株探米国株
英語
エドガーで原本を確認する
0.561.211.572.197731000007731000007731000007731000000.10.1SOUTHERN COPPER CORP/0001001838--12-312022Q2falseP3YP3Y0001001838srt:ParentCompanyMember2022-06-300001001838srt:ParentCompanyMember2021-12-3100010018382008-12-310001001838srt:ParentCompanyMemberus-gaap:TreasuryStockMember2022-01-012022-06-300001001838srt:ParentCompanyMemberus-gaap:TreasuryStockMember2021-04-012021-06-300001001838srt:ParentCompanyMemberus-gaap:TreasuryStockMember2021-01-012021-06-300001001838us-gaap:AdditionalPaidInCapitalMember2022-04-012022-06-300001001838us-gaap:AdditionalPaidInCapitalMember2022-01-012022-06-300001001838us-gaap:AdditionalPaidInCapitalMember2021-04-012021-06-300001001838us-gaap:AdditionalPaidInCapitalMember2021-01-012021-06-300001001838srt:ParentCompanyMemberus-gaap:TreasuryStockMember2022-06-300001001838scco:HoldingCompanyMemberus-gaap:TreasuryStockMember2022-06-300001001838us-gaap:TreasuryStockMember2022-06-300001001838us-gaap:RetainedEarningsMember2022-06-300001001838us-gaap:ParentMember2022-06-300001001838us-gaap:NoncontrollingInterestMember2022-06-300001001838us-gaap:CommonStockMember2022-06-300001001838us-gaap:AdditionalPaidInCapitalMember2022-06-300001001838us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-06-300001001838srt:ParentCompanyMemberus-gaap:TreasuryStockMember2022-03-310001001838scco:HoldingCompanyMemberus-gaap:TreasuryStockMember2022-03-310001001838us-gaap:RetainedEarningsMember2022-03-310001001838us-gaap:ParentMember2022-03-310001001838us-gaap:NoncontrollingInterestMember2022-03-310001001838us-gaap:AdditionalPaidInCapitalMember2022-03-310001001838us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-03-310001001838srt:ParentCompanyMemberus-gaap:TreasuryStockMember2021-12-310001001838scco:HoldingCompanyMemberus-gaap:TreasuryStockMember2021-12-310001001838us-gaap:RetainedEarningsMember2021-12-310001001838us-gaap:ParentMember2021-12-310001001838us-gaap:NoncontrollingInterestMember2021-12-310001001838us-gaap:CommonStockMember2021-12-310001001838us-gaap:AdditionalPaidInCapitalMember2021-12-310001001838us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-12-310001001838srt:ParentCompanyMemberus-gaap:TreasuryStockMember2021-06-300001001838scco:HoldingCompanyMemberus-gaap:TreasuryStockMember2021-06-300001001838us-gaap:TreasuryStockMember2021-06-300001001838us-gaap:RetainedEarningsMember2021-06-300001001838us-gaap:ParentMember2021-06-300001001838us-gaap:NoncontrollingInterestMember2021-06-300001001838us-gaap:AdditionalPaidInCapitalMember2021-06-300001001838us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-06-300001001838srt:ParentCompanyMemberus-gaap:TreasuryStockMember2021-03-310001001838scco:HoldingCompanyMemberus-gaap:TreasuryStockMember2021-03-310001001838us-gaap:RetainedEarningsMember2021-03-310001001838us-gaap:ParentMember2021-03-310001001838us-gaap:NoncontrollingInterestMember2021-03-310001001838us-gaap:CommonStockMember2021-03-310001001838us-gaap:AdditionalPaidInCapitalMember2021-03-310001001838us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-03-310001001838srt:ParentCompanyMemberus-gaap:TreasuryStockMember2020-12-310001001838scco:HoldingCompanyMemberus-gaap:TreasuryStockMember2020-12-310001001838us-gaap:RetainedEarningsMember2020-12-310001001838us-gaap:ParentMember2020-12-310001001838us-gaap:NoncontrollingInterestMember2020-12-310001001838us-gaap:CommonStockMember2020-12-310001001838us-gaap:AdditionalPaidInCapitalMember2020-12-310001001838us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-12-310001001838scco:EmployeeStockPurchase2018PlanMember2021-12-310001001838scco:EmployeeStockPurchase2015PlanMember2021-12-310001001838scco:EmployeeStockPurchase2018PlanMember2020-12-310001001838scco:EmployeeStockPurchase2015PlanMember2020-12-310001001838scco:DirectorsStockAwardPlanMember2021-01-012021-06-300001001838scco:OtherLarreaFamilyCompaniesMember2022-01-012022-06-300001001838srt:MaximumMemberscco:OperadoraDeCinemasSDeCVMember2022-01-012022-06-300001001838srt:MaximumMemberscco:OperadoraDeCinemasSDeCVMember2021-01-012021-06-300001001838us-gaap:OperatingSegmentsMemberscco:ZincMemberscco:MexicanIMMSAUnitMember2022-04-012022-06-300001001838us-gaap:OperatingSegmentsMemberscco:SilverMemberscco:PeruvianOperationsMember2022-04-012022-06-300001001838us-gaap:OperatingSegmentsMemberscco:SilverMemberscco:MexicanOpenPitMember2022-04-012022-06-300001001838us-gaap:OperatingSegmentsMemberscco:SilverMemberscco:MexicanIMMSAUnitMember2022-04-012022-06-300001001838us-gaap:OperatingSegmentsMemberscco:PeruvianOperationsMemberus-gaap:ReportableSubsegmentsMember2022-04-012022-06-300001001838us-gaap:OperatingSegmentsMemberscco:OtherMemberscco:PeruvianOperationsMember2022-04-012022-06-300001001838us-gaap:OperatingSegmentsMemberscco:OtherMemberscco:MexicanOpenPitMember2022-04-012022-06-300001001838us-gaap:OperatingSegmentsMemberscco:OtherMemberscco:MexicanIMMSAUnitMember2022-04-012022-06-300001001838us-gaap:OperatingSegmentsMemberscco:OtherEuropeanCountriesMemberscco:PeruvianOperationsMember2022-04-012022-06-300001001838us-gaap:OperatingSegmentsMemberscco:OtherEuropeanCountriesMemberscco:MexicanOpenPitMember2022-04-012022-06-300001001838us-gaap:OperatingSegmentsMemberscco:OtherEuropeanCountriesMemberscco:MexicanIMMSAUnitMember2022-04-012022-06-300001001838us-gaap:OperatingSegmentsMemberscco:OtherAsianCountriesMemberscco:PeruvianOperationsMember2022-04-012022-06-300001001838us-gaap:OperatingSegmentsMemberscco:OtherAsianCountriesMemberscco:MexicanOpenPitMember2022-04-012022-06-300001001838us-gaap:OperatingSegmentsMemberscco:OtherAsianCountriesMemberscco:MexicanIMMSAUnitMember2022-04-012022-06-300001001838us-gaap:OperatingSegmentsMemberscco:OtherAmericanCountriesMemberscco:PeruvianOperationsMember2022-04-012022-06-300001001838us-gaap:OperatingSegmentsMemberscco:OtherAmericanCountriesMemberscco:MexicanOpenPitMember2022-04-012022-06-300001001838us-gaap:OperatingSegmentsMemberscco:OtherAmericanCountriesMemberscco:MexicanIMMSAUnitMember2022-04-012022-06-300001001838us-gaap:OperatingSegmentsMemberscco:MolybdenumMemberscco:PeruvianOperationsMember2022-04-012022-06-300001001838us-gaap:OperatingSegmentsMemberscco:MolybdenumMemberscco:MexicanOpenPitMember2022-04-012022-06-300001001838us-gaap:OperatingSegmentsMemberscco:MexicanOpenPitMemberus-gaap:ReportableSubsegmentsMember2022-04-012022-06-300001001838us-gaap:OperatingSegmentsMemberscco:MexicanIMMSAUnitMemberus-gaap:ReportableSubsegmentsMember2022-04-012022-06-300001001838us-gaap:OperatingSegmentsMemberscco:MexicanIMMSAUnitMemberus-gaap:IntersubsegmentEliminationsMember2022-04-012022-06-300001001838us-gaap:OperatingSegmentsMemberscco:CopperMemberscco:PeruvianOperationsMember2022-04-012022-06-300001001838us-gaap:OperatingSegmentsMemberscco:CopperMemberscco:MexicanOpenPitMember2022-04-012022-06-300001001838us-gaap:OperatingSegmentsMemberscco:CopperMemberscco:MexicanIMMSAUnitMember2022-04-012022-06-300001001838us-gaap:OperatingSegmentsMembercountry:USscco:PeruvianOperationsMember2022-04-012022-06-300001001838us-gaap:OperatingSegmentsMembercountry:USscco:MexicanOpenPitMember2022-04-012022-06-300001001838us-gaap:OperatingSegmentsMembercountry:USscco:MexicanIMMSAUnitMember2022-04-012022-06-300001001838us-gaap:OperatingSegmentsMembercountry:SGscco:PeruvianOperationsMember2022-04-012022-06-300001001838us-gaap:OperatingSegmentsMembercountry:SGscco:MexicanOpenPitMember2022-04-012022-06-300001001838us-gaap:OperatingSegmentsMembercountry:SGscco:MexicanIMMSAUnitMember2022-04-012022-06-300001001838us-gaap:OperatingSegmentsMembercountry:PEscco:PeruvianOperationsMember2022-04-012022-06-300001001838us-gaap:OperatingSegmentsMembercountry:PEscco:MexicanOpenPitMember2022-04-012022-06-300001001838us-gaap:OperatingSegmentsMembercountry:MXscco:MexicanOpenPitMember2022-04-012022-06-300001001838us-gaap:OperatingSegmentsMembercountry:MXscco:MexicanIMMSAUnitMember2022-04-012022-06-300001001838us-gaap:OperatingSegmentsMembercountry:JPscco:PeruvianOperationsMember2022-04-012022-06-300001001838us-gaap:OperatingSegmentsMembercountry:JPscco:MexicanOpenPitMember2022-04-012022-06-300001001838us-gaap:OperatingSegmentsMembercountry:ITscco:PeruvianOperationsMember2022-04-012022-06-300001001838us-gaap:OperatingSegmentsMembercountry:ITscco:MexicanOpenPitMember2022-04-012022-06-300001001838us-gaap:OperatingSegmentsMembercountry:ITscco:MexicanIMMSAUnitMember2022-04-012022-06-300001001838us-gaap:OperatingSegmentsMembercountry:ESscco:PeruvianOperationsMember2022-04-012022-06-300001001838us-gaap:OperatingSegmentsMembercountry:ESscco:MexicanOpenPitMember2022-04-012022-06-300001001838us-gaap:OperatingSegmentsMembercountry:CNscco:MexicanOpenPitMember2022-04-012022-06-300001001838us-gaap:OperatingSegmentsMembercountry:CLscco:PeruvianOperationsMember2022-04-012022-06-300001001838us-gaap:OperatingSegmentsMembercountry:CLscco:MexicanOpenPitMember2022-04-012022-06-300001001838us-gaap:OperatingSegmentsMembercountry:CHscco:PeruvianOperationsMember2022-04-012022-06-300001001838us-gaap:OperatingSegmentsMembercountry:CHscco:MexicanOpenPitMember2022-04-012022-06-300001001838us-gaap:OperatingSegmentsMembercountry:CHscco:MexicanIMMSAUnitMember2022-04-012022-06-300001001838us-gaap:OperatingSegmentsMembercountry:BRscco:PeruvianOperationsMember2022-04-012022-06-300001001838us-gaap:OperatingSegmentsMembercountry:BRscco:MexicanIMMSAUnitMember2022-04-012022-06-300001001838scco:CorporateAndEliminationsMemberus-gaap:IntersubsegmentEliminationsMember2022-04-012022-06-300001001838scco:CorporateAndEliminationsMemberscco:ZincMember2022-04-012022-06-300001001838scco:CorporateAndEliminationsMemberscco:SilverMember2022-04-012022-06-300001001838scco:CorporateAndEliminationsMemberscco:OtherMember2022-04-012022-06-300001001838scco:CorporateAndEliminationsMemberscco:CopperMember2022-04-012022-06-300001001838scco:CorporateAndEliminationsMembercountry:PE2022-04-012022-06-300001001838scco:CorporateAndEliminationsMembercountry:MX2022-04-012022-06-300001001838us-gaap:ReportableSubsegmentsMember2022-04-012022-06-300001001838us-gaap:IntersubsegmentEliminationsMember2022-04-012022-06-300001001838scco:ZincMember2022-04-012022-06-300001001838scco:SilverMember2022-04-012022-06-300001001838scco:OtherMember2022-04-012022-06-300001001838scco:OtherEuropeanCountriesMember2022-04-012022-06-300001001838scco:OtherAsianCountriesMember2022-04-012022-06-300001001838scco:OtherAmericanCountriesMember2022-04-012022-06-300001001838scco:MolybdenumMember2022-04-012022-06-300001001838scco:CopperMember2022-04-012022-06-300001001838country:US2022-04-012022-06-300001001838country:SG2022-04-012022-06-300001001838country:PE2022-04-012022-06-300001001838country:MX2022-04-012022-06-300001001838country:JP2022-04-012022-06-300001001838country:IT2022-04-012022-06-300001001838country:ES2022-04-012022-06-300001001838country:CN2022-04-012022-06-300001001838country:CL2022-04-012022-06-300001001838country:CH2022-04-012022-06-300001001838country:BR2022-04-012022-06-300001001838us-gaap:OperatingSegmentsMemberscco:ZincMemberscco:MexicanIMMSAUnitMember2022-01-012022-06-300001001838us-gaap:OperatingSegmentsMemberscco:SilverMemberscco:PeruvianOperationsMember2022-01-012022-06-300001001838us-gaap:OperatingSegmentsMemberscco:SilverMemberscco:MexicanOpenPitMember2022-01-012022-06-300001001838us-gaap:OperatingSegmentsMemberscco:SilverMemberscco:MexicanIMMSAUnitMember2022-01-012022-06-300001001838us-gaap:OperatingSegmentsMemberscco:PeruvianOperationsMemberus-gaap:ReportableSubsegmentsMember2022-01-012022-06-300001001838us-gaap:OperatingSegmentsMemberscco:OtherMemberscco:PeruvianOperationsMember2022-01-012022-06-300001001838us-gaap:OperatingSegmentsMemberscco:OtherMemberscco:MexicanOpenPitMember2022-01-012022-06-300001001838us-gaap:OperatingSegmentsMemberscco:OtherMemberscco:MexicanIMMSAUnitMember2022-01-012022-06-300001001838us-gaap:OperatingSegmentsMemberscco:OtherEuropeanCountriesMemberscco:PeruvianOperationsMember2022-01-012022-06-300001001838us-gaap:OperatingSegmentsMemberscco:OtherEuropeanCountriesMemberscco:MexicanOpenPitMember2022-01-012022-06-300001001838us-gaap:OperatingSegmentsMemberscco:OtherEuropeanCountriesMemberscco:MexicanIMMSAUnitMember2022-01-012022-06-300001001838us-gaap:OperatingSegmentsMemberscco:OtherAsianCountriesMemberscco:PeruvianOperationsMember2022-01-012022-06-300001001838us-gaap:OperatingSegmentsMemberscco:OtherAsianCountriesMemberscco:MexicanOpenPitMember2022-01-012022-06-300001001838us-gaap:OperatingSegmentsMemberscco:OtherAsianCountriesMemberscco:MexicanIMMSAUnitMember2022-01-012022-06-300001001838us-gaap:OperatingSegmentsMemberscco:OtherAmericanCountriesMemberscco:PeruvianOperationsMember2022-01-012022-06-300001001838us-gaap:OperatingSegmentsMemberscco:OtherAmericanCountriesMemberscco:MexicanOpenPitMember2022-01-012022-06-300001001838us-gaap:OperatingSegmentsMemberscco:OtherAmericanCountriesMemberscco:MexicanIMMSAUnitMember2022-01-012022-06-300001001838us-gaap:OperatingSegmentsMemberscco:MolybdenumMemberscco:PeruvianOperationsMember2022-01-012022-06-300001001838us-gaap:OperatingSegmentsMemberscco:MolybdenumMemberscco:MexicanOpenPitMember2022-01-012022-06-300001001838us-gaap:OperatingSegmentsMemberscco:MexicanOpenPitMemberus-gaap:ReportableSubsegmentsMember2022-01-012022-06-300001001838us-gaap:OperatingSegmentsMemberscco:MexicanIMMSAUnitMemberus-gaap:ReportableSubsegmentsMember2022-01-012022-06-300001001838us-gaap:OperatingSegmentsMemberscco:MexicanIMMSAUnitMemberus-gaap:IntersubsegmentEliminationsMember2022-01-012022-06-300001001838us-gaap:OperatingSegmentsMemberscco:CopperMemberscco:PeruvianOperationsMember2022-01-012022-06-300001001838us-gaap:OperatingSegmentsMemberscco:CopperMemberscco:MexicanOpenPitMember2022-01-012022-06-300001001838us-gaap:OperatingSegmentsMemberscco:CopperMemberscco:MexicanIMMSAUnitMember2022-01-012022-06-300001001838us-gaap:OperatingSegmentsMembercountry:USscco:PeruvianOperationsMember2022-01-012022-06-300001001838us-gaap:OperatingSegmentsMembercountry:USscco:MexicanOpenPitMember2022-01-012022-06-300001001838us-gaap:OperatingSegmentsMembercountry:USscco:MexicanIMMSAUnitMember2022-01-012022-06-300001001838us-gaap:OperatingSegmentsMembercountry:SGscco:PeruvianOperationsMember2022-01-012022-06-300001001838us-gaap:OperatingSegmentsMembercountry:SGscco:MexicanOpenPitMember2022-01-012022-06-300001001838us-gaap:OperatingSegmentsMembercountry:SGscco:MexicanIMMSAUnitMember2022-01-012022-06-300001001838us-gaap:OperatingSegmentsMembercountry:PEscco:PeruvianOperationsMember2022-01-012022-06-300001001838us-gaap:OperatingSegmentsMembercountry:PEscco:MexicanOpenPitMember2022-01-012022-06-300001001838us-gaap:OperatingSegmentsMembercountry:MXscco:MexicanOpenPitMember2022-01-012022-06-300001001838us-gaap:OperatingSegmentsMembercountry:MXscco:MexicanIMMSAUnitMember2022-01-012022-06-300001001838us-gaap:OperatingSegmentsMembercountry:JPscco:PeruvianOperationsMember2022-01-012022-06-300001001838us-gaap:OperatingSegmentsMembercountry:JPscco:MexicanOpenPitMember2022-01-012022-06-300001001838us-gaap:OperatingSegmentsMembercountry:ITscco:PeruvianOperationsMember2022-01-012022-06-300001001838us-gaap:OperatingSegmentsMembercountry:ITscco:MexicanOpenPitMember2022-01-012022-06-300001001838us-gaap:OperatingSegmentsMembercountry:ITscco:MexicanIMMSAUnitMember2022-01-012022-06-300001001838us-gaap:OperatingSegmentsMembercountry:ESscco:PeruvianOperationsMember2022-01-012022-06-300001001838us-gaap:OperatingSegmentsMembercountry:ESscco:MexicanOpenPitMember2022-01-012022-06-300001001838us-gaap:OperatingSegmentsMembercountry:CNscco:MexicanOpenPitMember2022-01-012022-06-300001001838us-gaap:OperatingSegmentsMembercountry:CLscco:PeruvianOperationsMember2022-01-012022-06-300001001838us-gaap:OperatingSegmentsMembercountry:CLscco:MexicanOpenPitMember2022-01-012022-06-300001001838us-gaap:OperatingSegmentsMembercountry:CHscco:PeruvianOperationsMember2022-01-012022-06-300001001838us-gaap:OperatingSegmentsMembercountry:CHscco:MexicanOpenPitMember2022-01-012022-06-300001001838us-gaap:OperatingSegmentsMembercountry:CHscco:MexicanIMMSAUnitMember2022-01-012022-06-300001001838us-gaap:OperatingSegmentsMembercountry:BRscco:PeruvianOperationsMember2022-01-012022-06-300001001838us-gaap:OperatingSegmentsMembercountry:BRscco:MexicanIMMSAUnitMember2022-01-012022-06-300001001838scco:CorporateAndEliminationsMemberus-gaap:IntersubsegmentEliminationsMember2022-01-012022-06-300001001838scco:CorporateAndEliminationsMemberscco:ZincMember2022-01-012022-06-300001001838scco:CorporateAndEliminationsMemberscco:SilverMember2022-01-012022-06-300001001838scco:CorporateAndEliminationsMemberscco:OtherMember2022-01-012022-06-300001001838scco:CorporateAndEliminationsMemberscco:CopperMember2022-01-012022-06-300001001838scco:CorporateAndEliminationsMembercountry:PE2022-01-012022-06-300001001838scco:CorporateAndEliminationsMembercountry:MX2022-01-012022-06-300001001838us-gaap:ReportableSubsegmentsMember2022-01-012022-06-300001001838us-gaap:IntersubsegmentEliminationsMember2022-01-012022-06-300001001838scco:ZincMember2022-01-012022-06-300001001838scco:SilverMember2022-01-012022-06-300001001838scco:OtherMember2022-01-012022-06-300001001838scco:OtherEuropeanCountriesMember2022-01-012022-06-300001001838scco:OtherAsianCountriesMember2022-01-012022-06-300001001838scco:OtherAmericanCountriesMember2022-01-012022-06-300001001838scco:MolybdenumMember2022-01-012022-06-300001001838scco:CopperMember2022-01-012022-06-300001001838country:US2022-01-012022-06-300001001838country:SG2022-01-012022-06-300001001838country:JP2022-01-012022-06-300001001838country:IT2022-01-012022-06-300001001838country:ES2022-01-012022-06-300001001838country:CN2022-01-012022-06-300001001838country:CL2022-01-012022-06-300001001838country:CH2022-01-012022-06-300001001838country:BR2022-01-012022-06-300001001838us-gaap:OperatingSegmentsMemberscco:ZincMemberscco:PeruvianOperationsMember2021-04-012021-06-300001001838us-gaap:OperatingSegmentsMemberscco:ZincMemberscco:MexicanOpenPitMember2021-04-012021-06-300001001838us-gaap:OperatingSegmentsMemberscco:ZincMemberscco:MexicanIMMSAUnitMember2021-04-012021-06-300001001838us-gaap:OperatingSegmentsMemberscco:SilverMemberscco:MexicanIMMSAUnitMember2021-04-012021-06-300001001838us-gaap:OperatingSegmentsMemberscco:PeruvianOperationsMemberus-gaap:ReportableSubsegmentsMember2021-04-012021-06-300001001838us-gaap:OperatingSegmentsMemberscco:OtherMemberscco:PeruvianOperationsMember2021-04-012021-06-300001001838us-gaap:OperatingSegmentsMemberscco:OtherMemberscco:MexicanOpenPitMember2021-04-012021-06-300001001838us-gaap:OperatingSegmentsMemberscco:OtherMemberscco:MexicanIMMSAUnitMember2021-04-012021-06-300001001838us-gaap:OperatingSegmentsMemberscco:OtherEuropeanCountriesMemberscco:PeruvianOperationsMember2021-04-012021-06-300001001838us-gaap:OperatingSegmentsMemberscco:OtherEuropeanCountriesMemberscco:MexicanOpenPitMember2021-04-012021-06-300001001838us-gaap:OperatingSegmentsMemberscco:OtherEuropeanCountriesMemberscco:MexicanIMMSAUnitMember2021-04-012021-06-300001001838us-gaap:OperatingSegmentsMemberscco:OtherAsianCountriesMemberscco:PeruvianOperationsMember2021-04-012021-06-300001001838us-gaap:OperatingSegmentsMemberscco:OtherAsianCountriesMemberscco:MexicanOpenPitMember2021-04-012021-06-300001001838us-gaap:OperatingSegmentsMemberscco:OtherAsianCountriesMemberscco:MexicanIMMSAUnitMember2021-04-012021-06-300001001838us-gaap:OperatingSegmentsMemberscco:OtherAmericanCountriesMemberscco:PeruvianOperationsMember2021-04-012021-06-300001001838us-gaap:OperatingSegmentsMemberscco:OtherAmericanCountriesMemberscco:MexicanOpenPitMember2021-04-012021-06-300001001838us-gaap:OperatingSegmentsMemberscco:MolybdenumMemberscco:PeruvianOperationsMember2021-04-012021-06-300001001838us-gaap:OperatingSegmentsMemberscco:MolybdenumMemberscco:MexicanOpenPitMember2021-04-012021-06-300001001838us-gaap:OperatingSegmentsMemberscco:MexicanOpenPitMemberus-gaap:ReportableSubsegmentsMember2021-04-012021-06-300001001838us-gaap:OperatingSegmentsMemberscco:MexicanIMMSAUnitMemberus-gaap:ReportableSubsegmentsMember2021-04-012021-06-300001001838us-gaap:OperatingSegmentsMemberscco:MexicanIMMSAUnitMemberus-gaap:IntersubsegmentEliminationsMember2021-04-012021-06-300001001838us-gaap:OperatingSegmentsMemberscco:CopperMemberscco:PeruvianOperationsMember2021-04-012021-06-300001001838us-gaap:OperatingSegmentsMemberscco:CopperMemberscco:MexicanOpenPitMember2021-04-012021-06-300001001838us-gaap:OperatingSegmentsMemberscco:CopperMemberscco:MexicanIMMSAUnitMember2021-04-012021-06-300001001838us-gaap:OperatingSegmentsMembercountry:USscco:PeruvianOperationsMember2021-04-012021-06-300001001838us-gaap:OperatingSegmentsMembercountry:USscco:MexicanOpenPitMember2021-04-012021-06-300001001838us-gaap:OperatingSegmentsMembercountry:USscco:MexicanIMMSAUnitMember2021-04-012021-06-300001001838us-gaap:OperatingSegmentsMembercountry:SGscco:PeruvianOperationsMember2021-04-012021-06-300001001838us-gaap:OperatingSegmentsMembercountry:SGscco:MexicanOpenPitMember2021-04-012021-06-300001001838us-gaap:OperatingSegmentsMembercountry:SGscco:MexicanIMMSAUnitMember2021-04-012021-06-300001001838us-gaap:OperatingSegmentsMembercountry:PEscco:PeruvianOperationsMember2021-04-012021-06-300001001838us-gaap:OperatingSegmentsMembercountry:PEscco:MexicanIMMSAUnitMember2021-04-012021-06-300001001838us-gaap:OperatingSegmentsMembercountry:MXscco:MexicanOpenPitMember2021-04-012021-06-300001001838us-gaap:OperatingSegmentsMembercountry:MXscco:MexicanIMMSAUnitMember2021-04-012021-06-300001001838us-gaap:OperatingSegmentsMembercountry:JPscco:PeruvianOperationsMember2021-04-012021-06-300001001838us-gaap:OperatingSegmentsMembercountry:JPscco:MexicanOpenPitMember2021-04-012021-06-300001001838us-gaap:OperatingSegmentsMembercountry:ITscco:PeruvianOperationsMember2021-04-012021-06-300001001838us-gaap:OperatingSegmentsMembercountry:ITscco:MexicanOpenPitMember2021-04-012021-06-300001001838us-gaap:OperatingSegmentsMembercountry:ITscco:MexicanIMMSAUnitMember2021-04-012021-06-300001001838us-gaap:OperatingSegmentsMembercountry:ESscco:PeruvianOperationsMember2021-04-012021-06-300001001838us-gaap:OperatingSegmentsMembercountry:ESscco:MexicanOpenPitMember2021-04-012021-06-300001001838us-gaap:OperatingSegmentsMembercountry:CNscco:MexicanOpenPitMember2021-04-012021-06-300001001838us-gaap:OperatingSegmentsMembercountry:CLscco:PeruvianOperationsMember2021-04-012021-06-300001001838us-gaap:OperatingSegmentsMembercountry:CLscco:MexicanOpenPitMember2021-04-012021-06-300001001838us-gaap:OperatingSegmentsMembercountry:CHscco:PeruvianOperationsMember2021-04-012021-06-300001001838us-gaap:OperatingSegmentsMembercountry:CHscco:MexicanOpenPitMember2021-04-012021-06-300001001838us-gaap:OperatingSegmentsMembercountry:CHscco:MexicanIMMSAUnitMember2021-04-012021-06-300001001838us-gaap:OperatingSegmentsMembercountry:BRscco:PeruvianOperationsMember2021-04-012021-06-300001001838us-gaap:OperatingSegmentsMembercountry:BRscco:MexicanIMMSAUnitMember2021-04-012021-06-300001001838scco:CorporateAndEliminationsMemberus-gaap:IntersubsegmentEliminationsMember2021-04-012021-06-300001001838scco:CorporateAndEliminationsMemberscco:ZincMember2021-04-012021-06-300001001838scco:CorporateAndEliminationsMemberscco:OtherMember2021-04-012021-06-300001001838scco:CorporateAndEliminationsMemberscco:CopperMember2021-04-012021-06-300001001838scco:CorporateAndEliminationsMembercountry:MX2021-04-012021-06-300001001838us-gaap:ReportableSubsegmentsMember2021-04-012021-06-300001001838scco:ZincMember2021-04-012021-06-300001001838scco:SilverMember2021-04-012021-06-300001001838scco:OtherMember2021-04-012021-06-300001001838scco:OtherEuropeanCountriesMember2021-04-012021-06-300001001838scco:OtherAsianCountriesMember2021-04-012021-06-300001001838scco:OtherAmericanCountriesMember2021-04-012021-06-300001001838scco:MolybdenumMember2021-04-012021-06-300001001838scco:CopperMember2021-04-012021-06-300001001838country:US2021-04-012021-06-300001001838country:SG2021-04-012021-06-300001001838country:PE2021-04-012021-06-300001001838country:MX2021-04-012021-06-300001001838country:JP2021-04-012021-06-300001001838country:IT2021-04-012021-06-300001001838country:ES2021-04-012021-06-300001001838country:CN2021-04-012021-06-300001001838country:CL2021-04-012021-06-300001001838country:CH2021-04-012021-06-300001001838country:BR2021-04-012021-06-300001001838us-gaap:OperatingSegmentsMemberscco:ZincMemberscco:PeruvianOperationsMember2021-01-012021-06-300001001838us-gaap:OperatingSegmentsMemberscco:ZincMemberscco:MexicanOpenPitMember2021-01-012021-06-300001001838us-gaap:OperatingSegmentsMemberscco:ZincMemberscco:MexicanIMMSAUnitMember2021-01-012021-06-300001001838us-gaap:OperatingSegmentsMemberscco:SilverMemberscco:MexicanIMMSAUnitMember2021-01-012021-06-300001001838us-gaap:OperatingSegmentsMemberscco:PeruvianOperationsMemberus-gaap:ReportableSubsegmentsMember2021-01-012021-06-300001001838us-gaap:OperatingSegmentsMemberscco:OtherMemberscco:PeruvianOperationsMember2021-01-012021-06-300001001838us-gaap:OperatingSegmentsMemberscco:OtherMemberscco:MexicanOpenPitMember2021-01-012021-06-300001001838us-gaap:OperatingSegmentsMemberscco:OtherMemberscco:MexicanIMMSAUnitMember2021-01-012021-06-300001001838us-gaap:OperatingSegmentsMemberscco:OtherEuropeanCountriesMemberscco:PeruvianOperationsMember2021-01-012021-06-300001001838us-gaap:OperatingSegmentsMemberscco:OtherEuropeanCountriesMemberscco:MexicanOpenPitMember2021-01-012021-06-300001001838us-gaap:OperatingSegmentsMemberscco:OtherEuropeanCountriesMemberscco:MexicanIMMSAUnitMember2021-01-012021-06-300001001838us-gaap:OperatingSegmentsMemberscco:OtherAsianCountriesMemberscco:PeruvianOperationsMember2021-01-012021-06-300001001838us-gaap:OperatingSegmentsMemberscco:OtherAsianCountriesMemberscco:MexicanOpenPitMember2021-01-012021-06-300001001838us-gaap:OperatingSegmentsMemberscco:OtherAsianCountriesMemberscco:MexicanIMMSAUnitMember2021-01-012021-06-300001001838us-gaap:OperatingSegmentsMemberscco:OtherAmericanCountriesMemberscco:PeruvianOperationsMember2021-01-012021-06-300001001838us-gaap:OperatingSegmentsMemberscco:OtherAmericanCountriesMemberscco:MexicanOpenPitMember2021-01-012021-06-300001001838us-gaap:OperatingSegmentsMemberscco:OtherAmericanCountriesMemberscco:MexicanIMMSAUnitMember2021-01-012021-06-300001001838us-gaap:OperatingSegmentsMemberscco:MolybdenumMemberscco:PeruvianOperationsMember2021-01-012021-06-300001001838us-gaap:OperatingSegmentsMemberscco:MolybdenumMemberscco:MexicanOpenPitMember2021-01-012021-06-300001001838us-gaap:OperatingSegmentsMemberscco:MexicanOpenPitMemberus-gaap:ReportableSubsegmentsMember2021-01-012021-06-300001001838us-gaap:OperatingSegmentsMemberscco:MexicanIMMSAUnitMemberus-gaap:ReportableSubsegmentsMember2021-01-012021-06-300001001838us-gaap:OperatingSegmentsMemberscco:MexicanIMMSAUnitMemberus-gaap:IntersubsegmentEliminationsMember2021-01-012021-06-300001001838us-gaap:OperatingSegmentsMemberscco:CopperMemberscco:PeruvianOperationsMember2021-01-012021-06-300001001838us-gaap:OperatingSegmentsMemberscco:CopperMemberscco:MexicanOpenPitMember2021-01-012021-06-300001001838us-gaap:OperatingSegmentsMemberscco:CopperMemberscco:MexicanIMMSAUnitMember2021-01-012021-06-300001001838us-gaap:OperatingSegmentsMembercountry:USscco:PeruvianOperationsMember2021-01-012021-06-300001001838us-gaap:OperatingSegmentsMembercountry:USscco:MexicanOpenPitMember2021-01-012021-06-300001001838us-gaap:OperatingSegmentsMembercountry:USscco:MexicanIMMSAUnitMember2021-01-012021-06-300001001838us-gaap:OperatingSegmentsMembercountry:SGscco:PeruvianOperationsMember2021-01-012021-06-300001001838us-gaap:OperatingSegmentsMembercountry:SGscco:MexicanOpenPitMember2021-01-012021-06-300001001838us-gaap:OperatingSegmentsMembercountry:SGscco:MexicanIMMSAUnitMember2021-01-012021-06-300001001838us-gaap:OperatingSegmentsMembercountry:PEscco:PeruvianOperationsMember2021-01-012021-06-300001001838us-gaap:OperatingSegmentsMembercountry:PEscco:MexicanIMMSAUnitMember2021-01-012021-06-300001001838us-gaap:OperatingSegmentsMembercountry:MXscco:MexicanOpenPitMember2021-01-012021-06-300001001838us-gaap:OperatingSegmentsMembercountry:MXscco:MexicanIMMSAUnitMember2021-01-012021-06-300001001838us-gaap:OperatingSegmentsMembercountry:JPscco:PeruvianOperationsMember2021-01-012021-06-300001001838us-gaap:OperatingSegmentsMembercountry:JPscco:MexicanOpenPitMember2021-01-012021-06-300001001838us-gaap:OperatingSegmentsMembercountry:ITscco:PeruvianOperationsMember2021-01-012021-06-300001001838us-gaap:OperatingSegmentsMembercountry:ITscco:MexicanOpenPitMember2021-01-012021-06-300001001838us-gaap:OperatingSegmentsMembercountry:ITscco:MexicanIMMSAUnitMember2021-01-012021-06-300001001838us-gaap:OperatingSegmentsMembercountry:ESscco:PeruvianOperationsMember2021-01-012021-06-300001001838us-gaap:OperatingSegmentsMembercountry:ESscco:MexicanOpenPitMember2021-01-012021-06-300001001838us-gaap:OperatingSegmentsMembercountry:CNscco:MexicanOpenPitMember2021-01-012021-06-300001001838us-gaap:OperatingSegmentsMembercountry:CLscco:PeruvianOperationsMember2021-01-012021-06-300001001838us-gaap:OperatingSegmentsMembercountry:CLscco:MexicanOpenPitMember2021-01-012021-06-300001001838us-gaap:OperatingSegmentsMembercountry:CHscco:PeruvianOperationsMember2021-01-012021-06-300001001838us-gaap:OperatingSegmentsMembercountry:CHscco:MexicanOpenPitMember2021-01-012021-06-300001001838us-gaap:OperatingSegmentsMembercountry:CHscco:MexicanIMMSAUnitMember2021-01-012021-06-300001001838us-gaap:OperatingSegmentsMembercountry:BRscco:PeruvianOperationsMember2021-01-012021-06-300001001838us-gaap:OperatingSegmentsMembercountry:BRscco:MexicanIMMSAUnitMember2021-01-012021-06-300001001838scco:CorporateAndEliminationsMemberus-gaap:IntersubsegmentEliminationsMember2021-01-012021-06-300001001838scco:CorporateAndEliminationsMemberscco:ZincMember2021-01-012021-06-300001001838scco:CorporateAndEliminationsMemberscco:SilverMember2021-01-012021-06-300001001838scco:CorporateAndEliminationsMemberscco:OtherMember2021-01-012021-06-300001001838scco:CorporateAndEliminationsMemberscco:CopperMember2021-01-012021-06-300001001838scco:CorporateAndEliminationsMembercountry:MX2021-01-012021-06-300001001838us-gaap:ReportableSubsegmentsMember2021-01-012021-06-300001001838scco:ZincMember2021-01-012021-06-300001001838scco:SilverMember2021-01-012021-06-300001001838scco:OtherMember2021-01-012021-06-300001001838scco:OtherEuropeanCountriesMember2021-01-012021-06-300001001838scco:OtherAsianCountriesMember2021-01-012021-06-300001001838scco:OtherAmericanCountriesMember2021-01-012021-06-300001001838scco:MolybdenumMember2021-01-012021-06-300001001838scco:CopperMember2021-01-012021-06-300001001838country:US2021-01-012021-06-300001001838country:SG2021-01-012021-06-300001001838country:JP2021-01-012021-06-300001001838country:IT2021-01-012021-06-300001001838country:ES2021-01-012021-06-300001001838country:CN2021-01-012021-06-300001001838country:CL2021-01-012021-06-300001001838country:CH2021-01-012021-06-300001001838country:BR2021-01-012021-06-300001001838scco:OperadoraDeCinemasSDeCVMember2022-01-012022-06-300001001838scco:MexicoTransportesAereosSADeCVMember2022-01-012022-06-300001001838scco:MexicoProyectosYDesarrollosSaDeCvAndAffiliatesMember2022-01-012022-06-300001001838scco:MexicoGeneradoraDeEnergiaSDeRLMember2022-01-012022-06-300001001838scco:GrupoMexicoServiciosSBDeCVAndAffiliatesMember2022-01-012022-06-300001001838scco:GrupoMexicoSABDeCVMember2022-01-012022-06-300001001838scco:FerrocarrilMexicanoSADeCVMember2022-01-012022-06-300001001838scco:ControladoraDeInfraestructuraEnergeticaMexicoSADeCVMember2022-01-012022-06-300001001838scco:BoutiqueBowlingDeMexicoSDeCVMember2022-01-012022-06-300001001838scco:AsarcoMember2022-01-012022-06-300001001838scco:AmmincoApoyoAdministrativoS.a.DeC.v.Member2022-01-012022-06-300001001838scco:PeruMiningExplorationAndDevelopmentCompanyMember2021-01-012021-06-300001001838scco:OperadoraDeCinemasSDeCVMember2021-01-012021-06-300001001838scco:MexicoTransportesAereosSADeCVMember2021-01-012021-06-300001001838scco:MexicoProyectosYDesarrollosSaDeCvAndAffiliatesMember2021-01-012021-06-300001001838scco:MexicoGeneradoraDeEnergiaSDeRLMember2021-01-012021-06-300001001838scco:IntermodalMexicoS.a.DeC.v.Member2021-01-012021-06-300001001838scco:GrupoMexicoServiciosSBDeCVAndAffiliatesMember2021-01-012021-06-300001001838scco:GrupoMexicoSABDeCVMember2021-01-012021-06-300001001838scco:FerrocarrilMexicanoSADeCVMember2021-01-012021-06-300001001838scco:BoutiqueBowlingDeMexicoSDeCVMember2021-01-012021-06-300001001838scco:AsarcoMember2021-01-012021-06-300001001838scco:MolybdenumMemberus-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMember2022-06-300001001838scco:MolybdenumMemberus-gaap:EstimateOfFairValueFairValueDisclosureMemberus-gaap:FairValueMeasurementsRecurringMember2022-06-300001001838scco:CopperMemberus-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMember2022-06-300001001838scco:CopperMemberus-gaap:EstimateOfFairValueFairValueDisclosureMemberus-gaap:FairValueMeasurementsRecurringMember2022-06-300001001838scco:MolybdenumMemberus-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMember2021-12-310001001838scco:MolybdenumMemberus-gaap:EstimateOfFairValueFairValueDisclosureMemberus-gaap:FairValueMeasurementsRecurringMember2021-12-310001001838scco:CopperMemberus-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMember2021-12-310001001838scco:CopperMemberus-gaap:EstimateOfFairValueFairValueDisclosureMemberus-gaap:FairValueMeasurementsRecurringMember2021-12-310001001838us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-04-012022-06-300001001838us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-01-012022-06-300001001838us-gaap:SellingGeneralAndAdministrativeExpensesMember2022-01-012022-06-300001001838us-gaap:CostOfSalesMember2022-01-012022-06-300001001838scco:ExplorationExpenseMember2022-01-012022-06-300001001838us-gaap:SellingGeneralAndAdministrativeExpensesMember2021-01-012021-06-300001001838us-gaap:CostOfSalesMember2021-01-012021-06-300001001838scco:ExplorationExpenseMember2021-01-012021-06-300001001838scco:BuenavistaDelCobreSaDeCVMember2022-06-300001001838us-gaap:FairValueInputsLevel2Member2022-06-300001001838us-gaap:FairValueInputsLevel1Member2022-06-300001001838us-gaap:FairValueInputsLevel2Member2021-12-310001001838us-gaap:FairValueInputsLevel1Member2021-12-310001001838srt:MaximumMember2022-04-012022-06-300001001838srt:MaximumMember2021-04-012021-06-300001001838srt:MaximumMember2021-01-012021-06-3000010018382022-01-310001001838scco:CompaniaMineraCoimolacheSAMember2022-06-300001001838scco:ApuCoropunaS.r.l.Member2022-06-300001001838scco:EmployeeStockPurchase2018PlanMember2022-06-300001001838scco:EmployeeStockPurchase2015PlanMember2022-06-300001001838scco:EmployeeStockPurchase2018PlanMember2021-06-300001001838scco:EmployeeStockPurchase2015PlanMember2021-06-300001001838scco:MexicoCompaniaConstructoraSaDeCVMember2022-06-300001001838scco:GrupoMexicoServiciosSBDeCVAndAffiliatesMember2022-06-300001001838scco:FerrocarrilMexicanoSADeCVMember2022-06-300001001838scco:EolicaElRetiroMember2022-06-300001001838scco:AmmincoApoyoAdministrativoS.a.DeC.v.Member2022-06-300001001838scco:OperadoraDeCinemasSDeCVMember2021-12-310001001838scco:MexicoTransportesAereosSADeCVMember2021-12-310001001838scco:MexicoCompaniaConstructoraSaDeCVMember2021-12-310001001838scco:GrupoMexicoServiciosSBDeCVAndAffiliatesMember2021-12-310001001838scco:FerrocarrilMexicanoSADeCVMember2021-12-310001001838scco:EolicaElRetiroMember2021-12-310001001838scco:AmmincoApoyoAdministrativoS.a.DeC.v.Member2021-12-310001001838scco:OperadoraDeCinemasSDeCVMember2022-06-300001001838scco:MexicoTransportesAereosSADeCVMember2022-06-300001001838scco:MexicoGeneradoraDeEnergiaSDeRLMember2022-06-300001001838scco:GrupoMexicoServiciosDeIngenieriaS.a.DeC.v.Member2022-06-300001001838scco:CompaniaPerforadoraMexicoSAPIDeCVMember2022-06-300001001838scco:BoutiqueBowlingDeMexicoSDeCVMember2022-06-300001001838scco:AsarcoMember2022-06-300001001838scco:MexicoGeneradoraDeEnergiaSDeRLMember2021-12-310001001838scco:GrupoMexicoServiciosDeIngenieriaS.a.DeC.v.Member2021-12-310001001838scco:CorporateAndEliminationsMember2021-12-310001001838scco:CompaniaPerforadoraMexicoSAPIDeCVMember2021-12-310001001838scco:BoutiqueBowlingDeMexicoSDeCVMember2021-12-310001001838scco:AsarcoMember2021-12-310001001838scco:AmericasMiningCorporationMember2021-12-310001001838us-gaap:RetainedEarningsMember2022-04-012022-06-300001001838us-gaap:NoncontrollingInterestMember2022-04-012022-06-300001001838us-gaap:RetainedEarningsMember2022-01-012022-06-300001001838us-gaap:NoncontrollingInterestMember2022-01-012022-06-300001001838us-gaap:RetainedEarningsMember2021-04-012021-06-300001001838us-gaap:NoncontrollingInterestMember2021-04-012021-06-300001001838us-gaap:RetainedEarningsMember2021-01-012021-06-300001001838us-gaap:NoncontrollingInterestMember2021-01-012021-06-300001001838srt:NaturalGasPerThousandCubicFeetMemberus-gaap:SwapMemberus-gaap:DesignatedAsHedgingInstrumentMember2022-03-310001001838srt:NaturalGasPerThousandCubicFeetMemberus-gaap:CallOptionMemberus-gaap:DesignatedAsHedgingInstrumentMember2022-03-310001001838us-gaap:OtherPostretirementBenefitPlansDefinedBenefitMember2022-01-012022-06-300001001838scco:DefinedBenefitPostretirementHealthCarePlanMember2022-01-012022-06-300001001838us-gaap:OtherPostretirementBenefitPlansDefinedBenefitMember2021-01-012021-06-300001001838scco:DefinedBenefitPostretirementHealthCarePlanMember2021-01-012021-06-300001001838us-gaap:OperatingSegmentsMemberscco:PeruvianOperationsMember2022-04-012022-06-300001001838us-gaap:OperatingSegmentsMemberscco:MexicanOpenPitMember2022-04-012022-06-300001001838us-gaap:OperatingSegmentsMemberscco:MexicanIMMSAUnitMember2022-04-012022-06-300001001838scco:CorporateAndEliminationsMember2022-04-012022-06-300001001838us-gaap:OperatingSegmentsMemberscco:PeruvianOperationsMember2022-01-012022-06-300001001838us-gaap:OperatingSegmentsMemberscco:MexicanOpenPitMember2022-01-012022-06-300001001838us-gaap:OperatingSegmentsMemberscco:MexicanIMMSAUnitMember2022-01-012022-06-300001001838scco:CorporateAndEliminationsMember2022-01-012022-06-300001001838us-gaap:OperatingSegmentsMemberscco:PeruvianOperationsMember2021-04-012021-06-300001001838us-gaap:OperatingSegmentsMemberscco:MexicanOpenPitMember2021-04-012021-06-300001001838us-gaap:OperatingSegmentsMemberscco:MexicanIMMSAUnitMember2021-04-012021-06-300001001838scco:CorporateAndEliminationsMember2021-04-012021-06-300001001838us-gaap:OperatingSegmentsMemberscco:PeruvianOperationsMember2021-01-012021-06-300001001838us-gaap:OperatingSegmentsMemberscco:MexicanOpenPitMember2021-01-012021-06-300001001838us-gaap:OperatingSegmentsMemberscco:MexicanIMMSAUnitMember2021-01-012021-06-300001001838scco:CorporateAndEliminationsMember2021-01-012021-06-300001001838us-gaap:SubsequentEventMember2022-07-212022-07-2100010018382022-03-3100010018382021-03-310001001838us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMember2022-06-300001001838us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMember2021-12-310001001838us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:MortgageBackedSecuritiesMember2022-06-300001001838us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:AssetBackedSecuritiesMember2022-06-300001001838us-gaap:EstimateOfFairValueFairValueDisclosureMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:MortgageBackedSecuritiesMember2022-06-300001001838us-gaap:EstimateOfFairValueFairValueDisclosureMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:AssetBackedSecuritiesMember2022-06-300001001838us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:MortgageBackedSecuritiesMember2021-12-310001001838us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:AssetBackedSecuritiesMember2021-12-310001001838us-gaap:EstimateOfFairValueFairValueDisclosureMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:MortgageBackedSecuritiesMember2021-12-310001001838us-gaap:EstimateOfFairValueFairValueDisclosureMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:AssetBackedSecuritiesMember2021-12-310001001838us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMember2022-06-300001001838us-gaap:EstimateOfFairValueFairValueDisclosureMemberus-gaap:FairValueMeasurementsRecurringMember2022-06-300001001838us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMember2021-12-310001001838us-gaap:EstimateOfFairValueFairValueDisclosureMemberus-gaap:FairValueMeasurementsRecurringMember2021-12-310001001838scco:CorporateAndEliminationsMember2022-06-300001001838us-gaap:OperatingSegmentsMemberscco:PeruvianOperationsMember2021-06-300001001838us-gaap:OperatingSegmentsMemberscco:MexicanOpenPitMember2021-06-300001001838us-gaap:OperatingSegmentsMemberscco:MexicanIMMSAUnitMember2021-06-300001001838scco:CorporateAndEliminationsMember2021-06-300001001838country:MX2022-01-012022-03-3100010018382019-01-012019-12-3100010018382021-06-3000010018382020-12-310001001838scco:EmployeeStockPurchase2018PlanMember2021-01-012021-06-300001001838scco:EmployeeStockPurchase2015PlanMember2021-01-012021-06-300001001838us-gaap:OperatingSegmentsMemberscco:PeruvianOperationsMember2022-06-300001001838us-gaap:OperatingSegmentsMemberscco:MexicanOpenPitMember2022-06-300001001838us-gaap:OperatingSegmentsMemberscco:MexicanIMMSAUnitMember2022-06-300001001838us-gaap:OperatingSegmentsMemberscco:PeruvianOperationsMember2021-12-310001001838us-gaap:OperatingSegmentsMemberscco:MexicanOpenPitMember2021-12-310001001838us-gaap:OperatingSegmentsMemberscco:MexicanIMMSAUnitMember2021-12-310001001838scco:MarineTerminalInGuaymasMember2022-01-012022-06-300001001838scco:MarineTerminalInGuaymasMember2019-07-092019-07-090001001838scco:HoldingCompanyMemberus-gaap:TreasuryStockMember2022-04-012022-06-300001001838scco:HoldingCompanyMemberus-gaap:TreasuryStockMember2022-01-012022-06-300001001838scco:HoldingCompanyMemberus-gaap:TreasuryStockMember2021-04-012021-06-300001001838scco:HoldingCompanyMemberus-gaap:TreasuryStockMember2021-01-012021-06-300001001838srt:MinimumMembercountry:PEscco:LaborMattersMember2021-01-012021-12-310001001838srt:MaximumMembercountry:PEscco:LaborMattersMember2021-01-012021-12-310001001838scco:DirectorsStockAwardPlanMember2022-06-300001001838scco:DirectorsStockAwardPlanMember2021-12-310001001838scco:DirectorsStockAwardPlanMember2021-06-300001001838scco:DirectorsStockAwardPlanMember2020-12-310001001838scco:EmployeeStockPurchase2018PlanMember2018-11-012018-11-300001001838scco:EmployeeStockPurchase2015PlanMember2015-01-012015-01-310001001838scco:DirectorsStockAwardPlanMember2022-01-012022-06-300001001838scco:EmployeeStockPurchase2018PlanMember2022-01-012022-06-300001001838scco:EmployeeStockPurchase2015PlanMember2022-01-012022-06-300001001838country:PE2021-01-012021-06-300001001838scco:MichiquillayMemberscco:CopperMembercountry:PE2021-06-300001001838country:MXscco:MexicoGeneradoraDeEnergiaSDeRLMember2022-01-012022-06-300001001838scco:EolicaElRetiroMember2022-01-012022-06-300001001838country:MXscco:MexicoGeneradoraDeEnergiaSDeRLMember2021-01-012021-06-300001001838scco:EolicaElRetiroMember2021-01-012021-06-300001001838scco:SanMartinMembercountry:MX2022-06-300001001838scco:MolybdenumMember2022-06-300001001838scco:CopperMember2022-06-300001001838scco:July2022ThroughSeptember2022Memberscco:MolybdenumMember2022-01-012022-06-300001001838scco:July2022ThroughNovember2022Memberscco:CopperMember2022-01-012022-06-300001001838scco:TiaMariaMembercountry:PE2022-01-012022-06-300001001838scco:ParqueEolicoDeFeniciasS.DeR.l.DeC.vMembercountry:MXscco:PowerPurchaseAgreementMember2020-02-202020-02-200001001838scco:KallpaGeneracionSaMembersrt:MaximumMembercountry:PEscco:PowerPurchaseAgreementMember2016-05-012016-05-310001001838scco:KallpaGeneracionSaMembercountry:PEscco:PowerPurchaseAgreementMember2014-07-012014-07-310001001838scco:ElectroperuSaMembercountry:PEscco:PowerPurchaseAgreementMember2014-06-012014-06-300001001838country:PEscco:LaborMattersMember2022-06-300001001838scco:EolicaElRetiroMember2014-08-040001001838scco:MarineTerminalInGuaymasMember2019-07-192019-07-1900010018382015-12-310001001838scco:New2021GrantMember2022-01-012022-06-300001001838country:MXscco:MexicoGeneradoraDeEnergiaSDeRLMember2012-01-012012-12-310001001838scco:MariaelenaherediabustamanteetalmartineligioortizgamezetalandmariadelosangelesenriquezbacameetalMembercountry:MX2022-01-012022-06-300001001838scco:IloAndCuajoneMember2022-02-282022-02-280001001838scco:DefensaColectivaMember2022-01-012022-06-300001001838scco:AccionesColectivasDeSinaloaMember2022-01-012022-06-300001001838scco:TiaMariaMember2022-01-012022-06-300001001838country:PEscco:LaborMattersMember2022-01-012022-06-300001001838scco:TiaMariaMembercountry:PEscco:EducationalProjectMember2022-01-012022-06-3000010018382015-01-012015-12-310001001838scco:TiaMariaMembercountry:PE2019-07-152019-07-1500010018382015-01-012015-06-300001001838scco:BuenavistaDelCobreSaDeCVMember2018-12-3100010018382017-12-310001001838scco:BuenavistaDelCobreSaDeCVMember2016-12-310001001838scco:BuenavistaDelCobreSaDeCVMember2015-12-310001001838scco:NorbertoBustamanteEtAlMember2018-01-012018-12-310001001838scco:MariaelenaherediabustamanteetalmartineligioortizgamezetalandmariadelosangelesenriquezbacameetalMember2016-07-012016-09-300001001838scco:FranciscaGarciaEnriquezMember2015-01-012015-12-310001001838scco:July2022ThroughSeptember2022Memberscco:MolybdenumMember2022-06-300001001838scco:July2022ThroughNovember2022Memberscco:CopperMember2022-06-300001001838country:MX2022-01-012022-06-300001001838country:MX2021-01-012021-06-300001001838scco:ClimateChangeMember2022-01-012022-06-300001001838srt:MinimumMemberscco:ClimateChangeMember2022-01-012022-06-300001001838srt:MaximumMemberscco:ClimateChangeMember2022-01-012022-06-300001001838country:MX2011-01-012011-12-3100010018382019-06-242019-06-240001001838scco:SulfuricAcidMember2022-01-012022-06-300001001838scco:MolybdenumConcentratesMember2022-01-012022-06-300001001838scco:CopperConcentratesMember2022-01-012022-06-300001001838scco:CopperCathodesMember2022-01-012022-06-300001001838srt:MinimumMember2022-01-012022-06-300001001838srt:MaximumMember2022-01-012022-06-300001001838scco:MichiquillayMember2022-06-300001001838scco:MichiquillayMember2022-06-012022-06-300001001838scco:IloAndCuajoneMember2022-01-012022-06-300001001838scco:IloAndCuajoneMemberscco:MolybdenumMember2022-06-300001001838scco:IloAndCuajoneMemberscco:CopperMember2022-06-300001001838srt:MaximumMemberscco:OperadoraDeCinemasSDeCVMember2021-12-310001001838scco:GrupoMexicoSABDeCVAndAffiliatesMember2022-01-012022-06-300001001838scco:GrupoMexicoSABDeCVAndAffiliatesMember2021-01-012021-06-300001001838srt:NaturalGasPerThousandCubicFeetMemberus-gaap:SwapMemberus-gaap:DesignatedAsHedgingInstrumentMember2022-01-012022-03-310001001838srt:NaturalGasPerThousandCubicFeetMemberus-gaap:SwapMemberus-gaap:DesignatedAsHedgingInstrumentMember2021-11-012022-03-310001001838srt:NaturalGasPerThousandCubicFeetMemberus-gaap:CallOptionMemberus-gaap:DesignatedAsHedgingInstrumentMember2021-11-012022-03-310001001838srt:NaturalGasPerThousandCubicFeetMemberus-gaap:CallOptionMemberus-gaap:DesignatedAsHedgingInstrumentMember2022-01-012022-03-3100010018382022-04-012022-06-3000010018382021-04-012021-06-3000010018382021-01-012021-06-300001001838scco:MichiquillayMemberscco:CopperMembercountry:PE2021-06-012021-06-300001001838scco:MichiquillayMemberscco:CopperMembercountry:PE2018-06-300001001838scco:IloAndCuajoneMember2022-02-2800010018382021-01-012021-12-310001001838country:PE2022-01-012022-06-300001001838scco:TiaMariaMembercountry:PE2019-07-082019-07-080001001838scco:MichiquillayMemberscco:CopperMembercountry:PE2018-06-012018-06-300001001838scco:TiaMariaMembercountry:PE2022-06-300001001838scco:ToquepalaConcentratorExpansionMembercountry:PEscco:SocialInvestmentForTaxesMember2022-01-012022-06-300001001838scco:ToquepalaConcentratorExpansionMembercountry:PEscco:StudyOfEngineeringForCollazasDamMember2022-01-012022-06-300001001838scco:ToquepalaConcentratorExpansionMembercountry:PEscco:EducationalProjectMember2022-01-012022-06-300001001838scco:ToquepalaConcentratorExpansionMembercountry:PEscco:ConstructionOfCularjahuiraDamMember2022-01-012022-06-300001001838scco:DevelopmentFundMoqueguaRegionMembercountry:PEscco:WaterTreatmentMember2022-01-012022-06-300001001838scco:DevelopmentFundMoqueguaRegionMembercountry:PEscco:SocialInvestmentForTaxesMember2022-01-012022-06-300001001838scco:DevelopmentFundMoqueguaRegionMembercountry:PEscco:EducationalProjectMember2022-01-012022-06-300001001838scco:ToquepalaConcentratorExpansionMembercountry:PE2022-01-012022-06-300001001838scco:DevelopmentFundMoqueguaRegionMembercountry:PE2022-01-012022-06-300001001838country:PEscco:LaborMattersMember2021-12-310001001838country:PEscco:LaborMattersMember2021-01-012021-12-3100010018382022-06-3000010018382021-12-3100010018382022-07-2700010018382022-01-012022-06-30utr:lbscco:lawsuitscco:categoryscco:complaintscco:communityutr:MWutr:MWhiso4217:MXNxbrli:sharesiso4217:USDxbrli:sharesscco:employeexbrli:sharesutr:m3scco:segmentiso4217:USDscco:itemiso4217:PENutr:Txbrli:purescco:planiso4217:USDscco:itemscco:person

Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended: June 30, 2022

or

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from        to        

Commission File Number: 1-14066

Graphic

SOUTHERN COPPER CORPORATION

(Exact name of registrant as specified in its charter)

Delaware

    

13-3849074

(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification No.)

7310 North 16th St, Suite 135 Phoenix, AZ

85020

(Address of principal executive offices)

(Zip Code)

Registrant’s telephone number, including area code: (602) 264-1375

Securities registered pursuant to Section 12(b) of the Act:

Title of each class:

    

Trading Symbol

    

Name of each exchange on which registered:

Common stock, par value $0.01 per share

SCCO

New York Stock Exchange

Lima Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ⌧ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ⌧ No ◻

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ⌧

As of July 27, 2022 there were outstanding 773,092,469 shares of Southern Copper Corporation common stock, par value $0.01 per share.

Table of Contents

Southern Copper Corporation (“SCC”)

INDEX TO FORM 10-Q

    

    

Page No.

Part I. Financial Information:

Item 1.

Condensed Consolidated Financial Statements (Unaudited)

3

Condensed Consolidated Statements of Earnings for the three and six months ended June 30, 2022 and 2021

3

Condensed Consolidated Statements of Comprehensive Income for the three and six months ended June 30, 2022 and 2021

4

Condensed Consolidated Balance Sheets as of June 30, 2022 and December 31, 2021

5

Condensed Consolidated Statements of Cash Flows for the three and six months ended June 30, 2022 and 2021

6

Condensed Consolidated Statements of Changes in Equity for the three and six months ended June 30, 2022 and 2021

7

Notes to Condensed Consolidated Financial Statements

8-37

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

38-59

Item 3.

Quantitative and Qualitative Disclosure about Market Risk

60-62

Item 4.

Controls and procedures

62

Report of Independent Registered Public Accounting Firm

63

Part II. Other Information:

Item 1.

Legal Proceedings

64

Item 1A.

Risk Factors

64

Item 2.

Unregistered Sale of Equity Securities and Use of Proceeds

65

Item 4.

Mine Safety Disclosures

65

Item 6.

List of Exhibits

66-69

Signatures

70

2

Table of Contents

PART I — FINANCIAL INFORMATION

Item 1. Condensed Consolidated Financial Statements

Southern Copper Corporation

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS

(Unaudited)

    

Three Months Ended

Six Months Ended

June 30, 

June 30, 

2022

2021

    

2022

    

2021

(in millions, except for per share amounts) 

Net sales (including sales to related parties, see note 5)

$

2,306.9

$

2,897.0

$

5,070.7

$

5,429.5

Operating cost and expenses:

Cost of sales (exclusive of depreciation, amortization and depletion shown separately below)

 

1,246.7

 

985.5

 

2,304.4

 

1,929.3

Selling, general and administrative

 

30.9

 

31.4

 

61.2

 

61.6

Depreciation, amortization and depletion

 

209.0

 

195.4

 

405.6

 

396.0

Exploration

 

11.8

 

9.5

 

20.9

 

15.8

Total operating costs and expenses

 

1,498.4

 

1,221.8

 

2,792.1

 

2,402.7

Operating income

 

808.5

 

1,675.2

 

2,278.6

 

3,026.8

Interest expense

 

(96.6)

 

(96.6)

 

(195.1)

 

(193.4)

Capitalized interest

 

11.4

 

7.3

 

22.1

 

14.5

Other income (expense)

 

3.9

 

(8.2)

 

15.7

 

(5.9)

Interest income

 

4.3

 

1.3

 

8.9

 

3.7

Income before income taxes

 

731.5

 

1,579.0

 

2,130.2

 

2,845.7

Income taxes (including royalty taxes, see Note 4)

 

296.4

 

647.7

 

908.5

 

1,155.2

Net income before equity earnings of affiliate

 

435.1

 

931.3

 

1,221.7

 

1,690.5

Equity earnings (loss) of affiliate, net of income tax

 

(0.9)

 

5.1

 

0.4

 

13.1

Net income

 

434.2

 

936.4

 

1,222.1

 

1,703.6

Less: Net income attributable to the non-controlling interest

 

1.9

 

3.7

5.0

 

7.0

Net income attributable to SCC

$

432.3

$

932.7

$

1,217.1

$

1,696.6

Per common share amounts attributable to SCC:

Net earnings-basic and diluted

$

0.56

$

1.21

$

1.57

$

2.19

Weighted average shares outstanding-basic and diluted

 

773.1

 

773.1

 

773.1

 

773.1

The accompanying notes are an integral part of these condensed consolidated financial statements.

3

Table of Contents

Southern Copper Corporation

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

    

Three Months Ended

Six Months Ended

June 30, 

June 30, 

    

2022

    

2021

    

2022

    

2021

(in millions)

COMPREHENSIVE INCOME:

Net income and comprehensive income

$

434.2

$

936.4

$

1,222.1

$

1,703.6

Other comprehensive income (loss) net of tax:

- Unrealized gain (loss) on derivative instruments classified as cash flow hedge (net of income tax of $0.2 million in 2022)

(0.6)

Total other comprehensive income (loss)

 

 

(0.6)

Total comprehensive income

 

434.2

936.4

 

1,221.5

 

1,703.6

Comprehensive income attributable to the non-controlling interest

 

1.9

3.7

5.0

 

7.0

Comprehensive income attributable to SCC

$

432.3

$

932.7

$

1,216.5

$

1,696.6

The accompanying notes are an integral part of these condensed consolidated financial statements.

4

Table of Contents

Southern Copper Corporation

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

June 30, 

December 31, 

    

2022

    

2021

(in millions)

ASSETS

Current assets:

Cash and cash equivalents

$

2,113.1

$

3,002.0

Short-term investments

 

242.6

 

486.9

Accounts receivable trade

 

1,064.6

 

1,358.7

Accounts receivable other (including related parties 2022- $45.9 and 2021 - $49.1)

 

81.8

 

87.9

Inventories

 

1,071.6

 

972.9

Prepaid taxes

376.5

197.7

Other current assets

 

18.6

 

33.5

Total current assets

 

4,968.8

 

6,139.6

Property and mine development, net

 

9,521.8

 

9,464.4

Ore stockpiles on leach pads

 

1,087.7

 

1,097.6

Intangible assets, net

 

135.1

 

138.1

Right-of-use assets

 

883.7

 

916.3

Deferred income tax

 

284.3

 

316.2

Equity method investment

 

115.8

 

115.4

Other non-current assets

 

124.3

 

110.0

Total assets

$

17,121.5

$

18,297.6

LIABILITIES

Current liabilities:

Current portion of long-term debt

$

299.9

$

299.7

Accounts payable (including related parties 2022- $142.1 and 2021- $103.3)

671.5

591.9

Accrued income taxes

 

166.0

 

832.6

Accrued workers’ participation

 

153.5

 

325.7

Accrued interest

 

98.6

 

98.6

Lease liabilities current

75.9

73.9

Other accrued liabilities

 

43.0

 

27.6

Total current liabilities

 

1,508.4

 

2,250.0

Long-term debt

 

6,249.5

 

6,247.9

Lease liabilities

807.8

842.4

Deferred income taxes

 

119.0

 

118.3

Non-current taxes payable

55.4

Other liabilities and reserves

 

78.8

 

68.3

Asset retirement obligation

 

615.6

 

562.9

Total non-current liabilities

 

7,926.1

 

7,839.8

Commitments and contingencies (Note 10)

STOCKHOLDERS’ EQUITY (NOTE 11)

Common stock par value $0.01; shares authorized, 2022 and 2021–2,000; shares issued, 2022 and 2021–884.6

 

8.8

 

8.8

Additional paid-in capital

 

3,472.7

 

3,454.1

Retained earnings

 

7,247.3

 

7,769.7

Accumulated other comprehensive income

 

(10.1)

 

(9.4)

Treasury stock, at cost, common shares

 

(3,091.5)

 

(3,074.0)

Total Southern Copper Corporation stockholders’ equity

 

7,627.2

 

8,149.2

Non-controlling interest

 

59.8

 

58.6

Total equity

 

7,687.0

 

8,207.8

Total liabilities and equity

$

17,121.5

$

18,297.6

The accompanying notes are an integral part of these condensed consolidated financial statements.

5

Table of Contents

Southern Copper Corporation

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

    

Three Months Ended

    

Six Months Ended

    

June 30, 

June 30, 

2022

2021

2022

2021

(in millions)

OPERATING ACTIVITIES

Net income

$

434.2

$

936.4

$

1,222.1

$

1,703.6

Adjustments to reconcile net earnings to net cash provided from operating activities:

Depreciation, amortization and depletion

 

209.0

 

195.4

 

405.6

 

396.0

Equity earnings of affiliate, net of dividends received

 

0.9

 

(5.1)

 

(0.4)

(9.1)

Loss (gain) on foreign currency transaction effect

 

(3.9)

 

6.3

 

51.8

(13.4)

Provision (benefit) for deferred income taxes

 

(11.8)

 

42.1

 

31.9

3.2

Other, net

 

7.8

 

5.2

 

17.4

11.9

Change in operating assets and liabilities:

Decrease (increase) in accounts receivable

 

121.2

 

(203.4)

 

294.1

(366.7)

Decrease (increase) in inventories

 

(47.3)

 

(37.1)

 

(88.8)

1.1

(Decrease) increase in accounts payable and accrued liabilities

 

(218.7)

 

78.5

 

(743.7)

77.2

(Increase) decrease in other operating assets and liabilities

 

(181.5)

 

43.2

 

(59.4)

40.4

Net cash provided by operating activities

 

309.9

 

1,061.5

 

1,130.6

 

1,844.2

INVESTING ACTIVITIES

Capital expenditures

 

(224.6)

 

(219.8)

 

(429.7)

 

(452.4)

Proceeds from (purchase) sale of short-term investments, net

 

163.9

 

(129.9)

 

244.2

 

(135.0)

Other

 

0.1

(10.4)

 

(10.5)

Net cash used in investing activities

 

(60.6)

 

(360.1)

 

(185.5)

 

(597.9)

FINANCING ACTIVITIES

Cash dividends paid to common stockholders

 

(966.4)

 

(541.1)

(1,739.5)

 

(1,005.0)

Other, net

 

(2.0)

 

(1.4)

 

(3.7)

 

(2.7)

Net cash used in financing activities

 

(968.4)

 

(542.5)

 

(1,743.2)

 

(1,007.7)

Effect of exchange rate changes on cash and cash equivalents

 

(15.0)

(31.9)

 

(90.8)

 

(27.9)

(Decrease) increase in cash and cash equivalents

 

(734.1)

 

127.0

 

(888.9)

 

210.7

Cash and cash equivalents, at beginning of period

 

2,847.2

 

2,267.3

 

3,002.0

 

2,183.6

Cash and cash equivalents, at end of period

$

2,113.1

$

2,394.3

$

2,113.1

$

2,394.3

The accompanying notes are an integral part of these condensed consolidated financial statements.

6

Table of Contents

Southern Copper Corporation

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(Unaudited)

    

Three Months Ended

    

Six Months Ended

June 30, 

June 30, 

2022

2021

2022

2021

(in millions)

TOTAL EQUITY, beginning of period

$

8,220.6

$

7,578.3

$

8,207.8

$

7,276.0

STOCKHOLDERS’ EQUITY, beginning of period

 

8,160.7

 

7,525.1

 

8,149.2

 

7,224.8

CAPITAL STOCK:

Balance at beginning and end of period:

 

8.8

 

8.8

 

8.8

 

8.8

ADDITIONAL PAID-IN CAPITAL:

Balance at beginning of period

 

3,468.3

 

3,439.5

 

3,454.1

 

3,441.5

Other activity of the period

 

4.4

 

15.4

 

18.6

 

13.4

Balance at end of period

 

3,472.7

 

3,454.9

 

3,472.7

 

3,454.9

TREASURY STOCK:

Southern Copper common shares

Balance at beginning of the period

 

(2,767.1)

 

(2,767.5)

 

(2,767.2)

 

(2,767.5)

Used for corporate purposes

 

 

0.1

 

0.1

 

0.1

Balance at end of period

 

(2,767.1)

 

(2,767.4)

 

(2,767.1)

 

(2,767.4)

Parent Company common shares

Balance at beginning of period

 

(320.6)

 

(293.7)

 

(306.8)

 

(296.0)

Other activity, including dividend, interest and foreign currency transaction effect

 

(3.8)

 

(14.7)

 

(17.6)

 

(12.4)

Balance at end of period

 

(324.4)

 

(308.4)

 

(324.4)

 

(308.4)

Treasury stock balance at end of period

 

(3,091.5)

 

(3,075.8)

 

(3,091.5)

 

(3,075.8)

RETAINED EARNINGS:

Balance at beginning of period

 

7,781.3

 

7,146.4

 

7,769.7

 

6,846.4

Net earnings

 

432.3

 

932.7

 

1,217.1

 

1,696.6

Dividends declared and paid, common stock, per share, 2022- '$2.25, 2021– '$1.30

 

(966.4)

 

(541.1)

 

(1,739.5)

 

(1,005.0)

Balance at end of period

 

7,247.3

 

7,538.0

 

7,247.3

 

7,538.0

ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS):

Balance at beginning of the period

 

(10.0)

 

(8.4)

 

(9.4)

 

(8.4)

Other comprehensive income (loss)

 

(0.0)

 

 

(0.6)

 

Balance at end of the period

 

(10.0)

 

(8.4)

 

(10.0)

 

(8.4)

STOCKHOLDERS’ EQUITY, end of period

 

7,627.3

 

7,917.5

 

7,627.3

 

7,917.5

NON-CONTROLLING INTEREST, beginning of period

 

59.9

 

53.2

 

58.6

 

51.2

Net earnings

 

1.9

 

3.7

 

5.0

 

7.0

Distributions paid

 

(2.0)

 

(1.6)

 

(3.8)

 

(2.9)

NON-CONTROLLING INTEREST, end of period

 

59.8

 

55.3

 

59.8

 

55.3

TOTAL EQUITY, end of period

$

7,687.0

$

7,972.8

$

7,687.0

$

7,972.8

The accompanying notes are an integral part of these condensed consolidated financial statements.

7

Table of Contents

Southern Copper Corporation

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 1— DESCRIPTION OF THE BUSINESS:

The Company is a majority-owned, indirect subsidiary of Grupo Mexico S.A.B. de C.V. (“Grupo Mexico”). As of June 30, 2022, Grupo Mexico, through its wholly-owned subsidiary Americas Mining Corporation (“AMC”) owned 88.9% of the Company’s capital stock. The condensed consolidated financial statements presented herein consist of the accounts of Southern Copper Corporation (“Southern Copper”, "SCC" or the “Company”), a Delaware corporation, and its subsidiaries. The Company is an integrated producer of copper and other minerals, and operates mining, smelting and refining facilities in Peru and Mexico. The Company conducts its primary operations in Peru through a registered branch (the "Peruvian Branch" or “Branch” or “SPCC Peru Branch”). The Peruvian Branch is not a corporation separate from the Company. The Company's Mexican operations are conducted through subsidiaries. The Company also conducts exploration activities in Argentina, Chile, Ecuador, Mexico and Peru.

In the opinion of the Company, the accompanying unaudited condensed consolidated financial statements contain all adjustments (consisting only of normal recurring adjustments) necessary to fairly state the Company’s financial position as of June 30, 2022 and the results of operations, comprehensive income, cash flows and changes in equity for the three months ended June 30, 2022 and 2021. The results of operations for the three months ended June 30, 2022 are not necessarily indicative of the results to be expected for the full year. The December 31, 2021 balance sheet data was derived from audited financial statements, but does not include all disclosures required by generally accepted accounting principles in the United States of America (“GAAP”). The accompanying condensed consolidated financial statements should be read in conjunction with the consolidated financial statements at December 31, 2021 and notes included in the Company’s 2021 annual report on Form 10-K.

CUAJONE STOPPAGE OF OPERATIONS

On February 28, 2022 a small group of protesters from the community of Tumilaca, Pocata, Coscore and Tala, which have 472 residents in total, seized the facilities at the Viña Blanca water reservoir and cut off the water supply to the homes of the approximately 5,000 people who live in Cuajone. Prior to this illegal action, on February 18, 2022, the railway between Cuajone and Ilo was also blocked by a group of community members. They claim the Company usurped their land and demand compensation of $5.0 billion, in addition to the permanent payment of 5% of net profits.

After several unsuccessful attempts by the authorities to restore order through dialogue, on April 20, 2022, the Peruvian government declared a state of emergency in the Moquegua region. On April 21, 2022, the protesters returned the installations of the Viña Blanca water reservoir and the railway to the Company. The Company’s personnel immediately evaluated the damage caused to the facilities by acts of vandalism and took the necessary steps to resume production at the Cuajone mining unit. On April 25, 2022, the Cuajone mine, concentrator, industrial railroad and related facilities reached full capacity. Based on the 2022 Company operating plan, the total production loss during the stoppage period was 22,208 tonnes of copper content and 485 tonnes of molybdenum, which translates into a reduction in sales of $228 million. The Company also recorded $14.0 million of unabsorbed fixed costs, which directly impacted the cost of sales. To mitigate the impact on sales’ contracts, measures were taken to acquire concentrates from our Mexican Operations and third parties to maintain and adequate supply to the smelter. Despite the force majeure event at Cuajone, the Company was able to fulfill all sales’commitments without delays.

On April 30, 2022, the Peruvian government issued a Ministerial Resolution to set up a three-party-dialogue-table with members of the community, government and Company officials to better understand all parties’ concerns. As of today, nine round-table meetings and three direct meeting with the community have been held. The Company has proposed plans to invest in social programs that address the needs voiced by the communities and has indicated interest in purchasing land near the Cuajone operations to establish a buffer zone to protect installations and production down the line.

8

Table of Contents

NOTE 2 — SHORT-TERM INVESTMENTS:

Short-term investments were as follows (in millions):

At June 30, 

At December 31, 

    

2022

    

2021

Trading securities

$

242.3

$

486.5

Weighted average interest rate

 

2.1

%  

 

0.3

%

Available-for-sale

$

0.3

$

0.4

Weighted average interest rate

 

0.7

%  

 

0.7

%

Total

$

242.6

$

486.9

Trading securities consist of bonds issued by public companies and are publicly traded. Each financial instrument is independent of the others. The Company has the intention to sell these bonds in the short-term.

Available-for-sale investments consist of securities issued by public companies. Each security is independent of the others and as of June 30, 2022 and December 31, 2021, included asset and mortgage backed obligations. As of June 30, 2022 and December 31, 2021, gross unrealized gains and losses on available-for-sale securities were not material.

The Company earned interest related to these investments, which was recorded as interest income in the condensed consolidated statement of earnings. Also, the Company redeemed some of these securities and recognized gains (losses) due to changes in fair value, which were recorded as other income (expense) in the condensed consolidated statement of earnings.

The following table summarizes the activity of these investments by category (in millions):

Three months ended

Six months ended

 

June 30, 

June 30, 

    

2022

    

2021

    

2022

    

2021

 

Trading:

Interest earned

$

1.1

$

0.2

$

1.4

$

0.7

Unrealized gain (loss) at the end of the period

$

(*)  

$

(*)  

$

(*)  

$

(*)  

Available-for-sale:

Interest earned

$

(*)  

$

(*)  

$

(*)  

$

(*)  

Investment redeemed

$

0.1

$

$

0.1

$

0.1

(*) Less than $0.1 million.

NOTE 3 — INVENTORIES:

Inventories were as follows:

At June 30, 

At December 31, 

(in millions)

    

2022

    

2021

Inventory, current:

Metals at average cost:

Finished goods

$

99.5

$

58.6

Work-in-process

 

391.2

 

340.7

Ore stockpiles on leach pads  

254.7

259.7

Supplies at average cost

 

326.2

 

313.9

Total current inventory

$

1,071.6

$

972.9

Inventory, long-term:

Ore stockpiles on leach pads

$

1,087.7

$

1,097.6

9

Table of Contents

During the six months ended June 30, 2022 and 2021, total leaching costs capitalized as non-current inventory of ore stockpiles on leach pads amounted to $129.2 million and $118.8 million, respectively. Leaching inventories recognized in cost of sales amounted to $144.1 million and $133.8 million for the six months ended June 30, 2022 and 2021, respectively.

NOTE 4 — INCOME TAXES:

The income tax provision and the effective income tax rate for the first six months of 2022 and 2021 consisted of (in millions):

    

2022

    

2021

Statutory income tax provision

$

752.9

$

956.4

Peruvian royalty

 

26.5

 

38.9

Mexican royalty

 

87.4

 

107.9

Peruvian special mining tax

 

41.7

 

52.0

Total income tax provision

$

908.5

$

1,155.2

Effective income tax rate

42.6

%

40.6

%

These provisions include income taxes for Peru, Mexico and the United States. The Mexican royalty, the Peruvian royalty and the Peruvian special mining tax are included in the income tax provision. The increase in the effective income tax rate in 2022 compared to the same period in 2021 was primarily attributable to the fact that the Company registered uncertain tax provisions in the Peruvian jurisdiction.

Peruvian royalty and special mining tax: The Company has accrued $68.2 million and $90.9 million of royalty charge and special mining tax as part of the income tax provision for the first six months of 2022 and 2021, respectively.

Mexican mining royalty: The Company has accrued $87.4 million and $107.9 million of royalty taxes as part of the income tax provision for the first six months of 2022 and 2021, respectively.

Accounting for uncertainty in income taxes: In the first six months of 2022, the company received a refund and recorded a current liability and non-current liability for the Peruvian jurisdiction that increased the tax expense by approximately $33.1 million.

Tax Law Changes:

On December 28, 2021, the U.S. Treasury and the IRS released final regulations addressing various aspects of the foreign tax credit regime. The regulations apply to years beginning after December 28, 2021 and they are not expected to have a material impact on the Company’s financial statements.

NOTE 5 — RELATED PARTY TRANSACTIONS:

The Company has entered into certain transactions in the ordinary course of business with parties that are controlling shareholders or their affiliates. These transactions include the lease of office space, air and railroad transportation, construction services, energy supply, and other products and services related to mining and refining. The Company lends and borrows funds among affiliates for acquisitions and other corporate purposes. These financial transactions bear interest and are subject to review and approval by senior management, as are all related party transactions. Article Nine of the Amended and Restated Certificate of Incorporation of the Company prohibits the Company from engaging in a Material Affiliate Transaction that was not the subject of prior review by a committee of the Board of Directors with at least three members, each of whom is independent, and defines a Material Affiliate Transaction as a transaction or series of related transactions between Grupo Mexico or one of its affiliates (other than the Company or its subsidiaries), on the one hand, and the Company or one of its subsidiaries, on the other hand, that involves consideration of more than $10.0 million in the aggregate.

10

Table of Contents

It is the Company’s policy that (i) a Material Affiliate Transaction not be entered into or continued without the review and approval by the Audit Committee or its subcommittee of related party transactions comprised of independent directors,(ii) any potential related party transaction process with aggregate consideration between $8.0 million and $10.0 million be authorized by the General Counsel and Chief Financial Officer of the Company and (iii) that all related party transactions, including any Material Affiliate Transaction, be reported to the Audit Committee of the Board of Directors or to its subcommittee of related party transactions.

Receivable and payable balances with related parties are shown below (in millions):

At June 30, 

At December 31, 

    

2022

    

2021

Related parties receivable current:

Grupo Mexico and affiliates:

Asarco LLC

$

7.2

$

10.0

Americas Mining Corporation (“AMC”)

0.1

Compania Perforadora Mexico S.A.P.I. de C.V. and affiliates

 

0.3

 

0.3

Mexico Generadora de Energia S. de R.L. ("MGE")

37.8

38.4

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

0.2

0.2

Related to the controlling group:

Boutique Bowling de Mexico, S.A. de C.V.

0.1

0.1

Mexico Transportes Aereos, S.A. de C.V. ("Mextransport")

0.2

Operadora de Cinemas, S.A. de C.V.

0.1

(*)

$

45.9

$

49.1

Related parties payable:

Grupo Mexico and affiliates:

AMMINCO Apoyo Administrativo, S.A. de C.V. (“AMMINCO”)

$

6.5

$

9.5

Asarco LLC

25.5

14.9

Eolica El Retiro, S.A.P.I. de C.V.

 

1.2

 

2.7

Ferrocarril Mexicano, S.A. de C.V.

 

16.8

 

4.0

Grupo Mexico Servicios

16.1

11.1

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

1.4

0.9

MGE

69.8

57.2

Mexico Compania Constructora S.A de C.V.

4.0

2.0

Related to the controlling group:

Boutique Bowling de Mexico, S.A. de C.V.

 

0.2

 

0.3

Mextransport

 

0.5

 

0.5

Operadora de Cinemas, S.A. de C.V.

0.1

0.2

$

142.1

$

103.3

(*) Less than $0.1 million.

11

Table of Contents

Purchase and sale activity:

Grupo Mexico and affiliates:

The following table summarizes the purchase and sale activities with Grupo Mexico and its affiliates in the first six months of 2022 and 2021 (in millions):

    

2022

    

2021

Purchase activity

Asarco LLC

$

22.9

$

10.2

Eolica El Retiro, S.A.P.I. de C.V.

 

2.1

 

0.6

Ferrocarril Mexicano, S.A. de C.V.

 

17.0

 

21.6

Controladora de Infraestructura Energetica S.A. de C.V.

0.8

Grupo Mexico Servicios

10.0

14.3

AMMINCO

4.5

Intermodal Mexico S.A. de C.V.

0.5

MGE

 

156.5

 

140.9

Mexico Proyectos y Desarrollos S.A. de C.V. and affiliates

 

23.7

 

31.4

Peru Mining Exploration & Development Company

0.4

Total purchases

$

237.5

$

219.9

Sales activity

Asarco LLC

$

20.3

$

14.7

MGE

79.1

61.1

Total sales

$

99.4

$

75.8

Grupo Mexico, the parent and the majority indirect stockholder of the Company, and its affiliates provide various services to the Company. These services are primarily related to accounting, legal, tax, financial, treasury, human resources, price risk assessment and hedging, purchasing, procurement and logistics, sales and administrative and other support services. The Company pays AMMINCO and Grupo Mexico Servicios, subsidiaries of Grupo Mexico, for these services and expects to continue requiring these services in the future.

In the first six months of 2022, the Company did not make donations to Fundacion Grupo Mexico, A.C., an organization dedicated to promoting the social and economic development of the communities close to the Company’s Mexican operations. In the same period of 2021, the Company made donations of $0.8 million to this organization.

The Company’s Mexican operations paid fees for freight services provided by Ferrocarril Mexicano, S.A de C.V., which is a subsidiary of Grupo Mexico. Additionally, the Company´s Mexican operations paid fees for specialized technical and environmental services to obtain the energy license for El Arco project provided by Controladora de Infraestructura energetica S.A. de C.V., a subsidiary of Infraestructura y transportes Mexico S.A. de C.V., which is a subsidiary of Grupo Mexico.

The Company´s Peruvian and Mexican operations paid fees for engineering services provided by Grupo Mexico Servicios de Ingenieria, S.A. de C.V., and the Company’s Mexican operations paid fees for construction services provided by Mexico Compania Constructora S.A. de C.V. Both companies are subsidiaries of Mexico Proyectos y Desarrollos, S.A. de C.V., which is a subsidiary of Grupo Mexico.

The Company’s Mexican operations purchased copper concentrates and rod from Asarco LLC and also paid fees for tolling services, as well as reimbursement of freight fees. Additionally, the Company´s Mexican operations purchased power from MGE. Both companies are subsidiaries of Grupo Mexico.

In 2012, the Company signed a power purchase agreement with MGE, whereby MGE will supply some of the Company’s Mexican operations with power through 2032. MGE has two natural gas-fired combined cycle power generating units, with a net total capacity of 516.2 megawatts and has been supplying power to the Company since December 2013. Currently, MGE is supplying 0.7% of its power output to third-party energy users, compared to 2.5% as of June 30, 2021.

12

Table of Contents

In 2014, Mexico Generadora de Energia Eolica, S. de R.L. de C.V, an indirect subsidiary of Grupo Mexico, located in Oaxaca, Mexico, acquired Eolica el Retiro. Eolica el Retiro is a windfarm with 37 wind turbines. This company started operations in January 2014 and began to sell power to Industrial Minera Mexico, S.A. de C.V. and subsidiaries (IMMSA) and other subsidiaries of Grupo Mexico in the third quarter of 2014. Currently, Eolica el Retiro supplies approximately 39.6% of its power output to IMMSA and Mexcobre, compared to 16.6% as of June 30, 2021.

The Company sold copper concentrate, lime and sulfuric acid to Asarco LLC. The Company also received fees for natural gas and services provided to MGE, a subsidiary of Grupo Mexico.

Companies with relationships to the controlling group:

The following table summarizes the purchase and sales activities with other Larrea family companies in the first six months of 2022 and 2021 (in millions):

    

2022

    

2021

Purchase activity

Boutique Bowling de Mexico S.A. de C.V.

$

0.2

$

0.2

Mextransport

1.1

0.7

Operadora de Cinemas S.A. de C.V.

0.1

0.1

Total purchases

$

1.4

$

1.0

Sales activity

Boutique Bowling de Mexico S.A. de C.V.

$

(*)

$

(*)

Mextransport

0.9

0.9

Operadora de Cinemas S.A. de C.V.

(*)

(*)

Total sales

$

0.9

$

0.9

(*) amount is lower than $0.1 million

The Larrea family controls a majority of the capital stock of Grupo Mexico and has extensive interests in other businesses, including transportation, real estate and entertainment. The Company engages in certain transactions in the ordinary course of business with other entities controlled by the Larrea family relating to the lease of office space, air transportation and entertainment.

The Company’s Mexican operations paid fees for entertainment services provided by Boutique Bowling de Mexico, S.A de C.V. and Operadora de Cinemas, S.A. de C.V. Both companies are controlled by the Larrea family. Mextransport provides aviation services to the Company´s Mexican operations. This is a company controlled by the Larrea family.

In addition, the Company received fees for building rental and maintenance provided to Boutique Bowling de Mexico, S.A. de C.V. and Operadora de Cinemas, S.A. de C.V. The Company´s Mexican operations received fees from Mextransport for reimbursement of maintenance expenses and for rental services.

Equity Investment in Affiliate: The Company has a 44.2% participation in Compania Minera Coimolache S.A. (“Coimolache”), which it accounts for on the equity method. Coimolache owns Tantahuatay, a gold mine located in the northern part of Peru.

In addition, the Company has a 30.0% participation in Apu Coropuna S.R.L. (“Apu Coropuna”), which it accounts for on the equity method. Apu Coropuna is a company that performs exploration activities in the Pucay prospect, located in Arequipa, Peru.

It is anticipated that in the future the Company will enter into similar transactions with these same parties.

13

Table of Contents

NOTE 6 — DERIVATIVE INSTRUMENTS:

From time to time, the Company uses derivative instruments to manage its cash flows exposure to changes in commodity prices. The Company does not enter into derivative contracts unless it anticipates that the possibility exists that future activity will expose the Company’s future cash flows to deterioration. Derivative contracts for commodities are entered into to manage the price risk associated with forecasted purchases of the commodities that the Company uses in its manufacturing process.

Cash Flow Hedges of Natural Gas

The Company’s objective in using natural gas derivatives is to protect the stability of natural gas costs and manage exposure to natural gas price increases. To protect natural gas costs from estimated price increases in the past winter season, the Company acquired two derivative instruments that began in November 2021 and ended in March 2022.

Derivative instruments and its effects as of March 31, 2022, were as follows:

Derivatives designated as hedging instruments under ASC 815

Call Option

Financial Swap Cash Settlement

Commodity contracts

Natural gas

Natural gas

Gas volume (MMBTUs)

5,285,000

5,285,000

Hedge premium ($per MMBTU)

0.55

-

Reference price (swap: $per MMBTU))

Prior month average IFREC price

3.75

Hedge

Daily fluctuation range

Monthly average price

1Q 2022

November 2021 - March 2022

1Q 2022

November 2021 - March 2022

Cost (million $)

(1.7)

(2.9)

-

-

Profit (million $)

0.5

0.5

1.7

4.7

Net favorable/unfavorable effect (million $)

(1.2)

(2.4)

1.7

4.7

1Q 2022

November 2021 - March 2022

Combined profit (million $)

0.5

2.3

The Company assessed these derivative instruments as Cash Flow Hedges. As such, the effective portions of said hedges were initially reported in Other Comprehensive Income (OCI) and were reclassified as earnings in the same line item associated with the forecasted transaction and in the same period or periods during which the hedged transaction affected earnings. The Company did not identify any ineffective portions of these derivatives.

As of June 30, 2022 and the same period of 2021, the Company did not hold any derivative instruments.

NOTE 7 — LEASES:

The Company has operating leases for power generating facilities, vehicles and properties. The Company recognizes leasing expenses for these leases on a straight-line basis over the lease term. Some of the Company’s leases include both lease and non-lease components which are accounted for separately. The Company’s leases have remaining lease terms of one year to 11 years, and do not include options to extend the leases. The Company’s lease agreements do not contain options to purchase the leased assets or to terminate the leases before the expiration date. In addition, the Company’s lease contracts have no material residual value guarantees or material restrictive covenants. As none of the Company’s leases stipulates an implicit rate, the Company uses its incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments.

The weighted average remaining lease term for the Company’s leases is eight years, and the weighted average discount rate for these leases is 3.77%.

14

Table of Contents

The operating lease expense recognized in the first six months of 2022 and 2021 was classified as follows (in millions):

Classification

    

2022

 

2021

Cost of sales (exclusive of depreciation, amortization and depletion)

 

$

57.6

$

57.2

Selling, general and administrative

 

0.1

 

0.1

Exploration

 

0.1

 

0.1

Total lease expense

 

$

57.8

$

57.4

Maturities of lease liabilities are as follows:

Lease liabilities

Year

    

(in millions)

2022

 

$

57.7

2023

 

114.4

2024

 

106.5

2025

 

105.4

2026

 

105.2

After 2026

 

624.4

Total lease payments

 

$

1,113.6

Less: interest on lease liabilities

 

(229.9)

Present value of lease payments

 

$

883.7

NOTE 8 — ASSET RETIREMENT OBLIGATION:

Peruvian operations:

The Company maintains an asset retirement obligation for its mining properties in Peru, as required by the Peruvian Mine Closure Law. In accordance with the requirements of this law, the Company’s closure plans were approved by the Peruvian Ministry of Energy and Mines (“MINEM”). As part of the closure plans, the Company is required to provide annual guarantees over the estimated life of the mines, based on a present value approach, and to furnish the funds for the asset retirement obligation. This law requires a review of closing plans every five years.

On June 24, 2019, MINEM approved a change to the guarantees required for the mining closure plans. The new regulation specifies that annual guarantees can be secured with real estate up to a maximum of 50% and the remaining amount with credit instruments. Currently, the Company has pledged the value of its Lima office complex for the 50% of the guarantee and with a stand-by letter of credit for the other 50% as a security for this obligation.Through January 2022, the Company has provided total guarantees of $66.3 million.

On July 20, 2021, the Peruvian Government published Law 31347, which requires companies in the production stage to

set aside additional guarantees for progressive closure of its operations. The resources that back these guarantees will be

returned to the Company when activities cease and the regulatory agency verifies that all closure measures have been

satisfactorily completed. Under this Law, companies must include activities for environmental remediation within the

closure schedule and assume costs associated with environmental impacts that are identified during audits. As of June

30, 2022, the regulation attached to this Law had yet to be published. The Company is currently evaluating the possible

financial impact of the Law but cannot fully estimate the magnitude until the Law’s regulation is published.

The closure cost recognized for this liability includes the cost, as outlined in its closure plans, of dismantling the Toquepala and Cuajone concentrators, the Ilo smelter and refinery, and the shops and auxiliary facilities at the three units. In March 2016, MINEM approved the Mining Closure Plan for the Toquepala expansion project and the revised closure plans for the Cuajone mine and the Ilo facilities were approved in January and October 2019, respectively. Based on these new estimates, the Company increased the asset retirement obligation by $28.1 million in 2019. The closure plan for the Tia Maria project was approved in February 2017. However, the Company has not recorded a retirement obligation for the Tia Maria project because work on the project is still on hold.

15

Table of Contents

The Company believes that under these circumstances, the recording of a retirement obligation is not appropriate.

Mexican operations:

The Company has recognized an estimated asset retirement obligation for its mining properties in Mexico as part of its environmental commitment. Even though there is currently no enacted law, statute, ordinance, written or oral contract requiring the Company to carry out mine closure and environmental remediation activities, the Company believes that a constructive obligation presently exists based on the remediation requirements caused by the closure of any facility. The overall cost recognized for mining closure in Mexico includes the estimated costs of dismantling concentrators, smelter and refinery plants, shops and other facilities.

In the first quarter of 2022, the Company adjusted its estimate for the asset retirement obligation for its Mexican operations following a detailed review of the closing activities required. The effect was an increase in the asset retirement obligation to the order of $43.3 million.

The following table summarizes the asset retirement obligation activity for the first six months of 2022 and 2021 (in millions):

    

2022

    

2021

Balance as of January 1

$

562.9

$

545.0

Changes in estimates

 

43.3

 

Closure payments

 

(3.6)

 

(1.9)

Accretion expense

 

13.0

 

12.2

Balance as of June 30, 

$

615.6

$

555.3

NOTE 9 — BENEFIT PLANS:

Post retirement defined benefit plans:

The Company has two non-contributory defined benefit pension plans to cover former salaried employees in the United States and certain former expatriate employees in Peru. Effective October 31, 2000, the Board of Directors amended the qualified pension plan to suspend the accrual of benefits.

In addition, the Company’s Mexican subsidiaries have a defined contribution pension plan for salaried employees and a non-contributory defined benefit pension plan for union employees.

The components of net periodic benefit costs for the first six months of 2022 and 2021 are as follows (in millions):

(in millions)

    

2022

    

2021

Service cost

$

0.9

$

0.7

Interest cost

 

1.1

 

0.7

Expected return on plan assets

 

(1.9)

 

(1.7)

Amortization of prior service cost / (credit)

 

0.1

 

0.1

Amortization of net loss/(gain)

 

0.3

 

0.1

Net periodic benefit cost

$

0.5

$

(0.1)

Post-retirement health care plans:

United States: The Company adopted a post-retirement health care plan for retired salaried employees eligible for Medicare in 1996. The Company manages the plan and is currently providing health benefits to retirees. The plan is accounted for in accordance with ASC 715 “Compensation retirement benefits”. As of December 31, 2021, because there has been a significant reduction in participants and in the amount of liability, the Company considered that this plan was not material enough to run a valuation.

16

Table of Contents

In Mexico, health services are provided by the Mexican Social Security Institute.

The components of net periodic benefit cost for the first six months of 2022 and 2021 are as follows (in millions):

(in millions)

    

2022

    

2021

Interest cost

$

0.8

$

0.8

Amortization of net loss (gain)

 

0.1

 

0.1

Amortization of prior service cost/ (credit)

 

(*)

 

(*)

Net periodic benefit cost

$

0.9

$

0.9

NOTE 10 — COMMITMENTS 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 the implementation of scrubbing technology in the mines to reduce dust emissions, among others.

Environmental capital investments in the first six months of 2022 and 2021 were as follows (in millions):

    

2022

    

2021

Peruvian operations

$

2.9

$

0.7

Mexican operations

 

27.2

 

21.8

$

30.1

$

22.5

Peruvian operations: The Company’s operations are subject to applicable Peruvian environmental laws and regulations. The Peruvian government, through the Ministry of Environment (“MINAM”) conducts annual audits of the Company’s Peruvian mining and metallurgical operations. Through these environmental audits, matters related to environmental obligations, compliance with legal requirements, atmospheric emissions, effluent monitoring and waste management are reviewed. The Company believes that it is in material compliance with applicable Peruvian environmental laws and regulations. Peruvian law requires that companies in the mining industry provide assurances for future mine closure and remediation. In accordance with the requirements of this law, the Company’s closure plans were approved by MINEM. See Note 8 “Asset retirement obligation” for further discussion of this matter.

Air Quality Standards (“AQS”): In June 2017, MINAM enacted a supreme decree that defined new AQS for daily sulfur dioxide in the air. As of June 30, 2022, the Company maintains a daily average level of µg/m3 of SO2, lower than those required by the new AQS.

Soil Environmental Quality Standards (“SQS”): In 2013, the Peruvian government enacted Soil Quality Standards. In accordance with the regulatory requirements of the law, the Company prepared Soil Decontamination Plans (“SDP”) for environmentally impacted sites at each of its operation units (Toquepala, Cuajone and Ilo) with the assistance of consulting companies. The 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, establishing a Climate Change

Framework. This law establishes that it is in the national interest to promote public and private investments in climate change management. The law proposes creating an institutional framework to address climate change in Peru, and outlines new measures, particularly with respect to climate change mitigation. For example, it includes provisions addressing an increase in carbon capture and use of carbon sinks, afforestation and reforestation practices; land use changes; and sustainable systems of transportation, solid waste management, and energy systems. This is the first Latin American climate change framework law to incorporate obligations from the Paris Agreement. Regulations to this law were enacted by Supreme Decree 013-2019 published on December 31, 2019, and are applicable to all Peruvian institutions and agencies.

17

Table of Contents

It is expected that further Peruvian regulations will be applicable to non-governmental entities. However, no carbon pricing mechanism is currently applicable to the Company’s operations in Peru.

Mexican operations: The Company’s operations are subject to applicable Mexican federal, state and municipal environmental laws, to Mexican official standards, and to regulations for the protection of the environment, including regulations relating to water supply, water quality, air quality, noise levels and hazardous and solid waste.

The principal legislation applicable to the Company’s Mexican operations is the Federal General Law of Ecological Balance and Environmental Protection (the “General Law”), which is enforced by the Federal Bureau of Environmental Protection (“PROFEPA”). PROFEPA monitors compliance with environmental legislation and enforces Mexican environmental laws, regulations and official standards. It may also initiate administrative proceedings against companies that violate environmental laws, which in the most extreme cases may result in the temporary or permanent shutdown of non-complying facilities, the revocation of operating licenses and/or other sanctions or fines.

In 2011, the General Law was amended to provide an individual or entity the ability to challenge administrative acts, including environmental authorizations, permits or concessions granted, without the need to demonstrate the actual existence of harm to the environment as long as it can be argued that the harm may be caused. 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 may be considered sufficient to prove a “legitimate interest” to file civil actions for injuries arising out of alleged violations of environmental, consumer protection, financial services and economic competition laws. The group can seek restitution or economic compensation for the alleged injuries or suspension of the activities which allegedly caused the injuries in question. The amendments to the CFPC may result in more litigation, with plaintiffs seeking remedies, including suspension of the activities alleged to cause harm.

In 2013, the Environmental Liability Federal Law was enacted. This law establishes general guidelines for actions to be considered likely to cause environmental harm. If a possible determination regarding harm occurs, environmental clean-up and remedial actions sufficient to restore environment to a pre-existing condition should be taken. If restoration is not possible, compensation measures must be provided. Criminal penalties and monetary fines may be imposed under this law.

On February 2019, the Mexican Supreme Court confirmed the constitutionality of an ecological tax on extractive activities conducted in the state of Zacatecas, which taxes environmental remediation actions, emissions of certain gases to the atmosphere, emissions of polluting substances to the soil or water, and waste storage within the state. The Company has determined that this new environmental regulation will have no impact on its financial position.

Guaymas sulfuric acid spill: On July 9, 2019, there was an incident at the Company´s Marine Terminal in Guaymas, Sonora, that caused the discharge of approximately three cubic meters of sulfuric acid into the sea in the industrial port area.

The Guaymas bay has an estimated water volume of 340 million cubic meters. The spill, upon entering in contact with the sea’s alkaline conditions, led to quick dilution of the discharge. Thus, the sulfuric acid was naturally and immediately neutralized. As a result, the discharge was considered harmless; the report from the Ministry of Navy found that neither the flora nor fauna of the port area were affected.

On July 10, 2019, PROFEPA made a first inspection of the area, concluding that the Company executed all the appropiate procedures in order to contain the discharge, and no reference was made to the existence of negative impacts on the environment resulting from the incident.

On Friday, July 19, 2019, PROFEPA revisited the facilities to carry out a second inspection and declared a partial temporary shutdown that only affected the storage process and transportation of sulfuric acid at the terminal, arguing the absence of an authorization of environmental impact. It is important to note that these facilities have been in operation since 1979, prior to the 1988 Mexican General Law of Ecological Balance and the Protection of the Environment. Companies that were operating before the aforementioned law are exempt from the permit requirement. In addition, in 2009, PROFEPA awarded a certification of “Clean Industry and Environmental Quality” to the facility which was subsequently renewed four times (for a two-year period each time).

18

Table of Contents

The Company filed a lawsuit against the closure, which was dismissed by a ruling on August 25, 2021. This ruling has been challenged through a motion to reopen the case, which was submitted on September 28, 2021. On January 4, 2022, the challenge was resolved. The authority imposed two fines and ruled that the temporary closure would remain in place until the environmental impact statement is obtained. The Company intends to appeal this ruling

The Company is not aware of the reasons or causes for this partial and temporary closure, but will continue working with the environmental authorities to provide assurance that the operation is in strict compliance with environmental regulations. The Company expects the environmental authorities to suspend the partial temporary shutdown, once their concerns are resolved. Currently, the Company does not expect any impact on its operations. As of June 30, 2022, the matter is pending resolution.

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 $2.5/tCO2 to $12.5/tCO2, approximately. These refer to regional taxes applicable in the States of Baja California and Zacatecas, as well as a federal tax linked to Mexico’s carbon market system which is currently in its pilot phase. The requirements associated with this scheme are currently applicable only to two business units, the metallurgic and lime plants in Sonora, which generate annual GHG emissions levels above the threshold of 100,000 tCO2e per year contemplated by the scheme. These business units are required to report and verify their emissions once a year with average costs of less than $6,000 per unit. Units that emit more than 25,000 tonnes CO2 equivalent per year (all our Mexican units) are required to report their emissions to the National Emissions Registry (RENE) every year and to verify the reported emissions every three years. As a result, the Company’s total annual compliance costs related to climate change regulations in Mexico were not material to the Company.

The Company has also been participating in Mexico’s “GHG Program” since its inception in 2005, which is a voluntary initiative for the registry and reporting of greenhouse gases emissions.

The Company believes that all of its facilities in Peru and Mexico are in material compliance with environmental, mining and other applicable laws and regulations. The Company also believes that continued compliance with environmental laws of Mexico and Peru will have no material adverse effects on the Company’s business, properties, or operating results.

Litigation matters:

Peruvian operations:

The Tia Maria Mining Project

There are five lawsuits filed against the Peruvian Branch of the Company related to the Tia Maria project. The lawsuits seek (i) to declare null and void the resolution that approved the Environmental Impact Assessment of the project; (ii) the cancellation of the project and the withdrawal of mining activities in the area; (iii) to declare null and void the mining concession application for the Tia Maria project; and (iv) to declare null and void the resolution that approved the construction license. The lawsuits were filed by Messrs. Jorge Isaac del Carpio Lazo (filed May 22, 2015 – the judgment ruled in favor of SPCC), Ernesto Mendoza Padilla (filed May 26, 2015), Juan Alberto Guillen Lopez (filed June 18, 2015), Junta de Usuarios del Valle del Tambo (filed April 30, 2015), and Gobierno Regional de Arequipa (filed December 16, 2019).

The Mendoza Padilla case was initially rejected by the lower court on July 8, 2015. This ruling was confirmed by the Superior Court on June 14, 2016. On July 12, 2016, the case was appealed before the Constitutional Court. On November 20, 2018, the Constitutional Court reversed the previous decisions and remanded the case to the lower court for further action. In the third quarter of 2020, the Company was notified that the complaint had been reinstated. The Company answered the complaint on September 15, 2020. On December 2, 2020, the lower court issued a resolution, considering the complaint answered.

19

Table of Contents

On September 27, 2021, the Court ordered to temporarily archive the case. As of June 30, 2022, the case remains pending resolution.

The Guillen Lopez case is currently before the lower court. Oral arguments took place on July 19, 2019,. On January 7, 2020, the Judge decided to suspend the proceeding until the del Carpio Lazo case is concluded. On March 3, 2022, SCC’s Peruvian Branch informed the Court that the del Carpio Lazo case had concluded. As of June 30, 2022, the case remains pending resolution.

The Junta de Usuarios del Valle del Tambo case is currently before the lower court. In May 2016, the Company was included in the process, after the Ministry of Energy and Mines filed a civil complaint. On March 6, 2019, the Company was formally notified of the lawsuit and answered the complaint on March 20, 2019. On July 8, 2019, the Company requested the suspension of the proceeding until the del Carpio Lazo case is concluded. On March 3, 2022, SCC’s Peruvian Branch informed the Court that the del Carpio Lazo case had concluded. As of June 30, 2022, the case remains pending resolution.

The Gobierno Regional de Arequipa case is currently before the lower court. The Company answered the complaint on September 15, 2020. On February 8, 2021, the Judge decided to suspend the proceeding until the del Carpio Lazo case is concluded. On March 24, 2022, SCC’s Peruvian Branch informed the Court that the del Carpio Lazo case had concluded. As of June 30, 2022, the case remains pending resolution.

The Company asserts that these lawsuits are without merit and is vigorously defending against them. The potential contingency amount for these cases cannot be reasonably estimated by management at this time.

Special Regional Pasto Grande Project (“Pasto Grande Project”)

In 2012, the Pasto Grande Project, an entity of the Regional Government of Moquegua, filed a lawsuit against SCC’s Peruvian Branch alleging property rights over a certain area used by the Peruvian Branch and seeking the demolition of the tailings dam where SCC’s Peruvian Branch has deposited its tailings from the Toquepala and Cuajone operations since 1995. The Peruvian Branch has had title to use the area in question since 1960 and has, since 1995, constructed and operated the tailings dams with proper governmental authorization. Following a motion filed by the Peruvian Branch, the lower court included MINEM as a defendant in this lawsuit. MINEM has answered the complaint and denied the validity of the claim. As of June 30, 2022, the case was pending resolution without further developments.

SCC’s Peruvian Branch asserts that the lawsuit is without merit and is vigorously defending against it. The amount of this contingency cannot be reasonably estimated by management at this time.

Mexican operations:

The Accidental Spill at Buenavista Mine of 2014

In relation to the 2014 accidental spill of copper sulfate solution at a leaching pond in the Buenavista mine, the following legal procedures are pending against the Company:

On August 19, 2014, PROFEPA, as part of the administrative proceeding initiated after the spill, announced the filing of a criminal complaint against Buenavista del Cobre S.A. de C.V. (“BVC”), a subsidiary of the Company, in order to determine those responsible for environmental damages. During the second quarter of 2018, the criminal complaint was dismissed. This decision was appealed and was pending resolution as of June 30, 2022.

Through the first half of 2015, six collective action lawsuits were filed in federal courts in Mexico City and Sonora against two subsidiaries of the Company seeking economic compensation, clean up and remedial activities in order to restore the environment to its pre-existing conditions. Three of the collective action lawsuits have been dismissed by the court. As of June 30, 2022, three lawsuits are still pending: two were filed by Acciones Colectivas de Sinaloa, A.C. and one by Defensa Colectiva, A.C., requesting precautionary measures in the construction of facilities to monitoring public health services and prohibiting the closure of the Rio Sonora Trust.

20

Table of Contents

Similarly, during 2015, eight civil action lawsuits were filed against BVC in the state courts of Sonora seeking damages for alleged injuries and for moral damages as a consequence of the spill. The plaintiffs in the state court lawsuits are: Jose Vicente Arriola Nunez et al; Santana Ruiz Molina et al; Andres Nogales Romero et al; Teodoro Javier Robles et al; Gildardo Vasquez Carvajal et al; Rafael Noriega Souffle et al; Grupo Banamichi Unido de Sonora El Dorado, S.C. de R.L. de C.V; and Marcelino Mercado Cruz. In 2016, three additional civil action lawsuits, claiming similar damages, were filed by Juan Melquicedec Lebaron; Blanca Lidia Valenzuela Rivera et al and Ramona Franco Quijada et al. In 2017, BVC was served with thirty-three additional civil action lawsuits, claiming similar damages. The lawsuits were filed by Francisco Javier Molina Peralta et al; Anacleto Cohen Machini et al; Francisco Rafael Alvarez Ruiz et al; Jose Alberto Martinez Bracamonte et al; Gloria del Carmen Ramirez Duarte et al; Flor Margarita Sabori et al; Blanca Esthela Ruiz Toledo et al; Julio Alfonso Corral Dominguez et al; Maria Eduwiges Bracamonte Villa et al; Francisca Marquez Dominguez et al; Jose Juan Romo Bravo et al; Jose Alfredo Garcia Leyva et al; Gloria Irma Dominguez Perez et al; Maria del Refugio Romero et al; Miguel Rivas Medina et al; Yolanda Valenzuela Garrobo et al; Maria Elena Garcia Leyva et al; Manuel Alfonso Ortiz Valenzuela et al; Francisco Alberto Arvayo Romero et al; Maria del Carmen Villanueva Lopez et al; Manuel Martin Garcia Salazar; Miguel Garcia Arguelles et al; Dora Elena Rodriguez Ochoa et al; Honora Eduwiges Ortiz Rodriguez et al; Francisco Jose Martinez Lopez et al; Maria Eduwiges Lopez Bustamante; Rodolfo Barron Villa et al, Jose Carlos Martinez Fernandez et al, Maria de los Angeles Fabela et al; Rafaela Edith Haro et al; Luz Mercedes Cruz et al; Juan Pedro Montaño et al; and Juana Irma Alday Villa. In the first quarter of 2018, BVC was served with another civil action lawsuit, claiming similar damages. The lawsuit was filed by Alma Angelina Del Cid Rivera et al. In the last quarter of 2018, BVC was served with other three civil action lawsuits, claiming similar damages. These lawsuits were filed by Los Corrales de la Estancia, S.C. de R.L.; Jose Antonio Navarro; Jesus Maria Peña Molina, et al; these actions were dismissed by the court, because they have expired. As of June 30, 2022, forty-five cases remain pending resolution.

In 2015, four constitutional lawsuits (juicios de amparo) were filed before Federal Courts against various authorities and against a subsidiary of the Company, arguing; (i) the alleged lack of a waste management program approved by SEMARNAT; (ii) the alleged lack of a remediation plan approved by SEMARNAT with regard to the August 2014 spill; (iii) the alleged lack of community approval regarding the environmental impact authorizations granted by SEMARNAT to one subsidiary of the Company; and (iv) the alleged inactivity of the authorities with regard to the spill in August 2014. The plaintiffs in these lawsuits are: Francisca Garcia Enriquez, et al filed two lawsuits, Francisco Ramon Miranda, et al and Jesus David Lopez Peralta et al. In the third quarter of 2016, four additional constitutional lawsuits, claiming similar damages were filed by Mario Alberto Salcido et al; Maria Elena Heredia Bustamante et al; Martin Eligio Ortiz Gamez et al; and Maria de los Angeles Enriquez Bacame et al. In the third quarter of 2017, BVC was served with another constitutional lawsuit filed by Francisca García Enriquez et al. In 2018, BVC was served with two additional constitutional lawsuits that were filed against SEMARNAT by Norberto Bustamante et al. With regard to the constitutional lawsuit filed by Maria Elena Heredia Bustamante et al; in which it was claimed the lack of community approval regarding the authorization granted by SEMARNAT to build the new BVC tailings dam, on September 5, 2018, the Supreme Court of Justice issued a resolution establishing that such authorization was granted to BVC in compliance with the applicable legislation. However, SEMARNAT must carry out a public meeting to inform the community of the technical aspects required to build the dam, potential impacts and prevention measures. This public meeting will have no material effects to BVC’s operations. SEMARNAT has carried out the consultation ordered by the Supreme Court. As a result, it has informed the corresponding Judge its compliance with the resolution, in which BVC was required to implement additional measures of environmental impact prevention, such as: (i) the building of at least three monitoring wells downstream from the curtain of the contingency dam in a period of six months; (ii) monitoring of the groundwater level and water quality every six months; (iii) carrying out rain collection work in order to restore water to the Sonora River basin, with six months granted to present the execution program; (iv) determine the location of wildlife conservation and protection areas and define the need to establish biological corridors; (v) obtain photographic or videographic evidence every six months; (vi) submitting to SEMARNAT two years before the closure and abandonment of the site, or earlier if necessary, the closure program that includes the cleaning and restoration of the soil including Mexican regulation NOM-141; (vii) include the measures in the Environmental Monitoring Program according to the environmental components impacted; and (viii) hiring an external environmental consultant to validate compliance with the current and new conditions imposed. The foregoing does not impact BVC’s operations. Additionally, the lawsuits filed by Maria de los Angeles Enriquez Bacame and Norberto Bustamante have been dismissed and closed without prejudice to the Company. As of June 30, 2022, the remaining cases were still pending resolution.

21

Table of Contents

It is currently not possible to determine the extent of the damages sought in these state and federal lawsuits but the Company believes that these lawsuits are without merit. Accordingly, the Company is vigorously defending against them. Nevertheless, the Company believes that none of the legal proceedings resulting from the spill, individually or in the aggregate, would have a material effect on its financial position or results of operations.

Corporate operations:

Carla Lacey, on behalf of herself and all other similarly situated stockholders of Southern Copper Corporation, and derivatively on behalf of Southern Copper Corporation

In April 2019, a derivative lawsuit was filed against the Company, certain current and former Directors, and Grupo Mexico in the Delaware Court of Chancery relating to certain construction contracts, contracts for the purchase and sale of minerals, and transportation contracts entered into between the Company’s subsidiaries and subsidiaries of Grupo Mexico.

In October 2019, the plaintiff amended the complaint to include claims related to certain administrative services contracts between the Company’s subsidiaries and Grupo Mexico. The amended complaint alleges, among other things, that the construction, mineral, transportation, and administrative services contracts were unfair as a result of breaches of fiduciary duties and the Company’s charter. The amended complaint also added Americas Mining Corporation (“AMC”) as a defendant, alleging that AMC breached its fiduciary duties as a controlling stockholder of the Company. The amended complaint seeks, among other things, unspecified monetary damages. In January 2020, the Company, the current and former Directors, and Grupo Mexico responded to the complaint by filing motions to dismiss. The Plaintiff filed a brief in response to the motions on March 13, 2020. On July 16, 2020, the Court denied the motions to dismiss the breach of fiduciary duty claims against the Directors. On October 6, 2020, the Court dismissed the Plaintiff’s claims against Grupo Mexico for lack of personal jurisdiction. On February 11, 2021, the Court granted the Directors’ motion to dismiss plaintiff’s breach of contract claim. The Court also granted AMC’s motion to dismiss all claims against AMC other than those related to the mineral contracts.

On July 12, 2021, the parties reached an agreement-in-principle to settle the lawsuit, subject to Court approval. On September 29, 2021, the parties filed a Stipulation and Agreement of Compromise, Settlement and Release with the Court. On February 1, 2022, the Judge approved the settlement and awarded certain fees to the plaintiff’s attorneys. The Judge’s order for this decision was registered on February 2, 2022. Under applicable law, there was a 30-day period for parties to appeal the Judge's order. This period expired on March 4, 2022, and therefore the Judge's order is considered final.

Labor matters:

Peruvian operations: 73.1% of the Company's 4,536 Peruvian employees were unionized at June 30, 2022. Currently, there are six separate unions, none of which represents the majority of workers, as defined by current Peruvian labor legislation.

During 2021, the Company hold talks with the six unions to sign collective agreements prior to their effective dates. As a result, between June and December 2021, the Company signed collective agreements with the six unions with durations between three to six years. All of them granted annual salary increases of 5%. Additionally, each agreement granted, among other things, a signing bonus of between S/45,000 (approximately $11,749) and S/90,000 (approximately $23,499), depending on the duration of the agreement. A long-term agreement bonus of S/10,000 (approximately $2,611) was granted to the union that signed a six-year extension of the collective bargaining agreement. All these concepts were recorded as labor expense.

As of June 30, 2022, the Company has no pending negotiations with Peruvian unions.

22

Table of Contents

Mexican operations: 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.

The workers of the San Martin mine were on strike since July 2007. On February 28, 2018, the striking workers of the San Martín mine of IMMSA held an election to vote on the union that would hold the collective bargaining agreement at the San Martín mine. The Federacion Nacional de Sindicatos Independientes (the National Federation of Independent Unions) won the vote by a majority. Nevertheless, the vote was challenged by the National Mining Union. On June 26, 2018, the Federal Mediation and Arbitration Board issued a ruling recognizing the election results. Due to the agreement between workers and the Company to end the protracted strike, on August 22, 2018, the Federal Mediation and Arbitration Board authorized the restart of operations of the San Martín mine. Such authorization was challenged by the National Mining Union. On April 4, 2019, the Federal Mediation and Arbitration Board recognized, once again, the election results from February 28, 2018, by which the National Federation of Independent Unions won by a majority. In the last quarter of 2019, a Federal Court issued a resolution that established that the Labor Court should analyze the list of workers with the right to vote in the union election. The Company and the National Federation of Independent Unions challenged such determination before the Supreme Court of Justice. Such challenges were dismissed by the Supreme Court. As a consequence, on September 6, 2021, the Federal Mediation and Arbitration Board issued a new resolution determining that, based on the documents submitted by the National Federation of Independent Unions and given the status of the strike until 2018, it was not possible to create a registry of workers holding a right to vote. Therefore, in case of a strike, any economic collective proceedings shall remain suspended. The Federal Mediation and Arbitration Board shall decide on the request of the majority of workers to end the strike, despite the opposition of the National Mining Union. The Company expects that the conflict will be solved in accordance with the legal framework set by labor authorities and that any actions taken will respect the workers’ will.

As of June 30, 2022, the Company had completed most of the rehabilitation plan to restore operations at the San Martin mine, at a total expense of approximately $90.5 million; the mine has already reached full operating capacity.

In the case of the Taxco mine, its workers have been on strike since July 2007. After several legal procedures, in August 2015, the Supreme Court decided to assert jurisdiction over the case and to rule on it directly. As of June 30, 2022, the case was pending resolution without further developments.

It is expected that operations at the Taxco mine will remain suspended until the labor issues are resolved. In view of the lengthy strike, the Company has reviewed the carrying value of the Taxco mine to ascertain whether impairment exists. The Company concluded that there is a non-material impairment of the assets located at this mine.

Other legal matters:

The Company is involved in various other legal proceedings incidental to its operations, but the Company does not believe that decisions adverse to it in any such proceedings, individually or in the aggregate, would have a material effect on its financial position or results of operations.

Other commitments:

Peruvian Operations:

Tia Maria

On August 1, 2014, the Company received final approval for Tia Maria´s Environmental Impact Assessment (“EIA”). On July 8, 2019, the Company received the construction permit for this 120,000 ton annual SX-EW copper greenfield project with a total capital budget of $1,400 million. This permit was obtained after completing an exhaustive review process, complying with all established regulatory requirements and addressing all observations raised.

On July 15, 2019, anti-mining groups staged a violent demonstration affecting economic as well as other activities in the Islay province. These actions were followed by the filing of three complaints, sponsored by groups opposing the Tia Maria project, with the Mining Council, which is the Peruvian administrative authority responsible for ruling on these complaints.

23

Table of Contents

The Mining Council temporarily suspended the construction permit on August 8, 2019. On October 7, 2019, as part of the process, the Mining Council conducted a hearing to hear the complaints and the Company´s position. On October 30, 2019, the Mining Council of the Peruvian Ministry of Energy and Mines ratified the construction permit for the Tia Maria project.

The Company has been working to promote the welfare of the Islay province population. As part of these efforts, the Company has implemented social programs in education, healthcare and productive development to improve the quality-of-life in the region. The Company has also promoted agricultural and livestock activities in the Tambo Valley and supported growth in manufacturing, fishing and tourism in Islay. In 2021, the Peruvian Branch fortified its relation with the regional government and overcame its opposition to project initiation. This new consensus was reflected in an agreement for Social Investment for Taxes for projects relative to health facilities and roads. The Company´s efforts to ensure the current and long-term welfare of the population in the area of influence of the Tia Maria project were recognized by several local associations, which sent letters to the National Government to request project initiation.

During the construction and operation phase, the Company will make it a priority to hire local labor to fill the 9,000 jobs that the Company expects to generate during Tia Maria’s construction phase. Additionally, from day one of its operations, the Company will generate significant contributions to revenues in the Arequipa region.

Tia Maria´s project budget is approximately $1.4 billion, of which $333.5 million had been invested as of June 30, 2022. This project will use state-of-the-art SX-EW technology with the highest international environmental standards. SX-EW facilities are the most environmentally friendly in the industry as they do not require a smelting process and therefore, do not release any emissions into the atmosphere.

Michiquillay

In June 2018, the Company signed a contract for the acquisition of the Michiquillay copper project in Cajamarca, Peru, at a purchase price of $400 million. Michiquillay is a world-class mining project with estimated inferred mineral resources of 2,288 million tonnes with an estimated copper grade of 0.43%. It is expected 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.

As per the purchase agreement, the Company paid $12.5 million at the signing of the contract and $12.5 million in June 2021. The remaining balance of $375.0 million will be paid if the Company decides to develop the project. Therefore, it is not a present obligation.

In 2021, the Company signed social agreements with the Michiquillay and La Encañada communities. In addition, in October 2021, the Peruvian Ministry of Energy and Mines approved the semi-detailed environmental impact study for the project. At the end of June 2022, the Company has all the required permits for exploration activities. These events are important steps that will allow Southern Copper to initiate an in-depth exploration program in the third quarter of 2022.

Social agreements with the Michiquillay and La Ecañada communities represent an opportunity to improve quality of life of the residents of those communities via the Company´s strong social programs and backed by a solid framework for technical work at the project level. The main commitments signed by the Company in the social agreements are related to providing support for agricultural and livestock activities, economic development of local initiatives, and social programs in favor of education, water management, waste disposal, and healthcare for vulnerable groups.

In June 2022, the Company notified the Peruvian authorities the end of the suspension period and the start of the pre-operational period that lasts 12 years and it can be extended for three more years. The start of the pre-operational

period does not imply a payment obligation. The Company must support an investment of $20 million in the next five years which includes exploration activities as well as the development of social programs.

24

Table of Contents

Corporate Social Responsibility

The Company has a corporate social responsibility policy to maintain and promote the continuity of its mining operations and obtain the best results. The main objective of this policy is to integrate the Company´s operations with local communities in the areas of influence of its operations by creating permanent positive relationships to develop optimum social conditions and promote sustainable development in the area. Accordingly, the Company has made the following commitments:

Tacna Region: In connection with the Toquepala concentrator expansion, the Company has committed to funding various social and infrastructure improvement projects in Toquepala’s neighboring communities. The total amount committed for these purposes is S/445.0 million (approximately $116.2 million). In relation to this commitment, the Company has completed the construction of a school with an investment of S/18.8 million (approximately $4.9 million), has co-financed the construction of the Cularjahuira dam for S/15.6 million (approximately $4.1 million) and is preparing the study of engineering for the Callazas dam for S/2.6 million (approximately $0.7 million).

As the Toquepala expansion project has been completed, the Company considers that these commitments constitute present obligations of the Company and consequently has recorded a liability of $32.9 million in its condensed consolidated financial statements as of June 30, 2022.

In addition, the Company has committed S/94.1 million (approximately $24.6 million) for the construction of a high-performance school in the Tacna region under the “Social Investment for Taxes” (obras por impuestos) program, which allows the Company to use these amounts as an advance payment of taxes.

Moquegua Region: In the Moquegua region, the Company participates in a “development roundtable” with local municipal authorities and community representatives to discuss social needs and to determine the ways that the Company can contribute to sustainable development in the region. Currently, the roundtable is discussing the creation of a Moquegua Region Development Fund, for which the Company has offered a contribution of S/1,000 million (approximately $261.1 million). While final funding is not yet settled, the Company has committed to contribute S/108.4 million (approximately $28.3 million) as an advance, which is being utilized to fund an educational project. In addition, there is a commitment to finance the construction of a residual water treatment plant in Ilo for S/79.9 million (approximately $20.9 million), to build three schools in Moquegua for S/15.9 million (approximately $4.2 million) and to build tracks and sidewalks in Pacocha for S/6.4 million (approximately $1.7 million).

In addition, the Company has committed S/132.8 million (approximately $34.7 million) to build two infrastructure projects in the Moquegua region under the “social investment for taxes” (obras por impuestos) program, which allows the Company to use these amounts as an advance payment of taxes.

Power purchase agreements

Electroperu S.A.: In June 2014, the Company entered into a power purchase agreement for 120 megawatts (“MW”) with the state power company Electroperu S.A., under which Electroperu S.A. began supplying energy for the Peruvian operations for twenty years starting on April 17, 2017.

Kallpa Generacion S.A. (“Kallpa”): In July 2014, the Company entered into a power purchase agreement for 120MW with Kallpa, an independent Israeli owned power company, under which Kallpa will supply energy for the Peruvian operations for ten years starting on April 17, 2017 and ending on April 30, 2027. In May 2016, the Company signed an additional power purchase agreement for a maximum of 80MW with Kallpa, under which Kallpa began supplying energy for the Peruvian operations related to the Toquepala Expansion and other minor projects starting on May 1, 2017 and ending on October 31, 2029.

25

Table of Contents

Mexican operations:

Power purchase agreements

MGE: In 2012, the Company signed a power purchase agreement with MGE, an indirect subsidiary of Grupo Mexico, to supply power to some of the Company’s Mexican operations through 2032. For further information, please see Note 5 “Related party transactions”.

Eolica el Retiro, S.A.P.I. de C.V.: In 2013, the Company signed a power purchase agreement with Eolica el Retiro, S.A.P.I. de C.V. a windfarm energy producer that is an indirect subsidiary of Grupo Mexico, to supply power to some of the Company´s Mexican operations. For further information, please see Note 5 “Related party transactions”.

Parque Eolico de Fenicias, S. de R.L. de C.V.: On February 20, 2020, the Company signed a power purchase agreement with Parque Eolico de Fenicias, S. de R.L. de C.V., an indirect subsidiary of Grupo Mexico, to supply 611,400 MWh of power per year to some of the Company´s Mexican operations for 20 years. The agreement is expected to become effective in the the second semester of 2022.

Corporate operations:

Commitment for capital projects

As of June 30, 2022, the Company had committed approximately $437.0 million to the development of its capital investment projects at its operations.

Tax contingency matters:Tax contingencies are provided for under ASC 740-10-50-15 Uncertain tax position (see Note 4 “Income taxes”).

NOTE 11 — STOCKHOLDERS’EQUITY:

Treasury Stock:

Activity in treasury stock in the six-month period ended March 31, 2022 and 2021 is as follows (in millions):

    

2022

    

2021

Southern Copper common shares

Balance as of January 1,

$

2,767.2

$

2,767.5

Used for corporate purposes

 

(0.1)

 

(0.1)

Balance as of June 30, 

 

2,767.1

 

2,767.4

Parent Company (Grupo Mexico) common shares

Balance as of January 1,

 

306.8

 

296.0

Other activity, including dividend, interest and foreign currency transaction effect

 

17.6

 

12.4

Balance as of June 30, 

 

324.4

 

308.4

Treasury stock balance as of June 30, 

$

3,091.5

$

3,075.8

Southern Copper Common Shares:

On June 30, 2022 and on December 31, 2021, there were in treasury 111,503,617 and 111,509,217 shares of SCC’s common stock, respectively.

26

Table of Contents

SCC share repurchase program:

In 2008, the Company’s Board of Directors (“BOD”) authorized a $500 million share repurchase program that has since been increased by the BOD and is currently authorized to $3 billion. Pursuant to this program, the Company has purchased 119.5 million shares of common stock at a cost of $2.9 billion. These shares are available for general corporate purposes. The Company may purchase additional shares of its common stock from time to time, based on market conditions and other factors. This repurchase program has no expiration date and may be modified or discontinued at any time.

There has been no activity in the SCC share repurchase program since the third quarter of 2016. The NYSE closing price for SCC common shares as of June 30, 2022 was $49.81 and the maximum number of shares that the Company could purchase at that price was 1.6 million.

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 June 30, 2022.

Directors’ Stock Award Plan:

The Company established a stock award compensation plan for certain directors who are not compensated as employees of the Company. Under this plan, participants received 1,200 shares of common stock upon election and 1,200 additional shares following each annual meeting of stockholders thereafter. 600,000 shares of Southern Copper common stock have been reserved for this plan. On April 26, 2018, the Company's stockholders approved a five-year extension of the Plan until January 29, 2023 and an increase of the shares award from 1,200 to 1,600. The fair value of the award is measured each year at the date of the grant. Commencing with the 2021 grant, the 1,600 shares shall be granted quarterly and conditioned upon the attendance of each director to each Board meeting. The award is not subject to vesting requirements.

    

2022

    

2021

Total SCC shares reserved for the plan

 

600,000

 

600,000

Total shares granted at January 1,

 

(405,200)

 

(391,600)

Granted in the period

 

(5,600)

 

(8,000)

Total shares granted at June 30, 

 

(410,800)

 

(399,600)

Remaining shares reserved

 

189,200

 

200,400

Parent Company common shares:

At June 30, 2022 and at December 31, 2021 there were in treasury 78,286,412 and 79,800,655 of Grupo Mexico’s common shares, respectively.

Employee Stock Purchase Plan:

2015 Plan: In January 2015, the Company offered to eligible employees a new stock purchase plan through a trust that acquires series B shares of Grupo Mexico stock for sale to its employees, and employees of subsidiaries, and certain affiliated companies. The purchase price was set at 38.44 Mexican pesos (approximately $2.63) for the initial subscription, which expires in January 2023. Every two years employees will be able to acquire title to 50% of the shares paid in the previous two years. The employees will pay for shares purchased through monthly payroll deductions over the eight year period of the plan. At the end of the eight year period, the Company will grant the participant a bonus of 1 share for every 10 shares purchased by the employee. Any future subscription will be at the average market price at the date of acquisition or the grant date.

If Grupo Mexico pays dividends on shares during the eight year period, the participants will be entitled to receive the dividend in cash for all shares that have been fully purchased and paid as of the date that the dividend is paid. If the participant has only partially paid for shares, the entitled dividends will be used to reduce the remaining liability owed for purchased shares.

27

Table of Contents

In the case of voluntary or involuntary resignation/termination of the employee, the Company will pay to the employee the fair market sales price at the date of resignation of the fully paid shares, net of costs and taxes. When the fair market sales value of the shares is higher than the purchase price, the Company will apply a deduction over the amount to be paid to the employee based on a decreasing schedule specified in the plan.

In case of retirement or death of the employee, the Company will render the buyer or his legal beneficiary, the fair market sales value as of the date of retirement or death of the shares effectively paid, net of costs and taxes.

The stock based compensation expense for the first six months of 2022 and 2021 and the unrecognized compensation expense under this plan were as follows (in millions):

    

2022

    

2021

Stock based compensation expense

$

0.3

$

0.3

Unrecognized compensation expense

$

0.5

$

1.1

The following table presents the activity of this plan for the six months ended June 30, 2022 and 2021:

    

    

Unit Weighted Average

Shares

Grant Date Fair Value

Outstanding shares at January 1, 2022

 

867,234

$

2.63

Granted

 

 

Exercised

 

(16,394)

$

2.63

Forfeited

 

 

Outstanding shares at June 30, 2022

 

850,840

$

2.63

Outstanding shares at January 1, 2021

 

1,264,410

$

2.63

Granted

 

 

Exercised

 

(370,959)

$

2.63

Forfeited

 

 

Outstanding shares at June 30, 2021

 

893,451

$

2.63

2018 Plan: In November 2018, the Company offered a new stock purchase plan (the “New Employee Stock Purchase Plan”) to eligible employees through a trust that acquires series B shares of Grupo Mexico stock for sale to its employees, and employees of subsidiaries, and certain affiliated companies. The purchase price was established at 37.89 Mexican pesos (approximately $1.86) for the initial subscription, which expires in October 2026. Every two years employees will be able to acquire title to 50% of the shares paid in the previous two years. The employees will pay for shares purchased through monthly payroll deductions over the eight-year period of the plan. At the end of the eight-year period, the Company will grant the participant a bonus of 1 share for every 10 shares purchased by the employee. Any future subscription will be at the average market price at the date of acquisition or the grant date.

If Grupo Mexico pays dividends on shares during the eight-year period, the participants will be entitled to receive the dividend in cash for all shares that have been fully purchased and paid as of the date that the dividend is paid. If the participant has only partially paid for shares, the entitled dividends will be used to reduce the remaining liability owed for purchased shares.

In the case of voluntary or involuntary resignation/termination of the employee, the Company will pay to the employee the fair market sales price on the date of resignation of the fully paid shares, net of costs and taxes. When the fair market sales value of the shares is higher than the purchase price, the Company will apply a deduction over the amount to be paid to the employee based on a decreasing schedule specified in the plan.

In case of retirement or death of the employee, the Company will render the buyer or his legal beneficiary, the fair market sales value as of the date of retirement or death of the shares effectively paid, net of costs and taxes.

The stock based compensation expense for the six months ended June 30, 2022 and 2021 and the unrecognized compensation expense under this plan were as follows (in millions):

    

2022

2021

Stock based compensation expense

$

0.3

 

$

0.3

Unrecognized compensation expense

$

3.0

 

$

3.6

28

Table of Contents

The following table presents the stock award activity of this plan for the six months ended June 30, 2022 and 2021:

Unit Weighted Average

    

Shares

    

Grant Date Fair Value

Outstanding shares at January 1, 2022

 

3,173,924

$

1.86

Granted

 

Exercised

 

(160,236)

$

1.86

Forfeited

 

Outstanding shares at June 30, 2022

 

3,013,688

$

1.86

Outstanding shares at January 1, 2021

3,918,458

$

1.86

Granted

Exercised

(625,742)

1.86

Forfeited

Outstanding shares at June 30, 2021

 

3,292,716

$

1.86

Non-controlling interest:

The following table presents the non-controlling interest activity for the six months ended June 30, 2022 and 2021 (in millions):

    

2022

    

2021

Balance as of January 1,

 

$

58.6

 

$

51.2

Net earnings

 

5.0

 

7.0

Dividend paid

 

(3.8)

 

(2.9)

Balance as of June 30, 

 

$

59.8

 

$

55.3

NOTE 12 — FAIR VALUE MEASUREMENT:

Subtopic 820-10 of ASC “Fair value measurement and disclosures — Overall” establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy under Subtopic 820-10 are described below:

Level 1 - Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.

Level 2 - Inputs that are observable, either directly or indirectly, but do not qualify as Level 1 inputs. (i.e., quoted prices for similar assets or liabilities).

Level 3 - Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e., supported by little or no market activity).

The carrying amounts of certain financial instruments, including cash and cash equivalents, accounts receivable (other than accounts receivable associated with provisionally priced sales) and accounts payable approximate fair value due to their short maturities. Consequently, such financial instruments are not included in the following table, which provides information about the carrying amounts and estimated fair values of other financial instruments that are not measured at fair value in the condensed consolidated balance sheet as of June 30, 2022 and December 31, 2021 (in millions):

29

Table of Contents

At June 30, 2022

At December 31, 2021

    

Carrying Value

    

Fair Value

    

Carrying Value

    

Fair Value

Liabilities:

Long-term debt level 1

$

6,498.2

$

6,750.7

$

6,496.4

$

8,506.0

Long-term debt level 2

51.2

60.9

51.2

67.2

Total long-term debt

$

6,549.4

$

6,811.6

$

6,547.6

$

8,573.2

Long-term debt is carried at amortized cost and its estimated fair value is based on quoted market prices classified as Level 1 in the fair value hierarchy except for the case of the Yankee bonds, which qualify as Level 2 in the fair value hierarchy as they are based on quoted prices in markets that are not active.

Fair values of assets and liabilities measured at fair value on a recurring basis were calculated as follows as of June 30, 2022 and December 31, 2021 (in millions):

Fair Value at Measurement Date Using:

    

    

    

Significant

    

Fair Value

Quoted prices in

other

Significant

as of

active markets for

observable

unobservable

June 30, 

identical assets

inputs

inputs

Description

2022

(Level 1)

(Level 2)

(Level 3)

Assets:

Short term investment:

—Trading securities

$

242.3

$

242.3

$

$

—Available-for-sale debt securities:

Corporate bonds

 

Asset backed securities

 

0.1

0.1

Mortgage backed securities

 

0.2

0.2

Accounts receivable:

—Embedded derivatives—Not classified as hedges:

Provisionally priced sales:

Copper

 

517.1

 

517.1

Molybdenum

 

216.0

 

216.0

 

Total

$

975.7

$

975.4

$

0.3

$

Fair Value at Measurement Date Using:

    

    

    

Significant

    

Fair Value

Quoted prices in

other

Significant

as of

active markets for

observable

unobservable

December 31, 

identical assets

inputs

inputs

Description

2021

(Level 1)

(Level 2)

(Level 3)

Assets:

Short term investment:

—Trading securities

$

486.5

$

486.5

$

$

—Available-for-sale debt securities:

Corporate bonds

 

Asset backed securities

 

0.2

 

0.2

Mortgage backed securities

 

0.2

0.2

Accounts receivable:

—Embedded derivatives-Not classified as hedges:

Provisionally priced sales:

Copper

 

876.2

 

876.2

Molybdenum

 

288.3

 

288.3

 

Total

$

1,651.4

$

1,651.0

$

0.4

$

30

Table of Contents

The Company’s short-term trading securities investments are classified as Level 1 because they are valued using quoted prices of the same securities as they consist of bonds issued by public companies and are publicly traded. The Company’s short-term available-for-sale investments are classified as Level 2 because they are valued using quoted prices for similar investments.

The Company’s accounts receivables associated with provisionally priced copper sales are valued using quoted market prices based on the forward price on the LME or on the COMEX. Such value is classified within Level 1 of the fair value hierarchy. Molybdenum prices are established by reference to the publication Platts Metals Week and are considered Level 1 in the fair value hierarchy.

In addition, in the third quarter of 2021, the Company acquired two derivative instruments to protect natural gas costs from estimated price increases in the previous winter season. These derivative instruments occupied November 2021 through March 2022 period. For further information please refer to Note 6 “Derivative instruments.”

NOTE 13 — REVENUE:

The Company’s net sales were $2,306.9 and $5,070.7 million in the three and six months ended June 30, 2022 respectively, compared to $2,897.0 and $5,429.5 million in the same period of 2021. The geographic breakdown of the Company’s sales is as follows (in millions):

Three Months Ended June 30, 2022

Mexican 

Mexican 

IMMSA

Peruvian 

Corporate & 

    

Open-Pit

    

Unit

    

Operations

    

Elimination

    

Consolidated

The Americas:

Mexico

$

442.2

$

122.4

$

$

(44.0)

$

520.6

United States

 

447.7

 

10.7

 

105.2

 

 

563.6

Peru

 

63.3

 

 

155.5

 

(63.3)

 

155.5

Brazil

 

 

4.5

 

95.8

 

 

100.3

Chile

 

0.6

 

 

81.5

 

 

82.1

Other American countries

 

11.2

 

0.7

 

9.3

 

 

21.2

Europe:

 

 

 

 

 

Switzerland

 

98.8

 

14.5

 

165.1

 

 

278.4

Italy

 

0.8

 

3.8

 

54.7

 

 

59.3

Spain

 

107.1

 

 

38.0

 

 

145.1

Other European countries

 

11.1

 

6.0

 

14.0

 

 

31.1

Asia:

 

 

 

 

 

China

94.5

94.5

Singapore

 

0.7

 

3.6

 

32.8

 

 

37.1

Japan

 

20.6

 

 

133.5

 

 

154.1

Other Asian countries

 

38.4

 

0.1

 

25.5

 

 

64.0

Total

$

1,337.0

$

166.3

$

910.9

$

(107.3)

$

2,306.9

31

Table of Contents

Three Months Ended June 30, 2021

Mexican

Mexican

IMMSA

Peruvian

Corporate &

    

Open-Pit

    

Unit

    

Operations

    

Elimination

    

Consolidated

The Americas:

Mexico

$

494.9

$

109.6

$

$

(38.8)

$

565.7

United States

 

393.2

 

14.7

 

61.8

 

469.7

Peru

 

 

0.1

 

143.2

 

143.3

Brazil

 

 

5.6

 

120.6

 

126.2

Chile

 

1.0

 

 

95.2

 

96.2

Other American countries

 

7.7

 

 

1.0

 

8.7

Europe:

 

 

 

Switzerland

318.2

 

18.7

 

103.2

 

440.1

Italy

0.2

 

1.1

 

108.7

 

110.0

Spain

102.2

 

 

23.5

 

125.7

Other European countries

74.7

 

6.7

 

118.9

 

200.3

Asia:

 

 

 

China

49

49.0

Singapore

163.4

 

4.8

 

108.9

 

277.1

Japan

2.9

 

 

147.7

 

150.6

Other Asian countries

24.8

 

0.1

 

109.5

 

134.4

Total

$

1,632.2

$

161.4

$

1,142.2

$

(38.8)

$

2,897.0

Six Months Ended June 30, 2022

Mexican 

Mexican 

IMMSA

Peruvian 

Corporate & 

    

Open-Pit

    

Unit

    

Operations

    

Elimination

    

Consolidated

The Americas:

Mexico

$

976.0

$

253.2

$

$

(84.0)

$

1,145.2

United States

 

903.3

 

26.4

 

196.0

 

 

1,125.7

Peru

 

178.4

 

 

333.0

 

(178)

 

333.4

Brazil

 

-

 

9.6

 

214.8

 

 

224.4

Chile

 

0.6

 

 

185.0

 

 

185.6

Other American countries

 

17.7

 

0.7

 

14.7

 

 

33.1

Europe:

 

 

 

 

 

Switzerland

 

326.2

 

22.9

 

356.2

 

 

705.3

Italy

 

1.3

 

7.8

 

122.2

 

 

131.3

Spain

 

200.3

 

 

39.7

 

 

240.0

Other European countries

 

41.9

 

14.4

 

100.1

 

 

156.4

Asia:

 

 

 

 

 

China

206.9

206.9

Singapore

 

5.4

 

8.5

 

85.0

 

 

98.9

Japan

 

42.6

 

 

295.0

 

 

337.6

Other Asian countries

 

82.6

 

0.3

 

64.0

 

 

146.9

Total

$

2,983.2

$

343.8

$

2,005.7

$

(262.0)

$

5,070.7

32

Table of Contents

Six Months Ended June 30, 2021

Mexican

Mexican

IMMSA

Peruvian

Corporate &

    

Open-Pit

    

Unit

    

Operations

    

Elimination

    

Consolidated

The Americas:

Mexico

$

948.4

$

176.1

$

$

(65.0)

$

1,059.5

United States

 

782.6

 

31.7

 

81.0

 

895.3

Peru

 

 

0.1

 

290.6

 

290.7

Brazil

 

 

7.6

 

217.6

 

225.2

Chile

 

2.9

 

 

151.3

 

154.2

Other American countries

 

18.0

 

0.7

 

2.8

 

21.5

Europe:

 

 

 

Switzerland

612.6

 

25.8

 

195.5

 

833.9

Italy

0.2

 

1.9

 

181.9

 

184.0

Spain

193.2

 

 

43.4

 

236.6

Other European countries

148.0

 

33.2

 

199.9

 

381.1

Asia:

 

 

 

China

104

103.7

Singapore

235.0

 

8.4

 

236.0

 

479.4

Japan

24.4

 

 

310.3

 

334.7

Other Asian countries

41.7

 

0.2

 

187.8

 

229.7

Total

$

3,110.7

$

285.7

$

2,098.1

$

(65.0)

$

5,429.5

The following table presents information regarding the sales value by reporting segment of the Company’s significant products for the three and six months ended June 30, 2022 and 2021 (in millions):

Three Months Ended June 30, 2022

    

Mexican

Mexican

    

IMMSA 

    

Peruvian

    

Corporate, Other &

    

Total

Open-pit

Unit

Operations

Eliminations

Consolidated

Copper

$

1,114.0

$

28.0

$

737.9

$

(82.1)

$

1,797.8

Molybdenum

 

105.8

 

 

92.4

 

 

198.2

Silver

 

58.1

 

36.8

 

25.3

 

(20.8)

 

99.4

Zinc

 

 

82.0

 

 

(0.7)

 

81.3

Other

 

59.1

 

19.5

 

55.3

 

(3.7)

 

130.2

Total

$

1,337.0

$

166.3

$

910.9

$

(107.3)

$

2,306.9

Six Months Ended June 30, 2022

    

Mexican

Mexican

    

IMMSA 

    

Peruvian

    

Corporate, Other &

    

Total

Open-pit

Unit

Operations

Eliminations

Consolidated

Copper

$

2,482.4

$

50.4

$

1,631.8

$

(211.9)

$

3,952.7

Molybdenum

 

256.2

 

 

217.8

 

 

474.0

Silver

 

124.8

 

73.8

 

48.4

 

(42.4)

 

204.6

Zinc

 

 

180.6

 

 

(1.0)

 

179.6

Other

 

119.8

 

39.0

 

107.7

 

(6.7)

 

259.8

Total

$

2,983.2

$

343.8

$

2,005.7

$

(262.0)

$

5,070.7

33

Table of Contents

Three Months Ended June 30, 2021

    

Mexican

Mexican

    

IMMSA 

    

Peruvian

    

Corporate, Other &

    

Total

Open-pit

Unit

Operations

Eliminations

Consolidated

Copper

$

1,382.6

$

27.4

$

957.4

$

(19.2)

$

2,348.2

Molybdenum

 

149.6

 

 

132.6

 

 

282.2

Zinc

 

68.0

 

36.9

 

32.7

 

(17.4)

 

120.2

Silver

 

 

81.3

 

 

 

81.3

Other

 

32.0

 

15.8

 

19.5

 

(2.2)

 

65.1

Total

$

1,632.2

$

161.4

$

1,142.2

$

(38.8)

$

2,897.0

Six Months Ended June 30, 2021

    

Mexican

Mexican

    

IMMSA 

    

Peruvian

    

Corporate, Other &

    

Total

Open-pit

Unit

Operations

Eliminations

Consolidated

Copper

$

2,663.1

$

51.2

$

1,784.2

$

(32.9)

$

4,465.6

Molybdenum

 

240.7

 

 

211.1

 

 

451.8

Zinc

 

140.7

 

85.4

 

62.2

 

(29.1)

 

259.2

Silver

 

 

116.5

 

 

0.5

 

117.0

Other

 

66.2

 

32.6

 

40.6

 

(3.5)

 

135.9

Total

$

3,110.7

$

285.7

$

2,098.1

$

(65.0)

$

5,429.5

The opening and closing balances of receivables by reporting segment of the Company were as follows (in millions):

Mexican

    

Mexican

    

IMMSA

    

Peruvian

    

Corporate &

    

Open-Pit

Unit

Operations

Elimination

Consolidated

As of June 30, 2022:

 

  

 

  

 

  

 

  

 

  

Trade receivables

$

537.7

$

43.4

$

483.5

$

$

1,064.6

Related parties, current

 

101.6

 

0.2

 

0.7

 

(56.6)

 

45.9

As of December 31, 2021:

 

  

 

  

 

  

 

  

 

  

Trade receivables

$

656.0

$

51.2

$

651.5

$

$

1,358.7

Related parties, current

 

46.9

 

0.2

 

 

2.0

 

49.1

As of June 30, 2022, the Company has long-term contracts with promises to deliver the following products in 2022:

Copper concentrates (in tons)

    

118,000

Copper cathodes (in tons)

48,000

Molybdenum concentrates (in tons)

 

37,283

Sulfuric acid (in tons)

 

355,773

Provisionally priced sales: At June 30, 2022, the Company has recorded provisionally priced sales of copper at average forward prices per pound, and molybdenum at the June 30, 2022 market price per pound. These sales are subject to final pricing based on the average monthly London Metal Exchange (“LME”), or New York Commodities Exchange (“COMEX”), copper prices and Dealer Oxide molybdenum prices in the future month of settlement.

Following are the provisionally priced copper and molybdenum sales outstanding at June 30, 2022:

    

Sales volume

    

Priced at

    

(million lbs.)

(per pound)

Month of settlement

Copper

138.3

3.74

July 2022 through November 2022

Molybdenum

12.6

17.08

July 2022 through September 2022

34

Table of Contents

The provisional sales price adjustment included in accounts receivable and net sales as of June 30, 2022 includes negative adjustments of $57.4 million for copper and $22.5 million for molybdenum. Management believes that the final pricing of these sales will not have a material effect on the Company’s financial position or on operating results.

NOTE 14 — SEGMENT AND RELATED INFORMATION:

Company management views Southern Copper as having three reportable segments and manages it on the basis of these segments. The reportable segments identified by the Company are: the Peruvian operations, the Mexican open-pit operations and the Mexican underground mining operations segment identified as the IMMSA unit.

The three reportable segments identified are groups of mines, each of which constitute an operating segment, with similar economic characteristics, types of products, processes and support facilities, similar regulatory environments, similar employee bargaining contracts and similar currency risks. In addition, each mine within the individual group earns revenues from similar types of customers for their products and services and each group incurs expenses independently, including commercial transactions between groups.

Financial information is regularly prepared for each of the three segments and the results of the Company’s operations are regularly reported to the Chief Operating Decision Maker (“CODM”) on the segment basis. The CODM of the Company focuses on operating income and on total assets as measures of performance to evaluate different segments and to make decisions to allocate resources to the reported segments. These are common measures in the mining industry.

Financial information relating to Southern Copper’s segments is as follows:

Three Months Ended June 30, 2022

(in millions)

    

    

Mexican

    

    

Corporate, other

    

Mexican

IMMSA 

Peruvian 

and

Open-pit

Unit

Operations

eliminations

Consolidated

Net sales outside of segments

$

1,337.0

$

122.4

$

910.9

$

$

2,370.3

Intersegment sales

 

43.9

 

 

(107.3)

 

(63.4)

Cost of sales (exclusive of depreciation, amortization and depletion)

 

664.3

 

113.2

 

580.5

 

(111.3)

 

1,246.7

Selling, general and administrative

 

15.3

 

2.4

 

10.0

 

3.2

 

30.9

Depreciation, amortization and depletion

 

94.7

 

14.4

 

90.1

 

9.8

 

209.0

Exploration

 

0.6

 

1.3

 

4.0

 

5.9

 

11.8

Operating income

$

562.1

$

35.0

$

226.3

$

(14.9)

808.5

Less:

Interest, net

 

(80.9)

Other income (expense)

 

3.9

Income taxes

 

(296.4)

Equity earnings of affiliate

 

(0.9)

Non-controlling interest

 

(1.9)

Net income attributable to SCC

$

432.3

Capital investment

$

96.5

$

45.6

$

79.6

$

2.9

$

224.6

Property and mine development, net

$

4,597.9

$

622.4

$

3,685.8

$

615.7

$

9,521.8

Total assets

$

8,208.5

$

1,077.6

$

4,600.0

$

3,235.4

$

17,121.5

35

Table of Contents

Three Months Ended June 30, 2021

(in millions)

    

    

Mexican

    

    

Corporate, other

    

Mexican

IMMSA 

Peruvian 

and

Open-pit

Unit

Operations

eliminations

Consolidated

Net sales outside of segments

$

1,632.2

$

122.6

$

1,142.2

$

$

2,897.0

Intersegment sales

 

38.8

 

 

(38.8)

 

Cost of sales (exclusive of depreciation, amortization and depletion)

 

498.3

 

112.6

 

417.4

 

(42.8)

 

985.5

Selling, general and administrative

 

16.4

 

2.8

 

9.5

 

2.7

 

31.4

Depreciation, amortization and depletion

 

95.6

 

12.8

 

77.7

 

9.3

 

195.4

Exploration

 

0.7

 

0.9

 

3.2

 

4.7

 

9.5

Operating income

$

1,021.2

$

32.3

$

634.4

$

(12.7)

1,675.2

Less:

Interest, net

 

(88.0)

Other income (expense)

 

(8.2)

Income taxes

 

(647.7)

Equity earnings of affiliate

 

5.1

Non-controlling interest

 

(3.7)

Net income attributable to SCC

$

932.7

Capital investment

$

125.4

$

18.2

$

73.9

$

2.3

$

219.8

Property and mine development, net

$

4,609.8

$

546.0

$

3,695.8

$

604.5

$

9,456.1

Total assets

$

7,874.8

$

994.5

$

4,812.2

$

4,013.9

$

17,695.4

Six Months Ended June 30, 2022

(in millions)

    

    

Mexican

    

    

Corporate, other

    

Mexican

IMMSA 

Peruvian 

and

Open-pit

Unit

Operations

eliminations

Consolidated

Net sales outside of segments

$

2,983.2

 

259.9

 

2,005.7

 

$

5,248.8

Intersegment sales

 

 

83.9

 

 

(262.0)

 

(178.1)

Cost of sales (exclusive of depreciation, amortization and depletion)

 

1,212.5

 

245.0

 

1,049.6

 

(202.7)

 

2,304.4

Selling, general and administrative

 

30.8

 

4.8

 

18.5

 

7.1

 

61.2

Depreciation, amortization and depletion

 

192.7

 

25.7

 

167.7

 

19.5

 

405.6

Exploration

 

1.1

 

2.4

 

10.8

 

6.6

 

20.9

Operating income

$

1,546.1

$

65.9

$

759.1

$

(92.5)

2,278.6

Less:

Interest, net

 

(164.1)

Other income (expense)

 

15.7

Income taxes

 

(908.5)

Equity earnings of affiliate

 

0.4

Non-controlling interest

 

(5.0)

Net income attributable to SCC

$

1,217.1

Capital investment

$

185.7

$

77.3

$

160.8

$

5.9

$

429.7

Property and mine development, net

$

4,597.9

$

622.4

$

3,685.8

$

615.7

$

9,521.8

Total assets

$

8,208.5

$

1,077.6

$

4,600.0

$

3,235.4

$

17,121.5

36

Table of Contents

Six Months Ended June 30, 2021

(in millions)

    

    

Mexican

    

    

Corporate, other

    

Mexican

IMMSA 

Peruvian 

and

Open-pit

Unit

Operations

eliminations

Consolidated

Net sales outside of segments

$

3,110.7

 

220.7

 

2,098.1

 

$

5,429.5

Intersegment sales

 

 

65.0

 

 

(65.0)

 

Cost of sales (exclusive of depreciation, amortization and depletion)

 

1,008.2

 

193.0

 

802.3

 

(74.2)

 

1,929.3

Selling, general and administrative

 

32.3

 

4.9

 

18.9

 

5.5

 

61.6

Depreciation, amortization and depletion

 

191.2

 

26.7

 

159.1

 

19.0

 

396.0

Exploration

 

1.2

 

2.1

 

7.2

 

5.3

 

15.8

Operating income

$

1,877.8

$

59.0

$

1,110.6

$

(20.6)

3,026.8

Less:

Interest, net

 

(175.2)

Other income (expense)

 

(5.9)

Income taxes

 

(1,155.2)

Equity earnings of affiliate

 

13.1

Non-controlling interest

 

(7.0)

Net income attributable to SCC

$

1,696.6

Capital investment

$

275.0

$

32.5

$

140.4

$

4.5

$

452.4

Property and mine development, net

$

4,609.8

$

546.0

$

3,695.8

$

604.5

$

9,456.1

Total assets

$

7,874.8

$

994.5

$

4,812.2

$

4,013.9

$

17,695.4

NOTE 15 — SUBSEQUENT EVENTS:

Dividends:

On July 21, 2022, the Board of Directors authorized a dividend of $0.75 per share payable on August 25, 2022 to shareholders of record at the close of business on August 11, 2022.

37

Table of Contents

Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion provides information that management believes is relevant to an assessment and understanding of the condensed consolidated financial condition and results of operations of Southern Copper Corporation and its subsidiaries (collectively, “SCC”, “the Company”, “our”, and “we”). This item should be read in conjunction with our interim unaudited Condensed Consolidated Financial Statements and the notes thereto included in this quarterly report. Additionally, the following discussion and analysis should be read in conjunction with the Management Discussion and Analysis of Financial Condition and Results of Operations and the Consolidated Financial Statements included in Part II of our annual report on Form 10-K for the year ended December 31, 2021.

EXECUTIVE OVERVIEW

Business: Our business is primarily the production and sale of copper. In the process of producing copper, a number of valuable metallurgical by-products are recovered, which we also produce and sell. Market forces outside of our control largely determine the sale prices for our products. Our management, therefore, focuses on value creation through copper production, cost control, production enhancement and maintaining a prudent capital structure to remain profitable. We endeavor to achieve these goals through capital spending programs, exploration efforts and cost reduction programs. Our aim is to remain profitable during periods of low copper prices and to maximize financial performance in periods of high copper prices.

We are one of the world’s largest copper mining companies in terms of production and sales and our principal operations are in Peru and Mexico. We also have exploration programs in Chile, Argentina and Ecuador. In addition to copper, we produce significant amounts of other metals, either as a by-product of the copper process or through a number of dedicated mining facilities in Mexico.

Outlook: Various key factors will affect our outcome. These include, but are not limited to, the following:

Sales structure: In the second quarter of 2022, approximately 77.9% of our revenue came from the sale of copper; 8.6% from molybdenum; 4.3% from silver; 3.5% from zinc; and 5.7% from various other products, including gold, sulfuric acid and other materials.

Copper: In the second quarter of 2022, the LME copper price decreased from an average of $4.40 per pound in the second quarter of 2021 to $4.32 (-1.8%). During the month of June, we had a significant drop in copper prices down to its current level of $3.30 to 3.50 per pound; this scenario bodes a negative outlook for the Company. A concern for a simultaneous recession in the U.S., Europe and China is dominating the market and, consequently, affecting copper prices. These fears are based upon the following factors:

The consistent increment in interest rates by the FED, the ECB and other relevant central banks.
The slowdown of the Chinese economy due to Covid-19 restrictions and the construction activities 31% YoY reduction.

However, we should note that:

The most relevant market intelligence houses for the copper market are expecting a market in balance or with a small deficit for 2022 of about 200,000 tons.
This assumes growth in demand of 1.0-2.5% in 2022, particularly in terms of cathode consumption in the US.
There is uncertainty regarding future production growth in Chile and Peru, which together represent about 40% of the global supply. Chile registered a production drop of 7% in the first quarter of 2022, while 13% of Peru’s production is currently at risk in Las Bambas.
The major warehouses have not reported a relevant increase in copper inventories, which were as of June 30 at 8 days of consumption, a relatively low level.

38

Table of Contents

We believe the economic slowdowns in the U.S., China and Europe have temporarily weakened the demand for copper and are driving reductions in current prices. It is important to emphasize that copper plays a leading role in the global shift to clean energy, which correlates positively with our assertion that the underlying demand for copper will be strong in the long-term. In this scenario, we believe the current cycle of low prices should be short-lived.

Molybdenum: Represented 8.6% of our sales in the second quarter of 2022 and is currently our most important by-product. Molybdenum prices averaged $18.30 per pound in the second quarter of 2022, compared to $13.89 in the same period of 2021. This represented a 31.7% price increase.

Regarding this by-product, we believe that prices will be supported by lower exports from China and Russia, that are maintaining this market in a deficit.

Molybdenum is mainly used in the production of special alloys for stainless steel that require significant hardness and corrosion and heat resistance. New uses for this metal are associated with lubricants, sulfur filtering of heavy oils and shale gas production.

Silver: Represented 4.3% of our sales in the second quarter of 2022. We believe that the prices for silver will be supported by its intensive level of industrial use and the fact that, like gold, it represents value shelter in times of economic turmoil.

Zinc: Represented 3.5% of our sales in the second quarter of 2022. We consider zinc has very good long term fundamentals due to high levels of industrial consumption and expected production.

Production: For 2022, we expect to produce 898,200 tons of copper, which represents a decrease of 6.3% compared to 2021. We expect our copper production to bounce back in 2023 and reach 971,200 tonnes as we get the Peruvian production back on track and generate new production through our projects at Pilares and Buenavista Zinc Concentrator.

We also expect to produce 25,700 tonnes of molybdenum, which represents a decrease of 15.2% over our 2021 production levels. In 2022, we expect to produce 18.9 million ounces of silver, which represents a slight decrease of 0.5% over our 2021 production level. Additionally, we expect to produce 66,900 tonnes of zinc from our mines, in line with 2021 production.

Capital Investments: In the first semester of 2022, we spent $429.7 million on capital investments; this represented 35.3% of net income and a decrease of 5.0% compared to the amount registered for the same period in 2021.

CYBERSECURITY

Our operations depend upon information technology systems that may be subject to disruption, damage or failure from different sources, including, without limitation, installation of malicious software, computer viruses, security breaches, cyber-attacks and defects in design. In recent years, cybersecurity incidents have increased in frequency and include, but are not limited to, malicious software, attempts to gain unauthorized access to data and other electronic security breaches that could lead to disruptions in systems, unauthorized release of confidential or otherwise protected information and the corruption of data. We have implemented appropriate preventative measures to mitigate potential risks by implementing an information security management system, which ensures application of controls that are frequently reviewed and tested.

In March 2021, we experienced a Ransomware cyber-attack, which was conducted by individual hackers. This cyber-attack encrypted a total of 420 servers and units of personal equipment. However, due to the quick response of our IT team, our Enterprise Resource Planning software was not affected by the aforementioned attack.

After the attack, we immediately began a remediation and recovery process and completely restored the affected servers. The forensic investigation did not identify concrete evidence that any information was stolen during the attack.

39

Table of Contents

However, we maintain active lines of cyberintelligence and continue to monitor the DarkWeb/DeepWeb and social networks to identify any publication or activity related to the Company to validate the technological controls affected during the attack and ensure that our systems infrastructure remains secure.

In March 2021, we appointed a new head of the Information Technology Department, who implemented a new information security strategy to ensure business continuity based on processes (controls and corporate governance framework), technology and human capital (organizational culture). In July 2021, Grupo Mexico appointed a Chief Information Security Officer, who has been actively involved in the development and implementation of this information security strategy. In addition, from July to September of 2021, we performed a cybernetic forensic analysis with the assistance of a professional consulting firm with international experience in this area. The recommendations received were integrated in current information security programs.

Additionally, AMC set up a task force to oversee ongoing initiatives and ensure that targets are met. We are actively following this matter with the task force, our internal audit team and; will also require the expertise of third parties.

Our new information security strategy is being executed on a continuous basis. The compliance, internal control, information technology and internal audit departments are all working together to integrate reference frameworks, risk management models and the necessary controls to continue executing this strategy and corresponding programs. To support our commitment to the strategy, we are working under the international framework for reference and standard, such as ISO, COBIT and NIST, to certify the Company´s security systems. The Company has also established an information security culture with the purpose of training, communicating and maintaining permanent awareness among the workforce. On the governance framework side, the Company has created a Committee of Information Security and set up security policies and standards, among other actions.

For 2022 we have a non-material special budget to continue improvements in this area.

CUAJONE STOPPAGE OF OPERATIONS

On February 28, 2022, a small group of protesters from the community of Tumilaca, Pocata, Coscore and Tala, which have 472 residents in total, seized the facilities at the Viña Blanca water reservoir and cut off the water supply to the homes of the approximately 5,000 people who live in Cuajone. Prior to this illegal action, on February 18, 2022, the railway between Cuajone and Ilo was also blocked by a group of community members. They claim, the Company usurped their land and demand compensation of $5.0 billion, in addition to the permanent payment of 5% of net profits.

After several unsuccessful attempts by the authorities to restore order through dialogue, on April 20, 2022, the Peruvian government declared a state of emergency in the Moquegua region. On April 21, 2022, the protesters returned the installations of the Viña Blanca water reservoir and the railway to the Company. Our personnel immediately evaluated the damage caused to the facilities by acts of vandalism and took the necessary steps to resume production at the Cuajone mining unit. On April 25, 2022, the Cuajone mine, concentrator, industrial railroad and related facilities reached full capacity. Based on the 2022 Company operating plan, the total production loss during the stoppage period was 22,208 tonnes of copper content and 485 tonnes of molybdenum, which translates into a reduction in sales of $228 million. We also recorded $14.0 million of unabsorbed fixed costs, which directly impacted the cost of sales. To mitigate the impact on sales’ contracts, measures were taken to acquire concentrates from our Mexican Operations and third parties to maintain an adequate supply to the smelter. Despite the force majeure event at Cuajone, the Company was able to fulfill all sales’commitments without delays.

On April 30, 2022 the Peruvian government issued a Ministerial Resolution to set up a three-party-dialogue-table with members of the community, government and Company officials to better understand all parties’ concerns. As of today, nine round-table meetings and three direct meeting with the community have been held. The Company has proposed plans to invest in social programs that address the needs voiced by the communities and has indicated interest in purchasing land near the Cuajone operations to establish a buffer zone to protect installations and production down the line. We strongly believe that the programs that we have proposed will make meaningful and sustainable contributions to the community’s progress and wellbeing. These efforts will be complemented by positive impacts through the Social Investment for Taxes scheme (obras por impuestos), which will allow the Peruvian Branch to fund public investments in necessary infrastructure and services and credit expenditures against its taxes.

40

Table of Contents

ECONOMIC CONSEQUENCES OF RUSSIA´S INVASION OF UKRAINE

The Ukraine-Russia war that broke out in February of 2022, has generated a series of impacts in the global economy and on international trade including, but not limited to, volatility in commodity prices, cost and supply chain pressures and availability and disruption in capital markets. This has forced companies to adjust their supply and commercial plans to deal with shipping delays for goods and higher prices for the same. The increase in the cost of oil and energy, coupled with saturation at ports, which was already high due to a surge in global economic activity after the COVID-19 pandemic ebbed, has driven up the prices of the vast majority of products and generated uncertainty in economies. Although the Company does not currently have operations in Ukraine, Russia or other parts of Europe, this situation is affecting the countries in which we operate and in which our clients and suppliers operate, although the extent of the impact varies.

As of June 30, 2022, the impact of these events was not material for the Company; however, we are monitoring and adjusting our supply schedules to reflect the delay in the delivery of our critical supplies. Currently, our sales program has suffered no impacts.

KEY MATTERS

Below, we discuss several matters that we believe are important to understand the results of our operations and financial condition. These matters include, (i) our earnings, (ii) our production, (iii) our “operating cash costs” as a measure of our performance, (iv) metal prices, (v) business segments, (vi) the effect of inflation and other local currency issues, and (vii) our capital investment and exploration program.

Earnings: The table below highlights key financial and operational data of our Company for the three and six months ended June 30, 2022 and 2021 (in millions, except copper price, percentages and per share amounts):

    

Three months ended June 30, 

Six months ended June 30, 

    

    

2022

    

2021

    

Variance

% Change

 

    

2022

    

2021

    

Variance

% Change

 

Copper price LME

4.32

4.40

(0.08)

    

(1.8)

%

4.43

4.13

0.30

    

7.3

%

Pounds of copper sold

430.7

514.9

(84.2)

 

(16.4)

%

889.2

1,044.4

(155.2)

 

(14.9)

%

Net sales

$

2,306.9

$

2,897.0

$

(590.1)

 

(20.4)

%

$

5,070.7

$

5,429.5

$

(358.8)

 

(6.6)

%

Operating income

$

808.5

$

1,675.2

$

(866.7)

 

(51.7)

%

$

2,278.6

$

3,026.8

$

(748.2)

 

(24.7)

%

Net income attributable to SCC

$

432.3

$

932.7

$

(500.4)

(53.7)

%

$

1,217.1

$

1,696.6

$

(479.5)

(28.3)

%

Earnings per share

$

0.56

$

1.21

$

(0.65)

(53.7)

%

$

1.57

$

2.19

$

(0.62)

(28.3)

%

Dividends per share

$

1.25

$

0.70

$

0.55

78.6

%

$

2.25

$

1.30

$

0.95

73.1

%

Net sales in the second quarter of 2022 were 20.4% lower than in the same period of 2021. This decrease was driven by a drop in prices for copper (-1.8% - LME) and silver (-15.4%) and by a decrease in the sales volume of all our major products due to an uptick in the finished goods inventory, a decrease in production due to the Cuajone stoppage and lower ore grades. Net sales in this quarter were also negatively affected by the accounting adjustment of $173.5 million for a price variation on sales made and not yet collected. This effect was partially offset by higher prices for molybdenum (+31.7%) and zinc (+34.8%).

Net income attributable to SCC in the second quarter of 2022 was 53.7% lower than in the same period of 2021. This scenario has been compounded by increases in costs for fuel, power and some other operating materials due to inflation. In a context impacted by a drop in copper prices, we registered a significant mark-to-market adjustment to open sales. Quarterly results were also affected by a 25,624 tonne decrease in copper production at our Peruvian operations, which was mainly attributable to the stoppage at Cuajone and lower ore grades.

41

Table of Contents

In order to avoid a force majeure event, production losses were temporarily offset with copper purchased from third parties, albeit at a higher cost.

Net sales in the first six months of 2022 were 6.6% lower than in the same period of 2021, due to lower sales volume of

copper (-14.9%), silver (-10.5%), molybdenum (-5.8%) and a mark- to-market adjustment to open sales that represents a

decrease of $143.0 million in sales with regard to the figure in the first six months of 2021. These negative variances

were partially offset by higher average metal prices for almost all our main products in the first six months of 2022:

copper (+7.3% - LME), molybdenum (+48.6%), zinc (+35.9%) and by an increase in sales volumes of molybdenum

(+13.1%) and zinc (+0.1%).

Net income attributable to SCC in the first six months of 2022 was 28.3% lower than in the same period of 2021. This decrease was mainly attributable to lower sales while operating costs had an 16.2% increase.

Production: The table below highlights our mine production data for the three and six months ended June 30, 2022 and 2021:

Three months ended June 30, 

Six months ended June 30, 

    

2022

    

2021

    

Variance

    

% Change

    

2022

    

2021

    

Variance

    

% Change

Copper (in million pounds)

 

459.5

 

522.7

 

(63.2)

 

(12.1)

%

 

932.4

 

1,048.3

 

(115.9)

 

(11.1)

%

 

Molybdenum (in million pounds)

 

13.9

 

15.4

 

(1.5)

 

(9.4)

%

 

29.6

 

31.3

 

(1.7)

 

(5.4)

%

 

Silver (in million ounces)

 

4.4

 

4.6

 

(0.2)

 

(4.3)

%

 

8.7

 

9.6

 

(0.9)

 

(9.0)

%

 

Zinc (in million pounds)

 

33.4

 

37.7

 

(4.3)

 

(11.5)

%

 

65.8

 

74.0

 

(8.2)

 

(11.1)

%

 

The table below highlights our mine production data for the three and six months ended June 30, 2022 and 2021:

Three Months Ended June 30, 

Six Months Ended June 30, 

Copper (in million pounds):

    

2022

    

2021

    

Variance

    

% Change

    

2022

    

2021

    

Variance

    

% Change

Toquepala

 

98.2

 

130.2

 

(32.0)

 

(24.5)

%

210.7

 

258.6

 

(47.9)

 

(18.5)

%

 

Cuajone

 

68.7

 

93.2

 

(24.5)

 

(26.3)

%

122.5

 

180.7

 

(58.2)

 

(32.2)

%

 

La Caridad

 

58.5

 

72.9

 

(14.4)

 

(19.8)

%

123.1

 

145.2

 

(22.1)

 

(15.3)

%

 

Buenavista

 

228.9

 

221.9

 

7.0

 

3.1

%

466.5

 

453.8

 

12.7

 

2.8

%

 

IMMSA

 

5.2

 

4.5

 

0.7

 

16.5

%

9.6

 

10.0

 

(0.4)

 

(4.2)

%

 

Total mined copper

 

459.5

 

522.7

 

(63.2)

 

(12.1)

%

932.4

 

1,048.3

 

(115.9)

 

(11.1)

%

 

Second quarter: Mined copper production in the second quarter of 2021 fell by 12.1% to 459.5 million pounds compared to 522.7 million pounds in the second quarter of 2021. This was mainly attributed to a production drop due to the Cuajone mine stoppage (-26.3%) and lower copper production at Toquepala (-24.5%) and La Caridad (-19.8%) due to lower grades. This was partially offset by an increase of production at our Buenavista (+3.1%) and IMMSA (+16.5%) mines.

Molybdenum production decreased 9.4% in the second quarter of 2022 with regard to the levels registered in the second quarter of 2021. This was attributable to a decrease in production at our Cuajone (-23.9%) mine, which was primarily attributable to stoppage at this unit, and secondarily to a decrease in Toquepala (-5.7%) and La Caridad (-12.5%) mines due to lower grades and recoveries. This effect was partially offset by a increase in production at the Buenavista (+3.3%) mines due to higher grades.

Silver mine production decreased 4.3% in the second quarter of 2022, compared with the same period of 2021, due to a drop in production at the Toquepala (-27.6%), Cuajone (-22.7%) and La Caridad (-12.5%) operations. This was offset by higher production an the Buenavista (+5.5%) and IMMSA (+9.7%) operations.

Zinc production decreased 11.5% in the second quarter of 2022 compared with the same period of 2021. This decrease was mainly attributable to a drop in production at the Charcas and San Martin units, which was attributable to a decrease in processed material and lower average zinc grades.

42

Table of Contents

Six months: Mined copper production in the first six months of 2022 decreased 11.1% to 932.4 million pounds compared to 1,048.3 million pounds in the same period of 2021. This decrease was mainly attributable to the Cuajone

mine stoppage (-32.2%) and a drop in production at our Toquepala (-18.5%), La Caridad (-15.3%) and IMMSA (-4.2%)

mines due to lower grades. This effect was slightly offset by an increase in production at Buenavista (+2.8%) mine.

Molybdenum production decreased 5.4% in the first six months of 2022 compared to the same period in 2021; this was mainly due to lower production at our Cuajone (-33.2%) and La Caridad (-7.4%) mines, which was partially offset by higher production at the Toquepala (+1.9%) and Buenavista (+9.6%) mines.

Silver mine production decreased 9.0% in the first six months of 2022; this was principally due to lower production at our Toquepala (-25.9%), Cuajone (-28.6%), La Caridad (-9.1%) and IMMSA (-3.6%) operations, which was partially offset by higher production at Buenavista (+4.0%) mine.

Zinc production decreased 11.1% in the first six months of 2022 due to a fall in production at our Charcas, San Martin and Santa Barbara mines, principally due to lower grades.

Operating Cash Costs: An overall benchmark that we use, which is a common industry metric to measure performance is operating cash costs per pound of copper produced. Operating cash cost is a non-GAAP measure that does not have a standardized meaning and may not be comparable to similarly titled measures provided by other companies. This non-GAAP information should not be considered in isolation or as substitute for measures of performance determined in accordance with GAAP. A reconciliation of our operating cash cost per pound of copper produced to the cost of sales (exclusive of depreciation, amortization and depletion) as presented in the consolidated statement of earnings is presented under the subheading, “Non-GAAP Information Reconciliation” on page 59. We disclose operating cash cost per pound of copper produced, both before and net of by-product revenues.

We define operating cash cost per pound of copper produced before by-product revenues as cost of sales (exclusive of depreciation, amortization and depletion), plus selling, general and administrative charges, treatment and refining charges net of sales premiums; less the cost of purchased concentrates, workers’ participation and other miscellaneous charges, including royalty charges, and the change in inventory levels; divided by total pounds of copper produced by our own mines.

In our calculation of operating cash cost per pound of copper produced, we exclude depreciation, amortization and depletion, which are considered non-cash expenses. Exploration is considered a discretionary expenditure and is also excluded. Workers’ participation provisions are determined on the basis of pre-tax earnings and are also excluded. Additional exclusions from operating cash costs are items of a non-recurring nature and the mining royalty charge as it is based on various calculations of taxable income, depending on which jurisdiction, Peru or Mexico, is imposing the charge. We believe these adjustments allow our management and stakeholders to more fully visualize our controllable cash cost, which we believe is one of the lowest of all copper-producing companies of similar size.

We define operating cash cost per pound of copper produced net of by-product revenues as operating cash cost per pound of copper produced, as defined in the previous paragraph, less by-product revenues and net revenue (loss) on sale of metal purchased from third parties.

In our calculation of operating cash cost per pound of copper produced, net of by-product revenues, we credit against our costs the revenues from the sale of all our by-products, including, molybdenum, zinc, silver, gold, etc. and the net revenue (loss) on sale of metals purchased from third parties. We disclose this measure including the by-product revenues in this way because we consider our principal business to be the production and sale of copper. As part of our copper production process, much of our by-products are recovered. These by-products, as well as the processing of copper purchased from third parties, are a supplemental part of our production process and their sales value contribute to covering part of our incurred fixed costs. We believe that our Company is viewed by the investment community as a copper company, and is valued, in large part, by the investment community’s view of the copper market and our ability to produce copper at a reasonable cost.

43

Table of Contents

We believe that both of these measures are useful tools for our management and our stakeholders. Our cash costs before by-product revenues allow us to monitor our cost structure and address areas of concern within operating management. The measure operating cash cost per pound of copper produced net of by-product revenues is a common measure used in the copper industry and is a useful management tool that allows us to track our performance and better allocate our resources. This measure is also used in our investment project evaluation process to determine a project’s potential contribution to our operations, its competitiveness and its relative strength in different price scenarios. The expected contribution of by-products is generally a significant factor used by the copper industry to determine whether to move forward or not in the development of a new mining project. As the price of our by-product commodities can have significant fluctuations from period to period, the value of its contribution to our costs can be volatile.

Our operating cash cost per pound of copper produced, before and net of by-product revenues, is presented in the table below for the three and six months ended June 30, 2022 and 2021:

Operating cash cost per pound of copper produced (1)

(In millions, except cost per pound and percentages)

Three Months Ended June 30, 

 

Six Months Ended June 30, 

 

    

2022

    

2021

    

Variance

    

% Change

    

2022

    

2021

    

Variance

    

% Change

Total operating cash cost before by‑product revenues

$

951.2

$

817.9

$

133.3

 

16.3

%

$

1,788.9

$

1,589.3

$

199.6

 

12.6

%

Total by‑product revenues

$

(465.3)

$

(521.1)

$

55.8

 

(10.7)

%

$

(1,048.8)

$

(914.8)

$

(134.0)

 

14.6

%

Total operating cash cost net of by‑product revenues

$

485.9

$

296.8

$

189.1

 

63.7

%

$

740.1

$

674.5

$

65.6

 

9.7

%

Total pounds of copper produced(2)

 

442.9

 

507.7

 

(64.8)

 

(12.8)

%

 

900.7

 

1,018.5

 

(117.8)

 

(11.6)

%

Operating cash cost per pound before by‑product revenues

$

2.15

$

1.61

$

0.54

 

33.5

%

$

1.99

$

1.56

$

0.43

 

27.6

%

By‑products per pound revenues

$

(1.05)

$

(1.02)

$

(0.03)

 

2.9

%

$

(1.16)

$

(0.90)

$

(0.26)

 

28.9

%

Operating cash cost per pound net of by‑product revenues

$

1.10

$

0.59

$

0.51

 

86.4

%

$

0.82

$

0.66

$

0.16

 

24.2

%

(1) These are non-GAAP measures. Please see page 59 for reconciliation to GAAP measure.
(2) Net of metallurgical losses.

As seen in the table above, our per pound cash cost before by-product revenues in the second quarter of 2022 was 33.5% higher than in the same period of 2021. This increase was mainly attributable to an increase in production costs and the

unit cost effect generated by a 12.1% decrease in pounds of copper produced. Our cash cost per pound net of by-product

revenue for the second quarter of 2022 increased 86.4% when compared to the same period of 2021. This was mainly

attributable to a significant decrease in by-product revenues.

For the six months ended June 30, 2022, our per pound cash cost before by-product revenues was 27.6% higher than in

the same period of 2021. This increase was mainly driven by an increase in production costs and the unit cost effect

generated by a 11.6% decrease in pounds of copper produced. The operating cash cost per pound of copper net of by product revenue was $0.82 in the six months ended June 30, 2022. This represented an increase of 24.2 % compared to

the $0.66 reported in the same period of 2021. These results were mainly due to higher production costs and the unit cost effect generated by a 11.6% decrease in pounds of copper produced.

Metal 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.

We are subject to market risks arising from the volatility of copper and other metal prices. For the remaining six months of 2022, assuming that expected metal production and sales are achieved, tax rates remain unchanged and no effects are generated by potential hedging programs, metal price sensitivity factors would indicate the following change in estimated net income attributable to SCC resulting from metal price changes:

44

Table of Contents

    

Copper

    

Molybdenum

    

Zinc

    

Silver

Change in metal prices (per pound except silver—per ounce)

$

0.10

$

1.00

$

0.10

$

1.00

Change in net earnings (in millions)

$

59.0

$

16.3

$

7.5

$

5.8

Business Segments: We view our Company as having three reportable segments and manage it on the basis of these segments. These segments are (1) our Peruvian operations, (2) our Mexican open-pit operations and (3) our Mexican underground operations, known as our IMMSA unit. Our Peruvian operations include the Toquepala and Cuajone mine complexes and the smelting and refining plants, industrial railroad and port facilities that service both mines. The Peruvian operations produce copper, with significant by-product production of molybdenum, silver and other material. Our Mexican open-pit operations include La Caridad and Buenavista mine complexes, the smelting and refining plants and support facilities, which service both mines. The Mexican open pit operations produce copper, with significant by-product production of molybdenum, silver and other material. Our IMMSA unit includes five underground mines that produce zinc, lead, copper, silver and gold, and several industrial processing facilities for zinc, copper and silver.

Segment information is included in our review of “Results of Operations” in this item and also in Note 14 “Segment and Related Information” of our condensed consolidated financial statements.

Inflation and Exchange Rate Effect of the Peruvian Sol and the Mexican Peso: Our functional currency is the U.S. dollar and our revenues are primarily denominated in U.S. dollars. Significant portions of our operating costs are denominated in Peruvian sol and Mexican pesos. Accordingly, when inflation and currency devaluation/appreciation of the Peruvian currency and Mexican currency occur, our operating results can be affected. In recent years, we believe such changes have not had a material effect on our results and financial position. Please see Item 3. “Quantitative and Qualitative Disclosures about Market Risk” for more detailed information.

Capital Investment Programs: We made capital investments of $429.7 million in the six months ended June 30, 2022, compared to $452.4 million in the same period of 2021. In general, the capital investments and investment projects described below are intended to increase production, decrease costs or address social and environmental commitments.

Set forth below are descriptions of some of our current expected capital investment programs. We expect to meet the cash requirements for these projects by utilizing cash on hand; internally generated funds and additional external financing, including funding received in September 2019. All capital spending plans will continue to be reviewed and adjusted to respond to changes in the economy and market conditions.

Projects in Mexico:

Buenavista Zinc - Sonora: This project is located within the Buenavista facility and includes the development of a new concentrator to produce approximately 100,000 tonnes of zinc and 20,000 tonnes of copper per year. We have completed the engineering study. In order to continue with the project, stronger preventive measures to combat COVID-19 have been put in place. Procurement has progressed 99% and all the main equipment is on site. Construction site works are in progress. The project has all the necessary permits and the capital budget is $413 million. We expect to initiate operations in the second half of 2023. As of June 30, 2022, we had invested $264.9 million in this project. When completed, we anticipate that this new facility will double the Company’s zinc production capacity and will provide 490 direct jobs and 1,470 indirect jobs.

Pilares - Sonora: Located six kilometers from La Caridad, this project consists of an open-pit mine operation with an annual production capacity of 35,000 tonnes of copper in concentrate. A new 25-meter wide off-road facility for mining trucks has been built and will be used to transport the ore from the pit to the primary crushers at the La Caridad copper concentrator. This project will significantly improve the overall mineral ore grade (combining the 0.78% expected from Pilares with 0.34% from La Caridad). The budget for Pilares is $159 million of which we have invested $80.9 million as of June 30, 2022.

45

Table of Contents

The project has obtained all permits and licenses required and we expect to begin production in the last quarter of 2022.

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. We estimate a development investment of approximately $310 million. The results from experimental pads in leaching process have confirmed adequate levels of copper recovery. We expect this project to start production in 2024 with an expected mine life of 13 years. The basic engineering study is finished and the Company continues developing the project and site environmental activities.

Lime plant - Sonora: As part of our cost improvement projects, we are building a new lime plant with a production capacity of 600 metric tonnes per day, which will be the largest lime plant of Mexico. This facility will allow us to reduce to approximately 50% our current lime cost at our Mexican operations. The total budget for the plant is $63.1 million, of which we have spent $54.0 million as of June 30, 2022. The furnace of the plant started operations in the second quarter and we expect to reach full capacity in the third quarter of 2022.

Projects in Peru:

Quebrada Honda dam expansion – Tacna: This project aims to enlarge the main and lateral dams in Quebrada Honda and includes the relocation and repowered of some facilities due to dam growth and implementation of other facilities for water recovery, among other factors. As of June 30, 2022, pre-commissioning and commissioning activities are in progress with work on three fronts. This project has a total budget of $179.4 million, of which we have invested $152.9 million as of June 30, 2022.

Tia Maria - Arequipa: On July 8, 2019, we were granted the construction permit for this 120,000 tonne annual SX-EW copper greenfield project with a total capital budget of $1,400 million. The Government awarded the permit after completing an exhaustive review process, complying with all established regulatory requirements and addressing all observations raised. The challenges surrounding the construction permit were overcome when on October 30, 2019, the Mining Council of the Peruvian Ministry of Energy and Mines ratified the construction permit for the Tia Maria project.

The Company has been consistently working to promote the welfare of the Islay province population. As part of these efforts, we have implemented successful social programs in education, healthcare and productive development to improve the quality-of-life in the region. We have also promoted agricultural and livestock activities in the Tambo Valley and supported growth in manufacturing, fishing and tourism in Islay.

In 2021, SPCC fortified its relation with the regional government and successfully overcame its opposition to project initiation. This new consensus was reflected in an agreement for Social Investment for Taxes for projects relative to health facilities and roads. Our efforts to ensure the current and long-term welfare of the population in the area of influence of the Tia Maria project were recognized by several local associations, which sent letters to the National Government to request project initiation.

We reiterate our view that the initiation of construction activities at Tia Maria will generate significant economic opportunities for the Islay province and the Arequipa region. During the construction and operation phase, we will make it a priority to hire local labor to fill the 9,000 jobs that we expect to generate during Tia Maria’s construction phase. Additionally, from day one of our operations, we will generate significant contributions to revenues in the Arequipa region.

The Company has made an offer to the Peruvian government to build the Paltiture dam, instead of a desalinization plant originally proposed, to provide water to both the project and the community. The dam will have a total capacity of 73 million cubic meters, of which the Company will use a maximum of 10 million cubic meters. The remaining 63 million will be for community use. The dam, if built, will require a much higher investment than the $100 million budget planned for the desalinization plant.

46

Table of Contents

If the offer is accepted, the Company would take the appropriate steps to make the necessary adjustments to the project plan and update the required permits for its construction. Nevertheless, we believe that by increasing the water supply, it will generate more palpable benefits for local communities.

We expect the Peruvian government to continue to acknowledge the significant progress the project has made on the social front and the important contributions that Tia Maria will generate for Peru´s economy and, consequently, take the necessary steps to provide SCC with adequate support to initiate construction.

This greenfield project, located in Arequipa, Peru, will use state of the art SX-EW technology with the highest international environmental standards. SX-EW facilities are the most environmentally friendly in the industry due to their technical process with no emissions released into the atmosphere. 

Potential projects

We have a number of other projects that we may develop in the future. We continuously evaluate new projects on the basis of our long-term corporate objectives, expected return on investment, environmental concerns, required investment and estimated production, among other considerations. All capital spending plans will continue to be reviewed and adjusted to respond to changes in the economy and market conditions.

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 ore grade of 0.27%. The project includes an open-pit mine with a combined concentrator and SX-EW operations. Annual production is expected to total 190,000 tonnes of copper and 105,000 ounces of gold. The Company has started the baseline study and is reviewing the basic engineering analysis to request the environmental impact permit. Several years back, we began to acquire the rights to all relevant mining concessions in the area; this process was completed in 2020.

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%. Los Chancas project envisions an open-pit mine with a combined operation of concentrator and SX-EW processes to produce 130,000 tonnes of copper and 7,500 tonnes of molybdenum anually. The estimated capital investment is $2,600 million and the project is expected to be in operation in 2027. In the first quarter of 2022, we continued to engage in social and environmental improvements for the local communities and we worked on the project´s environmental impact assessment.

In February 2022, a group of illegal miners occupied part of the lands of the project and started to produce copper with a low scale artisan process. On May 31, 2022, a group of people attacked the project mining camp, causing a fire and completely destroyed the installations. There were no fatalities to regret. As of today, these illegal miners are working in the zone. The Company expects strong action from the authorities to restore the lands to the Company so that it can continue to develop the project.

Michiquillay Project - Cajamarca: In June 2018, Southern Copper signed a contract and made an initial payment of $12.5 million for the acquisition of the Michiquillay project in Cajamarca, Peru. In June 2021, the Company paid an additional $12.5 million to acquire the project. The Company has created a multidisciplinary management team to plan the development of this project. As part of this plan, the Company has established venues of contact with the local and regional authorities and communities to promote programs for the sustainable development in the area. In 2021, the Company signed Social Agreements with the Michiquillay and La Encañada communities. Additionally, in October 2021 the Peruvian Ministry of Energy and Mines approved the semi-detailed Environmental Impact Study for the project. At the end of June 2022, the Company has all the required permits for exploration activities. These events are important steps that will allow Southern Copper to initiate an in-depth exploration program in the third quarter of 2022.

The Social Agreements with the Michiquillay and the Encañada communities represent an opportunity to improve the quality of life of the residents of those communities via our strong social programs and backed by a solid framework for technical work at the project level. The main commitments signed by the Company in the social agreements are related to providing support for agricultural and livestock activities, economic development of local initiatives, and social programs in favor of education, water management, waste disposal, and healthcare for vulnerable groups.

47

Table of Contents

In June, 2022, the Company notified the Peruvian authorities the end of the suspension period and the start of the pre-operational period that lasts 12 years and it can be extended for three more years. The start of the pre-operational

period does not imply a payment obligation. The Company must support an investment of $20 million in the next five

years which includes exploration activities as well as the development of social programs.

Michiquillay is a world class mining project with inferred 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, at a competitive cash-cost. We estimate an investment of approximately $2.5 billion will be required and expect production start-up by 2028 and that Michiquillay will become one of Peru´s largest copper mines. The project will create significant business opportunities in the Cajamarca region; generate new jobs for the local communities and contribute with taxes and royalties to the local, regional and national governments.

The above information is based on estimates only. We cannot make any assurances that we will undertake any of these projects or that the information noted is accurate.

ENVIRONMENTAL, SOCIAL AND GOVERNANCE (“ESG”)

In line with best practice, the Board of Directors has approved the formation of a new Sustainability Committee chaired by an independent director. The purpose of this Committee is to support the Board of Directors of Southern Copper Corporation in developing and monitoring the Company's compliance with on-going commitments to the environment, health and safety, communities, human rights, and corporate governance. This is a significant step in our pledge to a robust and strong ESG performance.

Quoting the Chairman of our Board of Directors in the letter that accompanies the 2021 Sustainable Development Report of our holding, Grupo Mexico: "A business model focused on responsible and transparent management in the social, economic and environmental spheres are essential to guarantee sustainable development." S&P Global has recognized SCC’s sustainability efforts by including it in a new index, S&P/BVL Peru General ESG, as of April of this year. This index is the first of its kind in the Peruvian market and recognizes a total of 17 companies that meet high standards for environmental, social and governance management. In light of its improvements in the realm of ESG, S&P has also upgraded the Company’s Sustainability Assessment, which rose from 50/100 points in 2020 to 61/100 in 2021 ( 22% increase). These results led to our inclusion in the Dow Jones Sustainability index for the MILA region in 2019 and we have also been included in the 2022 Sustainability Yearbook. We aim to improve our sustainability management and performance to ensure that we maintain and continuously improve our sustainability ratings.

Certification of our environmental and occupational health and safety management systems allows the Company to reinforce a preventive culture that is aligned with best international practices. We continue to make progress in our quest to achieve ISO 45001 and 14001 certifications. During the second quarter of 2022, the Maritime Terminal of Guaymas, Mexico received ISO 45001 certification and the Charcas unit in Mexico became the first of our underground mines to obtain ISO 14001 certification.

Given the importance of water for our operations and in the broader perspective of climate change, the Company recently appointed a Water Resources Director at the executive level, whose main function will be to coordinate the actions needed to promote water management at all our operations and ensure our place as a responsible partner in the regional management of this valuable resource.

SCC seeks sustainability by managing different fronts. The Metallurgical Complex in Sonora, where we smelt and refine material mined from the region, was recognized in the ranking of the 10 Best Places to Work for Women. With this recognition, this plant has consolidated its position as the employer of choice for the best professionals in the country and has strengthened an organizational culture based on safety, predictability and employee trust. This industrial complex was also given the 2021 National Export Award in the category of Large Industrial Exporting Companies for its contribution to foreign trade and international business in the country.

48

Table of Contents

This distinction recognizes SCC’s responsible production of essential raw materials; environmental preservation efforts; and the economic benefits and support it provides to bolster the well-being of workers and their families.

In Peru, the Prime Minister joined us for the inauguration of the Cularjahuira dam ($11.5 million), which was the fruit of joint investment between the Company, government authorities and the highland community of Camilaca. This project will help strengthen agricultural activities in the province of Candarave (near our Toquepala operations) and will be complemented by work on a new Callazas dam ($35 million), which SCC hopes to finance through the “Social Investment for Taxes” (obras por impuestos) mechanism. These efforts are evolving in a context marked by record-highs for the Company’s tax contributions to the regional governments of Moquegua and Tacna in 2021.

ACCOUNTING ESTIMATES

Our discussion and analysis of financial condition and results of operations, as well as quantitative and qualitative disclosures about market risks, are based upon our consolidated financial statements, which have been prepared in accordance with U.S. GAAP. Preparation of these consolidated financial statements requires our management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. We make our best estimate of the ultimate outcome for these items based on historical trends and other information available when the financial statements are prepared. Changes in estimates are recognized in accordance with the accounting rules for the estimate, which is typically in the period when new information becomes available to management. Areas where the nature of the estimate makes it reasonably possible that actual results could materially differ from amounts estimated include: ore reserves, revenue recognition, ore stockpiles on leach pads and related amortization, estimated impairment of assets, asset retirement obligations, determination of discount rates related to the financial lease liabilities, classification of operating leases versus financial leases, valuation allowances for deferred tax assets, unrecognized tax benefits and fair value of financial instruments. We base our estimates on historical experience and on various other assumptions that we believe reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions.

RESULTS OF OPERATIONS

The following highlights key financial results for the three and six months ended June 30, 2022 and 2021 (in millions):

    

Three Months Ended

    

    

Six Months Ended

    

    

June 30, 

June 30, 

Statement of Earnings Data

    

2022

    

2021

    

Variance

    

% Change

    

2022

    

2021

    

Variance

    

% Change

Net sales

$

2,306.9

$

2,897.0

$

(590.1)

$

(20.4)

%

$

5,070.7

$

5,429.5

$

(358.8)

$

(6.6)

%

Operating costs and expenses

 

(1,498.4)

 

(1,221.8)

 

(276.6)

 

22.6

%

 

(2,792.1)

 

(2,402.7)

 

(389.4)

 

16.2

%

Operating income

 

808.5

 

1,675.2

 

(866.7)

 

(51.7)

%

 

2,278.6

 

3,026.8

 

(748.2)

 

(24.7)

%

Non‑operating income (expense)

 

(77.0)

 

(96.2)

 

19.2

 

(20.0)

%

 

(148.4)

 

(181.1)

 

32.7

 

(18.1)

%

Income before income taxes

 

731.5

 

1,579.0

 

(847.5)

 

(53.7)

%

 

2,130.2

 

2,845.7

 

(715.5)

 

(25.1)

%

Income taxes

 

(296.4)

(647.7)

351.3

(54.2)

%

(908.5)

(1,155.2)

246.7

(21.4)

%

Equity earnings of affiliate

 

(0.9)

5.1

(6.0)

(117.6)

%

0.4

13.1

(12.7)

(96.9)

%

Net income attributable to non‑controlling interest

 

(1.9)

 

(3.7)

 

1.8

 

(48.6)

%

 

(5.0)

 

(7.0)

 

2.0

 

(28.6)

%

Net income attributable to SCC

$

432.3

$

932.7

$

(500.4)

$

(53.7)

%

$

1,217.1

$

1,696.6

$

(479.5)

$

(28.3)

%

49

Table of Contents

NET SALES

Net sales in the second quarter of 2022 were 20.4% lower than in the same period of 2021. This decrease was driven by a drop in prices for copper (-1.8% - LME) and silver (-15.4%) and by a decrease in sales volumes for copper (-16.3%), molybdenum (-9.4%), silver (-3.3%) and zinc (-27.1%). This effect was slightly offset by higher molybdenum (+31.7%) and zinc (34.8%) prices. The second quarter of 2022 sales value also includes a negative adjustment of provisional sales of $112.6 million compared with a positive adjustment of $60.9 million in the second quarter of 2021 due to a decrease in copper and molybdenum prices.

Net sales in the first six months of 2022 were 6.6% lower than in the same period of 2021. This decrease was driven by lower sales volumes of copper (-14.9%), molybdenum (-5.8%) and silver (-10.5%) as well as a fall in prices of silver (-12.0%). This effect was offset by higher sales volumes of zinc (+13.1%) and an increase in copper (+7.3%), molybdenum (+48.6%) and zinc (+35.9%) prices.

    

    

Three Months Ended June 30, 

 

    

Six Months Ended June 30, 

 

    

2022

    

2021

    

% Change

    

2022

    

2021

    

% Change

Copper price ($per pound—LME)

$

4.32

$

4.40

(1.8)

%

$

4.43

$

4.13

7.3

%

Copper price ($per pound—COMEX)

$

4.34

$

4.43

(2.0)

%

$

4.44

$

4.14

7.2

%

Molybdenum price ($per pound)(1)

$

18.30

$

13.89

31.7

%

$

18.64

$

12.54

48.6

%

Zinc price ($per pound—LME)

$

1.78

$

1.32

34.8

%

$

1.74

$

1.28

35.9

%

Silver price ($per ounce—COMEX)

$

22.65

$

26.78

(15.4)

%

$

23.35

$

26.54

(12.0)

%

(1) Platts Metals Week Dealer Oxide

The table below provides our metal sales as a percentage of our total net sales for the three and six months ended June 30, 2022 and 2021:

    

Three Months Ended

Six Months Ended

    

June 30, 

June 30, 

Sales as a percentage of total net sales

    

2022

    

2021

    

    

2022

    

2021

Copper

 

77.9

%  

81.1

%

 

78.0

%  

82.2

%

Molybdenum

 

8.6

%  

9.7

%

 

9.3

%  

8.3

%

Silver

 

4.3

%  

4.1

%

 

4.0

%  

4.8

%

Zinc

 

3.5

%  

2.8

%

 

3.5

%  

2.2

%

Other by‑products

 

5.7

%  

2.3

%

 

5.2

%  

2.5

%

Total

 

100.0

%  

100.0

%

 

100.0

%  

100.0

%

The table below provides our copper sales by type of product for the three and six months ended June 30, 2022 and 2021. The difference in value between products is the level of processing. At the market price, concentrates take a discount since they require smelting and refining processes, while refined and rod copper receive premiums due to their purity and presentation.

    

Three Months Ended June 30, 

    

Six Months Ended June 30, 

    

Copper Sales (million pounds)

    

2022

    

2021

    

Variance

    

% Change

    

2022

    

2021

    

Variance

    

% Change

Refined (including SX‑EW)

246.0

210.3

35.7

17.0

%

498.1

446.3

51.8

11.6

%

Rod

115.5

122.3

(6.8)

(5.6)

%

227.7

245.8

(18.1)

(7.4)

%

Concentrates and other

69.2

182.3

(113.1)

(62.0)

%

163.4

352.3

(188.9)

(53.6)

%

Total

430.7

514.9

(84.2)

(16.4)

%

889.2

1,044.4

(155.2)

(14.9)

%

50

Table of Contents

The table below provides our copper sales volume by type of product as a percentage of our total copper sales volume for the three and six months ended June 30, 2022 and 2021:

Three months ended June 30, 

Six months ended June 30, 

Copper Sales by product type

    

2022

    

2021

    

2022

    

2021

    

Refined (including SX‑EW)

 

57.1

%  

40.8

%  

 

56.0

%  

42.7

%  

Rod

 

26.8

%  

23.8

%  

 

25.6

%  

23.6

%  

Concentrates and other

 

16.1

%  

35.4

%  

 

18.4

%  

33.7

%  

Total

 

100.0

%  

100.0

%  

 

100.0

%  

100.0

%  

OPERATING COSTS AND EXPENSES

The table below summarizes the production cost structure by major components as a percentage of total production cost:

    

Three months ended June 30, 

    

Six months ended June 30, 

2022

    

2021

2022

    

2021

Power

 

17.6

%  

16.4

%

 

17.5

%  

18.0

%

Labor

 

10.9

%  

11.7

%

 

11.2

%  

11.8

%

Fuel

 

17.6

%  

14.3

%

 

17.0

%  

14.2

%

Maintenance

 

18.5

%  

21.6

%

 

19.0

%  

21.1

%

Operating material

 

19.6

%  

17.2

%

 

19.8

%  

17.0

%

Other

 

15.8

%  

18.8

%

 

15.5

%  

17.9

%

Total

 

100.0

%  

100.0

%

 

100.0

%  

100.0

%

Second quarter: Operating costs and expenses were $1,498.4 million in the second quarter of 2022 compared to $1,221.8 million in the same period of 2021. The increase of $276.6 million was primarily due to:

Operating cost and expenses for the second quarter of 2021

    

$

1,221.8

Plus:

Increase in other cost of sales (exclusive of depreciation, amortization and depletion) mainly due to increases in fuel and power costs; this was partially offset by foreign currency effect.

 

119.0

Increase in the volume and cost of metals purchased from third parties.

 

65.7

Increase in worker participation expense (including bonus at our Mexican Operations).

76.5

Increase in depreciation, amortization and depletion expense.

13.6

Increase in exploration expense.

 

2.3

Less:

Decrease in selling, general and administrative expenses.

(0.5)

Operating cost and expenses for the second quarter of 2022

$

1,498.4

Six months: Operating costs and expenses were $2,792.1 million in the first six months of 2022 compared to $2,402.7 million in the same period of 2020. The increase of $389.4 million was primarily due to:

Operating cost and expenses for the first six months of 2021

    

$

2,402.7

Plus:

Increase in other cost of sales (exclusive of depreciation, amortization and depletion) mainly due to increases in fuel and power costs and other production costs. Higher sales expenses as well as a foreign currency effect; this was partially offset by lower inventory consumption.

199.5

Increase in the volume and cost of metals purchased from third parties.

    

 

115.5

Increase in worker participation expense (including bonus at our Mexican Operations).

60.1

Increase in depreciation, amortization and depletion expense.

 

9.6

Increase in exploration expense.

 

5.1

Less:

Decrease in selling, general and administrative expenses.

 

(0.4)

Operating cost and expenses for the first six months of 2022

$

2,792.1

51

Table of Contents

NON-OPERATING INCOME (EXPENSES)

Non-operating income (expense) represented a net expense of $77.0 million and $148.4 million in the three and six months that ended on June 30, 2022 compared to a net expense of $96.2 million and $181.1 million in the three and six months ended June 30, 2021.

Second quarter: The $19.2 million decrease in the expense level was principally due to:

$12.1 million decrease in miscellaneous expense, net, which was partially offset by
$3.0 million increase in interest income,
$0.1 million increase in interest expense, and
$4.0 million increase in capitalized interest.

Six months: The $32.7 million decrease in the expense level was principally due to:

$21.6 million decrease in miscellaneous expense, net; which was partially offset by a
$1.7 million increase in interest expense,
$7.6 million increase in capitalized interest,
$5.2 million increase in interest income.

INCOME TAXES

    

Six Months Ended

    

June 30, 

2022

    

2021

Provision for income taxes ($in millions)

$

908.5

$

1,155.2

Effective income tax rate

 

42.6

%  

 

40.6

%

In addition to the income taxes of Peru, Mexico and the United States, the provision for income taxes also includes the mining royalties from Peru and Mexico and the Peruvian special mining tax.

SEGMENT RESULT ANALYSIS

We have three segments: the Peruvian operations, the Mexican open-pit operations and the Mexican underground mining operations.

The table below presents information regarding the volume of our copper sales by segment for the three and six months ended June 30, 2022 and 2021:

    

Three Months Ended June 30, 

    

Six Months Ended June 30, 

    

Copper Sales (million pounds)

    

2022

    

2021

    

Variance

    

% Change

    

2022

    

2021

    

Variance

    

% Change

Peruvian operations

201.4

 

216.7

(15.3)

 

(7.1)

%

388.5

 

430.6

(42.1)

 

(9.8)

%

Mexican open‑pit

265.3

 

298.1

(32.8)

 

(11.0)

%

559.9

 

610.6

(50.7)

 

(8.3)

%

Mexican IMMSA unit

7.0

 

6.7

0.3

 

4.5

%

12.6

 

13.1

(0.5)

 

(3.8)

%

Other and intersegment elimination

(43.0)

 

(6.6)

(36.4)

 

551.5

%

(71.9)

 

(9.9)

(62.0)

 

626.3

%

Total copper sales

430.7

 

514.9

(84.2)

 

(16.4)

%

889.1

 

1,044.4

(155.3)

 

(14.9)

%

52

Table of Contents

The table below presents information regarding the volume of sales by segment of our significant by-products for the three and six months ended June 30, 2022 and 2021:

Three Months Ended June 30, 

Six Months Ended June 30, 

    

By‑product Sales (million pounds, except silver—million ounces)

    

2022

    

2021

    

Variance

    

% Change

    

2022

    

2021

    

Variance

    

% Change

Peruvian operations:

Molybdenum contained in concentrate

6.2

7.1

(0.9)

 

(12.7)

%

13.3

14.7

(1.4)

 

(9.5)

%

 

Silver

1.1

1.3

(0.2)

 

(15.4)

%

2.1

2.5

(0.4)

 

(16.0)

%

 

Mexican open‑pit operations:

  

 

  

  

 

  

 

Molybdenum contained in concentrate

7.6

8.2

(0.6)

 

(7.3)

%

16.1

16.5

(0.4)

 

(2.4)

%

 

Silver

2.6

2.5

0.1

 

4.0

%

5.4

5.2

0.2

 

3.8

%

 

IMMSA unit

  

 

  

  

 

  

 

Zinc‑refined and in concentrate

42.8

58.8

(16.0)

 

(27.2)

%

97.7

86.4

11.3

 

13.1

%

 

Silver

1.6

1.4

0.2

 

14.3

%

3.2

3.3

(0.1)

 

(3.0)

%

 

Other and intersegment elimination

  

 

  

  

 

  

 

Silver

(0.9)

(0.6)

(0.3)

 

50.0

%

(1.8)

(1.1)

(0.7)

 

63.6

%

 

Total by‑product sales

  

 

  

  

 

  

 

Molybdenum contained in concentrate

13.8

15.3

(1.5)

 

(9.8)

%

29.4

31.2

(1.8)

 

(5.8)

%

 

Zinc‑refined and in concentrate

42.8

58.8

(16.0)

 

(27.2)

%

97.7

86.4

11.3

 

13.1

%

 

Silver

4.4

4.6

(0.2)

 

(4.3)

%

8.9

9.9

(1.0)

 

(10.1)

%

 

Peruvian Operations:

    

Three Months Ended June 30, 

    

Six Months Ended June 30, 

2022

    

2021

Variance

% Change

2022

    

2021

Variance

    

% Change

Net sales

$

910.9

$

1,142.2

$

(231.3)

(20.3)

%

$

2,005.7

$

2,098.1

$

(92.4)

(4.4)

%

Operating costs and expenses

 

(684.6)

 

(507.8)

 

(176.8)

 

34.8

%

 

(1,246.6)

 

(987.5)

 

(259.1)

26.2

%

Operating income

$

226.3

$

634.4

$

(408.1)

(64.3)

%

$

759.1

$

1,110.6

$

(351.5)

(31.6)

%

Net sales in the second quarter of 2022 were $910.9 million compared to $1,142.2 million in the second quarter of 2021. The decrease in net sales was mainly driven by a drop in prices for copper (-1.8%) and silver (-15.4%) and lower sales volumes of copper (-7.1%), silver (-15.4%) and molybdenum (-12.7%). This effect was slightly offset by higher molybdenum (+31.7%) prices.

Operating costs and expenses in the second quarter of 2022 increased by $176.8 million to $684.6 million compared to $507.8 million in the same period of 2021. This was primarily due to:

Operating costs and expenses for the second quarter of 2021

    

$

507.8

Plus:

 

  

Increase in the cost of metals purchased from third parties.

221.0

Increase in depreciation, amortization and depletion expense.

 

12.4

Increase in exploration expenses.

 

0.8

Increase in selling, general and administrative expenses.

0.5

Less:

Decrease in cost of sales (exclusive of depreciation, amortization and depletion) mainly due to lower workers' participation expense and lower inventory consumption; this was partially offset by higher fuel and power costs.

(57.9)

Operating costs and expenses for the second quarter of 2022

$

684.6

Net sales in the first six months of 2022 were $2,005.7 million compared to $2,098.1 million in the same period of 2021. The decrease in net sales was mainly driven by lower sales volumes of copper (-9.8%), silver (-16.0%) and molybdenum (-9.5%) and by a decrease in the price of silver (-12.0%). This effect was largely offset by an increase in copper (+7.3%) and molybdenum (+48.6%) prices.

53

Table of Contents

Operating costs and expenses in the first six months of 2022 increased by $259.1 million to $1,246.6 million compared to $987.5 million in the same period of 2021. This was primarily due to:

Operating costs and expenses for the first six months of 2021

    

$

987.5

Plus:

 

  

Increase in cost of metals purchased from third parties.

230.9

Increase in cost of sales (exclusive of depreciation, amortization and depletion) mainly due to higher fuel and power costs as well as a foreign currency effect; this was partially offset by lower workers' participation expense, higher inventory consumption and capitalized leachable material.

16.4

Increase in depreciation, amortization and depletion expense.

8.6

Increase in exploration expenses.

 

3.6

Less:

Increase in selling, general and administrative expenses.

 

(0.4)

Operating costs and expenses for the first six months of 2022

$

1,246.6

Mexican Open-pit Operations:

Three Months Ended June 30, 

Six Months Ended June 30, 

2022

    

2021

Variance

% Change

    

2022

    

2021

Variance

% Change

Net sales

$

1,337.0

$

1,632.2

$

(295.2)

(18.1)

%

$

2,983.2

$

3,110.7

$

(127.5)

(4.1)

%

Operating costs and expenses

 

(774.9)

 

(611.0)

 

(163.9)

 

26.8

%

 

(1,437.1)

 

(1,232.9)

 

(204.2)

 

16.6

%

Operating income

$

562.1

$

1,021.2

$

(459.1)

(45.0)

%

$

1,546.1

$

1,877.8

$

(331.7)

(17.7)

%

Net sales in the second quarter of 2022 were $1,337.0 million, compared to $1,632.2 million in the same period of 2021. The decrease of $295.2 million was principally due to lower sales volumes of copper (-11.0%) and molybdenum (-7.3%) and to a decrease in copper (-1.8%) and silver (-15.4%) prices. This effect was slightly offset by higher sales volume of silver (+4.0%) as well as an increase in molybdenum prices (+31.7%).

Operating costs and expenses in the second quarter of 2022 increased by $163.9 million to $774.9 million versus $611.0 million in the same period of 2021, primarily due to:

Operating costs and expenses for the second quarter of 2021

    

$

611.0

Plus:

 

  

Increase in other cost of sales (exclusive of depreciation, amortization and depletion) mainly due to a higher fuel and power costs; partially offset by lower inventory consumption and foreign currency effect.

68.4

Increase in cost of metals purchased from third parties.

 

5.3

Increase in worker participation expense (including a bonus).

92.3

Less:

Decrease in selling, general and administrative expenses.

(1.1)

Decrease in depreciation, amortization and depletion expense.

(0.9)

Decrease in exploration expenses.

 

(0.1)

Operating costs and expenses for the second quarter of 2022

$

774.9

Net sales in the first six months of 2022 were $2,983.2 million, compared to $3,110.7 million in the same period of 2021. The decrease of $127.5 million was principally due to lower sales volumes of copper (-8.3%) and molybdenum (-2.4%) and to a decrease in silver (-12.0%) prices. This effect was offset by an increase in sales volumes of silver (+3.8%) and by higher copper (+7.3%) and molybdenum (+48.6%) prices.

Operating costs and expenses in the first six months of 2022 increased by $204.2 million to $1,437.1 million versus $1,232.9 million in the same 2021 period, primarily due to:

Operating costs and expenses for the first six months of 2021

    

$

1,232.9

Plus:

54

Table of Contents

Increase in other cost of sales (exclusive of depreciation, amortization and depletion) mainly due to a higher fuel and power costs; partially offset by lower inventory consumption.

101.9

Increase in cost of metals purchased from third parties.

19.9

Increase in worker participation expense (including a bonus).

82.5

Increase in depreciation, amortization and depletion expense.

 

1.5

Less:

 

Decrease in selling, general and administrative expenses.

 

(1.5)

Decrease in exploration expenses.

(0.1)

Operating costs and expenses for the first six months of 2022

$

1,437.1

Mexican Underground Operations (IMMSA):

Three Months Ended June 30, 

 

Six Months Ended June 30, 

2022

    

2021

Variance

% Change

    

    

2022

    

2021

Variance

% Change

    

Net sales

$

166.3

$

161.4

$

4.9

3.0

%

$

343.8

$

285.7

$

58.1

20.3

%

Operating costs and expenses

 

(131.3)

 

(129.1)

 

(2.2)

 

1.7

%

 

(277.9)

 

(226.7)

 

(51.2)

 

22.6

%

Operating income

$

35.0

$

32.3

$

2.7

8.4

%

$

65.9

$

59.0

$

6.9

11.7

%

Net sales in the second quarter of 2022 were $166.3 million, compared to $161.4 million in the same period of 2021. This increase of $4.9 million was primarily due to growth in sales volumes of copper (+4.5%) and silver (+14.3%) and to higher molybdenum (+31.7%) and zinc (+34.8%) prices. This effect was partially offset by a decrease in sales volume of zinc (-27.1%) and a fall in copper (-1.8%) and silver (-15.4%) prices.

Operating costs and expenses in the second quarter of 2022 increased by $2.2 million and reached $131.3 million versus $129.1 million in the same period of 2021. This was primarily due to:

Operating costs and expenses for the second quarter of 2021

    

$

129.1

Plus:

 

Increase in cost of metals purchased from third parties.

 

22.9

Increase in depreciation, amortization and depletion expense.

1.6

Increase in exploration expenses.

0.4

Less:

Decrease in cost of sales (exclusive of depreciation, amortization and depletion) mainly due to a decrease in power expenses and lower inventory consumption; slightly offset by higher labor costs.

(22.3)

Decrease in selling, general and administrative expenses.

 

(0.4)

Operating costs and expenses for the second quarter of 2022

$

131.3

Net sales in the first six months of 2022 were $343.8 million, compared to $285.7 million in the same period of 2021. This increase of $58.1 million was primarily due to higher zinc (+35.9%) and copper (+7.3%) prices and to an uptick in the zinc (+13.1 %) sales volumes. This effect was partially offset by a decrease in the prices of silver (-12.0%) and a drop in sales volume of copper (-3.8%) and silver (-3.0%).

Operating costs and expenses in the first six months of 2022 increased by $51.2 million to situate at $277.9 million versus $226.7 million in the same period of 2021. This was primarily due to:

Operating costs and expenses for the first six months of 2021

    

$

226.7

Plus:

 

Increase in cost of metals purchased from third parties.

61.3

Increase in exploration expenses.

0.3

Less:

55

Table of Contents

Decrease in cost of sales (exclusive of depreciation, amortization and depletion) mainly due to a decrease in inventory consumption and power expenses; which was partially offset by increases in sales expenses and labor costs.

(9.3)

Decrease in depreciation, amortization and depletion expense.

(1.0)

Decrease in selling, general and administrative expenses.

 

(0.1)

Operating costs and expenses for the first six months of 2022

$

277.9

Intersegment Eliminations and Adjustments:

The net sales, operating costs and expenses and operating income discussed above will not be directly equal to amounts in our condensed consolidated statement of earnings because the adjustments of intersegment operating revenues and expenses must be taken into account. Please see Note 14 “Segment and Related Information” of the condensed consolidated financial statements.

LIQUIDITY AND CAPITAL RESOURCES

Cash flow:

The following table shows the cash flow for the first six months of 2022 and 2021 (in millions):

    

2022

    

2021

    

Variance

Net cash provided by operating activities

$

1,130.6

$

1,844.2

$

(713.6)

Net cash used in investing activities

$

(185.5)

$

(597.9)

$

412.4

Net cash used in financing activities

$

(1,743.2)

$

(1,007.7)

$

(735.5)

Net cash provided by operating activities:

The change in net cash from operating activities for the first six months of 2022 and 2021 include (in millions):

    

2022

    

2021

    

Variance

    

% Change

Net income

$

1,222.1

$

1,703.6

$

(481.5)

(28.3)

%

Depreciation, amortization and depletion

 

405.6

 

396.0

 

9.6

 

2.4

%

Provision (benefit) for deferred income taxes

 

31.9

 

3.2

 

28.7

 

896.9

%

Loss (gain) on foreign currency transaction effect

 

51.8

 

(13.4)

 

65.2

 

(486.6)

%

Other adjustments to net income

 

17.0

 

2.8

 

14.2

 

507.1

%

Operating assets and liabilities

 

(597.8)

 

(248.0)

 

(349.8)

 

141.0

%

Net cash provided by operating activities

$

1,130.6

$

1,844.2

$

(713.6)

(38.7)

%

Significant items added to (deducted from) net income to arrive at operating cash flow include depreciation, amortization and depletion, deferred tax amounts, foreign currency fluctuations and changes in operating assets and liabilities.

Six months ended June, 2022: Net income was $1,222.1 million, which represented approximately 108.1% of the net operating cash flow. Operating cash flow decreased by $597.8 million due to the following variances in operating assets and liabilities:

$294.1 million decrease in trade accounts receivable, primarily driven by higher collections at our Peruvian and Mexican operations.
$(743.7) million decrease in accounts payable and accrued liabilities, which was mainly driven by a decrease in accrued income taxes at our Mexican and Peruvian operations.
$(59.4) million increase in other operating assets and liabilities.
$(88.8) million net increase in inventory; this was primarily driven by a $50.4 million increase in the work in process inventory.

56

Table of Contents

Six months ended June, 2021: Net income was $1,703.6 million, which represented approximately 92.4% of the net operating cash flow. Operating cash flow decreased by $248.0 million due to the following variances in operating assets and liabilities:

$(366.7) million increase in trade accounts receivable, which was mainly attributable to the increase in metal prices in the first semester of 2021.
$1.1 million net decrease in inventory; this was primarily driven by a $15.0 million drop in the leaching inventory, which was in turn partially offset by a $14.4 million increase in the work in process inventory.
$77.2 million increase in accounts payable and accrued liabilities, which was mainly due to the increase in accrued income taxes at our Mexican and Peruvian operations.
$40.4 million decrease in other operating assets and liabilities.

Net cash used in investing activities:

Six months ended June, 2022: Net cash used in investing activities included $429.7 million for capital investments. The capital investments included:

$268.9 million of investments at our Mexican operations:
$45.9 million for the Buenavista-Zinc project,
$5.6 million for the Pilares project,
$18.8 million for the MexArco unit,
$81.6 million at our IMMSA unit,
$121.6 million for various replacement and maintenance expenditures, and
$4.6 million increase in capital expenditures incurred but not yet paid.

$160.8 million of investments at our Peruvian operations:
$17.2 million for the Quebrada Honda dam expansion,
$3.4 million for the relocation of facilities at Toquepala,
$3.8 million for projects at the Ilo facilities,
$122.6 million for various other replacement and maintenance expenditures, and
$13.8 million dercease in capital expenditures incurred but not yet paid.

Investment activities in the first six months of 2022 included $266.3 million of net proceed of short-term investments.

Six months ended June 30, 2021: Net cash used in investing activities included $452.4 million for capital investments. The capital investments included:

$312.0 million of investments at our Mexican operations:

$103.5 million for the Buenavista-Zinc project,
$26.8 million for the new tailing disposal deposit at the Buenavista mine,
$16.7 million for the Pilares project,
$16.1 million for land acquisitions for new projects,
$34.0 million at our IMMSA unit,
$102.0 million for various replacement and maintenance expenditures, mainly at our Buenavista and La Caridad mines, and
$12.9 million decrease in capital expenditures incurred but not yet paid.

$140.4 million of investments at our Peruvian operations:

$32.1 million for the Quebrada Honda dam expansion,
$16.2 million for the Toquepala concentrator expansion project,

57

Table of Contents

$8.9 million for the relocation of facilities at Toquepala,
$5.6 million for projects at the Ilo facilities,
$66.3 million for various other replacement and maintenance expenditures, and
$11.3 million decrease in capital expenditures incurred but not yet paid.

Investment activities in the first six months of 2021 include $135.0 million of net purchases of short-term investments, and $12.5 million for the second payment for the acquisition of the Michiquillay project.

Dividends:

On July 21, 2022, the Board of Directors authorized a dividend of $0.75 per share payable on August 25, 2022 to shareholders of record at the close of business on August 11, 2022.

Capital Investment and Exploration Programs:

A discussion of our capital investment programs is an important part of understanding our liquidity and capital resources. We expect to meet the cash requirements for these capital investments from cash on hand, internally generated funds and from additional external financing if required. For information regarding our capital investment programs, please see the discussion under the caption “Capital Investment Programs” under this Item 2.

Contractual Obligations:

There have been no material changes in our contractual obligations in the second quarter of 2022. Please see item 7 in Part II of our 2021 annual report on Form 10-K.

58

Table of Contents

NON-GAAP INFORMATION RECONCILIATION

Operating cash cost: Following is a reconciliation of “Operating Cash Cost” (see page 43) to cost of sales (exclusive of depreciation, amortization and depletion) as reported in our consolidated statement of earnings, in millions of dollars and dollars per pound of copper in the table below:

 

Three Months Ended

 

Three Months Ended

 

Six Months Ended

 

Six Months Ended

June 30, 2022

June 30, 2021

June 30, 2022

June 30, 2021

    

    

$ per

    

    

$ per

    

    

$ per

    

    

$ per

$ millions

pound

$ millions

pound

$ millions

pound

$ millions

pound

Cost of sales (exclusive of depreciation, amortization and depletion)

$

1,246.7

$

2.82

$

985.5

$

1.95

$

2,304.4

$

2.56

$

1,929.3

$

1.90

Add:

 

  

 

 

  

 

 

  

 

 

  

 

Selling, general and administrative

 

30.9

 

0.07

 

31.4

 

0.06

 

61.2

 

0.07

 

61.6

 

0.06

Sales premiums, net of treatment and refining charges

 

(16.2)

 

(0.04)

 

(8.6)

 

(0.02)

 

(22.3)

(0.02)

 

(15.6)

 

(0.02)

Less:

 

 

 

 

 

 

 

Workers’ participation

 

(88.6)

 

(0.20)

 

(105.5)

 

(0.21)

 

(176.4)

(0.20)

 

(209.7)

 

(0.21)

Cost of metals purchased from third parties

 

(134.3)

 

(0.30)

 

(68.6)

 

(0.14)

 

(225.3)

(0.25)

 

(109.8)

 

(0.11)

Royalty charge and other, net

 

(112.8)

 

(0.26)

 

(43.6)

 

(0.08)

 

(225.4)

(0.25)

 

(59.9)

 

(0.05)

Inventory change

 

25.5

 

0.05

 

27.3

 

0.05

 

72.7

0.08

 

(6.6)

 

(0.01)

Operating Cash Cost before by‑product revenues

$

951.2

$

2.15

$

817.9

$

1.61

$

1,788.9

$

1.99

$

1,589.3

$

1.56

Add:

 

  

 

  

 

  

 

  

 

  

 

  

 

  

 

  

By‑product revenues(1)

 

(465.1)

(1.05)

 

(522.3)

(1.02)

 

(1,041.5)

(1.16)

 

(905.0)

(0.89)

Net revenue on sale of metal purchased from third parties

 

(0.2)

 

1.2

 

(7.3)

 

(9.8)

(0.01)

Add:

 

  

 

  

 

  

 

  

 

  

 

  v

 

  

 

  

Total by‑product revenues

 

(465.3)

 

(1.05)

 

(521.1)

 

(1.02)

 

(1,048.8)

 

(1.16)

 

(914.8)

 

(0.90)

Operating Cash Cost net of by‑product revenues

$

485.9

$

1.10

$

296.8

$

0.59

$

740.1

$

0.82

$

674.5

$

0.66

Total pounds of copper produced (in millions)

 

442.9

 

  

 

507.7

 

  

 

900.7

 

  

 

1,018.5

 

  

(1) By-product revenues included in our presentation of operating cash cost contain the following:

 

Three Months Ended

 

Three Months Ended

 

Six Months Ended

 

Six Months Ended

June 30, 2022

June 30, 2021

June 30, 2022

June 30, 2021

    

    

$ per

    

    

$ per

    

    

$ per

    

    

$ per

$ millions

pound

$ millions

pound

$ millions

pound

$ millions

pound

Molybdenum

$

(198.2)

$

(0.45)

$

(282.2)

$

(0.55)

$

(474.1)

$

(0.53)

$

(451.8)

$

(0.44)

Silver

 

(85.7)

 

(0.19)

 

(116.2)

 

(0.23)

 

(194.4)

 

(0.22)

 

(243.4)

 

(0.24)

Zinc

 

(58.2)

 

(0.13)

 

(60.7)

 

(0.12)

 

(121.8)

 

(0.14)

 

(78.5)

 

(0.08)

Sulfuric Acid

 

(92.7)

 

(0.21)

 

(34.1)

 

(0.07)

 

(192.4)

 

(0.21)

 

(70.2)

 

(0.07)

Gold and others

 

(30.3)

 

(0.07)

 

(29.1)

 

(0.05)

 

(58.8)

 

(0.06)

 

(61.1)

 

(0.06)

Total

$

(465.1)

$

(1.05)

$

(522.3)

$

(1.02)

$

(1,041.5)

$

(1.16)

$

(905.0)

$

(0.89)

59

Table of Contents

Item 3. Quantitative and Qualitative Disclosure about Market Risk

Commodity price risk:

For additional information on metal price sensitivity, refer to “Metal Prices” in Part I, Item 2 of this quarterly report on Form 10-Q for the period ended June 30, 2022.

Foreign currency exchange rate risk:

Our functional currency is the U.S. dollar. Portions of our operating costs are denominated in Peruvian soles and Mexican pesos. Since our revenues are primarily denominated in U.S. dollars, when inflation or deflation in our Mexican or Peruvian operations is not offset by a change in the exchange rate of the sol or the peso to the dollar, our financial position, results of operations and cash flows could be affected by local cost conversion when expressed in U.S. dollars. In addition, the dollar value of our net monetary assets denominated in soles or pesos can be affected by exchange rate variances of the sol or the peso, resulting in a re-measurement gain or loss in our financial statements. Recent inflation and exchange rate variances are provided in the table below for the three and six months ended June 30, 2022 and 2021:

    

Three Months Ended

    

    

Six Months Ended

    

June 30, 

June 30, 

    

2022

    

2021

    

    

2022

    

2021

    

Peru:

 

  

 

  

 

 

  

 

  

 

Peruvian inflation rate

 

2.5

%  

0.7

%

 

4.4

%  

2.1

%

Initial exchange rate

 

3.701

 

3.758

 

 

3.998

 

3.624

 

Closing exchange rate

 

3.830

 

3.866

 

 

3.830

 

3.866

 

Appreciation/(devaluation)

 

(3.5)

%  

(2.9)

%

 

4.2

%  

(6.7)

%

Mexico:

 

  

 

  

 

 

  

 

  

 

Mexican inflation rate

 

1.6

%  

1.1

%

 

4.0

%  

3.4

%

Initial exchange rate

 

19.994

 

20.605

 

 

20.584

 

19.949

 

Closing exchange rate

 

19.985

 

19.803

 

 

19.985

 

19.803

 

Appreciation/(devaluation)

 

0.0

%  

3.9

%

 

2.9

%  

0.7

%

Change in monetary position:

Assuming an exchange rate variance of 10% at June 30, 2022, we estimate our net monetary position in Peruvian sol and Mexican peso would increase (decrease) our net earnings as follows:

    

Effect in net

 

earnings

 

($ in millions)

Appreciation of 10% in U.S. dollar vs. Peruvian sol

$

11.6

Devaluation of 10% in U.S. dollar vs. Peruvian sol

$

(14.1)

Appreciation of 10% in U.S. dollar vs. Mexican peso

$

(27.2)

Devaluation of 10% in U.S. dollar vs. Mexican peso

$

33.3

Open sales risk:

Our provisional copper and molybdenum sales contain an embedded derivative that is required to be separate from the host contract for accounting purposes. The host contract is the receivable from the sale of copper and molybdenum concentrates at prevailing market prices at the time of the sale. The embedded derivative, which does not qualify for hedge accounting, is marked to market through earnings each period prior to settlement. See Note 13 to our condensed consolidated financial statements for further information about these provisional sales.

60

Table of Contents

Short-term Investments:

For additional information on our trading securities and available-for-sale investments, refer to “Short-term Investments” in Part I, Item 1 of this quarterly report on Form 10-Q for the period ended June 30, 2022.

Derivative Instruments:

From time to time, we use derivative instruments to manage our cash flows exposure to changes in commodity prices. We do not enter into derivative contracts unless we anticipate that the possibility exists that future activity will expose our future cash flows to deterioration. Derivative contracts for commodities are entered into to manage the price risk associated with forecasted purchases of the commodities that we use in our manufacturing process.

Cash Flow Hedges of Natural Gas

Our objective in using natural gas derivatives is to protect the stability of natural gas costs and manage exposure to natural gas price increases. To protect natural gas costs from estimated price increases in the past winter season, we acquired two derivative instruments that began in November 2021 and ended in March 2022.

Derivative instruments and its effects as of March 31, 2002, were as follows:

Derivatives designated as hedging instruments under ASC 815

Call Option

Financial Swap Cash Settlement

Commodity contracts

Natural gas

Natural gas

Gas volume (MMBTUs)

5,285,000

5,285,000

Hedge premium ($per MMBTU)

0.55

-

Reference price (swap: $per MMBTU))

Prior month average IFREC price

3.75

Hedge

Daily fluctuation range

Monthly average price

1Q 2022

November 2021 - March 2022

1Q 2022

November 2021 - March 2022

Cost (million $)

(1.7)

(2.9)

-

-

Profit (million $)

0.5

0.5

1.7

4.7

Net favorable/unfavorable effect (million $)

(1.2)

(2.4)

1.7

4.7

1Q 2022

November 2021 - March 2022

Combined profit (million $)

0.5

2.3

We assessed these derivative instruments as Cash Flow Hedges. As such, the effective portions of said hedges are initially reported in Other Comprehensive Income (OCI) and were reclassified as earnings in the same line item associated with the forecasted transaction and in the same period or periods during which the hedged transaction affected earnings. The Company did not identify any ineffective portions of these derivatives.

As of June 30, 2022 and the same period of 2021, we did not hold any derivative instruments.

Cautionary Statement:

Forward-looking statements in this report and in other Company statements include statements regarding expected commencement dates of mining or metal production operations, projected quantities of future metal production, anticipated production rates, operating efficiencies, costs and expenditures as well as projected demand or supply for the Company’s products. Actual results could differ materially depending upon factors including the risks and uncertainties relating to general U.S.

61

Table of Contents

and international economic and political conditions, the cyclical and volatile prices of copper, other commodities and supplies, including fuel and electricity, availability of materials, insurance coverage, equipment, required permits or approvals and financing, the occurrence of unusual weather or operating conditions, lower than expected ore grades, water and geological problems, the failure of equipment or processes to operate in accordance with specifications, failure to obtain financial assurance to meet closure and remediation obligations, labor relations, litigation and environmental risks as well as political and economic risk associated with foreign operations. Results of operations are directly affected by metal prices on commodity exchanges that can be volatile.

Item 4. Controls and Procedures

EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES

As of June 30, 2022, the Company conducted an evaluation under the supervision and with the participation of the Company’s disclosure committee and the Company’s management, including the Chief Executive Officer and Chief Financial Officer, of the effectiveness and the design and operation of the Company’s disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)). Based on that evaluation, the Chief Executive Officer and the Chief Financial Officer have concluded that the Company’s disclosure controls and procedures are effective as of June 30, 2022, to ensure that information required to be disclosed in reports filed or submitted under the Exchange Act is:

1. Recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and

2. Accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING

There were no changes in the Company’s internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934, as amended) that occurred during the three months ended June 30, 2022 that have materially affected, or are reasonably likely to materially affect, the Company’s internal controls over financial reporting.

62

Table of Contents

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Shareholders of Southern Copper Corporation:

Results of Review of Interim Financial Statements

We have reviewed the accompanying condensed consolidated balance sheet of Southern Copper Corporation and subsidiaries (the “Company”) as of June 30, 2022, the related condensed consolidated statements of earnings, comprehensive income and cash flows for the three-month and six-month periods ended June 30, 2022, and 2021, and the related notes (collectively referred to as the “interim financial information”). Based on our reviews, we are not aware of any material modifications that should be made to the accompanying interim financial information for it to be in conformity with accounting principles generally accepted in the United States of America.

We have previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheet of the Company as of December 31, 2021, and the related consolidated statements of earnings, comprehensive income, and cash flows for the year then ended (not presented herein); and in our report dated March 7, 2022, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying condensed consolidated balance sheet as of December 31, 2021 is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived.

Basis for Review Results

This interim financial information is the responsibility of the Company’s management. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our reviews in accordance with standards of the PCAOB. A review of interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards of the PCAOB, the objective of which is the expression of an opinion regarding the consolidated financial statements taken as a whole. Accordingly, we do not express such an opinion.

Galaz, Yamazaki, Ruiz Urquiza, S.C.

Member of Deloitte Touche Tohmatsu Limited

/s/ Paulina Ramos Ramirez

C.P.C. Paulina Ramos Ramirez

Mexico City, Mexico

July 27, 2022

63

Table of Contents

PART II — OTHER INFORMATION

Item 1. Legal Proceedings:

The information provided in Note 10 “Commitments and Contingencies” to the condensed consolidated financial statements contained in Part I of this Form 10-Q, is incorporated herein by reference.

Item 1A. Risk Factors:

The Company's operations and financial results are subject to various risks and uncertainties, including those described in “Risk Factors” included in Part I, Item 1A of our Annual report on Form 10-K for the year ended December 31, 2021 filed with the SEC on March 7, 2022. The following supplements and updates the risk factors previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2021.

Potential delays in transportation of products to customers and possible shortages of critical parts, equipment, and other resources may adversely affect our results of operations.

Current challenges in the global shipping industry have led to congestion in ports, a shortage in containers, and a lack of space on ships. Because of this situation, the Company faces a risk of potential supply chain disruptions that may adversely affect our operations and development projects. To address this potential issue, we have increased our safety stock levels and adjusted our replacement algorithms. Additionally, our revenues and collections may also be adversely affected by transportation delays that could have a negative impact on our sales agreements. Although the recovery of the global economy is causing the aforementioned issues at ports and in the shipping industry, this situation is expected to be resolved gradually and to return to normal levels in the short term. However, if these issues continue for a longer period, our supply chain and our sales flow could be adversely impacted.

Our mining operations or metal production projects may be subject to stoppage and additional costs due to community actions and other factors.

In recent months, the political action of certain groups in Peru has caused an increase in violence in the demands of certain communities, which has affected Cuajone's operations. On February 28, 2022, a small group of protesters from the community of Tumilaca, Pocata, Coscore and Tala, which have 472 residents in total, seized the facilities at the Viña Blanca water reservoir and cut off the water supply to the homes of the approximately 5,000 people who live in Cuajone. Prior to this illegal action, on February 18, 2022, the railway between Cuajone and Ilo was also blocked by a group of community members.

After several unsuccessful attempts by the authorities to restore order through dialogue efforts, on April 20, 2022, the Peruvian government declared a state of emergency in the Moquegua region. On April 21, 2022, the protesters returned the installations of the Viña Blanca water reservoir and the railway to the Company. Our personnel immediately evaluated the damage caused to the facilities by acts of vandalism and took the necessary steps to resume production at the Cuajone mining unit. As of today, the industrial railroad and the Cuajone mine, concentrator and related facilities are operating at full capacity.

On April 30, 2022 the Peruvian government issued a Ministerial Resolution to set up a three-party-dialogue-table with members of the community, government and Company officials to better understand all parties’ concerns. As of today, nine round-table meetings and three direct meeting with the community have been held. The Company has proposed plans to invest in social programs that address the needs voiced by the communities and has indicated interest in purchasing land near the Cuajone operations to establish a buffer zone to protect installations and production down the line.

However, if there is a recurrence of such incidents, we cannot guarantee that they will not adversely impact other facilities, the results of our operations; and our financial position.

64

Table of Contents

Item 2. Unregistered Sale of Equity Securities and Use of Proceeds:

SCC share repurchase program:

In 2008, the Company’s BOD authorized a $500 million share repurchase program that has since been increased by the BOD and is currently authorized to $3 billion. Pursuant to this program, the Company has purchased 119.5 million shares of common stock at a cost of $2.9 billion. These shares are available for general corporate purposes. The Company may purchase additional shares of its common stock from time to time, based on market conditions and other factors. This repurchase program has no expiration date and may be modified or discontinued at any time.

The NYSE closing price of SCC common shares as of June 30, 2022 was $49.81 and the maximum number of shares that the Company could purchase at that price was 1.6 million. 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 June 30, 2022. There has not been any activity in the SCC share repurchase program since the third quarter of 2016.

Item 4. Mine Safety Disclosures:

Not applicable.

65

Table of Contents

Item 6. Exhibits

Exhibit No.

Description of Exhibit

3.1

(a) Amended and Restated Certificate of Incorporation, filed on October 11, 2005. (Filed as Exhibit 3.1 to the Company’s Quarterly Report on Form 10-Q for the third quarter of 2005 and incorporated herein by reference).

(b) Certificate of Amendment of Amended and Restated Certificate of Incorporation dated May 2, 2006. (Filed as Exhibit 3.1 to Registration Statement on Form S-4, File No. 333-135170) filed on June 20, 2006 and incorporated herein by reference).

(c) Certificate of Amendment of Amended and Restated Certificate of Incorporation dated May 28, 2008. (Filed as Exhibit 3.1 to the Company’s Quarterly Report on Form 10-Q for the second quarter of 2008 and incorporated herein by reference).

3.2

By-Laws, as last amended on January 27, 2022. (Filed as Exhibit 3.2 to the Company’s Form 8-K filed on January 31, 2022 and incorporated herein by reference).

4.1

(a) Indenture governing $600 million 7.500% Notes due 2035, by and among Southern Copper Corporation, the Bank of New York and The Bank of New York (Luxembourg) S.A. (Filed as Exhibit 4.2 to the Company’s Current Report on Form 8-K, filed on August 1, 2005) and incorporated herein by reference).

(b) Indenture governing $400 million 7.500% Notes due 2035, by and between Southern Copper Corporation, The Bank of New York, The Bank of New York (Luxembourg) S.A.(Filed as Exhibit 4.2 to the Company’s Current Report on Form 8-K, filed on August 1, 2005 and incorporated herein by reference).

4.2

Form of 6.375% Note (included in Exhibit 4.1).

4.3

Form of New 7.500% Note (included in Exhibit 4.2(a)).

4.4

Form of New 7.500% Note (included in Exhibit 4.2(b)).

4.5

Indenture, dated as of April 16, 2010, between Southern Copper Corporation and Wells Fargo Bank, National Association, as trustee, pursuant to which $1.1 billion of 6.750% Notes due 2040 were issued (Filed as Exhibit 4.1 to the Company’s Current Report on Form 8-K filed on April 19, 2010 and incorporated herein by reference).

4.6

Second Supplemental Indenture, dated as of April 16, 2010, between Southern Copper Corporation and Wells Fargo Bank, National Association, as trustee, pursuant to which the 6.750% Notes due 2040 were issued. (Filed as an Exhibit to the Company’s Current Report on Form 8-K filed on April 19, 2010 and incorporated herein by reference).

4.7

Form of 6.750% Notes due 2040 (Filed as an Exhibit to the Company’s Current Report on Form 8-K filed on April 19, 2010 and incorporated herein by reference).

4.8

Third Supplemental Indenture dated as of November 8, 2012, between Southern Copper Corporation and Wells Fargo Bank, National Association, as trustee, pursuant to which the 3.500% Notes due 2022 were issued (Filed as an Exhibit to the Company’s Current Report on Form 8-K filed on November 9, 2012 and incorporated herein by reference).

4.9

Fourth Supplemental Indenture, dated as of November 8, 2012, between Southern Copper Corporation and Wells Fargo Bank, National Association, as trustee, pursuant to which the 5.250% Notes due 2042 were issued. (Filed as an Exhibit to the Company’s Current Report on Form 8-K filed on November 9, 2012 and incorporated herein by reference).

4.10

Form of 3.500% Notes due 2022. (Filed as an Exhibit to the Company’s Current Report on Form 8-K filed on November 9, 2012 and incorporated herein by reference).

66

Table of Contents

Exhibit No.

Description of Exhibit

4.11

Form of 5.250% Notes due 2042. (Filed as an Exhibit to the Company’s Current Report on Form 8-K filed on November 9, 2012 and incorporated herein by reference).

4.12

Fifth Supplemental Indenture dated as of April 23, 2015, between Southern Copper Corporation and Wells Fargo Bank, National Association, as trustee, pursuant to which the 3.875% Notes due 2025 were issued. (Filed as an Exhibit to the Company’s Current Report on Form 8-K filed on April 24, 2015 and incorporated herein by reference).

4.13

Sixth Supplemental Indenture, dated as of April 23, 2015, between Southern Copper Corporation and Wells Fargo Bank, National Association, as trustee, pursuant to which the 5.875% Notes due 2045 were issued. (Filed as an Exhibit to the Company’s Current Report on Form 8-K filed on April 24, 2015 and incorporated herein by reference).

4.14

Form of 3.875% Notes due 2025. (Filed as Exhibit A to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed on April 24, 2015 and incorporated herein by reference).

4.15

Form of 5.875% Notes due 2045. (Filed as Exhibit A to Exhibit 4.2 to the Company’s Current Report on Form 8-K filed on April 24, 2015 and incorporated herein by reference).

10.1

Directors’ Stock Award Plan of the Company, as amended through January 28, 2023. (Filed as an exhibit to the Company’s 2018 Proxy Statement and incorporated herein by reference). The plan expired by its terms on January 30, 2017. A 5-year extension of the plan was approved by the Company’s stockholders at the 2018 Annual Meeting of Stockholders.

10.2

Agreement and Plan of Merger, dated as of October 21, 2004, by and among Southern Copper Corporation, SCC Merger Sub, Inc., Americas Sales Company, Inc., Americas Mining Corporation and Minera Mexico S.A. de C.V. (Filed as an Exhibit to Current Report on Form 8-K filed on October 22, 2004 and incorporated herein by reference).

10.3

Tax Agreement entered into by the Company and Americas Mining Corporation, effective as of February 20, 2017. (Filed as Exhibit 10.4 to the Company’s Quarterly Report on Form 10-Q for the first quarter of 2017 and incorporated herein by reference).

14.0

Code of Business Conduct and Ethics adopted by the Board of Directors on May 8, 2003 and amended on July 21, 2022. (Filed as Exhibit 14.1 to the Company’s Current Report on Form 8-K filed July 26, 2022 and incorporated herein by reference).

15.0

Consent of Registered Public Accounting Firm (Galaz, Yamazaki, Ruiz Urquiza, S.C. - Member of Deloitte Touche Tohmatsu, Limited) (filed herewith).

23.2

Consent of Qualified Persons for Technical Report Summary of Mineral Reserves and Mineral Resources for the Cuajone Mine. (Filed as an Exhibit to the Company’s Current Report on Form 10-K filed on March 7, 2022 and incorporated herein by reference).

23.3

Consent of Qualified Persons for Technical Report Summary of Mineral Reserves and Mineral Resources for the Toquepala Mine. (Filed as an Exhibit to the Company’s Current Report on Form 10-K filed on March 7, 2022 and incorporated herein by reference).

23.4

Consent of Qualified Persons for Technical Report Summary of Mineral Reserves and Mineral Resources for the Tia Maria Project. (Filed as an Exhibit to the Company’s Current Report on Form 10-K filed on March 7, 2022 and incorporated herein by reference).

23.5

Consent of Qualified Persons for Technical Report Summary of Mineral Resources for the Los Chancas Project. (Filed as an Exhibit to the Company’s Current Report on Form 10-K filed on March 7, 2022 and incorporated herein by reference).

23.6

Consent of Qualified Persons for Technical Report Summary of Mineral Resources for the Michiquillay Project. (Filed as an Exhibit to the Company’s Current Report on Form 10-K filed on March 7, 2022 and incorporated herein by reference).

67

Table of Contents

Exhibit No.

Description of Exhibit

23.7

Consent of Qualified Persons for Technical Report Summary of Mineral Reserves and Mineral Resources for Buenavista del Cobre. (Filed as an Exhibit to the Company’s Current Report on Form 10-K filed on March 7, 2022 and incorporated herein by reference).

23.8

Consent of Qualified Persons for Technical Report Summary of Mineral Reserves and Mineral Resources for the La Caridad Mine. (Filed as an Exhibit to the Company’s Current Report on Form 10-K filed on March 7, 2022 and incorporated herein by reference).

23.9

Consent of Qualified Persons for Technical Report Summary of Mineral Resources for the Pilares Project. (Filed as an Exhibit to the Company’s Current Report on Form 10-K filed on March 7, 2022 and incorporated herein by reference).

23.10

Consent of Qualified Persons for Technical Report Summary of Mineral Reserves and Mineral Resources for the El Pilar Project. (Filed as an Exhibit to the Company’s Current Report on Form 10-K filed on March 7, 2022 and incorporated herein by reference).

23.11

Consent of Qualified Persons for Technical Report Summary of Mineral Reserves and Mineral Resources for the El Arco Project. (Filed as an Exhibit to the Company’s Current Report on Form 10-K filed on March 7, 2022 and incorporated herein by reference).

23.12

Consent of Qualified Persons for Technical Report Summary of Mineral Resources for the Charcas Mine. (Filed as an Exhibit to the Company’s Current Report on Form 10-K filed on March 7, 2022 and incorporated herein by reference).

23.13

Consent of Qualified Persons for Technical Report Summary of Mineral Resources for the Santa Barbara Mine. (Filed as an Exhibit to the Company’s Current Report on Form 10-K filed on March 7, 2022 and incorporated herein by reference).

23.14

Consent of Qualified Persons for Technical Report Summary of Mineral Resources for the San Martin Mine. (Filed as an Exhibit to the Company’s Current Report on Form 10-K filed on March 7, 2022 and incorporated herein by reference).

31.1

Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith).

31.2

Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith).

32.1

Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C., Section 1350. This document is being furnished in accordance with SEC Release No. 33-8238.

32.2

Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C., Section 1350. This document is being furnished in accordance with SEC Release No. 33-8238.

96.1

Technical Report Summary of Mineral Reserves and Mineral Resources for the Cuajone Mine. (Filed as an Exhibit to the Company’s Current Report on Form 10-K filed on March 7, 2022 and incorporated herein by reference).

96.2

Technical Report Summary of Mineral Reserves and Mineral Resources for the Toquepala Mine. (Filed as an Exhibit to the Company’s Current Report on Form 10-K filed on March 7, 2022 and incorporated herein by reference).

96.3

Technical Report Summary of Mineral Reserves and Mineral Resources for the Tia Maria Project. (Filed as an Exhibit to the Company’s Current Report on Form 10-K filed on March 7, 2022 and incorporated herein by reference).

96.4

Technical Report Summary of Mineral Resources for the Los Chancas Project. (Filed as an Exhibit to the Company’s Current Report on Form 10-K filed on March 7, 2022 and incorporated herein by reference).

96.5

Technical Report Summary of Mineral Resources for the Michiquillay Project. (Filed as an Exhibit to the Company’s Current Report on Form 10-K filed on March 7, 2022 and incorporated herein by reference).

68

Table of Contents

Exhibit No.

Description of Exhibit

96.6

Technical Report Summary of Mineral Reserves and Mineral Resources for Buenavista del Cobre. (Filed as an Exhibit to the Company’s Current Report on Form 10-K filed on March 7, 2022 and incorporated herein by reference).

96.7

Technical Report Summary of Mineral Reserves and Mineral Resources for the La Caridad Mine. (Filed as an Exhibit to the Company’s Current Report on Form 10-K filed on March 7, 2022 and incorporated herein by reference).

96.8

Technical Report Summary of Mineral Resources for the Pilares Project. (Filed as an Exhibit to the Company’s Current Report on Form 10-K filed on March 7, 2022 and incorporated herein by reference).

96.9

Technical Report Summary of Mineral Reserves and Mineral Resources for the El Pilar Project. (Filed as an Exhibit to the Company’s Current Report on Form 10-K filed on March 7, 2022 and incorporated herein by reference).

96.10

Technical Report Summary of Mineral Reserves and Mineral Resources for the El Arco Project. (Filed as an Exhibit to the Company’s Current Report on Form 10-K filed on March 7, 2022 and incorporated herein by reference).

96.11

Technical Report Summary of Mineral Resources for the Charcas Mine. (Filed as an Exhibit to the Company’s Current Report on Form 10-K filed on March 7, 2022 and incorporated herein by reference).

96.12

Technical Report Summary of Mineral Resources for the Santa Barbara Mine. (Filed as an Exhibit to the Company’s Current Report on Form 10-K filed on March 7, 2022 and incorporated herein by reference).

96.13

Technical Report Summary of Mineral Resources for the San Martin Mine. (Filed as an Exhibit to the Company’s Current Report on Form 10-K filed on March 7, 2022 and incorporated herein by reference).

101.INS

XBRL Instance Document (submitted electronically with this report). The instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

101.SCH

XBRL Taxonomy Extension Schema Document (submitted electronically with this report).

101.CAL

XBRL Taxonomy Calculation Linkbase Document (submitted electronically with this report).

101.DEF

XBRL Taxonomy Extension Definition Linkbase Document (submitted electronically with this report).

101.LAB

XBRL Taxonomy Label Linkbase Document (submitted electronically with this report).

101.PRE

XBRL Taxonomy Presentation Linkbase Document (submitted electronically with this report).

104

The cover page from our Quarterly Report on Form 10-Q for the period ended March 31, 2022, filed with the Securities and Exchange Commission on November 1, 2021, is formatted in Inline Extensible Business Reporting Language (“iXBRL”).

Attached as Exhibit 101 to this report are the following documents formatted in Inline XBRL (Inline Extensible Business Reporting Language): (i) the Condensed Consolidated Statement of Earnings for the three and six months ended June 30, 2022 and 2021; (ii) the Condensed Consolidated Statement of Comprehensive Income for the three and six months ended June 30, 2022 and 2021; (iii) the Condensed Consolidated Balance Sheet at June 30, 2022 and December 31, 2021; (iv) the Condensed Consolidated Statement of Cash Flows for the three and six months ended June 30, 2022 and 2021; and (v) the Notes to Condensed Consolidated Financial Statements tagged in detail. Users of this data are advised pursuant to Rule 406T of Regulation S-T that this interactive data file is deemed not filed or part of a registration statement or prospectus for purposes of sections 11 or 12 of the Securities Act of 1933, is deemed not filed for purposes of section 18 of the Securities Exchange Act of 1934, and otherwise is not subject to liability under these sections.

69

Table of Contents

PART II — OTHER INFORMATION

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

SOUTHERN COPPER CORPORATION

(Registrant)

/s/ Oscar Gonzalez Rocha

Oscar Gonzalez Rocha

President and Chief Executive Officer

July 27, 2022

/s/ Raul Jacob

Raul Jacob

Vice President, Finance, Treasurer and Chief Financial Officer

July 27, 2022

70