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Strength and
determination
Annual Report
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southerncoppercorp.com
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 2023. 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 tonnes
unless otherwise noted. To convert to short tonnes, 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.
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BUENAVISTA DEL COBRE, CANANEA, SONORA, MEXICO.
Letter to ShareholdersAnnual Report 2023 Letter to shareholders
Production statistics
Copper reserves
Index
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54
77
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Human resources
modernization)
General information
Results of operations
Selected and financial data
Capital investment program and exploration (expansion &
Environmental, social and governance
for the years ended December 31, 2023, 2022 and 2021
Commitment - Environmental affairs
Description of operations and development
Regarding the issuing entity
Members of the board of directors
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Letter to
Shareholders
TRAIN IN SCC PORT, ILO, MOQUEGUA, PERU
Letter to ShareholdersAnnual Report 2023
Despite challenges, we achieved good results in 2023.
Copper production in 2023 increased 1.8% YoY to 911,014 tons.
The year-end result was driven primarily by an uptick in production
at our Peruvian operations (+9.5%) and was partially offset by a
2.9% reduction in production at our Mexican operations, which
reflected a drop in ore grades, mineral processing, and recovery.
In the second half of 2023, our Buenavista operation was impacted
by a reduction in freshwater levels given that we still lack the
permits we expect to receive to build a pipeline (approximately 20
km) to transport water from the wells to the operations and nearby
townsites.
Molybdenum production was 26,836 tons in 2023, which topped
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the figure reported in 2022 by 2.3%. This increase was driven by
higher production at all our mines, except for Toquepala mine,
where grades and recoveries dropped. Mined zinc production
rose 9.2% YoY due to higher production at the Charcas and Santa
Barbara mines.
In 2023, copper
production reached
911,014 tons and net
income was $2,425.2
million.
Net sales in 2023 were $9,895.8 million, this is $152 million or 1.5% lower than net
sales in 2022. This result was driven by higher sales volumes of copper (+2.2%) and
molybdenum (+2.3%) and better prices molybdenum (+27.5%) and silver (+7.6%).
This situation was partially offset by a decrease in the price of copper (LME -3.8%) and
zinc (-24.1%) and by a reduction in the sales volume of silver (-4.3%) and zinc (-1.4%).
Net income was $2,425.2 million, 8.1% lower than in 2022. The net income margin in
2023 was 24.5%, versus 26.3% in 2022. The operating cash cost per pound of copper,
including by-product revenue credits, was $1.03 in 2023. This 25-cent increase in the
cash cost (+32.6%), compared to the $0.78 reported in 2022, was mainly attributable
to 17-cent per pound increase in the production cost and an 8-cent reduction in by-
product revenue credits. However, we believe Southern Copper has the lowest cash
cost of any copper producer.
Major improvements in water recovery. Over the last four years, we have reduced
water use at our operations. In 2023, we used 0.53m3 of water per milled ton of
mineral versus 0.64 m3 in 2020, which translated into a 17% uptick in efficiency.
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Improvement has been driven mainly by the Company’s initiatives to recover water
from our Quebrada Honda tailings dam in Peru and by an uptick in the water volume
recovered at the Buenavista del Cobre mine in Mexico.
We are witnessing a highly volatile copper market. Initial estimates for 2024 called for
a surplus this year. However, after some producers announced a significant reduction
Letter to ShareholdersAnnual Report 2023 in copper production, market expectations shifted from predictions of a surplus to
concerns about potential deficits due to low available inventories. In this context, we
believe copper prices should have good support through 2024.
We continue to focus on developing our capital projects and controlling costs at
a very competitive level. In 2023, we drove our Pilares project to full capacity and
initiated ramp-up at the Buenavista zinc concentrator. For 2024, we expect that
these projects, combined, will contribute 44,000 tons of copper and 54,000 tons of
zinc to our production.
2024 production forecast: we expect to produce 935,900 tons of copper, or 2.7%
above the production reported for 2023. We also expect to produce 117,800
tons of zinc (+79.8%), 20.7 million ounces of silver (+12.2%) and 25,500 tonnes of
molybdenum, (- 4.2%).
Our current capital investment program for this decade exceeds $15 billion and
includes investments in the Buenavista Zinc, Pilares, El Pilar and El Arco projects
in Mexico and in the Tia Maria, Los Chancas and Michiquillay projects in Peru.
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This capital forecast includes several infrastructure investments, including key
investments to bolster 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.
Southern Copper has been consistently working to promote the well-being of the
populations 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 unwavering effort and dedication; to our customers, for
their repeated displays of trust and loyalty; and to you, our shareholders, for your
unwavering support.
GERMAN LARREA MOTA-VELASCO
Chairman of the board
OSCAR GONZALEZ ROCHA
President and Chief
Executive Officer
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Letter to ShareholdersAnnual Report 2023 999
DRILLS IN TOQUEPALA MINE, TACNA, PERU
Production Statistics
Southern Copper Corporation and Subsidiaries
FIVE-YEAR PRODUCTION STATISTICS
2019
2020
2021
2022
2023
Mine production
Mined Material
(tonnes)
790,365
656,237
780,689
797,738
Copper in concentrates
(thousand)
841,452
851,323
825,226
751,628
Copper SX/EW
Total Copper
152,370
150,045
132,974
143,075
993,822
1,001,368
958,200
894,703
Molybdenum in concentrates
26,885
30,248
30,262
26,240
Zinc in concentrates
73,922
68,930
66,958
60,010
Silver in concentrates
(thousand ounces)
20,273
21,540
18,962
18,562
Smelter/refineries production
Copper
Zinc
Silver
Toquepala
Mined Material
595,173
633,801
598,569
637,489
104,977
102,440
92,672
99,893
(thousand ounces)
12,588
13,888
13,691
14,272
(thousand)
249,083
168,715
203,150
209,745
Copper in concentrates
231,673
229,116
203,624
175,055
Molybdenum in concentrates
7,277
10,019
10,642
7,681
Cuajone
Mined Material
(thousand)
153,911
130,047
148,302
139,916
Copper in concentrates
156,393
168,663
168,990
140,314
Molybdenum in concentrates
3,285
4,225
4,190
3,625
829,634
775,214
135,800
911,014
26,836
65,509
18,407
627,589
101,013
10,927
232,795
199,656
6,312
146,261
149,228
3,743
Smelter/refineries in Peru
SX/EW
Smelt concentrates
Blister produced
Anode produced
Cathode produced
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26,329
26,010
25,754
26,451
1,075,513
1,210,625
1,089,193
1,241,999
-
4,163
2,601
2,045
317,519
345,955
308,562
350,006
256,647
286,271
260,173
289,728
25,253
1,292,892
1,854
362,122
289,660
Annual Report 2023
2019
2020
2021
2022
2023
Mexicana de Cobre – Caridad
Mined Material
(thousand)
94,578
93,373
100,412
106,251
Copper in concentrates
107,161
109,671
102,689
88,492
Molybdenum in concentrates
10,206
10,535
10,203
9,560
Buenavista
Mined material
(thousand)
288,882
259,860
324,860
337,727
Copper in concentrates
337,960
333,571
341,204
338,633
Smelter/Refineries in Mexico
SX/EW
Smelt concentrates
Anode produced
Cathode produced
Rod produced
Underground Mines -
Contents in concentrates
(tonnes)
Zinc
Lead
126,041
124,036
107,221
116,624
1,011,374
1,029,486
1,047,292
1,051,981
277,654
283,683
287,406
285,438
231,609
240,407
242,667
245,670
142,728
129,439
150,122
156,441
73,922
68,930
66,958
60,010
22,567
20,358
17,104
16,590
Copper in concentrates
8,265
10,302
8,719
Silver
Gold
(thousand ounces)
(ounces)
6,943
7,647
7,983
6,589
8,734
7,662
9,134
6,750
6,428
124,090
87,814
11,367
322,142
328,953
110,547
966,582
263,613
218,564
154,304
65,509
18,746
9,563
6,664
6,482
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Copper Reserves
We believe we hold the world’s largest position of copper reserves. As of December
31, 2023, our copper mineral reserves, calculated at a copper price of $3.30 per
pound, totaled 97,082 million pounds of contained copper, at the following
locations:
Copper contained in ore
reserves
Mexico
Peru
Development projects
Total
Million Pounds
33,426
44,382
19,274
97,082
For more information about ore reserves refer to “SUMMARY DISCLOSURE OF
MINERAL RESERVES”, on page 41 of our 2023 Form 10-K.
Annual Report 2023
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)
2019
2020
2021
2022
2023
Consolidated Statement of Earnings
Net sales
Operating costs and expenses
Operating income
Net income attributable to Non-controlling
interest
$ 7,285.6
$ 7,984.9
$10,934.1
$10,047.9
4,532.6
2,753.0
4,864.2
3,120.7
4,869.0
5,612.1
6,065.1
4,435.8
6.1
7.4
14.1
9.5
Net earnings attributable to SCC
$ 1,485.8
$ 1,570.4
$ 3,397.1
$ 2,638.5
Per share amount:
Earnings basic and diluted
$ 1.92
$2.03
$ 4.39
$ 3.41
Dividends paid
$ 1.60
$1.50
$ 3.20
$3.50
Consolidated Balance Sheet
Cash and cash equivalents
$ 1,925.1
$ 2,183.6
$ 3,002.0
$ 2,069.7
Total assets
Total debt
Total equity
16,407.4
16,946.5
18,297.6
17,277.4
6,541.0
6,544.2
6,247.9
6,251.2
$ 6,858.2
$ 7,276.0
$ 8,207.8
$ 8,146.9
Consolidated Statement of Cash Flows
Cash provided by operating activities
$ 1,911.9
$ 2,783.6
$ 4,292.4
$ 2,802.5
Dividends paid
Capital investments
Depreciation, amortization and depletion
$ 764.4
$ 775.6
$806.0
1,236.9
1,159.6
2,473.8
2,705.8
707.5
592.2
892.3
948.5
796.3
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
773,059
773,073
773,087
773,098
$ 43.19
$ 65.82
$ 81.53
$ 78.17
$ 23.21
$ 23.53
$ 56.14
$ 42.81
8.82
22.10
9.35
32.06
10.54
14.04
10.46
17.69
Current assets to current liabilities
2.83
3.50
2.73
4.20
Net debt as % of Net capitalization (1)
41.8%
35.2%
27.1%
32.80%
Employees (at year end)
14,301
13,777
14,462
15,018
$ 9,895.8
5,703.5
4,192.3
9.5
$ 2,425.2
$ 3.14
$ 4.00
$ 1,151.5
16,725.3
6,254.6
$ 7,481.2
$ 3,573.1
3,092.4
1,008.6
$ 833.6
773,110
$ 88.40
$ 60.87
9.60
27.44
3.19
37.6%
15,810
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(1) Represents net debt divided by net debt plus equity. Net debt is defined as total debt minus cash, cash equivalents and short-term
investments balance.
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Capital Expenditures
and Exploration
Program
(Expansion and modernization)
Capital investments were $1,008.6 million for 2023, up 6.3% YoY to represent
41.2% of net income at year-end. Our program to develop the our Company’s full
production is underway. We are currently developing a new organic growth plan
whose goal is to increase our copper volume production to 1.3 million tonnes by
the end of this decade.
For 2024, the Board of Directors approved a capital investment program of $1,103.7
million. In addition to our ongoing capital maintenance and replacement spending.
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 we have built a new
concentrator plant. This facility has a production capacity of 100,000 tonnes of
zinc and 20,000 tonnes of copper per year. When operating, the concentrator will
Annual Report 2023
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400 TONS TRUCKS IN CUAJONE MINE, MOQUEGUA, PERU
CONCENTRATOR II PLANT, TOQUEPALA MINE, TACNA, PERU
double the Company’s zinc production capacity and will provide more than 2,000
jobs on the operating front.
Project update: The capital budget for the project is $439 million, most of which
has already been invested. Progress is 99%; we have initiated the commissioning
process. The ramping up of the plant began in the first quarter of 2024 after
technical adjustments to the concentrator. We expect to produce 54,500 tonnes of
zinc and 11,900 tonnes of copper in 2024 and an average of 90,200 tonnes of zinc
and 20,700 of copper per year in the next five years.
Pilares - Sonora:
Located six kilometers from La Caridad, this is currently 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 (considering
the 0.78% expected from Pilares with 0.29% from La Caridad).
Project update: The budget for Pilares is $176 million, of which $145 million has
been invested. Pilares is fully integrated in our operations and is delivering copper
ore to the La Caridad concentrator according to plans. Consequently, this will be
the last time that we report on Pilares as a project.
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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.
Project update: The results from experimental pads in the leaching process have confirmed adequate
levels of copper recovery and we are evaluating different options to drive the optimization. The basic
engineering study has been completed and the Company is engaging in project development and
onsite environmental activities. Project engineering is being developed by an external engineering
and technology company. Mine life is estimated at 13 years.
PERUVIAN PROJECTS
Quebrada Honda dam expansion – Tacna:
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This project will expand the main and lateral dams in Quebrada Honda and will also relocate and
repower some facilities, primarily to accommodate dam expansion and implement water recovery
facilities. By December 31, 2023, drainage was complete; eolic material had been removed from the
Southern Copper employs more than
15,000 direct workers and
60,000 indirect.
main and lateral dam; and complementary operational work had culminated. We
also installed two cyclone nests for the main dam, which are currently operating.
Additionally, purchases are pending for equipment for tailings hauling. We intend
to build administrative facilities down the line. This project has a total budget of
$165.0 million, of which we have invested $152.3 million as of December 31, 2023.
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. The estimated capital budget
for the project is $1.4 billion.
The Company has been consistently working to promote the welfare of the
population of the Islay province. 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.
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 expect
to begin the construction phase of the project in the near future. 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. Additionally, from day one of our operations, we will generate
significant contributions to revenues in the Arequipa region.
Potential projects:
We have a number of other projects that we may develop in the future. We
continuously evaluate new projects based on our long-term corporate objectives,
strategic and operating fit, expected return on investment, required investment,
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Annual Report 2023
estimated production, estimated cash flow profile, social and environmental
considerations, among other factors. All capital spending plans will continue to be
reviewed and adjusted to respond to changes in the economy and market conditions.
These projects are:
In Mexico:
El Arco - Baja California:
This is a world-class copper deposit located in the central part of the Baja California
peninsula with ore reserves of over 1,230 million tonnes with an average ore grade of
0.40% and 141 million tonnes of leach material with an average ore grade of 0.27%.
In Peru:
Los Chancas—Apurimac:
This greenfield project, located in Apurimac, Peru, is a copper and molybdenum
porphyry deposit. Current estimates of indicated copper mineral resources are 98
million tonnes of oxides with a copper content of 0.45% and 52 million tonnes of
sulfides with a copper content of 0.59%. The Los Chancas project envisions an open-
pit mine with a combined operation of concentrator and SX-EW processes that will
produce 130,000 tonnes of copper and 7,500 tonnes of molybdenum annually. The
estimated capital investment is $2,600 million and the project is expected to be in
operation in 2030.
Michiquillay Project—Cajamarca:
In June 2018, Southern Copper signed a contract for the acquisition of the Michiquillay
project in Cajamarca, Peru. Michiquillay is a world class mining project with inferred
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mineral resources of 2,288 million tonnes with an estimated copper grade of 0.43%.
When developed, we expect Michiquillay to produce 225,000 tonnes of copper per
year (along with by-products of molybdenum, gold and silver) for an initial mine life
of more than 25 years and at a competitive cash-cost. We estimate an investment of
approximately $2.5 billion will be required and expect production start-up by 2032.
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THICKENERS OF CUAJONE CONCENTRATOR, MOQUEGUA, PERU
Letter to ShareholdersAnnual Report 2023
Environmental, Social and Governance (“ESG”)
Responsible production is a fundamental axis of our sustainable development strategy,
which is made up of specific goals and objectives in areas such as water management,
climate change and mining waste, human talent, safety and health at work, labor
relations, development community, among others. The Company has also updated
a series of corporate policies related to sustainability, which are publicly disclosed on
Grupo Mexico’s website: https://www.gmexico.com/en/Pages/Politicsds.aspx. These
policies are applicable to SCC and its subsidiaries. These policies formalize our vision,
commitments and objectives to promote sustainable development and generate shared
value for our stakeholders. For more information about our disclosure regarding Human
Capital Resources, please see the section included in Part I, Item 1 of our Annual Report
on Form 10-K for the year ended December 31, 2023.
In 2023, we continued to make progress in our ESG (Environmental, Social and
Governance) performance by adopting best practices. The results registered by S&P
Global in its Corporate Sustainability Assessment (CSA) indicate that Southern Copper
Corporation had achieved a place among the top 10% of performers in the mining
sector with a rating that exceeded the industry average by 100%. These results reflect
our ongoing commitment to improving our sustainability practices and maintaining the
Company’s inclusion in the Dow Jones Sustainability Index (DJSI) for the Latin American
region. This year marks our fifth consecutive year in the DJSI. In 2023, SCC achieved
some of the highest scores in the sector for key CSA indicators, including transparency
and disclosure, occupational safety and health, operations closure, and human capital
development.
We obtained a score of 90 out of 100 on CSA’s climate governance index. This attests to
the progress the Company has made in this area. Additionally, we achieved a score of
100 in the Task Force on Climate-Related Disclosures (TCDF) category, which focuses
on management and disclosure of financial risks and opportunities related to climate
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change. Additionally, the investor-led Climate Action 100+ initiative recognized our
efforts to develop an emissions reduction roadmap and awarded us a full compliance
rating in the Task Force on Climate-Related Financial Disclosures (TCFD) category.
Furthermore, the rating agency Sustainalytics reduced the Company’s risk by two levels
between 2020 and 2023.
Regarding the Climate Disclosure Project (CDP), we maintained a B score for the
“Climate change” and “Water security” questionnaires. At the behest of our investors,
we expanded our responses to include the “Forests” questionnaire. As of the date of
publication of this report, the score was yet to be available.
The implementation and promotion of best practices has helped SCC secure and
maintain a place on the S&P/BVL Peru General ESG Sustainability Index of the Stock
Exchange of Lima.
Human Rights
At SCC 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 utilizes a due diligence process to monitor human rights to identify,
prevent, mitigate or remediate adverse impacts on the human rights of communities. In
the Mining and Infrastructure divisions, this process 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. Community Care Service (SAC), a tool that was designed with guidance from the
United Nations High Commissioner for Human Rights (Mexico Office); communities
can use this instrument to immediately communicate their concerns to the
Company.
The Company also has a due diligence process in place to protect the human rights
of employees (both the Company and contractors). Work environment surveys, the
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Complaint Line and supplier due diligence are the tools the company uses to comply with the
commitments included in the General Human Rights Policy. Currently, we are implementing a
Diversity and Inclusion Strategic Plan, which focuses primarily on training; review of contracting
processes; and physical changes in work areas.
Diversity, Equity and Inclusion (DEI)
Our vision of 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.
In keeping with our Code of Conduct and Human Rights Policy, our goal is to (i) build an
organizational culture of total equality and well-being, focusing on diversity, inclusion and non-
discrimination, (ii) increase the sensitivity, knowledge and skills of our leaders and employees to
build 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
2020-2023 Strategic Plan with five strategic initiatives:
1. Awareness campaigns, training and communication on diversity, inclusion and non-
discrimination.
2.
Incorporate a gender equality and diversity approach into our human resources policies
and procedures (focused both on hiring and retention).
3. Physical modifications at our operations for the inclusion of women.
4. Promote diversity and equal opportunities in our neighbor communities.
5. Define specific processes on awareness, prevention and handling potential incidents of
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sexual and/or workplace harassment.
In 2022, we disclosed our Policy on Diversity, Inclusion, Non-Discrimination, and Zero Tolerance
for Workplace or Sexual Harassment for Grupo Mexico and the Mining Division. The latter
describes the reporting mechanisms available in Mexico, Peru and the United States, and the
protection offered to whistleblowers. In 2023, we provided training about diversity and inclusion
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to more than 5,700 employees. Our goal is to increase women’s participation in
the organization by 2% a year. We grew our female workforce from 1,090 to 1,221,
which represents an increase of 12% in our female headcount year-over-year. We
also increased the number of females who hold Leadership positions by 12%. This
year, 34% of our female workforce holds a STEM position (Science, Technology,
Engineering, Mathematics).
We now have a better understanding of our diversity distribution, which helps us
design efforts for each group and advance towards inclusion.
Code of Ethics
We certify our employees in our Code of Ethics yearly. Every employee, including
new hires, signs and commits to adhering to an agreement. The Code of Ethics is
the tool we use to infom and guide employees regarding our expectations for legal,
professional and ethical conduct in both in our business dealings and interpersonal
relationships.
Community Outreach
We have implemented several sustainable development policies designed to
integrate the Company’s operations with the local communities in our areas of
influence. Some of the relevant policies include: the General Policy for Sustainable
Development; a Community Development Policy; a General Policy of Respect for
the Rights of Indigenous Peoples and Communities, and a Human Rights Policy,
which can be consulted on the Grupo Mexico website and apply in their entirety at
the Southern Copper Corporation level.
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These policies focus on creating permanent and positive relationships to generate
optimal social conditions and promote sustainable development in the areas of
influence. We continue to invest signficantly in community programs. For additional
information about our community programs, refer to Corporate Social Responsibility
in Note 13 “Commitments and contingencies” to the consolidated financial statements,
in our 2023 Form 10-K.
In 2023, SCC was recognized by the state agency ProInversion for a Drinking Water
and Rural Sanitation Program in Yacango town, Torata district. This project benefits 137
families through an investment of $2.8 million. Similarly, in Mexico, we have invested in
water distribution improvements in Nacozari and Cananea to benefit more than 53,800
residents.
Additionally, Youth Orchestras promoted by SCC were recognized by Mexican
Polymetallic Seminar. These orchestras support 1,646 students in Mexico and Peru.
SCC, with the support of the State Institute of Culture, held the first exhibition of work
from its Itinerant Documentary Workshops at the Cineteca in the State in Sonora,
Mexico. At this event, 17 original short films, which were produced by some of the 747
workshop participants, were on show.
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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
Ensuring that the operations coexist in a positive
and healthy manner in the places where we
operate.
Economic
Development
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.
Human
Development
Strengthen the capacities the members of
the communities in which we operate; these
individuals are the main drivers of development
at the personal, family and environmental levels.
Good Neigbors
We seek to generate a positive and healthy coexistence with our neighbors,
through close, open and constant communication channels with the
communities.
Economic Development
Through training and skill-building programs, as well as investments in
infrastructure, we contribute to strengthening the productive and economic
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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.
CUAJONE MINE, MOQUEGUA, PERU
This model
is known as “Casa Grande”, and
it has been
implemented through the following tools:
• 28 Community Development Centers (13 in Mexico and,
15 in Peru).- 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. - We respect the voice of the
community and work with local populations to conduct
community diagnoses to identify needs and expectations and
prioritize work through the Casa Nuestra model.
• Community Committees.- Led by volunteers from the
community and Company employees, who collaborate to
assess proposals for sustainable projects.
• Seed Capital.- AWe call on communities to present their
initiatives. SCC’s primary axes are education and
the
environment, which are complemented by initiatives relative
to health, safety and productivity..
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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. Meetings are held at ommunity
centers to generate shared value.
• SCC’s social team and volunteers from neighboring communities, an important
number of projects were developed. In 2023, we conducted 4,977 activities, 258
programs and projects with 209 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
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3,418 students from the preschool to high school levels. Most students are children
of employees or community members. In addition, we have complemented school
subjects with programs for students and parents.
As part of our ongoing commitment, the company is actively expanding
educational infrastructure in Peru to benefit the community under the
law of Social Investments for Taxes (Obras por Impuestos). This effort
includes the creation of five high performance schools (COAR) for
1,500 students, to strengthen their capacities as outstanding students
in the public sector. Two schools are currently under construction, in
the regions of Moquegua and Tacna. SCC is the main private investor
in educational infrastructure in Peru.
In Mexico, we renovated two community centers (called Casa
Grande) in Santa Barbara, Chihuahua and Charcas, San Luis Potosi.
These facilities will serve an additional 21,000 people, who will use
these spaces for learning and network. Both centers are equipped
with a library, recreational area, audiovisual room, computer centers,
spaces for physical activities, areas for temporary exhibitions and
green spaces.
Infrastructure and Services
In 2023, SCC trained 2,087 people from our communities: 833 for
employment, 1,145 in regional vocational and productive skills, and
109 from local companies to support small and medium-sized mining
suppliers. Additionally, SCC increased 97% social infrastructure in
year-over-year. In Mexico, $35.9 million was invested to improve water
infrastructure in the Cananea and Nacozari communities. In Peru,
$45.7 million was invested in social infrastructure via a wastewater
treatment plant (WWTP) in Ilo.
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Social Investment
In 2023, SCC invested $99.9 million in social development programs related to
education, health, productive projects, infrastructure and services.
Investiment and Social Expenses
$ (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
10.1
7.9
19.4
58.8
-
-
3.7
99,9
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
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environment. We operate in alignment with our environmental
management system to:
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.
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
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impact.
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8. Add value to
its customers, suppliers, society and the
environment through all of our activities.
These lines of action, which entailed an investment of US$290.7
million in 2023, were rolled out within the framework of the
Annual Report 2023
international and local certifications that our operating units
have in the two countries where we are present. In 2023, all of
SCC’s systems were certified ISO 14001:2015 certification for
environmental management systems, which attests to both our
employees’ commitment and the effectiveness of the transversal
application of environmental practices.
Additionally, we continue to advance in processes to certify
responsible mining production. We received The Copper Mark,
The Zinc Mark and The Molybdenum Mark seals in the La Caridad
mine, the Sonora Metallurgical Complex and the San Luis Potosi
Zinc Refinery. Additionally, SCC began the process to certificate
Buenavista del Cobre mine in Sonora and our three mining units
in Peru (Cuajone, Toquepala and Ilo).
Climate Change
SCC recognizes the importance and urgency of addressing climate
change and is committed to: the goals of the Paris Agreement
on climate change; conserving the environment; minimizing
environmental
footprint of our operations; and efficiently
managing risks and opportunities related climate change. We
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recognize climate change is likely to impact our strategy in several
ways, and we aim align with global business trends that increasingly
demand products with lower carbon footprints. Our priority is to
responsibly improve use of natural resources while complying with
legal standards for prevention, mitigation, control and remediation
of environmental impacts.
The Company is committed to continually improving its management
of the aforementioned issues, which is why it has initiated a multi-
year process to align its disclosures on climate change with TCFD
recommendations. As a result, beginning in 2020, Grupo Mexico’s
Sustainable Development Report included sections on climate-
related risks and opportunities, and more detailed information
about new short, medium and long term Scope 1 and 2 climate
targets, strategy and governance mechanisms, as well as new
emissions and energy metrics informed by SASB standards. In our
2023 Sustainability Development Report, we will include Scope 3
targets and preliminary capital allocation figures on decarbonization
projects. The report can be accessed at https://www.gmexico.com/
en/Pages/development.aspx.
We are referring our investors to Grupo Mexico’s internet site for
details on the aforementioned initiatives for informative purposes
only. We do not intend for this internet link to be an active link or to
otherwise incorporate the contents of the website into this Report
on Form 10-K.
Additionally, since 2019, SCC has been participating in the S&P
Global CSA evaluation, where we obtained a score of 90 out of 100
in the climate governance index. This attests to the progress that the
Company has made in this area. Additionally, we achieved a score of
100 in Task Force on Climate-Related Disclosure (TCDF) category,
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In 2023, the company
produced the most copper
in Mexico and Peru.
which focuses on managing and disclosing financial risks and on
identifying and treating opportunities related to climate change.
The investor-led initiative, Climate Action 100+, awarded us a full
compliance rating in the TCFD category in recognition of our efforts
to create a roadmap for emission reduction.
Since 2016, SCC has participated in CDP’s annual evaluation on
Climate Change (previously known as Carbon Disclosure Project).
In 2023, Grupo Mexico’s achieved a “B” rating, the third best on
evaluation scale in both questionnaires on “climate change” and
“water security.” Progress in managing these issues has positioned
SCC above the average scores registered for the mining sector and
the North American region:
• Provide products and services that support transition to low
carbon economies
• Reduce carbon footprint of the organization
• Increase the resilience of our operations by addressing potential
climate change effects in surrounding communities
• Align SCC with international best managing practices.
To reduce its carbon footprint, SCC is betting on energy diversification
by focusing on greater reliance on clean and renewable energy
supplies. Our Mexican operations have mitigated a portion of their
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indirect greenhouse gas emissions by consuming clean energy
supplied by SCC subsidiaries, which generate electricity from high-
efficiency combined cycle plants and a wind farm. In Peru, 100% of
the electricity we consumed in 2023 was supplied by renewable
energy sources through Clean Energy Certificates.
In addition to generating and consuming energy from renewable
sources and cleaner fuels, we also implement best practices
to enhance energy efficiency at our operations. These efforts
entail improvements, redesign, conversion and adaptation of
equipment; rational use of resources; and training for personnel
to bolster operating performance. For example, in Sonora, we
take advantage of smelter gases in the heat recovery boiler to
feed energy cogeneration.
Climate-related transition risks:
SCC recognizes that climate change has the potential to
generate transition/adaptation 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.
These taxes range from $2.5/tCO2 to $12.5/tCO2 approximately.
At the federal level, there is a tax on fuel imports, while at the state
level, taxes for this concept apply in the States of Baja California,
San Luis Potosi and Zacatecas. Additionally, there is an emissions
trading scheme (ETS) that completed its pilot phase in 2022 and
is officially operational.
Currently,
requirements associated with
this scheme are
applicable only to the Metallurgical Complex and the Lime Plant,
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3737
COMBINED CYCLE PLANT, SONORA, MEXICO
both located in the state of Sonora, which generate annual levels of GHG emissions
that surpass the threshold of 100,000 tCO2 per year contemplated in scheme. These
business units must report and verify their emissions once a year, at average costs
less than $6,000 USD per 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, 2023; 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. This law has declared that promoting
public and private investments to manage climate change constitutes a matter of
national interest. The law proposes creating an institutional framework to address
climate change in Peru and outlines new measures, with a particular focus on
climate change mitigation. The aforementioned measures include provisions
related to increasing carbon capture and the use of carbon sinks; afforestation
and reforestation practices; changes in land use; and sustainable transportation
systems, solid waste management, and energy systems. This is the first climate
change framework law in Latin America that incorporates obligations of the Paris
Agreement. The Regulation of this law was enacted by Supreme Decree 013-2019,
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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; however, for the Company’s operations in
Peru, there are no mechanisms in place for carbon pricing.
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At SCC, we recognize that climate change is impacting market trends, which reflect
a growing demand for goods with lower carbon footprints or for materials that help
Annual Report 2023
reduce emissions at their 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 assess how variations in global
and national GHG emissions may increase the regulatory burden as well as 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, in alignment with the Paris Agreement to keep the increase
in global to below 2 degrees Celsius. The Company is currently defining these targets
and aims to publicly disclose the same in forthcoming reporting.
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’s income.
Additionally, we believe that the cost of renewable electricity generation will move
closer to competing with the costs of conventional power plants. This will offer
opportunities 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
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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 helping achieve the objectives of the Paris Agreement and
its ability to demonstrate clear and sustained progress in decarbonizing its
operations, as required by this agreement.
With these actions, and others, SCC confirms the commitment to reduce
its carbon footprint, address its implications and perform as a sustainable
company, both nationally and internationally, improving its competitiveness and
contributing to the transition towards low-carbon economies.
In 2024, we will continue to identify more financial impacts related to the climate
risks and opportunities our company will face in the future.
Biodiversity
Southern Copper Corporation implements actions to generate positive impacts,
reaffirming its commitment to the environment and biodiversity. To comply with
this commitment, which is detailed in the Company’s Environmental Policy,
we have developed action plans for biodiversity management that are aligned
with the Good Practices for Mining guide and Biodiversity published by the
International Council of Mining and Metals (ICMM). These plans improve the
Company’s ability to implement effective prevention and mitigation measures
and contribute to the preservation and improvement of the environment in both
operating areas and surrounding communities.
We are the company with the largest productive capacity of trees in the mining
industry in Mexico. In our operating units we have 7 nurseries and greenhouses
that in 2023 produced 5.6 million plants, part of which was destined for
reforestation and rehabilitation of ecosystems, including protected natural areas
near our operations.
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Annual Report 2023 As part of our effort to conserve biodiversity, we have a 174-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 among others, that are part of this important program.
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. To date, it has housed 62 specimens of the
Mexican wolf and has delivered 23 cubs in its facilities. In a coordinated effort with
Mexican and United States authorities through the Binational Mexican Gray Wolf
Recovery Program, 27 specimens have been reintroduced to sites where this
species originally lived.
In March 2023, the Environmental Management Unit in Buenavista del Cobre
obtained certification from the Wildlife Habitat Council, for our contribution to
preventing extinction of Mexican gray wolf. Thanks to our actions, this species,
which was once extinct in the wild, now has populations in its natural habitat in
Mexico. We will continue working society hand and the authorities for common
good in the regions where we operate.
Our remediation program in Ite Bay, in Tacna, with an area of 1,600 hectares,
has resulted in the largest wetland with the greatest diversity of waterfowl on
the country’s coast, and has also become a focus of tourist attraction that favors
economic development.
Water care
Water constitutes the most important input for our mining operations, which is
why we have developed projects to guarantee the sustainability of this resource.
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These initiatives focus on ensuring efficient water use; promoting
water reuse; and reusing water discarded by third parties. At
some of our units, such as San Luis Potosi, we use specially
treated municipal wastewater to ensure that more fresh water is
available for the local population. Efficient wateruse and savings
programs rely on pumping systems to recover water from tailings
and thickeners and use closed circuits to recirculate the total
volume of processed water. In 2023, more than 74% of total water
consumption at our mining operations utilized recovered water,
which attests to our good management.
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Results of
Operations
Years ended December 31, 2021, 2022 and 2023.
Our net income attributable to SCC in 2023 was $2,425.2, compared to 2022 was
$2,638.5 million and $3,397.1 million in 2021. SCC’s net income attributable to SCC
decreased $213.3 million (8.08%), which was partially mitigated by an uptick in sales
volumes for copper and higher prices for by-products.
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)
2021
2022
2023
Operating Cash Cost before by-product revenues
1.64
2.02
Operating Cash Cost net of by-product revenues
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0.78
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Annual Report 2023
As seen in the table above, our per pound cash cost before by-product revenues
in 2023 was 8.4% higher when compared with 2022. This result was mainly
attributable to an increase in production costs. Our cash cost per pound net of
by-product revenues for 2023 was 32.6% above the figure for the same period
of 2022 and was mainly attributable to an increase in the production cost of
16.2 cents per pound and a reduction of 8 cents in by-product revenue credits.
Net sales:
2023-2022: Net sales in 2023 totaled $9,895.8 million, which represents a
slight decrease compared to 2022 net sales of $10,047.9 million. This decrease
was driven by lower copper (-3.8% - LME) and zinc (-24.1%) prices, along
with a reduction in the sales volumes of silver (-4.3%) and zinc (-1.4%). This
impact was partially offset by increased sales volumes for copper (+2.2%) and
molybdenum (+2.3%) and by better prices for molybdenum (+27.5%) and silver
(+7.6%). Net sales in 2023 were adversely affected by downward adjustments
of $406.0 million after sales were provisionally priced due to decreases in
metal prices.
2022-2021: Net sales in 2022 were $10,047.9 million in 2021 were $10,934.1
million, which represented a decrease of $886.2 million. This 8.1% reduction
was driven primarily by a decrease in sales volume copper (-6.5%), silver (-1.9%)
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and molybdenum (-13.4%), which was driven primarily by 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 the sales volume of zinc
(+10.5%) and by a rebound in the prices of molybdenum (+20.0%) and zinc
(+16.2%).
Prices:
The profitability of our operations is dependent on, and our financial performance
is significantly affected by, the international market prices for the products we
produce, and for copper, molybdenum, zinc and silver in particular. Sales prices for
the Company’s metals are mainly pegged to the prices quoted on the London Metal
Exchange (LME) and The New York Commodity Exchange (COMEX) or to those
published in the Platt’s Metals Week for dealer oxide mean prices for molybdenum.
Price/Volume Data
Average metal prices
Copper (per pound - LME)
Copper (per pound - COMEX)
Molybdenum (per pound)
Zinc (per pound - LME)
Silver (per ounce - COMEX)
Sales Volume
((in million pounds, except silver – million ounces)
Copper
Molybdenum (1)
Zinc
Silver
2021
$ 4.23
2022
$ 4.00
$ 4.24
$ 4.01
$ 15.51
$ 18.61
$ 1.36
$ 1.58
$ 25.18
$ 21.76
2021
2,052.9
66.8
201.9
19.2
2022
1,920.4
57.9
223.0
18.8
2023
$ 3.85
$ 3.86
$ 23.73
$ 1.20
$ 23.41
2023
1,961.8
59.3
219.7
18.0
(1) The Company´s molybdenum production is sold as concentrates. Volume represents pounds of
molybdenum contained in concentrates.
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SX-EW CATHODES HARVEST, TOQUEPALA MINE, TACNA, PERU
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Compromises and
Contingencies
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 use of
scrubbing technologies in our mines to reduce dust emissions, among others.
Environmental capital investments in years 2021, 2022 and 2023, were as follows (in
millions):
Mexican operation
Peruvian operation (*)
Total
2021
2022
2023
$ 62.3
$ 52.7
$ 281.2
6.4
8.7
9.5
$ 290.7
$ 61.4
$ 290.7
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.
Annual Report 2023
The principal legislation applicable to the Company’s Mexican operations is the
Federal General Law of Ecological Balance and Environmental Protection (the
“General Law”), which is enforced by the Federal Bureau of Environmental Protection
(“PROFEPA”). PROFEPA monitors compliance with environmental legislation and
enforces Mexican environmental laws, regulations and official standards. It may also
initiate administrative proceedings against companies that violate environmental
laws, which in the most extreme cases may result in the temporary or permanent
shutdown of non-complying facilities, the revocation of operating licenses and/or
other sanctions or fines.
In 2011, the General Law was amended to provide an individual or entity the ability
to contest administrative acts, including environmental authorizations, permits or
concessions granted, without the need to demonstrate the actual existence of harm
to the environment, if it can be argued that harm may in fact 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 antitrust laws. The group can seek
restitution, economic compensation for alleged injuries or move to halt the activities
that allegedly caused the injuries in question. Amendments to the CFPC may result
in more litigation, with plaintiffs seeking remedies, including suspension of any
activities alleged to cause harm.
In 2013, the Environmental Liability Federal Law was enacted. The law establishes
general guidelines for actions considered likely to cause environmental harm.
If a possible determination regarding harm occurs, environmental clean-up and
remedial actions sufficient to restore the environment to a pre-existing condition
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must 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 Supreme Court of Mexico confirmed the constitutionality of an
ecological tax on extractive activities carried out in the state of Zacatecas, which taxes
environmental remediation activities, emissions of certain gases into the atmosphere,
emissions of substances contaminants to soil or water and the storage of waste within
the territory of this state. The Company is evaluating the potential impact of this new
environmental standard 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 $US9/tCO2 to $US18/
tCO2 in 2023, approximately. These regional taxes, which are in addition to a federal tax
on fuel imports, are applicable in the States of Baja California, Zacatecas and San Luis
Potosi. In addition, Mexico’s emission trading (ETS) currently applies to the Company,
but solely through two business units, the metallurgic and lime plants in Sonora, which
both generate annual GHG emissions levels above the threshold of 100,000 tCO2
per year contemplated by the scheme. Every year, these units are required to report
and verify emissions 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) on a yearly basis
and must verify reported emissions every three years. The total expense associated
with ensuring annual compliance with climate change regulations in Mexico was not
material to the Company.
On May 09, 2023, Mexican Congress approved several changes to the Mining Law,
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National Waters Law, the General Law of Ecological Balance and Environmental
Protection, and the General Law for the Prevention and Integral Management of Waste,
all of which were effective immediately. The main changes entailed reducing mining
concession terms from 50 to 30 years; new restrictions and conditions on water use;
requirements to provide guarantees for closure and remediation of operations; and
a requirement to contribute 5% of net earnings to indigenous communities for new
projects and significant changes to exploration rules.
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We are the mining company with
the largest productive capacity
of trees (Mexico).
These amendments to the law have been challenged and are being reviewed by the
Supreme Court. The company is not expecting any negative impacts on its operations.
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 relating to environmental and
legal compliance, 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
defined new AQS for daily sulfur dioxide in the air. As of December 31, 2023, the
Company maintains the daily average level of µg/m3 of SO2, below the requirement
of the AQS.
In November 2023, MINAM enacted a new AQS for Cadmium, Arsenic and Chromium
in particulate matter less than ten microns (PM10). A review of the Company´s
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chemical monitoring results has determined that the Company´s operations will not
be significantly impacted by the new standards and concentration values in place. Our
results are expected to continue to fall below regulatory AQS.
Soil Environmental Quality Standards (“SQS”): In 2013, the Peruvian government
enacted Soil Quality Standards. In accordance with the regulatory requirements of the
law, the Company prepared Soil Decontamination Plans (“SDP”) for environmentally
impacted sites at each of its operation units (Toquepala, Cuajone and Ilo) with the
assistance of consulting companies. The costs of these SDPs are 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 promotes 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 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 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.
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5353
LA CARIDAD MINE PIT, SONORA, MEXICO
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General
Information
Information related to its constitution and inscription in the Public Registry:
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 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
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amounts of molybdenum concentrate and refined silver. We also produce refined
copper using SX/EW technology. We operate the Toquepala and Cuajone mines
high in the Andes Mountains, approximately 860 kilometers southeast of the city
of Lima, Peru. We also operate a smelter and refinery west of the Toquepala and
Cuajone mines in the coastal city of Ilo, Peru.
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Our Mexican operations are conducted through our subsidiary, Minera Mexico S.A.
de C.V. (“Minera Mexico”), which we acquired in 2005. Minera Mexico engages
principally in the mining and processing of copper, molybdenum, zinc, silver, gold
and lead. Minera Mexico operates through subsidiaries that are grouped into three
separate units. Mexicana de Cobre S.A. de C.V. (together with its subsidiaries, the
“Mexcobre unit”) operates La Caridad, an open-pit copper mine, a copper ore
concentrator, a SX/EW plant, a smelter, refinery and a rod plant.
Operadora de Minas e Instalaciones Mineras S.A de C.V. (the “Buenavista unit”)
operates Buenavista, formerly named Cananea, an open-pit copper mine, which
is located at the site of one of the world’s largest copper ore deposits, a copper
concentrator and two SX/EW plants. The Buenavista mine was operated by
Mexicana de Cananea S.A. de C.V. and by Buenavista del Cobre S.A. de C.V. until
December 11, 2010. From this date, Industrial Minera Mexico, S.A. de C.V. (together
with its subsidiaries, the “IMMSA unit”) operated five underground mines that
produce zinc, lead, copper, silver and gold, a coal mine and a zinc refinery until July
2012. Effective February 1, 2012, Minerales Metalicos del Norte S.A was merged
with Industrial Minera Mexico S.A. de C.V. (IMMSA). IMMSA absorbed Minerales
Metalicos del Norte S.A.
We utilize modern/state-of-the-art mining and processing methods, including global
positioning systems and computerized mining operations. Our operations have
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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.
Economic Group
SCC forma parte, indirectamente, de “Grupo Mexico, S.A.B. de C.V.”, quien es propietario del 100% del
accionariado de Americas Mining Corporation (“AMC”).
Name of the company
(Several Activities)
Grupo Mexico, S.A.B. de C. V.
Grupo Mexico (Servicios), S.A.B. 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.
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Inscription
Location
in the RPMV
%
Mexico
Mexico
USA
USA
Mexico
Mexico
Mexico
Mexico
Chile
Peru
Peru
Yes
100
100
88.90
99.96
100
100
98.18
100
√Yes (1)
99.29
100
Corporate Capital and Common Stock
The authorized number of shares
Issues an Paid Capital: Common Shares
Nominal Value of Common Shares
Shares
2,000,000,000
884,596,086
$ 0.01
Total number and percent of shares
Shares
Interest
Americas Mining Corporation
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Common Shares owned by 3rd parties
Total
687,405,997
85,704,472
88.9%
11.1%
773,110,469
100.0%
(1) Include 82.69% of common shares and 16.60% of investment shares
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SOUTHERN COPPER CORPORATION
Variable Income
Symbol ISIN
US84265V1052
US84265V1052
US84265V1052
US84265V1052
US84265V1052
US84265V1052
US84265V1052
US84265V1052
US84265V1052
US84265V1052
US84265V1052
US84265V1052
Nnemonic
SCCO
Year- Month
2023-01
SCCO
SCCO
SCCO
SCCO
SCCO
SCCO
SCCO
SCCO
SCCO
SCCO
SCCO
2023-02
2023-03
2023-04
2023-05
2023-06
2023-07
2023-08
2023-09
2023-10
2023-11
2023-12
Open
62.00
75.50
76.50
76.85
76.46
71.13
72.71
85.41
79.35
72.35
73.80
76.00
QUOTATION 2023
Average
Close
75.77
73.60
76.01
76.25
65.68
73.50
87.00
81.10
75.30
72.00
71.30
85.50
Maximum
77.53
Minimum
61.52
78.49
78.00
81.65
79.00
74.44
87.11
86.49
81.10
75.30
75.54
88.00
70.53
67.00
73.01
65.00
67.00
67.99
77.62
72.18
69.80
69.26
71.20
Price
73.31
74.23
72.34
78.03
69.18
73.07
77.84
81.17
77.72
71.68
73.26
81.69
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Description of Operations and Development
Regarding the issuing entity
Detail of the 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 N° 03025091 of the Juridical People
of the Registry Office of Lima and Callao.
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Actions following company incorporation:
Capital increase:
By Public Deed dated May 31, 1995, signed before notary public of Lima, Dr. Carlos
A. Sotomayor Bernos, the Branch capital increase was formalized. Said increase was
made through a money contribution by the Company in favor of its Peru Branch and
by the owners of labor shares, pursuant to Legislative Decree No. 677. The capital
contribution made by the Company aimed to increase the capital allotted to the
Branch by Headquarters and registered in Peru. The capital contribution made by
the owners of Labor Shares (today Investment Shares) was assigned to the Labor
Shares account of the Branch for issuing new Labor Shares.
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 awarded a specific number of
Common Shares, which were issued by SPCC in the United States. Through this
share exchange, previous owners of Labor Shares acquired 17.31% of SPCC’s
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Capital and this company acquired ownership of 80.77% of Labor Shares (now,
Investment Shares).
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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.
Following the merger, the corporation’s mining activities in Peru were conducted
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
Annual Report 2023
Incorporated, the main shareholder of Southern Peru Copper Corporation at that
time. In this way, SPCC became a subsidiary of Grupo Mexico, which holds its shares
through Americas Mining Corporation (AMC).
Acquisition of Minera Mexico (“MM”), and other corporate changes:
SCC shareholders, in a shareholder extraordinary meeting dated March 28,
2005, approved the issuance of Common Shares and required actions related to
the acquisition of MM, a firm incorporated pursuant to the Laws of the Republic
of Mexico. This transaction was approved by more than 90% of the stocks and
circulating capital of SCC. To acquire Minera Mexico, SCC issued 67,207,640 shares
in exchange for MM shares. Once the shares related to the acquisition were issued,
AMC increased its share in SCC from 54.2% to approximately 75.1%.
AMC Increased its Participation in SCC:
In 2008 and 2009, Grupo Mexico, through its wholly owned subsidiary Americas
Mining Corporation, purchased 11.8 million and 4.9 million shares of the Company’s
common Stock, respectively.
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SCC $500 Million Share Repurchase Program:
In 2008, our Board of Directors (‘‘BOD’’) authorized a $500 million share repurchase
program that has since been increased by the BOD and is currently authorized to
$3 billion. The SCC share repurchase program has registered no activity since the
third quarter of 2016. The NYSE closing price of SCC common shares at December
31, 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
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 given number of special independent directors; this number is
found by multiplying the total number of directors in the Board by the percentage
of Common Shares all the shareholders (that are not Grupo Mexico and its
affiliates) have, rounding up to the following integer number. Notwithstanding the
aforementioned, the total number of individuals appointed as special independent
directors (not belonging to Grupo Mexico) cannot be less than two or more than six.
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The Special Nominating Committee consists of three directors. Two of these
directors (2) are Luis Miguel Palomino and Carlos Ruiz Sacristan (each is an “Initial
Member” and, together with their successors, “Special Designees”) and the third is
currently Xavier Garcia de Quevedo (who is appointed by the Board of Directors or
the “Board Designee”. The Board Designee will be selected annually by the Board
of Directors. The Special Designees will be selected annually by the members of
the Board who are special independent directors or Initial Members. Only Special
Independent Directors can fill vacancies on the Special Nominating Committee. Any
member of the Special Nominating Committee may be removed at any time by the
Board of Directors for cause. The unanimous vote of all members of the nominating
committee will be necessary for the adoption of any resolution or the taking of any
action.
Notwithstanding the foregoing, the power of the Special Nominating Committee to
nominate special independent directors is subject to the rights of the stockholders
to make nominations in accordance with our by-laws.
The provisions of the Amended and Restated Certificate of Incorporation, as
amended, relating to Special Independent Directors may only be amended by the
affirmative vote of a majority of the holders of shares of Common Stock (calculated
without giving effect to any super majority voting rights) other than Grupo Mexico
and its affiliates.
Transactions with affiliates:
The Company entered into certain transactions in the ordinary course of business
with parties that are controlling shareholders or their affiliates. These transactions
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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. Article nine of the amended
and reformulated Deed of Constitution of the Company is prohibited from entering
or continuing a material related party transaction that has not been reviewed and
approved or ratified by a Board Committee consisting of at least three members,
each of whom is independent, and defines a material transaction between affiliates
as a transaction or series of related transactions between Grupo Mexico or one of
its affiliates (other than the Company or its subsidiaries), on the one hand, and the
Company or one of its subsidiaries, as the other party, in which there is economic
consideration for an aggregate total of more than $10.0 million. It is the policy of
the Company (i) that no material transaction between affiliates shall be entered
into or continued without the review and approval of the Audit Committee or
its Subcommittee on Related Party Transactions constituted by independent
directors, (ii) that any transaction process between potential related parties with
aggregate total consideration between $8.0 million and $10.0 million is authorized
by the Company’s General Counsel and Chief Financial Officer, and (iii) that all
related party transactions, including any material transactions between affiliates,
are reported to the Audit Committee of the Board of Directors or its Related Party
Transactions Subcommittee.
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 to 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.
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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.
Changes to the Articles of Incorporation and By-laws
On January 26, 2006, the Board approved an amendment to Southern Copper
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Corporation’s Articles of Incorporation and by-laws: (i) to remove the provisions related
to Class A Common Shares among other changes.(ii) add a new provision for advance
notice to shareholders seeking to nominate directors or to propose other business at
annual or special meetings of the Common Stockholders (as applicable) (iii) substitute
Grupo Mexico for ASARCO Incorporated in the “Change in Control” definition in the
Corporation’s by-laws (iv) and eliminate the 80% supermajority vote requirement
for certain corporate actions. The modification of the Modified Certificate of
Incorporation increased the capital stock from 167,207,640 shares to 320,000,000
shares. These modifications were submitted for approval of the shareholders at
the shareholders annual meeting held on April 27, 2006 which was adjourned and
reconvened for May 4, 2006, and later on adjourned and reconvened for May 11,
2006.
At the annual meeting, on April 27, 2006, the proposal to amend the by-laws to
eliminate certain extraneous provisions relating to the retired series of Class A
Common Stock had an affirmative vote of 79.85% of the required votes. Given that
the required vote for the approval of this proposal was 80% and because some votes
still needed to be tabulated, the annual meeting for this proposal was adjourned
until May 4, 2006. On May 4, 2006, at the adjourned and reconvened meeting
the stockholders approved the proposal with an affirmative vote of 80.61% of the
required votes.
On April 27, 2006, stockholders approved (i) the amendment to the by-laws to
introduce a new provision for advance notice to shareholders seeking to nominate
directors or to propose other business at annual or special meetings of the Common
Stockholders (as applicable); (ii) the amendment to the by-laws to substitute Grupo
Mexico for ASARCO Incorporated in the “Change in Control” definition in the
Corporation’s bylaws; (iii) the amendments to the Amended and Restated Certificate
of Incorporation to increase the number of shares of Common Stock, which the
Corporation is authorized to issue from 167,207,640 shares to 320,000,000 shares;
and (iv) the selection of the independent accountants.
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.
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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 14.
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. Additionally, on April 18, 1995, SCC and the
Peruvian Government (CONITE) signed a contract that remained in effect for ten years
and guaranteed the availability of foreign currencies, free remittance of dividends to
the exterior, among other guarantees related to the acid plant of the Ilo Smelter.
SCC obtains refunds for tax credits in Peru for the general sales tax (IGV) paid in
connection with the acquisition of capital goods and other goods and services used
in its operations, counting these credits as a paid expense in advance. By virtue of
these refunds, SCC is entitled to credit the amount of the IGV against its Peruvian tax
obligations or to receive a refund.
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Special Mining Tax:
In September 2011, the Peruvian government enacted a new tax for the mining sector.
This tax is based on operating profit and its rate varies from 2% to 8.4%. The Company
provisioned $71.7 million, $56.4 million and $114.0 million in 2023, 2022 and 2021,
respectively, with respect to this tax. These amounts are included as “income taxes” in
the consolidated statement of income.
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 $84.7 million, $71.4 million and $140.8 million of royalty charges in 2023, 2022
and 2021, respectively, of which $44.5, $35.8 million and $97.8 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.
Operations in Mexico
La Caridad Mine
“La Caridad Concentrator” began operations in 1979. The concentrator has a current
capacity of 94,500 tonnes of ore per day. “Molybdenum Plant” started operations in
1982, with a production capacity of 2,000 tonnes of copper-molybdenum concentrate
per day.
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The SX EW facility has an annual design capacity of 21,900 tonnes of copper
cathodes. These cut-off grades need to be reassessed as the mineral reserves
stated were estimated utilizing an economic cut-off value.
La Caridad Metallurgic Complex
“La Caridad Smelter” started operations in July, 1986. The current installed
capacity of the smelter is 1,000,000 tonnes per year, which is sufficient to treat all
the concentrates of La Caridad and almost 40.5% of the total production of the
OMIMSA I and OMIMSA II concentrators from Buenavista. In 2010, the smelter also
began processing concentrates from the IMMSA mines after we closed the San Luis
Potosi smelter.
“La Caridad Refinery” started operations in July, 1997 with a production capacity
of 493 tonnes of copper cathode per day, which was expanded to 822 tonnes in
January, 1998. The installed capacity of the refinery is 300,000 tonnes per year.
“La Caridad Precious Metals Plant” started operations in May, 1999. The
operations at the precious metal refinery begin with the reception of anodic slimes,
which are dried in a steam dryer. After this, the dried slime is smelted and a gold
and silver alloy is obtained, which is known as Dore. The precious metal refinery
plant has a hydrometallurgical stage and a pyrometallurgical stage, in addition to
a steam dryer, Dore casting system, Kaldo furnace, 20 electrolytic cells in the silver
refinery, one induction furnace for fine silver, one silver ingot casting system and
two reactors for obtaining fine gold. The process ends with the refining of the gold
and silver alloy. We also recover commercial selenium from the gas produced by
the Kaldo furnace process.
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“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 tonnes
in 1999. The plant is producing eight-millimeter copper rods with a purity of 99.99%.
Effluent and Dust Treatment Plant, in 2012, we began the operation of a dust
and effluent plant with a treatment capacity of 5,000 tons of foundry dust per year,
which will produce 1,500 tons of copper byproducts and 2,500 tons of lead sulfates
per year. This plant is designed to reduce dust emissions from the La Caridad
metallurgical complex.
Buenavista Mine
“Buenavista Concentrator”, the original concentrator currently has a nominal
milling capacity of 82,000 tonnes per day. The second concentrator began
operations in 2016 with a nominal milling capacity of 115,000 tonnes per day.
“Buenavista SX/EW I Plant”, facilities have a cathode production capacity of
174,470 tonnes per year.
“Buenavista SX/EW II Plant”, started operating in 1989 with a capacity of 66
tonnes per day, which was expanded to 120 tonnes per day in 2001.
“Buenavista SX/EW III Plant” started operating in June 2014; we completed the
construction of a new SX-EW plant that has significantly increased production of
leachable material by approximately 120,000 tonnes per year. The SX-EW facilities
have a cathode production capacity of 174,470 tonnes per year.
Underground Mines
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1. The Santa Barbara Unit with a milling capacity of 5,800 tonnes of ore per day.
2. The Santa Eulalia Unit with a milling capacity of 1,450 tonnes of ore per day.
3.
The San Martin Unit with a milling capacity of 4,400 tonnes of ore per day.
4.
The Charcas Unit with a milling capacity of 4,100 tonnes of ore per day.
5. The Taxco Unit with a milling capacity of 2,000 tonnes per day.
6. The electrolytic zinc refinery with a capacity of 288 tonnes per day.
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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 tonnes/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 tonnes/day throughput.
Based on Report N° 547-2002-EM/DGM/DPDM, dated November 6, 2002,
the “Director General de Mineria” authorized the expansion of the Toquepala
Concentrator to a capacity of 60,000 MT per day.
Resolution N° 0163-2020-MINEM-DGM/V, dated June 11, 2020, based on
Report N° 081 – 2020 - MINEM-DGM-DTM/PB, the “Director General de Mineria”
authorized the operation and auxiliary facilities of II Molibdenum Circuit at the
Toquepala Concentrator to a capacity of 120,000 MT per day. According with
this Report, the Company must comply with, among other aspects, environmental
recommendations and commitments; safety regulations; and occupational Health
and Safety Regulations.
“Toquepala Leaching Plant (SX/EW)”. Directorial Resolution No. 166-96-EM/
DGM dated May 7, 1996, approved the operation of the Toquepala SX/EW plant.
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The resolution granted 60 hectares of surface land and authorized a throughput of
11,850 tonnes/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 tonnes/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 tonnes/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 tonnes/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.
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“Cuajone Leaching Plant (LX/EW)”, Directorial Resolution No.155-96-EM/DGM dated
May 6, 1996 approved the operation of the Cuajone Leaching plant. The resolution
granted 400 hectares of surface land and authorized a throughput of 2,100 MT per day.
Based on Report No. 988-2009-MEM-DGM/V, dated December 16, 2009, the Cuajone
SX plant operation was approved and authorized with a capacity of 3100 MT per day.
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 tonnes/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 N° 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
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General de Mineria” authorized expanding Ilo Copper Refinery’s capacity to 658 MT
per day throughput.
Based on Report N° 080-2002-EM-DGM/DPDM, dated March 14, 2002, the “Director
General de Mineria” authorized the Ilo Copper Refinery to expand its capacity to 800
MT per day.
Resolution N° 520-2010-MEM-DGM/V dated December 30, 2010, based on Report N°
N°414-2010-MEM-DGM-DTM/PB, authorized changes in Ilo copper refinery without
expanding its capacity throughput.
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 tonnes 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 tonnes per year production.
“Coquina Wash Plant and Seashell Concentrates”, authorized to operate by
Directorial Resolution N° 110-93-EM/DGM of August 3, 1993. The plant processes 95
TC/h of raw material (coquina) recovered from nearby mines. Seashell is produced
separating sand and other materials from the coquina using seawater-washing screens.
Resolution N° 038-2011-MEM-DGM-DTM/PB dated February 2, 2011, based on
Report N° 035-2011-MEM-DGM-DTM/PB, authorized modifications to the concession
of “Coquina Wash Plant and Seashell Concentrates” to designate it a dry seashell
plant without expanding its capacity throughput, which represents 2,068 tonnes/day.
Through N° 2499277, dated May 19, 2015, SPCC requested a temporary, three-year
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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.
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TAKING WATER SAMPLES IN FRONT OF THE SCC DOCK, ILO, MOQUEGUA, PERU
Letter to ShareholdersAnnual Report 2023
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 Southern Copper 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 2023, SCC obtained ISO 45001-2019 certification in all its
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units. Additionally, in Mexico we maintain 29 units that are
certified by Secretariat the Ministry 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.
In 2023, the accident rate (IR) increased 36% compared to 2022 but stood
at rates similar to those seen in 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, 2019-2023
2019 0.82
Severity Rate (SR)
SCC, 2019-2023
2019 0.89
2020 0.49
2020 0.19
2021 0.79
2021 0.81
2022 0.50
2022 0.57
2023 0.68
2023 0.72
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 2023 on the Occupational Health and Safety front
include:
• Management and occupational health and safety systems promote risk
culture as resulted in a 9% reduction in workplace accidents compared to
2015.
• SCC advances in Critical Risk Registry in Mining Division, improving its
performance in various controls and preparing to prevent or mitigate
unwanted events. We involve responsible for operating units to monitor
their performance continuously. In addition, we report monthly their
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supervision and monitoring to Audit and Corporate Practices Committee at
Grupo Mexico and Sustainability Committee of SCC’ board.
• Our mining operations in Mexico have received the ELSSA (“Safe and
Healthy Work Environments”) distinction awarded by Mexican Government
for promoting safe and healthy work environments.
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These results are the product of our safety culture activities, the implementation of
inspection plans and, above all, the work and commitment of our collaborators.
Occupational Health
Healthy environments are part of the organizational culture and management system.
The Company assumes the responsibility to establish a culture of involvement,
participation, and commitment to enhance the quality of life of our employees, their
families, and the communities in which we operate.
Occupational Disease Rate
SCC 2019-2023
2019 0.23
2020 0.18
2021 0.15
2022 0.13
2023 0.06
ODR =
N° of Cases of Occupational Diseases
N° of Total Men-Hours Worked
x 200,000
We continued efforts to implement several programs related 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 public.
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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
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Investing in Safety and Health
In 2023, we invested over $127 million in occupational safety and health efforts
for engineering work; to purchase personal protective equipment; provide training
and coaching; and conduct industrial hygiene studies. To enhance the culture of
occupational health, we have developed programs to promote and protect health
and focused on primary prevention, treatment, and rehabilitation.
Employees for the year ended December 31th
Total Employees in SCC
2019
2020
2021
2022
2023
Total Mexico
Total Peru
Total Ecuador
Total Argentina
Total Chile
Total Corporate Office
Total OHYSA
Total
9,358
8,962
9,722
10,005
10,802
4,890
4,739
4,675
4,947
4,979
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15
9
1
5
58
4
6
3
5
35
15
7
3
5
4
9
10
38
5
1
11
8
4
5
14,301
13,777
14,462
15,018
15,810
Mexican operations
69.8% of our 10,802 Mexican employees were unionized as of December 31,
2023 and are represented by ten different unions. Under mexican law, the terms of
employment for unionized workers are set forth in collective bargaining agreements.
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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
60.9% of the Company’s 4,979 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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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 2023 Form 10-K.
Ms. CPC Lina Vingerhoets is the Company´s Controller and Mr. Bertin Galarreta is our
Finance Manager.
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
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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.
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.
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Between 2008 and 2016, the Company and AMC had bought shares periodically.
At December 31, 2023, there were of record 773,110,469 shares of common stock of
the Company, par value $0.01 per share, outstanding.
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Corporate Notes
Between July 2005 and October 2015, the Company issued senior unsecured notes eight times totaling
$6.2 billion. Interest on the notes is paid semi-annually in arrears. The notes rank pari passu with each other
and rank pari passu in right of payment with all of the Company’s other existing and future unsecured and
unsubordinated indebtedness.
The indentures relating to the notes contain certain restrictive covenants, including limitations on liens,
limitations on sale and leaseback transactions, rights of the holders of the notes upon the occurrence
of a change of control triggering event, limitations on subsidiary indebtedness and limitations on
consolidations, mergers, sales or conveyances. Certain of these covenants cease to be applicable before
the notes mature if the Company obtains an investment grade rating. The Company obtained investment
grade rating in 2005.
In addition, the Company´s Mexican operations hold $51.2 million in bonds referred above as “Yankee
bonds”, contain a covenant requiring Minera Mexico to maintain a ratio of EBITDA to interest expense
of not less than 2.5 to 1.0 as such terms are defined in the debt instrument. At December 31, 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.
Additionally, issuance costs of $9.8 million corresponding to these notes were paid and deferred. The
unamortized balance of the discount and the costs of this bond are presented net of the book value of
the debt issued and are amortized as financial expenses over the life of the loan. This debt was issued
in a single tranche, maturing in 2050 at an annual interest rate of 4.5%. Interest on the notes is paid
semiannually after maturity.
The Company intends to use the net proceeds from this offering (i) to finance Minera Mexico’s expansion
program, including the Buenavista Zinc, Pilares and El Pilar projects, (ii) for other capital expenditures and
(iii) for general corporate purposes.
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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 2023 Form 10-K.
Members of the Board of Directors
German Larrea Mota-Velasco,
Director.
Mr. Larrea has been Chairman of the Board of Directors since December 1999,
Chief Executive Officer from December 1999 to October 2004, and a member of
our Board of Directors since November 1999. He has been Chairman of the board
of directors, President and Chief Executive Officer of Grupo Mexico, S.A.B. de C.V.
(“Grupo Mexico”) (holding) since 1994. Mr. Larrea has been Chairman of the board
of directors and Chief Executive Officer of Grupo Ferroviario Mexicano, S.A. de C.V.
(railroad company) since 1997. Mr. Larrea was previously Executive Vice Chairman
of Grupo Mexico and has been member of the board of directors since 1981. He is
also Chairman of the board of directors and Chief Executive Officer of Empresarios
Industriales de Mexico, S.A. de C.V. (“EIM”) (holding) and Fondo Inmobiliario (real
estate company), since 1992.
Mr. Larrea presides over every Board meeting and since 1999, has been contributing
to the Company through 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 offers the Company 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 U.S. copper producer), an affiliate of
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the Company, since August 2010 and President, Chief Executive Officer of Americas
Mining Corporation (“AMC”) a holding company of Grupo Mexico, since 2015.
Previously, he was the President, 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 businessman with over 40
years of experience in the mining industry. He has been associated with our Mexican
operations since 1976. His contributions to the Company include his professional
skills, leadership, an open mind and a willingness to listen to different opinions. Mr.
Gonzalez Rocha has proven his ability to deal with crises to lessen negative impacts
on the Company. His dedication to the Company and hands-on management of
the operations in Mexico and Peru enable him to effectively lead the Company. Mr.
Gonzalez Rocha was recognized as Copper Man of the Year 2015 and was inducted
into the American Mining Hall of Fame in December 2016 in Tucson, Arizona and
into the Mexican Mining Hall of Fame in October 2017 in Guadalajara, Mexico.
Vicente Ariztegui Andreve,
Independent Director.
Mr. Vicente Ariztegui Andreve, Independent Director. Mr. Ariztegui Andreve has
been a director of the Company since April 25, 2018. He is Managing Director and
Chairman of Aonia Holding, a wholly owned private investment firm he founded
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in 1989. Aonia has made investments in the following industries:
gold mining, global commodity trading, retailing (e.g. dutyfree
shops), infrastructure (e.g. airport terminal operation), asset
management and real estate. Over the last five years, he has
continued to invest in private entities, aside from managing his
real estate holdings. 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 (1979-1987).
He founded and was President and Chief Executive Officer of
MK Metal Trading, a global based metal and mineral — copper,
zinc, lead, gold and silver concentrates — trading company. After
18 years in business (1994-2012), he sold MK Metal Trading to
a larger global trader (ie Ocean Partners Holdings Limited). Mr.
Ariztegui Andreve currently serves as member of the Board of
Directors of several non-public companies: InverCap Holding
(Pension fund manager), Alvamex (international storage and
logistics), ALTUM (senior secured private debt manager). He is
former director of Dufry AG (leading global retailler and airport
duty free operator), Latin American Airport Holdings (airport
infrastructure and
terminal operator), Satelites Mexicanos
(SATMEX — Satellite operator), Banco Mexicano (Banking),
Grupo financiero Inverlat (financial services), Minera Santa
Gertrudis (gold mining), University Club of Mexico and Club de
Golf Chapultepec. During the last five years Mr. Ariztegui did not
serve as a director of any US public company. In 1979 he received
an MBA from the Wharton School of Business and Finance and
an MSE from the Moore School of Engineering, both from the
University of Pennsylvania.
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Mr. Ariztegui Andreve became a member of the Audit Committee on July 22, 2021,
and founding Chairman of the Sustainability Committee on July 21, 2022. He is
one of our “Audit Committee Financial Experts”, as the term is defined by the SEC.
He brings to the Company his education in finance, from his academic studies
(Wharton MBA) and his vast experience in business in the financial (e.g. his tenure
as corporate banker at Citibank), mining and commercial fields. He also adds to the
Board of Directors his leadership experience and expertise attained through his
participation as a 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 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
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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) and Chairman of the Board CBM Banco, S.A., 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 and food
processing sectors. Mr. Castillo Sanchez Mejorada also serves as a member of
the audit committee of (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. Mr. Castillo Sanchez Mejorada brings to the Company more than 45 years
of experience in the financial sector. His leadership experience and the expertise
attained through his work as an independent director of other companies add value
to his participation on the Company’s board.
Leonardo Contreras Lerdo de Tejada,
Director.
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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 Chief Financial Officer of AMC
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in January 2022. Mr. Contreras Lerdo de Tejada has more than 10 years of
experience in private equity, investment banking, and entrepreneurship. Prior to
joining AMC, Mr. Leonardo Contreras Lerdo de Tejada founded and worked at
Murano Capital in September 2015, a private investment vehicle. Mr. Contreras
Lerdo de Tejada holds a BS in Industrial Engineering from Universidad Anahuac
in Mexico City and earned an MBA degree from the University of Chicago Booth
School of Business. Mr. Contreras Lerdo de Tejada is the son-in-law of Mr.
German Larrea Mota-Velasco.
Mr. Leonardo Contreras Lerdo de Tejada brings a set of operating, human
capital and financial skills to the Company, which derive from his more than 10
years of experience in private equity, investment banking and entrepreneurship.
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 of 2007. He has also been a director of the Master in
Finance Program at the University of the Pacific in Lima, Peru since July 2009
and an Associate of the Franklin Delano Roosevelt Institute since December
2022 to date. 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 and was a director of Mall Aventura, S.A., from
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March 2021 to March 2023. 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, member of the board of directors and
Manager of the Peruvian Economic Institute (economic think tank) from April 2009 to
August 2016, Partner of Profit Consultoria e Inversiones (a financial consulting firm)
from July 2007 to July 2016, and a member of the board of directors and chairman
of the audit committee of the Bolsa de Valores de Lima (Lima Stock Exchange)
from March 2013 to July 2016. Dr. Palomino was Principal and Senior Consultant of
Proconsulta International (financial consulting) from September 2003 to June 2007.
He was First Vice President and Chief Economist, Latin America, for Merrill Lynch,
Pierce, Fenner & Smith, New York (investment banking) from 2000 to 2002. He was
Chief Executive Officer, Senior Country and Equity Analyst of Merrill Lynch, Peru
(investment banking) from 1995 to 2000. Dr. Palomino has held various positions
with banks and financial institutions as an economist, financial advisor and analyst.
He has a PhD in finance from the Wharton School of the University of Pennsylvania
in Philadelphia, Pennsylvania and graduated from the Economics Program of the
University of the Pacific in Lima, Peru.
Dr. Palomino is a member of our Audit Committee and a special independent
director nominee. He is also one of our “Audit Committee Financial Experts,” as the
term is defined by the SEC. Dr. Palomino’s wise counsel is well recognized and he
contributes to the Company, among other venues, through his vast expertise as a
financial analyst of the mining sectors in Mexico and Peru.
Gilberto Perezalonso Cifuentes,
Special Independent Director.
Mr. Perezalonso has been a director of the Company since June 2002. Currently,
Mr. Perezalonso is a member of the board of directors of Gigante, S.A. de C.V. (retail
and real estate) and Blasky (hotel chain in Baja California, Mexico). Mr. Perezalonso
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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), member of the board of directors
and the investment committee of Afore Banamex (banking), the board and the
investment committee of Siefore Banamex No. 1 (banking), Masnegocio Co. S. de
R.L. de C.V. (information technology), Intellego (technology), Telefonica Moviles
Mexico, S.A. de C.V. (wireless communication), Marhnos Construction Company
(housing construction), and Fomento de Investigacion y Cultura Superior, A.C.
(Foundation of the Iberoamerican University in Mexico). Mr. Perezalonso was also a
director of Cablevision, S.A. de C.V., and a member of the audit committee of Grupo
Televisa, S.A.B. from March 1998 to September 2009. Mr. Perezalonso has a law
degree from the Iberoamerican University in Mexico City, Mexico and a Masters
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 special independent director nominee. Mr. Perezalonso
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contributes to the Company through: his legal and financial education, including a
Masters degree in Business Administration from INCAE in Nicaragua; his business
experience in financial areas of several companies; and his position as Chief Executive
Officer of different companies. Mr. Perezalonso also brings to the
Board of Directors informed judgment and diversified business
experience as a member of 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 and since
January 2022, is a strategic advisor to Sempra lnfrastructure, an
operating subsidiary of Sempra Energy. Mr. Ruiz Sacristan has
held various distinguished positions in the Mexican government,
the most recent of which was as Secretary of Communications
and Transportation of Mexico from 1995 to 2000. While holding
that position, he was also Chairman of the board of directors
of the Mexican-owned companies in the sector, and member
of the board of directors of development banks. He was also
the Chairman of the board of directors of Asarco LLC. Mr. Ruiz
Sacristan was Chairman of the board of directors and Executive
President of IEnova, the Mexican operating subsidiary of Sempra
Energy from September 2020 to November 2021. Mr. Ruiz
Sacristan was Chief Executive Officer of Sempra North American
lnfrastructure Group from 2018 until September 2020. Prior to
this appointment, Mr. Ruiz Sacristan was Chairman and Chief
Executive Officer of IEnova from 2012 to 2018 and a member of
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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). and of
Byline Bancorp. Mr. Ruiz Sacristan holds a Bachelor’s degree in
Business Administration from the Anahuac University in Mexico
City, Mexico, and a Masters 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 via his
extensive business studies, including a Master’s Degree in Business
Administration from Northwestern University in Chicago, Illinois;
broad investment banking experience; his position as former Chief
Executive Officer of PEMEX (Mexican oil company); a distinguished
career
in the Mexican government as a former Secretary of
Communications and Transport of Mexico; and director of Mexican-
owned enterprises and financial institutions. Mr. Ruiz Sacristan also
brings to the Board of Directors his informed judgment and the
diverse business experience gained from: serving on the board of
directors and of the audit, environmental and technology committees
of Sempra Energy, a Fortune 500 energy service company, based
in San Diego, California; acting as Chairman of Asarco LLC; and
serving the Chief Executive Officer of IEnova.
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Executive
Officers
At december 31, 2023
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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WHITE HERON, ITE WETLANDS, TACNA, PERU
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 20th, 2023, 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 judgmentl.
Special Committees of the Board
SCC’s Board of Directors has organized the following Special Committees:
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1. Executive Committee. It is comprised of five members who substitute for the Board when sessions
or decisions are required concerning urgent matters or matters for which the Board would have
expressly delegated its mandate.
2. Audit Committee. It is comprised of three independent Board members who are knowledgeable
in accounting and financial matters. Its main purpose is to: (a) assist the Board in monitoring (i) the
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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
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are US citizens or residents The Named Fiduciary controls and manages the Company’s benefits
plans subject to US regulations, including ERISA. This Officer appoints an Administrative Committee,
which is comprised of three management members and its purpose is, with delegated authority, to
administer and manage said plans and to oversee the performance of the trust agents and other
fiduciaries charged with investing the plans’ funds.
Administration and Board Income
Total remunerations of Board and Administration members, in relation to the Company´s gross
income is 0.11%.
Annual Meeting
The annual meeting of shareholders of Southern Copper Corporation will be held on May 24,
2024 at 9:00 A.M., Mexico City time.
Corporate Offices
United States
Mexico
Peru
7310 North 16th, Suite 135
Campos Eliseos No. 400,
Ave. Caminos del Inca N° 171
Phoenix, AZ 85020, USA
11 floor,
Chacarilla del Estanque
Phone: +1(602) 264-1375
Col. Lomas de Chapultepec
Santiago de Surco,
Mexico
Postal code 15038, Peru
Phone: +(52-55) 1103-5000.
Phone: +(511) 512-0440,
Ext- 35855
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”)
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and the Lima Stock Exchange (“BVL”). Effective February 17, 2010, SCC’s Common Stock
changed its symbol from PCU to SCCO on both the NYSE and the Lima Stock Exchange.
Others
The Branch in Peru has issued, in accordance with Peruvian law, ‘investment shares’ (formerly
named labor shares) that are quoted in the Lima Stock Exchange under the symbol SPCCPI1
and SPCCPI2.
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Transfer Agent, registrar and stockholders services to the SCC Common and Investment shareholders are
provided by Credicorp Capital, at El Derby Ave. 055, Tower 4, 10th floor, Santiago de Surco, Lima, 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
2023 (free of charge) contact to Investor Relations Department at our corporate offices:
Southern Copper Corporation
USA: 7312 North 16th, Suite 135
Phoenix, AZ 85020, USA
Phone: +(602) 264-1375
MEXICO: Campos Eliseos No. 400, 11 floor,
Col. Lomas de Chapultepec Mexico D.F.
Phone +(52-55) 1103-5000, Ext. 35855
PERU: Caminos del Inca Avenue, N° 171
Chacarilla del Estanque, Santiago de Surco –
Postal Code 15038- Peru.
Phone. +(511) 512-0440, Ext. 63181
Web page: www.southerncoppercorp.com
Email address: southerncopper@southernperu.com.pe
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LA CARIDAD CONCENTRATOR PLANT, NACOZARI DE GARCIA, SONORA, MEXICO
Members of the Board of Directors
German Larrea Mota-Velasco
Leonardo Contreras Lerdo de Tejada
Oscar Gonzalez Rocha
Luis Miguel Palomino Bonilla
Vicente Ariztegui Andreve
Gilberto Perezalonso Cifuentes
Enrique Castillo Sanchez Mejorada
Carlos Ruiz Sacristan
Audit Committee
Luis Miguel Palomino Bonilla (Chairman)
Vicente Ariztegui Andreve
Enrique Castillo Sanchez Mejorada
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