A N N U A L R E P O R T 2 0 2 0
Employment, investment and sustainability
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 2020. SCC takes responsibility for its contents according
to applicable requirements”.
Andres Ferrero Ghislieri
Raul Jacob Ruisanchez
General Counsel
Vice-President Finance and Chief
Financial Officer
CONVERSION INFORMATION: All tonnages in this annual report are metric tons
unless otherwise noted. To convert to short tons, multiply by 1.102. All distances are
in kilometers, to convert to miles, multiply by 0.62137. All ounces are troy ounces.
U.S. dollar amounts represent either historical dollar amounts, where appropriate,
or U.S. dollar equivalents translated in accordance with generally accepted
accounting principles in the United States. “SCCO”, “SCC”, “Southern Copper”
or the “Company” includes Southern Copper Corporation and its consolidated
subsidiaries.
IA GMX 2020 – SOUTHERN COPPER
INDEX
Letter to shareholders
Production statistics
Copper reserves
Selected and financial data
Capital investment program and exploration
Expansion & modernization
Environmental and social matters
Results of operations
For the years ended december 31, 2020, 2019 and 2018
Environmental affairs
General information
Description of operations and development regarding the issuing entity
Members of the board of directors
5
10
12
13
15
21
42
46
52
94
Shovel loading dump truck at Cuajone mine, Peru.
04 > 05
IA GMX 2020 – SOUTHERN COPPER
LETTER TO
SHAREHOLDERS
In 2020, copper production topped 1 million tons, a new milestone in the Company’s
history. Growth in copper production was principally attributable to an increase in
production at our Cuajone (+7.8%), La Caridad (+1.8%) and the IMMSA mines
(+24.6%).
In 2020, net sales increased 9.6% with regard to those registered in 2019
principally due to the contribution of additional sales volumes of copper (+6.1%),
silver (+8.8%), molybdenum (+12.7%) and zinc (+1.0%).
Southern Copper Corporation is positioned as the one of lowest- cost copper
producers in the mining industry. Additionally, the Company has continued to reap
the benefits of its expansion and cost reduction programs. In 2020, the operating
cash cost per pound of copper, including by-product revenue credits, was $0.69
per pound. This represented an improvement of 21.7% over the $0.88 reported in
2019, which was primarily due to a decrease in the production cost.
Capital investments in 2020 were $592.2 million, which represented 37.7% of net
income. Our low production cost will strengthen our operating position to provide
operating strength and liquidity and fuel on-going growth in Mexico and Peru, with
an eye on producing 1.5 million tons of copper by 2028.
Cash flow from operating activities in 2020 was $2,782.8 million, which represented
an increase of 45.6% over the $1,911.9 million posted in 2019. This improvement
was attributable to strong cash generation at our operations, which was driven by
an increase in copper and precious metals prices, higher sales volumes and cost
control efficiencies.
In the context of the COVID-19 pandemic, Southern Copper has implemented a
timely, well-designed protocols and strict hygiene and safety measures are in place
at all of our operations. This, coupled with the isolated nature of our physical mining
operations and low-density workforce, have helped us weather the pandemic. In
this context, our units registered high economic contributions that led us to close
the year with production records for copper, molybdenum and silver.
In 2020, Southern Copper faced the challenges of the pandemic with resilience,
innovation and solidarity. The new normal that the virus has imposed on the world
requires governments, companies and society to assume joint responsibility to
protect citizens as we resume growth; generate value; and fuel economic recovery.
When Covid-19 reared its head in early 2020, Southern Copper moved quickly
to preserve the health of its workers, their families, and the communities in the
countries where we operate. The company is committed to guaranteeing safe work
environments and has developed lines of action to prevent transmission; strengthen
community outreach; and bolster capacities for medical response.
Our top priority is to roll out solidarity-based efforts with the communities in our
areas of influence to work together to stem the pandemic and its impacts. In this
regard, the Company has mounted intense communication campaigns to educate
the population about the prevention and hygiene measures recommended by
health authorities and to provide psychological support for families through on-line
counseling and workshops.
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IA GMX 2020 – SOUTHERN COPPER
Dome at Toquepala Concentrator, Peru.
The year 2021 began with news of better things to come: several COVID-19
vaccines have been approved and are being rolled out around the globe. We
trust that this marks the beginning of the end of the COVID-19 sanitary crisis.
We believe this will open the door to significant economic recovery and drive an
uptick in 2021 copper consumption. Accordingly, we believe the copper market
will evolve positively, sustained by growth in consumption in China and in other
economies.
Our current portfolio for approved projects in Peru totals $2.8 billion, $1.6 billion
of which has already been invested. If we include the up-and-coming Michiquillay
($2.5 billion) and Los Chancas ($2.6 billion) projects, our total investment program
in Peru reflects a commitment of $7.9 billion.
Panoramic view at Cananea mine pit, Sonora, Mexico.
IA GMX 2020 – SOUTHERN COPPER
In Mexico, our portfolio consists of: Buenavista Zinc in Sonora, this project 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 all the necessary permits and
the capital budget is $413 million. This new facility will double the Company’s zinc
production capacity and provide 490 direct jobs and 1,470 indirect jobs.
The second project is Pilares, also in Sonora. This project consists of an open-pit mine
operation with an annual production capacity of 35,000 tons of copper in concentrate.
The budget for Pilares is $159 million. El Pilar will operate as a conventional open-
pit mine with an annual production capacity of 35,000 tons of copper cathodes. The
budget for El Pilar is $310 million and we expect the project to start production in
2023.
On behalf of the Board of Directors of Southern Copper Corporation, we would like to
express our gratitude to all the staff for its 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
OSCAR GONZALEZ ROCHA
Chairman of the Board
President and Chief Executive Officer
PRODUCTION STATISTICS
Southern Copper Corporation and Subsidiaries
Five-year Production Statistics
2020
2019
2018
2017
2016
656,237
851,323
150,045
1,001,368
30,248
68,930
21,540
633,801
102,440
13,888
168,715
229,116
5,511
130,047
168,663
4,225
26,010
1,210,625
4,163
345,955
286,271
93,373
109,671
10,535
790,365
841,452
152,470
993,822
26,885
73,922
20,273
595,173
104,977
12,588
249,083
231,673
4,484
153,911
156,393
3,285
26,329
1,075,513
–
317,519
256,647
94,578
107,161
10,206
814,228
741,488
142,201
883,689
21,985
70,778
17,308
633,630
107,536
13,583
241,514
143,720
4,159
175,177
160,579
3,099
26,526
1,187,710
2,630
344,758
292,654
96,541
106,087
9,809
743,163
711,720
165,259
876,979
21,328
68,665
15,926
617,853
104,402
13,688
203,778
122,949
4,184
149,265
158,105
3,746
25,093
1,153,486
1,793
345,847
291,373
98,534
106,271
9,934
742,935
715,360
184,595
899,955
21,736
73,984
16,172
591,339
106,093
15,196
209,064
116,525
6,324
175,009
171,448
3,926
24,800
1,070,588
929
322,567
270,183
98,435
104,949
9,911
(thousand)
(tons)
Mine production
Mined Material
Copper in concentrates
Copper SX/EW
Total Copper
Molybdenum in concentrates
Zinc in concentrates
Silver in concentrates
(thousand ounces)
Smelter/refineries production
Copper
Zinc
Silver
(thousand ounces)
Toquepala
Mined Material
Copper in concentrates
Molybdenum in concentrates
(thousand)
Cuajone
Mined Material
Copper in concentrates
Molybdenum in concentrates
(thousand)
Smelter/refineries in Peru
SX/EW
Smelt concentrates
Blister produced
Anode produced
Cathode produced
Mexicana de Cobre – Caridad
Mined Material
Copper in concentrates
Molybdenum in concentrates
(thousand)
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IA GMX 2020 – SOUTHERN COPPER
2020
2019
2018
2017
2016
259,860
140,888
288,882
141,521
297,718
139,157
124,036
1,029,486
283,683
240,407
129,439
68,930
20,358
10,302
7,983
8,734
259,860
126,041
1,011,374
277,654
231,609
142,728
73,922
22,567
8,265
6,943
7,647
288,882
115,675
1,041,663
286,242
239,185
147,147
70,778
22,081
6,221
5,649
6,423
297,718
288,716
135,690
140,166
997,657
270,213
228,062
133,100
68,665
20,246
5,486
4,760
5,428
288,716
257,395
140,661
159,715
1,004,829
267,843
224,158
144,516
73,984
24,385
6,428
5,622
6,420
257,395
Buenavista
Mined material
Copper in concentrates
(thousand)
Smelter/Refineries in Mexico
SX/EW
Smelt concentrates
Anode produced
Cathode produced
Rod produced
Underground Mines
Contents in concentrates
Zinc
Lead
Copper in concentrates
Silver
Gold
(tons)
(thousand ounces)
(ounces)
COPPER
RESERVES
We believe we hold the world’s largest position of copper reserves. As of
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 2020, the
average LME and COMEX per pound copper prices were $2.80). Our internal ore
reserve estimation value is as follows:
Copper contained in ore
reserves
Mexican open-pit
Peruvian operations
IMMSA
Development projects
Total
Thousand
tons
29,948
22,061
257
14,628
66,894
For more information about ore reserves refer to “Internal Ore Reserves
Estimates”, on page 59 of our 2019 Form 10-K.
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IA GMX 2020 – SOUTHERN COPPER
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
Net sales
Operating costs and expenses
Operating income
Net income attributable to
Non-controlling interest
Net earnings attributable to SCC
Per share amount:
Earnings basic and diluted
Dividends paid
Consolidated Balance Sheet
Cash and cash equivalents
Total assets
Total debt
Total equity
Consolidated Statement of
Cash Flows
Cash provided by operating
activities
Dividends paid
Capital investments
Depreciation, amortization and
depletion
Capital Stock
Common shares outstanding –
basic and diluted (in thousands)
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)
2020
2019
2018
2017
2016
$ 7,984.9
4,864.2
3,120.7
$ 7,285.6
4,532.6
2,753.0
$ 7,096.7
4,215.5
2,881.2
$ 6,654.5
4,035.6
2,618.9
$ 5,379.8
3,815.6
1,564.2
7.4
6.1
5.2
3.9
2.3
$ 1,570.4
$ 1,485.8
$ 1,543.0
$ 728.5
$ 776.5
$ 2.03
$ 1.50
$ 1.92
$ 1.60
$ 2,183.6
16,946.5
6,544.2
$ 7,276.0
$ 1,925.1
16,407.4
6,541.0
$ 6,858.2
$ 2.00
$ 1.40
$ 844.6
14,267.8
5,960.1
6,612.9
$ 0.94
$ 0.59
$ 1.00
$ 0.18
$ 1,004.8
13,780.1
5,957.1
$ 6,149.4
$ 546.0
13,234.3
5,954.2
$ 5,870.9
$ 2,783.6
$ 1,911.9
$ 2,235.1
$ 1,976.6
1,159.6
592.2
$ 775.6
1,236.9
707.5
$ 764.4
1,082.3
1,121.4
$ 674.3
456.1
1,023.5
$ 671.1
773,065
773,059
773,044
773,028
$ 65.82
$ 23.53
9.35
32.06
3.50
35.2%
13,777
$ 43.19
$ 23.21
8.82
22.10
2.83
41.8%
14,301
$ 57.34
$ 29.78
8.50
15.42
2.61
42.6%
13,899
$ 47.63
$ 32.38
7.90
50.35
2.71
44.4%
13,140
$ 923.1
139.3
1,118.5
$ 647.1
773.016
$ 34.98
$ 22.29
7.54
31.82
2.57
47.7%
13,414
(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.
$ 592.2 million
in capital investments during 2020.
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IA GMX 2020 – SOUTHERN COPPER
CAPITAL
EXPENDITURES AND
EXPLORATION PROGRAMS
Expansion and modernization
In 2020, we made capital investments of $592.2 million. In 2021, we plan to
invest $1,431.3 million in capital projects, which doubles the investment made
in the previous year and will be accompanied by on-going capital maintenance
and replacement spending. We are rolling out a growth program to develop the
Company’s full production potential. We are currently developing a new brownfield
plan to increase our copper production volume to 1.5 million tons in 2028 by
developing new projects.
In general, the capital investments and projects described below are intended
to increase production, decrease costs or address social and environmental
commitments.
Our principal capital programs include the following:
Open pit at Cuajone mine, Moquegua, Peru.
PROYECTOS EN MEXICO:
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 purchase orders have already been placed for
the main equipment.
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 (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. The
connection road between Pilares mine and La Caridad mine is now under construction.
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
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IA GMX 2020 – SOUTHERN COPPER
IA GMX 2020 – DIVISIÓN MINERA
Buenavista Zinc project, Sonora, Mexico.
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 in 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
to restart operations during the second quarter of 2019. Currently, the mine has 200,000 tons of ore
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 for the restoration program is $97.7 million.
As of December 31, 2019 the program reported a total expense of $73.6 million.
In the Quebrada Honda Dam Expansion project
we have invested $ 32 million
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IA GMX 2020 – SOUTHERN COPPER
Peruvian Projects
PROYECTOS EN PERU:
Quebrada Honda dam expansion – Tacna:
This project aims to enlarge the main and lateral dams in Quebrada Honda and
includes the relocation of some facilities due to dam growth and implementation
of other facilities for water recovery, among other factors. As of December 31,
2020, the engineering study is complete and we have initiated the procurement
process for the necessary materials and equipment. This project has a total budget
of $140.0 million, of which we had invested $32 million as of December 31, 2020.
The Project is 41% complete and moving along according to the plan.
Tia Maria - Arequipa:
On July 8, 2019, we were granted a construction permit for this 120,000-ton a
year SX-EW copper greenfield project with a total capital budget of $1,400 million.
The Government awarded the permit after completing an exhaustive review
process, complying with all established regulatory requirements and addressing
all observations raised. The challenges surrounding the construction permit were
overcome when on October 30, 2019, the Mining Council of the Peruvian Ministry
of Energy and Mines ratified the construction permit for the Tia Maria project.
The Company has been consistently working to promote the welfare of the Islay
province population. As part of these efforts, we have implemented successful
social programs in education, healthcare and productive development to improve
the quality of life in the region. We also have promoted agricultural and livestock
activities in the Tambo Valley and supported growth in manufacturing, fishing and
tourism in Islay.
We believe that the initiation of construction activities at Tia Maria will generate
significant economic opportunities for the Islay province and the Arequipa region.
During the construction and operation phase, we will make it a
priority to hire local labor to fill the 9,000 jobs (3,600 direct and
5,400 indirect) that we expect to generate during Tia Maria’s
construction phase. When operating, we expect Tia Maria to
directly employ 600 workers and indirectly provide jobs for
another 4,200. Additionally, from day one of our operations, we
will generate significant contributions to revenues in the Arequipa
region via royalties and taxes.
This greenfield project, located in Arequipa, Peru, will use state-
of-the-art SX-EW technology with the highest international
environmental standards. SX-EW
facilities are
the most
environmentally friendly in the industry given that they release no
emissions into the atmosphere.
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ENVIRONMENTAL
AND SOCIAL
MATTERS
Southern Copper Corporation (SCC) is a state-of- the-art, integrated mining
company whose innovative style leverages the power of efficient processes and
new technologies to improve of day-to-day operations to bolster results and
ensure business sustainability. We constantly strive to ensure that the Company’s
performance in the social, economic and environmental ambits is aligned with the
expectations of our stakeholders.
Our business focuses on sustainable development, which guides our actions,
investments and the distribution of economic value. Every day, we work to
consolidate the confidence of our stakeholders by engaging them in management;
communicating our results; and listening to their expectations.
Panoramic view at Tia Maria project, Arequipa, Peru.
Our environmental commitment
We maintain an ongoing commitment to pursuing the goals of our
expansion and modernization programs in ways that are in harmony
with our environment. We seek to comply with all regulatory
requirements and observe best environmental practices to achieve
optimum environmental performance by identifying, evaluating and
mitigating the impacts that our activities have on the environment.
SCC’S ENVIRONMENTAL POLICY HAS THE FOLLOWING GOALS:
•
•
Responsible use of water and natural resources
Efficient use of energy and reduction of green-house-gas
emissions
•
Reduction, control and mitigation of air emissions
to
atmosphere
Reduction in waste generation and its integrated management
Reforestation and biodiversity conservation
Mine closure
•
•
•
These lines of action are conducted in compliance with the
requirements of international and local certifications that govern
our operating units in the countries where we work. Five of our
units were awarded ISO 14001: 2005, we obtained through the
efforts of all our employees and a comprehensive effort to apply
best environmental practices.
In 2020, $144 million was allocated for environmental management
to cover investments and environmental expenditures in the
following areas: air, climate change, soil, waste, biodiversity, water
and administrative management.
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IA GMX 2020 – SOUTHERN COPPER
New truck Komatsu, Cuajone mine, Moquegua, Peru.
Energy and climate change
At SCC, we believe that the fight against climate change is a responsibility
that everyone, including the private the sector and the industries in which we
participate, shares. We are aware of climate change’s effects on our operations
and in anticipation of an increase in the probability of the occurrence of extreme
weather events, 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.
Accordingly, we are diversifying our clean, renewable energy supplies. Our operations
in Mexico have decreased their indirect greenhouse gas emissions by consuming
clean energy supplied by SCC subsidiaries that generate electric power through
high-efficiency combined cycle plant and a wind farm.
Alongside our environmental policy, we continue to take action to maximize electricity
generation by using our own energy sources. In Peru, we generate energy, 62%
from renewable sources, including hydroelectric plants principally.
We replaced traditional sources of energy with more efficient and renewable sources
and in 2020, offset more than 600 thousand tons of CO2 equivalent by removing
129,257 passenger vehicles from circulation for a year.
In addition to generating and consuming energy from renewable sources and cleaner
fuels, we also follow best practices to obtain greater energy efficiency; redesign,
convert and adapt equipment; and adequately train operating staff.
It is important to highlight that in terms of climate change, SCC has been working
with Grupo Mexico and non-governmental organizations to contribute to the fight
against climate change. These efforts are outlined in Grupo Mexico’s fourth Carbon
Disclosure Project, which was published in 2016 and contains information on SCC’s
greenhouse gas inventory
Smelter worker at La Caridad, Sonora, Mexico.
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IA GMX 2020 – SOUTHERN COPPER
Panoramic view at La Caridad mine, Sonora, Mexico.
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 creating an institutional framework to address climate change
in Peru and outlines new measures, particularly with respect to climate change
mitigation. It includes, for example, provisions regarding: 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.
This constituted 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, which was published on December
31, 2019 and are applicable to all Peruvian institutions.
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IA GMX 2020 – SOUTHERN COPPER
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 private sector entities. The Company is committed to the environment and
to managing climate-related impacts. The Company’s focus is on achieving on-
going improvements in the responsible use of natural resources as it complies
with strict applicable legal standards for prevention, mitigation, control and
remediation of environmental impacts.
With these actions, and others, SCC confirms its commitment to reducing its
carbon footprint and strengthening its position as a sustainable global company,
thereby improving its competitiveness and contributing to the shift toward
environmentally friendly economic development.
Biodiversity
Our company is the largest producer of trees in the mining industry in Mexico. At our
operating units, we have six forest nurseries and greenhouses that produce native
species to reforest and rehabilitate ecosystems, including those areas not adjacent to
our operations. These forest nurseries contribute to biological biodiversity; enrich flora
and fauna; and act as natural carbon sinks by trapping CO2 from the atmosphere.
As part of our conservation efforts, we have an 89-hectare Environmental Management
Unit (EMU) that focuses on replicating the wildlife environment of threatened and
endangered species, including the Mexican Gray Wolf and Turkey Gould and other
species.
The SCC UMA is one of the Mexican institutions that has the best installations and
strategic locations to breed and release Mexican Gray Wolves. In 2013, we became part
of the Binational Mexican Gray Wolf Recovery Program Mexico-USA. Since the onset of
the program, 400+ wolves have been born and more than 50 have been released into
the wild. Of this last number, 23 specimens were born at the facilities of SCC UMA.
In Peru, we continue to execute significant environmental expenditures for the Ite
Bay remediation program in Tacna. The contaminant removal program, conducted
over a 1,600-kilometer area, has been successful. Ite Bay, which is the largest and
most diverse coastal waterfowl wetland in the country, is also a tourist attraction and
contributes to economic development in the area.
Worker at IMMSA Tree Nursery, San Luis Potosi, Mexico.
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IA GMX 2020 – SOUTHERN COPPER
More than 70% of the total water
consumption of our mining operations was reclaimed water.
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IA GMX 2020 – SOUTHERN COPPER
Water management
Water is the most important input in our mining operations. SCC develops projects to
ensure water sustainability; efficiently use resources; and reuse water discharged
by third parties.
The efficient use of water and savings programs entails employing pumping
systems to continuously recover water from tailings and thickener processes;
implementing and maintaining closed circuits to use the total volume of process
water; and implementing a Zero Wastewater Discharge Program to boost the
efficient management of water resources.
Water from reuse programs feeds a large portion of total water consumption.
In 2020, a whopping 70% of total water consumption at the mining operations
entailed the use of reclaimed water.
In 2020, we invested in infrastructure and equipment to increase water recovery in
our processes. Additionally, we installed high efficiency thickeners to recover more
water.
At some of our units, SCC uses municipal wastewater, which is pre-treated (similar
to the process at San Luis Potosi and Cananea (Mexico), to generate fresh water
supplies for local populations.
Water recovery pond at Buenavista mine, Sonora, Mexico.
Our communities
COMMUNITY DEVELOPMENT MODEL
SCC seeks to improve the quality of life in the communities around its operations
by engaging in responsible management. SCC has developed a model where
people are agents of their own development.
Our Community Development Model approaches developing relationships with
communities through three specific components:
GOOD NEIGHBORS
EC ONOMIC DE VELOPMENT
HUMAN DE VELOPMENT
Community Development Model
Ensuring that the operations coexist in a positive and healthy manner in the places where we
operate.
Sharing the wealth generated by the operations with the community by creating or
regenerating the social fabric and strengthening the same to consequently increase
economic value.
Strengthen the capacities the members of the communities in which we operate; these
individuals are the main drivers of development at the personal, family and environmental
levels.
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Good neighbors
To generate positive relations with neighboring communities, we
maintain constant communication.
Economic development
Through training and skill-building programs, as well as investments
in infrastructure, we contribute to strengthening the productive and
economic capacities of communities.
Human development
To generate
trust
relationships and co-responsibility with
communities, our Casa Grande model rolls out programs at
community centers; these efforts focus on education, health,
culture and the environment.
This model is known as “Casa Grande”, and it has been implemented
through the following tools:
•
32 Community Development Centers. (17 in Mexico and,
15 in Peru) These are Open Houses for communities that offer
courses and workshops to promote development through
programs and projects that focus on education, health, culture
and environmental protection.
•
Participatory Diagnostics. The community and SCC work
together on Human Development
initiatives. Through a
community diagnostic, we identify needs and expectations that
are subsequently satisfied through the Casa Grande model.
•
Community Committees. Led by volunteers from the community and
Company employees, who collaborate to assess proposals for sustainable
projects.
•
Seed Capital. We call on communities to present their own initiatives. SCC’s
primary axes are education and the environment, which are complemented
by initiatives relative to health, safety and productivity.
Due to the SARS-CoV-2 coronavirus pandemic, in 2020, the Community
Development programs in Mexico and Peru migrated to an on-line platform and
provided 4,634 online workshops, which reached more than 9.4 million users.
Additionally, reproductions in our social networks increased 63%. We consolidated
a virtual community of more than 294 thousand followers on 19 Facebook pages.
Children and young people are our priority and we strive to ensure a better future
for new generations. Community projects are assessed by committees that are
comprised of both SCC employees and local personalities and the focus is on
promoting dialogue and citizen participation.
•
Productive Projects: Projects that transform community lives by generating
productive skills.
Casa Grande workers at Santa Barbara mine, Chihuahua, Mexico.
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Our team of experts uses this model to materialize the Company’s initiatives with
the participation of SCC volunteers and the community. Community centers are
used to hold these meetings to generate shared value.
SCC’s social team and volunteers from neighboring communities, an important
number of projects were developed in 2020. We conducted 9,808 activities
through more than 432 projects with 3,004 community and corporate volunteers.
Through our Seed Capital and productive projects, we helped create development
generators and promoted the participation of proactive leaders who work to
enhance the well-being of their communities.
Education and Entrepreneurship
Another way of contributing to people’s development is by providing training
and education opportunities to children and young people in neighboring
communities at the elementary, secondary, vocational or university levels.
At our mining operations in Mexico and Peru, we contribute to community
education through 11 schools that are sponsored by the Company and which
offer scholarships to employees and their families for different levels of study.
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, TICs are incorporated in the
teaching and learning process to benefit 33,560 students and teachers in
Mariscal Nieto, Ilo, and Sanchez Cerro in the Moquegua Region. To date, SCC
has invested more than $33 million in TIC projects to benefit students and
teachers in Peru.
We also continued efforts to promote and implement the job training selection
program Forjando Futuro (“Forging the Future”). This program was created to
generate the professional and vocational skills that residents in the areas of
influence of our operations in the south of Peru require.
Little students at the Elementary School Toquepala, Tacna, Peru.
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More than $40.2 million
in social development
programs in 2020.
Infrastructure and Services
In Peru, our mining operations are located in a remote rural area
in the south of the country. In close cooperation with authorities
and representative organizations from the region, we contribute
to program development. Our commitment to the community is
manifest the following areas of action: education and capacity
building, health, nutrition, infrastructure and support for the
agricultural sector.
SCC contributes to expanding the infrastructure for water
supply infrastructure and irrigation in the provinces in which
we operate. In 2020, we invested more than $2.1 million
in projects to optimize the availability and use of water in
agricultural activities in Mexico and Peru.
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These projects include: developing the “Cularjahuira Dam”, with
a capacity of 2.5 million cubic meters in the Camilaca district;
engaging in engineering studies for water canals in the districts of
Huanuara and Curibaya; and a study of the “Callazas Dam,” with
an anticipated capacity of 11 million cubic meters. All of these
projects are located in the Candarave province, Tacna region. In the
Jorge Basadre province, efforts on engineering studies for the drip
irrigation Project in the Cinto valley are on-going. Additionally, in
the Torata district, Moquegua region, 10 test plots for mechanized
irrigation (micro sprinkling and drip) have been installed to
encourage farmers to use highly efficient irrigation systems.
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Social investment
In 2020, SCC invested more than $ 40.2 million in social development programs
related to education, health, productive projects, infrastructure and services.
Investment in Community Development Programs
Community development programs, social linking and productive projects
Operating expenses in schools and camps
Infrastructure and equipment in neighboring communities
SCC townsite infrastructure
Total
US$ (in millions)
10.50
18.5
10.1
1.1
40.2
At Southern Copper Corporation, our business model is focused on continuously
improving the quality of life of the communities living in our operating areas.
We accomplish this by encouraging meaningful development and strengthening
collective participation to serve the common good and where individuals act as
the main agents of development.
Little visitors in the IMMSA Forest Nursery, San Luis Potosi, Mexico.
RESULTS
OF OPERATIONS
Years ended December 31, 2020, 2019 and 2018.
Our net income attributable to SCC in 2020 was $1,570.4 million, compared
to $1,485.8 million in 2019 and $1,543.0 million in 2018. SCC’s net income
increased $84.6 million in 2020, driven by growth in net sales.
In 2019, net income attributable to SCC decreased, which was primarily due to
increases in the cost of sales and depreciation, amortization and depletion, as
well as to lower prices for copper and molybdenum. The increase in 2018’s net
income was mainly driven by 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 with and without the revenues
of its by-products (molybdenum, silver, sulfuric acid, etc.). It excludes the cost
of purchases of third-party metal, depreciation, amortization and depletion,
exploration, workers participation provisions and other items of non-recurring
nature, as well as royalty charges, from its operating cash cost calculation.
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The Company’s operating cash cost per pound of copper produced, as previously
defined, for the three years ended December 31, is as follows:
Dollar per pound
2020
2019
2018
Operating Cash Cost without by-product
revenues
Operating Cash Cost with by-product
revenues
1.37
0.69
1.52
0.88
1.54
0.87
As seen in the table above, 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 a 13.1% increase in production.
NET SALES:
2020-2019: Net sales in 2020 were $7,984.9 million, compared to $7,285.6 million
in 2019, which represented an increase of $699.3 million. This 9.6% increase was
mainly attributable to higher sales volumes of copper (+6.1%), silver (+8.8%),
molybdenum (+12.7%) and zinc (+1.0%) as well as to higher copper (+2.9%)
and silver (+27.7%) prices. This effect was slightly offset by lower molybdenum
(−24.0%) and zinc (-11.2%) prices.
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, which was partially offset by a decrease in copper (−8.1%) and
molybdenum (−5.0%) prices.
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, and for copper, molybdenum, zinc and silver in particular. Sales prices
for the Company’s metals are mainly pegged to the prices quoted on the London
Metal Exchange (LME) and The New York Commodity Exchange (COMEX) or to
those published in the Platt’s Metals Week for dealer oxide mean prices for
molybdenum.
Price/Volume Data
Average metal prices
Copper (per pound - LME)
Copper (per pound - COMEX)
Molybdenum (per pound)
Zinc (per pound - LME)
Silver (per ounce - COMEX)
Sales Volume (in million pounds, except
silver – million ounces)
Copper
Molybdenum (1)
Zinc
Silver
2020
2019
2018
$ 2.80
$ 2.80
$ 8.57
$ 1.03
$ 20.62
2,305.9
66.7
230.9
22.4
$ 2.72
$ 2.72
$ 11.27
$ 1.16
$ 16.16
2,173.8
59.2
228.5
20.6
$ 2.96
$ 2.93
$ 11.86
$ 1.33
$ 15.65
1,952.9
48.6
234.8
19.4
(1) The Company's molybdenum production is sold as concentrates. Volume represents pounds of molybdenum
contained in concentrates.
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Mining operations at Buenavista mine, Sonora, Mexico.
ENVIRONMENTAL
AFFAIRS
Environmental matters
ASUNTOS AMBIENTALES
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 2020, 2019 and 2018, were as
follows (in millions):
2020
2019
2018
$ 41.1
$(3.3)
$ 37.8
$ 64.3
$ 18.6
$ 82.9
$ 43.5
$ 59.3
$ 102.8
Mexican operations
Peruvian operations (*)
Total
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.
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View of the concentrator plant, La Caridad mine, Sonora, Mexico.
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 to provide 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”)
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IA GMX 2020 – SOUTHERN COPPER
were enacted, which established three categories of collective actions under
which a group of 30 or more individuals can be considered sufficient to prove a
“legitimate interest” to file civil actions for injuries derived from alleged violations of
environmental, consumer protection, financial services and economic competition
laws and to seek restitution or economic compensation for the alleged injuries or
the suspension of the activities which allegedly generated the injuries in question.
The amendments to the CFPC may result in more litigation, with plaintiffs seeking
remedies, including suspension of the activities alleged to cause harm.
In 2013, the Environmental Liability Federal Law was enacted. The law establishes
general guidelines for actions to be considered to likely cause environmental harm.
If a possible determination regarding harm occurs, environmental clean-up and
remedial actions sufficient to restore the environment to its 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 on 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.
Peruvian operations
OPERACIONES PERUANAS:
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
View at Buenavista open pit, Sonora, Mexico
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,” for further
discussion of this matter.
Air Quality Standards (“AQS”): In June 2017, MINAM enacted a supreme decree
that sets new AQS for daily sulfur dioxide in the air. As of December 31, 2020,
the Company maintained a lower daily average level of µg/m3 of SO2 than that
required by the new AQS.
Soil Environmental Quality Standards (“SQS”): In 2013, the Peruvian government
enacted Soil Quality Standards. In accordance with the regulatory requirements
of the law, the Company prepared Soil Decontamination Plans (“SDP”) for
environmentally impacted sites at each of its operation units (Toquepala, Cuajone
and Ilo) with the assistance of consulting companies. The cost of these SDPs are
not material, either individually or in aggregated form, to the financial statements
of the Company.
The Company believes that all of its facilities in Mexico and Peru are in material
compliance with applicable environmental, mining and other laws and regulations.
The Company also believes that on-going compliance with environmental laws
of Mexico and Peru will generate no material adverse effects for the Company´s
business, properties, operating results, financial condition or prospects and will
not result in material capital investments.
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GENERAL
INFORMATION
INFORMATION RELATED TO ITS CONSTITUTION AND 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 both Peru and 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.
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Worker at La Caridad Smelter, Sonora, Mexico
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
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. (the “Buenavista unit”)
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, a copper
concentrator and two SX/EW plants. The Buenavista mine was operated by
Mexicana de Cananea S.A. de C.V. and by Buenavista del Cobre S.A. de C.V.
until December 11, 2010. From this date, Industrial Minera Mexico, S.A. de C.V.
(together with its subsidiaries, the “IMMSA unit”) operated five underground
mines that produce zinc, lead, copper, silver and gold, a coal mine and a zinc
refinery until July 2012. 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 ore mining to the production of refined copper and
other products, as well as most related transport and logistics functions, using
our own facilities, employees and equipment.
Workers at dump truck maintenance plant, Toquepala mine, Tacna, Peru.
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ECONOMIC GROUP
SCC, indirectly, is part of “Grupo Mexico S.A.B. de C.V.” which owns 100% of
Americas Mining Corporation (“AMC”).
Name of the company
Location
Inscription in
the RPMV
%
1
2
3
4
5
6
7
8
9
10
11
Grupo Mexico, S.A.B. de C. V.
Grupo Mexico Servicios, S.A. de C.V.
MINING ACTIVITIES
Americas Mining Corporation (“AMC”)
Southern Copper Corporation (SCC)
Minera Mexico, S. A. de C. V.
Industrial Minera Mexico, S.A. de C. V.
Buenavista del Cobre, S.A. de C. V.
Mexicana de Cobre, S.A. de C. V.
Southern Peru Copper Corporation, Agencia en Chile
Southern Peru Copper Corporation, Sucursal del Peru
Compañia Minera Los Tolmos, S.A.
Mexico
Mexico
USA
USA
Mexico
Mexico
Mexico
Mexico
Chile
Peru
Peru
100
100
88.90
99.96
100
100
98.20
100
99.291
100
YES
YES (1)
(1) Investment shares
Corporate Capital and Common Stock
The authorized number of shares
Issues an Paid Capital: Common Shares
Nominal Value of Common Shares
Shares
2,000,000,000
884,596,086
$ 0.01
Total number and percent of shares
Americas Mining Corporation
Common Shares owned by 3rd parties
Total outstanding shares
Shares
687,275,997
85,797,272
773,073,269
Interest
88.90%
11.1%
100.0%
1 Include 82.69% of common shares and 16.60% of investment shares.
Panoramic view at Cuajone mine, Moquegua, Peru
Smelter worker in La Caridad, Sonora, Mexico.
SOUTHERN COPPER CORPORATION
Variable Income
Symbol ISIN
Mnemonic
Year-Month
Open $
Close $
Maximum $ Minimum $
US84265V1052
US84265V1052
US84265V1052
US84265V1052
US84265V1052
US84265V1052
US84265V1052
US84265V1052
US84265V1052
US84265V1052
US84265V1052
US84265V1052
SCCO
SCCO
SCCO
SCCO
SCCO
SCCO
SCCO
SCCO
SCCO
SCCO
SCCO
SCCO
2020-01
2020-02
2020-03
2020-04
2020-05
2020-06
2020-07
2020-08
2020-09
2020-10
2020-11
2020-12
42.50
38.01
34.27
26.86
31.98
37.02
38.60
44.09
48.88
46.00
53.24
60.05
38.00
33.27
28.14
32.57
36.81
39.50
43.33
48.32
44.50
52.25
60.93
65.90
44.59
40.33
35.75
34.41
36.90
39.82
45.85
48.41
48.88
52.31
60.93
65.90
37.98
32.29
24.29
26.82
31.98
36.40
38.60
43.00
44.12
45.85
52.90
59.00
Average
Price $
40.64
37.23
28.11
29.24
34.59
37.88
42.80
46.12
46.49
48.54
56.34
62.04
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Open pit at Toquepala mine, Tacna, Peru.
DESCRIPTION OF OPERATIONS AND DEVELOPMENT
REGARDING THE ISSUING ENTITY 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.
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.
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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. Said
increase was made through a 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 aimed to increase the
capital allotted to the Branch by Headquarters and registered in Peru. The capital
contribution made by the owners of Labor Shares (today Investment Shares) was
assigned to the Labor Shares account of the Branch for issuing new Labor Shares.
Panoramic view of the open pit at Cuajone mine, Moquegua, Peru
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Part of the money contributed by the Company in favor of its Branch and by the
Labor Shares owners was applied as a capital premium to the Resident account
as Additional Capital.
EXCHANGE OF INVESTMENT SHARES (LABOR SHARES) FOR COMMON
SHARES:
Dated September 7, 1995, “Southern Peru Copper Holding Company” was also
incorporated pursuant to the Laws of the State of Delaware to act as the holding
company that owns all of Southern Peru Copper Corporation ‘s shares. This
was executed through an exchange of shares that were formerly denominated
“Labor Shares” (now, Investment Shares), which were issued by the branch in
Peru; through this operation, owners of labor shares were given a number of
Common Shares issued by SPCC in the United States. As a consequence of this
share exchange, previous 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.
After the corporate name change, the mining activities of the Company in Peru
were 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
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 remained
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.
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, which holds
its shares 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 the 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 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. The SCC share repurchase program has registered no
activity since the third quarter of 2016. The NYSE closing price of SCC common
shares at December 31, 2020 was $65.12 and the maximum number of shares
that the Company could purchase at that price was 1.3 million shares.
As a result of the repurchase of shares of SCC’s common stock, Grupo Mexico’s
direct and indirect ownership was 88.9% as of December 31, 2020 and 2019.
CHANGE IN THE CERTIFICATE OF INCORPORATION:
On March 28, 2005, following Board of Directors recommendations, SCC
shareholders approved, during an extraordinary meeting, the amendments to the
Articles of Incorporation Deed that changed 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
Water recovery pond at Buenavista mine, Sonora, Mexico
(ii) is nominated by the Special Nominating Committee. The Special Nominating
Committee has the right to nominate a number of special independent directors
based on the 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 aforementioned, the total number of individuals appointed as special
independent directors (not belonging to Grupo Mexico) cannot be less than two
or more than six.
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The Special Nominating Committee consists of three directors. Two
of these directors (2) are Luis Miguel Palomino and Carlos Ruiz
Sacristan (each is an “Initial Member” and, together with their
successors, “Special Designees”) and the third is currently Xavier
Garcia de Quevedo (who is appointed by the Board of Directors
or the “Board Designee”. The Board Designee will be selected
annually by the Board of Directors. The Special Designees will be
selected annually by the members of the Board who are special
independent directors or Initial Members. Only Special Independent
Directors can fill vacancies on the Special Nominating Committee.
Any member of the Special Nominating Committee may be removed
at any time by the Board of Directors for cause. The unanimous vote
of all members of the nominating committee will be necessary for
the adoption of any resolution or the taking of any action.
Notwithstanding the foregoing, the power of the Special Nominating
Committee to nominate special independent directors is subject to
the rights of the stockholders to make nominations in accordance
with our by-laws.
The provisions of the Amended and Restated Certificate of
Incorporation, as amended, relating to Special
Independent
Directors may only be amended by the affirmative vote of a majority
of the holders of shares of Common Stock (calculated without
giving effect to any super majority voting rights) other than Grupo
Mexico and its affiliates.
TRANSACTIONS WITH AFFILIATES:
In 2019, the Company 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 all are 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 renaming Southern
Peru Copper Corporation “Southern Copper Corporation or SCC.” The change
was adopted because the new corporate name more accurately reflects 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, on the same date, the majority shareholder approved an amendment
to 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 by a consensus reached by the majority of Board members
and stipulating that the number of directors will not be less than six or more than
fifteen.
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IA GMX 2020 – DIVISIÓN INFRAESTRUCTURA
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, any change in the corporate name of headquarters 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, in acknowledgement
of the importance of the net worth and assets of the Branch, decided it was
necessary to: continue acknowledging the position of the Peruvian Branch with
its local and international copper clients; preserve its proceeds, position and
good name in the copper market; prevent any possible client loss; and guarantee
the Branch’s revenue flow from sales, its financial and economic revenues and
solvency, agreed to maintain the original corporate name of 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 an amendment to Southern Copper
Corporation’s Articles of Incorporation and by-laws: (i) to remove the provisions
related to Class A Common Shares among other changes.(ii) add a new provision
for advance notice to shareholders seeking to nominate directors or to propose
other business at annual or special meetings of the Common Stockholders (as
applicable) (iii) substitute Grupo Mexico for ASARCO Incorporated in the “Change
in Control” definition in the Corporation’s by-laws (iv) and eliminate the 80%
supermajority vote requirement for certain corporate actions. The modification
of the Modified Certificate of Incorporation increased the capital stock from
167,207,640 shares to 320,000,000 shares. These modifications
were submitted for approval of the shareholders at the shareholders
annual meeting held on April 27, 2006 which was adjourned and
reconvened for May 4, 2006, and later on adjourned and reconvened
for May 11, 2006.
At the annual meeting, on April 27, 2006, the proposal to amend the
by-laws to eliminate certain extraneous provisions relating to the
retired series of Class A Common Stock had an affirmative vote of
79.85% of the required votes. Given that the required vote for the
approval of this proposal was 80% and because some votes still
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.
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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. Given that the required vote for the approval of this proposal was 80%
and because some votes still needed to be tabulated, the annual meeting for this
proposal was adjourned first until May 4, 2006, and subsequently until May 11,
2006. On May 11, 2006, at the adjourned and reconvened meeting stockholders
did not approve the proposal having received an affirmative vote of 79.61% of
the required votes.
SCC is, indirectly, part of Grupo Mexico S.A.B. de C.V. which owns 100% of
Americas Mining Corporation (AMC) shareholding, owner of 88.91% of SCC
shares.
Open pit at Cuajone mine, Moquegua, Peru.
INFORMATION ABOUT PLANS AND INVESTMENT POLICIES:
See Capital Expenditures and Exploration on page 9.
RELATIONSHIP BETWEEN THE ISSUER AND THE GOVERNMENT
On November 20, 1996, SCC and the Peruvian Government (Ministry of Energy and
Mines) signed a contract that 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, SCC 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.
SPECIAL MINING TAX
In September 2011, the Peruvian government enacted a new tax for the mining
industry. This tax is based on operating income with graduated rates increasing from
2% to 8.4%. The Company recognized $50.0 million, $38.1 million and $30.6 million
in 2020, 2019 and 2018, respectively, with respect to this tax. These amounts are
included as “income taxes” in the consolidated statement of earnings.
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Worker at tailings dam at Quebrada Honda, Toquepala mine, Tacna, Peru.
MINING ROYALTY
In 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% of operating profits; the minimum royalty charge is
equivalent to 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%. In 2020, 2019 and 2018, we
made provisions of $60.6 million, $42.3 million and $32.9 million,
respectively.
At the same time the Peruvian Congress amended the mining
royalty charge, it enacted a new tax for the mining industry. This
tax is also based on operating income and its rates range from 2%
to 8.4%.
SOCIAL INVESTMENT FOR TAXES
SCC has signed agreements with Ministry of Education, regional
and local governments of Tacna, Moquegua, and Arequipa, and a
public university “Universidad Nacional San Agustin de 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 on its income tax liability for up to
50% of the income tax levied for the prior year.
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Operations in Mexico
OPERACIONES EN MÉXICO
LA CARIDAD MINE
“La Caridad Concentrator”, began operations in 1979. The concentrator
has a current capacity of 94,500 tons of ore per day. “Molybdenum Plant”
started operations in 1982, with a production capacity of 2,000 tons of copper-
molybdenum concentrate per day.
“La Caridad SX-EW” has an annual design capacity of 21,900 tons of copper
cathodes. Approximately 919.7 million tons of leaching ore with an average
grade of approximately 0.241% copper was extracted from the La Caridad open
pit mine and deposited in leaching dumps though December 31, 2020.
LA CARIDAD METALLURGIC COMPLEX
“La Caridad Smelter”, started operations in July, 1986. The current installed
capacity of the smelter is 1,000,000 tons per year, which is sufficient to treat all
the concentrates of La Caridad and almost 40.5% of the total production of the
OMIMSA I and OMIMSA II concentrators from Buenavista. In 2010, the smelter
also began processing concentrates from the IMMSA mines after 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, which 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 began
operating in 2012.
Casa Grande does volunteer work in the schools of the communities near our operations.
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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, which was expanded to 120 tons per day in 2001.
“Buenavista SX/EW III Plant” started operating in June 2014; we completed
the construction of a new SX-EW plant that has significantly increased the
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.
2.- The Santa Eulalia Unit with a milling capacity of 1,450 tons of ore per day.
3.- The San Martin Unit with a milling capacity of 4,400 tons of ore per day.
4.- The Charcas Unit with a milling capacity of 4,100 tons of ore per day.
5.- The Taxco Unit with a milling capacity of 2,000 tons per day.
6.- Coque Coal Plant, in Coahuila Unit, with a capacity of 105,000 tons of coke
per year.
•
7.- The Zinc Refinery with a capacity of 288 tons per day of refined zinc.
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.
Resolution N° 0163-2020-MINEM-DGM/V, dated June 11, 2020, based on Report N° 081 –
2020 - MINEM-DGM-DTM/PB, the “Director General de Mineria” authorized the operation
and auxiliary facilities of II Molibdenum Circuit at the Toquepala Concentrator to a capacity
of 120,000 MT per day. According with this Report, the Company must comply with, among
other aspects, environmental recommendations and commitments; 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.
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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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 and 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, and as part of crusher process optimization, on November
18, 2011, we requested, through resource N° 2144941, that Peruvian authorities
consider the addition of three more facilities (HPGR mill and others).
On May 2012, through Directoral Resolution N° 153-2012-MEM-DGM-V and
based on report 165-2012-MEM-DGM-DTM-P, MEM approved and authorized
the project to include the three aforementioned additional facilities in the
amendment and increased 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, the Cuajone SX plant operation was approved and authorized with a
capacity of 3100 MT per day.
Copper cathodes.
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 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 Ilo Smelter to expand its capacity to 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.
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IA GMX 2020 – SOUTHERN COPPER
Based on Report No. 506-97-EM/DGM/DPDM dated September 2, 1998
the “Director General de Mineria” authorized expanding Ilo Copper
Refinery’s capacity to 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 Ilo Copper Refinery to
expand its capacity to 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.
“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
modifications to the concession of “Coquina Wash Plant and
Seashell Concentrates” to designate it a dry seashell plant
without expanding its capacity throughput, which represents
2,068 tons/day. Through Nº 2499277, dated May 19, 2015,
SPCC requested a temporary, three-year suspension of its Dry
Seashell Concentrates plant.
Resolution N° 0850-2018 – MEM-DGM/V dated November 15,
2018, based on Report N° 162-2018 /MEM-DGM-DTM-PCM,
SPCC communicated to MEM that it was initiating the closure of
the facilities at Coquina Mine.
Safety and health
At Southern Copper Corporation, caring for the lives, health and
welfare of our employees and their families is a priority at all of
our operations. No task is more important.
Accordingly, our main commitment is to create optimal and safe
work environments for our employees by 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 to
provide our employees with the knowledge and skills necessary
to identify, control and mitigate risks. The focus is on prioritizing
actions and taking the necessary precautions to prevent
accidents.
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IA GMX 2020 – DIVISIÓN INFRAESTRUCTURA
IA GMX 2020 – GRUPO MÉXICO FUNDACIÓN
Refinery plant in Ilo, Peru.
In 2020, we operated 12 units in Mexico and Peru, where
Occupational Safety and Health Management Systems have
been certified according to OHSAS 18001: 2007. Additionally,
in Mexico, we maintain 27 units that are certified by the
Secretariat of Labour and Social Welfare in Self-Managed
Occupational Health and Safety (PASST), which have endorsed
our commitment to best practices in health and safety at work.
During 2020, the accident rate (IR) decreased 40% compared
to 2019. We will continue working to reinforce prevention
activities to diminish risks and ensure the physical integrity of
our collaborators.
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ACCIDENT RATE(IR)
SCC, 2016-2020
SEVERITY RATE (GR)
SCC, 2016-2020
2016
2017
2018
2019
2020
0.77
0.75
0.74
0.82
0.49
2016
2017
2018
2019
2020
0.32
0.51
0.31
0.89
0.19
IR =
No.of disabling accidents
No.of disabling accidents
x 200,000
GR =
No.of days lost
No.of total men - hours worked
x 1,000
The accomplishments 2020 on the occupational health and safety front include:
•
The occupational accident rate at our mining operations in SCC is 71%
below the average in the mining industry in the USA, according to the Mine
Safety and Health Administration.
•
The Mining Chamber of Mexico (CAMIMEX) in 2020 awarded the “Jorge
Rangel Zamorano” Silver Helmet Trophy to the Mexicana de Cobre and
Santa Eulalia unit La Caridad and SX/EW plant, (Mexicana del Cobre); and,
Zinc Refinery (IMMSA), after it reported the lowest accident rates in the
industry and in recognition of its efforts in the field of accident prevention.
These results reflect our efforts to strengthen our safety culture; implement
inspection plans; and, most importantly, work and commitment of our employees.
OCCUPATIONAL HEALTH
Healthy environments are part of the organizational culture and management
system. The Company assumes the responsibility to establish culture of
involvement, participation and commitment to generate better health conditions
that improve the quality of life of our employees, their families and the
communities in which we operate.
OCCUPATIONAL DISEASE RATE
SCC 2016-2020
2016
2017
2018
2019
2020
0.41
0.34
0.18
0.42
0.17
ODR =
No. of Cases of Occupational Diseases
No. of Total Men-Hours Worked
x 200,000
We continued efforts to implement several programs relative to education,
prevention, risk control and medical treatment. We aim to preserve our workers’
health. These programs cover our employees and, in some cases, their family
members, contractors, suppliers, institutions and the general public.
ACTIVITIES TARGETING WORKPLACE PERSONNEL:
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 COMMUNITY:
86 > 87
HEALTH
FAIR
FAMILY
GATHERINGS
AND PARADES
GUIDED
TOURS
“KNOWING
MY COMPANY”
FAMILY
FIREFIGHTING
COURSES
HEALTH
CAREER
FAMILY
CONTESTS
TO PROMOTE
VALUES
ACTIVITIES TARGETING WORKPLACE PERSONNEL:
AWARDS TO
EMPLOYEES OR
DEPARTMENTS
WITH ZERO
ACCIDENTS
HEALTH
CAREER
SECURITY
COURSES AND
CONFERENCES
LABOR
HEALTH
FAIR
EXPO
SAFETY
INTERNAL
SECURITY
FORUM
IA GMX 2020 – SOUTHERN COPPER
ACTIVITIES TARGETING EMPLOYEES’ FAMILIES AND COMMUNITY:
HEALTH
FAIR
FAMILY
GATHERINGS
AND PARADES
GUIDED
TOURS
“KNOWING
MY COMPANY”
FAMILY
FIREFIGHTING
COURSES
HEALTH
CAREER
FAMILY
CONTESTS
TO PROMOTE
VALUES
INVESTMENT IN SAFETY AND HEALTH
In 2020, we invested over $50 million in occupational safety and health efforts for engineering
work; to purchase personal protective equipment; provide training and coaching; and conduct
industrial hygiene studies. To enhance the culture of occupational health, we have developed
programs to promote and protect health and focused on primary prevention, treatment and
rehabilitation.
EMPLOYEES FOR THE YEAR ENDED DECEMBER 31TH
Total Employees in SCC
Mexico
Peru
Ecuador
Argentina
Chile
Corporate Office
OHYSA
Total
2020
2019
2018
2017
2016
8,962
4,739
58
4
6
3
5
13,777
9,358
4,890
23
15
9
1
5
14,301
9,002
4,850
30
5
5
2
5
13,899
8,450
4,628
27
18
10
2
5
13,140
8,762
4,562
47
20
20
3
5
13,414
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. Given that SCC is not 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 provides
information on 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 comprise
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 2020 Form 10-K.
Changes of those responsible for the preparation and revision of
the financial Information
At December 31, 2020, no changes have been made.
Information related to the stock entered in the Stock Market Public.
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IA GMX 2020 – DIVISIÓN INFRAESTRUCTURA
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Mining operations in Cuajone mine, Moquegua, Peru.
Common Stock
On November 29, 1995 the Company offered to exchange the recently
issued common shares for any and all 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, and 80.8% of the total labor shares in circulation
were exchanged 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 shares in SCC.
On August 30, 2006, the Executive Committee of the Board of Directors
declared a two-for-one split of the Company’s outstanding common 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, 2020, there were of record 773,073,269 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, 2029, the Company was in compliance with this covenant.
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Panoramic view of the Concentrator Plant 2, Toquepala mine, Tacna, Peru.
On September 26, 2019, Minera Mexico 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.
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
with regard to our long-term debt, on our 2020 Form 10-K.
MEMBERS
OF THE BOARD
at December 31, 2020
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.
MR. 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. 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
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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 other 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.
Worker in the Refinery plant, Ilo, Peru.
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.
ENRIQUE CASTILLO SANCHEZ MEJORADA, INDEPENDENT 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).
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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 in 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). Currently, Mr. Castillo Sanchez
Mejorada is Chairman of the Board of Banco Nacional de Mexico, S.A. (Citibanamex), one
of the largest banks in Mexico, and member of the board of Grupo Financiero Citibanamex,
where he serves as a member of the 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. Mr. Castillo Sanchez Mejorada also serves as a member of the audit committee (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; and (v) Laboratorios
Sanfer S.A. de C.V., 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.
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 41
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
Car dumper, Port Operations, Ilo, Peru.
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). 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 Tecnologico Autonomo de Mexico (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).
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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
Tecnologico Autonomo de Mexico 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.
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.
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
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Ite bay in Jorge Basadre, Tacna.
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. 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 boards of directors of different Mexican
companies.
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
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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 boards 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.
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.
Executive Officers
German Larrea Mota Velasco
Chairman of the Board of Directors
Oscar Gonzalez Rocha
President and Chief Executive Officer
Raul Jacob Ruisánchez
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 does 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, 2020. The Company has taken advantage of
the exceptions to comply with the corporate governance rules of the NYSE. The Board of Directors
of the Company determined that Messrs. Luis Miguel Palomino Bonilla, Gilberto Perezalonso
Cifuentes, and Carlos Ruiz Sacristan, the three members of the Company’s Audit Committee, are
independent of management and financially literate in accordance with the requirements of the
NYSE and the Securities and Exchange Commission (“SEC”), as such requirements are interpreted
by the Company’s Board of Directors in its business judgment. Additionally, Messrs. Emilio Carrillo
Gamboa, Enrique Castillo Sanchez Mejorada and Rafael Mac Gregor Anciola are our fourth, fifth
and sixth independent directors.
At its meeting on January 21, 2021, the Board of Directors determined that Messrs. Luis Miguel
Palomino Bonilla, Gilberto Perezalonso Cifuentes, Carlos Ruiz Sacristan, Vicente Ariztegui Andreve,
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:
1. Executive Committee. It is comprised of five members who substitute
for the Board when sessions or decisions are required concerning urgent
matters, or matters for which the Board would have expressly delegated
its mandate.
2. Audit Committee. It is comprised of three independent Board members
who are knowledgeable in accounting and financial matters. Its main
purpose is to: (a) assist the Board in monitoring (i) the quality and
integrity of the Company’s financial statements; (ii) the qualifications
and independence of the independent auditors; (iii) the performance of
the internal audit function and of the independent auditors; and (iv) the
Company’s compliance with legal and regulatory requirements; and (b)
prepare the report required by the Securities and Exchange Commission
(SEC) rules.
3. Compensation Committee. It is comprised of four Board members and
its principal objective is to evaluate and establish the remunerations of
principal officers and key employees of the Company and its subsidiaries.
4. Special Nominating Committee. It is comprised of two independents
Board members and one nominated by the Board and it has the exclusive
authority to propose and evaluate individuals who are proposed as special
independents directors.
Workers at Smelter Plant, San Luis Potosí, Mexico.
5. Corporate Governance Committee. It is comprised of four Board members
and has as its primary functions to consider and make recommendations to
the Board concerning the appropriate function and needs of the Board, to
develop and recommend to the Board corporate governance principles 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.
6. Administrative Committee. It is designated by the Named Fiduciary
appointed by the Board for the benefit plans as required by the Employee
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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%.
ANNUAL MEETING:
Up to date, SCC has not established when will be hold the annual stockholders meeting for the
year 2021.
CORPORATE OFFICES:
UNITED STATES
1440 East Missouri Avenue, Suite 160, Phoenix, Az. 85014, USA
Phone: +1(602) 264-1375
MEXICO
Edificio Parque Reforma, Campos Eliseos Nº. 400
Col. Lomas de Chapultepec Mexico D.F.
Phone: +(52-55) 1103-5000
PERU
Avenida Caminos del Inca Nº 171, Chacarilla del Estanque
Santiago de Surco, Cod postal 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 Credicorp Capital, at Av. El Derby 055, Tower 4, 10th floor, Santiago
de Surco, Lima, Peru (Cod. Postal 15038-Peru.
Phone +(511) 313-2478.
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:
USA:
1440 East Missouri Avenue, Suite 160, Phoenix, Az. 85014, USA. Phone: (602)264-1375
MEXICO:
Campos Eliseos No. 400, 11 floor, Col. Lomas de Chapultepec Mexico D.F.
Phone +(52-55) 1103-5000, Extension 5855
PERU:
Av. Caminos del Inca 171, Chacarilla del Estanque, Santiago de Surco, Cod postal 15038- Peru.
Phone. +(511) 512-0440, Ext. 3181Pág
Web Page: www.southerncoppercorp.com
Email address: southerncopper@southernperu.com.pe
Members of the Board of Directors
German Larrea Mota-Velasco
Oscar Gonzalez Rocha
Vicente Ariztegui Andrave
Alfredo Casar Perez
Enrique Castillo Sanchez Mejorada
Xavier Garcia de Quevedo Topete
Rafael Mac Gregor Anciola
Luis Miguel Palomino Bonilla
Gilberto Perezalonso Cifuentes
Carlos Ruiz Sacristan
AUDIT COMMITTEE
Luis Miguel Palomino Bonilla, Chairman
Gilberto Perezalonso Cifuentes
Enrique Castillo Sanchez Mejorada
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Worker in rod plant in Mexico