
tons annually.
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Capital Expenditures and Exploration
In 2018, we made capital investments of $1,121.4 million. This is 9.6%
higher than in 2017 ($1,023.5 million), and represented 72.4% of net
income. Our growth program to develop the full production potential of
our Company is underway.
For 2019, the Board of Directors approved a capital investment program
of $1,752.8 million. We are currently developing a new organic growth
plan to increase our copper volume production to 1.5 million tons by 2025
with the development of new projects.
In addition to our ongoing capital maintenance and replacement spending,
our principal capital programs include the following.
Projects in Mexico
BUENAVISTA ZINC - SONORA. This project is located within the
Buenavista facility and includes the development of a new concentrator
to produce approximately 80,000 tons of zinc per year which will allow
us to double our current zinc production capacity. Also, the project will
produce 20,000 tons of additional copper per year. We have completed
the basic engineering and we are working on the purchasing process for
the main project components. Water concessions have been requested.
We estimate an investment of $413 million for this project and expect to
initiate operations in 2021.
Southern Copper
has been
consolidated
again as the copper
producer with
greater organic
growth.
2018 Annual Report Expansion & Modernization
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20
Worker in the Metallurgical Complex at Esqueda,
Sonora, Mexico.
Our growth program to develop all the productive
potential of our Company is underway.
PILARES - SONORA. This project, located six kilometers from La Caridad,
will be developed as an open-pit mine operation. The ore will be
transported from the pit to the primary crushers of the La Caridad
copper concentrator through a new 25-meter wide off-road facility for
mining trucks, and will significantly improve the over-all mineral ore
grade (combining the 0.78% expected from Pilares with 0.34% at
La Caridad). An investment of $159 million is estimated to produce
35,000 tons of copper in concentrates per year. We expect this project
to start producing in early 2020.
We are currently developing a new organic
growth plan to increase our copper volume
production to 1.5 million tons by 2025 with
the development of new projects.
Projects in Peru
We currently have a portfolio of projects in Peru, with a total capital
budget of $2,900 million, out of which $1,755 million have already been
invested.
TOQUEPALA EXPANSION, TACNA. This $1,255 million project includes a
new state-of-the-art concentrator which will increase Toquepala’s annual
copper production by 100,000 tons to reach 258,000 tons in 2019, a
74% production increase, when compared to 2017. Through December
31, 2018, we have invested $1,227 million in this expansion. Construction
of the project was completed and production began in the fourth quarter
of 2018. Full production is expected to be reached by the second quarter
of 2019.
The project to improve the crushing process at Toquepala with the
installation of a High Pressure Grinding Roll (HPGR) system, has as its
main objective, to ensure that our existing concentrator will operate at its
maximum annual production capacity of 117,000 tons of copper while
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reducing operating costs through ore crushing efficiencies, even with an
increase of the ore material hardness index. The budget for this project is
$50 million and as of December 31, 2018, we have invested $44 million
in this project. We are in the administrative close-out process for this
project, which was added to operations during the fourth quarter of 2018.
CUAJONE TAILING THICKENERS, MOQUEGUA. This project will replace
two of the three existing thickeners at the concentrator with a new hi-rate
thickener. The purpose is to streamline the concentrator flotation process
and improve water recovery efficiency, increasing the tailings solids
content from 54% to 61%, thereby reducing fresh water consumption
and replacing it with recovered water. Equipment assembly is completed
and we are in the commissioning process. As of December 31, 2018,
we have invested $30 million in this project out of the approved capital
budget of $30 million. During the commissioning process, a problem in
the design of the thickener was detected and we are currently working
on the solution. We expect the project to be completed in the first quarter
of 2019.
TAILINGS DISPOSAL AT QUEBRADA HONDA, MOQUEGUA. This project
increases the height of the existing Quebrada Honda dam to impound
future tailings from the Toquepala and Cuajone mills and will extend
the expected life of this tailings facility by 25 years. The first stage and
construction of the drainage system for the lateral dam is finished. We
finished the second stage with the installation of a new cyclone battery
station that allows us to place more slurry at the dams. We are working
to improve several operational processes of this facility. The project has
a total budgeted cost of $116 million. We have invested $107 million
through December 31, 2018 and expect the project to be completed in
the first quarter of 2019.
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Worker at Santa Barbara Unit, Chihuahua,
Mexico.
We carry out explorations
to locate mineral deposits
in other places such as
Chile, Peru, Ecuador and
Argentina.
2018 Annual Report 24
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6.2million of trees produced during 2018. 24
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D E V E L O P M E N T
community
outreach
2018 Annual Report Community Outreach
26
In an area of 1,600
hectares, the contaminant
removal program is
successful. It is the largest
and most diverse coastal
waterfowl wetland in the
country. Ite Bay, Tacna,
Peru.
Community Outreach
Southern Copper Corporation (SCC) is a state-of-the-art, integrated
mining company whose innovative style lies not only in the utilization of
more efficient processes and new technologies, but also in our day-to-
day operations, where we work to have more and better results, always
aiming at the sustainability of the organization over time. We constantly
strive to ensure that the Company's performance in the social, economic
and environmental areas takes into account the expectations of our
stakeholders.
Our business goal focuses on sustainable development, with which we
guide our actions and our investments and the distribution of economic
value. Every day we work to consolidate the confidence of our stakeholders
by making them participants in management, communicating our
performance and listening to their expectations.
Our Commitment to the Environment
We maintain an ongoing commitment to advance with the challenges
of our expansion and modernization programs in harmony with our
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We maintain and conserve the most extensive coastal wetland and
greater diversity of aquatic birds of Peru.
environment. In this sense, we not only seek regulatory compliance, we
also operate under the best environmental practices, in order to always
achieve optimum environmental performance, to identify, evaluate and
mitigate the impacts generated by our activities on the environment.
SCC’s environmental policy has the following goals:
- Responsible use of water and natural resources
- Efficient use of energy and reduction of green-house-gas emissions
- Reduction, control and mitigation of air emissions to atmosphere
- Reduction in waste generation and its integrated management
- Reforestation and biodiversity conservation
- Mine closure
These lines of action are carried out in compliance with international and
local certifications that rule our operating units in the countries where we
2018 Annual Report Community Outreach
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The Community Committees are integrated by leaders of
the community, as well as by members of the Company that
collaborate evaluating sustainable proposals
are present. In 2018, eight of our units were granted the
ISO 14001: 2004. These certifications, together with
the 18 Clean Industry certifications and Environmental
■
Increasing
the
level of electric power self-
sufficiency.
■
Promoting efforts to capture greenhouse gases.
Quality Certifications, are the result of the efforts of all our
Accordingly, we are diversifying our sources of generation
employees and result from a comprehensive application
of clean, renewable energy for our supply. Our operations
of our environmental practices.
in Mexico have decreased their indirect greenhouse gas
emissions by consuming clean energy supplied by SCC
For environmental management in our operations, in
subsidiaries that generate electric power through its high
2018 $188 million were allocated to investments and
efficiency combined cycle plant and a wind farm. By
environmental expenditures in the following areas: air,
replacing traditional sources of energy with more efficient
climate change, soil, waste, biodiversity, water and
and renewable sources, in 2018 we achieved a mitigation
administrative management.
of 367,413 tons of CO2eq., equivalent to taking 78,007
passenger vehicles out of circulation for a year.
Energy and Climate Change
At SCC we believe that the fight against climate change is
Simultaneously with our environmental policy, we
everyone's responsibility, including the private sector and
continue implementing actions to maximize electricity
the industries in which we participate. In addition, we are
generation using our own energy sources. In Mexico, we
aware of the effects of climate change on our operations,
uses smelter' gases to recover boiler heat and generate
so, by anticipating an increase in the probability of
energy. In Peru, we generate energy from renewable
occurrence of extreme weather events, we have identified
sources, in particular from two hydroelectric plants with
potential risks from global warming.
a combined capacity of 130 terajoules.
Given these challenges, we are taking measures, which
In addition to generating and consuming energy from
include:
renewable sources and cleaner fuels, we have also
■
Using energy more efficiently.
implemented practices that have resulted in higher
■ Developing and using renewable energy source.
energy efficiency in our operations, including the
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400,570
tons of CO2 mitigated
in the year.
2018 Annual Report Community Outreach
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We have carried out 5 releases of 25 wolves
in danger of extinction. Environmental
Management Unit in Cananea, Sonora, Mexico.
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improvement, redesign, conversion and retrofitting of
produce 6.2 trees in 2018. We have increased our trees
equipment, rational use of resources, and personnel
production in 25% compared with 2017.
training to improve their performance during operations.
In our operating units we have six forest nurseries and
It is important to highlight that in terms of climate
greenhouses whose production of regional native species
change SCC, along with Grupo México, have been
is used to reforest and rehabilitate ecosystems, including
working together with non-governmental organizations
those areas not adjacent to our operations. These
to contribute in the fight against climate change. Such
forest nurseries contribute to biological biodiversity and
is the case of Grupo Mexico's third report in 2018 to
enrichment of flora and fauna; and in addition, they act as
the Carbon Disclosure Project, through which we have
natural carbon sinks, trapping CO2 from the atmosphere.
developed and reported our inventory of greenhouse
gases at SCC.
As part of our conservation efforts, we have a 5.7
hectares Environmental Management Unit (EMU) that
SCC plans to initiate a multi-year process to adopt
has been developed to replicate the wildlife environment
the applicable recommendations in the reports of the
of threatened and endangered species, including
Task Force on Climate Related Financial Disclosures
Mexican Gray Wolf and Turkey Gould, along with other
(“TCFD”) once new regulations for these disclosures
species that are part of our program.
are implemented in Peru. SCC intends to report on the
implementation of TCFD’s disclosures in future Annual
The EMU strategy is focuses on reproduction and
Reports and on its’ website.
release of species, as well as ecosystems regeneration.
In addition, the program reflects our efforts to involve
With these actions, and others, SCC confirms its’
community in the protection of the environment, in
commitment to reduce its carbon footprint, and
particular, biodiversity of Sonora. In an Ecological Path,
enhance its’ position as a sustainable global company,
along 1.8 kilometers, EMU works offering educational
thereby improving its’ competitiveness and contributing
and recreational activities, which involved 5,000 people
to shift towards an environmentally friendly economic
and 52 schools per year in average.
development.
Biodiversity
In Peru, we continue making significant environmental
expenditures in Ite bay remediation program in Tacna.
We are the Company with the highest productive
In an area of 1,600 hectares, the contaminant removal
capacity of trees in the mining industry in Mexico, we
program is successfully. It is the largest and most diverse
2018 Annual Report Community Outreach
32
coastal waterfowl wetland in the country, and it is also a tourist attraction
that improve economic development.
Water Management
Water is the most important input for our mining operations. SCC develops
projects to ensure water sustainability, does an efficient use of source,
promotes, and reuse of water discharged by third parties.
The efficient use of water and savings programs are based on the
implementation of pumping systems to recover water, continuous water
recovery from tailings and thickener processes, implementation and
maintenance of closed circuits to use the total volume of process water,
and Implementation of the Zero Wastewater Discharge Program, looking
for a more efficient management of water resource.
These reused water programs represent a large portion of total water
consumption. In 2018, 69% of total water consumption in mining
operations was reclaimed water, which management results speaks by
itself.
In 2018, we invested $19 million in infrastructure and equipment to
increase water recovery in our processes. In addition, we installed high
efficiency thickeners that will allow us to recover more water.
In some of our units, SCC uses municipal wastewater, which are treated
previously, such in San Luis Potosí and Cananea (Mexico), so that we
support regular fresh water supply to local population.
Our Communities
SCC looks to improves life quality in communities around its operations,
promoting an approach based on management responsibility. SCC has
32
33
Reading activities at the library
of Casa Grande Nacozari, Sonora, Mexico.
developed a model which people become as generators
strategies to improve quality of life in community.
of its own development.
■
Productive Projects - Projects that transform
community lives by productive skills.
This model is known as "Casa Grande", and it has been
implemented through the following tools:
For SCC, social welfare represents: synergy of different
■
16 Community Development Centers - Those are
close dialogue with communities. Therefore, health,
Open Houses for community, where courses and
education, culture and sports in each location we
factors that strengthen through a multi-strategy, and
workshops are held to promote development.
operate are strengthen.
■
Participatory Diagnostics - Together, community
and SCC participate carrying out development
Participatory Diagnostics motivate local people to be
actions.
part of the project to identify needs and expectations,
■ Community Committees - Integrated by volunteer
priorizing opportunities and start working with them.
leaders from community, as well as members
Our Model, Casa Grande, permits recognize those
of the Company who collaborate in evaluating
opportunities. By this model, our team of experts
sustainable proposals.
materialize Company initiatives, includes its participation
■
Seed Capital - As a result of the participation
of SCC volunteers, community, and community centers
in social projects, it is possible to implement
are meeting point to generate shared value.
2018 Annual Report Community Outreach
34
In Mexico and Peru we contribute to the education of the communities
through 13 schools, sponsored by the Company. Students from La
Caridad School, Sonora, Mexico.
SCC organizes events to receive initiatives from communities, where
education and environment are main axes. In addition, health, security
and productive development programs are complementary axes. For us,
children and young people are priority, because they will set future. The
projects presented in those calls are evaluated by community services,
media and citizen which participate in these events.
Together, SCC’ social team and volunteers from communities neighboring
developed projects in 2018. We carried out 4,053 activities and
more than 437 projects, 13,971 community and corporate volunteers
participated in these programs. With projects named as seed capital, and
summer camps we encouraged the formation of development generators
and proactive leaders that strengthen the well-being in their communities.
Education and Entrepreneurship
Another way to contribute to the development of people is through
training activities for children and young people from neighboring
communities, during elementary training, secondary education and even
university studies. In our mining operational areas in Mexico and Peru, we
34
35
In 2018, we have invested more than $3
million in projects aimed at optimizing the
availability and use of water in agricultural
activities in Peru.
contribute to the education of the communities through
We also continue promoting the training and job
13 of our own Company sponsored schools, and provide
selection program Forjando Futuro
(“Forging
the
scholarships for various levels of study.
Future”), created to respond, through capacity building,
Another way to contribute to the development of
located in the areas of influence of our operations in the
to the professional and labor skill needs of the residents
people is through training activities for children and
south of Peru.
young people from neighboring communities, during
either elementary training, secondary education or
Infrastructure and Services
even university studies. In our mining operations in
In Peru, our mining operations are located in a remote
Mexico and Peru, we contribute to the education of the
area in the south of the country, in a rural environment.
communities through 13 own schools, sponsored by the
We contribute to its development in close cooperation
Company, and the delivery of scholarships for different
with the authorities and representative organizations of
levels of studies, which also extend to our collaborators
the region. Our commitment to the community manifests
and their families.
in the following areas of work: education and capacity
building, health, nutrition, infrastructure and support to
In Peru, we have implemented the TICs project
the agricultural sector.
(Information and Communication Technologies)
in
Moquegua, which is considered a pioneer effort to
In this sense, SCC contributes to the expansion of water
reduce the technological gap in rural areas of Peru.
supply infrastructure and irrigation techniques in the
Through cooperation between the Regional Government
provinces in which we operate. In 2018, we invested
of Moquegua and SCC, the use of TICs in the teaching
more than $3 million in projects aimed at optimizing
and learning process is incorporated, benefiting 33,560
the availability and use of water in agricultural activities
students and teachers of Mariscal Nieto, Ilo, and
in Peru. An example of this is the installation project
Sánchez Cerro in the Moquegua Region. To date, SCC
of the technical irrigation system in Tapala, Candarave.
has invested more than $34 million in the incorporation
The works include the construction of a water reservoir,
of information and communication technology for the
installation of lines of conduction, and training for the
benefit of students and teachers in Peru.
maintenance of these systems.
2018 Annual Report Community Outreach
36
In this sense, SCC contributes to the expansion of water supply
infrastructure and irrigation technics in the provinces in which we operate.
Just in 2018, we have invested more than US $3 million in projects aimed
at optimizing the availability and use of water in agricultural activities in
Peru. An example of this is the installation project of the technical irrigation
system in Tapala, Candarave. The works include the construction of a
water reservoir, installation of lines of conduction, and training for the
maintenance of the water infrastructure.
Social Investment
In 2018, SCC has invested more than $ 58 million in social development
programs, related
to education, health, productive projects and
infrastructures and services.
INVESTMENT IN COMMUNITY DEVELOPMENT PROGRAMS (IN MILLIONS)
SCC
Community development programs, social linking and productive
projects
Infrastructure and equipment in neighboring communities
Investment in town site infrastructure
Total
$ 8.40
$ 27.32
$ 21.97
$ 57.69
In Southern Copper Corporation, our business model is focused on
continuously improving quality of life in communities around our operation
areas, by encouraging meaningful development, and strengthening
collective participation that will result in common good, placing people as
central agents of development.
Ilo Hospital,
Moquegua,
Peru.
36
37
2018 Annual Report 38
A new
focus in
$728.5 millionnet profits 38
39
In 2018, operating cash cost per pound of copper
without by-product revenues was $ 0.05 higher than in
2017, an increase of 3.5%.
results of
operations
2018 Annual Report Results of Operations
40
Results of Operations
The years ended December 31, 2018, 2017 and 2016.
Our net income attributable to SCC in 2018 was $1,543.0 million,
compared to $728.5 million in 2017 and $776.5 million in 2016. The
increase in 2018 net income was mainly due to higher sales and lower
taxes as the 2017 financial results included the one-time, non-cash
income tax adjustment of $785.9 million recorded in 2017 as a result of
the U.S. income tax legislation enacted in the fourth quarter of 2017. Net
income attributable to SCC decreased in 2017 due to this adjustment.
This was partially offset by higher sales and cost reductions achieved in
electricity (-8.0%), tires (-9.4%), and other cost elements.
The Company presents its operating costs both including and excluding
the revenues of its byproducts (molybdenum, silver, sulfuric acid, etc.).
40
41
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.
The Company’s operating cash cost, as previously defined, for the three
years ended December 31, is as follows:
(dollar per pound)
2018
2017
2016
Operating Cash Cost without by-product revenues
1.54
1.49
1.45
Operating Cash Cost with by-product revenues
0.87
0.92
0.95
As seen on the chart above, our 2018 operating cash cost per pound of
copper without by-product revenues was $0.06 per pound higher than
in 2017, an increase of 3.5%. This was due to higher production costs.
2018-2017: Net sales in 2018 were $7,096.7 million, compared to
$6,654.5 million in 2017, an increase of $442.2 million. This 6.6%
increase was principally the result of higher copper (+5.7%) and
molybdenum (+45.9%) prices and higher sales volumes of silver
2018 Annual Report Results of Operations
42
Net sales in 2018
were $7,096.7 million,
compared to $6,654.5
million in 2017, an
increase of $442.2 million.
(+15.3%) and molybdenum (+3.3%), partially offset by lower silver price
(-8.1%) and lower zinc sales volume (-1.0%).
2017-2016: Net sales in 2017 were $6,654.5 million, compared to
$5,379.8 million in 2016, an increase of $1,274.7 million. This 23.7%
increase was principally the result of higher metal prices as shown below,
and also due to slightly higher sales volumes of copper (+1.8%) and zinc
(+2.0%), partially offset by lower sales volumes of silver (-2.1%) and
molybdenum (-1.7%).
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.
42
43
Copper is generally produced through a process of several
stages, beginning with the mining and concentrating of low grade
minerals containing copper sulphides, followed by a process of melting
and electrolytic refining to produce pure copper cathodes.
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)
2018
2017
2016
$2.96
$2.93
$11.86
$1.33
$15.65
1,953.0
48.6
234.8
$2.80
$2.80
$8.13
$1.31
$17.03
2.21
2.20
6.42
0.95
17.10
1,959.2
1,923.9
47.1
237.2
47.9
232.4
Silver (ounces)
19.4
(1)The Company´s molybdenum production is sold in the form of concentrates. Volume represents pounds of molybdenum contained
16.9
17.2
in concentrates.
2018 Annual Report 44
A new
focus in
$102.8million in capital expenditures. 44
45
Tailings dump, Quebrada Honda,
Toquepala Mine, Tacna, Peru.
Environmental
matters
2018 Annual Report Environmental Matters
46
Flamingo taking off from the
Ite Bay, Tacna, Peru.
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 others, water
recovery
systems to conserve water and minimize the 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.
Environmental capital expenditures in years 2018, 2017 and 2016, were
as follows (in millions):
Mexican operations
Peruvian operations
Total
2018
2017
2016
$43.5
$59.3
$102.8
$128.9
$ 93.1
$ 222.6
$140.1
$110.3
$250.4
46
47
The EBITDA of Southern Copper was $270 million, which
represents an increase of 24% over the previous year.
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 enforces Mexican environmental laws,
regulations and official standards. It may also initiate administrative
proceedings against companies that violate environmental laws, which
in the most extreme cases may result in the temporary or permanent
shutdown of non-complying facilities, the revocation of operating licenses
and/or other sanctions or fines.
In 2011, the General Law was amended, giving 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 as long
as it can be argued that the harm may be caused. In addition, in 2011,
amendments to the Civil Federal Procedures Code (‘‘CFPC’’) were
2018 Annual Report Environmental Matters
48
Birds resting in
Ite Bay, Tacna,
Peru.
enacted. These amendments establish 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 amendments to the CFPC may result in more
litigation, with plaintiffs seeking remedies, including suspension of the
activities alleged to cause harm.
In 2013, the Environmental Liability Federal Law was enacted. The law
establishes general guidelines for actions to be considered to likely
cause environmental harm. If a possible determination regarding harm
occurs, environmental clean-up and remedial actions sufficient to restore
environment to a pre-existing condition should be taken. Under this law,
if restoration is not possible, compensation measures should be provided.
Criminal penalties and monetary fines can be imposed under this law.
48
49
On February 2019, the Mexican Supreme Court confirmed the
constitutionality of an ecological tax to extractive activities developed
in the state of Zacatecas, which taxes the environmental remediation
actions, emissions of certain gases to the atmosphere, emissions of
pollutant substances to the soil or water, and waste storage within the
state territory. The Company is evaluating the potential impact of this new
environmental regulation in its financial position.
The Company believes that all of its facilities in Peru and Mexico are
in material compliance with applicable environmental, mining and
other laws and regulations. The Company also believes that continued
compliance with environmental laws of Mexico and Peru will not have a
material adverse effect on the Company’s business, properties, result of
2018 Annual Report Environmental Matters
50
operations, financial condition or prospects and will not result in material
capital investments.
Peruvian operations: The Company’s operations are subject to applicable
Peruvian environmental laws and regulations. The Peruvian government,
through the Ministry of Environment (‘‘MINAM’’) conducts annual audits
of the Company’s Peruvian mining and metallurgical operations. Through
these environmental audits, matters related to environmental obligation,
compliance with legal requirements, atmospheric emissions, effluent
monitoring and waste management 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 assurances for future mine closure and remediation. In
accordance with the requirements of this law, the Company’s closure
plans were approved by MINEM. See Note 6 ‘‘Asset retirement obligation,’’
for further discussion of this matter.
Air Quality Standards (‘‘AQS’’): In June 2017, MINAM enacted a supreme
decree which defines new AQS for daily sulfur dioxide in the air. The
Company believes that these new AQS will allow Peruvian industry to be
more competitive with other countries. As of December 31, 2018, the
Company maintains a lower daily average level of g/m3 of SO2, than
those required by the new AQS.
50
51
Panoramic view of the new Toquepala
concentrator, Tacna, Peru.
In June 2017, MINAM promulgated a supreme decree
that establishes new water quality standards for
Peruvian territory.
Soil Environmental Quality Standards (‘‘SQS’’): In 2013, the Peruvian
government enacted SQS applicable to any existing facility or project that
generates or could generate the risk of soil contamination in its area of
operation or influence. In March 2014, MINAM issued a supreme decree,
which established additional provisions for the gradual implementation
of SQS. Pursuant to this regulation, the Company had twelve months
to identify contaminated sites in and around its facilities and present a
report of identified contaminated sites. These documents were submitted
to MINEM for approval in April 2015, and were fully approved in July
2017. The next step is for the Company to prepare a characterization
study to determine the depth, extent and physio-chemical composition of
the contaminated areas and define an appropriate remediation plan with
2018 Annual Report Environmental Matters
52
Combined-cycle power plant, La Caridad,
Nacozari, Mexico.
The adoption of the new
water quality standards
has no adverse impact
on Company’s financial
position.
52
53
a time-frame for completion. In addition, the Company must submit a Soil
Decontamination Plan (‘‘SDP’’) for approval within 30 months after being
notified by the authority. This SDP must include remediation actions,
a schedule and compliance deadlines. Pursuant to this regulation, the
Company may request a one year extension for the decontamination plan
if deemed necessary with reasonable justification.
Soil confirmation tests must be carried out after completion of the
decontamination actions (within the approved schedule) and results must
be presented to authorities within 30 days after receiving such results.
Although no specific sanctions have been established yet, non-compliance
with this obligation or with decontamination goals will carry penalties for
companies. However, companies cannot be penalized for non-compliance
with the SQS during the schedule set forth for compliance.
In accordance with the regulatory requirements, the Company has been
working on the characterization phase and SDPs for environmentally
impacted sites in each of its operating units (Toquepala, Cuajone, and
Ilo) with the assistance of consulting companies. It is estimated that the
Toquepala and Cuajone SDPs will be presented to the authorities for
review and approval at the end of the second quarter of 2019, and the Ilo
SDP will be submitted during the third quarter of 2019.
2018 Annual Report Environmental Matters
54
Ball mill for ore in
Buenavista del Cobre
Cananea, Sonora, Mexico.
54
55
While the Company believes that there is a reasonable possibility that
a potential loss contingency may exist, it cannot currently reasonably
estimate the amount of the contingency. The Company believes
that a reasonable determination of the loss will be possible once the
characterization study and the SDP are substantially completed, which is
expected for the third quarter of 2019. At that time the Company will be
in a position to estimate the remediation cost. Furthermore, the Company
does not believe that it can estimate a reasonable range of possible costs
until the noted studies have substantially progressed and therefore is not
able to disclose a range of costs that is meaningful.
Water Quality Standards (‘‘WQS’’): In June 2017, MINAM enacted a
supreme decree which establishes water quality standards in the Peruvian
territory. The adoption of these standards have not a material impact on
its financial position.
2018 Annual Report 56
A new
focus in
359,663free integral medicalservices granted. 56
57
General view, Dr. Vagon, Health
Train.
general
information
2018 Annual Report General Information
58
General Information
Information related to its constitution and their inscription in the Public
Registry:
See:
“Brief historical review from the constitution of the Company” on page
74. Brief Description: Southern Copper Corporation (SCC) 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 in Chile, Ecuador and
Argentina. 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. At December 31, 2018, SCC is the mining
company with the largest copper inventory worldwide. 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.
Our Mexican operations are conducted through our subsidiary, Minera
Mexico S.A. de C.V. (“Minera Mexico”), which we acquired in 2005.
58
59
Patient receiving free medication at Health Train
facilities.
Thanks to the success of the Health Train, the capacity
to attend 10,000 patients per route was increased, which
represents an increase of 60%.
Minera Mexico engages principally in the mining and
December 11, 2010 by Mexicana de Cananea S.A. de
processing of copper, molybdenum, zinc, silver, gold
C.V. and by Buenavista del Cobre S.A. de C.V. from
and lead. Minera Mexico operates through subsidiaries
that date until July 2012. Industrial Minera Mexico,
that are grouped into three separate units. Mexicana
S.A. de C.V. (together with its subsidiaries, the “IMMSA
de Cobre S.A. de C.V. (together with its subsidiaries,
unit”) operates five underground mines that produce
the “Mexcobre unit”) operates La Caridad, an open-
zinc, lead, copper, silver and gold, a coal mine and a
pit copper mine, a copper ore concentrator, a SX/EW
zinc refinery. Effective February 1, 2012, Minerales
plant, a smelter, refinery and a rod plant.
Metalicos del Norte S.A was merged with Industrial
Minera Mexico S.A. de C.V. (IMMSA). IMMSA absorbed
Operadora de Minas e Instalaciones Mineras S.A de
Minerales Metalicos del Norte S.A.
C.V. (the “Buenavista unit”) Operates Buenavista,
formerly named Cananea, an open-pit copper mine,
We utilize modern/state of the art mining and processing
which is located at the site of one of the world’s largest
methods, including global positioning systems and
copper ore deposits, a copper concentrator and two
computerized mining operations. Our operations have
SX/EW plants. The Buenavista mine was operated until
a high level of vertical integration that allows us to
2018 Annual Report General Information
60
Volunteers participating in the 6th movilization of
the Volunteer Day at Grupo Mexico Foundation.
30,163
volunteers participated in
2018 edition.
60
61
%
100
100
100
88.91
99.96
100
100
98.20
100
99.291
100
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.
Economic Group
SCC, indirectly, is part of “Grupo Mexico S.A.B. de C.V.” which owns
100% of Americas Mining Corporation (“AMC”).
NAME OF THE COMPANY
Grupo Mexico, S.A.B. de C. V.
Grupo Mexico Servicios, S.A. de C.V.
ACTIVIDADES DE TRANSPORTE FERROVIARIO
Infraestructura y Transportes Mexico, S.A. de C. V.
MINING ACTIVITIES
Americas Mining Corporation (“AMC”)
Southern Copper Corporation (SCC)
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 Copper Corporation, Agencia en Chile
Southern Peru Copper Corporation, Sucursal del Peru
Compañia Minera Los Tolmos, S.A.
LOCATION
Mexico
Mexico
Mexico
EE.UU.
EE.UU.
Mexico
Mexico
Mexico
Mexico
Chile
Peru
Peru
1
2
3
4
5
6
7
8
9
10
11
12
CORPORATE CAPITAL AND COMMON STOCK
The authorized number of shares
Issues an Paid Capital: Common Shares
Nominal Value of Common Shares
TOTAL NUMBER AND PERCENT OF SHARES
Americas Mining Corporation
Common Shares
Total
1Include 82.69% of common shares and 16.60% of investment shares.
SHARES
2,000,000,000
884,596,086
$ 0.01
SHARES
687,275,997
85,752,472
773,028,469
INSCRIPTION IN
THE RPMV
P
INTEREST
88.91%
11.09%
100.0%
2018 Annual Report
General Information
62
Operations in Mexico
LA CARIDAD MINE
“La Caridad Concentrator” began operations in 1979. The concentrator
has a current capacity of 94,500 tons of ore 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” has an annual design capacity of 21,900 tons of
copper cathodes. Approximately 856.8 million tons of leaching ore with
an average grade of approximately 0.251% copper have been extracted
from the La Caridad open-pit mine and deposited in leaching dumps
from May 1995 to December 31, 2018.
LA CARIDAD METALLURGIC COMPLEX
La Caridad Smelter started operations in July, 1986. 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 La Caridad and almost 40.5%
of total production of the OMIMSA I and OMIMSA II concentrators from
Buenavista, and starting in 2010, the concentrates from the IMMSA
mines, as we closed the San Luis Potosi smelter.
“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. The installed capacity of the refinery is
300,000 tons per year.
“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.
62
63
The Company uses an educational platform to
train teachers of our sponsored schools.
“La Caridad Wire Rod Plant”, a rod plant at the La Caridad complex
began operations 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%.
Effluent and Dust Treatment Plant, a dust and effluent plant with a
treatment capacity of 5,000 tons of smelter dusts per year which will
produce 1,500 tons of copper by-products and 2,500 tons of lead
sulfates per year. This plant started its operating in 2012.
BUENAVISTA MINE
“Buenavista Concentrator”, the original concentrator currently has a
nominal milling capacity of 76,700 tons per day. The second concentrator
began operations in 2015 with a nominal milling capacity of 100,000
tons per day.
2018 Annual Report General Information
64
“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
66 tons per day and was expanded to 120 tons per day in 2001.
“Buenavista SX/EW III Plant” started operating during the June 2014, we
completed the construction of a new SX-EW plant that significantly has
increased production of leachable material by approximately 120,000
tons per year. The SX-EW facilities have a cathode production capacity
of 174,470 tons per year.
UNDERGROUND MINES
1.-The Santa Barbara Unit with a milling capacity of 5,800 tons of ore
per day.
2.- The Santa Eulalia Unit with a milling capacity of 1,450 tons of ore
per day.
3.- The San Martin Unit with a milling capacity of 4,400 tons of ore per
day.
4.- The Charcas Unit with a milling capacity of 4,100 tons of ore per day.
5.- The Taxco Unit with a milling capacity of 2,000 tons per day.
6.- Coquizadora Coal Plant, in Coahuila Unit, with a capacity of 105,000
tons of coke per year.
7.- The Zinc Refinery with a capacity of 288 tons per day.
64
65
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.
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 MT per 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. 660-98-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.
2018 Annual Report
General Information
66
Panoramic view
of Cuajone Mine,
Moquegua, Peru.
CUAJONE
1. Botiflaca Concentrator
in Cuajone: Directorial
For operating reasons as part of the crusher
Resolution No. 150-81-EM/DCM dated August
process optimization, on November 18, 2011,
14, 1981 approved the operation of Botiflaca
we requested to the Peruvian authorities through
Concentrator. The resolution granted 56 hectares
resources N° 2144941 to add three additional
of surface land.
facilities (HPGR mill and others).
Based on Report No. 266-99-EM/DGM/DPDM
On May 2012, with Directoral Resolution N°
dated July 20, 1999 the “Director General de
153-2012-MEM-DGM-V
based
on
report
Mineria” authorized the expansion of Botiflaca
165-2012-MEM-DGM-DTM-PB. MEM approved
Concentrator to 87,000 MT per day throughput.
and authorized the project to include three additional
facilities aforementioned on the procedure of the
Resolution N° 379-2010-MEM-DGM/V dated
amendment and increase of the installed capacity
October 7, 2010, based on Report N°312-2010-
from 87,000 to 90,000 MT per day.
MEM-DGM-DTM/PB, authorized construction and
expansion of Botiflaca Concentrator to 90,000 MT
2. Cuajone Leaching Plant
(LX/EW). Directorial
per day throughput.
Resolution No.155-96-EM/DGM dated May 6, 1996
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approved the operation of the Cuajone Leaching
Based on Report No.204-2000-EM-DGM-DPDM
plant. The resolution granted 400 hectares of
dated June 20, 2000 the “Director General de
surface land and authorized a throughput of 2,100
Mineria” authorized the expansion of the Ilo
MT per day. Based on Report No. 988-2009-MEM-
Smelter to a 3,100 MT per day throughput of
DGM/V, dated December 16, 2009, Cuajone SX
copper concentrates.
plant operation was approved and authorized the
of the, with a capacity of 3100 MT per day.
On February 4, 2010, by the Application Nº
ILO
1961695, the Company began the process to
obtain authorization from the MINEM to operate a
1.
Ilo Smelter: Authorized (definitely) by Directorial
capacity of 3,770 MT per day, which is included
Resolution No. 078-69-EM/DGM dated August 21,
as an ancillary facility to Acid Plant No. 2, with a
1969 approved the operation of the Ilo Smelter. The
capacity of 2,880 MT per day or 1,051,200 MT per
resolution authorized a production of 400 Short
year.
tons/day of blister copper.
2018 Annual Report
General Information
68
Collaborators participating in the 2nd
edition of Holidays with Sense.
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 MT per 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 MT per 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 MT per 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.
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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 per
year.
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 per 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 seawater-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. By the Application
Nº 2499277 dated on May 19, 2015, SPCC requested temporary
suspension for three years of its plant Dry Sea shell Concentrates.
Resolution N° 0850-2018 – MEM-DGM/V dated November 15, 2018,
based on Report N° 162-2018 /MEM-DGM-DTM-PCM, the communication
presented by SPCC to MEM, on the beginning of the closure of the facilities
of the Coquina Mine.
2018 Annual Report
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7070
Description of Operations and
Development regarding the
issuing entity purpose
THE PURPOSE
The purpose of SCC is to engage in activities allowed
In 1954, SCC established a Branch in Peru to carry
by the laws of the State of Delaware. Its main activity
out mining activities in this country. The Branch was
is to extract, mill, concentrate, smelt, treat, prepare
established under public instrument certified by public
for market, manufacture, sell, exchange and, in
notary from Lima, Dr. Ricardo Fernandini Arana, on
general, to produce and negotiate for sales of copper,
November 6, 1954.
molybdenum, gold, silver, lead, zinc, iron and any other
class of minerals and materials or other materials,
The Branch is registered in the Electronic Record Nº
effects and goods of any nature or description; as well
03025091 of the Juridical People of the Registry Office
as to explore, exploit, sample, examine, investigate,
of Lima and Callao.
recognize, locate, appraise, buy, sell, exchange, etc.,
mining concessions and mining deposits. SCC belongs
ACTIONS FOLLOWING COMPANY INCORPORATION:
to the CIIU 1320 group.
Capital increase:
By Public Deed dated May 31, 1995, signed before
The term of duration of the Company is indefinite.
notary public of Lima, Dr. Carlos A. Sotomayor Bernos,
the Branch capital increase was formalized. It was
BRIEF HISTORICAL REVIEW FROM THE CONSTITUTION
made through money contribution by the Company in
OF SCC:
favor of its Peru Branch and by the owners of labor
The Company was organized on December 12, 1952,
shares, pursuant to Legislative Decree No. 677.
according to the Laws of the State of Delaware of
The capital contribution made by the Company was
the United States of America, under the original
aimed at increasing the capital allotted to the Branch
denomination of Southern Peru Copper Corporation
by the headquarters and registered in Peru. The
(“SPCC”), which was renamed on October 11, 2005, to
capital contribution made by the Labor Shares (today
Southern Copper Corporation.
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.
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, at that times, 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.
7070 | 71
71
70
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o
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e
R
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a
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A
8
1
0
2
2018 Annual Report
General Information
72
Geologist at the Santa Eulalia Unit, Chihuahua,
Mexico.
With our investment
program, we will
achieve a production
close to 1,800,000 tons
of copper in the next
10 years, an increase of
more than 80%.
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Our capital investments were $1,121.4
million in 2018.
As a consequence of this corporate name change, the
ACQUISITION OF MINERA MEXICO (“MM”), AND OTHER
mining activities of the Company in Peru started being
CORPORATE CHANGES:
performed under the name of Southern Peru Limited,
SCC shareholders, in a shareholder extraordinary
Peru Branch (SPL).
meeting dated March 28, 2005, approved issuance of
Common Shares and required actions related to the
On December 31, 1998, the merger between Southern
acquisition of MM, a firm incorporated pursuant to
Peru Copper Corporation and Southern Peru Limited
the Laws of the Republic of Mexico. This transaction
was agreed. The first company absorbed the second
was approved by more than 90% of the stocks and
one and assumed all its assets and liabilities, including
circulating capital of SCC. To acquire Minera Mexico,
the Branch in Peru. This merger did not imply any
SCC issued 67,207,640 shares in exchange for MM
change to the share percentage in the corporate capital
shares. Once the shares related to the acquisition were
or in the Net Worth Share Account (Investment Shares),
issued, AMC increased its share in SCC from 54.2% to
which were kept the unchanged.
approximately 75.1%.
As a consequence of the merger, the mining activities
AMC INCREASED ITS PARTICIPATION IN SCC:
of the corporation in Peru were again carried out under
In 2008 and 2009 Grupo Mexico, through its wholly
the name of Southern Peru Copper Corporation, Peru
owned subsidiary Americas Mining Corporation,
Branch, or the abbreviated name of “Southern Peru”
purchased 11.8 million and 4.9 million shares of the
and/or the acronym SPCC.
Company’s common Stock, respectively.
CHANGE OF ECONOMIC GROUP:
SCC $500 MILLION SHARE REPURCHASE PROGRAM:
In November 1999, Grupo Mexico S.A.B. de C. V.,
In 2008, our Board of Directors (‘‘BOD’’) authorized a
a firm incorporated pursuant to the Laws of the
$500 million share repurchase program that has since
Republic of Mexico, acquired in the United States
been increased by the BOD and is currently authorized to
100% of ASARCO Incorporated, the main shareholder
$3 billion. Pursuant to this program, through December
of Southern Peru Copper Corporation at that time. In
31, 2018 we have purchased 119.5 million shares of
this way, SPCC became a subsidiary of Grupo Mexico,
our common stock at a cost of $2,900 million. These
who keeps its shareholding through Americas Mining
shares are available for general corporate purposes.
Corporation (AMC).
We may purchase additional shares from time to time,
2018 Annual Report General Information
74
For Southern Copper, the
care of the life, health
and well-being of our
employees is priority
number one in all of our
operations.
based on market conditions and other factors. This
independent directors. A special independent director
repurchase program has no expiration date and may
is a person who (i) complies with the independence
be modified or discontinued at any time.
standards of the New York Stock Exchange (or any
other stock exchange or association in which Common
At December 31, 2016, Grupo Mexico
indirect
Shares are listed) and (ii) is appointed by the Special
ownership is 88.91%.
Appointment Committee of the Board. A special
independent director may only be removed from the
CHANGE IN THE CERTIFICATE OF INCORPORATION:
Board upon a justified cause.
On March 28, 2005, following Board of Directors
recommendations, SCC shareholders approved in an
Our Amended and Restated Certificate of Incorporation
extraordinary meeting the amendments to the Articles
determine that the minimum number of Special
of Incorporation Deed, changing the composition and
Independent Directors in that Directory at any time
obligations of some Board committees.
shall equal the total number of directors in the Board
multiplied by the percentage of Common Shares all
SPECIAL INDEPENDENT DIRECTOR:
the shareholders (that are not Grupo Mexico and its
The changes to the Articles of Incorporation Deed
affiliates) have, rounding up to the following integer
require the Board to include a certain number of special
number. Notwithstanding the abovementioned, the
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75
Mine rescue group "Los Coyotes" from
the Santa Barbara Unit, Chihuahua, Mexico.
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
Currently, 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.
2018 Annual Report General Information
76
We are currently working on several
copper projects in Peru and Mexico, with
an authorized investment exceeding
$10,000 million.
The Special Nominating Committee consists of three directors. 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 Gilberto Perezalonso
Cifuentes, 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.
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.
TRANSACTIONS WITH AFFILIATES:
76
77
Cargo train leaving our HPGR plant at Cuajone
Mine, Moquegua, Peru.
CHANGE OF CORPORATE NAME AND OTHER CORPORATE
CHANGES:
The Company has entered into certain transactions
On September 20, 2005, by written consent instead
in the ordinary course of business with parties that
of an extraordinary shareholder meeting, the majority
are controlling shareholders or their affiliates. These
shareholder approved the corporate name change of
transactions include the lease of office space, air
Southern Peru Copper Corporation to Southern Copper
transportation, construction services and products
Corporation or SCC. The change was adopted because
and services related to mining and refining. The
the new corporate name reflects more precisely the
Company lends and borrows funds among affiliates
Company’s operational reach outside the Republic of
for acquisitions and other corporate purposes. These
Peru after its acquisition of Minera Mexico and the
financial transactions bear interest and are subject to
latter’s presence in the Republic of Chile through the
review and approval by senior management, as are all
acquisition of some mining exploration concessions,
related party transactions. It is the Company’s policy
and its exploration activities in the Republics of
that the Audit Committee of the Board of Directors shall
Argentina and Ecuador.
review all related party transactions. The Company
is prohibited from entering or continuing a material
Additionally, on the same date, the majority shareholder
related party transaction that has not been reviewed
approved an amendment of our Articles of Incorporation
and approved or ratified by the Audit Committee.
Deed to remove others’ provisions in our Deed related
2018 Annual Report General Information
Dump truck entering
Toquepala Mine, Tacna,
Peru.
78
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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 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
2018 Annual Report General Information
80
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.
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
bylaws; (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
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81
Lixiviation pads, Toquepala Mine,
Tacna, Peru.
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 88.91%
of SCC shares.
2018 Annual Report General Information
82
INFORMATION ABOUT PLANS AND
INVESTMENT
POLICIES:
See Capital Expenditures and Exploration on page 9.
operating income and its rate ranges from 2% to 8.4%.
It begins at 2% for the first 10% of operating income
RELATIONSHIP BETWEEN THE
ISSUER AND THE
margin and for each additional 5% of operating income
GOVERNMENT
margin is increased by an additional rate of 0.4% until
On November 20, 1996, SCC and the Peruvian
85% of operating income margin is reached.
Government (Ministry of Energy and Mines) signed a
contract that remained effective until the year 2010
MINING ROYALTY
and guaranteed the tax stability and the availability
In September 2011, the Peruvian Congress approved
of exchange to foreign currency of the Branch’s
an amendment to the mining royalty charge. The new
earnings related to the operation of the SX/EW plant
mining royalty charge is based on operating income
at Toquepala and the Solvent Extraction (SX) operation
margins with graduated rates ranging from 1% to 12%,
in Cuajone. Also, on April 18, 1995, SCC and the
with a minimum royalty charge assessed at 1% of net
Peruvian Government (CONITE) signed a contract that
sales. If the operating income margin is 10% or less,
remained effective during ten years and guaranteed
the royalty charge is 1% and for each 5% increment in
the availability of foreign currencies, free remittance
the operating income margin, the royalty charge rate
of dividends to the exterior, among other guarantees
increases by 0.75%, up to a maximum of 12%.
related to the acid plant of the Ilo Smelter.
SOCIAL INVESTMENT FOR TAXES
SCC obtains refunds for tax credits in Peru for the general
SCC has signed agreements with the regional and
sales tax (IGV) paid in connection with the acquisition
local governments of Tacna, Moquegua, and Arequipa,
of capital goods and other goods and services used in
under the law of Social Investments for Taxes (Obras
its operations, counting these credits as a paid expense
por Impuestos). Once the investments are completed,
in advance. By virtue of these refunds, SCC is entitled
the municipalities benefiting from these investments,
to credit the amount of the IGV against its Peruvian tax
must submit a certificate of public, local or regional
obligations or to receive a refund.
investment. SCC has the right to use these investment
SPECIAL MINING TAX
liability, taking as a limit 50% of the previous years
amounts as an advance payment of its income tax
In September 2011, the Peruvian government enacted
income tax.
a new tax for the mining industry. This tax is based on
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Tailing thickeners in Buenavista
del Cobre Mine, Sonora, Mexico.
2018 Annual Report General Information
84
Our operations comply in
every material aspect with
all laws and regulations
on health and safety in
the countries in which we
operate.
Safety and Health
In Southern Copper Corporation, life caring, health and welfare of our
employees and their families is priority in all our operations. No task is
more important.
Accordingly, our main commitment is to create optimal and safe work
environments for our employees, applying the highest safety and
occupational health standards. Our goal: ZERO accidents.
An Integrated Occupational Health and Safety Management System
allows us to implement effective processes and provide our employees
knowledge and skills necessary for the identification, control and
mitigation of risks, prioritizing actions and the necessary care to prevent
accidents.
In 2018, we maintained 11 units in Mexico and Peru whose Occupational
Safety and Health Management System, have been certified according to
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Crane operator at Ilo Refinery, Moquegua,
Peru.
OHSAS 18001: 2007. Additionally, in Mexico we have 17 units certified
with the Secretariat of Labour and Social Welfare in Self-Managed
Occupational Health and Safety (PASST), endorsing our commitment to
best practices in health and safety at work.
The accomplishments achieved in 2018 on occupational health and
safety include:
■
The occupational accident rates at our mining operations in SCC
is 41% below average mining industry in USA, according to Mine
Safety and Health Administration.
■
The Mining Chamber of Mexico (CAMIMEX) awarded the “Jorge
Rangel Zamorano” Silver Helmet Trophy to Mexicana de Cobre and
Santa Eulalia unit, for achieving the lowest recorded accident rates
in the industry, as for his efforts in the field of accident prevention.
2018 Annual Report General Information
86
■
In Peru, SCC has reduced its rate of accidents by 33% during the last
5 years by the implementation of programs to reinforce prevention
culture.
As a result of our commitment with safety and health, SCC has reduced
its rate of accidents by 28%. Every year, we reinforce our policy of
prevention to identify risks and set strategies to reduce accidents in our
processes for the care of the physical integrity of our employees.
These results reflect the efforts in our culture of safety activities, the
implementation of inspection plans and, especially, the work and
commitment of our employees.
Occupational Health
Healthy environments are part of the organizational culture and
management system, as a responsibility of the Company that establishes
a culture of involvement, participation and commitment to generate better
health conditions that lead to improving the quality of life of our employees,
their families and the communities in which we operate.
During the last five years, we reduced our rate of occupational diseases by
52% as a result of various programs on education, prevention and control
risks, as well as diseases treatment. These programs are offered to our
employees and, in some cases, to their families, contractors, suppliers,
institutions and the general public.
Accident Rate (IR)
SCC, 2013-2018
Severity Rate (SR)
SCC, 2013-2018
86
87
1.0
0.8
0.6
0.4
0.2
0
0.5
0.4
0.3
0.2
0.1
0
2013
1.01
2014
0.89
2015
0.72
2017
2016
0.77 [VALUE]*
2018
0.74
2013
0.21
2014
0.58
2015
0.24
2016
0.32
2017
0.51
2018
0.31
IR =
No.of disabling accidents
No.of total men - hours worked"
x 200,000
GR =
No.of days lost
x 1.00
No.of total men - hours worked
Occupational Disease
Rate (ODR)
SCC, 2013-2018
1.0
0.8
0.6
0.4
0.2
0
*Nota: Se han ajustado indicadores de accidentabilidad del 2017 debido a la calificacion de
accidentes posterior a la generacion del reporte 2017.
Activities:
TARGETING WORKPLACE PERSONNEL / LABOR
■
■
■
Security courses and conferences
Expo safety
Internal Security
■ Health Fair
■ Health Career Forum
■
Awards
to employees or Departments with
ZERO ACCIDENTS
TARGETING EMPLOYEES’ FAMILIES AND COMMUNITY
/ FAMILY
2013
0.78
2014
0.57
2015
0.14
2016
0.41
2017
0.34
2018
0.18
■ Guided tours “Knowing my Company”
ODR =
No. of Cases of Occupational Diseases
No. of Total Men-Hours Worked
x 200,000
■ Health career
■
■
■
Parades Familiar Promote values
Firefighting courses
Familiar contests and contests to
■ Health fai
2018 Annual Report General Information
88
Investment in Safety and Health
During 2018, we invested over $112 million in occupational safety and
health, focusing efforts on engineering works, purchase of personal
protective equipment,
training, coaching, and
industrial hygiene
studies. In enhanced occupational health, we have developed programs
in promotion and protection health, as well as in primary prevention,
treatment and rehabilitation.
Employees for the year ended december 31th
Mexican Operations
Total
Peruvian Operations
Total
Ecuador Office
Total
Argentina Office
Total
Chile Office
Total
Corporate Office
Total
OHYSA
Total
Total Employees in SCC
Total Mexico
Total Peru
Total Ecuador
Total Argentina
Total Chile
Total Corporate Office
Total
Total
2018
2017
2016
2015
2014
9,002
8,450
8,762
8,316
8,105
4,850
4,628
4,562
4,602
4,524
30
5
5
2
5
9,012
4,850
30
5
5
2
5
27
18
10
2
5
47
20
20
3
5
52
26
26
2
-
52
26
26
2
-
8,450
4,628
8,762
4,562
8,316
4,602
8,105
4,524
27
18
10
2
5
47
20
20
3
5
52
26
26
2
-
52
26
26
2
-
13,899
13,140
13,419
13,024
12,735
88
89
Pest control worker in
Pier SPCC, Ilo, Moquegua, Peru.
2018 Annual Report General Information
90
Principles of Corporate Governance
Information referred to the Resolution of “Superintendencia del Mercado
de Valores” No. 012-2014-SMV / 01, consisting of a "Report on
Compliance with the Code of Good Corporate Governance for Peruvian
Companies" is applicable only to Peruvian companies. Not being SCC a
Peruvian company, this report is not submitted to the “Superintendencia
del Mercado de Valores” (SMV) of Peruvian Republic. Notwithstanding,
SCC submits the "Annual Written Affirmation" to SMV. This document is
an informative of Good Corporate Governance which our company remits
annually to the New York Stock Exchange.
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 12 “Commitments and Contingencies” to our
Consolidated Financial Statements.
Changes of those responsible for the preparation and revision of the
financial Information.
At December 31, 2018, no changes have been done.
90
91
Cargo truck operator of Buenavista del Cobre, Cananea,
Sonora, Mexico.
Information related to the stock
entered in the Stock Market Public
COMMON STOCK
On November 29, 1995 the Company offered to exchange the recently
issued common shares for all and any labor shares of the Peruvian Branch
of the Company, at a ratio of one common share per four S-1 shares
and one common share per five S-2 shares. The exchange expired on
December 29, 1995, with 80.8% of the total labor shares in circulation
exchange for 22,959,334 common shares. These common shares are
quoted in New York Stock Exchange and the Lima Stock Exchange and
are entitled to one vote per share.
2018 Annual Report General Information
92
Along with the exchange of labor shares the holders of common shares
of the Company exchanged their shares for Class A common shares,
with the right to five votes per share.
In connection with the Minera Mexico acquisition (April 1, 2005),
134,415,280 new common shares were issued and class A common
shares of the Company were converted to common shares, and
preferential votes were eliminated. On June 9, 2005, Cerro Trading
Company, Inc., SPC Investors L.L.C., Phelps Dodge Overseas Capital
Corporation and Climax Molybdenum B.V., subsidiaries of two of SCC’s
founding shareholders and affiliates, sold their share in SCC.
On August 30, 2006 the Executive Committee of the Board of Directors
declared a two-for-one split of the Company’s outstanding common
92
93
Workers of underground mine in Santa Barbara, Chihuahua,
Mexico.
stock. On October 2, 2006 common shareholders
2008 common shareholders of record at the close of
of record at the close of business on September 15,
business on June 30, 2008, received two additional
2006, received one additional share of common stock
shares of common stock for every share owned. The
for every share owned. The Company’s common stock
split increased the number of shares outstanding to
began trading at its post-split price on October 3, 2006.
883,410,150 from 294,470,050.
The split increased the number of shares outstanding
to 294,460,850 from 147,230,425.
All share and per share amounts were retroactively
adjusted to reflect the stock splits.
On June 19, 2008 the Executive Committee of the
Board of Directors declared a three-for-one split of the
Since 2008 and 2018, the Company and AMC had
Company’s outstanding common stock. On July 10,
bought shares periodically.
2018 Annual Report General Information
94
At December 31, 2018, there were of record 773,028,469 shares of
common stock of the Company, par value $0.01 per share, outstanding.
Corporate Bonds
Between July 2005 and October 2015 the Company issued senior
unsecured notes eight times totaling $6.2 billion as listed above. Interest
on the notes is paid semi-annually in arrears. The notes rank pari passu
with each other and rank pari passu in right of payment with all of the
Company’s other existing and future unsecured and unsubordinated
indebtedness.
The indentures relating to the notes contain certain restrictive covenants,
including limitations on liens, limitations on sale and leaseback
transactions, rights of the holders of the notes upon the occurrence of a
change of control triggering event, limitations on subsidiary indebtedness
and limitations on consolidations, mergers, sales or conveyances. Certain
of these covenants cease to be applicable before the notes mature if the
Company obtains an investment grade rating. The Company obtained
investment grade rating in 2005.
In addition, the Company´s Mexican operations hold $51.2 million in
bonds referred above as “Yankee 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 in the debt instrument.
At December 31, 2018, the Company was in compliance with this
covenant.
Please see Note 11 “Financing” for a discussion about the covenants
requirements related to our long-term debt, on Form 10-K 2018.
Mills at Toquepala Concentrator,
Tacna, Peru.
94
95
2018 Annual Report Members of the Board of Directors
96
Members of the Board of Directors at
December 31, 2018
German Larrea Mota-Velasco
DIRECTOR.
Mr. Larrea has been Chairman of the Board of Directors since December
1999, Chief Executive Officer from December 1999 to October 2004, and
a member of our Board of Directors 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) 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 a director of the Consejo Mexicano
de Negocios since 1999, was a director of Banco Nacional de Mexico, S.A.
(Citigroup) from 1992 to 2015 and was also a director of Grupo Televisa,
S.A.B. from 1999 to 2014.
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
the President and Chief Executive Officer of Americas Mining Corporation
("AMC") since November 1, 2014 and the Chief Executive Officer and a
director of Asarco LLC (integrated US copper producer), an affiliate of the
Company, since August 2010. Previously, he was the Company’s President
96
97
and General Director and Chief Operating Officer from
concentrates). He also sold Aonia’s equity stake in
December 1999 to October 20, 2004. Mr. Gonzalez
Fumisa and Aerodom, airport
terminal operating
Rocha has been a director of Grupo Mexico since
companies in Mexico City and in the Dominican
2002. He was General Director of Mexicana de Cobre,
Republic, respectively. In 2013, Mr. Ariztegui Andreve
S.A. de C.V. from 1986 to 1999 and of Buenavista del
made inroads in the financial asset management
Cobre, S.A. de C.V. (formerly Mexicana de Cananea,
business by acquiring a stake in InverCap, the fifth
S.A. de C.V.) from 1990 to 1999. He was an alternate
largest pension fund manager in Mexico, which he
director of Grupo Mexico from 1998 to April 2002.
sold in April 2017. Mr. Ariztegui Andreve worked as a
Mr. Gonzalez Rocha is a civil engineer with a degree
Corporate Banker and Vice President of international
from the Autonomous National University of Mexico
operations and trade finance for Citibank in New
("UNAM") in Mexico City, Mexico.
York and Mexico City for eight years (1979-1987).
Mr. Ariztegui Andreve co-founded and was President
Vicente Ariztegui Andreve
and Chief Executive Officer of MK Metal Trading, a
DIRECTOR
global based metal and mineral (copper, zinc, lead,
Mr. Vicente Ariztegui Andreve, Independent Director. Mr.
gold and silver concentrates) trading company start-
Ariztegui Andreve is Managing Director and Chairman of
up for 18 years (1994-2012). MK Metal Trading was
Aonia Holding, a wholly owned private investment firm
sold in 2012. Mr. Ariztegui Andreve currently sits on
he founded in 1989. Aonia has made investments in
the boards of several non-public companies, including
the following industries: gold mining, global commodity
InverCap Holding
(financial assets management),
trading, retailing (e.g. duty free shops), infrastructure
Reim (real estate mid-size residential development),
(e.g. airport terminal operation), asset management
Alvamex (international storage and logistics). He also is
and real estate.
a director of the University Club, in Mexico. Previously,
he was director of Dufry AG (leading global retail and
During the last five years, Mr. Ariztegui has been
airport duty free operator), Latin American Airport
actively selling and buying stakes in non-public
Holdings (airport infrastructure and terminal operator),
companies, including Pallium Trading (fish meal) and
Satelites Mexicanos (SATMEX) (telecommunications),
MK Metal Trading (copper, zinc, lead, gold and silver
Banco Mexicano, Grupo Financiero Inverlat (financial
2018 Annual Report Members of the Board of Directors
98
services) and Minera Santa Gertrudis (mining). During the last five years
Mr. Ariztegui did not serve as a director of any US public company. Mr.
Ariztegui Andreve received a Master in Business Administration degree
from the Wharton School of Business and Finance.
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 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 College of Mexico. Mr. Casar Perez holds
a degree in Economics from the Autonomous Technological Institute of
Mexico, ITAM, and one in Industrial Engineering from Anahuac University
in Mexico City, Mexico. He also holds a Master’s degree in Economics
from the University of Chicago in Chicago, Illinois.
Enrique Castillo Sanchez Mejorada
DIRECTOR.
Mr. Castillo Sanchez Mejorada has been a director of the Company since
July 26, 2010 and is our fourth independent director nominee. From May
2013 to date, Mr. Castillo Sanchez Mejorada has been Senior Partner
of Ventura Capital Privado, S.A. de C.V. (Mexican financial company)
and since October 2013 to date, he has been Chairman of the board
of directors of Maxcom Telecomunicaciones, S.A.B. de C.V. (Mexican
98
99
telecommunications company).
Since November
out of New York. From April 2012 to April 2016, Mr.
2016 to date, Mr. Castillo Sanchez Mejorada has been
Castillo Sánchez Mejorada served as a member of the
Chairman of the Board of Banco Nacional de Mexico,
board of directors of Organización Cultiba, S.A.B. de
S.A. (Citibanamex) one of the largest banks in Mexico.
C.V. (formerly Grupo Embotelladoras Unidas, S.A.B.
de C.V.), a Mexico-based holding company primarily
From April 2011 to May 2013, Mr. Castillo Sánchez
engaged in the beverage industry. From April 2012
Mejorada was a senior advisor at Grupo Financiero
until April 2014, Mr. Castillo Sánchez Mejorada served
Banorte, S.A.B. de C.V. (“GFNorte”) a financial holding
as an independent director on the board and as a
institution that controls a bank, a broker dealer and
member of the audit committee of Grupo Aeroportuario
other financial institutions in Mexico. From October
del Pacifico, S.A.B. de C.V., a Mexico-based and NYSE-
2000 to March 2011, Mr. Castillo Sánchez Mejorada
listed company that operates, maintains and develops
was the Chairman of the board of directors and Chief
twelve airports in the Pacific and central regions
Executive Officer of Ixe Grupo Financiero, S.A.B. de
of Mexico. From April 2010 until 2013, Mr. Castillo
C.V., a Mexican financial holding company that merged
Sánchez Mejorada was a member of the board of
into GFNorte on April 2011. In addition, from March
directors of Grupo Casa Saba, S.A.B. de C.V., a Mexican
2007 to March 2009, Mr. Castillo Sánchez Mejorada
wholesale distributor of pharmaceutical, health, beauty
was the President of the Mexican Banking Association
and other consumer products and operator of a retail
(Asociación de Bancos de México). Currently, Mr.
pharmacy chain. Mr. Castillo Sánchez Mejorada has
Castillo Sánchez Mejorada is Chairman of the Board
been a member of the audit committee of Alfa, S.A.B.
of Banco Nacional de Mexico, S.A. (Citbanamex),
de C.V. since 2010. Mr. Castillo Sánchez Mejorada
one of the largest banks in Mexico and serves as an
holds a Bachelor’s degree in Business Administration
independent director on the board of directors of (i)
from the Anáhuac University, in Mexico City, Mexico.
Grupo Herdez, S.A.B. de C.V., a Mexican holding
company for the manufacture, sale and distribution
of food products; (ii) Alfa, S.A.B. de C.V., a Mexico-
Xavier Garcia de Quevedo
Topete
based holding company that, through its subsidiaries,
DIRECTOR.
is engaged in the petrochemical, food processing,
Mr. Garcia de Quevedo has been a director of the
automotive and telecommunication sectors; (iii) Médica
Company since November 1999. He was our Chief
Sur, S.A.B. de C.V., a Mexico-based company engaged
Operating Officer from April 12, 2005 until April 23,
in the hospital business and (iv) UNIFIN, an independent
2015. Since November 1, 2014 Mr. Garcia de Quevedo
leasing company. He is also a Senior Advisor for
Topete serves as the President of the infrastructure
General Atlantic in Mexico, a private equity firm based
division of Grupo Mexico, composed of the energy,
2018 Annual Report Members of the Board of Directors
100
gas, oil and construction subsidiaries of Grupo Mexico. Mr. Garcia
is the Chief Financial Officer of Grupo Mexico. He was the President
and Chief Executive Officer of Southern Copper Minera Mexico from
September 2001 until November 1, 2014. He was the President and
Chief Executive Officer of Americas Mining Corporation from September
7, 2007 to October 31, 2014. From December 2009 to June 2010,
he was Chairman and Chief Executive Officer of Asarco LLC, previously
he was President of Asarco LLC from November 1999 to September
2001. Mr. Garcia de Quevedo began his professional career in 1969 with
Grupo Mexico. He was President of Grupo Ferroviario Mexicano, S.A.
de C.V. and of Ferrocarril Mexicano, S.A. de C.V. from December 1997
to December 1999, and Executive Vice-President 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 was the Chairman
of the Mining Chamber of Mexico from November 2006 to August 2009.
He is a chemical engineer with a degree from the UNAM in Mexico City,
Mexico. He also attended a continuous business administration and
finance program at the Technical Institute of Monterrey in Monterrey,
Mexico.
Rafael Mac Gregor Anciola
DIRECTOR.
Mr.Mac Gregor has been a director of the Company since July 2017 and is
an independent director. Mr. Mac Gregor has served as managing Partner
of RMAC Asociados (Mexican consulting firm) since 2016. He has been
an independent director of the Board of Grupo Financiero Citibanamex
(Mexican banking company), Chairman of its Risk Committee, Chairman of
Citibanamex’s Impulsora de Fondos Committee (Asset Management Co),
and member of Citibanamex’s Audit Committee since 2016. In addition,
he is an independent member of the Board of directors of Corporación
100
101
Multi Inversiones (CMI) (multi-national agro-industrial
Tecnológico Autónomo de México in Mexico City and
company) since 2016. From February 1999 to July
he attended the Stanford University Executive program
2015, he served as a Corporate Director of Grupo Bal
in Palo Alto, California.
(Mexican companies principally engaged in agricultural
and
livestock, commercial operations,
industrial
Luis Miguel Palomino Bonilla
operations, and financial services businesses). From
DIRECTOR.
April 1999 to 2015, he was a member of the Board of
Dr. Palomino has been a director of the Company since
Directors of the Mexican Stock Exchange. From 2001
March 19, 2004 and is a special independent director
to 2016, he served as a member of the Board of the
nominee. Dr. Palomino has been Chairman of the board
Instituto Tecnológico Autónomo de México (ITAM) and
of directors of Aventura Plaza, S.A. (commercial real
from April 2008 to 2016, he served as a member of
estate developer and operator) since January 2008,
the Board of Fresnillo PLC (Mexican-based mining
Manager of the Peruvian Economic Institute (economic
company). From April 1995 to July 2015, he served
think tank) since April 2009, Partner of Profit Consultoria
as President of the Board of a Mexican Brokerage
e Inversiones (a financial consulting firm) since July
House and Valmex Leasing Company (Mexican leasing
2007, director of the Master in Finance Program at the
company).
University of the Pacific in Lima, Peru since July 2009,
and a director and chairman of the audit committee of
Aditionally, from April 1995 to July 2015, Mr. Mac
the Bolsa de Valores de Lima (Lima Stock Exchange)
Gregor Anciola served on the Boards of Grupo Nacional
since March 2013. He was a member of the board of
Provincial, S.A.B. (Mexican insurance company), Grupo
directors of Access SEAF SAFI from December 2007
Palacio de Hierro, S.A.B. (Mexican department stores),
to April 2010. Dr. Palomino was previously Principal
Industrias Peñoles, S.A.B. (Mexican mining company),
and Senior Consultant of Proconsulta International
Crédito Afianzador, S.A. (Mexican financing company),
(financial consulting) from September 2003 to June
MineraTizapa, S.A. de C.V. (Mexican mining company),
2007. Previously he was First Vice President and
MineraPenmont, S.A. de C.V.(Mexican mining company),
Chief Economist, Latin America, for Merrill Lynch,
Profuturo G.N.P., S.A. de C.V., Afore, Profuturo GNP
Pierce, Fenner & Smith, New York (investment banking)
Pensiones, S.A. de C.V. (Mexican insurance and
from 2000 to 2002. He was Chief Executive Officer,
pension holding company) and Vice President of the
Senior Country and Equity Analyst of Merrill Lynch,
MexDer (Mexican derivatives exchange). Mr. Mac
Peru (investment banking) from 1995 to 2000. Dr.
Gregor Anciola holds the recognition of the Professional
Palomino has held various positions with banks and
Merit Award from ITAM. Mr. Mac Gregor Anciola holds
financial institutions as an economist, financial advisor
a degree in Business Administration from the Instituto
and analyst. He has a PhD in finance from the Wharton
2018 Annual Report Members of the Board of Directors
102
School of the University of Pennsylvania in Philadelphia, Pennsylvania
and graduated from the Economics Program of the University of the
Pacific in Lima, Peru.
Dr. Palomino is a member of our Audit Committee and a special
independent director nominee. He is also our “financial expert,” as the
term is defined by the SEC. Dr. Palomino contributes to the Company his
education in economics and finance, acquired from extensive academic
studies, including a PhD in Finance from the Wharton School of the
University of Pennsylvania in Philadelphia, Pennsylvania, his expertise,
his wise counsel, and his extensive business experience gained from his
past and current activities from serving as a financial analyst, including
of the mining sectors in Mexico and Peru.
Gilberto Perezalonso Cifuentes
DIRECTOR.
Mr. Perezalonso has been a director of the Company since June 2002 and
is a special independent director nominee. Mr. Perezalonso was Chairman
of the board of directors of Volaris Compañia de Aviacion, S.A.P.I. de C.V.
(airline) from March 2, 2011 to November 2014. 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 of directors and the investment
committee of Afore Banamex (banking), the board and the investment
102
103
committee of Siefore Banamex No. 1 (banking), and is a
and Transportation of Mexico from 1995 to 2000. While
member of the boards of directors of Gigante, S.A. de C.V.
holding that position, he was also Chairman of the
(retail), Masnegocio Co. S. de R.L. de C.V. (information
board of directors of the Mexican-owned companies
technology), Intellego (technology), Telefonica Moviles
in the sector, and member of the board of directors of
Mexico, S.A. de C.V. (wireless communication), Cruz
development banks. He was also the Chairman of the
Roja Mexicana (emergency and medical services),
board of directors of Asarco LLC. Mr. Ruiz Sacristan
Construction Company Marhnos (housing construction),
was a member of the board of directors from 2007
and Fomento de Investigacion y Cultura Superior, A.C.
to 2012 and of the audit, and environmental and
(Foundation of the Iberoamerican University) . Mr.
technology committees of Sempra Energy (energy
Perezalonso was a director of Cablevision, S.A. de
services). In 2012, Mr. Ruiz Sacristan was appointed
C.V., Grupo Televisa, S.A.B. and a member of the audit
Chairman and Chief Executive Officer of IEnova, the
committee of Grupo Televisa, S.A.B. from March 1998
Mexican operating subsidiary of Sempra Energy. He is
to September 2009. Mr. Perezalonso has a law degree
a member of the boards of directors of Constructora y
from the Iberoamerican University in Mexico City, Mexico
Perforadora Latina, S.A. de C.V. (Mexican geothermal
and a Master’s degree in Business Administration from
exploration and drilling company), of Banco Ve Por
the Business Administration Graduate School for Central
Mas, S.A. (Mexican bank), of OHL Concesiones Mexico
America (INCAE) in Nicaragua. Mr. Perezalonso has
(a construction and civil engineering company), and
also attended a Corporate Finance program at Harvard
of AMAIT (an international airport in Mexico). Mr.
University in Cambridge, Massachusetts.
Carlos Ruiz Sacristan
DIRECTOR.
Ruiz Sacristan holds a Bachelor’s degree in Business
Administration from the Anahuac University in Mexico
City, Mexico, and a Master's degree in Business
Administration
from Northwestern University
in
Mr. Ruiz Sacristan has been a director of the Company
Chicago, Illinois.
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 Communications
2018 Annual Report 104
Executive Officers
German Larrea Mota-Velasco
CHAIRMAN OF THE BOARD OF DIRECTORS
Oscar Gonzalez Rocha
PRESIDENT AND CHIEF EXECUTIVE OFFICER
Raul Jacob Ruisanchez
VICE-PRESIDENT, FINANCE TREASURER AND
CHIEF FINANCIAL OFFICER
Edgard Corrales Aguilar
VICE-PRESIDENT, EXPLORATION
Jorge Lazalde Psihas
SECRETARY
Andres Ferrero Ghislieri
GENERAL COUNSEL
Lina Vingerhoets Vilca
COMPTROLLER
Rafael Fernando Lopez Abad
GENERAL AUDITOR
104
105
Next of Kin
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 88.91 % of the stock of the Company, as of
December 31, 2018. 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 Cifuentes, and Carlos Ruiz Sacristan, the
three members of the Company’s Audit Committee, are independent of
management and financially literate in accordance with the requirements
of the NYSE and the Securities and Exchange Commission (“SEC”), as
such requirements are interpreted by the Company's Board of Directors
in its business judgment. Additionally, Messrs. Emilio Carrillo Gamboa,
Enrique Castillo Sanchez Mejorada and Rafael Mac Gregor Anciola are our
fourth, fifth and sixth independent directors.
At its meeting on January 26, 2017 and July 20, 2017, the Board of
Directors determined that Messrs. Luis Miguel Palomino Bonilla, Gilberto
Perezalonso Cifuentes, Carlos Ruiz Sacristan, Emilio Carrillo Gamboa,
Enrique Castillo Sanchez Mejorada and Rafael Mac Gregor Anciola are
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 relationship of affinity and/or
consanguinity exists among the members of the Board, and between them
and the Executive Officers of Southern Copper Corporation.
2018 Annual Report 106
106
Special Committees of the Board
SCC’s Board of Directors has organized the following Special Committees:
1. Executive Committee. It is comprised of five members who
substitute for the Board when sessions or decisions are required
concerning urgent matters, or matters for which the Board would
have expressly delegated its mandate.
2. Audit Committee. It is comprised of three independent Board
members who are knowledgeable in accounting and financial
matters. Its main purpose is to: (a) assist the Board in monitoring
(i) the quality and integrity of the Company’s financial statements;
(ii) the qualifications and independence of the independent
auditors; (iii) the performance of the internal audit function and
of the independent auditors; and (iv) the Company’s compliance
with legal and regulatory requirements; and (b) prepare the report
required by SEC rules.
3. Compensation Committee. It is comprised of four Board
members and its principal objective is to evaluate and establish
the remunerations of principal officers and key employees of the
Company and its subsidiaries.
4. Special Nominating Committee. It is comprised of two independents
Board members and one nominated by the Board and it has the
exclusive authority to propose and evaluate individuals who are
proposed as special independents directors.
5. Corporate Governance Committee. It is comprised of four Board
members and has as its primary functions to consider and make
recommendations to the Board concerning the appropriate function
and needs of the Board, to develop and recommend to the Board
corporate governance principles, to oversee evaluation of the
Board and management, and to oversee and review compliance
with the disclosure and reporting standards of the Company that
require full, fair, accurate, timely, and understandable disclosure
of material information regarding the Company in reports and
documents that it files with the SEC, the NYSE and equivalent
authorities in the countries in which the Company operates, as
well as in other public communications that it regularly makes.
6. Administrative Committee. It is designated by the Named Fiduciary
appointed by the Board for the benefit plans as required by the
Employee Retirement Income Security Act – ERISA of the United
States. ERISA is the law that covers employee retirement and other
benefit plans. Mr. Daniel Muñiz Quintanilla is the Board-appointed
Named Fiduciary for the Company’s benefits plans subject to US
regulations, including ERISA. This Officer appoints an Administrative
Committee, which is comprised of three management members
and its purpose is to administer and manage said plans and to
oversee the performance of the trust agents and other fiduciaries
charged with investing the plans’ funds.
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Administration and Board Income
Total remunerations of Board and Administration members, in relation to the
Company´s gross income is 0.06%.
Annual Meeting
The annual stockholders meeting of Southern Copper Corporation will be held at Edificio
Parque Reforma, Campos Eliseos No. 400, 9th Floor, Col. Lomas de Chapultepec,
Mexico City, C.P. 11000, Mexico, on Thursday, April 25, 2019 at 9:00 A.M., Mexico
City time.
Corporate Offices
UNITED STATES
1440 East Missouri
Avenue, Suite 160
Phoenix, Az. 85014, USA
Phone: +(602) 264-1375
MEXICO
Edificio Parque Reforma, Campos
Eliseos Nº. 400
Col. Lomas de Chapultepec Mexico D.F.
Phone: +(52-55) 1103-5000
PERU
Caminos del Inca Avenue Nº 171
Chacarilla del Estanque
Santiago de Surco, Lima 33, Peru
Phone: +(511) 512-0440, Ext. 3181
Servicios de Agente de Transferencia,
Transfer Agent, registrar and stockholder
services
Computershare
480 Washington Boulevard
Jersey City, NJ 07310-1900
Phone: +1(866)230-0172
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(866) 230-0172.
Stock Exchange Listing
The principal markets for SCC’s Common Stock are the New York Stock Exchange
and the Lima Stock Exchange. Effective February 17, 2010, SCC’s Common Stock
changed its symbol from PCU to SCCO on both the NYSE and the Lima Stock
Exchange.
Others
The Branch in Peru has issued, in accordance with Peruvian law, ‘investment
shares’ (formerly named labor shares) that are quoted in the Lima Stock Exchange
under the symbol SPCCPI1 and SPCCPI2.
Transfer Agent, registrar and stockholders services are provided by Banco de
Credito of Peru at Avenue Centenario 156, La Molina, Lima 12, Peru.
Phone +(511) 313-2478, Fax +(511) 313-2556.
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Other Corporate Information
For other information on the corporation or to obtain additional copies of the annual
report, Form 10-K 2015 contact to Investor Relations Department at our corporate
offices:
Southern Copper Corporation
USA: 1440 East Missouri Avenue, Suite 160 Phoenix, Az. 85014, USA
Phone: (602)264-1375, Fax (602) 264-1397.
MEXICO: Campos Eliseos No. 400, 11 floor, Col. Lomas de Chapultepec
Mexico D.F.
Phone +(52-55) 1103-5000, Extension 5855.
PERU: Caminos del Inca Avenue 171 (B-2), Chacarilla del Estanque, Santiago de
Surco – Lima 33 - Peru.
Phone. +(511) 512-0440, Ext. 3181.
Web Page: www.southerncoppercorp.com
Email address: southerncopper@southernperu.com.pe
El Formulario 10-K1 Attached Form 10-K contains Management’s Discussion and
Analysis of Financial Condition and Results of Operations, Consolidated Combined
Financial Statements and the accompanying notes are an integral part of these
Annual Report.
1Form 10-K Phone. +(511) 512-0440, extension 3442 for Spanish
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Members of the Board of Directors
German Larrea Mota-Velasco
Oscar Gonzalez Rocha
Vicente Ariztegui Andreve
Alfredo Casar Perez
Enrique Castillo Sanchez Mejorada
Xavier Garcia de Quevedo Topete
Rafael Mac Gregor Anciola
Luis Miguel Palomino Bonilla
Gilberto Perezalonso Cifuentes
Carlos Ruiz Sacristan
Audit Committee
Luis Miguel Palomino Bonilla, Chairman
Gilberto Perezalonso Cifuentes
Enrique Castillo Sanchez Mejorada
2018 Annual Report View of Cerro Baul
from Cuajone mine,
Moquegua, Peru.
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STATEMENT OF RESPONSABILITY
“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 2018. SCC takes responsibility for its contents according to
applicable requirements”.
ANDRES FERRERO GHISLIERI
Assistant Secretary
RAUL JACOB RUISANCHEZ
Vice President Finance and
Chief Financial Officer
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
accordance with generally accepted accounting principles in the United States. “SCCO”, “SCC”, “Southern Copper” or the
“Company” includes Southern Copper Corporation and its consolidated subsidiaries.
SOUTHERN COPPER CORPORATION
United States:
1440 E. Missouri Avenue, Suite 160,
Phoenix, AZ 85014, U.S.A.
Phone: +(602)264-1375
Mexico:
Campos Elíseos Nº 400, 11 floor
Col. Lomas de Chapultepec,
México D.F.
Phone: +(52-55) 1103-5000, Anexo 5855
Peru:
Avenue Caminos del Inca 171
Chacarilla del Estanque, Santiago de Surco
Lima 33 - Peru
Phone: + (511) 512-0440, Anexo 3442
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