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southerncoppercorp.com
TENACITY AND
CONFIDENCE
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 2022. 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
05
Letter to shareholders
08
Production statistics
10
Copper reserves
11
Selected and financial data
12
Capital investment program and exploration
(Expansion & modernization)
17
Development - community outreach
44
Results of operations
For the years ended December 31, 2022, 2021 and 2020
48
Commitment - Environmental Affairs
55
General information
Description of operations and development regarding
the issuing entity
78
Recursos Humanos
87
MEMBERS OF THE BOARD OF DIRECTORS
4 | 5
Refinery’ copper cathodes, Buenavista
del Cobre, Sonora, Mexico
5
SCC ANNUAL REPORT 2022 - LETTER TO SHAREHOLDERS
Letter to
Shareholders
The year 2022 was challenging. The world expected to return
to some semblance of stability but new global conditions
triggered volatility across economies.
In this context, Southern Copper made a solid show of its
strengths and ability to generate cash flows. With the support
of our workforce, we shored up our operations and our
financial position.
Proof or our ability to bounce back from difficult situations lies
in the fact that in the fourth quarter of 2022, net sales were
up 30.8% YoY. The operating cash cost per pound of copper,
including bi-product revenues, was 57% lower than the print
in 2021.
We have worked arduously to overcome the impact of drop
of 8.1% in global sales in year-over-year terms. This reduction
was driven by a decrease in sales volumes of copper (-6.5%),
silver (-1.9%) and molybdenum (-13.4%). Notwithstanding,
we reported 10.5% growth in the zinc sales volume, which was
fueled by a 16.2% increase in the price of this metal. Prices for
molybdenum also rose, up 20% compared to 2021, while fell
prices for copper and silver fell -5.4% and -13.6% respectively.
Net profit in 2022 stood at $2,638.5 million, down 22.3%
from 2021. The net profit margin in 2022 was 26.3%, versus
6 |
7
31.1% in 2021. Adjusted EBITDA in 2022 was $5,365.3 million, which reflected
a decrease of 21.7% with regard to the figure in 2021. The adjusted EBITDA
margin in 2022, in turn, was 53.4% vs 62.7% in 2021.
Overall copper production in 2022 fell 6.6% to 894,703 tons, impacted by the
stoppage at Cuajone and by a reduction in ore grades.
Molybdenum production stood at 26,240 tons in 2022, 13.3% below the print
in 2021. This drop was driven by a decrease in production at our Toquepala
mine due to lower ore grades. Mined zinc production fell 10.4%, which reflected
lower production at the Charcas and Santa Barbara mines. Silver production
decreased 2.1% in 2022, fueled by a decrease in production at our Peruvian
operations and at the La Caridad mine. This reduction was partially offset by an
uptick in production at our Buenavista and IMMSA mines.
Despite the challenges of 2022, Southern Copper has maintained its current
capital investment program for the decade, which tops $15 billion and includes
investments in the Buenavista Zinc, Pilares, El Pilar and El Arco projects in
Mexico and the Tia Maria, Los Chancas and Michiquillay projects in Peru. This
program includes diverse investments in infrastructure and contemplates others
to drive the competitiveness of the El Arco project These initiatives heighten our
optimism about the Company’s ability to continue delivering attractive results to
our shareholders in coming years.
7
SCC ANNUAL REPORT 2022 - LETTER TO SHAREHOLDERS
Buenavista del Cobre open pit,
Sonora, Mexico
Southern Copper has been consistently working to promote well-being of
population in its areas of influence. As part of these efforts, we have implemented
successful social programs in education, health care and productive development
to improve the quality of life in the countries in which we operate. Depending on
characteristics of each zone, we also promote agricultural and livestock activities
and support initiatives in manufacturing, fishing, and tourism, among others.
On behalf of Southern Copper Corporation Board, we express our gratitude to
all personnel for their uninterrupted effort and dedication, to our customers for
their repeated displays of trust and loyalty, and to you, our shareholders, for your
unwavering support.
LIC. GERMAN LARREA
ING. OSCAR
MOTA VELASCO
GONZALEZ ROCHA
Chairman of the Board
President and Chief Executive Officer
8 | 9
Production statistics
Southern Copper Corporation and Subsidiaries
Five-year Production Statistics
2022
2021
2020
2019
2018
Mine production
Mined Material
toneladas
(thousand)
797,738
780,689
656,237
790,365
814,228
Copper in concentrates
751,628
825,226
851,323
841,452
741,488
Copper SX/EW
Total Copper
Molybdenum in concentrates
Zinc in concentrates
Silver in concentrates
(thousand ounces)
Smelter/refineries production
143,075
132,974
150,045
152,370
142,201
894,703
958,200
1,001,368
993,822
883,689
26,240
60,010
18,562
30,262
30,248
26,885
21,985
66,958
68,930
73,922
70,778
18,962
21,540
20,273
17,308
Copper
Zinc
Silver
Toquepala
Mined Material
Copper in concentrates
Molybdenum in concentrates
Cuajone
637,489
598,569
633,801
595,173
633,630
(thousand ounces)
99,893
14,272
92,672
102,440
104,977
107,536
13,691
13,888
12,588
13,583
(thousand)
209,745
203,150
168,715
249,083
241,514
175,055
203,624
229,116
231,673
143,720
7,681
10,642
10,019
7,277
4,159
Mined Material
(thousand)
139,916
148,302
130,047
153,911
175,177
Copper in concentrates
Molybdenum in concentrates
Smelter/refineries in Peru
SX/EW
Smelt concentrates
Blister produced
Anode produced
Cathode produced
140,314
168,990
168,663
156,393
160,579
3,625
4,190
4,225
3,285
3,099
26,451
25,754
26,010
26,329
26,526
1,241,999
1,089,193
1,210,625
1,075,513 1,187,710
2,045
2,601
4,163
-
2,630
350,006
308,562
345,955
317,519
344,758
289,728
260,173
286,271
256,647
292,654
9
SCC ANNUAL REPORT 2022 -PRODUCTION STATISTICS
2022
2021
2020
2019
2018
Mexicana de Cobre – Caridad
Mined Material
(thousand)
106,251
100,412
93,373
94,578
96,541
Copper in concentrates
Molybdenum in concentrates
88,492
102,689
109,671
107,161
106,087
9,560
10,203
10,535
10,206
9,809
Buenavista
Mined material
(thousand)
337,727
324,860
259,860
288,882
297,718
Copper in concentrates
338,633
142,912
140,888
141,521
139,157
Smelter/Refineries in Mexico
SX/EW
Smelt concentrates
Anode produced
Cathode produced
Rod produced
116,624
107,221
124,036
126,041
115,675
1,051,981
1,047,292
1,029,486
1,011,374
1,041,663
285,438
287,406
283,683
277,654
286,242
245,670
242,667
240,407
231,609
239,185
156,441
150,122
129,439
142,728
147,147
Underground Mines - Contents in concentrates
Zinc
Lead
Copper in concentrates
Silver
Gold
60,010
16,590
9,134
6,750
6,428
66,958
68,930
73,922
70,778
17,104
20,358
22,567
22,081
8,719
10,302
6,589
7,662
7,983
8,734
8,265
6,943
7,647
6,221
5,649
6,423
(thousand ounces)
(ounces)
10 |
11
Toquepala mine,
Tacna Peru
Copper reserves
We believe we hold the world’s largest position of copper
reserves. As of December 31, 2022, our copper mineral
reserves, calculated at a copper price of $3.30 per pound,
totaled 45,134 million tons of contained copper, at the
following locations:
Copper contained in ore reserves
Million tons
Mexican open-pit
Peruvian operations
Development projects
Total
15,849
20,542
8,743
45,134
For more information about ore reserves refer to “summary
disclosure of mineral reserves”, on page 36 of our 2022
Form 10-K.
11
SCC ANNUAL REPORT 2022 -FIVE-YEAR SELECTED FINANCIAL AND STATISTICAL DATA
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)
2022
2021
2020
2019
2018
Consolidated Statement of Earnings
Net sales
$10,047.9
$10,934.1
$7,984.9
$ 7,285.6
$7,096.7
Operating costs and expenses
Operating income
Net income attributable to
Non-controlling interest
5,612.1
4,435.8
4,869.0
4,864.2
4,532.6
4,215.5
6,065.1
3,120.7
2,753.0
2,881.2
9.5
14.1
7.4
6.1
5.2
Net earnings attributable to SCC
2,638.5
$3,397.1
$1,570.4
$ 1,485.8
$1,543.0
Per share amount:
Earnings basic and diluted
Dividends paid
Consolidated Balance Sheet
Cash and cash equivalents
Total assets
Total debt
Total equity
3.41
$3.50
$4.39
$3.20
$2.03
$1.50
$ 1.92
$ 1.60
$2.00
$1.40
$2,069.7
$3,002.0
$2,183.6
$ 1,925.1
$844.6
17,277.4
18,297.6
16,946.5
16,407.4
14,267.8
6,251.2
6,247.9
6,544.2
6,541.0
5,960.1
$8,146.9
$8,207.8
$7,276.0
$ 6,858.2
6,612.9
Consolidated Statement of Cash Flows
Cash provided by operating activities
$2,802.5
$4,292.4
$2,783.6
$1,911.9
$2,235.1
Dividends paid
Capital investments
Depreciation, amortization and depletion
2,705.8
2,473.8
1,159.6
1,236.9
1,082.3
948.5
796.3
892.3
$806.0
592.2
707.5
1,121.4
$775.6
$764.4
$674.3
Capital Stock
Common shares outstanding – basic and diluted (in
thousands)
NYSE price – high
NYSE price – low
Book value per share
P/E ratio
Financial Ratios
Current assets to current liabilities
Net debt as % of Net capitalization (1)
Employees (at year end)
773,098
773,087
773,073
773,059
773,044
$78.17
$42.81
10.46
17.69
4.20
32.80%
15,018
$81.53
$56.14
10.54
14.04
2.73
27.1%
14,462
$65.82
$23.53
9.35
32.06
3.50
35.2%
13,777
$43.19
$ 57.34
$23.21
$ 29.78
8.82
22.10
8.50
15.42
2.83
2.61
41.8%
42.6%
14,301
13,899
(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.
12 | 13
Capital Expenditures and Exploration
Programs
(Expansion and modernization)
Capital investments were $948.5 million for 2022. This is 6.3% higher than in 2021 and
represented 36.2% of net income. Our growth program to develop our Company’s full
production potential is well underway. We are currently developing a new organic growth
plan, whose goal is to increase our copper volume production to 1.7 million tons by the
end of this decade.
For 2023, the Board of Directors approved a capital investment program of $1,099.6
million. In general, the capital investments and projects described below are intended to
increase production, decrease costs or address social and environmental commitments.
Our principal capital programs include the following
MEXICAN PROJECTS:
Buenavista Zinc, Sonora:
This project is located within the Buenavista deposit, where a new concentrator is being
built. This facility has a production capacity of 100,000 tonnes of zinc and 20,000 tonnes
of copper per year. We have completed the engineering study and the project has all
the necessary permits. When operating, this facility will double the Company’s zinc
production capacity and will provide more than 2,000 operational jobs. We expect to
initiate operations in the second half of 2023. As of December 31, 2022, we have invested
most of the $416 million budget.
Pilares, Sonora:
Located six kilometers from La Caridad, this project consists of an open-pit mine operation
with an annual production capacity of 35,000 tonnes of copper in concentrate. This project
will significantly improve the overall mineral ore grade (combining the 0.78% expected
from Pilares with 0.29% from La Caridad). The budget for Pilares is $159 million, most
of which has already been invested. Pilares is currently operating and delivering copper
mineral oxides to the SX-EW facilities of the Caridad operation. We expect to produce
mineral for the Caridad concentrator at full capacity in the second quarter of 2023.
13
Ecological warehouse at Buenavista del Cobre mine,
Cananea, Sonora
14 |
15
El Pilar, Sonora:
This low-capital intensity copper greenfield 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 317 million tonnes of ore with an average copper grade of 0.249%. We
anticipate that El Pilar will operate as a conventional open-pit mine with an
annual production capacity of 36,000 tonnes of copper cathodes. This operation
will use highly cost efficient and environmentally friendly SX-EW technology.
The budget for El Pilar is $310 million. The results from experimental pads
in leaching process have confirmed adequate levels of copper recovery. The
basic engineering study is finished and the Company continues developing
the project and engage in onsite environmental activities. The SX-EW plant
EPCM project has been awarded to a contractor and has started. We expect
production to begin in 2024 and mine life is estimated at 13 years.
Lime plant - Sonora:
As part of our cost improvement projects, we built a new lime plant with a
production capacity of 600 metric tonnes per day, which will be the largest lime
plant of Mexico. This facility will allow us to reduce our current lime cost at our
Mexican operations by approximately 50%. The total budget for the plant is
$65.5 million, of which we had invested $62.6 million as of December 31, 2022.
The furnace of the plant started operations in the second quarter of 2022,
complying with the performance tests.
15
SCC ANNUAL REPORT 2022 -CAPITAL EXPENDITURES AND EXPLORATION PROGRAMS
We are currently developing a new organic
growth plan, whose goal is to increase our
copper volume production to 1.7 million tons
by the end of this decade.
PERUVIAN PROJECTS:
Quebrada Honda dam expansion – Tacna:
This project aims to enlarge the main and lateral dams in Quebrada Honda and
includes the relocation and repowering of some facilities due to dam growth
and installations of facilities for water recovery, among other factors. As of
December 31, 2022, the drainage works and removal of Eolic material for the
main and lateral dam had been completed; complementary operational works
are underway and are expected to be completed in the first quarter 2023. This
project has a total budget of $174.4 million, of which we have invested $153.6
million as of December 31, 2022.
Tia Maria - Arequipa:
This greenfield project, located in Arequipa, Peru, will use state of the art SX-EW
technology with the highest international environmental standards to produce
120,000 tonnes of SX- EW copper cathodes per year. SX-EW facilities are the
most environmentally friendly in the industry as they do not require a smelting
process and therefore, do not release any emissions into the atmosphere.
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 have also promoted agricultural and
livestock activities in the Tambo Valley and supported growth in manufacturing,
fishing and tourism in Islay.
16 | 17
Refinery cathode at La
Caridad Sonora, Mexico
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. Given the current Peruvian economic situation, it
is crucial to move ahead on projects that will stimulate a
sustainable growth cycle. We will make it a priority to hire
local labor to fill the 9,000 jobs that we expect to generate
during Tia Maria’s construction phase. Additionally, from
day one of our operations, we will generate significant
contributions to revenues in the Arequipa region.
Tia Maria’s project budget is approximately $1.4 billion, of
which $329.8 million had been invested as of December
31, 2022 (Property net book value is $294.4 million).
17
SCC ANNUAL REPORT 2022 - ENVIRONMENTAL, SOCIAL AND GOVERNANCE (“ESG”)
Environmental, social and
governance (“ESG”)
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, 2022.
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 69/100 in 2022. As a result, the Company
has earned a place in the Dow Jones Sustainability Index MILA (“Integrated
Latin-American Markets”1) every year for the past 4 years. SCCO’s 2022 score
of 69 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 5 indicators: Political Influence, Environmental Reporting, Operational
Ecoefficiencies, Social Reporting, and Corporate Citizenship and Philanthropy.
This result was thanks to the good ratings we obtained for shared values, business
ethics, cybersecurity, environmental and social reporting, among others.
1 Comprised by the Pacific Alliance: Mexico, Peru, Chile and Colombia.
18 | 19
Human rights
At Southern Peru, we are committed to enforcing the United Nations Guiding
Principles on Business and Human Rights. We have a series of policies and
procedures that serve as a guide to all employees and suppliers: General
Human Rights Policy; Policy of Respect for the Rights of Indigenous Peoples
and Communities; Diversity, Inclusion and Non-Discrimination, No Workplace
or Sexual Harassment Policy; and the Code of Conduct for Suppliers,
Contractors and Relevant Business Partners, which includes several sections
related to human rights.
The company has a human rights’ due diligence process in place to identify,
prevent, mitigate or remediate adverse impacts on the human rights of
communities. In the Mining and Infrastructure divisions, it has three main
components:
1. Participatory Social Diagnosis to allow the communities to voice their
concerns regarding human rights,
2. Social Management Plans that define actions to address those concerns,
and,
3. The Community Care Service (SAC), a tool that was designed with the
advice of the United Nations High Commissioner for Human Rights Mexico
Office and allows the community to immediately communicate its concerns
to the Company.
The Company also has a human rights’ due diligence process in place to protect
the rights of employees (both the Company’s and those of contractors). The
work climate surveys, Complaint Hotline and the due diligence of suppliers are
tools that enable the company to comply with the commitments included in
the General Human Rights Policy. We are currently implementing a Diversity
and Inclusion Strategic Plan, which focuses primarily on training; revision of
recruitment processes; and physical changes to working areas.
19
Workers at Cuajone
Mine - Moquegua, Peru
20 | 21
Worker in Toquepala
mine - Tacna, Peru
21
SCC ANNUAL REPORT 2022 - ENVIRONMENTAL, SOCIAL AND GOVERNANCE (“ESG”)
Diversity, equity and inclusion (DEI)
Our vision on DEI is to ensure that our people always feel included, welcomed
and valued for their personal and professional contributions. This vision is
based on our core values of respect, honesty and responsibility.
Consistent with our Code of Conduct and Human Rights Policy, our goal is to
(i) build an organizational culture of total equality and well-being with a focus
on diversity, inclusion and non-discrimination, (ii) increase the sensitivity,
knowledge and skills of our leaders and employees to assemble diverse and
inclusive teams and promote a culture of respect, and (iii) extend this culture to
the communities in which we operate.
Based on the results of a DEI survey in Mexico and Peru, we aligned our
diversity and inclusion Strategic Plan with six strategic initiatives to create Key
Performance Indicators and increase women’s participation in the organization
by 2%; strengthen our human resource policies for inclusion; consolidate
commitment at the executive level; and implement continuous training and
communication campaigns at all levels of the organization.
In 2022, we disclosed our DEI Corporate Policy, originally issued in 2021, and
trained our total workforce on DEI fundamental principles through the Training
Program “Towards an Inclusive Grupo Mexico”. We are committed to inclusion
and to honoring our diversity. We increased our female workforce from 944
to over 1,090, which represents an increase of 15% in our female headcount
year-over-year. Additionally, 30% of our female workforce hold a STEM position
(Science, Technology, Engineering, Mathematics).
We now have a better understanding of our diversity distribution, which
we believe allows us to design efforts for each group and advance towards
inclusion.
22 | 23
Code of Ethics
We certify our employees’s knowledge and commitment to our Code of Ethics
on a yearly basis. Every employee, including new hires, signs a commitment to
observe the rules laid out in our main document and guidance tool for legal,
professional and ethical obligations for our business dealings and interpersonal
relationships.
23
SCC ANNUAL REPORT 2022 - COMMUNITY OUTREACH AND ENVIRONMENTAL PROGRAMS
Community outreach
We have implemented several sustainable development policies to integrate the
Company´s operations with local communities in our areas of influence. 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 reported on Form 10-K, 2022.
In 2022, in Mexico we obtained recognition as an Exceptional Company from
the Business Coordinating Council of the Institute for the Promotion of Quality
and the Communication Council, which recognizes companies that carry out
successful practices. In the case of Grupo Mexico, the following practices and
programs were recognized: Community Development Model, Community Care
Service, Youth Orchestras and Choirs, Traveling Documentary Film Workshop
and Casa Grande Movil.
Additionally, the Business Coordinating Council (CCE) and the Mexican
Association of Organizational Communicators (AMCO) recognized the social
impact generated by the Traveling Documentary Film Workshop (TACD) that
the Company promotes in the communities in which it operates. Through this
program, young and adults’ people have the opportunity to create audiovisual
materials with themes and characters from their own localities to strenghten
ties between mining and communities. Since this program began, 547 students
have developed 173 productions, some of which were presented at the Cineteca
Nacional de Mexico.
24 | 25
Operations and Mining Projects in Peru were certified in ISO 9001:2015 Quality
Management System for Community Development in 2022.
COMMUNITY DEVELOPMENT MODEL
SCC seeks to improve the quality of life in the communities around its operations
by engaging in responsible management. SCC has developed a model where
people are agents of their own development.
Our Community Development Model approaches developing relationships
with communities through three specific components:
Good
Neigbors
Economic
Development
Human
Development
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.
25
We promote an approach
based in co-responsibility
26 | 27
We generate a positive and healthy
coexistence with our neighbors
27
SCC ANNUAL REPORT 2022 - COMMUNITY OUTREACH AND ENVIRONMENTAL PROGRAMS
INFORME ANUAL 2022 . DIVISION MINERIA
Good Neigbors
To generate positive relations with neighboring communities, we maintain
constant communication.
Economic Development
Through training and skill-building programs, as well as investments in
infrastructure, we contribute to strengthening the productive and economic
capacities of communities.
Human Development
To generate trust relationships and co-responsibility with communities, our
Casa Grande model rolls out programs at community centers; these efforts
focus on education, health, culture and the environment.
This model is known as “Casa Grande”, and it has been implemented through
the following tools:
• 32 Community Development Centers (17 in Mexico and, 15 in Peru) -
These are Open Houses for communities that offer courses and workshops
to promote development through programs and projects that focus on
education, health, culture and environmental protection.
• Participatory Diagnostics - The community and SCC work together on
Human Development initiatives. Through a community diagnostic, we
identify needs and expectations that are subsequently satisfied through the
Casa Grande model.
• Community Committees - Led by volunteers from the community and
Company employees, who collaborate to assess proposals for sustainable
projects.
• Seed Capital - We call on communities to present their own initiatives. SCC’s
primary axes are education and the environment, which are complemented
by initiatives relative to health, safety and productivity.
28 | 29
Pig farmer, winner of Seed Capital,
one of our social programs,
Ilabaya, Tacna, Peru
Children from La Encañada, a district close
to our Michiquillay project - Cajamarca, Peru
29
SCC ANNUAL REPORT 2022 - COMMUNITY OUTREACH AND ENVIRONMENTAL PROGRAMS
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 2022, we
conducted 7,173 activities, 180 programs and projects with 152
community and corporate volunteers. Through our Seed Capital
and productive projects, we helped create development generators
and promoted the participation of proactive leaders who work to
enhance the well-being of their communities.
EDUCATION AND ENTREPRENEURSHIP
Another way of contributing to people’s development
is by
providing training and education opportunities to children and
young people in neighboring communities at the elementary,
secondary, vocational or university levels. At our mining operations
in Mexico and Peru, we contribute to community education through
11 schools that are sponsored by the Company and which offer
scholarships to employees and their families for different levels
of study. These company-sponsored schools are home to 3,542
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.
30 | 30
We continue our efforts to promote and implement the job
training program Forjando Futuro (“Forging the Future”).
This program was created to train employees needed to 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. In 2022, more than
671 people from communities were trained at our mining-
metallurgical operations; 36% of these
individuals were
women.
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
2022, we invested more than $2.2 million in projects to
optimize the use of water in agricultural activities in Peru
through Social Investment for Taxes law. Recently completed
projects include sanitation infrastructure for a rural drinking
water and sanitation system in the district of Torata, which built
a 7.9 km-conduction line; a 9.3 km-adduction line; a 15 m3-
reservoir; 139 household connections; and 137 biodigesters
for 520 beneficiaries Pre-feasibility studies were also
completed for Ilo’s sewage pumping chamber improvement
project and covered aspects relative to relocation, electrical
equipment, and construction of 05 pumping chambers. This
project is complementary and will be connected to the new Ilo
PTAR (for its acronym in Spanish) that is under construction.
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SCC ANNUAL REPORT 2022 - COMMUNITY OUTREACH AND ENVIRONMENTAL PROGRAMS
SOCIAL INVESTMENT
In 2022, SCC invested more than $ 72.1 million in social development programs
related to education, health, productive projects, infrastructure and services.
Investiment and Social Expenses
$USD (millions)
Community development programs, social linking and productive projects
Operating expenses in schools SCC
Operating expenses in camps SCC
Infrastructure and equipment in neighboring communities
Infrastructure in schools SCC
Infrastructure in camps SCC
Donations
Total
8.2
6.2
13.8
40.9
0.9
0.3
1.8
72.1
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.
Our environmental commitment
Southern Copper’s mining operations are aligned with the best practices in the
sector to ensure that our environmental impacts are minimal and preserve the
environment. We operate in alignment with our environmental management
system:
1. Plan, design, build and operate our facilities with a preventive approach
throughout their life cycle.
2. Reduce the risks and damage that our activities may imply for the
environment.
3.
Improve our environmental performance by going beyond environmental
compliance.
4. Reduce our carbon footprint and contribute to an environment resilient to
climate change.
32 | 33
Workers at Ilo
smelter - Moquegua, Peru
33
SCC ANNUAL REPORT 2022 - COMMUNITY OUTREACH AND ENVIRONMENTAL PROGRAMS
5. Conserve water by using efficient processes during production while
contributing to ensuring that water is available in the basins near our
operating areas.
6. Promote the efficient use of energy.
7. Contribute to the conservation of biodiversity and the environment, which
generates ecosystems with a positive impact.
8. SCC adds value to its customers, suppliers, society and the environment
through all of our activities.
The aforementioned actions implied an investment of US$150 million in
2022. Actions were conducted within the framework of local and international
certifications obtained by our operating units in the two countries in which we
are present. Fourteen (14) of SCC’s systems have obtained ISO 14001:2015
certification for environmental management systems, which attests to the
commitment of our employees and the effectiveness of the transversal
application of environmental practices.
Additionally, Southern Copper Corporation
is commited to aligning
its
operations with The Copper Mark, which promotes responsible production in
the copper industry and also contributes to the UN Sustainable Development
Goals. In 2022, La Caridad open pit mine and Metallurgical Complex in Sonora,
Mexico (smelter and refinery) obtained The Copper Mark certificate. These
operations also obtained The Molybdenum Mark and The Zinc Mark certificates
respectively. Our goal in the near future is demonstrate to customers, investors,
communities and other stakeholders that the copper we produce meets the
environmental, social and governance criteria of Copper Mark (32 in total) and
that compliance has been verified by an independent auditor.
34 | 35
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.
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 importance and urgency of addressing climate change. In 2022,
we updated our climate change strategy, and recently Grupo Mexico issued a
Policy, along with a road map to reduce greenhouse emissions effect in the
short, medium, and long term.
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).
Information concerning SCC
is
included
in Grupo Mexico’s Sustainable
Development Report. Since 2016, Grupo Mexico has participated in the annual
35
SCC ANNUAL REPORT 2022 - COMMUNITY OUTREACH AND ENVIRONMENTAL PROGRAMS
assessment of Climate Change of CDP (formerly known as Carbon Disclosure
Project). In 2021, its score improved two levels from 5th C to 3rd B and in 2022,
maintained the last level recorded. This score is superior to the regional average
in North America (“C”) and superior to the global average for smelting, refining
and production of metals (“C”).
The Company is committed to continuously improving its management of the
aforementioned issues. Accordingly, it has initiated a multi-year process to align
its disclosure on climate change for all its operations in Mexico and Peru 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 our parent company’s website for details on the
aforementioned initiatives. Said details are for informational purposes only. We
do not claim that this Internet link is active or that the contents of the report
uploaded to this website are the same as those reported on Form 10-K.
Climate change represents challenges to SCC. We are working on:
• Providing products and services in ways aligned with the transition to low-
carbon economies.
• Reducing the organization’s carbon footprint.
•
Increasing resilience to climate change effects at our operations and in
surrounding communities.
• Ensuring management is aligned with the best international practices.
36 | 37
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.
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 2022 for a total of
840,000 tons of CO2.
In addition to generating and consuming energy from renewable sources and
cleaner fuels, we also implement best practices to boost the energy efficiency of
our operations by improving, redesigning, converting and adapting equipment;
rationally using resources; and improving staff training.
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, 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
37
Operations in open pit mine
La Caridad - Sonora Mexico
38 | 39
400 Tons truck in
La Caridad mine - Sonora, Mexico
Mexico’s carbon market system. The requirements associated with this scheme
are currently applicable to only 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, 2022; this
amount had no material impact on the Company.
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 regard 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;
39
SCC ANNUAL REPORT 2022 - COMMUNITY OUTREACH AND ENVIRONMENTAL PROGRAMS
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, there are no mechanisms in place for
carbon pricing; this 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 material at this time.
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 to 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.
40 | 41
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 the 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 impact the Company.
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.
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 plays 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.
It constantly strives to
increase
its
competitiveness while contributing to a low-carbon economy and reducing
its carbon footprint.
41
SCC ANNUAL REPORT 2022 - COMMUNITY OUTREACH AND ENVIRONMENTAL PROGRAMS
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. In
2022, to contribute to reforestation and rehabilitate areas inside and
outside of our operating areas, we planted 5.8 million trees that were
grown in 6 forest nurseries and greenhouses.
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 and other.
SCC’s UMA in Mexico is located in a strategic area to boost Mexican
Gray Wolf reproduction. Since 2013, SCC has been part of the US-
Mexico Binational Program to Recover the Mexican Gray Wolf. UMA
Buenavista del Cobre has release 59 wolves into the wild, 23 of which
were born at UMA. Approximately 50 per cent of the wolves released
into the wild in Mexico were raised at UMA Buenaventura del Cobre.
42 | 43
Blue Heron, Ite
wetlands - Tacna, Peru
43
SCC ANNUAL REPORT 2022 - COMMUNITY OUTREACH AND ENVIRONMENTAL PROGRAMS
INFORME ANUAL 2022 . DIVISION TRANSPORTES
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.
Water care
SCC has developed projects to guarantee the sustainability
of water resources. Our operations 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 Potosi 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 invested in infrastructure and technology to
reuse water. Effort focused on optimizing closed circuits
and installing thickeners and high-efficiency tailings filters.
In 2022, more than 74% of the total water consumed at our
mining operations was recovered water.
44 | 45
Results
of operations
Years ended December 31, 2022, 2021 and 2020.
Our net income attributable to SCC in 2022 was $2,638.5 million, compared
to $3,397.1 million in 2021 and $1,570.4 million in 2020. SCC’s net income
attributable to SCC decreased 22.3%, which was mainly driven by an uptick in
costs of sales and by a reduction in sales volumes.
The Company presents its operating cash costs with and without the revenues
of its by-products (molybdenum, silver, sulfuric acid, etc.). It excludes the cost
of purchases of third-party metal, depreciation, amortization and depletion,
exploration, provisions for employee profit sharing, other non-recurring items
and 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:
(dollar per pound)
2022
2021
2020
Operating Cash Cost before by-product revenues
2.02
1.64
1.37
Operating Cash Cost net of by-product revenues
0.78
0.67
0.69
As seen in the table above, our per pound cash cost before by-product revenues
in 2022 was 22.8% higher when compared with 2021. This result was mainly
attributable to an increase in production costs and to the unit cost effect
generated by a decrease in pounds of copper produced (-7.2%).
45
SCC ANNUAL REPORT 2022 - RESULTS OF OPERATIONS
INFORME ANUAL 2022 . DIVISION TRANSPORTES
Ingots in Zinc Plant, San
Luis Potosi, Mexico
Worker in spreader,
Buenavista del Cobre, Sonora, Mexico
Net Sales:
2022-2021: Net sales in 2022 were $10,047.9, compared to $10,934.1 million in 2021,
which represented a decrease of $886.2 million. This 8.1% reduction was driven primarily
by a decrease in sales volume for copper (-6.5%), silver (-1.9%) and molybdenum (-13.4%)
due to a lower production, and secondarily by a drop in prices for copper (-5.4%) and
silver (-13.6%). The aforementioned was partially offset by an increase in sales volume
for zinc (+10.5%) and by an uptick in prices for molybdenum (+20.0%) and zinc (+16.2%).
46 | 47
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.
Prices:
The profitability of our operations is dependent on, and our financial performance
is significantly affected by, the international market prices for the products we
produce, and for copper, molybdenum, zinc and silver in particular. Sales prices
for the Company’s metals are mainly pegged to the prices quoted on the London
Metal Exchange (LME) and The New York Commodity Exchange (COMEX) or
to those published in the Platt’s Metals Week for dealer oxide mean prices for
Ventas 2022
US$2,713
molybdenum.
Price/Volume Data
Average metal prices
Copper
Copper
(per pound - LME)
(per pound - COMEX)
Molybdenum
(per pound)
2022
2021
2020
$4.00
$4.01
$18.61
$1.58
$21.76
$4.23
$4.24
$15.51
$1.36
$2.80
$2.80
$8.57
$1.03
$25.18
$20.62
Agricola
Zinc
Silver
Intermodal
(per pound - COMEX)
(per ounce - COMEX)
Minerales
Industriales
Energia
SALES VOLUME (in million pounds, except silver –
million ounces)
Copper
14%
Molybdenum (1)
12%
8%
Zinc
Silver
1,920.4
57.9
223.0
18.8
8%
2,052.9
66.8
201.9
19.2
2,305.9
66.7
230.9
22.4
Quimicos
Automotriz
(1) The Company´s molybdenum production is sold as concentrates. Volume represents pounds of molybdenum
Cemento
Metales
Otros
contained in concentrates.
47
48 | 49
Commitment -
environmental affairs
Environmental matters
The Company has established comprehensive environmental conservation
programs at its mining facilities in Peru and Mexico. The Company’s environmental
programs include 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, among others.
Environmental capital investments in years 2022, 2021 and 2020, were as
follows (in millions):
Mexican operation
Peruvian operation
Total
2022
$52.7
$ 8.7
$61.4
2021
$62.3
$ 6.4
$68.7
2020
$41.1
$(3.3)
$37.8
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
49
SCC ANNUAL REPORT 2022 - COMMITMENT - ENVIRONMENTAL AFFAIRS
Environmental Management Unit,
Sonora, Mexico
violate environmental laws, which in the most extreme cases may result in the
temporary or permanent shutdown of non-complying facilities, the revocation of
operating licenses and/or other sanctions or fines.
In 2011, the General Law was amended to provide an individual or entity the
ability to contest administrative acts, including environmental authorizations,
permits or concessions granted, without the need to demonstrate the actual
existence of harm to the environment as long as it can be argued that harm
may be caused. Additionally, amendments to the Civil Federal Procedures Code
(“CFPC”) were enacted in 2011 and 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 arising out
of alleged violations of environmental, consumer protection, financial services
and economic competition laws. The group can seek restitution or economic
compensation for the alleged injuries or suspension of the activities which
allegedly caused 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-
50 | 51
up and remedial actions sufficient to restore environment
to a pre-existing condition should be taken. If restoration is
not possible, compensation measures should be provided.
Criminal penalties and monetary fines can be imposed
under this law.
In February 2019, the Mexican Supreme Court confirmed
the constitutionality of an ecological tax on extractive
activities developed in the state of Zacatecas, which taxes
the environmental remediation actions; emissions of certain
gases to the atmosphere; emissions of polluting substances
to the soil or water; and waste storage within the state.
The Company has determined that this environmental
regulation will have no impact on its financial position.
Climate change: Several taxes are applicable to the
Company’s mining operations in Mexico, including federal
and state fossil fuel taxes, and the requirements associated
with Mexico’s emission trading scheme. These taxes range
from $1.2/tCO2 to $20/tCO2, approximately. These refer
to regional taxes applicable in the States of Baja California
and Zacatecas, as well as a federal tax linked to the import
of fuels. In addition, an emission trading scheme (ETS) is
currently available to the Company.
The requirements associated with this scheme are currently
applicable only to two business units, the metallurgic
and lime plants in Sonora, which generate annual GHG
emissions levels above the threshold of 100,000 tCO2e
per year contemplated by the scheme. These two units are
required to report and verify their emissions once a year
with average costs of less than $6,000 per unit. Units that
emit more than 25,000 tonnes CO2 equivalent per year (all
our Mexican units) are required to report their emissions
to the National Emissions Registry (RENE) every year and
to verify the reported emissions every three years. As a
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SCC ANNUAL REPORT 2022 - COMMITMENT - ENVIRONMENTAL AFFAIRS
result, the total expenses for ensure annual compliance with climate change
regulations in Mexico were not material to the Company.
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
which defines new AQS for daily sulfur dioxide in the air. As of December 31,
2022, the Company maintains a daily average level of µg/m3 of SO2, which falls
below the requirement under the 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 Descontamination Plans (“SDP”) for
environmentally impacted sites in each of its operation units (Toquepala,
Cuajone and Ilo) with the assistance of consulting companies. The cost of these
SDPs is not material, either individually or in aggregated form, for the financial
statements of the Company.
Climate change: On April 17, 2018, the Peruvian government enacted Law N.
30754, which promulgates that it is in the national interest to promote public and
private investments in climate change management and establishes a Climate
Change Framework. The law proposes creating an institutional framework to
address climate change in Peru and outlines new measures for climate change
52 | 53
mitigation, such as provisions to address an increase in
carbon capture and use of carbon sinks; afforestation and
reforestation practices;
land use changes; sustainable
systems of transportation, solid waste management,
and energy systems. This climate change framework
law incorporates obligations from the Paris Agreement.
Supreme Decree 013-2019 published on December 31,
2019, enacted statutory regulations, which are applicable
to all Peruvian institutions and agencies. It is expected
that additional Peruvian regulations will be applicable to
non-governmental entities. However, no carbon pricing
mechanism
is currently applicable to the Company’s
operations in Peru.
The Company believes that all of its facilities in Peru and
Mexico are in material compliance with environmental,
mining and other applicable laws and regulations. The
Company also believes that continued compliance with
environmental laws of Mexico and Peru will have no material
adverse effects on the Company’s business, properties, or
operating results.
53
Copper refinery at Buenavista del
Cobre, Sonora, Mexico.
54 | 55
Leaching pads at Toquepala -
Tacna, Peru
55
SCC ANNUAL REPORT 2022 - GENERAL INFORMATION
General
information
Information related to its constitution and inscription in the Public Registry:
“Brief historical review from the constitution of the Company”.
Southern Copper Corporation (SCC) is one of the largest integrated copper
producers in the world. We produce copper, molybdenum, zinc, silver, lead and
other by-products. All of our mining, smelting and refining facilities are located
in Peru and in Mexico and we conduct exploration activities in those countries
and in Chile, Ecuador and Argentina. Our operations make us one of the largest
mining companies in both Peru and Mexico. We are one of the largest copper
mining companies in the world. We were incorporated in Delaware in 1952 and
have conducted copper mining operations since 1960. Since 1996, our common
stock has been listed on both the New York and the Lima Stock Exchanges.
Our Peruvian copper operations involve mining, milling and flotation of copper
ore to produce copper concentrates and molybdenum concentrates; the
smelting of copper concentrates to produce anode copper; and the refining of
anode copper to produce copper cathodes. As part of this production process,
we produce significant amounts of molybdenum concentrate and refined silver.
We also produce refined copper using SX/EW technology. We operate the
Toquepala and Cuajone mines high in the Andes Mountains, approximately 860
kilometers southeast of the city of Lima, Peru. We also operate a smelter and
refinery west of the Toquepala and Cuajone mines in the coastal city of Ilo, Peru.
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.
56 | 57
Workers at Toquepala mine, Tacna,
Peru
Operadora de Minas e Instalaciones Mineras S.A de C.V. (the “Buenavista unit”)
operates Buenavista, formerly named Cananea, an open-pit copper mine, which
is located at the site of one of the world’s largest copper ore deposits, a copper
concentrator and two SX/EW plants. The Buenavista mine was operated by
Mexicana de Cananea S.A. de C.V. and by Buenavista del Cobre S.A. de C.V.
until December 11, 2010. From this date, Industrial Minera Mexico, S.A. de C.V.
(together with its subsidiaries, the “IMMSA unit”) operated five underground
mines that produce zinc, lead, copper, silver and gold, a coal mine and a zinc
refinery until July 2012. Effective February 1, 2012, Minerales Metalicos del
Norte S.A was merged with Industrial Minera Mexico S.A. de C.V. (IMMSA).
IMMSA absorbed Minerales Metalicos del Norte S.A.
We utilize modern/state-of-the-art mining and processing methods, including
global positioning systems and computerized mining operations. Our operations
have a high level of vertical integration that allows us to manage the entire
production process, from ore mining to the production of refined copper and
other products, as well as most related transport and logistics functions, using
our own facilities, employees and equipment.
57
SCC ANNUAL REPORT 2022 - GENERAL INFORMATION
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
Grupo Mexico, S.A.B. de C. V.
Grupo Mexico Servicios, S.A. de C.V.
Mining Activities
Americas Mining Corporation (“AMC”)
Southern Copper Corporation (SCC)
Minera Mexico, S. A. de C. V.
Industrial Minera Mexico, S.A. de C. V.
Buenavista del Cobre, S.A. de C. V.
Mexicana de Cobre, S.A. de C. V.
Southern Peru Copper Corporation, Agencia en Chile
Southern Peru Copper Corporation, Sucursal del Peru
Compañia Minera Los Tolmos, S.A.
1
2
3
4
5
6
7
8
9
10
11
Location
Mexico
Mexico
USA
USA
Mexico
Mexico
Mexico
Mexico
Chile
Peru
Peru
Inscription in
the RPMV
%
Yes
100
100
88.90
99.96
100
100
98.18
100
Yes (1)
99.29 (2)
100
Corporate Capital and Common Stock
Shares
The authorized number of shares
Issues an Paid Capital: Common Shares
Nominal Value of Common Shares
2,000,000,000
884,596,086
$ 0.01
Total number and percent of shares
Shares
Americas Mining Corporation
Common Shares owned by 3rd parties
687,405,997
85,692,472
Interest
88.9%
11.1%
Total
773,098,469
100.0%
(1) Investment shares
(2) Include 82.69% of common shares and 16.60% of investment shares.
58 | 59
SOUTHERN COPPER CORPORATION
Variable Income
Symbol ISIN
Nnemonic
Year-Month
COTISATION 2022
Open
Close
Maximum
Minimum
US84265V1052
US84265V1052
US84265V1052
US84265V1052
US84265V1052
US84265V1052
US84265V1052
US84265V1052
US84265V1052
US84265V1052
US84265V1052
US84265V1052
SCCO
SCCO
SCCO
SCCO
SCCO
SCCO
SCCO
SCCO
SCCO
SCCO
SCCO
SCCO
2022-01
2022-02
2022-03
2022-04
2022-05
61.27
65.00
70.93
77.40
61.80
2022-06
62.09
2022-07
2022-08
2022-09
2022-10
2022-11
2022-12
49.50
47.80
44.97
47.94
48.63
61.36
63.80
68.95
77.03
63.08
61.78
49.59
48.90
47.59
45.16
47.00
60.85
61.57
70.08
69.50
78.25
78.18
63.23
64.90
51.59
51.30
49.42
49.31
60.88
62.01
61.27
62.12
67.93
62.21
53.64
49.00
44.85
45.98
42.89
45.75
47.00
59.71
Average
Price
66.34
66.36
74.41
72.26
58.68
57.22
47.95
48.67
45.38
47.85
59.24
61.23
59
SCC ANNUAL REPORT 2022 - GENERAL INFORMATION
Description of operations and development
Regarding the Issuing Entity
CORPORATE PURPOSE
The purpose of SCC is to engage in activities that are permitted under 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 sales of copper, molybdenum, gold, silver, lead,
zinc, iron and any other class of minerals and materials or other materials, effects and goods of any
nature or description; as well as to explore, exploit, sample, examine, investigate, recognize, locate,
appraise, buy, sell, exchange, etc., mining concessions and mining deposits. SCC belongs to the CIIU
1320 group.
The term of duration of the Company is indefinite.
Brief historical review from the constitution of SCC:
The Company was organized on December 12, 1952, according to the Laws of the State of Delaware of
the United States of America, under the original denomination of Southern Peru Copper Corporation
(“SPCC”), which was renamed on October 11, 2005, to Southern Copper Corporation.
In 1954, SCC established a Branch in Peru to carry out mining activities in this country. The Branch
was established under public instrument certified by public notary from Lima, Dr. Ricardo Fernandini
Arana, on November 6, 1954.
The Branch is registered in the Electronic Record Nº 03025091 of the Juridical People of the Registry
Office of Lima and Callao.
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.
60 | 61
61
Part of the money contributed by the Company in favor of its Branch and by the
Labor Shares owners was applied as a capital premium to the Resident account as
Additional Capital.
Exchange of Investment Shares (Labor Shares) for Common Shares:
Dated September 7, 1995, “Southern Peru Copper Holding Company” was also
incorporated pursuant to the Laws of the State of Delaware to act as the holding
company that owns all of Southern Peru Copper Corporation ‘s shares. This was
executed through an exchange of shares that were formerly denominated “Labor
Shares” (now, Investment Shares), which were issued by the branch in Peru; through
this operation, owners of labor shares were given a number of Common Shares
issued by SPCC in the United States. As a consequence of this share exchange,
previous owners of Labor Shares acquired 17.31% of SPCC’s Capital and this
company acquired ownership of 80.77% of Labor Shares (now, Investment Shares).
On December 31, 1995, Southern Peru Copper Corporation changed its corporate
name to “Southern Peru Limited”, and “Southern Peru Copper Holding Company”
changed its corporate name to Southern Peru Copper Corporation.
After the corporate name change, the mining activities of the Company in Peru
were performed under the name of Southern Peru Limited, Peru Branch (SPL).
On December 31, 1998, the merger between Southern Peru Copper Corporation
and Southern Peru Limited was agreed. The first company absorbed the second
and assumed all its assets and liabilities, including the Branch in Peru. This merger
did not imply any change to the share percentage in the corporate capital or in the
Equity Participation Account (Investment Shares), which remained unchanged.
As a consequence of the merger, the mining activities of the corporation in Peru
were again carried out under the name of Southern Peru Copper Corporation, Peru
Branch, or the abbreviated name of “Southern Peru” and/or the acronym SPCC.
Change of Economic Group:
In November 1999, Grupo Mexico S.A.B. de C. V., a firm incorporated pursuant
to the Laws of the Republic of Mexico, acquired, in the United States, 100% of
ASARCO Incorporated, the main shareholder of Southern Peru Copper Corporation
61
61
SCC ANNUAL REPORT 2022 - GENERAL INFORMATION
at that time. In this way, SPCC became a subsidiary of Grupo Mexico, which holds
its shares through Americas Mining Corporation (AMC).
Acquisition of Minera Mexico (“MM”), and other corporate changes:
SCC shareholders, in a shareholder extraordinary meeting dated March 28,
2005, approved the issuance of Common Shares and required actions related to
the acquisition of MM, a firm incorporated pursuant to the Laws of the Republic
of Mexico. This transaction was approved by more than 90% of the stocks and
circulating capital of SCC. To acquire Minera Mexico, SCC issued 67,207,640 shares
in exchange for MM shares. Once the shares related to the acquisition were issued,
AMC increased its share in SCC from 54.2% to approximately 75.1%.
AMC Increased its Participation in SCC:
In 2008 and 2009, Grupo Mexico, through its wholly owned subsidiary Americas
Mining Corporation, purchased 11.8 million and 4.9 million shares of the Company’s
common Stock, respectively.
SCC $500 Million Share Repurchase Programs:
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, 2022 was $60.39 and the maximum number of shares that the Company could
purchase at that price was 1.4 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, 2022.
Change in the Certificate of Incorporation:
On March 28, 2005, following Board of Directors recommendations, SCC
shareholders approved, during an extraordinary meeting, the amendments to the
Articles of Incorporation Deed that changed the composition and obligations of
some Board committees.
Special Nominating Committee and Special Independent Directors:
The changes to the Certificate of Incorporation require the Board to include a certain
62 | 63
Cuajone mine
Moquegua, Peru
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 following integer number. Notwithstanding the aforementioned, the total
number of individuals appointed as special independent directors (not belonging
to Grupo Mexico) cannot be less than two or more than six.
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
63
SCC ANNUAL REPORT 2022 - GENERAL INFORMATION
Board of Directors for cause. The unanimous vote of all members of the nominating
committee will be necessary for the adoption of any resolution or the taking of any
action.
Notwithstanding the foregoing, the power of the Special Nominating Committee to
nominate special independent directors is subject to the rights of the stockholders to
make nominations in accordance with our by-laws.
The provisions of the Amended and Restated Certificate of Incorporation, as
amended, relating to Special Independent Directors may only be amended by the
affirmative vote of a majority of the holders of shares of Common Stock (calculated
without giving effect to any super majority voting rights) other than Grupo Mexico
and its affiliates.
Transactions with affiliates:
In 2019, the Company entered into certain transactions in the ordinary course
of business with parties that are controlling shareholders or their affiliates. These
transactions include the lease of office space, air and railroad transportation,
construction services, energy supply and other products and services related to
mining and refining. The Company lends and borrows funds among affiliates for
acquisitions and other corporate purposes. These financial transactions bear interest
and are subject to review and approval by senior management, as all are related party
transactions. It is the Company’s policy that the Audit Committee of the Board of
Directors shall review all related party transactions. The Company is prohibited from
entering or continuing a material related party transaction that has not been reviewed
and approved or ratified by the Audit Committee.
Change of corporate name and other corporate changes:
On September 20, 2005, by written consent instead of an extraordinary shareholder
meeting, the majority shareholder approved renaming Southern Peru Copper
Corporation “Southern Copper Corporation or SCC.” The change was adopted
because the new corporate name more accurately reflects the Company’s operational
reach outside the Republic of Peru after its acquisition of Minera Mexico, and the
latter’s presence in the Republic of Chile through the acquisition of some mining
exploration concessions, and its exploration activities in the Republics of Argentina
and Ecuador.
64 | 65
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 to 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.
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 its 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.
65
SCC ANNUAL REPORT 2022 - GENERAL INFORMATION
Changes to the Articles of Incorporation and By-laws
On January 26, 2006, the Board approved an amendment to
Southern Copper Corporation’s Articles of Incorporation and
by-laws: (i) to remove the provisions related to Class A Common
Shares among other changes.(ii) add a new provision for
advance notice to shareholders seeking to nominate directors
or to propose other business at annual or special meetings
of the Common Stockholders (as applicable) (iii) substitute
Grupo Mexico for ASARCO Incorporated in the “Change
in Control” definition in the Corporation’s by-laws (iv) and
eliminate the 80% supermajority vote requirement for certain
corporate actions. The modification of the Modified Certificate
of Incorporation increased the capital stock from 167,207,640
shares to 320,000,000 shares. These modifications were
submitted for approval of the shareholders at the shareholders
annual meeting held on April 27, 2006 which was adjourned
and reconvened for May 4, 2006, and later on adjourned and
reconvened for May 11, 2006.
At the annual meeting, on April 27, 2006, the proposal to
amend the by-laws to eliminate certain extraneous provisions
relating to the retired series of Class A Common Stock had an
affirmative vote of 79.85% of the required votes. Given that the
required vote for the approval of this proposal was 80% and
because some votes still needed to be tabulated, the annual
meeting for this proposal was adjourned until May 4, 2006. On
May 4, 2006, at the adjourned and reconvened meeting the
stockholders approved the proposal with an affirmative vote
of 80.61% of the required votes.
On April 27, 2006, stockholders approved (i) the amendment
to the by-laws to introduce a new provision for advance notice
to shareholders seeking to nominate directors or to propose
other business at annual or special meetings of the Common
66 | 67
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 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 88.9% of SCC
shares.
Information about plans and investment policies:
See Capital Expenditures and Exploration on page 13.
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.
67
Cularjahuira dam - Tacna, Peru. Built with the contribution of
the Company through Candarave Development Fund
68 | 69
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
This tax is based on operating income with graduated rates increasing from 2%
to 8.4%. The Company recognized $56.4 million, $114.0 million and $50.0 million
in 2022, 2021 and 2020, respectively, with respect to this tax. These amounts
were included as income taxes in the Consolidated Statement of Earnings.
MINING ROYALTY
The royalty charge is based on operating income margins with graduated rates
ranging from 1% to 12% of operating profits, with a minimum royalty charge
assessed at 1% of net sales. The minimum royalty charge is recorded as cost of
sales and those amounts assessed at higher rates are included in the income
tax provision. The Company has accrued $71.4 million, $140.8 million and $60.6
million of royalty charges in 2022, 2021 and 2020, respectively, of which $35.8
million, $97.8 million and $31.4 million were included in income taxes in 2022,
2021 and 2020, respectively.
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.
69
SCC ANNUAL REPORT 2022 - GENERAL INFORMATION
La Caridad mine,
Sonora, Mexico
Operations in Mexico
LA CARIDAD MINE
“La Caridad Concentrator”, began operations in 1979. The concentrator
has a current capacity of 94,500 tons of ore per day. “Molybdenum Plant”
started operations in 1982, with a production capacity of 2,000 tons of copper-
molybdenum concentrate per day.
La Caridad SX-EW has an annual design capacity of 21,900 tons of copper
cathodes. Approximately 983.9 million tons of leaching ore with an average
grade of approximately 0.239% copper was extracted from the La Caridad open
pit mine and deposited in leaching dumps to December 31, 2022.
LA CARIDAD METALLURGIC COMPLEX
“La Caridad Smelter”, started operations in July, 1986. The current installed
capacity of the smelter is 1,000,000 tons per year, which is sufficient to treat all
the concentrates of La Caridad and almost 40.5% of the total production of the
OMIMSA I and OMIMSA II concentrators from Buenavista. In 2010, the smelter
also began processing concentrates from the IMMSA mines after we closed the
San Luis Potosi smelter.
70 | 71
Our workforce is comprised of more
than 15,000 employees
71
SCC ANNUAL REPORT 2022 - GENERAL INFORMATION
“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 capacity of 43,836 ounces of silver; 247 ounces of
gold; and 342 kilograms of selenium.
“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.
BUENAVISTA MINE
“Buenavista Concentrator”, the original concentrator currently
has a nominal milling capacity of 82,000 tons per day. The second
concentrator began operations in 2015 with a nominal milling
capacity of 100,000 tons per day.
“Buenavista SX/EW I Plant”,started operating in 1980, with a
capacity of 30 tons per day.
“Buenavista SX/EW II Plant, inicio sus operaciones con una
capacidad de 66 t/d en 1989 y amplio su capacidad a 120 t/d en
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 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.
72 | 73
UNDERGROUND MINES
1. The Santa Barbara Unit with a milling capacity of 5,800 tons of ore per day.
2. The Santa Eulalia Unit with a milling capacity of 1,450 tons of ore per day.
3. The San Martin Unit with a milling capacity of 4,400 tons of ore per day.
4. The Charcas Unit with a milling capacity of 4,100 tons of ore per day.
5.
The Taxco Unit with a milling capacity of 2,000 tons per day.
6. Coque Coal Plant, in Coahuila Unit, with a capacity of 105,000 tons of coke per
year.
7. The Zinc Refinery with a capacity of 288 tons per day of refined zinc.
Peruvian Operations
TOQUEPALA MINE
“Toquepala Concentrator”. Directorial Resolution No.455-91-EM/DGM/DCM dated
July 5, 1991 approved the operation of the Toquepala Concentrator. The resolution
granted 240 hectares of surface land and authorized a throughput of 39,000 tons/
day.
Based on Report No. 413-97-EM/DGM/DPDM dated July 7, 1997, the “Director
General de Mineria” authorized the expansion of the Toquepala Concentrator to a
43,000 tons/day throughput.
Based on Report N° 547-2002-EM/DGM/DPDM, dated November 6, 2002,
the “Director General de Mineria” authorized the expansion of the Toquepala
Concentrator to a capacity of 60,000 MT per day.
Resolution N° 0163-2020-MINEM-DGM/V, dated June 11, 2020, based on
Report N° 081 – 2020 - MINEM-DGM-DTM/PB, the “Director General de Mineria”
authorized the operation and auxiliary facilities of II Molibdenum Circuit at the
Toquepala Concentrator to a capacity of 120,000 MT per day. According with this
Report, the Company must comply with, among other aspects, environmental
recommendations and commitments; safety regulations; and occupational Health
and Safety Regulations.
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SCC ANNUAL REPORT 2022 - GENERAL INFORMATION
“Toquepala Leaching Plant (SX/EW)”. Directorial Resolution No. 166-96-EM/DGM dated
May 7, 1996, approved the operation of the Toquepala SX/EW plant. The resolution granted
60 hectares of surface land and authorized a throughput of 11,850 tons/day.
Based on Report No. 660-98-EM-DGM/DPDM dated November 10, 1998 the “Director
General de Mineria” authorized construction and expansion of Toquepala SX/EW plant
to 18,737 tons/day throughput. Directoral Resolution dated May 19, 2003, based on
Report No. 291-2003-EM-DGM/DPDM, authorized operation of the SX/EW plant to a
throughput of 18,737 tons/day. Resolution dated December 15, 2021, based on Report No.
0457-2021-MINEM-DGM-DTM/PB, authorized operation of the SX/EW plant from 18,737
tons/day to 18, 756 TMD.
CUAJONE MINE
“Botiflaca Concentrator” in Cuajone. Directorial Resolution No. 150-81-EM/DCM dated
August 14, 1981 approved the operation of Botiflaca Concentrator. The resolution granted
56 hectares of surface land.
Based on Report No. 266-99-EM/DGM/DPDM dated July 20, 1999 the “Director General de
Mineria” authorized the expansion of Botiflaca Concentrator to 87,000 MT per day throughput.
Resolution N° 379-2010-MEM-DGM/V dated October 7, 2010 and based on Report N°312-
2010-MEM-DGM-DTM/PB, authorized construction and expansion of Botiflaca Concentrator
to 90,000 MT per day throughput.
For operating reasons, and as part of crusher process optimization, on November 18, 2011,
we requested, through resource N° 2144941, that Peruvian authorities consider the addition
of three more facilities (HPGR mill and others).
On May 2012, through Directoral Resolution N° 153-2012-MEM-DGM-V and based on report
165-2012-MEM-DGM-DTM-P, MEM approved and authorized the project to include the three
aforementioned additional facilities in the amendment and increased the installed capacity
from 87,000 to 90,000 MT per day.
“Cuajone Leaching Plant (LX/EW)”. Directorial Resolution No.155-96-EM/DGM dated May
6, 1996 approved the operation of the Cuajone Leaching plant. The resolution granted 400
74 | 75
hectares of surface land and authorized a throughput of 2,100
MT per day. Based on Report No. 988-2009-MEM-DGM/V,
dated December 16, 2009, the Cuajone SX plant operation
was approved and authorized with a capacity of 3100 MT per
day.
ILO METALLURGICAL COMPLEX
“Ilo Smelter” Authorized (definitely) by Directorial Resolution
No. 078-69-EM/DGM dated August 21, 1969 approved
the operation of the Ilo Smelter. The resolution authorized
production of 400 short tons/day of blister copper.
Based on Report No.204-2000-EM-DGM-DPDM dated June
20, 2000 the “Director General de Mineria” authorized the Ilo
Smelter to expand its capacity to 3,100 MT per day throughput
of copper concentrates.
On February 4, 2010, by the Application Nº 1961695, the
Company began the process to obtain authorization from
the MINEM to operate a capacity of 3,770 MT per day, which
is included as an ancillary facility to Acid Plant No. 2, with a
capacity of 2,880 MT per day or 1,051,200 MT per year.
“Ilo Refinery”. Authorized by Report No. 056-94-EM/DGM/
DRDM dated May 27, 1994 the “Director General de Mineria”
authorized the operation of the Ilo Copper Refinery at 533 MT
per day throughput of blister copper.
Based on Report No. 506-97-EM/DGM/DPDM dated
September 2, 1998 the “Director General de Mineria”
authorized expanding Ilo Copper Refinery’s capacity to 658
MT per day throughput.
75
Ilo refinery,
Moquegua, Peru
76 | 77
Based on Report N° 080-2002-EM-DGM/DPDM, dated March 14,
2002, the “Director General de Mineria” authorized the Ilo Copper
Refinery to expand its capacity to 800 MT per day.
Resolution N° 520-2010-MEM-DGM/V dated December 30,
2010, based on Report N° N°414-2010-MEM-DGM-DTM/PB,
authorized changes in Ilo copper refinery without expanding its
capacity throughput.
Resolution N° 0162-2020-MINEM-DGM/V dated June 11, 2020,
based on Report N° 080-2020-MINEM-DGM-DTM/PB, authorized
the Ilo Copper Refinery to expand its capacity to 810 MT per day.
“Sulfuric Acid Plant”. Authorized by Directorial Resolution
No. 024-96-EM/DGM dated January 19, 1996, approved the
operation of the sulfuric acid plant, installed at the smelter, at a
production rate of 150,000 tons per year.
Based on Report No. 313-98-EM/DGM/DPDM dated May 21,
1998 the “Director General de Mineria” authorized the expansion
of the Ilo Sulfuric Acid Plant to a capacity of 300,000 tons per
year production.
“Coquina Wash Plant and Sea shell Concentrates” authorized
to operate by Directorial Resolution Nº 110-93-EM/DGM of
August 3, 1993. The plant processes 95 TC/h of raw material
(coquina) recovered from nearby mines. Seashell is produced
separating sand and other materials from the coquina using
seawater-washing screens.
Resolution N°038-2011-MEM-DGM-DTM/PB dated February
2, 2011, based on Report N°035-2011-MEM-DGM-DTM/PB,
authorized modifications to the concession of “Coquina Wash
77
SCC ANNUAL REPORT 2022 - GENERAL INFORMATION
Panoramic view of Ilo Smelter,
Moquegua, Peru
Plant and Seashell Concentrates” to designate it a dry seashell
plant without expanding
its capacity throughput, which
represents 2,068 tons/day. Through Nº 2499277, dated May
19, 2015, SPCC requested a temporary, three-year suspension
of its Dry Seashell Concentrates plant.
Resolution N° 0850-2018 – MEM-DGM/V dated November 15,
2018, based on Report N° 162-2018 /MEM-DGM-DTM-PCM,
SPCC communicated to MEM that it was initiating the closure
of the facilities at Coquina Mine.
78 | 79
Human resources
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.
Accordingly, our main commitment is to create optimal and
safe work environments for our employees by applying the
highest occupational health and safety standards. Our goal:
ZERO accidents. Our main commitments regarding health
and safety, are disclosed on Grupo Mexico 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 2022, we operated 13 units in Mexico and Peru, where
Occupational Safety and Health Management Systems have
been certified according to OHSAS 18001: 2007. Additionally,
in Mexico, we maintain 28 units that are certified by the
Secretariat of Labor 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
and compliance with government provisions on the matter.
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SCC ANNUAL REPORT 2022 - HUMAN RESOURCES
In 2022, the accident rate (IR) increased 37% compared to 2021 but stood at
rates similar to previous years. We will continue working to reinforce prevention
activities to diminish risks and ensure the physical integrity of our collaborators.
Accident Rate (IR)
SCC, 2018-2022 t
2018 0.74
2019 0.82
2020 0.49
2021 0.79
2022 0.50
Severity Rate (GR)
SCC, 2018-2022
2018 0.31
2019 0.89
2020 0.19
2021 0.81
2022 0.57
IR =
N° of disabling accidents
N° of total men - hours worked
x 200,000
GR =
N° of days lost
N° of total men - hours worked
x 1,000
The accomplishments in 2022 on the occupational health and safety front
include:
• The occupational accident rate at our mining operations in SCC is 62% 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 2022 awarded the “Jorge
Rangel Zamorano” Silver Helmet Trophy to the Planta de Metales Preciosos
de Mexicana del Cobre, after it reported the lowest accident rates in the
industry and in recognition of its efforts in the field of accident prevention.
• The Metalurgica del Cobre, La Caridad, Santa Barbara, Charcas, San Martin
and Zinc Refinery operations were recognized with the distinctive ELSSA
Program. Awarded by the Mexican Government for those companies that
promote safe and healthy work environments.
• XVI National Competition of Underground Mining Rescue Crews, First
Aid and Hazardous Materials, organized by the Mexican Mining Chamber
80 | 81
(CAMIMEX) and the National Council for Standardization and Certification of
Labor Competences (CONOCER), following achievements were obtained:
- 1st place to Santa Barbara Unit (First Aid to rescue crew “Coyotes”)
- 1st place to Santa Barbara Unit (Underground mining rescue “Nahuales”)
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 2018-2022
2018
2019
2020
2021
2022
0.18
0.23
0.18
0.15
0.13
ODR =
N° 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, and 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.
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SCC ANNUAL REPORT 2022 - HUMAN RESOURCES
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
gatherings and
parades
Family
Firefighting
courses
Family contests
to promote
values
82 | 83
INVESTING IN SAFETY AND HEALTH
In 2022, we invested over $41 million in occupational safety and health efforts for engineering work;
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
2021
9,722
4,675
35
15
7
3
5
2020
8,962
4,739
58
4
6
3
5
2019
9,358
4,890
23
15
9
1
5
2018
9,002
4,850
30
5
5
2
5
15,018
14,462
13,777
14,301
13,899
TOTAL EMPLOYEES IN SCC
2022
10,005
4,947
4
9
10
38
5
Mexico
Peru
Ecuador
Argentina
Chile
Corporate Office
OHYSA
Total
Labor Matters
Mexican operations:
72.4% of our 10,005 Mexican employees were unionized as of December 31, 2022 and are represented
by four different unions. Under Mexican law, the terms of employment for unionized workers are
set forth in collective bargaining agreements. Mexican companies negotiate the salary provisions
of collective bargaining agreements with the labor unions on an annual basis and negotiate other
benefits every two years. We conduct negotiations separately at each mining complex and each
processing plant.
In recent years, the Mexican operations have experienced a positive improvement in their labor
environment, as workers opted to change their affiliation from the Sindicato Nacional de Trabajadores
Mineros, Metalurgicos y Similares de la Republica Mexicana (the “National Mining Union”) to other
less politicized unions.
Peruvian operations:
76.5% of the Company’s 4,947 Peruvian employees were unionized at December 31, 2022. Currently,
there are six separate unions, none of which represents the majority of workers, as defined by current
Peruvian labor legislation.
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SCC ANNUAL REPORT 2022 - HUMAN RESOURCES
In the first half of 2022, the six unions came together to defend their rights
to work at the Cuajone unit. This action was taken after a small group of
residents from the community of Tumilaca, Pocata, Coscore and Tala,
Moquegua cut off the water supply and blocked railroad access, which
directly affected the health and safety of workers and their families and
the production process.
Principles of corporate governance
Information referred to the Resolution of “Superintendencia del
Mercado de Valores” No. 012-2014-SMV / 01, consisting of a “Report
on Compliance with the Code of Good Corporate Governance for
Peruvian Companies” is applicable only to Peruvian companies. Given
that SCC is not a Peruvian company, this report is not submitted to the
“Superintendencia del Mercado de Valores” (SMV) of Peruvian Republic.
Notwithstanding, SCC submits the “Annual Written Affirmation” to SMV.
This document provides information on Good Corporate Governance,
which our company remits annually to the New York Stock Exchange.
Economic relations with other companies due to loans that commit more
than 10% of the stockholder’s equity of the issuing entity:
To the date, there are no loans with other companies that comprise more
than 10% of SCC’s property.
ADMINISTRATIVE
JUDICIAL
OR
ARBITRATION
PROCESSES LITIGATION
See Note 13 “Commitments and Contingencies” to our Consolidated
Financial Statements on our 2022 Form 10-K.
Ms. CPC Lina Vingerhoets is the Company´s Controller and Mr. Eco.
Marco Antonio Garcia Vargas was our Finance Manager until December
2, 2022. The Company has expressed its deepest gratitude to Mr. Garcia
for his work, dedication and service to the Company during his 40-year
career there.
84 | 85
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.
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 Minera Mexico’s 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.
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SCC ANNUAL REPORT 2022 - HUMAN RESOURCES
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, 2022, there were of record 773,098,469 shares of common
stock of the Company, par value $0.01 per share, outstanding.
Corporate notes
Between July 2005 and October 2015, the Company issued senior unsecured
notes eight times totaling $6.2 billion. Interest on the notes is paid semi-annually
in arrears. The notes rank pari passu with each other and rank pari passu in right
of payment with all of the Company’s other existing and future unsecured and
unsubordinated indebtedness.
The indentures relating to the notes contain certain restrictive covenants,
including limitations on liens, limitations on sale and leaseback transactions,
rights of the holders of the notes upon the occurrence of a change of control
triggering event, limitations on subsidiary indebtedness and limitations on
consolidations, mergers, sales or conveyances. Certain of these covenants cease
to be applicable before the notes mature if the Company obtains an investment
grade rating. The Company obtained investment grade rating in 2005.
In addition, the Company´s Mexican operations hold $51.2 million in bonds
referred above as “Yankee bonds”, contain a covenant requiring Minera Mexico
to maintain a ratio of EBITDA to interest expense of not less than 2.5 to 1.0 as
86 | 87
Workers at Cuajone mine,
Moquegua, Peru
such terms are defined in the debt instrument. At December 31, 2022,
the Company was in compliance with this covenant.
On September 26, 2019, Minera Mexico S.A. de C.V., a subsidiary of SCC,
issued $1 billion Senior Notes at a fixed rate with a discount of $12.7
million, which will be amortized over the corresponding debt period. This
debt was issued in a single tranche, maturing in 2050 at an annual interest
rate of 4.5%. Interest on the notes will be paid semi-annually at maturity.
The Company aims to use the net proceeds from the offer (i) to finance
the expansion program of Minera Mexico, including the Buenavista Zinc,
Pilares and El Pilar projects, (ii) for other capital expenditures, and (iii) for
general corporate purposes.
The notes constitute general unsecured obligations of Minera Mexico.
The notes were issued in an unregistered offering pursuant to Rule 144A
and Regulation S under the Securities Act of 1933.
Please see Note 11 “Financing” for a discussion about the covenants’
requirements with regard to our long-term debt, on our 2022 Form 10-K.
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SCC ANNUAL REPORT 2022 - MEMBERS OF THE BOARD
Members of the Board of
Directors
At December 31, 2022
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 his education, 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 a valuable mix of business experience in different
industries.
Oscar Gonzalez Rocha, Director. Mr. Gonzalez Rocha has been our President
since December 1999 and our President and Chief Executive Officer since
October 21, 2004. He has been a director of the Company since November 1999.
Mr. Gonzalez Rocha has been Chief Executive Officer and director of Asarco
LLC (integrated US copper producer), an affiliate of the Company, since August
88 | 89
2010 and President, Chief Executive Officer of Americas Mining Corporation
(“AMC”), a holding company of Grupo Mexico, since 2015. Previously, he was
the President and General Director and Chief Operating Officer of Minera
Mexico S.A. de C.V. 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 business man 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, leadership, an open mind and willingness to
listen to different opinions. Mr. Gonzalez Rocha has proven his ability to deal
with crises to lessen negative impacts on 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. Mr. Gonzalez Rocha was recognized
as Copper Man of the Year 2015 and 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.
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. Over 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, 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
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SCC ANNUAL REPORT 2022 - MEMBERS OF THE BOARD
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, an
international 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 is also 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).
Mr. Ariztegui has not served as a director of any other US public company
over the last five years. 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 the expertise attained through his work as director
of other companies.
Enrique Castillo Sanchez Mejorada, Independent Director. Mr. Castillo
Sanchez Mejorada has been a director of the Company since July 26, 2010 and
is our fifth independent director nominee. From May 2013 to December 2020,
Mr. Castillo Sanchez Mejorada was Senior Partner of Ventura Capital Privado,
S.A. de C.V. (Mexican financial company).
From October 2013 to April 2021, he was 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
90 | 91
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; and (iv) 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. 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. He brings to the Company more than 44 years of experience in
the financial sector as well as the leadership experience and expertise he has
attained as independent director of other companies.
Leonardo Contreras Lerdo de Tejada, Director. Mr. Leonardo Contreras Lerdo
de Tejada has been a director of the Company since May 2021. He 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, President
of IMMSA, a subsidiary of the Company that integrates the underground
operations, in August 2020, and CFO of Americas Mining Corporation in January
2022. Mr. Contreras Lerdo de Tejada has more than 10 years of experience in
private equity, investment banking, and entrepreneurship. 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.
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SCC ANNUAL REPORT 2022 - MEMBERS OF THE BOARD
Mr. Leonardo Contreras Lerdo de Tejada brings to the Company his
operating, human capital, and financial skills as well as more than
10 years of experience in private equity, investment banking and
entrepreneurship.
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, which is
comprised of the energy, gas, oil and construction subsidiaries of Grupo
Mexico. He is also Vice-chairman of Grupo Mexico. Additionally, Mr.
Garcia de Quevedo was the President and Chief Executive Officer of
Southern Copper Minera Mexico from September 2001 until November
1, 2014. He was the President and Chief Executive Officer of Americas
Mining Corporation from September 7, 2007 to October 31, 2014. From
December 2009 to June 2010, he was Chairman and Chief Executive
Officer of Asarco LLC. Previously he was President of Asarco LLC from
November 1999 to September 2001. Mr. Garcia de Quevedo began his
professional career in 1969 with Grupo Mexico. He was President of
Grupo Ferroviario Mexicano, S.A. de C.V. and of Ferrocarril Mexicano,
S.A. de C.V. from December 1997 to December 1999, and Executive
Vice President of Exploration and Development of Grupo Mexico from
1994 to 1997. He has been a director of Grupo Mexico since April
2002. He was also Vice President of Grupo Condumex, S.A. de C.V.
(telecommunications, electronics and automotive parts producer) for
eight years. Mr. Garcia de Quevedo was the Chairman of the Mining
Chamber of Mexico from November 2006 to August 2009. He is a
chemical engineer with a degree from the UNAM in Mexico City, Mexico.
He also attended a continuous business administration and finance
program at the Technical Institute of Monterrey in Monterrey, Mexico.
Mr. Garcia de Quevedo contributes 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 45 years of experience as an executive with Grupo Mexico and
subsidiaries, he was responsible for developing the integration strategy
92 | 93
Copper discharge in La Caridad
Metallurgical Complex - Sonora, Mexico
Anode wheel, Ilo
smelter - Moquegua, Peru
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SCC ANNUAL REPORT 2022 - MEMBERS OF THE BOARD
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 the diversified business experience
he gained from having served on the boards of different Mexican and United
States companies and as Chairman of the Mining Chamber of Mexico.
Luis Miguel Palomino Bonilla, Special Independent Director. Dr. Palomino
has been a director of the Company since March 19, 2004. Dr. Palomino is the
President of the Peruvian Economics Institute (a think tank) since April of 2022,
after having served as Director, Consultant, and Chief Executive Officer since
January 2007. He has also been Director of the Master’s in Finance Program
at the University of the Pacific in Lima, Peru since July 2009, Dr. Palomino has
been a member of the board of directors of Laboratorios Portugal (personal care
products manufacturer) since September 2017 and a member of the board of
directors of Summa Capital, S. A. (corporate consulting firm) since April 2014.
He has been a director of Mall Aventura, S.A. since March 2021 and an Associate
of the Instituto Educacional Franklin Delano Roosevelt since December 2022.
Dr. Palomino was a member of the board of directors and Vice-chairman of the
Central Bank of Peru (Banco Central de Reserva del Peru) from September 2016
to October 2021. He was the Chairman of the board of directors of Aventura
Plaza, S.A. (commercial real estate developer and operator) from January 2008
to June 2016, Partner of Profit Consultoria e Inversiones (a financial consulting
firm) from July 2007 to July 2016, and a member of the board of directors and
chairman of the audit committee of the Bolsa de Valores de Lima (Lima Stock
Exchange) from March 2013 to July 2016. Dr. Palomino was Principal and Senior
Consultant of Proconsulta International (financial consulting) from September
2003 to June 2007. He was First Vice President and Chief Economist, Latin
America, for Merrill Lynch, Pierce, Fenner & Smith, New York (investment
banking) from 2000 to 2002. He was Chief Executive Officer, Senior Country and
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Equity Analyst of Merrill Lynch, Peru (investment banking) from 1995 to 2000.
Dr. Palomino has held various positions with banks and financial institutions as
an economist, financial advisor and analyst. He has a PhD in finance from the
Wharton School of the University of Pennsylvania in Philadelphia, Pennsylvania
and graduated from the Economics Program of the University of the Pacific in
Lima, Peru.
Dr. Palomino is a member of our Audit Committee and a special independent
director nominee. He is also our “audit committee financial expert,” as the
term is defined by the SEC. Dr. Palomino contributes to the Company through
his education in economics and finance, acquired from extensive academic
studies, including a PhD in Finance from the Wharton School of the University of
Pennsylvania in Philadelphia, Pennsylvania, his expertise, his wise counsel, and
the extensive business experience gained from his past and current activities
while serving as a financial analyst in multiple sectors, including the mining
sectors of Mexico and Peru.
Gilberto Perezalonso Cifuentes, Special
Independent Director. Mr.
Perezalonso has been a director of the Company since June 2002. Currently, Mr.
Perezalonso is a member of the board of directors of Gigante, S.A. de C.V. (retail
and real estate) and Blasky (hotel chain in Baja California, Mexico). He is also
National Vice President of the Cruz Roja Mexicana (Red Cross). Mr. Perezalonso
was Chairman of the board of directors of Volaris Compañia de Aviacion, S.A.P.I.
de C.V. (airline) from March 2, 2011 to November 2014. He was Chief Executive
Officer of Corporacion Geo, S.A. de C.V. (housing construction) from February
2006 to February 2007. Mr. Perezalonso was the Chief Executive Officer of
Aeromexico (Aerovias de Mexico, S.A. de C.V.) (airline company) from 2004 until
December 2005. From 1998 until April 2001, he was Executive Vice President
of Administration and Finance of Grupo Televisa, S.A.B. (media company). From
1980 until February 1998, Mr. Perezalonso held various positions with Grupo
Cifra, S.A. de C.V. (retail and department stores), the most recent position being
that of General Director of Administration and Finance. He was also a member
of the Advisory Council of Banco Nacional de Mexico, S.A. de C.V. (banking), the
board of directors and the investment committee of Afore Banamex (banking),
the board and the investment committee of Siefore Banamex No. 1 (banking),
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SCC ANNUAL REPORT 2022 - MEMBERS OF THE BOARD
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 the legal and
financial education acquired from extensive academic studies, including a
Master’s degree in Business Administration from INCAE in Nicaragua, and his
business experience acquired serving in the financial areas of several companies
and as Chief Executive Officer of different companies. Mr. Perezalonso also
brings to the Board of Directors his informed judgment and diversified business
experience, which as been gained from serving on boards of directors of different
Mexican companies.
Carlos Ruiz Sacristan, Special Independent Director. Mr. Ruiz Sacristan has
been a director of the Company since February 12, 2004. Since November
2001, he has been the owner and Managing Partner of Proyectos Estrategicos
Integrales, a Mexican investment banking firm specialized in agricultural,
transport, tourism, and housing projects. Since January 2022, he has served as
a strategic advisor to Sempra Infrastructure, an operating subsidiary of Sempra
Energy. Mr. Ruiz Sacristan has held various distinguished positions in the Mexican
government, the most recent being that of Secretary of Communications and
Transportation of Mexico from 1995 to 2000. While holding that position, he
was also Chairman of the board of directors of the Mexican-owned companies
in the sector, and member of the board of directors of development banks.
Additionally, he was Chairman of the board of directors of Asarco LLC. Mr. Ruiz
Sacristan was Chairman of the board of directors and Executive President of
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IEnova, the Mexican operating subsidiary of Sempra Energy from September
2020 to Noviember 2021. Mr. Ruiz Sacristan was Chief Executive Officer of
Sempra North American Infrastructure Group from 2018 until September 2020.
Prior to this appointment, he was Chairman and Chief Executive Officer of IEnova
from 2012 to 2018 and a member of the board of directors of Sempra Energy
from 2007 to 2012. He is a member of the boards of directors of Constructora
y Perforadora Latina, S.A. de C.V. (Mexican geothermal exploration and drilling
company) and of Banco Ve Por Mas, S.A. (Mexican bank). Mr. Ruiz Sacristan holds
a Bachelor’s degree in Business Administration from the Anahuac University in
Mexico City, Mexico, and a Master’s degree in Business Administration from
Northwestern University in Chicago, Illinois.
Mr. Ruiz Sacristan is one of our special independent director nominees. Mr. Ruiz
Sacristan contributes to the Company his extensive business studies, including
a Master’s Degree in Business Administration from Northwestern University
in Chicago, Illinois, his investment banking experience and his broad business
experience as a former Chief Executive Officer of PEMEX (Mexican oil company),
combined with his distinguished career in the Mexican government as a former
Secretary of Communications and Transport of Mexico and as a director of
Mexican-owned enterprises and financial institutions. Mr. Ruiz Sacristan also
brings to the Board of Directors informed judgment and diversified business
experience gained from serving on the board of directors and of the audit, and
environmental and technology committees of Sempra Energy, a Fortune 500
energy service company, based in San Diego, California; as the former Chairman
of Asarco LLC; and as the Chief Executive Officer of IEnova.
97
Ilo Smelter - Moquegua,
Peru
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Executive
officers
GERMAN LARREA MOTA-VELASCO
Chairman of the Board of Directors
OSCAR GONZALEZ ROCHA
President and Chief Executive Officer
RAUL JACOB RUISANCHEZ
Vice President, Finance Treasurer
and Chief Financial Officer
EDGARD CORRALES AGUILAR
Vice President, Exploration
JORGE LAZALDE PSIHAS
Secretary
ANDRES FERRERO GHISLIERI
General Counsel
LINA VINGERHOETS VILCA
Comptroller
RAUL VACA CASTRO
General Auditor
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Mill maintenance
work
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CONTROLLED COMPANIES- AFFINITY AND INBREEDING
A company with more than 50% of the voting power held by a one single entity
is a “controlled company”, and does not need to comply with the Corporate
Governance requirements of the New York Stock Exchange (“NYSE”), which
requires a majority of independent directors and independent Compensation
and Nomination/Corporate Governance committees.
SCC is a controlled company as defined by the rules of the NYSE. Grupo
Mexico owns indirectly 88.9% of the stock of the Company, as of December
31, 2022. 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 28th, 2022, the Board of Directors determined that
Messrs. Luis Miguel Palomino Bonilla, Gilberto Perezalonso Cifuentes, Carlos
Ruiz Sacristan, Vicente Ariztegui Andreve, Enrique Castillo Sanchez Mejorada
and Rafael Mac Gregor Anciola continue to be independent of management,
in accordance with the requirements of the NYSE as such requirements are
interpreted by our Board of Directors in its business judgment.
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
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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 that require full, fair, accurate, timely, and understandable
disclosure of material information regarding the Company in reports and
documents that it files with the SEC, the NYSE and equivalent authorities
in the countries in which the Company operates, as well as in other public
communications that it regularly makes.
6. Administrative Committee.
It
is designated by the Named Fiduciary
appointed by the Board for the benefit plans as required by the Employee
Retirement Income Security Act – ERISA of the United States. ERISA is the
law that covers employee retirement and other benefit plans for employees
that are US citizens or residents The Named Fiduciary controls and manages
the Company’s benefits plans subject to US regulations, including ERISA.
This Officer appoints an Administrative Committee, which is comprised of
three management members and its purpose is, with delegated authority,
to administer and manage said plans and to oversee the performance of the
trust agents and other fiduciaries charged with investing the plans’ funds.
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Administration and board income
Total remunerations of Board and Administration members, in relation to the
Company´s gross income is 0.11%.
Annual meeting
The annual meeting will be hold on May 26th, 2023, at 9:00 hour in Mexico City.
Corporate Offices:
United States
Mexico
Peru
7310 North 16th, Suite 135
Phoenix, AZ 85020, USA
Phone: +1(602) 264-1375
Campos Eliseos No. 400,
11 floor,
Col. Lomas de Chapultepec
Mexico D.F.
Phone +(52-55) 1103-5000,
Extension 35855
Caminos del Inca Avenue
N° 171
Chacarilla del Estanque
Santiago de Surco,
Cod. Postal 15038, Peru
Phone: +(511) 512-0440, Ext.
63181
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.
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Others
The Branch in Peru has issued, in accordance with Peruvian law, ‘investment
shares’ (formerly named labor shares) that are quoted in the Lima Stock
Exchange under the symbol SPCCPI1 and SPCCPI2.
Transfer Agent, registrar and stockholders services to the SCC Common and
Investment shareholders are provided by Credicorp Capital, at Av. El Derby 055,
Tower 4, 10th floor, Santiago de Surco, Lima, Peru (Cod. Postal 15038-Peru.
Phone +(511) 313-2478.
OTHER CORPORATE INFORMATION
For other information on the corporation or to obtain additional copies of the
annual report, Form 10-K 2022 (free of charge) contact to Investor Relations
Department at our corporate offices:
USA:
7310 North 16th, Suite 135
Phoenix, AZ 85020, USA
Phone: +(602) 264-1375
Mexico:
Campos Eliseos N° 400, 11 floor
Col. Lomas de Chapultepec,
Mexico D.F.
Phone: +(52-55) 1103-5000, Anexo 35855
Peru:
Caminos del Inca Avenue N° 171 (B-2),
Chacarilla del Estanque, Santiago de Surco
Cod postal 15038 - Peru.
Phone: + (511) 512-0440, Anexo 63181
Web page: www.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
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Tacna, Peru
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TENACITY AND
CONFIDENCE