Southern Copper Annual Report 2019

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FY2019 Annual Report · Southern Copper

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SCC_IA2019_forros ingles.pdf 1 02/07/2020 09:36:06 a.m.

OUR WORK
REFLECTS
REFLECTS
REFLECTS
OUR
EXPERIENCE

84 YEARS WORKING NO N STO P
ANNUAL REPORT 2019

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STATEMENT OF RESPONSIBILITY

“To the best of our knowledge this document contains truthful and sufficient information regarding

the development of the business of Southern Copper Corporation (“SCC”) during 2019. SCC takes

responsibility for its contents according to applicable requirements.”

Andres Ferrero Ghislieri
General Counsel

Raul Jacob Ruisanchez
Vice President Finance Treasurer 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.

INDEX

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, 2019, 2018 and 2017

Commitment - Environmental Affairs

General Information

Description of Operations and Development

Regarding the Issuing Entity

Members of the Board of Directors

Toquepala Concentrator, Peru

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Letter to shareholders

During 2019, total copper production reached over 1 million tons, a new milestone

in the history of Southern Copper Corporation. This 12.5% increase in production,

compared with 2018, was principally due to higher copper production at the new

Toquepala concentrator (+51.5%); and at our Buenavista unit (+5.8%).

In 2019, net sales were $7,285.6 million, a new Company record and 2.7% higher

than 2018 net sales, principally due to higher sales volume for copper, molybdenum

and silver. However, the market had a decrease in the prices of our main product,

copper (-8.1%, LME), that offset the significant contribution of the additional sales

volume.

We achieved significant increases in by-products as molybdenum (+22.3%), silver

(+17.1%) and zinc (+4.4%), that allowed to consolidate Southern Copper Corporation

as the one of lowest cost copper producer in the mining industry. Additionally,

Southern Copper has continued to see the benefit of its expansion and cost reduction

programs, which has allowed a 1.3% decrease in cash costs per pound of copper

produced before by-product revenues, from $1.54 in 2018 to $1.52 in 2019. This

decrease was the result of the unit cost effect of 13.1% higher production in Mexico

and Peru.

Capital investments in 2019 were $707.5 million. Our low production cost will

provide operating strength and liquidity to continue our growth program in Mexico

and Peru to reach 1.5 million tons of copper by 2028.

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In 2019, we also received financial market recognition for our leadership position as

one of the best low-cost copper producers of the industry, obtaining excellent terms

in the issuance of our 30 year Minera Mexico, notes issued in the third quarter of

2019.

Southern Copper will continue to grow and develop projects, as Buenavista Zinc,

this project is located within the Buenavista facilities in Sonora, Mexico, 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 has a budget of $413 million,

and we expect to initiate operations in the third quarter of 2022. Other two projects in

Mexico are Pilares and El Pilar. The first one is located six kilometers from La Caridad,

this project includes an open-pit mine operation with an annual production capacity

of 35,000 tons of copper concentrates. This project will significantly improve the

over-all mineral ore grade (combining the 0.78% expected from Pilares with 0.34%

from La Caridad). The budget for Pilares is $159 million and we expect it to start

production during the first half of 2022. El Pilar will operate as a conventional open-

pit mine and copper cathodes will be produced using the highly cost efficient and

environmentally friendly SX-EW technology. We estimate a development investment

of approximately $310 million and expect this project to start production during

2023.

Currently, we have a portfolio of $2.8 billion approved projects in Peru, of which we

have already invested $1.6 billion, mainly in the Toquepala concentrator. Considering

the up-and-coming Michiquillay ($2.5 billion) and Los Chancas ($2.8 billion)

projects, our total investment program in Peru will increased to $8.1 billion. The Tia

Maria project received the construction permit for this greenfield project of 120,000

tons annual SX/EW copper production with a capital budget of $1,400 million. The

Company continues to work on common grounds for dialogue with the neighboring

communities to address any concerns they may have on the project and awaiting the

proper economic and political conditions to move ahead with the project.

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We reaffirm our commitment to continue focusing on generating long-term value

for our shareholders with our expansion projects and efforts to reduce costs. We

also express our commitment to our stakeholders and to focus on working for the

development of local and regional communities and governments where we operate,

which will result in sharing prosperity and sustainability for our business and society.

We believe that Southern Copper has solid foundations that guarantee its business

success, as well as an adequate 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

populations to our operating areas.

On behalf of the Board of Directors of Southern Copper Corporation, we express our

gratitude to all the staff for their 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
President and Chief Executive Officer

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Production Statistics
Southern Copper Corporation and Subsidiaries
Five-year production statistics

2019

2018

2017

2016

2015

Mine production

(tons)

Mined Material (thousand)

790,365

814,228

743,163

742,935 764,532

Copper in concentrates

841,452

741,488

711,720

715,360 569,072

Copper SX/EW

Total Copper

152,370

142,201

165,259

184,595

173,921

993,822

883,689 876,979

899,955 742,993

Molybdenum in concentrates

26,885

21,985

21,328

21,736

23,347

Zinc in concentrates

73,922

70,778

68,665

73,984

61,905

Silver in concentrates (thousand ounces)

20,273

17,308

15,926

16,172

13,288

Smelter / refineries production

Copper

Zinc

595,173

633,630

617,853

591,339 597,945

104,977

107,536 104,402

106,093 100,576

Silver (thousand ounces)

12,588

13,583

13,688

15,196

13,638

Toquepala

Mined Material (thousand)

249,083

241,514 203,778

209,064

193,013

Copper in concentrates

231,673

143,720

122,949

116,525

119,427

Molybdenum in concentrates

4,484

4,159

4,184

6,324

7,924

Cuajone

Mined Material (thousand)

153,911

175,177

149,265

175,009

191,651

Copper in concentrates

156,393

160,579

158,105

171,448

178,187

Molybdenum in concentrates

3,285

3,099

3,746

3,926

4,444

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Smelter / refineries in Peru

SX/EW

Smelt concentrates

Blister produced

Anode produced

Cathode produced

26,329

26,526

25,093

24,880

24,167

1,075,513

1,187,710 1,153,486 1,070,588 1,143,682

2,630

1,793

929

2,800

317,519

344,758 345,847

322,567 338,893

256,647

292,654

291,373

270,183 292,654

2019

2018

2017

2016

2015

Mexicana de Cobre – La Caridad

Mined Material (thousand)

94,578

96,541

98,534

98,435 94,283

Copper in concentrates

107,161

106,087

106,271

104,949

103,861

Molybdenum in concentrates

10,206

9,809

9,934

9,911

10,040

Buenavista del Cobre

Mined Material (thousand)

288,882

297,718

288,716

257,395 282,954

Copper in concentrates

141,521

139,157

135,690

140,661

142,025

Smelter / Refineries in Mexico

SX/EW

Smelt concentrates

Anode produced

Cathode produced

Rod produced

Underground Mines

Contents in concentrates (tons)

126,041

115,675

140,166

159,715 149,754

1,011,374 1,041,663

997,657 1,004,829 933,403

277,654

286,242

270,213

267,843 256,252

231,609

239,185 228,062

224,158 213,360

142,728

147,147

133,100

144,516

138,180

Zinc

Lead

73,922

70,778

68,665

73,984

61,905

22,567

22,081

20,246

24,385

20,693

Copper in concentrates

8,265

6,221

5,486

6,428

5,593

Silver (thousand ounces)

6,943

5,649

4,760

5,622

4,995

Gold

(ounces)

7,647

6,423

5,428

6,420

4,697

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Copper Reserves

We believe we hold the world’s largest copper reserves position. At December 31,

2019, our copper ore reserves, calculated at a copper price of $2.90 per pound,

totaled 67.6 million tons of contained copper (In 2019, the average LME and COMEX

per pound copper prices were $2.72), our internal ore reserve estimation value is

as follows:

Copper contained in
ore reserves

Thousand tons

Mexican open-pit

Peruvian operations

IMMSA

Development projects

Total

31,004

21,718

248

14,604

67,574

For more information about ore reserves refer to “Internal Ore Reserves Estimates”,

on page 56 of our 2019 Form 10-K.

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Five-Year Selected Financial and Statistical Data

Southern Copper Corporation and Subsidiaries
For the years ended December 31

(in millions, except per share amounts,
employee data and stock and financial ratios).

Consolidated Statement of Earnings

2019

2018

2017

2016

2015

Net sales

$7,285.6

$7,096.7 $6,654.5 $5,379.8 $5,045.9

Operating costs and expenses

4,532.6

4,215.5

4,035.6

3,815.6

3,631.5

Operating income

2,753.0

2,881.2

2,618.9

1,564.2

1,414.4

6.1

5.2

3.9

2.3

4.7

Net income attributable to Non-controlling interest

Net earnings attributable to SCC

$1,485.8

$1,543.0

$728.5

$776.5

$736.4

Per share amount:

Earnings basic and diluted

Dividends paid

Consolidated Balance Sheet

Cash and cash equivalents

Total assets

Total debt

Total equity

$1.92

$1.60

$2.00

$1.40

$0.94

$0.59

$1.00

$0.18

$0.93

$0.34

$1,925.1

$844.6 $1,004.8

$546.0

$274.5

16,407.4

14,267.8

13,780.1

13,234.3

12,593.2

6,541.0

5,960.1

5,957.1

5,954.2

5,951.5

$6,858.2

$6,612.9 $6,149.4 $5,870.9 $5,299.2

Consolidated Statement of Cash Flows

Cash provided by operating activities

$1,911.9

$2,235.1 $1,976.6

$923.1

$879.8

Dividends paid

Capital investments

1,236.9

1,082.3

456.1

139.3

271.2

707.5

1,121.4

1,023.5

1,118.5

1,149.6

Depreciation, amortization and depletion

$764.4

$674.3

$671.1

$647.1

$510.7

Capital Stock

Common shares outstanding – basic and
diluted (in thousand)

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)

773,059

773,044 773,028

773.016 775.942

$43.19

$23.21

8.82

22.10

2.83

41.8%

14,301

$57.34

$47.63

$34.98

$33.14

$29.78

$32.38

$22.29

$24.40

8.50

15.42

7.90

50.35

7.54

31.82

6.78

28.19

2.61

2.71

2.57

2.70

42.6%

44.4%

47.7%

48.9%

13,899

13,140

13,414

13,024

(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.

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Capital Expenditures and Exploration Programs
Expansion and modernization

In 2019, we made capital investments of $707.5 million. This is 36.9% lower than

in 2018, and represented 47.0% of net income. Our growth program to develop the

full production potential of our Company is underway. We are currently developing a

new browfield plan to increase our copper production volume to 1.5 million tons in

2028 by developing new projects.

For 2020, the Board of Directors
approved a capital investment
program of $1,146.7 million.

In general, the capital investments and projects described below are intended

to increase production, decrease costs or address social and environmental

commitments.

In addition to our ongoing capital maintenance and replacement spending, our

principal capital programs include the following:

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MEXICAN PROJECTS

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 and 20,000 tons

of copper per year. Currently, we have completed the basic engineering and obtained

all environmental permits for the project. The project´s budget is $413 million, and

we expect to initiate operations in the third quarter of 2022. When completed, this

new facility will double the Company’s zinc production capacity and will provide 490

direct jobs and 1,470 indirect jobs. The bidding process for the site preparation has

started and the purchase orders for the main equipment have already been placed.

Pilares, Sonora

This project, located six kilometers from La Caridad, will be developed as an open

pit mine operation with an annual production capacity of 35,000 tons of copper in

concentrate. 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 (combi-

ning the 0.78% expected from Pilares with 0.34% from La Caridad). The budget for

Pilares is $159 million and we expect it to start production during the first half of

2022. The connection road between Pilares mine and La Caridad mine is now under

construction.

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El Pilar, Sonora

This is a low capital intensity copper greenfield project strategically located in

Sonora, Mexico, approximately 45 kilometers from our Buenavista mine. Its copper

oxide mineralization contains estimated proven and probable reserves of 325

million tons of ore with an average copper grade of 0.287%. El Pilar will operate

as a conventional open-pit mine and copper cathodes will be produced using the

highly cost efficient and environmentally friendly SX-EW technology. We estimate a

development investment of approximately $310 million. The construction of the pilot

plant is completed and the production tests have recently begun. We expect this

project to start production during 2023.

The San Martin mine restoration program

After eleven years of an illegal stoppage, we resumed control of the San Martin mine

in August 2018. The San Martin facilities deteriorated during this period and we

undertook a major renovation in order to restart operations during the second quarter

of 2019. Currently, the mine has 200,000 tons of ore storage and the concentrator

has initiated production. In 2019, we produced 5,837 tons of zinc, 1.2 million ounces

of silver and 1,335 tons of copper. The budget of the restoration program is $97.7

million. At December 31, 2019 the program had a total expense of $73.6 million.

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Cathodes of Ilo Refinery, Peru //

PERUVIAN PROJECTS

Toquepala Concentrator Expansion

This $1,320 million project includes a new state-of-the-art concentrator, which

increased Toquepala’s annual copper production to 258,000 tons in 2019, a 51.5%

production increase, when compared to 2018. As of December 31, 2019, we

have invested $1,280.1 million in this expansion. Construction of the project was

completed and production began in the fourth quarter of 2018. Full production was

reached in 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 reducing operating costs through ore crushing

efficiencies, even with an increase of the ore material hardness index. The budget

for this project is $52 million and as of December 31, 2019, we have invested $51.9

million. We are in the administrative close-out process for this project, which was

added to operations during the fourth quarter of 2018.

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Cuajone Mine, Peru.

Cuajone tailing thickeners project - 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. As of December 31, 2019, we have invested $31 million out of the

approved budget of $31.3 million in this project. This project was finished in October

2019.

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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 concentrators 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 evaluating improvements in operational processes of this

facility. The project has a total budgeted cost of $116 million and we have invested

$107.2 million through December 31, 2019.

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Environmental and social matters

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 focus is on sustainable development, with which we guide our

actions, 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 always taking account their

expectations.

Our environmental commitment

We maintain an ongoing commitment to advance with the challenges of our expansion

and modernization programs in harmony with our 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

1. Responsible use of water and natural resources

2. Efficient use of energy and reduction of green-house-gas emissions

3. Reduction, control and mitigation of air emissions to atmosphere

4. Reduction in waste generation and its integrated management

5. Reforestation and biodiversity conservation

6. Mine closure

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Cathode harvest, Ilo Refinery, Peru //

These lines of action are carried out in compliance with international and local

certifications that rule our operating units in the countries where we are present. In

2019, seven of our units were granted the ISO 14001: 2004. These certifications,

together with the 18 Clean Industry Certifications and Environmental Quality

Certifications, are the result of the efforts of all our employees and result from a

comprehensive application of our environmental practices.

For environmental management in our operations, in 2019, $145 million were

allocated to investments and environmental expenditures in the following areas: air,

climate change, soil, waste, biodiversity, water and administrative management.

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ENERGY AND CLIMATE CHANGE

At SCC, we believe that the fight against climate change is everyone’s responsibility,

including the private sector and the industries in which we participate. In addition,

we are aware of the effects of climate change on our operations, so, by anticipating

an increase in the probability of occurrence of extreme weather events, we have

identified potential risks from global warming.

Given these challenges, we are taking measures, which include:

Using energy more efficiently.

Developing and using renewable energy sources.

Increasing the level of electric power self-sufficiency.

Promoting efforts to capture greenhouse gases.

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Toquepala Dome, Peru. //

Accordingly, we are diversifying our sources of generation of clean, renewable

energy for our supply. Our operations in Mexico have decreased their indirect

greenhouse gas emissions by consuming clean energy supplied by SCC subsidiaries

that generate electric power through its high efficiency combined cycle plant and a

wind farm. In Peru, we generate energy from renewable sources, in particular from

two hydroelectric plants with a combined capacity of 130 terajoules.

Accordingly, to our environmental goal, to reduce Greenhouse gases. SCC is taking

action to maximize operational processes. In Mexico, we take advantage of heat

generating in the smelter to produce energy.

By replacing traditional sources of energy with more efficient and renewable

sources, in 2019, we achieved mitigation of 625,285 tCO2e, equivalent taking out

of circulation 135,000 passenger vehicles for a year.

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In addition, to generating and consuming energy from renewable sources and

cleaner fuels, we have also implemented practices that have resulted in higher

energy efficiency in our operations, including the improvement, redesign, conversion

and retrofitting of equipment, rational use of resources, and personnel training to

improve their performance during operations.

It is important to highlight that in terms of climate change SCC, along with Grupo

México, have been working together with non-governmental organizations to

contribute in the fight against climate change. Such is the case of Grupo Mexico’s four

report in 2018 to the Carbon Disclosure Project, through which we have developed

and reported our inventory of greenhouse gases at SCC.

On April 17, 2018, the Peruvian government enacted Law N. 30754, establishing

a Climate Change Framework. Through this law, promoting public and private

investment in climate change management is declared to be of national interest.

The law proposes to create an institutional framework to address climate change in

Peru, outlining new measures, particularly with respect to climate change mitigation.

It includes, for example, provisions dealing with: increasing carbon capture and

use of carbon sinks; afforestation and reforestation practices; land use changes;

and sustainable systems of transportation, solid waste management, and energy

systems. It was the first Latin American climate change framework law to incorporate

responsibilities from the Paris Agreement. Regulations to this law were enacted by

Supreme Decree 013-2019, published on December 31, 2019, and are applicable to

all peruvian institutions and agencies. It is expected that further peruvian regulations

would be applicable to non-governmental entities. The Company anticipates

initiating a multi-year process to adopt applicable reporting recommendations

of the Task-Force on Climate Related Financial Disclosures (TCFD) once new

peruvian climate change regulations applicable to non-governmental entities are

implemented. The Company is committed to the environment and to manage

climate-related impacts. The Company’s focus is to seek continuous improvement

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in the responsible use of natural resources while complying with strict applicable

legal standards for prevention, mitigation, control and remediation of environmental

impacts. Implementing continuous improvement in the Company’s processes allows

greater efficiency in the use and consumption of energy, water, and other natural

resources. During the multi-year development process, SCC intends to engage with

interested shareholders. SCC intends also to report on the implementation of TCFD’s

disclosures in future Annual Reports and on its website.

With these actions, and others, SCC confirms its commitment to reduce its carbon

footprint, and enhance its position as a sustainable global company, thereby

improving its competitiveness and contributing to shift towards an environmentally

friendly economic development.

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Mexican
gray wolf.

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BIODIVERSITY

We are the company with the highest productive capacity of trees in the mining

industry in Mexico. We produced 5.8 million trees in 2019, which meets our goal of

guaranteeing a production of 5 million trees per year, in a joint effort among entities

in charge of reforestation.

In our operating units, we have six forest nurseries and greenhouses whose production

of regional native species is used to reforest and rehabilitate ecosystems, including

those areas not adjacent to our operations. These forest nurseries contribute to

biological biodiversity and enrichment of flora and fauna; and in addition, they act as

natural carbon sinks, trapping CO2 from the atmosphere.

As part of our conservation efforts, we have a 5.7 hectare
Environmental Management Unit (EMU) that has been
developed to replicate the wildlife environment of

threatened and endangered species, including Mexican

Gray Wolf and Turkey Gould, along with other species that

are part of our program.

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Cub of Mexican Gray Wolf in UMA.

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Since the beginning of the Binational
Program, 433 wolves have been born
and 51 specimens have been released.

The EMU strategy is focused on reproduction and release of species, as well as

ecosystems regeneration. In addition, the program reflects our efforts to involve

community in the protection of the environment, in particular, biodiversity of Sonora.

In an Ecological Path, along 1.8 kilometers, EMU works offering educational and

recreational activities, which involved 5,000 people and 52 schools per year in

average.

In Peru, we continue making significant environmental expenditures in Ite bay

remediation program in Tacna. In an area of 1,600 hectares, the contaminant

removal program is successfully. It is the largest and most diverse coastal waterfowl

wetland in the country, and it is also a tourist attraction that improve economic

development.

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In 2019, 71% of the total water
consumption of our mining
operations was recovered water.

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 2019, 71% of total water consumption in mining operations was reclaimed water,

which management results speaks by itself.

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Open pit at Cananea, Sonora, Mexico. //

In 2019, we invested $11 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.

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OUR COMMUNITIES

Model of community development

SCC looks to improve life quality in communities around its operations, promoting an

approach based on management responsibility. SCC has developed a model, which

people become as generators of its own development.

Community Development Model proposes an approach relationship with

communities by three specific components:

GOOD NEIGHBOR S

ECONOMIC DEVEL OPMENT

HUMAN DEVELOPMENT

GOOD NEIGHBORS

In order to generate positive relations with neighboring communities, we maintain

constantly communication with them.

ECONOMIC DEVELOPMENT

Through training and skill-building programs, as well as investments in

infrastructure, we promote the productive strengthening and economic value of

the community.

HUMAN DEVELOPMENT

To generate trustable relationships and co-responsibility with the communities,

our Casa Grande model develops programs focused on education, health, culture,

and environment in its own community centers.

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This model is known as “Casa Grande” in Mexico and “Casa Nuestra” in Peru, and it

has been implemented through the following tools:

16 Community Development Centers - Those are Open Houses for

community, where courses and workshops are held in order to promote

development by programs and projects focused on education, health, culture,

and care for the environment.

Participatory Diagnostics - Together, community and SCC, participate

carrying out Human Development activities. Based on community’s diagnosis,

we identify their needs and expectations, which are satisficed in accordance

with Casa Grande model.

Community Committees - Integrated by volunteer leaders from community,

as well as members of the Company who collaborate in evaluating sustainable

proposals.

Seed Capital - We call on communities to present their own initiatives. SCC

establishes, as main axes, education and environment, been complemented

by health, safety and productivity projects.

Children and young people are our priority; in that sense, we work to get a

better future for new generations. Community projects are evaluated in mix

committees conformed by SCC and local personalities, promoting dialogue

and citizen participation.

Productive Projects - Projects that transform community lives by productive

skills.

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Control center, Cuajone Concentrator, Peru

By this model, our team of experts materializes Company initiatives and includes the

participation of SCC volunteers and the community. Community centers are meeting

points to generate shared value.

Together, SCC’ social team and volunteers from communities neighboring developed

projects in 2019. We carried out 9,607 activities and more than 362 projects,

16,296 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.

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SCC has invested more than $33 million
in the incorporation of information and
communication technology.

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 either elementary

training, secondary education or even university studies. In our mining operations in

Mexico and Peru, we contribute to the education of the communities through 11 own

schools, sponsored by the Company, and the delivery of scholarships for different

levels of studies, which also extend to our collaborators and their families.

In Peru, we have implemented the TICs project (Information Technology and

Communication) in Moquegua, which is considered a pioneer effort to reduce the

technological gap in rural areas of Peru. Through cooperation between the Regional

Government of Moquegua and SCC, the use of TICs in the teaching and learning

process is incorporated, benefiting 33,560 students and teachers of Mariscal Nieto,

Ilo, and Sánchez Cerro in the Moquegua Region. To date, SCC has invested more

than $33 million in the incorporation of information and communication technology

for the benefit of students and teachers in Peru.

We also continue promoting the training and job selection program Forjando

Futuro (“Forging the Future”), created to respond, through capacity building, to the

professional and labor skill needs of the residents located in the areas of influence

of our operations in the south of Peru.

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INFRASTRUCTURE AND SERVICES

In Peru, our mining operations are located in a remote area in the south of the

country, in a rural environment. We contribute to its development in close cooperation

with the authorities and representative organizations of the region. Our commitment

to the community manifests in the following areas of work: education and capacity

building, health, nutrition, infrastructure and support to the agricultural sector.

In this sense, SCC contributes to the expansion of water supply infrastructure and

irrigation techniques in the provinces in which we operate. In 2019, we invested

more than $3.4 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 these systems.

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Aerial view of Tapala, Candarave - Peru. //

In 2019, we have invested more than $3.4
million in projects aimed at optimizing the
availability and use of water in agricultural
activities in Peru.

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SOCIAL INVESTMENT

IIn 2019, SCC has invested more than $ 40.2 million in social development

programs, related to education, health, productive projects and infrastructures

and services.

Investment in Community Development Programs

$ (in millions)

Community development programs, social linking and productive projects

Operating expenses in schools and camps

Infrastructure and equipment in neighboring communities

SCC townsite infrastructure

Total

10.5

18.5

10.1

1.1

40.2

At 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.

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Worker at
mechanical workshop.

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Results of Operations

Years ended December 31, 2019, 2018 and 2017

Our net income attributable to SCC in 2019 was $1,485.8 million, compared

to $1,543.0 million in 2018 and $728.5 million in 2017. In 2019, net income

attributable to SCC decreased mainly due to increases in cost of sales and

depreciation, amortization and depletion, as well as lower prices for copper and

molybdenum. 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.

The Company presents its operating cash costs both including and excluding the

revenues of its by-products (molybdenum, silver, sulfuric acid, etc.). 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 per pound of copper produced, as previously

defined, for the three years ended December 31, is as follows:

Operating Cash Cost without by-product revenues

Operating Cash Cost with by-product revenues

2019

2018

2017

1.52

1.54

1.49

0.88

0.87

0.92

*Dollar per pound

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SX-EW III Plant, Sonora, Mexico //

As seen in the previous table, our per pound cash

cost before by-product revenues in 2019 was 1.3%

lower when compared with 2018. This decrease

was the result of the unit cost effect of 13.1% higher

production.

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NET SALES

2019-2018

Net sales in 2019 were $7,285.6 million, compared to $7,096.7 million in 2018,

an increase of $188.9 million. This 2.7% increase was mainly the result of higher

copper (+11.3%), molybdenum (+21.7%) and silver (+5.7%) sales volumes, partially

offset by copper (−8.1%) and molybdenum (−5.0%) prices.

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 mainly the result of higher

copper (+5.7%) and molybdenum (+45.9%) prices and higher sales volumes of

silver (+15.3%) and molybdenum (+3.3%), partially offset by lower silver price

(−8.1%) and lower zinc sales volume (−1.0%).

Prices

The profitability of our operations is dependent on, and our financial performance is

significantly affected by, the international market prices for the products we produce,

especially for copper, molybdenum, zinc and silver. 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.

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Price/Volume Data

2019

2018

2017

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 millions pounds, except silver – millions ounces

Copper

Molybdenum (1)

Zinc

Silver

(1) The Company´s molybdenum production is sold as concentrates.

Volume represents pounds of molybdenum contained in concentrates.

$2.72

$2.96

$2.80

$2.93

$2.80

$11.27

$11.86

$1.16

$1.33

$8.13

$1.31

$16.16

$15.65

$17.03

2,173.8

1,953.0

1,959.2

59.2

48.6

47.1

228.5

234.8

237.2

20.6

19.4

16.9

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4141

INFORME ANUAL 2019

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 investments in years 2019, 2018 and 2017, were as follows

(in millions):

Mexican operations

Peruvian operations

Total

2019

2018

2017

$64.3

$18.6

$43.5

$128.9

$59.3

$93.7

$82.9

$102.8

$222.6

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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 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.

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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.

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 has determined that this new environmental regulation

will have no impact on its financial position.

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Panoramic view of Toquepala Concentrator, Perú

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 10 “Asset retirement

obligation” of our 2019 Form 10-K, 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. As of December 31, 2019, the Company

maintains a lower daily average level of µg/m3 of SO2, than those required by the new AQS.

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45
45

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.

In accordance with the regulatory requirements, the Company has been working

on the characterization phase and a Soil Decontamination Plan (“SDP”) for

environmentally impacted sites in each of its operating units (Toquepala, Cuajone,

and Ilo) with the assistance of consulting companies. The Toquepala and Cuajone

SDP were presented to the authorities for review and approval during the third

quarter of 2019, and the Ilo SDP was submitted in January 2020.

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 reviewed and approved

by the Peruvian government, which is expected for 2020. 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.

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 operations, financial condition or prospects and will not result in

material capital investments.

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Ilo Smelter, Peru. //

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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 30.

Brief Description: Southern Copper Corporation (SCC) is one of the largest integrated

copper producers in the world. We produce copper, molybdenum, zinc, silver, lead

and other by-products. 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. 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.

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Our Mexican operations are conducted through our subsidiary, Minera Mexico S.A.

de C.V. (“Minera Mexico”), which we acquired in 2005. Minera Mexico engages

principally in the mining and processing of copper, molybdenum, zinc, silver, gold

and lead. Minera Mexico operates through subsidiaries that are grouped into three

separate units. Mexicana de Cobre S.A. de C.V. (together with its subsidiaries, the

“Mexcobre unit”) operates La Caridad, an open-pit copper mine, a copper ore

concentrator, a SX/EW plant, a smelter, refinery and a rod plant.

Operadora de Minas e Instalaciones Mineras S.A de C.V. operates Buenavista,

formerly named Cananea, an open-pit copper mine, which is located at the site

of one of the world’s largest copper ore deposits, two copper concentrator and

two SX/EW plants. The Buenavista mine was operated until December 11, 2010

by Mexicana de Cananea S.A. de C.V. and by Buenavista del Cobre S.A. de C.V.

from that date until July 2012. Industrial Minera Mexico, S.A. de C.V. operates five

underground mines that produce zinc, lead, copper, silver and gold, a coal mine

and a zinc refinery. Effective February 1, 2012, Minerales Metalicos del Norte S.A

was merged with Industrial Minera Mexico S.A. de C.V. (IMMSA). IMMSA absorbed

Minerales Metalicos del Norte S.A.

We utilize modern/state of the art mining and processing methods, including global

positioning systems and computerized mining operations. Our operations have a

high level of vertical integration that allows us to manage the entire production

process, from the mining of the ore to the production of refined copper and other

products and most related transport and logistics functions, using our own facilities,

employees and equipment.

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Economic Group

SCC, indirectly, is part of “Grupo Mexico S.A.B. de C.V.” which owns 100% of Ame-

ricas Mining Corporation (“AMC”).

Name
of the
company

SEVERAL ACTIVITIES

Grupo Mexico, S.A.B. de C.V.

Grupo Mexico Servicios, S.A. de C.V.

RAIL TRANSPORT ACTIVITIES

Location

Inscription
in the RPMV

Mexico

100

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

Mexico

100

MINING ACTIVITIES

Americas Mining Corporation (AMC)

Southern Copper Corporation (SCC)

Minera Mexico, S.A. de C.V.

USA

Mexico

Sí

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

Mexico

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 en Peru

Compañía Minera Los Tolmos S.A.

Mexico

Chile

Peru

100

88.90

99.96

100

98.20

100

Sí

99.29(1)

100

(1)

Include 82.69% of common shares
and 16.60% of investment shares.

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Molybdenum plant, Sonora, Mexico //

Corporate Capital and Common Stock

The authorized number of shares

2,000,000,000

Issues an Paid Capital: Common Shares

884,596,086

Nominal Value of Common Shares

$0.01

Total number and percent of shares

Interest

Americas Mining Corporation

Common Shares owned by 3rd parties

687,275,997

85,782,872

88.9%

11.1%

Total outstanding shares

773,058,869

100.0%

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La Caridad mine, Nacozari de Garcia, Sonora, Mexico.

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.

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“La Caridad SX-EW” has an annual design capacity of 21,900 tons of copper

cathodes. Approximately 1,009.2 million tons of leaching ore with an average grade

of approximately 0.219% copper have been extracted from the La Caridad open pit

mine and deposited in leaching dumps from May 1995 to December 31, 2019.

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.

“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.

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Buenavista Mine

“Buenavista Concentrator”, the original concentrator currently has a nominal milling

capacity of 82,000 tons per day. The second concentrator began operations in 2015

with a nominal milling capacity of 100,000 tons per day.

“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

The Santa Barbara Unit with a milling capacity of 5,800 tons of ore per day.

The Santa Eulalia Unit with a milling capacity of 1,450 tons of ore per day.

The San Martín Unit with a milling capacity of 4,400 tons of ore per day.

The Charcas Unit with a milling capacity of 4,100 tons of ore per day.

The Taxco Unit with a milling capacity of 2,000 tons per day.

Coal Washery Plant with a capacity of 300,000 MT per year.

The Zinc Refinery with a capacity of 288 tons per day of refined zinc.

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Aerial view of
Buenavista del
Cobre, Cananea,
Sonora.

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PERUVIAN OPERATIONS

Toquepala

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.

Based on Report N° 147 – 2019 - MEM-DGM/DTM/V, dated June 03, 2019,

the “Director General de Mineria” authorized the expansion of the Toquepala

Concentrator to a capacity of 120,000 MT per day. According with this Report,

the Company must compliance with, among others, recommendations,

environmental commitments and safety regulations, and occupational Health

and Safety Regulations.

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.

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La Caridad mine, Sonora, Mexico //

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.

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Aerial view of Cuajone Mine, Moquegua, Peru.

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Cuajone

Botiflaca Concentrator in Cuajone: Directorial Resolution No. 150-81-EM/DCM

dated August 14, 1981 approved the operation of Botiflaca Concentrator. The

resolution granted 56 hectares of surface land.

Based on Report No. 266-99-EM/DGM/DPDM dated July 20, 1999

the “Director General de Mineria” authorized the expansion of Botiflaca

Concentrator to 87,000 MT per day throughput.

Resolution N° 379-2010-MEM-DGM/V dated October 7, 2010, based on

Report N°312-2010-MEM-DGM-DTM/PB, authorized construction and

expansion of Botiflaca Concentrator to 90,000 MT per day throughput.

For operating reasons as part of the crusher process optimization, on November

18, 2011, we requested to the Peruvian authorities through resources N°

2144941 to add three additional facilities (HPGR mill and others).

On May 2012, with Directoral Resolution N° 153-2012-MEM-DGM-V based

on report 165-2012-MEM-DGM-DTM-PB, MEM approved and authorized the

project to include three additional facilities aforementioned on the procedure

of the amendment and increase of the installed capacity from 87,000 to

90,000 MT per day.

Cuajone Leaching Plant (LX/EW). Directorial Resolution No.155-96-EM/

DGM dated May 6, 1996 approved the operation of the Cuajone Leaching

plant. The resolution granted 400 hectares of surface land and authorized

a throughput of 2,100 MT per day. Based on Report No. 988-2009-MEM-

DGM/V, dated December 16, 2009, Cuajone SX plant operation was approved

and authorized the of the, with a capacity of 3100 MT per day.

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Ilo

Ilo Smelter: Authorized (definitely) by Directorial Resolution No. 078-69-EM/

DGM dated August 21, 1969 approved the operation of the Ilo Smelter. The

resolution authorized a production of 400 short tons/day of blister copper.

Based on Report No.204-2000-EM-DGM-DPDM dated June 20, 2000 the

“Director General de Mineria” authorized the expansion of the Ilo Smelter to a

3,100 MT per day throughput of copper concentrates.

On February 4, 2010, by the Application Nº 1961695, the Company began

the process to obtain authorization from the MINEM to operate a capacity of

3,770 MT per day, which is included as an ancillary facility to Acid Plant No.

2, with a capacity of 2,880 MT per day or 1,051,200 MT per year.

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 expanding its capacity throughput.

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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.

“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 Seashell Concentrates” to a

classified dry seashell plant without expanding 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

Seashell 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.

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Sport workshop sponsored by Casa Grande at Santa Bárbara mine, Mexico

DESCRIPTION OF OPERATIONS AND DEVELOPMENT REGARDING THE ISSUING

ENTITY PURPOSE

Detail of the corporate purpose

The purpose of SCC is to engage in activities allowed by the laws of the State of

Delaware. Its main activity is to extract, mill, concentrate, smelt, treat, prepare for

market, manufacture, sell, exchange and, in general, to produce and negotiate

for sales of copper, molybdenum, gold, silver, lead, zinc, iron and any other class

of minerals and materials or other materials, effects and goods of any nature or

description; as well as to explore, exploit, sample, examine, investigate, recognize,

locate, appraise, buy, sell, exchange, etc., mining concessions and mining deposits.

SCC belongs to the CIIU 1320 group. The term of duration of the Company is indefinite

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Brief historical review from the constitution of SCC

The Company was organized on December 12, 1952, according to the Laws of the

State of Delaware of the United States of America, under the original denomination

of Southern Peru Copper Corporation (“SPCC”), which was renamed on October 11,

2005, to Southern Copper Corporation.

In 1954, SCC established a Branch in Peru to carry out mining activities in this

country. The Branch was established under public instrument certified by public

notary from Lima, Dr. Ricardo Fernandini Arana, on November 6, 1954.

The Branch is registered in the Electronic Record Nº 03025091 of the Juridical

People of the Registry Office of Lima and Callao.

Actions following company incorporation

Capital increase: By Public Deed dated May 31, 1995, signed before notary public of

Lima, Dr. Carlos A. Sotomayor Bernos, the Branch capital increase was formalized.

It was made through money contribution by the Company in favor of its Peru Branch

and by the owners of labor shares, pursuant to Legislative Decree No. 677. The capital

contribution made by the Company was aimed at increasing the capital allotted to

the Branch by the headquarters and registered in Peru. The capital contribution

made by the Labor Shares (today Investment Shares) owners was assigned to the

Labor Shares account of the Branch for issuing new Labor Shares.

Part of the money contribution made by the Company in favor of its Branch and by

the Labor Shares owners was applied as a capital premium to the Resident account

as Additional Capital.

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Exchange of Investment Shares (Labor Shares) for Common Shares: Dated September

7, 1995, “Southern Peru Copper Holding Company” was also incorporated pursuant

to the Laws of the State of Delaware, aiming at acting as a holding company that

owns all Southern Peru Copper Corporation shares, and at performing an exchange

of the shares that were then called “Labor Shares” (now, 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 time, former owners of Labor Shares acquired 17.31% of

SPCC’s Capital, and this company acquired ownership of 80.77% of Labor Shares

(now, Investment Shares).

On December 31, 1995, Southern Peru Copper Corporation changed its corporate

name to “Southern Peru Limited”, and “Southern Peru Copper Holding Company”

changed its corporate name to Southern Peru Copper Corporation.

As a consequence of this corporate name change, the mining activities of the

Company in Peru started being performed under the name of Southern Peru Limited,

Peru Branch (SPL).

On December 31, 1998, the merger between Southern Peru Copper Corporation and

Southern Peru Limited was agreed. The first company absorbed the second one and

assumed all its assets and liabilities, including the Branch in Peru. This merger did

not imply any change to the share percentage in the corporate capital or in the Equity

Participation Account (Investment Shares), which were kept unchanged.

As a consequence of the merger, the mining activities of the corporation in Peru

were again carried out under the name of Southern Peru Copper Corporation, Peru

Branch, or the abbreviated name of “Southern Peru” and/or the acronym SPCC.

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Change of Economic Group

In November 1999, Grupo Mexico S.A.B. de C. V., a firm incorporated pursuant to

the Laws of the Republic of Mexico, acquired in the United States 100% of ASARCO

Incorporated, the main shareholder of Southern Peru Copper Corporation at that time.

In this way, SPCC became a subsidiary of Grupo Mexico, who keeps its shareholding

through Americas Mining Corporation (AMC).

Acquisition of Minera Mexico (“MM”), and other corporate changes

SCC shareholders, in a shareholder extraordinary meeting dated March 28, 2005,

approved issuance of Common Shares and required actions related to the acquisition

of MM, a firm incorporated pursuant to the Laws of the Republic of Mexico. This

transaction was approved by more than 90% of the stocks and circulating capital

of SCC. To acquire Minera Mexico, SCC issued 67,207,640 shares in exchange for

MM shares. Once the shares related to the acquisition were issued, AMC increased

its share in SCC from 54.2% to approximately 75.1%.

AMC Increased its Participation in SCC

In 2008 and 2009, Grupo Mexico, through its wholly owned subsidiary Americas

Mining Corporation, purchased 11.8 million and 4.9 million shares of the Company’s

common Stock, respectively.

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SCC $500 Million Share Repurchase Program

In 2008, our Board of Directors (‘‘BOD’’) authorized a $500 million share repurchase

program that has since been increased by the BOD and is currently authorized to $3

billion. Pursuant to this program, through December 31, 2019 we have purchased

119.5 million shares of our common stock at a cost of $2,900 million. These shares

are available for general corporate purposes. We may purchase additional shares

from time to time, based on market conditions and other factors. This repurchase

program has no expiration date and may be modified or discontinued at any time. At

December 31, 2019, Grupo Mexico indirect ownership is 88.9%.

Change in the Certificate of Incorporation

On March 28, 2005, following Board of Directors recommendations, SCC shareholders

approved in an extraordinary meeting the amendments to the Articles of Incorporation

Deed, changing the composition and obligations of some Board committees.

Special Nominating Committee and Special Independent Directors

The changes to the Certificate of Incorporation require the Board to include a certain

number of special independent directors. 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.

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The Special Nominating Committee has the right to nominate a number of special

independent directors based on the total number of directors in the Board multiplied

by the percentage of Common Shares all the shareholders (that are not Grupo Mexico

and its affiliates) have, rounding up to the following integer number. Notwithstanding

the above mentioned, the total number of individuals appointed as special independent

directors (not belonging to Grupo Mexico) cannot be less than two or more than six.

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.

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Transactions with affiliates

In 2019, the Company has entered into certain transactions in the ordinary course

of business with parties that are controlling shareholders or their affiliates. These

transactions include the lease of office space, air and railroad transportation,

construction services, energy supply and other products and services related to mining

and refining. The Company lends and borrows funds among affiliates for acquisitions

and other corporate purposes. These financial transactions bear interest and are subject

to review and approval by senior management, as are all related party transactions. It

is the Company’s policy that the Audit Committee of the Board of Directors shall review

all related party transactions. The Company is prohibited from entering or continuing a

material related party transaction that has not been reviewed and approved or ratified

by the Audit Committee.

Change of corporate name and other corporate changes

On September 20, 2005, by written consent instead of an extraordinary shareholder

meeting, the majority shareholder approved renaiming Southern Peru Copper

Corporation as Southern Copper Corporation or SCC. The change was adopted

because the new corporate name reflects more precisely the Company’s operational

reach outside the Republic of Peru after its acquisition of Minera Mexico and the latter’s

presence in the Republic of Chile through the acquisition of some mining exploration

concessions, and its exploration activities in the Republics of Argentina and Ecuador.

Additionally, at the same date, the majority shareholder approved an amendment of

our Articles of Incorporation to remove others’ provisions in our Articles of Incorporation

related with our Class A Common Shares that were formerly in circulation, which

were converted to Common Shares on May 19, 2005, and to change the number of

Corporate directors from fifteen to a number that will be regularly established following

agreement of most of Board members stipulating the number of directors will not be

less than six or more than fifteen.

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The amendment of our Articles of Incorporation 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 to the Articles of Incorporation and By-laws

On January 26, 2006, the Board approved amendment to Southern Copper Corporation’s

Articles of Incorporation and by-laws: (i) aiming at removing the provisions related to

Class A Common Shares among other changes.(ii) adding a new provision for advance

notice to shareholders seeking to nominate directors or to propose other business at

annual or special meetings of the Common Stockholders (as applicable) (iii) substitute

Grupo Mexico for ASARCO Incorporated in the “Change in Control” definition in the

Corporation’s by-laws (iv) and eliminate the 80% supermajority vote requirement for

certain corporate actions. The modification of the Modified Certificate of Incorporation

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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 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.

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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.

Information about plans and investment policies:

See Capital Expenditures and Exploration on page 12.

Relationship between the Issuer and the Government

On November 20, 1996, SPCC and the Peruvian Government (Ministry of Energy and

Mines) signed a contract that remained effective until the year 2010 and guaranteed

the tax stability and the availability of exchange to foreign currency of the Branch’s

earnings related to the operation of the SX/EW plant at Toquepala and the Solvent

Extraction (SX) operation in Cuajone. Also, on April 18, 1995, SPCC and the Peruvian

Government (CONITE) signed a contract that remained effective during ten years and

guaranteed the availability of foreign currencies, free remittance of dividends to the

exterior, among other guarantees related to the acid plant of the Ilo Smelter.

SCC obtains refunds for tax credits in Peru for the general sales tax (IGV) paid in

connection with the acquisition of capital goods and other goods and services used

in its operations, counting these credits as a paid expense in advance. By virtue of

these refunds, SCC is entitled to credit the amount of the IGV against its Peruvian tax

obligations or to receive a refund.

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Special Mining tax

In September 2011, the Peruvian government enacted a new tax for the mining

industry. This tax is based on operating income and its rate ranges from 2% to 8.4%.

It begins at 2% for the first 10% of operating income margin and for each additional

5% of operating income margin is increased by an additional rate of 0.4% until 85% of

operating income margin is reached.

Mining Royalty

In September 2011, the Peruvian Congress approved an amendment to the mining

royalty charge. The new mining royalty charge is based on operating income margins

with graduated rates ranging from 1% to 12%, with a minimum royalty charge assessed

at 1% of net sales. If the operating income margin is 10% or less, the royalty charge is

1% and for each 5% increment in the operating income margin, the royalty charge rate

increases by 0.75%, up to a maximum of 12%.

Social Investment for Taxes

SCC has signed agreements with the regional and local governments of Tacna,

Moquegua, and Arequipa, under the law of Social Investments for Taxes (Obras por

Impuestos). Once the investments are completed, the municipalities benefiting from

these investments must submit a certificate of public, local or regional investment.

SCC has the right to use these investment amounts as an advance payment of its

income tax liability, with a limit 50% of prior year income tax.

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Mining trucks,
Toquepala, Peru.

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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 2019, we maintained 12 units in Mexico and Peru whose Occupational Safety and

Health Management System have been certified according to OHSAS 18001: 2007.

Additionally, in Mexico we have 27 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.

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Refining, Ilo Peru. //

The accomplishments achieved in 2019 on occupational health and safety include:

The occupational accident rates at our mining operations in SCC is 31%

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 its

efforts in the field of accident prevention.

During 2019, accident rate (IR) increase in 10% compared with 2018. We improve

our strategies to prevent and identify risk conditions, with an aim to guarantee

physical integrity of our collaborators.

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Accident Rates (IR)
SCC, 2015-2019

2015

2016

2017

2018

2019

0.72

0.77

0.75

0.74

0.82

IR=

No.of disabling accidents

No.of total men - hours worked

x 200,000

Severity Rate (GR)
SCC, 2015-2019

2015

2016

2017

2018

2019

0.24

0.32

0.51

0.31

0.89

No.of days lost

GR=

No.of total men - hours worked

x 1,0

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.

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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.

Occupational Disease Rate (ODR)
SCC, 2015-2019

2015

2016

2017

2018

2019

0.14

0.41

0.34

0.18

0.42

No. of Cases of Occupational Diseases

ODR=

No. of Total Men-Hours Worked

x 200,000

We continue implementing several programs in education, prevention and control

risk, as well as disease treatment. We aim to ensure worker health care. These

programs are oriented to our collaborators and, in some cases, to their family

members, contractors, suppliers, institutions and public.

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ACTIVITIES TARGETING WORK PLACE PER SONNE L

AWARDS TO
EMPLOYEES OR
DEPARTMENTS
WITH ZERO
ACCIDENTS

HEALTH
CAREER

SECURITY
COURSES AND
CONFERENCES

LABOR

HEALTH
FAIR

EXPO
SAFETY

INTERNAL
SECURITY
FORUM

ACTIVITIES TARGETING EMPLOYEES’ FAMILIES AND C OMMUNI TY

GUIDED
TOURS
“KNOWING
MY COMPANY”

HEALTH
FAIR

HEALTH
CAREER

FAMILY

FAMILY
GATHERINGS
AND PARADES

FAMILY
CONTESTS
TO PROMOTE
VALUES

FIREFI GHTING
COURSES

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INVESTMENT IN SAFETY AND HEALTH

During 2019, we invested over $140 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

2019

2018

2017

2016

2015

Mexican Operations

9,358

9,002

8,450

8,762

8,316

Peruvian Operations

4,890

4,850

4,628

4,562

4,602

Ecuador Office

Argentina Office

Chile Office

USA Office

OHISA

Total Employees in SCC

Mexico

Peru

Ecuador

Argentina

Chile

USA

OHISA

Total

9,358

9,002

8,450

8,762

8,316

4,890

4,850

4,628

4,562

4,602

14,301

13,899

13,140

13,414

13,024

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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 the 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 13 “Commitments

and Contingencies” to our Consolidated Financial Statements on our 2019 Form 10-K.

Changes of those responsible for the preparation and revision of the financial

Information. At December 31, 2019, no changes have been done.

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Truck operator
at Cuajone mine,
Peru

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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.

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 (formerly, “Southern

Peru Copper Corporation” is now “SCC”).

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On August 30, 2006, the Executive Committee of the Board of Directors declared

a two-for-one split of the Company’s outstanding common stock. On October 2,

2006, common shareholders of record at the close of business on September

15, 2006, received one additional share of common stock for every share owned.

The Company’s common stock began trading at its post-split price on October 3,

2006. The split increased the number of shares outstanding to 294,460,850 from

147,230,425.

On June 19, 2008, the Executive Committee of the Board of Directors declared a

three-for-one split of the Company’s outstanding common stock. On July 10, 2008,

common shareholders of record at the close of business on June 30, 2008, received

two additional shares of common stock for every share owned. The split increased

the number of shares outstanding to 883,410,150 from 294,470,050.

All share and per share amounts were retroactively adjusted to reflect the stock

splits.

Between 2008 and 2016, the Company and AMC had bought shares periodically.

At December 31, 2019, there were of record 773,058,869 shares of common stock

of the Company, par value $0.01 per share, outstanding.

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CORPORATE NOTES

Between July 2005 and October 2015, the Company issued senior unsecured notes

eight times totaling $6.2 billion. 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, 2019, the Company was in

compliance with this covenant.

On September 26, 2019, Minera México S.A. de C.V., a subsidiary of SCC, issued

$1 billion Senior Notes at a fixed rate with a discount of $12.7 million, which will

be amortized over the corresponding debt period. This debt was issued in a single

tranche, maturing in 2050 at an annual interest rate of 4.5%. Interest on the notes

will be paid semi-annually at maturity. The Company aims to use the net proceeds

from the offer (i) to finance the expansion program of Minera Mexico, including the

Buenavista Zinc, Pilares and El Pilar projects, (ii) for other capital expenditures, and

(iii) for general corporate purposes.

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Cuajone mine, Peru //

The notes constitute general unsecured obligations of Minera Mexico. The notes

were issued in an unregistered offering pursuant to Rule 144A and Regulation S

under the Securities Act of 1933.

Please see Note 11 “Financing” for a discussion about the covenants requirements

related to our long-term debt, on our 2019 Form 10-K.

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Members of the Board of Directors

AT DECEMBER 31, 2019

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.

Mr. Larrea presides over every Board meeting and since 1999 has been contributing

to the Company his education, his leadership skills, industry knowledge, strategic

vision, informed judgment and over 20 years of business experience, especially in

the mining sector. As Chairman and Chief Executive Officer of Grupo Mexico, of

Grupo Ferroviario Mexicano, S.A. de C.V. and of EIM, a holding company engaged

in a variety of business, including mining, construction, railways, real estate, and

drilling, he brings to the Company a valuable mix of business experience in different

industries.

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Oscar Gonzalez Rocha, Director. Mr. Gonzalez Rocha has been our President since

December 1999 and our President and Chief Executive Officer since October 21,

2004. He has been a director of the Company since November 1999. Mr. Gonzalez

Rocha has been Chief Executive Officer and director of Asarco LLC (integrated US

copper producer), an affiliate of the Company, since August 2010 and President and

Chief Executive Officer of Americas Mining Corporation (“AMC”) a holding company

of Grupo Mexico, since 2015. Previously, he was the Company’s President and

General Director and Chief Operating Officer from December 1999 to October 20,

2004. Mr. Gonzalez Rocha has been a director of Grupo Mexico since 2002. He

was General Director of Mexicana de Cobre, S.A. de C.V. from 1986 to 1999 and

of Buenavista del Cobre, S.A. de C.V. (formerly Mexicana de Cananea, S.A. de C.V.)

from 1990 to 1999. He was an alternate director of Grupo Mexico from 1998 to April

2002. Mr. Gonzalez Rocha is a civil engineer with a degree from the Autonomous

National University of Mexico (“UNAM”) in Mexico City, Mexico.

Mr. Gonzalez Rocha is a civil engineer by profession and a businessman with over 40

years of experience in the mining industry. He has been associated with our Mexican

operations since 1976. His contributions to the Company include his professional

skills, his leadership, an open mind and a willingness to listen to different opinions.

Mr. Gonzalez Rocha has proven his ability to deal with crises to lessen negative

impacts to the Company. His devotion of time to the Company and his hands-

on management of the operations in Mexico and Peru contribute to his effective

leadership of the Company. Mr. Gonzalez Rocha has been recognized as Copper

Man of the Year 2015 and was inducted into the American Mining Hall of Fame in

December 2016 in Tucson, Arizona and into the Mexican Mining Hall of Fame in

October 2017 in Guadalajara, Mexico.

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Vicente Ariztegui Andreve, Independent Director. Mr. Ariztegui Andreve has been

a director of the Company since April 25, 2018. Mr. Ariztegui Andreve is Managing

Director and Chairman of Aonia Holding, a wholly owned private investment firm

he founded in 1989. Aonia has made investments in the following industries: gold

mining, global commodity trading, retailing (e.g. duty free shops), infrastructure

(e.g. airport terminal operation), asset management and real estate. During the last

seven years, Mr. Ariztegui has been actively selling and buying stakes in non-public

companies, including Pallium Trading (fish meal) and MK Metal Trading (copper, zinc,

lead, gold and silver concentrates). He also sold Aonia’s equity stake in Fumisa and

Aerodom, airport terminal operating companies in Mexico City and in the Dominican

Republic, respectively.

In 2013, Mr. Ariztegui Andreve made inroads in the financial asset management

business by acquiring a stake in InverCap, the fifth largest pension fund manager in

Mexico, which he sold in April 2017. Mr. Ariztegui Andreve worked as a Corporate

Banker and Vice President of international operations and trade finance for Citibank

in New York and Mexico City for eight years (1979-1987). Mr. Ariztegui Andreve

co-founded and was President and Chief Executive Officer of MK Metal Trading, a

global based metal and mineral (copper, zinc, lead, gold and silver concentrates)

trading company start-up for 18 years (1994-2012). MK Metal Trading was sold in

2012.

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Mr. Ariztegui Andreve currently sits on the boards of several non-public companies,

including InverCap Holding (financial assets management), Reim (real estate mid-

size residential development), Alvamex (international storage and logistics). He also

is a director of the University Club, in Mexico. Previously, he was director of Dufry

AG (leading global retail and airport duty free operator), Latin American Airport

Holdings (airport infrastructure and terminal operator), Satelites Mexicanos (SATMEX)

(telecommunications), Banco Mexicano, Grupo Financiero Inverlat (financial 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 and a Master in Systems Engineering degree from the University of

Pennsylvania.

Mr. Ariztegui Andreve brings to the Company his vast experience in the financial,

mining and commercial sectors. He also adds to the Board of Directors his leadership

experience and expertise attained through his participation as a director of other

companies.

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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 as 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 a degree in

Industrial Engineering from Anahuac University of Mexico City, Mexico. He also holds

a Master’s degree in Economics from the University of Chicago in Chicago, Illinois.

Mr. Casar Perez has been associated with Grupo Mexico or its affiliated companies in

different executive positions for more than 21 years. He contributes to the Company

his background in engineering and economics, his extensive business experience,

his high performance standards, leadership and mature confidence. As Chief

Executive Officer of Ferrocarril Mexicano, S.A. de C.V., Mr. Casar Perez contributes

to the Company a unique experience and ability to address challenging issues and

propose creative solutions.

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Enrique Castillo Sanchez Mejorada, Director. Mr. Castillo Sanchez Mejorada has

been a director of the Company since July 26, 2010 and is our fifth independent

director nominee. From May 2013, Mr. Castillo Sanchez Mejorada has been Senior

Partner of Ventura Capital Privado, S.A. de C.V. (Mexican financial company), and,

since October 2013, he has been Chairman of the Board of Directors of Maxcom

Telecomunicaciones, S.A.B. de C.V. (Mexican telecommunications company).

From April 2011 to May 2013, Mr. Castillo Sanchez Mejorada was a senior advisor

at Grupo Financiero Banorte, S.A.B. de C.V.(“GFNorte”) a financial holding institution

that controls a bank, a broker dealer and other financial institutions in Mexico. From

October 2000 to March 2011, Mr. Castillo Sanchez Mejorada was the Chairman of

the Board of Directors and Chief Executive Officer of Ixe Grupo Financiero, S.A.B. de

C.V., a Mexican financial holding company that merged into GFNorte on April 2011.

In addition, from March 2007 to March 2009, Mr. Castillo Sanchez Mejorada was

the President of the Mexican Banking Association (Asociacion de Bancos de Mexico).

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Currently, Mr. Castillo Sanchez Mejorada is Chairman of the Board of Banco Nacional

de Mexico, S.A. (Citbanamex), one of the largest banks in Mexico and Member

of the Board of Grupo Financiero Citibanamex where he serves as a member of

Practices Committee and Audit Committee. He serves as an independent director

on the Board of Directors of (i) 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-based holding company that, through its subsidiaries, is engaged

in the petrochemical, food processing, automotive and telecommunication sectors,

has been a member of the audit committee too (iii) Medica Sur, S.A.B. de C.V., a

Mexico-based company engaged in the hospital business, (iv) UNIFIN Financiera,

S.A.B de C.V. , an independent leasing company, (v) Laboratorios Sanfer S.A.B. de

C.V. is one of the leading companies in the Mexican pharmaceutical market. He is

also a Senior Advisor for General Atlantic in Mexico, a private equity firm based out

of New York. From April 2012 to April 2016, Mr. Castillo Sanchez Mejorada served as

a member of the Board of Directors of Organizacion Cultiba, S.A.B. de C.V. (formerly

Grupo Embotelladoras Unidas, S.A.B. de C.V.), a Mexico-based holding company

primarily engaged in the beverage industry. Mr. Castillo Sanchez Mejorada holds a

Bachelor’s degree in Business Administration from the Anahuac University, in Mexico

City, Mexico.

Mr. Castillo Sanchez Mejorada became a member of our Audit Committee on April

18, 2013. Mr. Castillo Sanchez Mejorada brings to the Company more than 40

years of experience in the financial sector. He also adds to the Board of Directors

his leadership experience and expertise attained through his participation as an

independent director of other companies.

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Xavier Garcia de Quevedo Topete, Director. Mr. Garcia de Quevedo has been a

director of the Company since November 1999. He was our Chief Operating Officer

from April 12, 2005 until April 23, 2015. Since November 1, 2014, Mr. Garcia de

Quevedo Topete has served as the President of the infrastructure division of Grupo

Mexico, composed of the energy, gas, oil and construction subsidiaries of Grupo

Mexico. He is also Vice-chairman 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, electronics 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.

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Mr. Garcia de Quevedo contributes to the Company his extensive business experience

and leadership, his industry knowledge, his skills to motivate high-performing talent,

and his general management skills. During his more than 40 years of experience as

an executive with Grupo Mexico and subsidiaries, he was responsible for developing

the integration strategy of Grupo Mexico. He was directly responsible for the

development of the copper smelter, refinery, precious metal and rod plants of Grupo

Mexico. Mr. Garcia de Quevedo also headed the process for the acquisition of railroad

concessions for Grupo Mexico, the formation of Grupo Ferroviario Mexicano, S.A. de

C.V. and its partnership with Union Pacific. Previously, he had a distinguished career

as Vice President of sales and marketing for Grupo Condumex, S.A. de C.V., where

among other achievements, he was responsible for the formation of a division for the

sale, marketing and distribution of products in the United States and Latin America

and where he headed the Telecommunications division. Mr. Garcia de Quevedo also

contributes to the Company his diversified business experience gained from having

served on the boards of different Mexican and United States companies and as

Chairman of the Mining Chamber of Mexico.

Rafael A. Mac Gregor Anciola, Independent Director. Mr. Mac Gregor has been a

director of the Company since July 2017. 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 and member of Citibanamex’s

Audit Committee since 2016. He is also an independent member of the board of

directors of Black Rock Mexico (asset management). In addition, he has been an

independent member of the Board of Directors of Corporacion Multi Inversiones

(CMI) (multi-national agro-industrial company) since 2016. From February 1999 to

July 2015, he served as a Corporate Director of Grupo Bal (Mexican companies

principally engaged in agricultural and livestock, commercial operations, industrial

operations, and financial services businesses).

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From April 1999 to 2015, he was a member of the Board of Directors of the Mexican

Stock Exchange. From 2001 to 2016, he served as a member of the Board of the

Instituto Tecnológico Autónomo de México (ITAM) and from April 2008 to 2016, he

served as a member of the Board of Fresnillo PLC (Mexican-based mining company).

From April 1995 to July 2015, he served as President of the Board of a Mexican

Brokerage House and Valmex Leasing Company (Mexican leasing company).

Additionally, from April 1995 to July 2015, Mr. Mac Gregor Anciola served on the

Boards of Grupo Nacional Provincial, S.A.B. (Mexican insurance company), Grupo

Palacio de Hierro, S.A.B. (Mexican department stores), Industrias Peñoles, S.A.B.

(Mexican mining company), Credito Afianzador, S.A. (Mexican financing company),

Minera Tizapa, S.A. de C.V. (Mexican mining company), Minera Penmont, S.A. de

C.V.(Mexican mining company), Profuturo G.N.P., S.A. de C.V., Afore, Profuturo GNP

Pensiones, S.A. de C.V. (Mexican insurance and pension holding company) and Vice

President of the MexDer (Mexican derivatives exchange). Mr. Mac Gregor Anciola

holds the recognition of the Professional Merit Award from ITAM. Mr. Mac Gregor

Anciola holds a degree in Business Administration from the Instituto Tecnológico

Autónomo de México in Mexico City and he attended the Stanford University Executive

program in Palo Alto, California.

Mr. Mac Gregor Anciola brings to the Company more than 30 years of experience in

the financial sector. He also adds to the Board of Directors his leadership experience

and expertise attained through his participation as a director of the Mexican Stock

Exchange and as an independent director of various other companies.

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Luis Miguel Palomino Bonilla, Special Independent Director. Dr. Palomino has

been a director of the Company since March 19, 2004. Dr. Palomino is a member

of the Board of Directors and Vice-chairman of the Central Bank of Peru (Banco

Central de Reserva del Peru) since September 2016, a director of the Master’s in

Finance Program at the University of the Pacific in Lima, Peru since July 2009, a

member of the Board of Directors of Laboratorios Portugal (personal care products

manufacturer) since September 2017, and a member of the Board of Directors of

Summa Capital, S. A. (corporate consulting firm) since April 2014. Dr. Palomino

was Chairman of the Board of Directors of Aventura Plaza, S.A. (commercial real

estate developer and operator) from January 2008 to June 2016, member of the

Board of Directors and Manager of the Peruvian Economic Institute (economic think

tank) from April 2009 to August 2016, Partner of Profit Consultoria e Inversiones (a

financial consulting firm) from July 2007 to July 2016, and a member of the Board

of Directors and Chairman of the Audit Committee of the Bolsa de Valores de Lima

(Lima Stock Exchange) from March 2013 to July 2016.

Dr. Palomino was Principal and Senior Consultant of Proconsulta International

(financial consulting) from September 2003 to June 2007. He was First Vice President

and Chief Economist, Latin America, for Merrill Lynch, Pierce, Fenner & Smith, New

York (investment banking) from 2000 to 2002. He was Chief Executive Officer, Senior

Country and Equity Analyst of Merrill Lynch, Peru (investment banking) from 1995 to

2000. Dr. Palomino has held various positions with banks and financial institutions

as an economist, financial advisor and analyst. He has a PhD in finance from the

Wharton School of the University of Pennsylvania in Philadelphia, Pennsylvania and

graduated from the Economics Program of the University of the Pacific in Lima, Peru.

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Dr. Palomino is a member of our Audit Committee and a special independent director

nominee. He is also our “audit committee 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, Special Independent Director. Mr. Perezalonso

has been a director of the Company since June 2002. Currently, Mr. Perezalonso is

a member of the Board of Directors of Gigante, S.A. de C.V. (retail and real estate)

and Blasky (hotel chain in Baja California, Mexico). He is also National Vice President

of the Cruz Roja Mexicana (Red Cross). 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. (retail and department stores), the most

recent position being that of General Director of Administration and Finance.

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He was also 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 Committee of Siefore Banamex

No. 1 (banking), Masnegocio Co. S. de R.L. de C.V. (information technology), Intellego

(technology), Telefonica Moviles Mexico, S.A. de C.V. (wireless communication),

Marhnos Construction Company (housing construction), and Fomento de Investigacion

y Cultura Superior, A.C. (Foundation of the Iberoamerican University in Mexico). Mr.

Perezalonso was also a director of Cablevision, S.A. de C.V., and a member of the

audit committee of Grupo Televisa, S.A.B. from March 1998 to September 2009.

Mr. Perezalonso has a law degree from the Iberoamerican University in Mexico

City, Mexico and a Master’s degree in Business Administration from the Business

Administration Graduate School for Central America (INCAE) in Nicaragua. Mr.

Perezalonso has also attended a Corporate Finance program at Harvard University in

Cambridge, Massachusetts.

Mr. Perezalonso is a member of our Audit Committee and a special independent

director nominee. Mr. Perezalonso contributes to the Company his legal and financial

education acquired from extensive academic studies, including a Master’s degree

in Business Administration from INCAE in Nicaragua, and his business experience

acquired serving in the financial areas of several companies and as Chief Executive

Officer of different companies. Mr. Perezalonso also brings to the Board of Directors

his informed judgment and his diversified business experience gained from serving

on the Board of Directors of different Mexican companies.

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Carlos Ruiz Sacristan, Special Independent Director. Mr. Ruiz Sacristan has been

a director of the Company since February 12, 2004. 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

and Transportation of Mexico from 1995 to 2000. While holding that position, he

was also Chairman of the Board of Directors of the Mexican-owned companies in

the sector, and member of the Board of Directors of development banks. He was also

the Chairman of the Board of Directors of Asarco LLC. Mr. Ruiz Sacristan is Chairman

of the board of directors and Chief Executive Officer of Sempra’s Energy North

America Infrastructure Group since September 2018. Prior to this appointment,

Mr. Ruiz Sacristan was Chairman and Chief Executive Officer of IEnova, the Mexican

operating subsidiary of Sempra Energy from 2012 to 2018 and a member of the

Board of Directors of Sempra Energy from 2007 to 2012. Mr. Ruiz Sacristan remains

as Chairman of IEnova.

He is a member of the Board of Directors of Constructora y Perforadora Latina, S.A.

de C.V. (Mexican geothermal exploration and drilling company) and of Banco Ve Por

Mas, S.A. (Mexican bank). Mr. 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 Chicago, Illinois.

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Mr. Ruiz Sacristan is one of our special independent director nominees. Mr. Ruiz

Sacristan contributes to the Company his extensive business studies, including a

Master’s Degree in Business Administration from Northwestern University in Chicago,

Illinois, his investment banking experience and his broad business experience

as a former Chief Executive Officer of PEMEX (Mexican oil company), combined

with his distinguished career in the Mexican government as a former Secretary

of Communications and Transport of Mexico and as a director of Mexican-owned

enterprises and financial institutions.

Mr. Ruiz Sacristan also brings to the Board of Directors his informed judgment and

his diversified business experience gained from serving on the Board of Directors

and of the audit, and environmental and technology committees of Sempra Energy, a

Fortune 500 energy service company, based in San Diego, California, as the former

Chairman of Asarco LLC, and as the Chief Executive Officer of IEnova.

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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

Raul Vaca Castro

General Auditor

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Controlled Companies- Affinity and Inbreeding

A company with more than 50% of the voting power held by a one single entity is

a “controlled company”, and do not need to comply with the Corporate Governance

requirements of the New York Stock Exchange (“NYSE”) which requires 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 88.9% of the stock of the Company, as of December 31, 2019. 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 February 20, 2020, 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 continue to be 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.

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Special Committees of the Board

SCC’s Board of Directors has organized the following Special Committees:

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.

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 the

Securities and Exchange Commission (SEC) rules.

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.

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.

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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 of SCC, 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.

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 for employees that are

US citizens or residents The Named Fiduciary controls and manages 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, with delegated authority, to

administer and manage said plans and to oversee the performance of the

trust agents and other fiduciaries charged with investing the plans’ funds.

Administration and Board Income

Total remunerations of Board and Administration members, in relation to the

Company´s gross income is 0.18%.

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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, July 24, 2020 at 9:00

A.M., Mexico City time. In the event that the annual meeting does not take place on

such date, it will be held on September 24, 2020 at 9:00 am at the same address.

C O R P O R A T E O F F I C E S

United States

Mexico

Peru

1440 E. Missouri Avenue,
Suite 160,
Phoenix, AZ 85014
U.S.A.
Phone: +(602) 264-1375

Ediﬁcio Parque Reforma
Campos Eliseos No. 400
Col. Lomas de Chapultepec
Mexico, D.F.
Phone: +(52-55) 1103-5000

Av. Caminos del Inca No. 171
Chacarilla del Estanque
Santiago de Surco
C.P. 15038 Peru
Phone: +(511) 512-0440
Ext. 3181

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 Computershare. For more information, contact Computershare at phone +1(866)

230-0172.

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Stock Exchange Listing

The principal markets for SCC’s Common Stock are the New York Stock Exchange

(“NYSE”) and the Lima Stock Exchange (“BVL”). 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 to the SCC Common and

Investment shareholders are provided by Banco de Credito of Peru at Avenida

Centenario 156, La Molina, Lima 12, Peru.

Phone.: +(511) 313-2478, Fax +(511) 313-2556.

Other Corporate Information

For other information on the corporation or to obtain additional copies of the annual

report, Form 10-K 2019 (free of charge) contact to Investor Relations Department at

our corporate offices:

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Members of the Board of Directors

Southern Copper Corporation

German Larrea Mota-Velasco

Oscar Gonzalez Rocha

Vicente Ariztegui Andrave

Alfredo Casar Perez

Enrique Castillo Sanchez Mejorada

USA:

1440 East Missouri Avenue, Suite 160,

Phoenix, Az. 85014, USA

Phone: +(602)264-1375

Xavier Garcia de Quevedo Topete

Mexico:

Rafael Mac Gregor Anciola

Luis Miguel Palomino Bonilla

Campos Elíseos No. 400, Piso 11

Gilberto Perezalonso Cifuentes

Col. Lomas de Chapultepec

Carlos Ruiz Sacristan

México D.F.

Phone: +(52-55) 1103-5000, Extension 5855

Audit Committee

Luis Miguel Palomino Bonilla, Chairman

Peru:

Gilberto Perezalonso Cifuentes

Av. Caminos del Inca 171 (B-2),

Enrique Castillo Sanchez Mejorada

Chacarilla del Estanque, Santiago de Surco

Código postal 15038 - Perú.

Phone: + (511) 512-0440, Extension 3181

Web Page

southerncoppercorp.com

Email address

southerncopper@southernperu.com.pe

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SCC_IA2019_forros español.pdf 2 23/06/2020 04:10:16 p.m.

SCC_IA2019_forros español.pdf 1 23/06/2020 04:10:11 p.m.

SOMOS
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84 AÑO S TRABAJA NDO DE MA NER A CO NTINUA
INF ORME ANUAL 201 9

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