WE INVEST
IN A SUSTAINABLE
FUTURE
DISCIPLINE, INVESTMENT, WORK
ANNUAL REPORT 2021
Cover:
Ite Wetlands, Tacna, Peru.
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 2021. 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.
INDEX
07
LETTER TO SHAREHOLDERS
10
PRODUCTION STATISTICS
12
COPPER RESERVES
16
SELECTED AND FINANCIAL DATA
18
CAPITAL INVESTMENT PROGRAM AND EXPLORATION
(EXPANSION & MODERNIZATION)
26
DEVELOPMENT - COMMUNITY OUTREACH
54
RESULTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 2021, 2020 AND 2019
60
COMMITMENT - ENVIRONMENTAL AFFAIRS
66
GENERAL INFORMATION
72
DESCRIPTION OF OPERATIONS AND DEVELOPMENT REGARDING
THE ISSUING ENTITY
105 MEMBERS OF THE BOARD OF DIRECTORS
6
SCC . LETTER TO SHAREHOLDERS
01
LETTER TO
SHAREHOLDERS
2021 marked another important year in Southern Copper’s history. This year, net sales, net
income, adjusted EBITDA and cash from operations hit record highs.
2021 net sales hit a record high of $10,934.1 million, which represented an increase of
36.9% over the figure reported in 2020. This growth was mainly driven by higher market
metal prices for all our main products. Metal prices increased for copper (+51.1%, LME);
molybdenum (+81.0%); zinc (+32.0%); and silver (+22.1%).
2021 net income was $3,387.1 million, 116.3% higher than in 2020. These significant
improvements also represented historic highs for net income, which were driven by an
increase in sales and by our strict cost control measures, which allowed us to absorb last
year increases in fuel, power and other operating costs.
EBITDA in 2021 also hit a historic high of $6,852.7 million; 77.1% above the figure in
2020. The adjusted EBITDA margin in 2021 was 62.7% vs 48.5% in 2020.
Southern Copper Corporation is positioned as the one of lowest- cost copper producers in
the mining industry. 2021’s Operating cash cost per pound of copper, net of by-product
revenue credits, was $0.67, which represented a reduction of 3.0% compared to the $0.69
reported in 2020. This result was mainly attributable to an increase in by-product revenue
credits, which was partially offset by an uptick in production costs.
In 2021, we spent $892.3 million on capital investments, which reflected a 50.7% increase
YoY and represented 26.3% of net income in 2021.
These results clearly reflect the significant efforts our corporation has made in the last decade
to double our copper production capacity to almost one million tons while maintaining our
cost control measures. The positive environment we see for copper prices and our strong
pipeline of high-potential projects make us optimistic about Southern Copper´s capacity to
deliver attractive results to our shareholders in coming years.
As the world braces for the economic effects of this new COVID-19 wave, particularly in
terms of work force attrition, we have stepped up safety measures to preserve the health
of our workers, the vast majority of whom are fully vaccinated. Throughout 2021, the
bulk of our workforce has remained available for duties, which has allowed us to roll out
Worker at Cuajone mine, Moquegua, Peru.
7
maintenance activities and capture opportunities for efficiencies. In tandem, we continue
to recover normal operating levels at all of our mines and are bringing capital investment
execution levels up to speed.
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.
The year 2021 began with news of better things to come: several COVID-19 vaccines were
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.
In Mexico, our portfolio consists of 5 projects, one of them is Buenavista Zinc in Sonora,
this project includes the development of a new concentrator to produce approximately
100,000 tons of zinc and 20,000 tons of copper per year. As of December 31, 2021, we
have invested $217 million in this project. We expect to start operations in 2023. This new
facility will double the Company’s zinc production capacity and provide 490 direct jobs and
1,470 indirect jobs.
8
SCC . LETTER TO SHAREHOLDERS
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. The third project, El Pilar, will operate as a conventional
openpit mine with an annual production capacity of 36,000 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
9
ANNUAL REPORT 2021
PRODUCTION STATISTICS
SOUTHERN COPPER CORPORATION AND SUBSIDIARIES
FIVE-YEAR PRODUCTION STATISTICS
(tons)
(thousand)
(thousand ounces)
(thousand ounces)
(thousand)
(thousand)
Mine production
Mined Material
Copper in concentrates
Copper SX/EW
Total Copper
Molybdenum in concentrates
Zinc in concentrates
Silver in concentrates
Smelter/refineries production
Copper
Zinc
Silver
Toquepala
Mined Material
Copper in concentrates
Molybdenum in concentrates
Cuajone
Mined Material
Copper in concentrates
Molybdenum in concentrates
Smelter/refineries in Peru
SX/EW
Smelt concentrates
Blister produced
Anode produced
Cathode produced
Mexicana de Cobre – Caridad
Mined Material
Copper in concentrates
Molybdenum in concentrates
(thousand)
1010
2021
2020
2019
2018
2017
780,689
656,237
790,365
814,228
743,163
825,226
851,323
841,452
741,488
711,720
132,974
150,045
152,370
142,201
165,259
958,200
1,001,368
993,822
883,689
876,979
30,262
66,958
18,962
30,248
68,930
21,540
26,885
73,922
20,273
21,985
70,778
17,308
21,328
68,665
15,926
598,569
633,801
595,173
633,630
617,853
92,672
13,691
102,440
104,977
107,536
104,402
13,888
12,588
13,583
13,688
203,150
203,624
10,642
148,302
168,990
4,190
168,715
249,083
241,514
203,778
229,116
231,673
143,720
122,949
10,019
7,277
4,159
4,184
130,047
153,911
175,177
149,265
168,663
156,393
160,579
158,105
4,225
3,285
3,099
3,746
25,754
26,010
26,329
26,526
25,093
1,089,193
1,210,625
1,075,513
1,187,710
1,153,486
2,601
308,562
260,173
100,412
102,689
10,203
4,163
-
2,630
1,793
345,955
317,519
344,758
345,847
286,271
256,647
292,654
291,373
93,373
94,578
96,541
98,534
109,671
107,161
106,087
106,271
10,535
10,206
9,809
9,934
SCC . PRODUCTION STATISTICS
Buenavista
Mined material
Copper in concentrates
Smelter/Refineries in Mexico
SX/EW
Smelt concentrates
Anode produced
Cathode produced
Rod produced
2021
2020
2019
2018
2017
(thousand)
324,860
142,912
259,860
288,882
297,718
288,716
140,888
141,521
139,157
135,690
107,221
124,036
126,041
115,675
140,166
1,047,292
1,029,486
1,011,374
1,041,663
997,657
287,406
242,667
150,122
283,683
277,654
286,242
270,213
240,407
231,609
239,185
228,062
129,439
142,728
147,147
133,100
Underground Mines
Contents in concentrates
(tons)
Zinc
Lead
Copper in concentrates
Silver
Gold
66,958
17,104
8,719
6,589
7,662
68,930
20,358
10,302
7,983
8,734
73,922
22,567
8,265
6,943
7,647
70,778
22,081
6,221
5,649
6,423
68,665
20,246
5,486
4,760
5,428
(thousand ounces)
(ounces)
1111
GMX . DIVISIÓN MINERA 02
COPPER
RESERVES
Panoramic view of La Caridad, Sonora, Mexico.
14
SCC . COPPER RESERVES
We believe we hold the world’s largest position of copper reserves. As of December 31,
2021, our copper ore reserves, calculated at a copper price of $3.30 per pound, totaled
42.4 million tons of contained copper. Our internal ore reserve estimation value is as
follows:
Copper contained in ore reserves
Thousand tons
Mexican
Peruvian
Development projects
Total
11,319
22,712
8,379
42,410
For more information about ore reserves refer to “Summary Disclosure of Mineral Reserves”, on
page 36 of our 2021 Form 10-K.
Mine operations in Buenavista del Cobre, Sonora, Mexico.
15
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
2021
2020
2019
2018
2017
$ 10,934.1 $ 7,984.9 $ 7,285.6 $ 7,096.7 $ 6,654.5
4,869.0
6,065.1
14.1
4,864.2
3,120.7
7.4
4,532.6
2,753.0
6.1
4,215.5
2,881.2
5.2
4,035.6
2,618.9
3.9
Net earnings attributable to SCC
$ 3,397.1 $ 1,570.4 $ 1,485.8 $ 1,543.0 $
728.5
Per share amount:
Earnings basic and diluted
Dividends paid
Consolidated Balance Sheet
Cash and cash equivalents
Total assets
Total debt
Total equity
$
$
4.39 $
2.03 $
1.92 $
2.00 $
3.20 $
1.50 $
1.60 $
1.40 $
0.94
0.59
$ 3,002.0 $ 2,183.6 $ 1,925.1 $
844.6 $ 1,004.8
18,297.6
16,946.5
16,407.4
14,267.8
13,780.1
6,247.9
6,544.2
6,541.0
5,960.1
5,957.1
$ 8,207.8 $ 7,276.0 $ 6,858.2
6,612.9 $ 6,149.4
Consolidated Statement of Cash Flows
Cash provided by operating activities
$ 4,292.4 $ 2,783.6 $ 1,911.9 $ 2,235.1 $ 1,976.6
Dividends paid
Capital investments
Depreciation, amortization and depletion
Capital Stock
$ 2,473.8
1,159.6
1,236.9
892.3
592.2
707.5
1,082.3
1,121.4
456.1
1,023.5
806.0 $
775.6 $
764.4 $
674.3 $
671.1
$
$
Common shares outstanding – basic and diluted (in thousands)
773,087
773,073
773,059
773,044
773,028
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)
$
$
81.53 $
65.82 $
43.19 $
57.34 $
56.14 $
23.53 $
23.21 $
29.78 $
10.54
13.97
9.35
32.06
8.82
22.10
8.50
15.42
47.63
32.38
7.90
50.35
2.73
27.1%
14,463
3.50
35.2%
13,777
2.83
41.8%
14,301
2.61
42.6%
13,899
2.71
44.4%
13,140
(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.
Worker from the Toquepala mine.
16
17
GMX . DIVISIÓN MINERA 03
CAPITAL EXPENDITURES
AND EXPLORATION
PROGRAMS
400 Tons truck at Buenavista del Cobre, Sonora, Mexico.
20
SCC . CAPITAL EXPENDITURES AND EXPLORATION
EXPANSION AND MODERNIZATION
We made capital investments of $892.3 million in 2021, $592.2 million in 2020 and $707.5
million in 2019. In general, the capital investments and projects described below are intended
to increase production, decrease costs or address social and environmental commitments.
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
1.8 million tons in 2028 by developing new projects:
MEXICAN PROJECTS
BUENAVISTA ZINC, SONORA
This project is located within the Buenavista facility and includes the development of a new
concentrator to produce approximately 100,000 tons of zinc and 20,000 tons of copper
per year. We have completed the engineering study. In order to continue with the project,
stronger preventive measures to combat COVID-19 have been put in place. Procurement
has progressed 96% and all the main equipment is on site. Additionally, construction
site works are in underway. The project has all the necessary permits, and its budget is
$413 million. We expect to initiate operations in 2023. As of December 31, 2021, we had
invested $217 million in this project. When completed, we anticipate that this new facility
will double the Company’s zinc production capacity and will provide 490 direct jobs and
1,470 indirect jobs.
La Caridad mine, Sonora, Mexico.
21
Panoramic view of La Caridad mine, Sonora, Mexico.
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. A
new 25-meter wide off-road facility for mining trucks had been built. This will significantly
improve the overall 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 the project
to begin production in the second half of 2022.
EL PILAR, SONORA
The low-capital intensity copper development project is strategically located in Sonora,
Mexico, approximately 45 kilometers from our Buenavista mine. Its copper oxide
mineralization contains estimated proven and probable reserves of 281 million tons of ore,
with an average copper grade of 0.301%. El Pilar will operate as a conventional open-pit
mine with an annual production capacity of 36,000 tons of copper cathodes. This operation
2222
SCC . RESULTADOS GRUPO MÉXICO
will use highly cost efficient and environmentally friendly SX-EW technology. We estimate
a development investment of approximately $310 million. The results from experimental
pads in leaching process have confirmed adequate levels of copper recovery. We expect
this project to start production in 2023 with an expected mine life of 13 years. The basic
engineering study is finished and the Company continues developing project and site
environmental activities.
THE SAN MARTIN MINE RECOVERY PROGRAM
After eleven years of illegal stoppage, we resumed control of the San Martin mine in August
2018. The San Martin facilities deteriorated during this period but we made executed major
renovations and restarted operations in the second quarter of 2019. In 2020, we produced
14,361 tons of zinc, 2.8 million ounces of silver, 3,601 tons of copper, and 1,425 tons of
lead. As of December 2021, the Company had completed most of the rehabilitation plan
to restore operations at the San Martin mine with a total expense of approximately $90.5
million; the mine has since reached full operating capacity.
23
INFORME ANUAL 2021
Quebrada Honda tailings disposal at Toquepa mine, Tacna, Peru.
PERUVIAN PROJECTS
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 implementing other facilities for water
recovery, among other works. As of December 31, 2021, construction and pre-commissioning
activities were underway with work on three fronts. This project has a total budget of $140.0
million, of which we had invested $114.6 million as of December 31, 2021.
TIA MARIA - AREQUIPA
On July 8, 2019, we were granted the construction permit for this 120,000 ton annual 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.
24
SCC . CAPITAL EXPENDITURES AND EXPLORATION
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.
On January 7, 2021, the Mayor of Islay Province (Arequipa, Peru) awarded a City Diploma
to SPCC in recognition of the Company’s efforts to help Islay’s population during COVID-19
pandemic. SPCC also delivered a portable oxygen plant to a local hospital, and financed COVID
monitoring unit that helped more than 7,000 people in 2021. This year, SPCC strengthened
its relationship with the regional government and successfully overcame its opposition at the
beginning of the project. This new consensus was reflected in the “Social Investment for taxes”
agreement for projects related to sanitary facilities and roads. Our efforts to ensure the current
and long-term well-being of population in the influence area of the Tía María project were
recognized by several local associations, which sent letters to Central Government requesting
the start of project. In July 2021, the Ministry of Energy and Mines sent a letter to Southern
Copper acknowledging its progress in achieving social acceptance of Tía María project.
We reiterate our view 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.
We expect the Peruvian government to acknowledge the significant progress the project has
made on the social front and the important contributions that Tia Maria will generate for Peru´s
economy and, consequently, take the necessary steps to provide SCC with adequate support
to initiate construction.
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 due to their technical process with no emissions released into the
atmosphere.
25
04
DEVELOPMENT -
COMMUNITY
OUTREACH
According to its sustainable development policies, SCC collaborates with
surrounding communities
28
SCC . ENVIRONMENTAL AND SOCIAL MATTERS
Responsible production is an essential axis of our sustainable development strategy,
which is comprised of specific goals and objectives in areas such as water management,
climate change and mining waste, human talent, occupational safety and health, labor
relations, community development, among others. The Company has also updated a range
of sustainability-related corporate policies, which are publicly disclosed on Grupo Mexico’s
website: https://www.gmexico.com/en/Pages/Politicsds.aspx. These policies, which are
applicable to SCC and its subsidiaries, set forth our vision, commitments and objectives
to promote sustainable development and generate shared value for our stakeholders. For
further information on our disclosure on Human Capital Resources, see the section included
in Part I, Item 1 of our Annual Report on Form 10-K for the year ended December 31, 2021.
Also, see our disclosure on our COVID-19 response, environmental disclosure and support
of our local communities elsewhere in this report.
We are committed to improving our ESG performance by adopting best practices. Southern
Copper Corporation has consistently increased its scores on the Corporate Sustainability
Assessment (CSA) of S&P Global over the past four years, and achieved a score of 61
in 2021. As a result, the Company has earned a place in the Dow Jones Sustainability
Index MILA (“Integrated Latin-American Markets” in Spanish) every year for the past 3
years. SCCO’s 2021 score of 61 points is significantly above the average in the Mining
and Metals industry, and the Company achieved one of the highest scores in the industry
for the following 4 indicators: Environmental Reporting, Operational Ecoefficiencies, Social
Reporting, and Corporate Citizenship and Philanthropy. This result was thanks to the
good ratings we obtained for business ethics, labor relations, community development,
environmental and social reporting, human rights, water management and climate change,
among others.
Workers at Casa Grande, the Santa Barbara mine, Chihuahua, Mexico.
29
SCC social policies generate positive relationships.
COMMUNITY OUTREACH
We have implemented several sustainable development policies designed to integrate
the Company´s operations with local communities in areas influenced by our operations.
Some of the relevant policies include the General Policy for Sustainable Development;
a Community Outreach Policy; a General Policy of Respect for the Rights of Indigenous
Peoples and Communities, a Human Rights Policy Statement. These policies are disclosed
publicly on Grupo Mexico’s website and fully apply to Southern Copper Corporation.
These policies focus on creating permanent and positive relationships to generate optimal
social conditions and promote sustainable development in the area. We continue to
make significant expenditures for community programs. For additional information on our
community programs, refer to Corporate Social Responsibility under Note 13 “Commitments
and contingencies” to the consolidated financial statements.
3030
SCC . ENVIRONMENTAL AND SOCIAL MATTERS
The government of Sonora recognized Southern Copper Corporation as a “Culturally
Responsible Company” for the voluntary initiatives implemented to promote and safeguard
the state’s history, culture and traditions. Three of the community programs launched by
the Company were pinpointed as particularly relevant: the Itinerant Documentary Cinema
Workshop, which led to the creation of over 200 videos; the funding provided for organizing
the “Festival Alfonso Ortiz Tirado” (“FAOT”) in Nacozari and Cananea; and the creation
of Youth Orchestras, which has led to the creation of six orchestras and four choirs .
These educational music programs, which are offered to more than 2,100 children in the
communities surrounding our mining operations in Mexico and Peru.
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:
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.
Good Neigbors
Economic Development
Human Development
31
SCC calls on communities to present their own initiatives.
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:
Young volunteers from Casa Grande program.
• 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.
In 2021, to respond to the special needs of each community, the “Casa Grande Movil”
format continued to bring services to the communities near our operations in Mexico.
A similar program, “Casa Nuestra,” was delivered in Peru. During the pandemic, these
programs migrated to an online format. In 2021, 4,566 online workshops were imparted
through more than 15.3 million views. Our offerings increased their followers by 62% in the
social networks and reached a virtual community of more than 486,220 thousand followers
on Facebook.
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.
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 2021, we conducted 2,008 activities, 315 programs and projects
with 323 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.
Worker at the Nursery Forest, San Luis, Potosi Mexico.
34
35
GMX . DIVISIÓN MINERA 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.
These company-sponsored schools are home to 3,705 students from the preschool to
high school levels. Most students are children of employees or of community members. In
addition, we have complemented school subjects with programs for students and parents
and have continued efforts to promote and implement the job training program Forjando
Futuro (“Forging the Future”). This program was created to train the employees needed to
man the Company’s operations and to strengthen the vocational skills of residents in the
Company’s areas of influence in Peru. This program was replicated in Mexico in 2021.
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 the development program. Our commitment to the community is
in the following areas: education, reinforcing capabilities, health, nutrition, infrastructure,
and support to agricultural sector.
SCC contributes to the provinces in which it operates by expanding water infrastructure
for irrigation programs. In 2021, we invested more than $6.7 million in projects to
optimize the use of water in agricultural activities in Mexico and Peru.
36
In 2021, we invested $66 million in education, health, and productive projects,
and also another infrastructure and services.
Projects underway include the “Cularjahuira Dam,”with a capacity of 2.5 million cubic
meters in the Camilaca district; the recovery of 452 hectares in platform areas, with the
participation of the Candarave Irrigation Users Board (these platforms are located in the
districts of Candarave and Camilaca); and engineering studies for the “Callazas Dam,”
which has the capacity to hold 11 million m3 of water. Studies for channel improvement
in the districts of Huanuara and Curibaya are also being conducted. All these projects are
in the province of Candarave in the Tacna region.
37
GMX . DIVISIÓN MINERA SOCIAL INVESTMENT
In 2021, SCC invested more than $ 66 million in social development programs related to
education, health, productive projects, infrastructure and services.
Southern Copper Corporation’s business model is focused on continuously improving the
lives of the residents of the communities in which we operate by encouraging them to
participate in efforts to enhance society’s wellbeing by identifying local leaders who operate
as agents for development.
Investment in Community Development Programs
$ (in millions)
Community development programs, social linking and productive projects
Operating expenses in schools and camps
Infrastructure and equipment in neighboring communities
Total
7.1
17.0
41.9
66.0
RESPONSE TO COVID-19
The Company has launched several programs and initiatives in all of the regions where
we operate to help communities combat the COVID-19 pandemic. In Peru, a partnership
was established with the government in July 2021 to help vaccinate 40% of the population
in the five regions where our operations are located. The Company donated over $2.45
million to help build, modernize, equip and operate vaccination centers. In the context of
this partnership, more than one million doses of COVID-19 vaccines were applied in five
regions of Peru (Apurimac, Arequipa, Cajamarca, Moquegua and Tacna) where Southern
Copper Corporation has operations or projects. This achievement surpassed our initial
goal of administering 850 thousand doses and reached 48% of the target population.
As of December 31, 2021 96.1% of Southern Copper Corporation’s workforce was fully
vaccinated against COVID-19.
38
SCC . ENVIRONMENTAL AND SOCIAL MATTERS
Minera Mexico has invested approximately $600,000 to purchase and operate a
molecular laboratory for PCR tests in the community of Cananea, Sonora. This facility
is offering testing to members of the community and beneficiaries of the Federal Public
Health System. The federal sanitary authority is currently using the Company facilities
as vaccination sites, where Minera México’s personnel are providing medical support,
food and technical assistance to register vaccination in the official portal of the Mexican
Federal Government.
OUR ENVIRONMENTAL COMMITMENT
Southern Copper mining operations are aligned with the best practices in the sector, in order
to guarantee that our environmental impacts are minimal and preserve the environment. In
this sense, we operate following our environmental management system:
• Plan, design, build and operate our facilities with a preventive approach throughout their
life cycle.
• Reduce the riskiest and damage that could be caused to the environment by changes in
land use, waste management, emissions, and discharges.
• Improve our environmental performance by going beyond environmental compliance.
• Reduce our carbon footprint and contribute to an environment resilient to climate
change.
• Conserve water by efficient process production and contributes to the availability of
water in close basins.
• Promote the efficient use of energy.
• Contribute to the conservation of biodiversity and the environment, which generates
ecosystems with a positive impact.
• 8. SCC adds value to its customers and suppliers, indirectly to society, and improves
its activities for a better environment.
39
40
SCC . ENVIRONMENTAL AND SOCIAL MATTERS
SCC´s operations units have international and local certifications in the countries we operate.
SCC also has six environmental management systems that have been certified by ISO
14001:2015. This reflects the Company’s keen commitment to preserving the environment.
SCC’s copper production is committed to the “Copper Mark” standard, which promotes
responsible production practices in the industry, and adheres to the UN Sustainable
Development Goals. The open-pit mine La Caridad and the Sonora Metallurgical Complex
(smelter and refinery) were the first facilities in SCC to initiate the process to obtain the Copper
Mark certification. SCC expects to demonstrate to customers, investors, communities, and
other stakeholders that our copper production meets Copper Mark (32 in total) criteria in the
environment, social, and governance aspects. An independent audit verifies commitment
with these criteria.
In 2021, $150 million were invested in environmental areas: air, climate change, soil, waste,
biodiversity, water, and administrative management.
CLIMATE CHANGE
Southern Copper Corporation is committed to preserving the environment, minimizing
the carbon footprint of our operations, and efficiently managing climate-related risks and
opportunities. Our approach seeks continuous improvement in the responsible use of natural
resources, complying with strict applicable legal standards for the prevention, mitigation,
control and remediation of environmental impacts.
Mining mill at Buenavista del Cobre Concentrator, Sonora, Mexico.
41
SX/EW III Plant, Sonora, Mexico.
Everyone is responsible for stemming climate change, including the private sector.
Climate change may impact our operations; as such, we have identified potential risks
linked to global temperature change to anticipate any situation that may be adverse for
the Company.
We recognize that climate change will likely influence our strategy in various ways, and
we aim to meet the expectations of global business trends, which are moving toward
demanding products with lower carbon footprints. SCC recognizes the importance and
urgency of addressing climate change, evidenced by the significant decrease in our
operating greenhouse gas emissions in the last three years and the decrease in carbon
footprint per ton of copper produced. Our focus is to seek continuous improvement in
the responsible use of natural resources, implementing efficiency measures to minimize
energy, water, and other natural resources consumption.
42
SCC . ENVIRONMENTAL AND SOCIAL MATTERS
Since 2006, Grupo Mexico, our indirect parent company, has generated annual reports on
SCC’s performance with regard to the Global Reporting Initiative Standards (GRI). As of 2020,
the Group’s sustainability reports also include the metrics of the Sustainability Accounting
Standards Board (SASB) and the recommendations of the Task Force on Climate-Related
Financial Disclosure (TCFD).
Since 2016, Grupo Mexico has participated in the annual assessment of Climate Change
of CDP (formerly known as Carbon Disclosure Project). In 2021, its score improved two
levels from C to B, which is superior to the Metal, smelting, refining & forming average; the
averages in the region where the Company operates, and the global average.
The Company is committed to continuously improving its management of the aforementioned
issues. Accordingly, it has initiated a multi-year process to align its disclosures on climate
change with the TCFD recommendations. As of 2020, Grupo Mexico’s Sustainable
Development Report includes sections on climate-related risks and opportunities, as well
as more detailed information on climate targets, strategy and governance mechanisms.
Further details are available in the report, which can be accessed at https://www.gmexico.
com/en/Pages/development.aspx
We refer our investors to the website, our parent company, for details on the aforementioned
initiatives only for informational purposes. We do not claim that this Internet link is an active
one or incorporates contents of the website in this Report on Form 10-K.
43
43
GMX . DIVISIÓN MINERA SCC implements best practices for efficient energy
use at its operations.
Climate change represents challenges to SCC. We are working on:
• Efficiency use of energy.
• Increase the consumption of renewable energy sources and their development.
• Increase our electricity self-supply.
• Promote forest greenhouse gases capture activities (GHG).
In this sense, we are diversifying our energy supply sources to contemplate clean and renewable
generation. Our operations in Mexico mitigate a portion on their greenhouse emissions by
utilizing electricity from clean energy sources, which are generated through high-efficiency
combined-cycle power plants and a wind farm.
44
Additionally, we take advantage of smelter emissions and recovery boilers to generate energy.
In Peru, 63% of the electricity consumed is generated by hydroelectric and renewable
sources.
By implementing efficient energy projects, as well a using cleaner fuels and renewable energy,
we mitigated scope 1 and 2 emission in 2021 for a total of 250,000 tons of CO2. This would
be equivalent to removing 55,000 passenger vehicles from circulation for one year.
In addition to generating and consuming energy from renewable sources and cleaner fuels,
we also implement best practices to allow us to boost the energy efficiency of our operations
by improving, redesigning, converting and adapting equipment; rationally using resources;
and improving staff training.
45
GMX . DIVISIÓN MINERA CLIMATE-RELATED TRANSITION RISKS
SCC recognizes that climate change has the potential to generate transition risks for the
Company associated with, for instance, technological and other operational changes;
changing market trends; or credit risks. Based on its assessment, however, SCC does not
believe at this time that said risks have had or will have a material impact on its business,
financial condition or results of operation. The impacts of climate change policy and
regulatory changes in Mexico and Peru are described below.
Mexican Operations: Several taxes are applicable to SCC’s mining operations in Mexico,
including federal and state fossil fuel taxes and taxable obligations under Mexico’s emission
trading scheme. These taxes range from US$2.5/tCO2 to US$12.5/tCO2 (approximately)
and entail regional taxes applicable in the States of Baja California and Zacatecas as well
as a federal tax linked to Mexico’s carbon market system, which is currently is in its pilot
phase. The requirements associated with this scheme are currently applicable to onlys two
business units, the metallurgic and lime plants located in Sonora, which generate annual
GHG emissions levels above the threshold of 100,000 tCO2e per year contemplated by the
scheme. These business units are required to report and verify their emissions once a year
if their average costs run less than $6,000 per each unit. SCC units located in Mexico that
emit more than 25,000 tons of CO2 equivalent per year (all our units except the Guaymas
Terminal and the Taxco underground mine) must report their emissions to the National
Emissions Registry (RENE) each year and verify emissions reported every three years. Our
total annual compliance costs related to climate change regulations in Mexico were less
than $30,000 for each of the three years ended December 31, 2021; this amount had no
material impact on the Company.
Workers at Buenavista del Cobre mine, Sonora, Mexico.
46
47
GMX . DIVISIÓN MINERA Peruvian Operations: On April 17, 2018, the Peruvian government enacted Law No.
30754, which establishes a Climate Change Framework. Through this law, it is declared of
national interest to promote public and private investments in the management of climate
change. The law proposes creating an institutional framework to address climate change
in Peru and outlines new measures, particularly with respect to climate change mitigation.
For example, it includes provisions relating to: increasing carbon sequestration and the
use of carbon sinks; afforestation and reforestation practices; changes in land use; and
sustainable transportation systems, solid waste management, and energy systems. This is
the first climate change framework law in Latin America that incorporates obligations of the
Paris Agreement. The Regulation of this law was enacted by Supreme Decree 013-2019,
which was published on December 31, 2019, and is applicable to all Peruvian institutions
and organizations. Peruvian regulations are expected to be extended to non-governmental
entities in the future.
For the Company’s operations in Peru, no mechanism to place carbon pricing, and seems
unlikely to change before 2025, when the country is due to review its NDCs (nationally
determined contributions) according to the Paris Climate Agreement.
The Company recognizes that national or global greenhouse gas emission reduction
goals have an impact on the business. Climate-related changes in market trends may
include a lower demand for goods that produce significant greenhouse gas emissions or
those derived from carbon-based energy sources and an increase demand for goods that
generate lower emissions. Additionally, there will be greater demand for goods that have
a lower carbon footprint or for materials that help reduce emissions from the point of
origination. Large copper consumers will more than likely increasingly seek to acquire low
or zero-emission products to achieve their own GHG emission reduction targets. Adapting to
this trend inadequately or with insufficient speed might result in reputational risks or loss of
market opportunities for SCC. Based on these assessments, the Company does not believe
that these impacts have been, or are reasonably expected to be, material at this time.
48
La Caridad mine, Sonora, Mexico.
The Company will continue evaluating how climate-related risks could affect its financial
interests and will define appropriate mitigation and adaptation responses as necessary.
The Company will also continue evaluate how variations in global and national GHG
emissions may increase the regulatory burden as well as the demand for low-carbon or
carbon-free products from customers, investors, and stakeholders in general. Recently,
investors have been asking the Company to disclose its GHG emission reduction goals,
aligned with the Paris Agreement to limit global temperature rise to below 2 degrees
Celsius. The Company is currently defining these targets, and aims to publicly disclose
the same in forthcoming reporting.
49
GMX . DIVISIÓN MINERA Ilo refinery, Moquegua, Peru.
CLIMATE-RELATED OPPORTUNITIES
In accordance with the goals of the Paris Agreement on climate change, global GHG
emissions reductions must be achieved to contain global warming below 1.5 degrees
Celsius above pre-industrial average temperature. Copper is a critical component for many
technologies required for transition to low-carbon economies, including wind and solar
photovoltaic power generation, electric vehicles, power grids, and more. Consequently, the
demand for copper is expected to increase significantly, which could boost copper prices
and positively impacts in Company’s.
Additionally, we believe that the cost of renewable electricity generation will become
increasingly competitive with the costs of conventional power plants, offering an opportunity
to reduce both operating costs and GHG emissions.
50
As one of the world’s largest copper producers, we believe that the implications of climate
change could benefit SCC’s reputation as stakeholders increasingly recognize the vital role
that copper plans in helping societies migrate to low carbon economies. However, we realize
that this is conditional upon the Company’s commitment to help achieve the objectives
of the Paris Agreement and its ability to demonstrate clear and sustained progress in
decarbonizing its operations as required by said agreement.
SCC is a sustainable company. Always improving its competitiveness and contributing to a
low-carbon economy, reducing its carbon footprint.
51
GMX . DIVISIÓN MINERA BIODIVERSITY
Southern Copper Corporation implements actions to generate positive impacts, reaffirming
its commitment to the environment and biodiversity and in accordance with its Environmental
Policy. Our biodiversity plans are aligned with the guide of Good Practices for Mining and
Biodiversity published by the International Council of Mining and Metals (ICMM). The
Company is implementing mitigation measures, contributing to environmental preservation.
SCC is the largest tree producer in the mining industry in Mexico. For areas inside and
outside of our operations, SCC has 6 forest nurseries and greenhouses to grow flora and
fauna to contribute to reforestation and rehabilitation.
As part of our effort to conserve biodiversity, we have an 89-hectare Environmental
Management Unit (UMA), which has been conditioned to replicate -through enclosures-
threatened and endangered species such as the Mexican Gray Wolf and Gould’s Turkey.
SCC’s UMA in Mexico is located in a strategic area to boost Mexican Gray Wolf reproduction.
Since the beginning of this program, 400 wolves have been born; of the 50 that were
released into the wild, 23 were born at UMA. SCC is part of the US-Mexico Binational
Program for Recovering the Mexican Gray Wolf.
Our recovery program in Ite Bay (Tacna, Peru) secured 1,600 hectares of wetland, which is
home to a variety of waterfowl life. This area has become a new tourist attraction.
5252
SCC . ENVIRONMENTAL AND SOCIAL MATTERS
WATER CARE
SCC has developed projects to guarantee the sustainability of water resources. In our
operations, we reuse our water as well as resources discharged by third parties. At some
of our units, we utilize municipal wastewater, which we treat prior to use. At our operations
in San Luis Potosí and Cananea (Mexico), we provide freshwater to the local population.
SCC has implemented modern pumping systems and thickeners to recover water from
tailings and also utilizes closed circuits to recirculate water. In 2021, 74.5% of water
consumption was recovered, which reflects good management.
In 2021, SCC has invested in infrastructure and technology for reusing water consumption,
including the optimization of closed circuits, as well as the installation of thickeners and
high-efficiency tailings filters.
53
05
RESULTS OF
OPERATIONS
Cathodes at Ilo refinery, Moquegua, Peru.
56
SCC . RESULTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 2021, 2020 AND 2019.
Net income attributable to SCC in 2021 was $3,397.1 million, compared to $1,570.4
million in 2020 and $1,485.8 million in 2019. In 2021, net income attributable to SCC
increased by $1,826.7 million (116.3%), which was mainly due to higher metal prices and
strict cost controls.
In 2020, net income attributable to SCC increased by $84.6 million, which was driven
primarily higher net sales. In 2019, net income decreased in a context marked by increases
in the cost of sales; depreciation, amortization and depletion; as well as lower copper and
molybdenum prices.
The Company presents its operating cash costs with and without the revenues of its by-
products (molybdenum, silver, sulfuric acid, etc.). SCC excludes the cost of purchases of
third-party metal; depreciation, amortization and depletion; exploration; workers participation
provisions; other items of non-recurring nature; as well as royalty charges from its operating
cash cost calculation.
The Company’s operating cash cost per pound of copper produced, as previously defined,
for the three years ended December 31, is as follows:
Operating Cash Cost without
by-product revenues
Operating Cash Cost with
by-product revenues
2021
2020
2019
(dollar per pound)
1.64
0.67
1.37
0.69
1.52
0.88
Ore load at Toquepala mine, Tacna, Peru.
57
ANNUAL REPORT 2021
As is evident in the table above, our cash cost per pound before by-product revenues in 2021
was 19.7% higher than the figure in 2020 and 7.9% higher than 2019’s result. The 2021
increase was due to an increase in the production cost, coupled with a decrease in production.
Our cash cost per pound of copper with by-product revenue decreased 3% versus 2020 and
24% versus 2019, which was attributable to an increase in by-product revenue, which was
partially offset by higher costs.
NET SALES
2021-2020: Net sales in 2021 were $10,934.1 million, the highest in our history, compared
to $7,984.9 million in 2020. This growth represented a YoY increase of $2,949.2 million,
or 36.9%, and was primarily driven by growth in copper (+51.1% - LME), molybdenum
(+81.0%), silver (22.1%) and zinc (+32.0%) prices. This effect was partially offset by lower
copper (-11.0%), silver (-14.1%) and zinc (-12.6%) sales volumes.
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 the
result of higher sales volumes of copper (+6.1%), silver (+8.8%), molybdenum (+12.7%)
and zinc (+1.0%) as well as higher copper (+2.9%) and silver (+27.7%) prices. This effect
was slightly offset by lower molybdenum (−24.0%) and zinc (-11.2%) 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 the prices 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.
5858
La Caridad mine, Sonora, Mexico.
2021
2020
2019
$
$
$
$
$
4.23
4.24
15.51
1.36
25.18
$
$
$
$
$
2.80
2.80
8.57
1.03
20.62
$
$
$
$
$
2.72
2.72
11.27
1.16
16.16
2,052.9
2,305.9
2,173.8
66.8
201.9
19.2
66.7
230.9
22.4
59.2
228.5
20.6
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
(1) The Company´s molybdenum production is sold as concentrates.
Volume represents pounds of molybdenum contained in concentrates.
59
GMX . DIVISIÓN MINERA
06
COMMITMENT -
ENVIRONMENTAL
AFFAIRS
Worker at anode casting wheel at the Smelter, Sonora, Mexico.
62
SCC . COMMITMENT - ENVIRONMENTAL AFFAIRS
ENVIRONMENTAL MATTERS
The Company has instituted extensive environmental conservation programs at its mining
facilities in Peru and Mexico. The Company’s environmental programs include, among
others, water recovery systems to conserve water and minimize the impact on nearby
streams, reforestation programs to stabilize the surface of the tailings dams and the
implementation of scrubbing technology in the mines to reduce dust emissions.
Environmental capital investments in years 2021, 2020 and 2019, were as follows (in
millions)
PRECIO PROMEDIO DE METALES
Mexican operation
Peruvian operation (*)
Total
(*) 2020 activity includes prepayment settlements classified as expenses.
2021
2020
2019
$
$
62.3
$
6.4
68.7
$
41.1
(3.3)
37.8
$
$
64.3
18.6
82.9
MEXICAN OPERATIONS
The Company’s operations are subject to applicable Mexican federal, state and municipal
environmental laws, to Mexican official standards, and to regulations for the protection of the
environment, including regulations relating to water supply, water quality, air quality, noise levels
and hazardous and solid waste.
The principal legislation applicable to the Company’s Mexican operations is the Federal General
Law of Ecological Balance and Environmental Protection (the “General Law”), which is enforced
by the Federal Bureau of Environmental Protection (“PROFEPA”). PROFEPA monitors compliance
with environmental legislation and enforces Mexican environmental laws, regulations and
official standards. It may also initiate administrative proceedings against companies that violate
environmental laws, which in the most extreme cases may result in the temporary or permanent
shutdown of non-complying facilities, the revocation of operating licenses and/or other sanctions
or fines.
Pine seedlings, Forest Nursery, San Luis Potosi, Mexico.
63
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”) 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
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.
64
SCC . COMMITMENT - ENVIRONMENTAL AFFAIRS
PERUVIAN OPERATIONS
The Company’s operations are subject to applicable Peruvian environmental laws and
regulations. The Peruvian government, through the Ministry of Environment (“MINAM”)
conducts annual audits of the Company’s Peruvian mining and metallurgical operations.
Through these environmental audits, matters related to environmental obligation, compliance
with legal requirements, atmospheric emissions, effluent monitoring and waste management
are reviewed. The Company believes that it is in material compliance with applicable
Peruvian environmental laws and regulations. Peruvian law requires that companies in the
mining industry provide assurances for future mine closure and remediation. In accordance
with the requirements of this law, the Company’s closure plans were approved by MINEM.
See Note 10 “Asset retirement obligation,” 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, 2021, the Company
maintained a lower daily average level of µg/m3 of SO2 than those 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.
65
07
GENERAL
INFORMATION
Bicentennial Park, San Luis Potosi, Mexico.
ANNUAL REPORT 2021
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 Peru, Mexico and the world.
We were incorporated in Delaware in 1952 and have conducted copper mining operations
since 1960. Since 1996, our common stock has been listed on both the New York and the
Lima Stock Exchanges.
Our Peruvian copper operations involve mining, milling and flotation of copper ore to produce
copper concentrates and molybdenum concentrates; the smelting of copper concentrates
to produce anode copper; and the refining of anode copper to produce copper cathodes. As
part of this production process, we 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. SCC operates a smelter and refinery west of the Toquepala
and Cuajone mines in the coastal city of Ilo, Peru.
Our Mexican operations are conducted through our subsidiary, Minera Mexico S.A. de C.V.
(“Minera Mexico”), which we acquired in 2005. 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.
68
SCC . GENERAL INFORMATION
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
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.
69
ECONOMIC GROUP
SCC, indirectly, is part of “Grupo Mexico S.A.B. de C.V.” which owns 100% of Americas
Mining Corporation (“AMC”).
SEVERAL ACTIVITIES
Location
Inscription in the RPMV
%
Grupo Mexico, S.A.B. de C. V.
Grupo Mexico (Services), 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.
Mexico
Mexico
USA
USA
Mexico
Mexico
Mexico
Mexico
Southern Peru Copper Corporation, Agencia en Chile
Chile
Si
100
100
88.90
99.96
100
100
98.20
100
Southern Peru Copper Corporation, Sucursal del Peru
Compañia Minera Los Tolmos, S.A.
Peru
Peru
yes (1)
99.291
100
1
2
3
4
5
6
7
8
9
10
11
(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
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.
7070
SCC . GENERAL INFORMATION
VARIABLE INCOME
COTISATION 2021
SYMBOL ISIN
Mnemonic
Year - Month
Open $
Close $
Maximun $
Minimun $
US 84265V1052
US 84265V1052
US 84265V1052
US 84265V1052
US 84265V1052
US 84265V1052
US 84265V1052
US 84265V1052
US 84265V1052
US 84265V1052
US 84265V1052
US 84265V1052
SCCO
SCCO
SCCO
SCCO
SCCO
SCCO
SCCO
SCCO
SCCO
SCCO
SCCO
SCCO
2021-01
2021-02
2021-03
2021-04
2021-05
2021-06
2021-07
2021-08
2021-09
2021-10
2021-11
2021-12
68.18
67.00
73.30
71.77
69.85
70.90
64.00
66.85
61.55
56.80
59.90
58.00
66.40
71.33
68.52
69.95
69.90
64.35
65.45
62.45
55.80
60.30
58.63
61.78
71.67
83.00
79.32
77.39
82.58
72.10
65.45
67.08
63.15
66.50
62.30
61.78
66.40
67.00
65.50
65.15
67.23
58.72
60.00
60.50
55.49
56.15
56.45
56.43
Average
Price $
69.44
73.78
72.78
72.39
72.35
68.16
62.44
64.41
57.63
61.75
59.95
59.33
7171
La Caridad mine, Sonora, Mexico.
DESCRIPTION OF OPERATIONS AND DEVELOPMENT REGARDING THE
ISSUING ENTITY PURPOSE
CORPORATE PURPOSE
The purpose of SCC is to engage in activities allowed by the laws of the State of Delaware.
Its main activity is to extract, mill, concentrate, smelt, treat, prepare for market, manufacture,
sell, exchange and, in general, to produce and negotiate for sales of copper, molybdenum,
gold, silver, lead, zinc, iron and any other class of minerals and materials or other materials,
effects and goods of any nature or description; as well as to explore, exploit, sample, examine,
investigate, recognize, locate, appraise, buy, sell, exchange, etc., mining concessions and
mining deposits. SCC belongs to the CIIU 1320 group.
The term of duration of the Company is indefinite.
7272
SCC . GENERAL INFORMATION
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 as “Southern
Copper Corporation”.
In 1954, SCC established a Branch in Peru to carry out mining activities in this country. The
Branch was established under public instrument certified by public notary from Lima, Dr.
Ricardo Fernandini Arana, on November 6, 1954.
The Branch is registered in the Electronic Record Nº 03025091 of the Juridical People of
the Registry Office of Lima and Callao.
ACTIONS FOLLOWING COMPANY INCORPORATION:
Capital increase:
By Public Deed dated May 31, 1995, signed before notary public of Lima, Dr. Carlos A.
Sotomayor Bernos, the Branch capital increase was formalized. 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.
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.
73
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, an agreement was reached to merge Southern Peru Copper
Corporation and Southern Peru Limited. The first company absorbed the second and
assumed all its assets and liabilities, including the Branch in Peru. This merger did not imply
any changes to the share percentage in the corporate capital or in the Equity Participation
Account (Investment Shares).
As a consequence of the merger, the mining activities of the corporation in Peru once 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.
7474
Workers inside the Santa Barbara Mine, Chihuahua, Mexico.
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. According, SPCC became
a subsidiary of Grupo Mexico, which holds its shares through Americas Mining Corporation
(AMC).
75
SX/EW III Plant, Buenavista del Cobre, Sonora, Mexico.
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.
7676
SCC . DIVISIÓN TRANSPORTES
SCC $500 MILLION SHARE REPURCHASE PROGRAM
In 2008, our Board of Directors (‘‘BOD’’) authorized a $500 million share repurchase program
that has since been increased by the BOD and is currently authorized to $3 billion. 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, 2021 was $61.71 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, 2021.
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.
77
SPECIAL NOMINATING COMMITTEE AND SPECIAL INDEPENDENT
DIRECTORS:
The changes to the Certificate of Incorporation require the Board to include a certain
number of special independent directors. The Special Nominating Committee functions as
a special committee to nominate special independent directors to the Board. Pursuant to
our Amended and Restated Certificate of Incorporation, as amended, a special independent
director is any director who (i) satisfies the independence requirements of the New York
Stock Exchange or NYSE (or any other exchange or association on which the Common Stock
is listed) and (ii) is nominated by the Special Nominating Committee. 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
next 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.
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.
78
SCC . GENERAL INFORMATION
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
The Company has entered into certain transactions in the ordinary course of business with parties that are
controlling shareholders or their affiliates. These transactions include the lease of office space, air and railroad
transportation, construction services, energy supply, and other products and services related to mining and refining.
The Company lends and borrows funds among affiliates for acquisitions and other corporate purposes. These
financial transactions bear interest and are subject to review and approval by senior management, as are all
related party transactions. Article Nine of the Amended and Restated Certificate of Incorporation of the Company
prohibits the Company from engaging in a Material Affiliate Transaction that was not the subject of prior review by
a committee of the Board of Directors with at least three members, each of whom is independent, and defines a
Material Affiliate Transaction as a transaction or series of related transactions between Grupo Mexico or one of its
affiliates (other than the Company or its subsidiaries), on the one hand, and the Company or one of its subsidiaries,
on the other hand, that involves consideration of more than $10.0 million in the aggregate. It is the Company’s
policy that (i) a Material Affiliate Transaction not be entered into or continued without the review and approval by
the Audit Committee or its subcommittee of related party transactions comprised of independent directors,(ii) any
potential related party transaction process with aggregate consideration between $8.0 million and $10.0 million be
authorized by the General Counsel and Chief Financial Officer of the Company and (iii) all related party transactions,
including any Material Affiliate Transaction, be reported to the Audit Committee of the Board of Directors or to its
subcommittee of related party transactions.
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.
79
Hauling at Toquepala mine, Tacna, Peru.
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.
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.
8080
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
81
GMX . DIVISIÓN MINERA 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.
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
82
La Caridad mine, Sonora, Mexico.
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.
INFORMATION ABOUT PLANS AND INVESTMENT POLICIES
See Capital Expenditures and Exploration on page 18.
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.
83
GMX . DIVISIÓN MINERA
84
SCC . GENERAL INFORMATION
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 $ 114 million, $50.0 million and $38.1 million in 2021, 2020 and
2019, respectively, with respect to this tax. These amounts are included as “income taxes”
in the consolidated statement of earnings.
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 2021, 2020 and 2019, we made provisions of $140.8, $60.6 million
and $42.3 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%.
Cathodes from Refinery, Ilo, Moquegua, Peru.
85
Operador at Cuajone mine, Moquegua, Peru.
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.
OPERATIONS IN MEXICO
LA CARIDAD MINE
“La Caridad Concentrator” began operations in 1979. The concentrator has a current
capacity of 94,500 tons of ore per day. “Molybdenum Plant” started operations in 1982,
with a production capacity of 2,000 tons of copper-molybdenum concentrate per day.
8686
SCC . GENERAL INFORMATION
“La Caridad SX-EW” has an annual design capacity of 21,900 tons of copper
cathodes. Approximately 953.8 million tons of leaching ore with an average
grade of approximately 0.24% 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, as we closed the
San Luis Potosi smelter.
“La Caridad Refinery” started operations in July, 1997 with a production capacity
of 493 tons of copper cathode per day, 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.
87
ANNUAL REPORT 2021
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 115,000 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
1. The Santa Barbara Unit with a milling capacity of 5,800 tons of ore per day.
2. The Santa Eulalia Unit with a milling capacity of 1,450 tons of ore per day.
3. The San Martin Unit with a milling capacity of 4,400 tons of ore per dayl.
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.
88
SCC . GENERAL INFORMATION
PERUVIAN OPERATIONS
TOQUEPALA
1. Toquepala Concentrator. Directorial Resolution N° 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 N° 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.
2. Toquepala Leaching Plant (SX/EW). Directorial Resolution N° 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 N° 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 N° 291-2003-EM-DGM/
DPDM, authorized operation of the SX/EW plant to a throughput of 18,737 tons/day. Resolution
dated December 15, 2021, based on Report N° 0457-2021-MINEM-DGM-DTM/PB, authorized
operation of the SX/EW plant from 18,737 tons/day to 18, 756 TMD.
89
CUAJONE
1. Botiflaca Concentrator in Cuajone: Directorial Resolution N° 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 N° 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.
2. Cuajone Leaching Plant (LX/EW). Directorial Resolution No.155-96-EM/DGM dated May
6, 1996 approved the operation of the Cuajone Leaching plant. The resolution granted
400 hectares of surface land and authorized a throughput of 2,100 MT per day. Based
on Report N° 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.
Aereal view of Concentrador 2, Toquepala mine, Tacna, Peru.
90
91
GMX . DIVISIÓN MINERA Cathodes at the Refinery, Ilo, Moquegua, Peru.
ILO
1. Ilo Smelter: Authorized (definitely) by Directorial Resolution N° 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 N° 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.
2. Ilo Refinery: Authorized by Report N° 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.
9292
Based on Report N° 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° 414-2010-MEM-DGM-DTM/PB, authorized changes in Ilo copper refinery without
expanding its capacity throughput.
3. Sulfuric Acid Plant: Authorized by Directorial Resolution N° 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.
93
GMX . DIVISIÓN MINERA Smelter workers, Ilo, Moquegua, Peru.
Based on Report N° 313-98-EM/DGM/DPDM dated May 21, 1998 the “Director General
de Mineria” authorized the expansion of the Ilo Sulfuric Acid Plant to a capacity of
300,000 tons per year production.
4. “Coquina Wash Plant and Sea shell Concentrates” authorized to operate by Directorial
Resolution Nº 110-93-EM/DGM of August 3, 1993. The plant processes 95 TC/h of raw
material (coquina) recovered from nearby mines. Seashell is produced separating sand
and other materials from the coquina using seawater-washing screens.
Resolution N° 038-2011-MEM-DGM-DTM/PB dated February 2, 2011, based on
Report N° 035-2011-MEM-DGM-DTM/PB, authorized 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.
9494
SCC . GENERAL INFORMATION
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. In 2021, the Company updated its health and safety policy, as disclosed
on the Grupo México website.
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.
In 2021, we operated 12 units in Mexico and Peru, where Occupational Safety and Health
Management Systems have been certified according to OHSAS 18001: 2007 and ISO
45001:2018. We maintain 8 units that are certifified by ISO45001-2019. Additionally, in
Mexico, we maintain 26 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 2021, the accident rate (IR) increased 61% compared to 2020, but witn similar rate
to previous years. We will continue working to reinforce prevention activities to diminish
risks and ensure the physical integrity of our collaborators.
95
Accident Rate (IR)
SCC, 2017-2021
2017
2018
2019
2020
2021
0.75
0.74
0.82
0.49
0.79
IR =
N° of disabling accident”
N° of total men - hours worked
x 200,000
Severity Rate (GR)
SCC, 2017-2021
2017
2018
2019
2020
2021
0.51
0.31
0.89
0.19
0.81
GR =
No.of days lost
No.of days lost” /” N° of total men - hours worked
x 1,000
The accomplishments 2021 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 2021 awarded the “Jorge Rangel
Zamorano” Silver Helmet Trophy to the 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.
96
SCC . GENERAL INFORMATION
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 2017-2021
2017
2018
2019
2020
2021
0.34
0.18
0.42
0.17
0.14
ODR =
N° of Cases of Occupational Diseases
N° 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.
97
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
TARGETING EMPLOYEES’ FAMILIES AND THE COMMUNITY
GUIDED
TOURS
“KNOWING MY
COMPANY”
HEALTH
FAIR
HEALTH
CAREER
FAMILY
FIREFIGHTING
COURSES
FAMILY
CONTESTS
TO PROMOTE
VALUES
FAMILY
GATHERINGS
AND PARADES
989898
SCC . GENERAL INFORMATION
INVESTMENT IN SAFETY AND HEALTH
In 2021, we invested over $70 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
Total Mexico
Total Peru
Total Ecuador
Total Argentina
Total Chile
Total Corporate Office
Total OHYSA
Total
2021
2020
2019
2018
2017
9,722
4,675
35
15
7
4
5
8,962
4,739
58
4
6
3
5
9,358
4,890
23
15
9
1
5
9,002
4,850
30
5
5
2
5
8,450
4,628
27
18
10
2
5
14,463
13,777
14,301
13,899
13,140
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.
99
Leaching Pads, Buenavista del Cobre, Sonora, Mexico.
ADMINISTRATIVE JUDICIAL OR ARBITRATION PROCESSES LITIGATION
See Note 13 “Commitments and Contingencies” to our Consolidated Financial Statements
on our 2021 Form 10-K.
Changes of those responsible for the preparation and revision of the financial Information
At December 31, 2021, no changes have been made.
Information related to the stock entered in the Stock Market Public.
COMMON STOCK
On November 29, 1995, the Company offered to exchange the recently issued common
shares for 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.
100
GMX . GENERAL INFORMATION
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, 2021, a record number of 773,086,869 shares of common stock of the
Company, par value $0.01 per share, were outstanding.
101
CORPORATE NOTES
Between July 2005 and November 2012, the Company issued senior unsecured
notes six times totaling $4.2 billion, as listed above. Interest on the notes is paid
semi-annually in arrears. The notes rank pari passu with each other and rank
pari passu in right of payment with all of the Company’s other existing and
future unsecured and unsubordinated indebtedness. On April 20, 2015, the
Company issued $2.0 billion of fixed-rate senior unsecured notes. This debt
was issued in two tranches, $500 million due 2025 at an annual interest rate of
3.875% and $1.5 billion due 2045 at an annual interest rate of 5.875%. These
notes are general unsecured obligations of the Company and rank equally with
all of its existing and future unsecured and unsubordinated debt. Net proceeds
are being used for general corporate purposes, including the financing of
the Company´s capital investment program. The notes were issued with an
underwriters’ discount of $20.2 million. Additionally, issuance costs of $11.8
million associated with these notes were paid and deferred. The unamortized
balance of the discount and the costs are presented net of the carrying value of
the debt issued and are amortized as interest expense over the life of the loan.
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. The Company has registered these notes under the Securities Act of
1933, as amended. The Company may issue additional debt from time to
time pursuant to certain of the indentures.
102
Anode casting wheel at the Smelter, Ilo, Moquegua, Peru.
If the Company experiences a “Change of Control Triggering Event”, the Company must
offer to repurchase the notes at a purchase price equal to 101% of the principal amount
thereof, plus accrued and unpaid interest, if any. A Change of Control Trigger Event means
a Change of Control (as defined) and a rating decline (as defined), that is, if the rating of the
notes, by at least one of the rating agencies shall be decreased by one or more gradations.
At December 31, 2021, the Company was in compliance with the covenants of the notes.
Please see Note 11 “Financing” for a discussion about the covenants’ requirements with
regard to our long-term debt, on our 2021 Form 10-K.
103
GMX . DIVISIÓN MINERA 104
SCC . MEMBERS OF THE BOARD
08
MEMBERS OF
THE BOARD OF DIRECTORS
AT DECEMBER 31, 2021
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.
Buenavista del Cobre mine, Sonora, Mexico.
105
ANNUAL REPORT 2021
OSCAR GONZALEZ ROCHA, DIRECTOR.
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 November 1st, 2014. 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 1988 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.
106
SCC . MEMBERS OF THE BOARD
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 nine 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, which are 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 Mexicanos (SATMEX)
(telecommunications), Banco Mexicano, Grupo Financiero Inverlat (financial services) and
Minera Santa Gertrudis (mining). During the last seven 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.
107
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. Since 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, has acted as Chairman of the board of directors of Maxcom
Telecomunicaciones, S.A.B. de C.V. (Mexican telecommunications company).
From April 2011 to May 2013, Mr. Castillo Sanchez Mejorada was a senior advisor at Grupo
Financiero Banorte, S.A.B. de C.V.(“GFNorte”) a financial holding institution that controls
a bank, a broker dealer and other financial institutions in Mexico. From October 2000 to
March 2011, Mr. Castillo Sanchez Mejorada was the Chairman of the board of directors and
Chief Executive Officer of Ixe Grupo Financiero, S.A.B. de C.V., a Mexican financial holding
company that merged into GFNorte 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 that is 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.
108
SCC . MEMBERS OF THE BOARD
LEONARDO CONTRERAS LERDO DE TEJADA, DIRECTOR NOMINEE.
Mr. Leonardo Contreras Lerdo de Tejada joined AMC on September 10, 2018. He was
appointed President of ASARCO in January 2019, Director for Commercial and Supply Chain
of AMC in August 2019 and President of IMMSA, a subsidiary of the Company, in August
2020. Mr. Contreras Lerdo de Tejada has more than 10 years of experience in private equity,
investment banking, and entrepreneurship. Prior to joining AMC, Mr. Leonardo Contreras
Lerdo de Tejada founded Murano Capital in September 2015, a private investment vehicle
targeting primary investments in companies with solid operating teams with the potential
to transcend globally. Prior to founding Murano Capital, Mr. Contreras Lerdo de Tejada
worked at Nexxus Capital for almost five years during which time he participated in several
private and public equity and debt transactions. At Nexxus Capital, he was a member of
the investment and fundraising teams, as well as responsible for day-to-day involvement,
monitoring and reporting of three portfolio companies engaged in healthcare, education and
e-commerce. Earlier on in his career, he co-founded a toy manufacturing and distribution
start-up, which was acquired by a strategic buyer, and co-founded a Smoothie and Juice
Bar start-up company. Mr. Contreras Lerdo de Tejada holds a BS in Industrial Engineering
from Universidad Anahuac in Mexico City and earned an MBA degree from The University
of Chicago Booth School of Business. Mr. Contreras Lerdo de Tejada is son-in-law of Mr.
Germán Larrea Mota-Velasco.
Mr. Leonardo Contreras Lerdo de Tejada brings to the Company his financial and operating
skills and his more than 10 years of experience in private equity, investment banking and
entrepreneurship.
109
GMX . DIVISIÓN MINERA ANNUAL REPORT 2021
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 and 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 his extensive business experience and leadership;
industry knowledge, skills to motivate high-performing talent; and general management
skills to the Company. During his more than 42 years of experience as an executive with
Grupo Mexico and subsidiaries, he was responsible for developing the integration strategy
of Grupo Mexico. He was directly responsible for the development of the copper smelter,
refinery, precious metal and rod plants of Grupo Mexico. Mr. Garcia de Quevedo also headed
the process for the acquisition of railroad concessions for Grupo Mexico, the formation of
Grupo Ferroviario Mexicano, S.A. de C.V. and its partnership with Union Pacific. Previously,
he had a distinguished career as Vice President of sales and marketing for Grupo Condumex,
S.A. de C.V., where among other achievements, he was responsible for the formation of a
division for the sale, marketing and distribution of products in the United States and Latin
America and where he headed the Telecommunications division. Mr. Garcia de Quevedo
also contributes to the Company his diversified business experience gained from having
served on the boards of different Mexican and United States companies and as Chairman
of the Mining Chamber of Mexico.
110110
SCC . MEMBERS OF THE BOARD
LUIS MIGUEL PALOMINO BONILLA, SPECIAL INDEPENDENT DIRECTOR.
Dr. Palomino has been a director of the Company since March 19, 2004. Dr. Palomino was
a member of the board of directors and served as Vice-chairman of the Central Bank of
Peru (Banco Central de Reserva del Peru) since September 2016 to October 2021. He is
director of the Master’s in Finance Program at the University of the Pacific in Lima, Peru
and since July 2009, has served as member of the board of directors of Laboratorios
Portugal (personal care products manufacturer) since September 2017. Dr. Palomino is
also a member of the board of directors of Summa Capital, S. A. (corporate consulting
firm) since April 2014. He 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 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. From March 2021 to
date, Dr. Palomino has served as director of Mall Aventura S.A.
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 his education in economics and finance to the company,
acquired from extensive academic studies, including a PhD in Finance from the Wharton
School of the University of Pennsylvania in Philadelphia, Pennsylvania; as well as his
expertise; wise counsel, and extensive business experience, which was gained from his
past and current activities as a financial analyst of numerous sectors, including the mining
sectors of Mexico and Peru.
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GILBERTO PEREZALONSO CIFUENTES, SPECIAL INDEPENDENT DIRECTOR.
Mr. Perezalonso has been a director of the Company since June 2002. Currently, Mr.
Perezalonso is a member of the board of directors of Gigante, S.A. de C.V. (retail and
real estate) and Blasky (hotel chain in Baja California, Mexico). He is also National Vice
President of the Cruz Roja Mexicana (Red Cross). Mr. Perezalonso was Chairman of the
board of directors of Volaris Compañia de Aviacion, S.A.P.I. de C.V. (airline) from March 2,
2011 to November 2014. He was Chief Executive Officer of Corporacion Geo, S.A. de C.V.
(housing construction) from February 2006 to February 2007. Mr. Perezalonso was the
Chief Executive Officer of Aeromexico (Aerovias de Mexico, S.A. de C.V.) (airline company)
from 2004 until December 2005. From 1998 until April 2001, he was Executive Vice
President of Administration and Finance of Grupo Televisa, S.A.B. (media company). From
1980 until February 1998, Mr. Perezalonso held various positions with Grupo Cifra, S.A.
de C.V. (retail and department stores), the most recent of which was General Director of
Administration and Finance. Mr. Perezalonso was also a member of the Advisory Council
of Banco Nacional de Mexico, S.A. de C.V. (banking) and member of the board of directors
and the investment committee of Afore Banamex (banking). He has sat on 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 through his legal and financial
education, which was acquired from extensive academic studies and includes a Master’s
degree in Business Administration from INCAE in Nicaragua, and through his business
experience, which was acquired while 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, which
were gained from serving on the boards of directors of different Mexican companies.
112
SCC . MEMBERS OF THE BOARD
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 as Secretary of Communications and Transportation
of Mexico from 1995 to 2000. While holding that position, he was also Chairman of the
board of directors of the Mexican-owned companies in the sector, and member of the board
of directors of development banks. He was also the Chairman of the board of directors of
Asarco LLC. Mr. Ruiz Sacristan is Chairman of the board of directors and Chief Executive
Officer of Sempra’s Energy North America Infrastructure Group since September 2018.
Prior to this appointment, Mr. Ruiz Sacristan was Chairman and Chief Executive Officer
of IEnova, the Mexican operating subsidiary of Sempra Energy from 2012 to 2018 and a
member of the board of directors of Sempra Energy from 2007 to 2012. Mr. Ruiz Sacristan
remains as Chairman of IEnova. He is a member of the 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 through his extensive business studies, including a Master’s
Degree in Business Administration from Northwestern University in Chicago, Illinois, and
via his investment banking experience and broad business experience as a former Chief
Executive Officer of PEMEX (Mexican oil company). The aforementioned is complemented
by 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 diversified
business experience, which was 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, and as the former Chairman of
Asarco LLC and Chief Executive Officer of IEnova.
113113
GMX . DIVISIÓN MINERA ANNUAL REPORT 2021
EXECUTIVE OFFICERS
German Larrea Mota-Velasco
Chairman of the Board of Directors
Oscar Gonzalez Rocha
President and Chief Executive Officer
Raul Jacob Ruisanchez
Vice President, Finance Treasurer and Chief Financial Officer
Edgard Corrales Aguilar
Vice President, Exploration
Jorge Lazalde Psihas
Secretary
Andres Ferrero Ghislieri
General Counsel
Lina Vingerhoets Vilca
Comptroller
Raul Vaca Castro
General Auditor
114
114
SCC . GENERAL INFORMATION
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. Vicente Ariztegui Andreve
and Enrique Castillo Sanchez Mejorada are our fourth and fifth independent directors.
At its meeting on April 22, 2021, the Board of Directors determined that Messrs. Luis
Miguel Palomino Bonilla, Gilberto Perezalonso Cifuentes, Carlos Ruiz Sacristan, Vicente
Ariztegui Andreve and Enrique Castillo Sanchez Mejorada would 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, only affinity relationship existing among the
members of the Board of Directors and between them and the Executive Officers of SCC
is that related to Mr. Leonardo Contreras Lerdo de Tejada, who is the son-in-law of the
Chairman of the Board.
115
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.
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, which 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.
116
SCC . GENERAL INFORMATION
6. Administrative Committee. It is designated by the Named Fiduciary appointed by
the Board for the benefit plans as required by the Employee Retirement Income
Security Act – ERISA of the United States. ERISA is the law that covers employee
retirement and other benefit plans 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. This committees is delegated
the authority to administer and manage the aforementioned plans and to oversee the
performance of trust agents and that of 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 0.11%.
ANNUAL MEETING
The Annual Stockholders Meeting will be held on May 27, 2022.
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CORPORATE OFFICES
UNITED STATES
7310 North 16th St. Suite 135
Phoenix AZ 85020, 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
Chararilla del Estanque
Santiago de Surco,
Postal Code 15038, Peru
Phone: +(511) 512-0440, Ext. 3181
118
SCC . GENERAL INFORMATION
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.
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.
119
ANNUAL REPORT 2021
OTHER CORPORATE INFORMATION
For other information on the corporation or to obtain additional copies of the annual report,
Form 10-K 2021 (free of charge) contact to Investor Relations Department at our corporate
offices:
SOUTHERN COPPER CORPORATION
USA:
7310 North 16th St. Suite 135
Phoenix AZ 85020, 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:
Avenida Caminos del Inca 171 (B-2)
Chacarilla del Estanque, Santiago de Surco
Postal Code 15038 - Peru.
Phone: +(511) 512-0440, Ext. 3181
Web page: https://southerncoppercorp.com
Email address: southerncopper@southernperu.com.pe
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MEMBERS OF THE BOARD OF DIRECTORS
German Larrea Mota-Velasco
Oscar Gonzalez Rocha
Vicente Ariztegui Andreve
Enrique Castillo Sanchez Mejorada
Leonardo Contreras Lerdo de Tejada
Xavier Garcia de Quevedo Topete
Luis Miguel Palomino Bonilla
Gilberto Perezalonso Cifuentes
Carlos Ruiz Sacristan
AUDIT COMMITTEE
Luis Miguel Palomino Bonilla, Chairman
Vicente Ariztegui Andreve
Enrique Castillo Sanchez Mejorada
SCC . MIEMBROS DEL DIRECTORIO
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Foto
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GMX . DIVISIÓN MINERA