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SOUTHERN COPPER CORP

SOUTHERN COPPER CORPSCCOEarnings & Financial Report

NYSE · Materials · Metal Mining

Southern Copper Corporation, organized in Delaware and headquartered in Phoenix, Arizona, owns copper mines, smelters, and refineries in Peru and Mexico, including the Cuajone mine, the Toquepala mine, and the Tia Maria mine in Peru and the Buenavista mine and the La Caridad Mine in Mexico. In 2024, the company mined 2.1 billion pounds of copper, 21 million ounces of silver, 64 million pounds of molybdenum, and 286 million pounds of zinc.

What changed in SOUTHERN COPPER CORP's 10-K — 2022 vs 2023

Top changes in SOUTHERN COPPER CORP's 2023 10-K

530 paragraphs added · 501 removed · 369 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

46 edited+18 added−9 removed84 unchanged
For additional information on our community programs, refer to Corporate Social Responsibility under Note 13 “Commitments and contingencies” to the consolidated financial statements. ​ DIVERSITY, EQUITY AND INCLUSION (DEI) ​ Our vision on DEI is to ensure that our people always feel included, welcomed and valued for their personal and professional contributions.
For additional information on our community programs, refer to Corporate Social Responsibility under Note 13 “Commitments and contingencies” to the consolidated financial statements. ​ DIVERSITY, EQUITY AND INCLUSION (DEI) ​ Our vision of DEI is to ensure that our people always feel included, welcomed and valued for their personal and professional contributions.
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 held talks with the six unions to sign collective agreements prior to their effective dates.
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 held talks with the six unions to sign collective bargaining agreements prior to their effective dates.
Under Mexican law, mineral resources belong to the Mexican nation and a concession from the Mexican federal government is required to explore or mine mineral reserves. Mining concessions have a 50-year term that can be renewed for another 50 years.
Under Mexican law, mineral resources belong to the Mexican nation and a concession from the Mexican federal government is required to explore or mine mineral reserves. Mining concessions have a 50-year term that can be renewed for another 25 years.
For the purpose of clarity, the chart identifies only our main subsidiaries and eliminates intermediate holding companies. ​ ​ We are a majority-owned, indirect subsidiary of Grupo Mexico S.A.B. de C.V. (“Grupo Mexico”). As of December 31, 2022, Grupo Mexico, through its wholly-owned subsidiary Americas Mining Corporation (“AMC”), owned 88.9% of our capital stock.
For the purpose of clarity, the chart identifies only our main subsidiaries and eliminates intermediate holding companies. ​ ​ We are a majority-owned, indirect subsidiary of Grupo Mexico S.A.B. de C.V. (“Grupo Mexico”). As of December 31, 2023, Grupo Mexico, through its wholly-owned subsidiary Americas Mining Corporation (“AMC”), owned 88.9% of our capital stock.
Pursuant to this program, through December 31, 2022 we have purchased 119.5 million shares of our common stock at a cost of $2.9 billion. These shares are available for general corporate purposes. We may purchase additional shares from time to time, based on market conditions and other factors.
Pursuant to this program, through December 31, 2023 we have purchased 119.5 million shares of our common stock at a cost of $2.9 billion. These shares are available for general corporate purposes. We may purchase additional shares from time to time, based on market conditions and other factors.
Power is distributed over a 224-kilometer closed loop transmission circuit, which is connected to the Peruvian network. ​ Water: We have water rights or licenses for up to 1,964 liters per second from well fields at the Huaitire-Gentilar, Vizcachas and Titijones aquifers and surface water rights from Lake Suches.
Power is distributed over a 224-kilometer closed loop transmission circuit, which is connected to the Peruvian network. ​ Water: We have water rights or licenses for up to 1,950 liters per second from well fields at the Huaitire-Gentilar, Vizcachas and Titijones aquifers and surface water rights from Lake Suches.
For a description of the key assumptions, parameters and methods used to estimate mineral reserves and mineral resources included in this Form 10-K, as well as data verification procedures and a general discussion of the extent to which the estimates may be affected by any known environmental, permitting, legal, title, taxation, sociopolitical, marketing or other relevant factors, please review the Technical Report Summaries for each of the Company’s material properties which are included as exhibits to, and incorporated by reference in this report. ​ ​
For a description of the key assumptions, parameters and methods used to estimate mineral reserves and mineral resources included in this Form 10-K, as well as data verification procedures and a general discussion of the extent to which the estimates may be affected by any known environmental, permitting, legal, title, taxation, sociopolitical, marketing or other relevant factors, please review the Technical Report Summaries for each of the Company’s material properties which are included as exhibits to, and incorporated by reference in this report. ​ ​ 15 Table of Contents
To convert to short tons, multiply by 1.102. All ounces are troy ounces. All distances are in kilometers. To convert to miles, multiply by 0.621. To convert hectares to acres, multiply by 2.47. ​ ORGANIZATIONAL STRUCTURE ​ The following chart describes our organizational structure, starting with our controlling stockholders, as of December 31, 2022.
To convert to short tons, multiply by 1.102. All ounces are troy ounces. All distances are in kilometers. To convert to miles, multiply by 0.621. To convert hectares to acres, multiply by 2.47. ​ ORGANIZATIONAL STRUCTURE ​ The following chart describes our organizational structure, starting with our controlling stockholders, as of December 31, 2023.
In accordance with our Community Development commitment, more than 55% of our workforce is hired locally. ​ Talent Development, Training and Retention ​ As a large integrated copper producer, we have a wide range of employees, including management professionals, technicians, engineers, and production employees.
In accordance with our Community Development commitment, more than 46% of our workforce is hired locally. ​ Talent Development, Training and Retention ​ As a large integrated copper producer, we have a wide range of employees, including management professionals, technicians, engineers, and production employees.
However, the information found on our website is not part of this or any other report. ​ 14 Table of Contents CAUTIONARY STATEMENT ​ Forward-looking statements in this report and in other Company statements include information regarding expected commencement dates of mining or metal production operations, projected quantities of future metal production, anticipated production rates, operating efficiencies, costs and expenditures, including taxes, as well as projected demand or supply for the Company’s products.
However, the information found on our website is not part of this or any other report. ​ CAUTIONARY STATEMENT ​ Forward-looking statements in this report and in other Company statements include information regarding expected commencement dates of mining or metal production operations, projected quantities of future metal production, anticipated production rates, operating efficiencies, costs and expenditures, including taxes, as well as projected demand or supply for the Company’s products.
Currently, Eolica el Retiro is supplying approximately 26.58% of its power output to IMMSA and Mexcobre. ​ On February 20, 2020, the Company signed a power purchase agreement with Parque Eolico de Fenicias, S. de R.L. de C.V., and 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.
Currently, Eolica el Retiro is supplying approximately 12% of its power output to IMMSA and Mexcobre. ​ On February 20, 2020, the Company signed a power purchase agreement with Parque Eolico de Fenicias, S. de R.L. de C.V., and 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 first factor represents the degree to which an individual identifies with the organization and its business goals, and the second reflects the individual’s degree of satisfaction with his/her working conditions and draws a line between satisfaction levels and performance at work. 9 Table of Contents The average of these factors indicates the level of engagement on a scale of 1 to 5 (a Likert scale).
The first factor represents the degree to which an individual identifies with the organization and its business goals, and the second reflects the individual’s degree of satisfaction with his/her working conditions and draws a line between satisfaction levels and performance at work. ​ The average of these factors indicates the level of engagement on a scale of 1 to 5 (a Likert scale).
The concessions have indefinite terms, subject to our payment of concession fees of up to $3.00 per hectare annually for the mining concessions and a fee based on nominal capacity for the processing concessions. Fees paid during 2022, 2021 and 2020, were approximately $2.5 million, $2.3 million and $1.4 million, respectively.
The concessions have indefinite terms, subject to our payment of concession fees of up to $3.00 per hectare annually for the mining concessions and a fee based on nominal capacity for the processing concessions. Fees paid during 2023, 2022 and 2021, were approximately $3.4 million, $2.5 million and $2.3 million, respectively.
Diesel oil is a backup method for all these uses. We use diesel oil to power mining equipment at our operations. ​ 12 Table of Contents Electricity: Electricity is used as the main energy source at our mining complexes. We purchase most of our electricity from Mexico Generadora de Energia S. de R. L.
Diesel oil is a backup method for all these uses. We use diesel oil to power mining equipment at our operations. ​ Electricity: Electricity is used as the main energy source at our mining complexes. We purchase most of our electricity from Mexico Generadora de Energia S. de R. L.
Additionally, we have permits in Ilo to use water at three desalination plants that generate water for industrial use and domestic consumption; we believe these facilities will produce sufficient water to cover the requirements of both current and projected needs.
Additionally, we have permits in Ilo to use water at three desalination plants that generate water for industrial use and domestic consumption; 12 Table of Contents we believe these facilities will produce sufficient water to cover the requirements of both current and projected needs.
You may read and copy any document we file at the SEC’s Public Reference Room at 100 F Street NE, Washington, D.C. 20549. The SEC maintains a website that contains annual, quarterly and current reports, proxy statements and other information that issuers (including Southern Copper Corporation) file electronically with the SEC.
You may read and copy any document we file at the SEC’s Public Reference Room at 100 F Street NE, Washington, D.C. 20549. The SEC maintains a website that contains annual, quarterly and current 14 Table of Contents reports, proxy statements and other information that issuers (including Southern Copper Corporation) file electronically with the SEC.
(“MGE”), a subsidiary of Grupo Mexico which has two power plants designed to supply power to La Caridad and Buenavista units. Currently, MGE supplies 1.42% of its power output to third party energy users. These plants are natural gas-fired combined cycle power generating units, with a net total capacity of 516.2 megawatts.
(“MGE”), a subsidiary of Grupo Mexico which has two power plants designed to supply power to La Caridad and Buenavista units. Currently, MGE supplies 7.6% of its power output to third party energy users. These plants are natural gas-fired combined cycle power generating units, with a net total capacity of 516.2 megawatts.
The per pound LME zinc price during the last 5 and 10 year periods averaged $1.29 and $1.14, respectively. ​ 7 Table of Contents COMPETITIVE CONDITIONS ​ Competition in the copper market is based primarily on price and service basis, with price being the most important factor when supplies of copper are ample.
The per pound LME zinc price during the last 5 and 10 year periods averaged $1.27 and $1.18, respectively. ​ 7 Table of Contents COMPETITIVE CONDITIONS ​ Competition in the copper market is based primarily on price and service basis, with price being the most important factor when supplies of copper are ample.
We use natural gas to power boilers and generators and utilize diesel fuel to power mining equipment for metallurgical processes at our operations. 11 Table of Contents We believe that sufficient sources of fuel, electricity and water are readily available.
We use natural gas to power boilers and generators and utilize diesel fuel to power mining equipment for metallurgical processes at our operations. We believe that sufficient sources of fuel, electricity and water are readily available.
Additionally, 30% of our female workforce hold a STEM position (Science, Technology, Engineering, Mathematics). ​ We now have a better understanding of our diversity distribution, which we believe allows us design efforts for each group, and advance towards inclusion. ​ CODE OF ETHICS ​ We certify our employees in our Code of Ethics yearly.
Additionally, this year 34% of our female workforce hold a STEM position (Science, Technology, Engineering, Mathematics). ​ We now have a better understanding of our diversity distribution, which we believe allows us design efforts for each group, and advance towards inclusion. ​ CODE OF ETHICS ​ We certify our employees in our Code of Ethics yearly.
Water usage fees are updated on a yearly basis and have been on the rise in recent years. ​ LEGAL AND REGULATORY MATTERS ​ In 2021 and 2022, no legal, environmental, labor or tax regulations came into effect that required the Company to incur material costs of compliance, had material adverse effects on the Company’s operations, or affected normal execution of the Company’s projects.
Water usage fees are updated on a yearly basis and have been on the rise in recent years. ​ 13 Table of Contents LEGAL AND REGULATORY MATTERS ​ In 2022 and 2023, no legal, environmental, labor or tax regulations came into effect that required the Company to incur material costs of compliance, had material adverse effects on the Company’s operations, or affected normal execution of the Company’s projects.
The market prices for our three principal by-products over the last 10 years are as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Molybdenum (Dealer ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Oxide Platt’s ​ ​ ​ ​ ​ ​ ​ ​ Silver (COMEX) Metals Week) ​ Zinc (LME) Year High Low Average High Low Average High Low Average 2013 32.41 18.53 23.82 11.95 9.12 10.26 0.99 0.81 0.87 2014 22.05 15.39 19.04 15.05 8.75 11.30 1.10 0.88 0.98 2015 18.35 13.67 15.68 9.40 4.30 6.59 1.09 0.66 0.88 2016 20.67 13.74 17.10 8.60 5.10 6.42 1.32 0.73 0.95 2017 18.49 15.37 17.03 10.25 6.85 8.13 1.53 1.00 1.31 2018 17.55 13.95 15.65 13.00 10.60 11.86 1.64 1.04 1.33 2019 19.39 ​ 14.28 ​ 16.16 ​ 12.70 ​ 8.28 ​ 11.27 ​ 1.37 ​ 0.90 ​ 1.16 2020 29.25 ​ 11.74 ​ 20.62 ​ 10.90 ​ 7.00 ​ 8.57 ​ 1.29 ​ 0.72 ​ 1.03 2021 29.40 ​ 21.46 ​ 25.18 ​ 20.10 ​ 9.95 ​ 15.51 ​ 1.73 ​ 1.15 ​ 1.36 2022—1st Q 26.89 ​ 22.17 ​ 24.05 ​ 19.33 ​ 18.70 ​ 18.99 ​ 1.93 ​ 1.60 ​ 1.70 2022—2nd Q 26.14 ​ 20.28 ​ 22.65 ​ 19.30 ​ 17.08 ​ 18.30 ​ 2.05 ​ 1.47 ​ 1.78 2022—3rd Q 20.72 ​ 17.55 ​ 19.10 ​ 18.58 ​ 13.90 ​ 16.00 ​ 1.76 ​ 1.28 ​ 1.48 2022—4th Q 24.09 ​ 18.02 ​ 21.25 ​ 31.85 ​ 17.95 ​ 21.17 ​ 1.49 ​ 1.22 ​ 1.36 2022 26.89 ​ 17.55 ​ 21.76 ​ 31.85 ​ 13.90 ​ 18.61 ​ 2.05 ​ 1.22 ​ 1.58 ​ The per ounce COMEX silver price during the last 5 and 10 year periods averaged $19.88 and $19.20, respectively.
The market prices for our three principal by-products over the last 10 years are as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Molybdenum (Dealer ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Oxide Platt’s ​ ​ ​ ​ ​ ​ ​ ​ Silver (COMEX) Metals Week) ​ Zinc (LME) Year High Low Average High Low Average High Low Average 2014 22.05 15.39 19.04 15.05 8.75 11.30 1.10 0.88 0.98 2015 18.35 13.67 15.68 9.40 4.30 6.59 1.09 0.66 0.88 2016 20.67 13.74 17.10 8.60 5.10 6.42 1.32 0.73 0.95 2017 18.49 15.37 17.03 10.25 6.85 8.13 1.53 1.00 1.31 2018 17.55 13.95 15.65 13.00 10.60 11.86 1.64 1.04 1.33 2019 19.39 ​ 14.28 ​ 16.16 ​ 12.70 ​ 8.28 ​ 11.27 ​ 1.37 ​ 0.90 ​ 1.16 2020 29.25 ​ 11.74 ​ 20.62 ​ 10.90 ​ 7.00 ​ 8.57 ​ 1.29 ​ 0.72 ​ 1.03 2021 29.40 ​ 21.46 ​ 25.18 ​ 20.10 ​ 9.95 ​ 15.51 ​ 1.73 ​ 1.15 ​ 1.36 2022 26.89 ​ 17.55 ​ 21.76 ​ 31.85 ​ 13.90 ​ 18.61 ​ 2.05 ​ 1.22 ​ 1.58 2023—1st Q 24.23 ​ 20.01 ​ 22.53 ​ 38.50 ​ 24.00 ​ 32.04 ​ 1.59 ​ 1.30 ​ 1.42 2023—2nd Q 26.04 ​ 22.33 ​ 24.26 ​ 23.50 ​ 16.65 ​ 20.87 ​ 1.33 ​ 1.01 ​ 1.15 2023—3rd Q 25.22 ​ 22.24 ​ 23.60 ​ 26.25 ​ 21.98 ​ 23.59 ​ 1.20 ​ 1.03 ​ 1.10 2023—4th Q 25.50 ​ 20.85 ​ 23.25 ​ 22.50 ​ 16.73 ​ 18.41 ​ 1.20 ​ 1.08 ​ 1.13 2023 26.04 ​ 20.01 ​ 23.41 ​ 38.50 ​ 16.65 ​ 23.73 ​ 1.59 ​ 1.01 ​ 1.20 ​ The per ounce COMEX silver price during the last 5 and 10 year periods averaged $21.43 and $19.16, respectively.
We believe that the labor environment in our operations in Mexico and Peru is favorable, which has allowed us to increase productivity as we advance the goals of our capital expansion program. In addition, around 14,000 people were working as contractors in support of our operations.
We believe that the labor environment in our operations in Mexico and Peru is favorable, which has allowed us to increase productivity as we advance the goals of our capital expansion program. In addition, around 13,066 people were working as contractors in support of our operations.
The per pound LME copper price during the last 5 and 10 year periods averaged $3.34 and $3.06, respectively. ​ The table below shows the high, low and average prices per pound with the exception of silver, which is priced per ounce.
The per pound LME copper price during the last 5 and 10 year periods averaged $3.52 and $3.12, respectively. ​ The table below shows the high, low and average prices per pound with the exception of silver, which is priced per ounce.
We have two types of mining concessions in Peru: metallic and non-metallic concessions. ​ Mexico: ​ In Mexico we have 493,117 hectares in concessions from the Mexican government for our exploration and exploitation activities as outlined on the table below: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ IMMSA La Caridad Buenavista Projects Total ​ (hectares) Mine concessions 223,313 ​ 103,821 ​ 93,706 ​ 72,277 493,117 ​ We believe that our Mexican concessions are in full force and in effect under applicable Mexican laws and that we are in compliance with all material terms and requirements applicable to these concessions.
We have two types of mining concessions in Peru: metallic and non-metallic concessions. ​ Mexico: ​ In Mexico we have 502,688 hectares in concessions from the Mexican government for our exploration and exploitation activities as outlined on the table below: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ IMMSA La Caridad Buenavista Projects Total ​ (hectares) Mine concessions 223,313 ​ 103,821 ​ 93,706 ​ 81,848 502,688 ​ We believe that our Mexican concessions are in full force and in effect under applicable Mexican laws and that we are in compliance with all material terms and requirements applicable to these concessions.
Our products compete with other materials, including aluminum and plastics. For additional information, see Item 1A “Risk Factors—The copper mining industry is highly competitive.” ​ HUMAN CAPITAL RESOURCES ​ As of December 31, 2022, we had 15,018 employees, approximately 73% of whom are covered by a Collective Labor Agreement and are represented by ten different labor unions.
Our products compete with other materials, including aluminum and plastics. For additional information, see Item 1A “Risk Factors—The copper mining industry is highly competitive.” ​ HUMAN CAPITAL RESOURCES ​ As of December 31, 2023, we had 15,810 employees, approximately 67% of whom are covered by a Collective Labor Agreement and are represented by 16 different labor unions.
For a further discussion of our products 6 Table of Contents market prices, please see Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Metal Prices.” ​ The table below shows the high, low and average COMEX and LME per pound copper prices during the last 10 years: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Copper (COMEX) Copper (LME) Year High Low Average High Low Average 2013 3.78 3.03 3.34 3.74 3.01 3.32 2014 3.43 2.84 3.12 3.37 2.86 3.11 2015 2.95 2.02 2.51 2.92 2.05 2.50 2016 2.69 1.94 2.20 2.69 1.96 2.21 2017 3.29 2.48 2.80 3.27 2.48 2.80 2018 3.29 2.56 2.93 3.29 2.64 2.96 2019 2.98 ​ 2.51 ​ 2.72 ​ 2.98 ​ 2.51 ​ 2.72 2020 3.63 ​ 2.12 ​ 2.80 ​ 3.61 ​ 2.09 ​ 2.80 2021 4.78 ​ 3.54 ​ 4.24 ​ 4.86 ​ 3.52 ​ 4.23 2022—1st Q 4.93 ​ 4.30 ​ 4.54 ​ 4.87 ​ 4.34 ​ 4.53 2022—2nd Q 4.80 ​ 3.71 ​ 4.34 ​ 4.73 ​ 3.74 ​ 4.32 2022—3rd Q 3.71 ​ 3.21 ​ 3.50 ​ 3.77 ​ 3.18 ​ 3.51 2022—4th Q 3.95 ​ 3.36 ​ 3.66 ​ 3.87 ​ 3.37 ​ 3.63 2022 4.93 ​ 3.21 ​ 4.01 ​ 4.87 ​ 3.18 ​ 4.00 ​ The per pound COMEX copper price during the last 5 and 10 year periods averaged $3.34 and $3.07, respectively.
For a further discussion of our products market prices, please see Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Metal Prices.” ​ The table below shows the high, low and average COMEX and LME per pound copper prices during the last 10 years: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Copper (COMEX) Copper (LME) Year High Low Average High Low Average 2014 3.43 2.84 3.12 3.37 2.86 3.11 2015 2.95 2.02 2.51 2.92 2.05 2.50 2016 2.69 1.94 2.20 2.69 1.96 2.21 2017 3.29 2.48 2.80 3.27 2.48 2.80 2018 3.29 2.56 2.93 3.29 2.64 2.96 2019 2.98 ​ 2.51 ​ 2.72 ​ 2.98 ​ 2.51 ​ 2.72 2020 3.63 ​ 2.12 ​ 2.80 ​ 3.61 ​ 2.09 ​ 2.80 2021 4.78 ​ 3.54 ​ 4.24 ​ 4.86 ​ 3.52 ​ 4.23 2022 4.93 ​ 3.21 ​ 4.01 ​ 4.87 ​ 3.18 ​ 4.00 2023—1st Q 4.27 ​ 3.74 ​ 4.09 ​ 4.28 ​ 3.72 ​ 4.05 2023—2nd Q 4.12 ​ 3.55 ​ 3.85 ​ 4.12 ​ 3.59 ​ 3.85 2023—3rd Q 3.99 ​ 3.63 ​ 3.77 ​ 3.96 ​ 3.64 ​ 3.79 2023—4th Q 3.94 ​ 3.54 ​ 3.72 ​ 3.87 ​ 3.54 ​ 3.71 2023 4.27 ​ 3.54 ​ 3.86 ​ 4.28 ​ 3.54 ​ 3.85 ​ The per pound COMEX copper price during the last 5 and 10 year periods averaged $3.53 and $3.12, respectively.
Holding fees for mining concessions can be from $0.39 to $8.67 per hectare depending on the start date of the mining concession. Fees paid during 2022, 2021 and 2020 were approximately $8.7 million, $7.7 million and $6.6 million, respectively. In addition, all of our operating units in Mexico have water concessions that are in full force and effect.
Holding fees for mining concessions can be from $0.52 to $11.48 per hectare depending on the start date of the mining concession. Fees paid during 2023, 2022 and 2021 were approximately $11.7 million, $8.7 million and $7.7 million, respectively. In addition, all of our operating units in Mexico have water concessions that are in full force and effect.
This agreement is expected to become effective in the first semester of 2023. ​ Water: In Mexico, water is deemed public property and industries that are not connected to a public service water supply must obtain a water concession from Comision Nacional del Agua (the National Water Commission or the “CNA”).
This agreement is expected to become effective during the second quarter of 2024. ​ Water: In Mexico, water is deemed public property and industries that are not connected to a public service water supply must obtain a water concession from Comision Nacional del Agua (the National Water Commission or the “CNA”).
This reflects our belief that it is in the Company’s best interest to listen to all of our people and create open communications channels. 76% of our employees participated in 2021’s survey, which is an increase of 6% compared to 2019.
This reflects our belief that it is in the Company’s best interest to listen to all of our people and create open communications channels. 85% of our employees participated in 2023’s survey, which is an increase of 9% compared to 2021.
The per pound Platt’s Metals Week Dealer Oxide molybdenum price during the last 5 and 10 year periods averaged $13.16 and $10.85, respectively.
The per pound Platt’s Metals Week Dealer Oxide molybdenum price during the last 5 and 10 year periods averaged $15.54 and $12.20, respectively.
For more information on tax matters, refer to Note 7 “Income taxes” of the consolidated financial statements. ​ 13 Table of Contents MINING RIGHTS AND CONCESSIONS ​ Peru: ​ We have 237,102 hectares in concessions from the Peruvian government for our exploration, exploitation, extraction and production operations, at various sites, as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Toquepala Cuajone Ilo Other Total ​ (hectares) Plants 360 ​ 919 ​ 421 ​ — 1,700 Operations 22,423 ​ 30,261 ​ 4,249 ​ — 56,933 Projects and water resources ​ — ​ — ​ — ​ 36,333 ​ 36,333 Exploration — ​ — ​ — ​ 142,136 142,136 Total 22,783 31,180 4,670 178,469 237,102 ​ We believe that our Peruvian concessions are in full force and effect under applicable Peruvian laws and as such, comply with all material terms and requirements applicable to said concessions.
For more information on tax matters, refer to Note 7 “Income taxes” of the consolidated financial statements. ​ MINING RIGHTS AND CONCESSIONS ​ Peru: ​ We have 156,818 hectares in concessions from the Peruvian government for our exploration, exploitation, extraction and production operations, at various sites, as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Toquepala Cuajone Ilo Other Total ​ (hectares) Plants 360 ​ 919 ​ 421 ​ — 1,700 Operations 22,423 ​ 26,461 ​ 4,249 ​ 36,733 89,866 Projects and water resources ​ — ​ — ​ — ​ — ​ — Exploration — ​ — ​ — ​ 65,251 65,251 Total 22,783 27,380 4,670 101,985 156,818 ​ We believe that our Peruvian concessions are in full force and effect under applicable Peruvian laws and as such, comply with all material terms and requirements applicable to said concessions.
The survey also included new sociodemographic elements, in order to consider the opinions of our diverse groups within our Company and respond with our “ECO Action Plan” for the next two years. ​ All employees, both unionized and non-unionized, are invited to participate in all of our human talent initiatives.
We believe this positive trend suggests a continuous improvement on the engagement level of our people year to year. ​ The survey also included sociodemographic elements, in order to consider the opinions of our diverse groups within our Company and respond with our “ECO Action Plan” for the next two years. ​ All employees, both unionized and non-unionized, are invited to participate in all of our human talent initiatives.
We increased our female workforce from 944 to over 1,090, which represents an increase of 15% in our female headcount year-over-year.
We increased our female workforce from 1,090 to 1,221, which represents an increase of 12% in our female headcount year-over-year. We also increased our female workforce on Leadership positions by 12%.
From time to time, we have entered into hedging transactions to provide partial protection against future decreases in the market price of metals and we may do so under certain market conditions.
Our contract prices also reflect any negotiated premiums and the costs of freight and other factors. 6 Table of Contents From time to time, we have entered into hedging transactions to provide partial protection against future decreases in the market price of metals and we may do so under certain market conditions.
This number exceeds that registered by other companies that apply similar surveys. ​ We have adopted a corporate social responsibility policy that is designed to integrate the Company´s operations with local communities in areas influenced by our operations. This policy focuses on creating permanent and positive relationships to generate optimal social conditions and promote sustainable development in the area.
This number 9 Table of Contents exceeds that registered by other companies that apply similar surveys, consolidating the trust our employees have in this instrument. ​ We have adopted a corporate social responsibility policy that is designed to integrate the Company´s operations with local communities in areas influenced by our operations.
This vision is based on our core values of respect, honesty and responsibility. ​ Consistent with our Code of Conduct and Human Rights Policy, our goal is to (i) build an organizational culture of total equality and well-being with focus on diversity, inclusion and non-discrimination, (ii) increase sensitivity, knowledge and skills in our leaders and employees in order to integrate diverse and inclusive teams and promote a culture of respect, and (iii) extend this culture to the communities in which we operate. ​ Based on the results of a DEI survey in Mexico and Peru, we aligned our diversity and inclusion Strategic Plan with six strategic initiatives to create Key Performance Indicators and increase participation of women by 2% in the organization, reinforce our human resources policies for inclusion, consolidate the executive level commitment and implement continuous training and communication campaigns at all levels in the organization. ​ In 2022, we disclosed our DEI Corporate Policy, originally issued in 2021, and trained our total workforce on DEI fundamental principles through the Training Program “Towards an Inclusive Grupo Mexico.” We are committed to inclusion and to honor our diversity.
This vision is based on our core values of respect, honesty and responsibility. ​ Consistent with our Code of Conduct and Human Rights Policy, our goal is to (i) build an organizational culture of total equality and well-being, focusing on diversity, inclusion and non-discrimination, (ii) increase sensitivity, knowledge and skills in our leaders and employees in order to build diverse and inclusive teams and promote a culture of respect, and (iii) extend this culture to the communities in which we operate. ​ Based on the results of a DEI survey in Mexico and Peru, we aligned our diversity and inclusion 2020-2023 Strategic Plan with five strategic initiatives: 1.
Prices for our molybdenum products are established by reference to the publication Platt’s Metals Week. Our contract prices also reflect any negotiated premiums and the costs of freight and other factors.
Prices for our molybdenum products are established by reference to the publication Platt’s Metals Week.
Our townsite and housing complexes provide schools, medical facilities, churches, banks, shops, social clubs, recreational facilities and other services. ​ Mexico ​ 72.4% of our 10,005 Mexican employees were unionized as of December 31, 2022 and are represented by four different unions. Under Mexican law, the terms of employment for unionized workers are set forth in collective bargaining agreements.
Housing, maintenance and utility services are provided to most of our employees for a nominal cost. Our townsite and housing complexes provide schools, medical facilities, churches, banks, shops, social clubs, recreational facilities and other services. ​ Mexico ​ 69.8% of our 10,802 Mexican employees were unionized as of December 31, 2023 and are represented by ten different unions.
Every employee, starting with new hires, commit and sign agreement with our main document and guidance tool for our conduct in terms of our legal, professional and ethical obligations, both in our business dealings and our interpersonal relationships. ​ 10 Table of Contents Peru ​ 76.5% of the Company’s 4,947 Peruvian employees were unionized as of December 31, 2022.
Every employee, starting with new hires, commit and sign agreement with our main document and guidance tool for our conduct in terms of our legal, professional and ethical obligations, both in our business dealings and our interpersonal relationships. ​ Peru ​ The Company maintains ongoing communication with union representatives with the aim of ensuring labor harmony and proper management of labor relations.
Mexican companies negotiate the salary provisions of collective bargaining agreements with the labor unions on an annual basis and negotiate other benefits every two years. We conduct negotiations separately at each mining complex and each processing plant. ​ Our Taxco mine in Mexico has been on strike since July 2007.
We conduct negotiations separately at each mining complex and each processing plant. ​ 11 Table of Contents Our Taxco mine in Mexico has been on strike since July 2007.
As a result, from June to December 2021, the Company signed six collective agreements ranging from three to six year terms. All of the agreements granted annual salary increases of 5% and a signing bonus ranging S/45,000 (approximately $11,780) to S/90,000 (approximately $23,560), depending on the duration of the agreement, among other benefits.
As a result, between the duration of the agreement, a long-term agreement bonus of S/10,000 (approximately $2,670) was granted in June and December 2021, the Company signed collective bargaining agreements with the six unions with durations between three to six years. All of them granted annual salary increases of 5%.
In the second quarter of 2022, the Maritime Terminal of Guaymas also received ISO 45001 Certification and the Charcas unit became the first of our underground mines to obtain ISO 14001 Certification. ​ Health and safety programs include a strong annual training plan, compliance with the regulators at each site, risk management and Behavior Based Safety programs that extend our safety culture to contractors. ​ Talent Attraction and Recruiting ​ We deploy several talent attraction programs, which entail leveraging organizational relations; establishing links with national and regional institutions of higher learning in the countries where we operate; and participating in job fairs.
Health campaigns were held in collaboration with healthcare institutions for workers and their families within the communities where we operate, offering general consultations with comprehensive examinations including imaging studies and laboratory tests, with a special focus on breast and prostate cancer screenings. ​ In 2023, the environmental and occupational health and safety management systems from all our mining operations are certified under the respective ISO 140001 and ISO 45001 standards. ​ Health and safety programs include a strong annual training plan, compliance with the regulators at each site, risk management and Behavior Based Safety programs that extend our safety culture to contractors. ​ Talent Attraction and Recruiting ​ We deploy several talent attraction programs, which entail leveraging organizational relations; establishing links with national and regional institutions of higher education in the countries where we operate; and participating in job fairs.
We believe in our people, and we provide a wide variety of opportunities for professional growth for all employees in Peru and Mexico. In 2022 we had a training investment of over $2.5 million, which resulted in more than 408,000 training hours, focused on safety and health, technical training, soft skills development, code of ethics and compliance training.
In 2023 we made a training investment of over $4.4 million, which resulted in more than 440,000 training hours that focused on safety and health, rquipment operations and maintenance certifications, technical training, soft skills development (primarily in Leadership Competencies, code of ethics and compliance training.
A long-term agreement bonus of S/10,000 (approximately $2,618) was granted to the union that agreed to six-year extension of the collective bargaining agreement. All these concepts were recorded as labor expense. There were no other collective agreements pending negotiation with the unions in 2022.
Additionally, each agreement granted, among other things, a signing bonus of between S/45,000 (approximately $12,013) and S/90,000 (approximately $24,026), depending on the union that signed a six-year extension of the collective bargaining agreement. All these concepts were recorded as labor expense.
Additionally, the Company reached a settlement agreement with one of the unions regarding compliance with an 2018-2019 Arbitration Award. ​ In February 2022, the Company´s railway from Cuajone to Ilo was blocked and the Viña Blanca water reservoir facilities were seized, cutting off the water supply to some residents of the Cuajone mining camp.
In 2022, these collective bargaining agreements were executed and the Company does not have any collective agreement pending to be negotiated with the unions. ​ In December 2022, the Company reached a settlement with one of the unions regarding compliance with an 2018-2019 Arbitration Award.
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We offer productivity bonuses to our employees, which motivates them to grow the Company’s results. ​ 8 Table of Contents Health and Safety ​ During 2022, we intensified our COVID-19 related communication to the entire organization, with a view to strengthening the application of the health safety protocols in all of the Company’s operations and offices, which include: a) Increase of the application of antigen and PCR tests per day, including those prescribed at the homes of our employees. b) Decrease in capacity to 30% in offices and common spaces, keeping well-ventilated areas, and restriction of meetings. c) Promoting "home office" in those positions that allow it, applying sanitary filters and safety protocols.
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We believe in our people, and we provide a wide variety of opportunities for professional growth for all employees in Peru and Mexico.
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We hired special Infirmary staff in all sites and offices, for prevention and medical care. d) Continuous sanitization and prevention equipment for employees. e) Limitation of access to company camps, where our employees´ families live. f) Medical and psychological counseling line for our employees and our communities. g) Functioning of health committees at each business center. h) Coordinated actions with the municipal health committees. i) Donations of supplies and diagnostic tests to local communities. j) Accommodations for our employees in their complete vaccination schedule and booster applications. ​ Our focus on health and safety includes prevention and wellness programs, through the Medical and HR departments, such as clinical attention and periodical revisions, wellness training and a wellness platform for our employees. ​ We are committed to have our operations audited and certified under the ISO 45001 standards.
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We offer productivity bonuses to our employees, which motivates them to grow the Company’s results. ​ 8 Table of Contents Health and Safety ​ Our focus on health and safety includes prevention and wellness programs, through the Medical and HR departments, such as clinical attention and periodical revisions, wellness training and a wellness platform for our employees. ​ During 2023, we carried out 50 health campaigns with the participation of 1,894 collaborators in early detections of diseases such as breast cancer, cervical cancer, prostate cancer, and tuberculosis.
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In the first quarter of 2022, the Santa Barbara and San Martin mines obtained ISO 45001 Certification for the environmental management system while La Caridad Mine and the Lime Plant in Sonora obtained ISO 14001 Certification.
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Additionally, we conducted 3,877 health promotion talks with 22,804 attendees and delivered 4,569 occupational health talks, focused on preventing occupational risks and diseases.
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In 2017, we had an engagement rating of 3.71 and in 2019, our rating was at 3.77. In 2021 the rating increased to 4.09.
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In 2023, we had an engagement rating of 4.17, an increase of 2% in the good perception of our employees regarding our Company.
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We believe this positive trend suggests a continuous improvement on the engagement level of our people. ​ For the 2021 survey, we added and measured the COVID-19 factor to better understand the opinion of our people about the actions taken by SCC in favor of our employees’ health and prevention, and we obtained a very high rating for this particular factor.
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This policy focuses on creating permanent and positive relationships to generate optimal social conditions and promote sustainable development in the area. We continue to make significant expenditures for community programs.
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We continue to make significant expenditures for community programs.
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Awareness campaigns, training and communication on diversity, inclusion and non-discrimination. 2. Incorporate a gender equality and diversity approach into our human resources policies and procedures (focused both on hiring and retention). 3. Physical modifications at our operations for the inclusion of women. 4. Promote diversity and equal opportunities in our neighbor communities. 5.
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The six unions came together during the first half of 2022 to defend their rights to work in the Cuajone mining unit in response to the action carried out by this small group of residents from the community of Tumilaca, Pocata, Coscore and Tala, Moquegua, which directly affected the health and safety of workers and their families and the production process.
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Define specific processes on awareness, prevention and handling potential incidents of sexual and/or workplace harassment. ​ In 2022, we disclosed our Policy on Diversity, Inclusion, Non-Discrimination, and Zero Tolerance for Workplace or Sexual Harassment for Grupo México and the Mining Division.
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The National Federation of Metallurgical and Steel Mining Workers of Peru (“Federacion Nacional de Trabajadores Mineros Metalurgicos y Siderurgicos del Peru”) condemned the actions against the Cuajone unit and ratified its collective agreements with the Company. ​ Our employees at the Toquepala and Cuajone mining units reside in the 3,700 houses and apartments that we have built at the townsites.
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The latter describes the reporting mechanisms available in Mexico, Peru and the United States, and the protection for the person reporting. In 2023 we provided training about diversity and inclusion to more than 5700 employees. We have the goal to increase participation of women by 2% yearly in the organization.
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We also have 90 houses in Ilo for staff personnel. Housing, maintenance and utility services are provided to most of our employees for a nominal cost.
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The Company has collective bargaining agreements with each of the six unions, the earliest expiration of which is in 2024 and the latest of which is in 2027. These agreements regulate benefits related to remuneration and working conditions. ​ 10 Table of Contents 60.9% of the Company’s 4,979 Peruvian employees were unionized as of December 31, 2023.
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As part of this settlement, the Company made a one-time payment to each union member of S/4,000 (approximately $1,068) as a compensation bonus and also paid a signing bonus of S/1,000 (approximately $267). ​ In the first quarter of 2023, the Company began applying the terms of the agreements entered into with the six unions pursuant to Law 31632, which stipulates new conditions for compensation of leaves granted during COVID-19.
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Within the current framework of labor regulations and the agreements with all six unions, this compensation has been adapted to align with current working hours in the mining sector. These conditions were in effect until December 1, 2023. ​ In June 2023, the Company held two meetings with the unions to discuss different issues of collective interest.
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At these meetings, the unions expressed concerns regarding the current economic situation, including the rise in the cost of living in Peru, as well as issues related to services provided by the Company.
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In the third quarter of 2023, the Company released a formal response to each union confirming that there are collective labor agreements in force with each union that regulate all benefits related to salaries and working conditions.
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The Company has been complying with all its obligations under such collective labor agreements and is committed to maintaining on-going communication with the unions to ensure harmony. ​ In the last quarter of 2023, one of the unions which represents 24.7% of affiliated workers in the Company’s three productive units, held elections for 2023-2025.
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Another union, which represents 25.7% of affiliated workers, is in the process of electing its new representatives. ​ An important development in labor relations with the Company’s unions stems from a ruling by the Peruvian Supreme Court that was notified to the Company on October 23, 2023.
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After 12 years of litigation, the Court ruled in favor of the Company to settle a suit involving a worker payment in the amount of S/11,000 (approximately $2,936) that a lower court had ordered the Company to pay to one of the unions in 2011. The Company had been legally pursuing recovery of the total amount of this worker payment.
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The union has expressed its intention to comply with the court order and to reach an agreement to return the amount paid by the Company. ​ Our employees at the Toquepala and Cuajone mining units reside in the 3,700 houses and apartments that we have built at the townsites. We also have 90 houses in Ilo for staff personnel.
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Under Mexican law, the terms of employment for unionized workers are set forth in collective bargaining agreements. Mexican companies negotiate the salary provisions of collective bargaining agreements with the labor unions on an annual basis and negotiate other benefits every two years.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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For further detailed discussion of pending litigation, please see Note 13 “Commitment and Contingencies—Litigation matters” of the consolidated financial statements. ​ Developments in the United States, Europe and emerging market countries may adversely affect the Company business, our common stock price and our debt securities. ​ The business and market value of securities of companies with significant operations in Peru and Mexico is, to varying degrees, affected by the economic policies and market conditions in the United States, Europe and emerging market countries.
For further detailed discussion of pending litigation, please see Note 13 “Commitment and Contingencies—Litigation matters” of the consolidated financial statements. ​ Developments in the United States, Europe and emerging market countries may adversely affect the Company business, our common stock price and our debt securities. ​ The business, market value and trading price of securities of companies with significant operations in Peru and Mexico is, to varying degrees, affected by the economic policies and market conditions in the United States, Europe and emerging market countries.
There can be no assurance that the Company will be able to recognize the expected future benefits of deferred tax assets; this inability could have a material adverse effect on the Company’s results of operations. ​ Operational risks ​ Our actual reserves and resources may not conform to our current estimates of our ore deposits and our long-term viability depends on our ability to replenish mineral reserves and resources. ​ There is a degree of uncertainty attributable to the estimation of reserves and resources.
There can be no assurance that the Company will be able to recognize the expected future benefits of deferred tax assets; this inability could have a material adverse effect on the Company’s financial results. ​ Operational risks ​ Our actual reserves and resources may not conform to our current estimates of our ore deposits and our long-term viability depends on our ability to replenish mineral reserves and resources. ​ There is a degree of uncertainty attributable to the estimation of reserves and resources.
Depending on our capital investment program and global economic conditions, it is possible that future dividend distributions will be lower than the levels seen in recent years. ​ Our ability to recognize the benefits of deferred tax assets is dependent on future cash flows and taxable income. ​ Through 2022, the Company recognized the expected future tax benefit from deferred tax assets when the tax benefit was considered more likely than not to be realized.
Depending on our capital investment program and global economic conditions, it is possible that future dividend distributions will be lower than the levels seen in recent years. ​ Our ability to recognize the benefits of deferred tax assets is dependent on future cash flows and taxable income. ​ Through 2023, the Company recognized the expected future tax benefit from deferred tax assets when the tax benefit was considered more likely than not to be realized.
Furthermore, disaster recovery plans may not adequately protect us from a serious disaster. ​ Natural disasters, adverse weather conditions, floods, pandemics (including the recent coronavirus outbreak), acts of terrorism and other catastrophic or geo-political events may cause damage or disruption to our operations, international commerce and the global economy, which could have an adverse effect on our business, operating results, and financial condition. ​ 24 Table of Contents Risks Associated with Doing Business in Peru and Mexico ​ There is uncertainty as to the termination and renewal of our mining concessions. ​ Under the laws of Peru and Mexico, mineral resources belong to the state and government.
Furthermore, disaster recovery plans may not adequately protect us from a serious disaster. ​ Natural disasters, adverse weather conditions, floods, pandemics (including the recent coronavirus outbreak), acts of terrorism and other catastrophic or geo-political events may cause damage or disruption to our operations, international commerce and the global economy, which could have an adverse effect on our business, operating results, and financial condition. ​ Risks Associated with Doing Business in Peru and Mexico ​ There is uncertainty as to the termination and renewal of our mining concessions. ​ Under the laws of Peru and Mexico, mineral resources belong to the state and government.
Among other actions, past governments have imposed controls on prices, exchange rates and local and foreign investments; placed limitations on imports; restricted companies’ abilities to dismiss employees and have prohibited the remittance of profits to foreign investors. ​ Between 2019 and 2022, Peru experienced heightened political instability in a context marked by ongoing investigations into allegations of corruption and confrontation on the political front.
Among other actions, past governments have imposed controls on prices, exchange rates and local and foreign investments; placed limitations on imports; restricted companies’ abilities to dismiss employees and have prohibited the remittance of profits to foreign investors. ​ Between 2019 and 2023, Peru experienced heightened political instability in a context marked by ongoing investigations into allegations of corruption and confrontation on the political front.
We cannot assure you that these and other uninsured events will not have an adverse effect on our business, properties, operating results, financial condition or prospects. ​ Changes in the demand level for our products and copper sales agreements could adversely affect our revenues. ​ Our financial results may be affected by fluctuations in demand for the refined, semi-refined metal products and concentrates we sell at both the industrial and consumer level, and may also be affected by changes in the global economy, including economic upturns and downturns of differing magnitudes.
We cannot assure you that these and other uninsured events will not have an adverse effect on our business, properties, operating results, financial condition or prospects. ​ Changes in the demand level for our products and copper sales agreements could adversely affect our revenues. ​ Our financial results may be affected by fluctuations in demand for the refined, semi-refined metal products and concentrates we sell at both the industrial and consumer level, and may also be affected by changes in the global 18 Table of Contents economy, including economic upturns and downturns of differing magnitudes.
We cannot assure you that we will be able to maintain our production at levels that generate sufficient cash, or that we will have access to sufficient financing to continue our exploration, exploitation and refining activities at or above present levels. ​ Restrictive covenants in the agreements governing our indebtedness and the indebtedness of our Minera Mexico subsidiary may restrict our ability to pursue our business strategies. ​ Our financing instruments and those of our Minera Mexico subsidiary include financial and other restrictive covenants that, among other things, limit our and Minera Mexico’s abilities to incur additional debt and sell assets.
We cannot assure you 16 Table of Contents that we will be able to maintain our production at levels that generate sufficient cash, or that we will have access to sufficient financing to continue our exploration, exploitation and refining activities at or above present levels. ​ Restrictive covenants in the agreements governing our indebtedness and the indebtedness of our Minera Mexico subsidiary may restrict our ability to pursue our business strategies. ​ Our financing instruments and those of our Minera Mexico subsidiary include financial and other restrictive covenants that, among other things, limit our and Minera Mexico’s abilities to incur additional debt and sell assets.
Moreover, the Company cannot offer any assurances that the outcome of these lawsuits will not have adverse effects on the Company. ​ Environmental regulation, climate change and other regulations may increase our costs of doing business, restrict our operations or result in operational delays. ​ Our exploration, mining, milling, smelting and refining activities are subject to a number of Peruvian and Mexican laws and regulations, including environmental laws and regulations, and certain industry technical standards.
Moreover, the Company cannot offer any assurances that the outcome of these lawsuits will not have adverse effects on the Company. ​ 21 Table of Contents Environmental regulation, climate change and other regulations may increase our costs of doing business, restrict our operations or result in operational delays. ​ Our exploration, mining, milling, smelting and refining activities are subject to a number of Peruvian and Mexican laws and regulations, including environmental laws and regulations, and certain industry technical standards.
We cannot assure you that current or future legislative, regulatory or trade developments will not have adverse effects on our business, properties, operating results, financial condition or prospects. 21 Table of Contents Our mining and metal production projects may expose us to new risks. ​ Our Company is in the midst of a large expansion program, which may expose us to additional risks in terms of industrial accidents.
We cannot assure you that current or future legislative, regulatory or trade developments will not have adverse effects on our business, properties, operating results, financial condition or prospects. ​ Our mining and metal production projects may expose us to new risks. ​ Our Company is in the midst of a large expansion program, which may expose us to additional risks in terms of industrial accidents.
Along these lines, significant competition exists to acquire properties that produce or are capable of producing copper and other metals, and some of our main competitors have consolidated, which makes them more diversified than we are. ​ 22 Table of Contents We cannot assure you that changes in market conditions, including competition, will not adversely affect our ability to compete in the future on the basis of price or other factors with companies that may benefit from future favorable trading or other arrangements. ​ We are controlled by Grupo Mexico, which exercises control over our affairs and policies and whose interests may be different from yours. ​ As of December 31, 2022, Grupo Mexico owned indirectly 88.9% of our capital stock.
Along these lines, significant competition exists to acquire properties that produce or are capable of producing copper and other metals, and some of our main competitors have consolidated, which makes them more diversified than we are. ​ We cannot assure you that changes in market conditions, including competition, will not adversely affect our ability to compete in the future on the basis of price or other factors with companies that may benefit from future favorable trading or other arrangements. ​ We are controlled by Grupo Mexico, which exercises control over our affairs and policies and whose interests may be different from yours. ​ As of December 31, 2023, Grupo Mexico owned indirectly 88.9% of our capital stock.
Market prices are affected by a number of factors, including global economic and political conditions in general, and in particular by: international policies and regulations in the ambits of trade, taxes and tariffs; levels of supply and demand; the availability and cost of substitutes; inventory levels maintained by users; actions of participants in the commodities markets; interest rates; expectations 15 Table of Contents regarding future inflation rates; currency exchange rates and changes in technology.
Market prices are affected by a number of factors, including global economic and political conditions in general, and in particular by: international policies and regulations in the ambits of trade, taxes and tariffs; levels of supply and demand; the availability and cost of substitutes; inventory levels maintained by users; actions of participants in the commodities markets; interest rates; expectations regarding future inflation rates; currency exchange rates and changes in technology.
Compliance with existing and new laws and regulations that may be applicable to us in the future could increase our operating costs and adversely affect our financial results of operations and cash flows. ​ Our objective is to preserve the health and safety of our workforce by implementing occupational health and training programs and safety incentives at our operations that meet all regulatory requirements and enhance employee performance.
Compliance with existing and new laws and regulations that may be applicable to us in the future could increase our operating costs and adversely affect our financial results of operations and cash flows. ​ 19 Table of Contents Our objective is to preserve the health and safety of our workforce by implementing occupational health and training programs and safety incentives at our operations that meet all regulatory requirements and enhance employee performance.
In addition, future shortages of critical parts, equipment and skilled labor could adversely affect our operations and development projects. ​ ​ 18 Table of Contents Potential delays in the transport 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.
In addition, future shortages of critical parts, equipment and skilled labor could adversely affect our operations and development projects. ​ Potential delays in the transport 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.
In September 2018, the three countries reached an agreement on a new trade deal, which will be 23 Table of Contents known as the United States—Mexico—Canada Agreement (“USMCA”). In June 2019, Mexico’s senate ratified the UMSCA. In December 2019, the three countries agreed to a new review of its regional trade pact, also concluding that the USMCA would replace NAFTA.
In September 2018, the three countries reached an agreement on a new trade deal, which will be known as the United States—Mexico—Canada Agreement (“USMCA”). In June 2019, Mexico’s senate ratified the UMSCA. In December 2019, the three countries agreed to a new review of its regional trade pact, also concluding that the USMCA would replace NAFTA.
In addition, future credit facilities may contain limitations on our capacity to incur additional debt and liens, dispose of assets, or pay dividends to our common stockholders. 16 Table of Contents ​ We may not pay a significant amount of our net income as cash dividends on our common stock in the future. ​ We have distributed a significant amount of our net income as dividends since 1996.
In addition, future credit facilities may contain limitations on our capacity to incur additional debt and liens, dispose of assets, or pay dividends to our common stockholders. ​ We may not pay a significant amount of our net income as cash dividends on our common stock in the future. ​ We have distributed a significant amount of our net income as dividends since 1996.
The Company’s operations may also be affected by mudslides and flash floods caused by torrential rains. 17 Table of Contents Such occurrences could result in damage to, or destruction of, mining operations resulting in monetary losses and possible legal liability.
The Company’s operations may also be affected by mudslides and flash floods caused by torrential rains. ​ Such occurrences could result in damage to, or destruction of, mining operations resulting in monetary losses and possible legal liability.
The imposition of exchange control policies could impair Minera Mexico’s ability to obtain imported goods and to meet its U.S. dollar-denominated obligations and could have an adverse effect on our business and financial condition. ​
The imposition of exchange control policies could impair Minera Mexico’s ability to obtain imported goods and to meet its U.S. dollar-denominated obligations and could have an adverse effect on our business and financial condition. ​ 27 Table of Contents
Accordingly, when inflation or deflation in Peru is not offset by a change in the exchange rate of the sol, our financial position, results of operations, cash flows and the market price of our common stock could be affected. Inflation in Peru in 2022, 2021 and 2020 was 8.5%, 6.4% and 2.0%, respectively.
Accordingly, when inflation or deflation in Peru is not offset by a change in the exchange rate of the sol, our financial position, results of operations, cash flows and the market price of our common stock could be affected. ​ Inflation in Peru in 2023, 2022 and 2021 was 3.2%, 8.5% and 6.4%, respectively.
The Vice President immediately assumed the presidency, which has led to considerable turmoil, particularly in the south of Peru, where acts of vandalism and violence have escalated. Roadblocks are scattered throughout the country, which have negatively affected the normal course of business in various regions. Fortunately, our operations have not been impacted.
The Vice President immediately assumed the presidency, which has led to considerable turmoil, particularly in the south of Peru, where acts of vandalism and violence escalated. Roadblocks were scattered throughout the country, which negatively affected the normal course of business in various regions. Fortunately, our operations were not impacted.
In February 2022, the railway between Cuajone and Ilo was blocked and Viña Blanca water reservoir facilities were seized, cutting off the water supply to some residents of the Cuajone mining camp. ​ 20 Table of Contents After numerous efforts to restore order through dialogue by the authorities, the Peruvian government declared a state of emergency in the Moquegua region in April 2022 forcing the protestors to return the Viña Blanca facilities and the railway to the Company.
In February 2022, the railway between Cuajone and Ilo was blocked and Viña Blanca water reservoir facilities were seized, cutting off the water supply to some residents of the Cuajone mining camp. ​ After numerous efforts to restore order through dialogue by the authorities, the Peruvian government declared a state of emergency in the Moquegua region in April 2022 and ordered the protestors to return the Viña Blanca facilities and the railway to the Company.
Some of our officers and directors, and those of Minera Mexico, are also directors and/or officers of Grupo Mexico and/or of its affiliates. We cannot assure you that the interests of Grupo Mexico will not conflict with those of our minority stockholders.
Some of our officers and directors, and those of Minera Mexico, are also directors and/or officers of Grupo Mexico and/or of its affiliates. We 23 Table of Contents cannot assure you that the interests of Grupo Mexico will not conflict with those of our minority stockholders.
As a result, actual cash operating costs and 19 Table of Contents economic returns based upon the development of proven and probable mineral reserves may differ significantly from those originally estimated.
As a result, actual cash operating costs and economic returns based upon the development of proven and probable mineral reserves may differ significantly from those originally estimated.
Despite being the epicenter of the COVID-19 pandemic, China began 2021 with a relatively optimistic economic growth outlook and represents approximately 50% of the world’s copper demand.
Despite being the epicenter of the COVID-19 pandemic, China began 2021 with a relatively optimistic economic growth outlook and represents approximately 50% of the world’s 24 Table of Contents copper demand.
Geopolitical uncertainty and protectionism have the potential to inhibit international trade and negatively impact business confidence, which can create price volatility and constraints on our ability to trade in certain markets. ​ In addition to the factors discussed above, copper prices may be affected by demand from China, which is currently the largest consumer of refined copper and concentrate in the world. ​ Over the last three years, approximately 79% of our revenues have come from the sale of copper; 10% from molybdenum; 5% from silver; and 3% from zinc.
Geopolitical uncertainty and protectionism have the potential to inhibit international trade and negatively impact business confidence, which can create price volatility and constraints on our ability to trade in certain markets. ​ In addition to the factors discussed above, copper prices may be affected by demand from China, which is currently the largest consumer of refined copper and concentrate in the world. ​ Over the last three years, approximately 77.6% of our revenues have come from the sale of copper; 10.9% from molybdenum; 4.2% from silver; and 3.1% from zinc.
Regarding non-fatal accidents, during the last three years, the Company’s Dart rate (rate to measure workplace injuries severe enough to warrant Day Away from work, job Restrictions and/or job Transfers) was much lower than the MSHA Dart rate (the MSHA Dart rate is published by the U.S.’s Mine Safety and Health Administration, and is used as an industry benchmark). ​ In 2022, we recorded four fatalities and recorded three in 2021.
Regarding non-fatal accidents, during the last four years, the Company’s Dart rate (rate to measure workplace injuries severe enough to warrant Day Away from work, job Restrictions and/or job Transfers) was much lower than the MSHA Dart rate (the MSHA Dart rate is published by the U.S.’s Mine Safety and Health Administration, and is used as an industry benchmark). ​ In 2023, we recorded five fatalities (two contractors and three employees).
Accordingly, when inflation in Mexico increases without a corresponding depreciation of the peso, the net income generated by our Mexican operations is adversely affected. Inflation in Mexico was 7.8% in 2022, 7.4% in 2021 and 3.2% in 2020.
Accordingly, when inflation in Mexico increases without a corresponding depreciation of the peso, the net income generated by our Mexican operations is adversely affected. Inflation in Mexico was 4.7% in 2023, 7.8% in 2022 and 7.4% in 2021.
Fuel, gas and power costs constituted approximately 34% of our total production cost in 2022, 31% in 2021 and 28% in 2020. We rely upon third parties for our supply of the energy resources consumed in our operations.
Fuel, gas and power costs constituted approximately 29% of our total production cost in 2023, 34% in 2022 and 31% in 2021. We rely upon third parties for our supply of the energy resources consumed in our operations.
On January 29, 2020, the U.S. ratified the USMCA and its President signed the USMCA into law.
On January 29, 2020, the President of the U.S. ratified and signed the USMCA into law.
Our Tia Maria project in Peru has experienced delays while trying to resolve issues with community groups. ​ Seemingly in the Peruvian mining environment, it is becoming crucial to obtain acceptance from local communities for projects in their areas, which may entail compliance with the demands for substantial investments in community infrastructure development and modernization to proceed with the mining projects. ​ We are confident that we will move forward with the Tia Maria project.
Our Tia Maria project in Peru has experienced delays while trying to resolve issues with community groups. ​ Seemingly in the Peruvian mining environment, it is becoming crucial to obtain acceptance from local communities for projects in their areas, which may entail compliance with the demands for substantial investments in community infrastructure development and modernization to proceed with the mining projects.
Any termination or unfavorable modification of the terms of one or more of our concessions, or failure to obtain renewals of such concessions subject to renewal or extensions, could have a material adverse effect on our financial condition and prospects. ​ Peruvian economic and political conditions may have an adverse impact on our business. ​ A significant portion of our operations is conducted in Peru.
Any 25 Table of Contents termination or unfavorable modification of the terms of one or more of our concessions, or failure to obtain renewals of such concessions subject to renewal or extensions, could have a material adverse effect on our financial condition and prospects. ​ Peruvian economic and political conditions, as well as illegal mining activities may have an adverse impact on our business. ​ A significant portion of our operations is conducted in Peru.
These may include changes in rainfall patterns, water shortages, changes in sea levels, storm patterns and intensities, and temperatures. These effects may adversely impact the cost, production and financial performance of our operations.
These may include droughts and the associated changes in rainfall patterns, water shortages, changes in sea levels, and high temperatures. These effects may adversely impact the cost, production and financial performance of our operations.
Acquisitions may also contribute to increasing mineral reserves and resources, and we review potential acquisition opportunities on a regular basis.
Acquisitions may also contribute to increasing mineral reserves and resources, and we review 17 Table of Contents potential acquisition opportunities on a regular basis.
Although economic policies and conditions in these countries may significantly differ from policies and conditions in Peru or Mexico, the business community’s reactions to developments in any of these countries may adversely affect the Company’s business, the market value or the trading price of securities, including debt securities, of issuers that have significant operations in Peru or Mexico. ​ In addition, in recent years economic conditions in Mexico have shown an increased correlation to U.S. economic conditions.
Although economic policies and conditions in these countries may significantly differ from policies and conditions in Peru or Mexico, the market’s reactions to developments in any of these countries may adversely affect the Company’s business causing a fluctuation on the market value or the trading price of our securities, including debt securities. ​ In addition, in recent years economic conditions in Mexico have shown to have an increased correlation to U.S. economic conditions.
As of December 31, 2022, unions represented approximately 77% of our workforce in Peru and 72.0% of our workforce in Mexico. Currently, we have labor agreements in effect for our Mexican and Peruvian operations. ​ Our Taxco mine in Mexico has been on strike since July 2007.
As of December 31, 2023, unions represented approximately 61% of our workforce in Peru and 70% of our workforce in Mexico. Currently, we have labor agreements in effect for our Mexican and Peruvian operations. ​ 20 Table of Contents Our Taxco mine in Mexico has been on strike since July 2007.
Currently, the industrial railroad, 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 executives to better understand the concerns of all parties.
After an evaluation of the damage, the Company resumed production at the Cuajone mining unit and the facilities are currently 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 executives to better understand the concerns of all parties.
Aligned with government efforts, we are working to measure our carbon footprint to reduce the contributions to greenhouse gas emissions of our operations.
Aligned with government efforts, we measure our carbon footprint and have updated our climate strategy to reduce the contributions to greenhouse gas emissions of our operations.
As has occurred in other metal producing countries, the mining industry may be perceived as a source of additional fiscal revenue. ​ 25 Table of Contents In addition, public safety organizations in Mexico are under significant stress, as a result of drug-related violence.
Other risks in Mexico are increases in taxes on the mining sector and higher royalties, such as those enacted in 2013. As has occurred in other metal producing countries, the mining industry may be perceived as a source of additional fiscal revenue. ​ In addition, public safety organizations in Mexico are under significant stress, as a result of drug-related violence.
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 facilities and production in the future. ​ However, we cannot guarantee that any additional incidents will not arise or assert that any future incidents that occur will imply no adverse impacts for our facilities, the results of our operations or our financial position. ​ In addition, several collective action lawsuits and civil action lawsuits have been filed against the Company in Mexico through both federal courts and state courts in Sonora.
The Community insist to receive a economic compensation. ​ However, we cannot guarantee that any additional incidents will not arise or assert that any future incidents that occur will imply no adverse impacts for our facilities, the results of our operations or our financial position. ​ In addition, several collective action lawsuits and civil action lawsuits have been filed against the Company in Mexico through both federal courts and state courts in Sonora.
SCC hopes that the government will take clear action to restore order, protect the rights of all citizens, and set the stage for a peaceful solution to these protests so that Peru can achieve the growth development it deserves. ​ Because we have significant operations in Peru, we cannot provide any assurance that political developments and economic conditions, including any changes to economic policies or the adoption of other reforms proposed by existing or future administrations in Peru and/or other factors will have no material adverse effects on market conditions, the prices of our securities, our ability to obtain financing, our results of operations, or our financial condition. ​ Mexican economic and political conditions, as well as drug-related violence, may have an adverse impact on our business. ​ The Mexican economy is highly sensitive to economic developments in the United States, mainly because of its high level of exports to this market.
This climate of violence gradually subsided during the year and was replaced by a general concern about the economic recession and personal insecurity. ​ Because we have significant operations in Peru, we cannot provide any assurance that political developments and economic conditions, including any changes to economic policies or the adoption of other reforms proposed by existing or future administrations in Peru and/or other factors will have no material adverse effects on market conditions, the prices of our securities, our ability to obtain financing, our results of operations, or our financial condition. ​ Mexican economic and political conditions, as well as drug-related violence, may have an adverse impact on our business. ​ The Mexican economy is highly sensitive to economic developments in the United States, mainly because of its high level of exports to this market.
The value of the peso appreciated by 5.9% against the U.S. dollar in 2022 after depreciating by 3.2% and 5.9% in 2021 and 2020 respectively.
The value of the peso appreciated by 12.7% against the U.S. dollar in 2023, versus a 5.9% apreciation in 2022 and a 3.2% of depreciation in 2021.
No fatalities were reported in 2020.The amounts paid to the Mexican and Peruvian authorities for reportable accidents had no adverse effects on our results.
In 2022, we recorded four fatalities (two contractors and two employees) and in 2021, three employee fatalities were registered. The amounts paid to the Mexican and Peruvian authorities for reportable accidents had no adverse effects on our results.
In 2022, the value of the sol appreciated by 4.5% against the U.S. dollar after having depreciated by 10.3% and 9.3% in 2021 and 2020, respectively.
In 2023, the value of the sol appreciated by 2.8% against the U.S. dollar, versus a 4.5% appreciation in 2022 and a 10.3% depreciation in 2021.
The adoption and expansion of trade restrictions; changes in the current U.S.-China relations, including on-going trade tensions; or other governmental action related to taxes, tariffs, trade agreements or other policies are difficult to predict, and could adversely affect the demand for our products, our costs, our customers, our suppliers and the U.S. economy, and consequently could have a material adverse effect on our cash flows, competitive position, financial condition or results of operations. ​ Additionally, the United Kingdom left the European Union in December 2020 after an 11-month transition period that started in January.
The adoption and expansion of trade restrictions; changes in the current U.S.-China relations, including on-going trade tensions; or other changes in governmental policies related to taxes, tariffs, trade agreements or any other policies are difficult to predict, and could adversely affect the demand for our products, our costs, our customers, our suppliers and the U.S. economy, and consequently could have a material adverse effect on our cash flows, competitive position, financial condition or results of operations. ​ We cannot assure you that the market value or trading prices of our common stock and debt securities, will not be adversely affected by events in the United States or elsewhere, including emerging market countries. ​ Other international risks ​ We are a company with substantial assets located outside of the United States.
For more information regarding our tailing dams, please see Item 2 “Properties—Slope Stability—Tailing Dams.” ​ During recent years, social and political demands has caused violence which could result in damage to, or destruction of, mining operations resulting in monetary losses and possible legal liability. ​ We maintain insurance against many of these and other risks, which under certain circumstances may not provide adequate coverage.
For more information regarding our tailing dams, please see Item 2 “Properties—Slope Stability—Tailing Dams.” ​ During recent years, social and political demands has caused violence which could result in damage to, or destruction of, mining operations resulting in monetary losses and possible legal liability. ​ In our proactive approach to managing operational sustainability risks, we have implemented the Critical Risk Registry, aligning with the International Council on Mining and Metals (ICMM) Good Practice Guide on Health and Safety Critical Control Management.
The potential risks to our operations might increase if the violence spreads to our areas of production. ​ Because we have significant operations in Mexico, we cannot provide any assurance that political developments and economic conditions, including any changes to economic policies or the adoption of other reforms proposed by existing or future administrations in Mexico, or the advent of drug-related violence in the country, will have no material adverse effect on market conditions, the prices of our securities, our ability to obtain financing, our results of operations or our financial condition. ​ Peruvian inflation and fluctuations in the sol exchange rate may adversely affect our financial condition and results of operations. ​ Although the U.S. dollar is our functional currency and our revenues are primarily denominated in U.S. dollars, as we operate in Peru, portions of our operating costs are denominated in Peruvian soles.
The main aspects of the Companys´s business that will be affected by the legislation are the terms for mining concessions from 50 to 30 years; new conditions on water use; provision of guarantees for site closure and remediation; a new 5% contribution of net earnings to indigenous communities for new projects and significant changes to exploration rules. ​ 26 Table of Contents Down the line, the aforementioned changes could trigger amendment, additions and repeals of provisions of a number of laws, including the Mining Law, the National Water Law, the General Law for Ecological Balance and Environmental Protection and the General Law for the Prevention and Management of Mine Waste. ​ Although the Company believes that there will be no material impact on the Company's current operations or financial situation as a result of these changes, we cannot assure you that future developments in these laws will not affect our business. ​ Because we have significant operations in Mexico, we cannot provide any assurance that political developments and economic conditions, including any changes to economic policies or the adoption of other reforms proposed by existing or future administrations in Mexico, or the advent of drug-related violence in the country, will have no material adverse effect on market conditions, the prices of our securities, our ability to obtain financing, our results of operations or our financial condition. ​ Peruvian inflation and fluctuations in the sol exchange rate may adversely affect our financial condition and results of operations. ​ Although the U.S. dollar is our functional currency and our revenues are primarily denominated in U.S. dollars, as we operate in Peru, portions of our operating costs are denominated in Peruvian soles.
At the start of the pandemic in 2020, copper prices were initially impacted by economic uncertainty. However, in mid-2020, copper prices began to rise and reached a record highs during 2021. Volatility in global economic growth, particularly in developing countries, has the potential to adversely affect future demand and prices for commodities.
In addition, the market prices of copper and certain other metals have on occasion been subject to rapid short-term changes. At the start of the pandemic in 2020, copper prices were initially impacted by economic uncertainty. However, in mid-2020, copper prices began to rise and reached a record highs during 2021.
For further information on this incident, refer to “Cybersecurity” under Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations”. ​ Given the unpredictability of the timing, nature and scope of information technology disruptions, we could potentially be subject to manipulation or improper use of our systems and networks, operational delays, situations that compromise confidential or otherwise protected information, destruction or corruption of data, security breaches, or financial losses from remedial actions, any of which could have a material adverse effect on the cash flows, competitive position, financial condition or results of our operations. ​ Other risks ​ Applicable law restricts the payment of dividends from our Minera Mexico subsidiary to us. ​ Our subsidiary, Minera Mexico, is a Mexican company and, as such, may pay dividends only out of net income that has been approved by shareholders.
However, due to the quick response of our 22 Table of Contents Information Technology team, our Enterprise Resource Planning software was not affected by the aforementioned attack. ​ Given the unpredictability of the timing, nature and scope of information technology disruptions, we could potentially be subject to manipulation or improper use of our systems and networks, operational delays, situations that compromise confidential or otherwise protected information, destruction or corruption of data, security breaches, or financial losses from remedial actions, any of which could have a material adverse effect on the cash flows, competitive position, financial condition or results of our operations. ​ Our business is exposed to certain risks associated with artificial intelligence (“AI”) and other new technologies. ​ Information and operational technology systems continue to evolve and, in order to remain competitive, we must implement new technologies in a timely, cost-effective and efficient manner.
These events include acts of nature, labor strikes, fires, floods, wars, transportation delays, government actions or other events that are beyond the control of the parties to the agreement. ​ Interruptions of energy supply or increases in energy, fuel and gas costs, shortages of water supply, critical parts, equipment, skilled labor and other production costs may adversely affect our results of operations. ​ We require substantial amounts of fuel oil, electricity, water and other resources for our operations.
These events include acts of nature, labor strikes, fires, floods, wars, transportation delays, government actions or other events that are beyond the control of the parties to the agreement. ​ However, the success of the energy transition is intrinsically linked to copper, our key product, critical for the production of technological solutions to the decrease the global greenhouse gas (GHG) emissions.
This cyber-attack encrypted a total of 420 servers and units of personal equipment. However, due to the quick response of our Information Technology team, our Enterprise Resource Planning software was not affected by the aforementioned attack.
This cyber-attack encrypted a total of 420 servers and units of personal equipment.
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In addition, the market prices of copper and certain other metals have on occasion been subject to rapid short-term changes. In 2020, the COVID-19 pandemic and the consequent negative impact on the global economy created significant volatility in the financial markets, including the copper market.
Added
Volatility in global economic growth, particularly in developing countries, has the potential to adversely affect future demand and prices for commodities.
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Our personnel immediately took steps to evaluate the damage to the facilities by acts of vandalism and took the necessary steps to resume production at the Cuajone mining unit.
Added
This robust system addresses both environmental and health and safety risks, ensuring compliance with best practices. By focusing on critical controls through this approach, we optimize resource allocation and bolster our efforts in sustainability risk management. ​ To enhance the monitoring of controls, we recently introduced a comprehensive company procedure and digital tool.
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To date, nine round-table meetings and two direct meeting with the community have been held.
Added
This platform facilitates detailed oversight by establishing clear roles, responsibilities, timelines, reminders, and notifications. It streamlines the chain of command, enabling the prompt identification of deviations from established protocols and facilitating the implementation of corrective actions along with subsequent monitoring.
Removed
Brexit may adversely affect global political, regulatory, economic and market conditions, including the capital markets and foreign exchange markets, which could adversely affect our business, financial condition and results of operations. ​ We cannot assure you that the market value or trading prices of our common stock and debt securities, will not be adversely affected by events in the United States or elsewhere, including emerging market countries. ​ Other international risks ​ We are a company with substantial assets located outside of the United States.
Added
Through the digital tool, we can measure, verify, and audit controls, promptly identifying instances of incorrect implementation or threshold breaches. ​ In addition, we maintain insurance against many of these and other risks, which under certain circumstances may not provide adequate coverage.
Removed
Other risks in Mexico are increases in taxes on the mining sector and higher royalties, such as those enacted in 2013.
Added
Given copper's crucial role in electrification and the generation of clean energies, there exists an increasing expectation from both corporate entities and societal stakeholders that copper sourcing should emanate from entities committed to rigorous and responsible production practices. ​ This commitment has driven us to pledge certifications for all our copper production under international standards. ​ Interruptions of energy supply or increases in energy, fuel and gas costs, shortages of water supply, critical parts, equipment, skilled labor and other production costs may adversely affect our results of operations. ​ We require substantial amounts of fuel oil, electricity, water and other resources for our operations.
Added
We are confident that we will move forward with the Tia Maria project.
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Several meetings have been held, the last meeting was in June 2023 and it is expected to have a new meeting in March 2024.
Added
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 facilities and production in the future.
Added
For example, nowadays a major number of software, hardware, services and in general technological solutions vendors are including AI components for a very wide range of applications; and we may find improvement opportunities by developing and applying AI in several of our business and operational processes. These applications may become important in our operations over time.
Added
Our ability to implement new technologies, including AI, may affect our competitiveness and, consequently, our results of operations. In addition, we may utilize AI and other new technologies in software provided by third parties to enhance our capabilities in producing copper, improving business processes and responding to threats to our technology platforms.
Added
The use of AI when lacking of a strategy and a governance model may increase our exposure to cybersecurity risks and additional risks relating to the protection of data. ​ Other risks ​ Applicable law restricts the payment of dividends from our Minera Mexico subsidiary to us. ​ Our subsidiary, Minera Mexico, is a Mexican company and, as such, may pay dividends only out of net income that has been approved by shareholders.
Added
The potential risks to our operations might increase if the violence spreads to our areas of production. ​ On May 09, 2023, Mexican Congress approved several changes effective immediately to the Mining Law, the National Waters Law, the General Law of Ecological Balance and Environmental Protection and the General Law for the Prevention and Integral Management of Waste.

Item 2. Properties

Properties — owned and leased real estate

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Power is transmitted for process needs from the Peruvian grid using two Southern Copper-owned transmission lines of 138 kV and 220 kV. Additionally, the Cuajone operations use surface and underground water from a variety of sources as a fresh make up water. ​ The property is currently in the production stage.
Power is transmitted for process needs from the Peruvian grid using two Southern Copper-owned transmission lines of 138 kV and 220 kV. Additionally, the Cuajone operations use surface and underground water from a variety of sources as fresh make up water. ​ The property is currently in the production stage.
The mineralogy is typically simple and consists of pyrite, chalcopyrite, and bornite, with sparse sphalerite, galena, and enargite. ​ Concentrator ​ Our Cuajone operations use state-of-the-art computer monitoring systems at the concentrator, the crushing plant and the flotation circuit to coordinate inflows and optimize operations.
The Cuajone mineralogy is typically simple and consists of pyrite, chalcopyrite, and bornite, with sparse sphalerite, galena, and enargite. ​ Concentrator ​ Our Cuajone operations use state-of-the-art computer monitoring systems at the concentrator, the crushing plant and the flotation circuit to coordinate inflows and optimize operations.
Power is transmitted for process needs from the Peruvian grid using two Southern Copper-owned transmission lines of 138 kV and 220 kV. Additionally, the Toquepala operations use surface and underground water from a variety of sources as a fresh make up water. ​ The property is currently under the production stage.
Power is transmitted for process needs from the Peruvian grid using two Southern Copper-owned transmission lines of 138 kV and 220 kV. Additionally, the Toquepala operations use surface and underground water from a variety of sources as fresh make up water. ​ The property is currently under the production stage.
Air is pumped into the cells producing a froth, which carries the copper mineral to the surface but not the waste rock, or tailings. Recovered copper, with the consistency of froth, is filtered and dried to produce copper concentrates with an average copper content of approximately 24%.
Air is pumped into the cells producing a froth, which carries the copper mineral to the surface but not the waste rock, or tailings. Recovered copper, with the consistency of froth, is filtered and dried to produce copper concentrates with an average copper content of approximately 24%.
Mineral resources are reported within a conceptual pit shell that use the following input parameters: metal prices of $3.80/lb Cu and $11.50/lb Mo; average metallurgical recovery assumptions of 84.8% for copper and 62.9% for molybdenum from a process plant and 42.4% copper recovery from a heap leach; based mining cost of $ 1.76/t, mill process operating costs of $7.05/t processed, leach costs of $5.26/t processed; copper concentrate payable price of $3.36/lb Cu, molybdenum concentrate payable price of $9.72/lb Mo, and leach copper payable price of $ 3.77/lb Cu.
Mineral resources are reported within a conceptual pit shell that use the following input parameters: metal prices of $3.80/lb Cu and $11.50/lb Mo; average metallurgical recovery assumptions of 84.8% for copper and 62.9% for molybdenum from a process plant and 42.4% copper recovery from a heap leach; based on mining cost of $1.76/t, mill process operating costs of $7.05/t processed, leach costs of $5.26/t processed; copper concentrate payable price of $3.36/lb Cu, molybdenum concentrate payable price of $9.72/lb Mo, and leach copper payable price of $3.77/lb Cu.
Technical Studies are underway. ​ Mineral reserves ​ The following table contains the summary of copper mineral reserves for El Pilar as of December 31, 2022, based on long-term price assumptions of $3.30 per pound: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Copper ROM Ore (million tonnes) Copper grade Contained copper (thousand tonnes) Recovered copper (million pounds) Proven mineral reserves ​ 63 ​ 0.27 % 168 ​ 370 Probable mineral reserves 254 ​ 0.25 % 623 ​ 1,374 Total mineral reserves ​ 317 ​ 0.25 % 790 ​ 1,744 ​ (1) Mineral reserves are effective as at December 31, 2021 as reported in the Technical Report Summary dated February 28, 2022.
Technical Studies are underway. ​ Mineral reserves ​ The following table contains the summary of copper mineral reserves for El Pilar as of December 31, 2023, based on long-term price assumptions of $3.30 per pound: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2023 Copper ROM Ore (million tonnes) Copper grade Contained copper (thousand tonnes) Recovered copper (million pounds) Proven mineral reserves ​ 63 ​ 0.27 % 168 ​ 370 Probable mineral reserves 254 ​ 0.25 % 623 ​ 1,374 Total mineral reserves ​ 317 ​ 0.25 % 790 ​ 1,744 ​ (1) Mineral reserves are effective as at December 31, 2021 as reported in the Technical Report Summary dated February 28, 2022.
The porphyry intrusions appear to be controlled by intense, concentrated extension on releasing bends, splays, overlaps in dextral fault segments and on the margins of brittle fault zones with development of multiple extensional phases in stockworks, synthetic/antithetic extensional faults and extensional duplexes. ​ Mineral resources ​ The following table contains the summary of copper mineral resources for Michiquillay as of December 31, 2022, based on long-term price assumptions of $3.80 per pound, fixed over long-term period that would be expected to be required to produce the mineral resources: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Copper Amount (million tonnes) Grades Metallurgical recovery ​ Metal content (million pounds) Measured mineral resources ​ — ​ — % — % — Indicated mineral resources — ​ — % — % — Measured + Indicated mineral resources ​ — ​ — % — % — Inferred mineral resources ​ 2,288.0 ​ 0.43 % 85 % 21,554.8 ​ (1) Mineral resources are reported in situ and are current as at December 31, 2022.
The porphyry intrusions appear to be controlled by intense, concentrated extension on releasing bends, splays, overlaps in dextral fault segments and on the margins of brittle fault zones with development of multiple extensional phases in stockworks, synthetic/antithetic extensional faults and extensional duplexes. ​ Mineral resources ​ The following table contains the summary of copper mineral resources for Michiquillay as of December 31, 2023, based on long-term price assumptions of $3.80 per pound, fixed over long-term period that would be expected to be required to produce the mineral resources: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Copper Amount (million tonnes) Grades Metallurgical recovery ​ Metal content (million pounds) Measured mineral resources ​ — ​ — % — % — Indicated mineral resources — ​ — % — % — Measured + Indicated mineral resources ​ — ​ — % — % — Inferred mineral resources ​ 2,288.0 ​ 0.43 % 85 % 21,554.8 ​ (1) Mineral resources are reported in situ and are current as at December 31, 2023.
The only known mineralization is derived from oxidation of low-grade porphyry copper systems. ​ Mineral resources ​ The following table contains the summary of copper mineral resources for the La Tapada and Tia Maria deposits as of December 31, 2022, based on long-term price assumptions of $3.80 per pound, fixed over the 20 year mine life: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ La Tapada Amount (million tonnes) Grades Metallurgical recovery ​ Metal content (million pounds) Measured mineral resources ​ — ​ — % — % — Indicated mineral resources 90.4 ​ 0.21 % 69 % 420.3 Measured + Indicated mineral resources ​ 90.4 ​ 0.21 % 69 % 420.3 Inferred mineral resources ​ 1.6 ​ 0.18 % 69 % 6.4 ​ ​ ​ ​ ​ ​ ​ ​ ​ Tia Maria Amount (million tonnes) Grades Metallurgical recovery ​ Metal content (million pounds) Measured mineral resources ​ — ​ — % — % — Indicated mineral resources 35.5 ​ 0.17 % 65 % 135.2 Measured + Indicated mineral resources ​ 35.5 ​ 0.17 % 65 % 135.2 Inferred mineral resources ​ 21.8 ​ 0.22 % 65 % 107.8 (1) Mineral resources are reported in situ and are current as at December 31, 2022.
The only known mineralization is derived from oxidation of low-grade porphyry copper systems. ​ Mineral resources ​ The following table contains the summary of copper mineral resources for the La Tapada and Tia Maria deposits as of December 31, 2023, based on long-term price assumptions of $3.80 per pound, fixed over the 20 year mine life: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ La Tapada Amount (million tonnes) Grades Metallurgical recovery ​ Metal content (million pounds) Measured mineral resources ​ — ​ — % — % — Indicated mineral resources 90.4 ​ 0.21 % 69 % 420.3 Measured + Indicated mineral resources ​ 90.4 ​ 0.21 % 69 % 420.3 Inferred mineral resources ​ 1.6 ​ 0.18 % 69 % 6.4 ​ ​ ​ ​ ​ ​ ​ ​ ​ Tia Maria Amount (million tonnes) Grades Metallurgical recovery ​ Metal content (million pounds) Measured mineral resources ​ — ​ — % — % — Indicated mineral resources 35.5 ​ 0.17 % 65 % 135.2 Measured + Indicated mineral resources ​ 35.5 ​ 0.17 % 65 % 135.2 Inferred mineral resources ​ 21.8 ​ 0.22 % 65 % 107.8 ​ (1) Mineral resources are reported in situ and are current as at December 31, 2023.
In the flotation separator, reagent solutions and air pumped into the flotation cells cause the minerals to separate from the waste rock and bubble to the surface where they are collected and dried. ​ 27 Table of Contents If the bulk concentrated copper contains molybdenum, it is first processed in a molybdenum plant as described below under “Molybdenum Production.” In addition, some of the concentrates contain economic amounts of gold and silver that are recovered in the smelters and refineries. ​ COPPER SMELTING ​ Copper concentrates are transported to a smelter, where they are smelted using a furnace, converter and anode furnace to produce either blister copper (which is in the form of cakes with air pockets) or copper anodes (which are cleaned of air pockets).
In the flotation separator, reagent solutions and air pumped into the flotation cells cause the minerals to separate from the waste rock and bubble to the surface where they are collected and dried. ​ 31 Table of Contents If the bulk concentrated copper contains molybdenum, it is first processed in a molybdenum plant as described below under “Molybdenum Production.” In addition, some of the concentrates contain economic amounts of gold and silver that are recovered in the smelters and refineries. ​ COPPER SMELTING ​ Copper concentrates are transported to a smelter, where they are smelted using a furnace, converter and anode furnace to produce either blister copper (which is in the form of cakes with air pockets) or copper anodes (which are cleaned of air pockets).
In 2010, the smelter also began processing concentrates from the IMMSA mines, as we closed the San Luis Potosi smelter. ​ Other facilities in the smelter include two sulfuric acid plants with capacities of 2,625 and 2,135 tonnes per day, three oxygen plants each with a production capacity of 275 tonnes per day; and one power turbine which generates 11.5 MWh. ​ 69 Table of Contents Refinery ​ La Caridad includes an electrolytic copper refinery that uses permanent cathode technology.
In 2010, the smelter also began processing concentrates from the IMMSA mines, as we closed the San Luis Potosi smelter. 71 Table of Contents Other facilities in the smelter include two sulfuric acid plants with capacities of 2,625 and 2,135 tonnes per day, three oxygen plants each with a production capacity of 275 tonnes per day; and one power turbine which generates 11.5 MWh. ​ Refinery ​ La Caridad includes an electrolytic copper refinery that uses permanent cathode technology.
We believe all of the equipment at our Peruvian plants is in good physical condition and is suitable for our operations. ​ 37 Table of Contents The map below indicates the approximate location of, and access to, our Cuajone and Toquepala mine complexes and our Ilo processing facilities: ​ ​ Cuajone ​ The Cuajone operations consist of an open-pit copper mine and a concentrator and are located in the Torata District, Mariscal Nieto Region, of Moquegua, approximately 878 km from the city of Lima and 27 km from the city of Moquegua.
We believe all of the equipment at our Peruvian plants is in good physical condition and is suitable for our operations. ​ 42 Table of Contents The map below indicates the approximate location of, and access to, our Cuajone and Toquepala mine complexes and our Ilo processing facilities: ​ ​ Cuajone ​ The Cuajone operations consist of an open-pit copper mine and a concentrator and are located in the Torata District, Mariscal Nieto Region, of Moquegua, approximately 878 km from the city of Lima and 27 km from the city of Moquegua.
Planned on-site infrastructure includes an open pit mine, two waste rock storage facilities, mill complex and oxide fine crushing facilities, temporary ore stockpile, heap leach facility, tailings storage facility, administration building, truck shop and warehouse, main 230 kV electrical substation and a water storage dam and reservoir. ​ We hold 11 mining concessions, covering 72,131 hectares.
Planned on-site infrastructure includes an open pit mine, two waste rock storage facilities, mill complex and oxide fine crushing facilities, temporary ore stockpile, heap leach facility, tailings storage facility, administration building, truck shop and warehouse, main 230 kV electrical substation and a water storage dam and reservoir. ​ We hold 20 mining concessions, covering 72,131 hectares.
Mineralization at El Arco occurs in three sub-horizontal zones. ​ Mineral resources ​ The following table contains the summary of mineral resources for El Arco as of December 31, 2022, based on long-term price assumptions of $3.80 and $10.35 per pound for copper and molybdenum, respectively, and fixed over the 35-year expected mine life. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Mill plant Amount (million tonnes) Copper grades Molybdenum grades ​ Gold grade (g/t) ​ Silver grade (g/t) ​ Contained copper (million pounds) Contained molybdenum (million pounds) ​ Contained gold (million ounces) ​ Contained silver (million ounces) Measured mineral resources ​ — ​ — % — % — ​ ​ ​ — ​ — ​ — ​ — Indicated mineral resources 826.6 ​ 0.41 % 0.008 % 0.12 ​ 1.6 ​ 7,544.9 ​ 146.5 ​ 3.23 ​ 41.88 Measured + Indicated mineral resources ​ 826.6 ​ 0.41 % 0.008 % 0.12 ​ 1.6 ​ 7,544.9 ​ 146.5 ​ 3.23 ​ 41.88 Inferred mineral resources ​ 2,344.9 ​ 0.37 % 0.006 % 0.11 ​ 1.5 ​ 19,352.3 ​ 298.2 ​ 8.05 ​ 110.89 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Leach plant Amount (million tonnes) Copper grades Molybdenum grades ​ Gold grade (g/t) ​ Silver grade (g/t) ​ Contained copper (million pounds) Contained molybdenum (million pounds) ​ Contained gold (million ounces) ​ Contained silver (million ounces) Measured mineral resources ​ — ​ — % — % — ​ — ​ — ​ — ​ — ​ — Indicated mineral resources 51.3 ​ 0.30 % — % — ​ — ​ 335.3 ​ — ​ — ​ — Measured + Indicated mineral resources ​ 51.3 ​ 0.30 % — % — ​ — ​ 335.3 ​ — ​ — ​ — Inferred mineral resources ​ 63.8 ​ 0.25 % — % — ​ — ​ 350.9 ​ — ​ — ​ — ​ (1) Mineral resources are reported in situ and are current as at December 31, 2022.
Mineralization at El Arco occurs in three sub-horizontal zones. ​ ​ 76 Table of Contents Mineral resources ​ The following table contains the summary of mineral resources for El Arco as of December 31, 2023, based on long-term price assumptions of $3.80 and $10.35 per pound for copper and molybdenum, respectively, and fixed over the 35-year expected mine life. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2023 Mill plant Amount (million tonnes) Copper grades Molybdenum grades ​ Gold grade (g/t) ​ Silver grade (g/t) ​ Contained copper (million pounds) Contained molybdenum (million pounds) ​ Contained gold (million ounces) ​ Contained silver (million ounces) Measured mineral resources ​ — ​ — % — % — ​ — ​ — ​ — ​ — ​ — Indicated mineral resources 826.6 ​ 0.41 % 0.008 % 0.12 ​ 1.6 ​ 7,544.9 ​ 146.5 ​ 3.23 ​ 41.88 Measured + Indicated mineral resources ​ 826.6 ​ 0.41 % 0.008 % 0.12 ​ 1.6 ​ 7,544.9 ​ 146.5 ​ 3.23 ​ 41.88 Inferred mineral resources ​ 2,344.9 ​ 0.37 % 0.006 % 0.11 ​ 1.5 ​ 19,352.3 ​ 298.2 ​ 8.05 ​ 110.89 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Leach plant Amount (million tonnes) Copper grades Molybdenum grades ​ Gold grade (g/t) ​ Silver grade (g/t) ​ Contained copper (million pounds) Contained molybdenum (million pounds) ​ Contained gold (million ounces) ​ Contained silver (million ounces) Measured mineral resources ​ — ​ — % — % — ​ — ​ — ​ — ​ — ​ — Indicated mineral resources 51.3 ​ 0.30 % — % — ​ — ​ 335.3 ​ — ​ — ​ — Measured + Indicated mineral resources ​ 51.3 ​ 0.30 % — % — ​ — ​ 335.3 ​ — ​ — ​ — Inferred mineral resources ​ 63.8 ​ 0.25 % — % — ​ — ​ 350.9 ​ — ​ — ​ — ​ (1) Mineral resources are reported in situ and are current as at December 31, 2023.
Santa Barbara includes three main underground mines (San Diego, Segovedad and Tecolotes) as well as a flotation plant and produces lead, copper and zinc concentrates, with significant amounts of silver. ​ IMMSA currently holds 33 mining concessions over the Santa Barbara property, covering a total area of 27,772.5082 hectares (ha), with the titles held 100% by the Company.
Santa Barbara includes three main underground mines (San Diego, Segovedad and Tecolotes) as well as a flotation plant and produces lead, copper and zinc concentrates, with significant amounts of silver. ​ IMMSA currently holds 33 mining concessions over the Santa Barbara property, covering a total area of 27,772.51 hectares (ha), with the titles held 100% by the Company.
Exhumation of the upper part of the Cananea minig district porphyry system resulted in the formation of a supergene enrichment and an oxidation overburden overlying the porphyry system. ​ ​ 59 Table of Contents Concentrator ​ Buenavista uses state-of-the-art computer monitoring systems at the concentrators, the crushing plant and the flotation circuit in order to coordinate inflows and optimize operations.
Exhumation of the upper part of the Cananea minig district porphyry system resulted in the formation of a supergene enrichment and an oxidation overburden overlying the porphyry system. ​ ​ 62 Table of Contents Concentrator ​ Buenavista uses state-of-the-art computer monitoring systems at the concentrators, the crushing plant and the flotation circuit in order to coordinate inflows and optimize operations.
(8) There were no changes with regard to the figures reported in 2021. ​ Mineral reserves ​ The following table contains the summary of copper mineral reserves for the La Tapada and Tia Maria deposits as of December 31, 2022, based on long-term price assumptions of $3.30 per pound, fixed over the estimated 20-year mine life: ​ ​ ​ ​ ​ ​ ​ ​ ​ La Tapada Amount (million tonnes) Grades Metallurgical recovery ​ Metal content (million pounds) Proven mineral reserves ​ — ​ — % — % — Probable mineral reserves 487.6 ​ 0.41 % 69 % 4,449.2 Total mineral reserves ​ 487.6 ​ 0.41 % 69 % 4,449.2 ​ ​ ​ ​ ​ ​ ​ ​ ​ Tia Maria Amount (million tonnes) Grades Metallurgical recovery ​ Metal content (million pounds) Proven mineral reserves ​ — ​ — % — % — Probable mineral reserves 223.8 ​ 0.29 % 65 % 1,412.5 Total mineral reserves ​ 223.8 ​ 0.29 % 65 % 1,412.5 ​ (1) Mineral reserves are current as at December 31, 2022.
(8) There were no changes with regard to the figures reported in 2021. ​ Mineral reserves ​ The following table contains the summary of copper mineral reserves for the La Tapada and Tia Maria deposits as of December 31, 2023, based on long-term price assumptions of $3.30 per pound, fixed over the estimated 20-year mine life: ​ ​ ​ ​ ​ ​ ​ ​ ​ La Tapada Amount (million tonnes) Grades Metallurgical recovery ​ Metal content (million pounds) Proven mineral reserves ​ — ​ — % — % — Probable mineral reserves 487.6 ​ 0.41 % 69 % 4,449.2 Total mineral reserves ​ 487.6 ​ 0.41 % 69 % 4,449.2 ​ ​ ​ ​ ​ ​ ​ ​ ​ Tia Maria Amount (million tonnes) Grades Metallurgical recovery ​ Metal content (million pounds) Proven mineral reserves ​ — ​ — % — % — Probable mineral reserves 223.8 ​ 0.29 % 65 % 1,412.5 Total mineral reserves ​ 223.8 ​ 0.29 % 65 % 1,412.5 55 Table of Contents ​ (1) Mineral reserves are current as at December 31, 2023.
Copper concentrates from Toquepala and Cuajone are transported by railroad to the smelter, where they are smelted using an ISASMELT furnace, converters and anode furnaces to produce copper anodes with 99.7% copper. ​ At the smelter, the concentrates are mixed with flux and other material and sent to the ISASMELT furnace producing a mixture of copper matte and slag, which is tapped through a taphole to either of two rotary holding furnaces, where these smelted phases will be separated. ​ Copper matte contains approximately 63% copper.
Copper concentrates from Toquepala and Cuajone are transported by railroad to the smelter, 52 Table of Contents where they are smelted using an ISASMELT furnace, converters and anode furnaces to produce copper anodes with 99.7% copper. ​ At the smelter, the concentrates are mixed with flux and other material and sent to the ISASMELT furnace producing a mixture of copper matte and slag, which is tapped through a taphole to either of two rotary holding furnaces, where these smelted phases will be separated. ​ Copper matte contains approximately 63% copper.
The solvent is then separated using an acid solution, freeing the copper. The acid solution containing the copper is then moved to electrolytic extraction tanks to produce copper cathodes. ​ MOLYBDENUM PRODUCTION ​ Molybdenum is recovered from copper-molybdenum concentrates produced at the concentrator. The copper-molybdenum concentrate is first treated with a thickener until it becomes slurry with 60% solids.
The solvent is then separated using an acid solution, freeing the copper. The acid solution containing the copper is then moved to electrolytic extraction tanks to produce copper cathodes. ​ MOLYBDENUM PRODUCTION ​ Molybdenum is recovered from copper-molybdenum concentrates produced at the concentrator. The copper-molybdenum concentrate is first treated with a thickener until it becomes slurry.
The area where surface rights are required is within the Tiaparo and Tapairíhua rural community boundaries. Additionally, we hold two water rights that cover water from four spring sources. ​ The property is currently under the exploration stage. We commenced exploration in the Los Chancas area in 1997.
Surface rights are currently being negotiated. The area where surface rights are required is within the Tiaparo and Tapairíhua rural community boundaries. Additionally, we hold two water rights that cover water from four spring sources. ​ The property is currently under the exploration stage. We commenced exploration in the Los Chancas area in 1997.
The plant produces copper cathodes of LME grade A. ​ ​ 60 Table of Contents Slope stability ​ At the Buenavista mine, we are following the recommendations produced by a geotechnical evaluation of the design slope for the 15-year pit plan. This evaluation was prepared by an independent mine consulting firm.
The plant produces copper cathodes of LME grade A. ​ ​ 63 Table of Contents Slope stability ​ At the Buenavista mine, we are following the recommendations produced by a geotechnical evaluation of the design slope for the 15-year pit plan. This evaluation was prepared by an independent mine consulting firm.
We believe all our Mexican open-pit segment equipment is in good physical condition and suitable for our operations. ​ ​ ​ ​ 57 Table of Contents Buenavista ​ The Buenavista mining unit operates an open-pit porphyry copper mine, two concentrators and three SX-EW plants.
We believe all our Mexican open-pit segment equipment is in good physical condition and suitable for our operations. ​ ​ ​ ​ 60 Table of Contents Buenavista ​ The Buenavista mining unit operates an open-pit porphyry copper mine, two concentrators and three SX-EW plants.
The following parameters were used in estimation: assumed open-pit mining methods; assumed concentration and leaching processes; variable NSR cut-off values of $7.791–$8.079/t-processed for concentration material, and a NSR cut-off value of $9.061/t-processed for leaching material; mining recovery of 100%; variable metallurgical recoveries (average LOM recoveries of 84.4% for copper by concentration, 62.5 % for molybdenum by concentration, and 48.2% for copper by leaching, including concentration and leach ore existing in stockpiles); average copper recoveries of 97.4% for smelting and 99.9% for refining; variable mining costs that range from $2.337–$3.417/t-mined; average process costs of $7.971/t-processed for concentration material, and $9.061/t for leaching material; average smelting and refining cost of $0.382/lb Cu; selling costs of $-0.0024/lb Cu for concentration process, $1.679/lb Mo for concentration process, and $-0.009/lb Cu for leaching process; and 1% NSR royalty applied to the for Cu and Mo..
The following parameters were used in estimation: assumed open-pit mining methods; assumed concentration and dump leaching processes; copper price of $3.30/lb, molybdenum price of $10.00/lb; variable NSR cut-off values of $7.791–$8.079/t-processed for concentration material, and a NSR cut-off value of $9.061/t-processed for leaching material; mining recovery of 100%; variable metallurgical recoveries (average LOM recoveries of 84.4% for copper by concentration, 62.5 % for molybdenum by concentration, and 48.2% for copper by leaching, including concentration and leach ore existing in stockpiles); average copper recoveries of 97.4% for smelting and 99.9% for refining; variable mining costs that range from $2.337–$3.417/t-mined; average process costs of $7.971/t-processed for concentration material, and $9.061/t for leaching material; average smelting and refining cost of $0.382/lb Cu; selling costs of $-0.0024/lb Cu for concentration process, $1.679/lb Mo for concentration process, and $-0.009/lb Cu for leaching process; and 1% NSR royalty applied to the for Cu and Mo.
Southern Copper has reported that minor contractor activity conducted at the site since that time has not materially impacted the total Mineral Resource estimates effective as at December 31, 2021. Therefore, the estimates as at December 31, 2021 are deemed to be current as at December 31, 2022.
Southern Copper has reported that minor contractor activity conducted at the site since that time has not materially impacted the total Mineral Resource estimates effective as at December 31, 2021. Therefore, the estimates at December 31, 2021 are deemed to be current as at December 31, 2023.
There are an additional 371.07 hectares covered by a contract with the community of Santa Barbara that allows for any further work or exploration required. 78 Table of Contents ​ Due to the variable characteristics of the ore bodies, four types of mining methods are used: shrinkage stoping, long-hole drilled open stoping, cut-and-fill stoping and horizontal bench stoping.
There are an additional 371.07 hectares covered by a contract with the community of Santa Barbara that allows for any further work or exploration required. ​ Due to the variable characteristics of the ore bodies, four types of mining methods are used: shrinkage stoping, long-hole drilled open stoping, cut-and-fill stoping and horizontal bench stoping.
(6) There were no changes with regard to the mineral resource figures reported in 2021. ​ 55 Table of Contents MEXICAN OPERATIONS ​ The map below indicates the approximate locations of our Mexican mines and processing facilities: ​ ​ ​ MEXICAN OPEN-PIT SEGMENT ​ Our Mexican open-pit segment operations combine two units of Minera Mexico, La Caridad and Buenavista, which include La Caridad and Buenavista mine complexes and smelting and refining plants and support facilities, which service both complexes. ​ 56 Table of Contents The map below indicates the approximate location of, and access to, our Mexican open-pit mine complexes and our processing facilities: ​ ​ We have ongoing maintenance and improvement programs to ensure the satisfactory performance of our equipment.
(6) There were no changes with regard to the mineral resource figures reported in 2021. ​ 58 Table of Contents MEXICAN OPERATIONS ​ The map below indicates the approximate locations of our Mexican mines and processing facilities: ​ ​ ​ MEXICAN OPEN-PIT SEGMENT ​ Our Mexican open-pit segment operations combine two units of Minera Mexico, La Caridad and Buenavista, which include La Caridad and Buenavista mine complexes and smelting and refining plants and support facilities, which service both complexes. ​ 59 Table of Contents The map below indicates the approximate location of, and access to, our Mexican open-pit mine complexes and our processing facilities: ​ ​ We have ongoing maintenance and improvement programs to ensure the satisfactory performance of our equipment.
Previous work in the project was conducted by Northern Peru Mining Company, American Smelting and Refining Company, later Asarco LLC, Minero Peru S.A., and various Anglo American subsidiaries. In June 2018, Southern Copper purchased the project from Activos Mineros S.A.C. for a total purchase price of $400 million and made an initial payment of $12.5 million.
Previous work in the project was conducted by Northern Peru Mining Company, American Smelting and Refining Company, later Asarco LLC, Minero Peru S.A., and various Anglo 57 Table of Contents American subsidiaries. In June 2018, Southern Copper purchased the project from Activos Mineros S.A.C. for a total purchase price of $400 million and made an initial payment of $12.5 million.
Southern Copper has reported that minor contractor activity conducted at the site since that time has not materially impacted the original Mineral Reserves estimates. Therefore, the estimates as at December 31, 2021 are deemed to be current as at December 31, 2022.
Southern Copper has reported that minor contractor activity conducted at the site since that time has not materially impacted the original Mineral Reserves estimates. Therefore, the estimates at December 31, 2021 are deemed to be current as at December 31, 2023.
The ore contains lead and zinc concentrates, with some amounts of gold and silver. ​ There was no mine exploration drilling at Taxco during the three-year period ended December 31, 2022 due to the strikes.
The ore contains lead and zinc concentrates, with some amounts of gold and silver. ​ There was no mine exploration drilling at Taxco during the three-year period ended December 31, 2023 due to the strikes.
(6) For further information on assumptions used in preparing the estimates for the following mineral properties: El Arco, Tia Maria and El Pilar, please refer to the individual property disclosure in this Form 10-K and to their project technical report summary prepared by qualified persons, under Exhibit 96.10, 96.3 and 96.9 respectively of Form 10-K/A, filed on March 7, 2022. ​ ​ 36 Table of Contents Tailings Dams ​ Tailings are comprised of solid particles originating at the concentrator plants during the grinding process that, combined with water, are sent to specially built structures where they are impounded.
(6) For further information on assumptions used in preparing the estimates for the following mineral properties: El Arco, Tia Maria and El Pilar, please refer to the individual property disclosure in this Form 10-K and to the project technical report summaries prepared by qualified persons, under Exhibit 96.10, 96.3 and 96.9 respectively of Form 10-K/A, filed on March 7, 2022. ​ 41 Table of Contents Tailings Dams ​ Tailings are comprised of solid particles originating at the concentrator plants during the grinding process that, combined with water, are sent to specially built structures where they are impounded.
San Martin – SRK Consulting (U.S.), Inc. ​ El Arco project: ​ Wood Group USA Inc. ​ El Pilar project: ​ M3 Engineering & Technology Corp., Ingenieria Geomex, S.A. de C.V., and Golder Associates USA Inc. ​ Pilares project: ​ Golder Associates USA Inc. ​ ​ MINERAL RESERVES AND MINERAL RESOURCES INTERNAL CONTROLS DISCLOSURE ​ In 2021, we adopted the new requirements of S-K 1300.
San Martin – SRK Consulting (U.S.), Inc. ​ El Arco project: ​ Wood Group USA Inc. ​ El Pilar project: ​ M3 Engineering & Technology Corp., Ingenieria Geomex, S.A. de C.V., and Golder Associates USA Inc. ​ Pilares project: ​ Golder Associates USA Inc. ​ 87 Table of Contents MINERAL RESERVES AND MINERAL RESOURCES INTERNAL CONTROLS DISCLOSURE ​ In 2021, we adopted the new requirements of S-K 1300.
We do not expect that these activities will generate any adverse material effects in our operations. ​ We have six tailings dams in operation in Mexico and one in Peru as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Country Operation Name Current Height Material Method Mexico Buenavista Tailings dam # 3 100 meters Borrowed Downstream Mexico Buenavista New tailings dam 99 meters Borrowed Downstream Mexico La Caridad Tailings dam # 7 189 meters Borrowed Downstream Mexico Charcas Tailings dam 55 meters Coarse tailings Upstream Mexico Santa Barbara Noriega dam 50 meters Coarse tailings Upstream Mexico San Martin Tailings dam 5 & 7 50 meters Coarse tailings Upstream Peru Cuajone and Toquepala Quebrada Honda 138 meters Coarse tailings Downstream ​ ​ INDIVIDUAL PROPERTY DISCLOSURE ​ In 2021, we adopted the disclosure requirements of S-K 1300.
We do not expect that these activities will generate any adverse material effects in our operations. ​ We have six tailings dams in operation in Mexico and one in Peru as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Country Operation Name Current Height Material Method Mexico Buenavista Tailings dam # 3 103 meters Borrowed Downstream Mexico Buenavista New tailings dam 99 meters Borrowed Downstream Mexico La Caridad Tailings dam # 7 189 meters Borrowed Downstream Mexico Charcas Tailings dam 55 meters Coarse tailings Upstream Mexico Santa Barbara Noriega dam 52 meters Coarse tailings Upstream Mexico San Martin Tailings dam 5 & 7 50 meters Coarse tailings Upstream Peru Cuajone and Toquepala Quebrada Honda 143 meters Coarse tailings Downstream ​ ​ INDIVIDUAL PROPERTY DISCLOSURE ​ In 2021, we adopted the disclosure requirements of S-K 1300.
An airstrip with a reported runway length of 2,500 meters is located 36 kilometers north of Nacozari, less 64 Table of Contents than one kilometer away from the La Caridad copper smelter and refinery. The smelter and the sulfuric acid plants, as well as the refineries and rod plant, are located approximately 24 kilometers from the mine.
An airstrip with a reported runway length of 2,500 meters is located 36 kilometers north of Nacozari, less than one kilometer away from the La Caridad copper smelter and refinery. The smelter and the sulfuric acid plants, as well as the refineries and rod plant, are located approximately 24 kilometers from the mine.
Mineralization predominantly consists of the copper oxide mineral chrysocolla, which occurs as coatings on clasts of highly silicified breccia and as grains in the sedimentary gravel matrix. ​ Mineral resources ​ The following table contains the summary of copper mineral resources for El Pilar as of December 31, 2022, based on long-term price assumptions of $3.80 per pound: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Copper Amount (million tonnes) Total copper Soluble copper ​ Contained copper (million pounds) Measured mineral resources ​ 2.2 ​ 0.20 % 0.10 % 9.5 ​ Indicated mineral resources 81.3 ​ 0.18 % 0.08 % 317.0 ​ Measured + Indicated mineral resources ​ 83.4 ​ 0.18 % 0.08 % 326.5 ​ Inferred mineral resources ​ 88.6 ​ 0.12 % 0.06 % 234.4 ​ ​ (1) Mineral resources are reported in situ and effective as at December 31, 2021 as reported in the Technical Report Summary dated February 28, 2022.
Mineralization predominantly consists of the copper oxide mineral chrysocolla, which occurs as coatings on clasts of highly silicified breccia and as grains in the sedimentary gravel matrix. ​ ​ 74 Table of Contents Mineral resources ​ The following table contains the summary of copper mineral resources exclusive of mineral reserves for El Pilar as of December 31, 2023, based on long-term price assumptions of $3.80 per pound: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2023 Copper Amount (million tonnes) Total copper Soluble copper ​ Contained copper (million pounds) ​ Measured mineral resources ​ 2.2 ​ 0.20 % 0.10 % 9 ​ Indicated mineral resources 81.3 ​ 0.18 % 0.08 % 317 ​ Measured + Indicated mineral resources ​ 83.4 ​ 0.18 % 0.08 % 326 ​ Inferred mineral resources ​ 88.6 ​ 0.12 % 0.06 % 234 ​ ​ (1) Mineral resources are reported in situ and effective as at December 31, 2021 as reported in the Technical Report Summary dated February 28, 2022.
Because a measured mineral resource has a higher level of confidence than the level of confidence of either an indicated mineral 84 Table of Contents resource or an inferred mineral resource, a measured mineral resource may be converted to a proven mineral reserve or to a probable mineral reserve. ​ Indicated mineral resource is that part of a mineral resource for which quantity and grade or quality are estimated on the basis of adequate geological evidence and sampling.
Because a measured mineral resource has a higher level of confidence than the level of confidence of either an indicated mineral resource or an inferred mineral resource, a measured mineral resource may be converted to a proven mineral reserve or to a probable mineral reserve. ​ Indicated mineral resource is that part of a mineral resource for which quantity and grade or quality are estimated on the basis of adequate geological evidence and sampling.
The remaining tailings are sent to the Quebrada Honda dam, our principal tailings storage facility. ​ SX-EW Plant ​ The SX-EW facility at Toquepala produces grade A LME electrowon copper cathodes of 99.999% purity from solutions obtained by leaching low-grade ore stored at the Toquepala and Cuajone mines.
The remaining tailings are sent to the Quebrada Honda dam, our principal tailings storage facility. ​ SX-EW Plant ​ The SX-EW facility at Toquepala produces grade A LME electrowon copper cathodes of 99.999% purity from solutions obtained by leaching low-grade ore stored at the Toquepala mine and copper oxides ore at the Cuajone mine.
The track runs in a single 214 kilometer standard gauge line and supports a 30-ton axle load. The total length of the track system is around 257 kilometers including main yards and sidings. The infrastructure includes 27 50 Table of Contents kilometers of track under tunnels and one concrete bridge.
The track runs in a single 214 kilometer standard gauge line and supports a 30-ton axle load. The total length of the track system is around 257 kilometers including main yards and sidings. The infrastructure includes 27 kilometers of track under tunnels and one concrete bridge.
(2) The Taxco mine has been on strike since July 2007. (3) In some cases, real production exceeds nominal capacity due to higher grades and recovery rates. 30 Table of Contents OTHER PROPERTIES ​ The table below provides details on the locations and other information as of December 31, 2022 for our properties under development or exploration.
(2) The Taxco mine has been on strike since July 2007. (3) In some cases, real production exceeds nominal capacity due to higher grades and recovery rates. ​ OTHER PROPERTIES ​ The table below provides details on the locations and other information as of December 31, 2023 for our properties under development or exploration.
Additionally, a spur railway runs from the Toquepala operations to the Cuajone operations. ​ The Cuajone operations are owned and operated by SPCC Peru Branch and contain a single mining concession, “Acumulación Cuajone”, which covers an area of 15,024.5 hectares.
Additionally, a spur railway runs from the Toquepala operations to the Cuajone operations. ​ The Cuajone operations are owned and operated by SPCC Peru Branch and contain a single mining concession, “Acumulacion Cuajone”, which covers an area of 15,024.5 hectares.
The purpose of the plan was to develop a program of optimum bench design and inter-ramp 66 Table of Contents slope angles for the open-pit. The results of the evaluation presented by the consultants included a recommendation of a maximum average bench face angle of 72 degrees.
The purpose of the plan was to develop a program of optimum bench design and inter-ramp slope angles for the open-pit. The results of the evaluation presented by the consultants included a recommendation of a maximum average bench face angle of 72 degrees.
In addition, 5,000 meters of core sample from the drilling program were analyzed with a hyperspectral scanner, and a study of 498 kilometers of hyperspectral imaging was conducted to recognize the geology of the entire Chalchihuites mineral district.
In addition, 5,000 meters of core sample from the drilling program were analyzed with a hyperspectral scanner, and a study of 498 kilometers of hyperspectral imaging was conducted to 88 Table of Contents recognize the geology of the entire Chalchihuites mineral district.
The elevation of the mine is of the order of 1,604 meters above mean sea level. ​ The Buenavista del Cobre (“BVC”) deposit is divided into two pit areas, namely BVC and Buenavista Zinc (“BVZ”). The BVZ pit area lies within the largest BVC pit.
The elevation of the mine is of the order of 1,604 meters above mean sea level. ​ The Buenavista del Cobre (“BVC”) deposit contains two pit areas, namely BVC and Buenavista Zinc (“BVZ”). The BVZ pit area lies within the largest BVC pit.
Additionally, on October 1, 2021 the Peruvian Ministry of Energy and Mines approved the semi-detailed Environmental Impact Study for the project. In the fourth quarter of 2022, the Company informed MINEM that it had begun exploration activities and initiated an assessment of existing mineral resources at depth.
Additionally, on October 1, 2021 the Peruvian Ministry of Energy and Mines approved the semi-detailed Environmental Impact Study for the project. In the fourth quarter of 2022, the Company informed MINEM that it had begun exploration activities and initiated an assessment of existing mineral resources at depth. In 2022, we drilled 1,585 meters.
The slurry is then agitated in a chemical and water solution and pumped to the flotation separator. The separator creates a froth that carries molybdenum to the surface but not the copper mineral (which is later filtered to produce copper concentrates containing approximately 27% copper).
The slurry is then agitated in a chemical and water solution and pumped to the flotation separator. The separator creates a froth that carries molybdenum to the surface but not the copper mineral (which is later filtered to produce copper concentrates.
The resulting cut-off grade for the concentrator is approximately 0.08% copper and the leachable cutoff grade is approximately 0.01% copper. ​ SX-EW Plant ​ Approximately 983.9 million tonnes of leaching ore with an average grade of approximately 0.239% copper was extracted from the La Caridad open-pit mine and deposited in leaching dumps to December 31, 2022.
The resulting cut-off grade for the concentrator is approximately 0.08% copper and the leachable cutoff grade is approximately 0.01% copper. ​ SX-EW Plant ​ Approximately 999.0 million tonnes of leaching ore with an average grade of approximately 0.239% copper was extracted from the La Caridad open-pit mine and deposited in leaching dumps to December 31, 2023.
The purified zinc sulfide solution is treated by electrolysis to produce refined zinc and to separate silver and gold, which are recovered as concentrates. ​ SULFURIC ACID PRODUCTION ​ Sulfur dioxide gases are produced in the copper smelting and zinc roasting processes.
The 32 Table of Contents purified zinc sulfide solution is treated by electrolysis to produce refined zinc and to separate silver and gold, which are recovered as concentrates. ​ SULFURIC ACID PRODUCTION ​ Sulfur dioxide gases are produced in the copper smelting and zinc roasting processes.
A low voltage but high amperage electrical current is passed through the anodes, chemical solution and cathodes to dissolve copper which is initially deposited on very thin starting sheets until thickness is increased to produce high grade copper cathodes.
A low voltage but high amperage electrical current is passed through the anodes, chemical solution and cathodes to dissolve copper which is initially deposited on very thin starting copper sheets until thickness is increased to produce 53 Table of Contents high grade copper cathodes.
(4) Variations in mineral resources in 2022 were attributable to additional exploration drilling and production depletion in 2022. ​ Santa Barbara ​ The Santa Barbara mining complex is located approximately 26 kilometers southwest of the city of Hidalgo del Parral in southern Chihuahua, Mexico.
(6) Variations in mineral resources in 2023 were attributable to additional exploration drilling and production depletion in 2023. ​ Santa Barbara ​ The Santa Barbara mining complex is located approximately 26 kilometers southwest of the city of Hidalgo del Parral in southern Chihuahua, Mexico.
(7) There were no changes in mineral resources with regard to the figures reported in 2021. ​ 74 Table of Contents Mineral reserves ​ The following table contains the summary of copper mineral reserves for El Arco as of December 31, 2022, based on long-term price assumptions of $3.30 and $9.00 per pound for copper and molybdenum, respectively, and were fixed over the 35 year expected mine life. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Probable mineral reserves Amount (million tonnes) Copper grades Molybdenum grades Gold grade (g/t) ​ Silver grade (g/t) ​ Contained copper (million pounds) Contained molybdenum (million pounds) ​ Contained gold (million ounces) ​ Contained silver (million ounces) Sulfide mill ​ 1,229.5 ​ 0.40 % 0.006 % 0.14 ​ 1.8 ​ 10,822 ​ 166.7 ​ 5.6 ​ 70.5 Oxide leach 140.5 ​ 0.27 % — % — ​ — ​ 846 ​ — ​ — ​ — ​ (1) Mineral reserves are current as at December 31, 2022.
(7) There were no changes in mineral resources with regard to the figures reported in 2021. ​ Mineral reserves ​ The following table contains the summary of copper mineral reserves for El Arco as of December 31, 2023, based on long-term price assumptions of $3.30 and $9.00 per pound for copper and molybdenum, respectively, and were fixed over the 35 year expected mine life. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2023 Probable mineral reserves Amount (million tonnes) Copper grades Molybdenum grades Gold grade (g/t) ​ Silver grade (g/t) ​ Contained copper (million pounds) Contained molybdenum (million pounds) ​ Contained gold (million ounces) ​ Contained silver (million ounces) Sulfide mill ​ 1,229.5 ​ 0.40 % 0.006 % 0.14 ​ 1.8 ​ 10,822 ​ 166.7 ​ 5.6 ​ 70.5 Oxide leach 140.5 ​ 0.27 % — % — ​ — ​ 846 ​ — ​ — ​ — ​ (1) Mineral reserves are current as at December 31, 2023. 77 Table of Contents (2) The reference point for the estimate is the point of delivery to the processing facility.
Additionally, railways extend from Ilo to Toquepala, and a spur railway runs from the Toquepala operations to the Cuajone operations. ​ The Toquepala operations are owned and operated by SPCC Peru Branch and contain a single mining concession, “Acumulación Toquepala 1”, which covers an area of 17,552.4 hectares.
Additionally, railways extend from Ilo to Toquepala, and a spur railway runs from the Toquepala operations to the Cuajone operations. 47 Table of Contents The Toquepala operations are owned and operated by SPCC Peru Branch and contain a single mining concession, “Acumulacion Toquepala 1”, which covers an area of 17,552.4 hectares.
Mine access will be from the Pan-American Highway, diverting off the highway to the Project access road at km 1027–1028, between Arequipa and Moquegua, approximately 17 km before the town of El Fiscal. ​ The Project covers an area of 34.689.6 hectares in 55 concessions.
Mine access will be from the Pan-American Highway, diverting off the highway to the Project access road at km 1027–1028, between Arequipa and Moquegua, approximately 17 km before the town of El Fiscal. ​ The Project covers an area of 36,604.3 hectares in 55 concessions.
The water is recovered to be reused in the process. ​ Tailings dams are basically built in two manners: by using the coarse fraction from the same tailings or by using external material, often known as “borrowed material” such as rock, clay etc. We believe SCC’s tailings dams are built with the highest quality standards and engineering practices.
The water is recovered to be reused in the process. ​ Tailings dams are basically built in two manners: by using the coarse fraction from the same tailings or by using external material, often known as “borrowed material” such as rock, clay etc. We believe SCC’s tailings dams are built according to international standards and national accepted engineering practices.
The molybdenum recovery plant has a capacity of 2,000 tonnes per day of copper-molybdenum concentrates. The lime plant has a capacity of 340 tonnes of finished product per day. ​ The mineral reserves estimated for La Caridad were estimated utilizing an economic cut-off to assign material to either the concentrator or leach pad.
The lime plant has a capacity of 340 tonnes of finished product per day. ​ The mineral reserves estimated for La Caridad were estimated utilizing an economic cut-off to assign material to either the concentrator or leach pad.
(4) There were no changes in resources with regard to 2021’s figures.
(6) There were no changes in resources with regard to 2021’s figures.
(5) There were no changes in reserves with regard to 2021’s figures.
(7) There were no changes in reserves with regard to 2021’s figures.
The molybdenum froth is skimmed off, filtered and dried to produce molybdenum concentrates of approximately 58% contained molybdenum. ​ 28 Table of Contents ZINC REFINING ​ Metallic zinc is produced through electrolysis using zinc concentrates and zinc oxides. Sulfur is eliminated from the concentrates by roasting and the zinc oxide is dissolved in sulfuric acid solution to eliminate solid impurities.
The molybdenum froth is skimmed off, filtered and dried to produce molybdenum concentrates. ​ ZINC REFINING ​ Metallic zinc is produced through electrolysis using zinc concentrates and zinc oxides. Sulfur is eliminated from the concentrates by roasting and the zinc oxide is dissolved in sulfuric acid solution to eliminate solid impurities.
(4) Variations in mineral resources in 2022 were attributable to additional exploration drilling and production depletion in 2022. ​ 80 Table of Contents San Martin ​ The San Martin mining complex is located in the municipality of Sombrerete in the northwestern part of the state of Zacatecas, Mexico. It is located approximately 185 kilometers from the city of Zacatecas.
(6) Variations in mineral resources in 2023 were attributable to additional exploration drilling and production depletion in 2023. ​ ​ San Martin ​ The San Martin mining complex is located in the municipality of Sombrerete in the northwestern part of the state of Zacatecas, Mexico. It is located approximately 185 kilometers from the city of Zacatecas.
Mineral resources are constrained within a wireframe constructed at a 0.1% total copper cut-off grade. 51 Table of Contents (4) Mineral resources are reported within a conceptual pit shell that uses the following input parameters: metal prices of $3.80/lb Cu; metallurgical recovery assumptions of 69% for La Tapada and 65% for Tía María; base mining costs of $1.40/t mined and incremental haul costs of $0.017/t mined; process operating costs of $3.78/t processed for La Tapada and $3.61/t processed for Tía María; general and administrative costs of $0.37/t processed; transport and freight costs of $0.04/lb Cu; an assumed copper cathode premium of $0.03/lb Cu, and a royalty payable of 1%.
(4) Mineral resources are reported within a conceptual pit shell that uses the following input parameters: metal prices of $3.80/lb Cu; metallurgical recovery assumptions of 69% for La Tapada and 65% for Tia Maria; base mining costs of $1.40/t mined and incremental haul costs of $0.017/t mined; process operating costs of $3.78/t processed for La Tapada and $3.61/t processed for Tia María; general and administrative costs of $0.37/t processed; transport and freight costs of $0.04/lb Cu; an assumed copper cathode premium of $0.03/lb Cu, and a royalty payable of 1%.
(3) For further information on assumptions used in preparing the estimates, including a detailed description of the cut-off determination, please refer to Chapter 12 of the La Caridad operations technical report summary prepared by qualified persons, under Exhibit 96.9 of the Company´s Form 10-K/A for the fiscal year ended December 31, 2021, filed on March 7, 2022.
Value / tonne = ($0.73 * Cu Recovery * Cu Grade) – ($0.15 * Cu Recovery * Cu Grade) - $0.57 (5) For further information on assumptions used in preparing the estimates, including a detailed description of the cut-off determination, please refer to Chapter 12 of the La Caridad operations technical report summary prepared by qualified persons, under Exhibit 96.9 of the Company´s Form 10-K/A for the fiscal year ended December 31, 2021, filed on March 7, 2022.
All of the anodes produced in the smelter are sent to the La Caridad copper refinery. The actual installed capacity of the smelter is 1,000,000 tonnes per year, a capacity that is sufficient to treat all the concentrates of La Caridad and almost 40.5% of total production of the OMIMSA I and OMIMSA II concentrators from Buenavista.
The actual installed capacity of the smelter is 1,000,000 tonnes per year, a capacity that is sufficient to treat all the concentrates of La Caridad and almost 40.5% of total production of the OMIMSA I and OMIMSA II concentrators from Buenavista.
The Quebrada Honda tailings storage facility (TSF) is 40 km south of the mine, and is accessed via the MO-107 route that that connects Alto Camiara with Toquepala. Within the operations area, access is by unpaved mine and exploration roads. The city of Tacna has a regional airstrip, with regular service within Peru.
The Quebrada Honda tailings can be accessed via the MO-107 route that connects Alto Camiara with Toquepala. Within the operations area, access is by unpaved mine and exploration roads. The city of Tacna has a regional airstrip, with regular service within Peru.
The Lapilli Tuff hosts the mineralized structure of the Pilares Breccia. ​ Mineral resources ​ The following table contains the summary of copper and molybdenum mineral resources for Pilares as of December 31, 2022, based on long-term price assumptions of $3.80 and $11.50 per pound, respectively: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Process Classification Amount (million tonnes) Total copper Copper oxide ​ Molybdenum grade ​ Contained copper (million pounds) ​ Contained molybdenum (million pounds) Leach ​ Inferred ​ 4.8 ​ 0.44 % 0.22 % 0.002 % 45.6 ​ — Mill Inferred ​ 71.8 ​ 0.56 % 0.05 % 0.005 % 879.9 ​ 7.7 ​ (1) Mineral resources are reported in situ and effective as at December 31, 2021 as reported in the Technical Report Summary dated February 24, 2022.
The Lapilli Tuff hosts the mineralized structure of the Pilares Breccia. ​ Mineral resources The following table contains the summary of copper and molybdenum mineral resources for Pilares as of December 31, 2023, based on long-term price assumptions of $3.80 and $11.50 per pound, respectively: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2023 Process Classification Amount (million tonnes) Total copper Copper oxide ​ Molybdenum grade ​ Contained copper (million pounds) ​ Contained molybdenum (million pounds) ​ Variation Copper ​ Variation Molybdenum Leach ​ Inferred ​ 0.9 ​ 0.34 % 0.09 % 0.003 % 6.8 ​ — ​ (85.0)% ​ — Mill Inferred ​ 67.3 ​ 0.55 % 0.04 % 0.005 % 817.3 ​ 7.4 ​ (7.1)% ​ (4.1)% ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2022 Process Classification ​ Amount (million tonnes) Total copper Copper oxide ​ Molybdenum grade ​ Contained copper (million pounds) ​ Contained molybdenum (million pounds) ​ ​ ​ ​ Leach ​ Inferred ​ 4.8 ​ 0.44 % 0.22 % 0.002 % 45.6 ​ — ​ ​ ​ ​ Mill Inferred ​ 71.8 ​ 0.56 % 0.05 % 0.005 % 879.9 ​ 7.7 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (1) Mineral resources are reported in situ and effective as at December 31, 2023.
(2) Mineral resources are reported exclusive of mineral reserves. (3) For further information on assumptions used in preparing the estimates, including a detailed description of the cut-off determination, please refer to Chapter 11 of the Charcas operations technical report summary prepared by qualified persons, under Exhibit 96.11 to this Form 10-K.
(5) For further information on assumptions used in preparing the estimates, including a detailed description of the cut-off determination, please refer to Chapter 11 of the Charcas operations technical report summary prepared by qualified persons, under Exhibit 96.11 to this Form 10-K.
(4) Variations in mineral resources in 2022 were attributable to additional exploration drilling and production depletion in 2022. ​ ​ ​ 82 Table of Contents Santa Eulalia ​ The mining district of Santa Eulalia is located in the central part of the state of Chihuahua, Mexico, approximately 26 kilometers east of the city of Chihuahua, and is connected to the city of Chihuahua by a paved road (highway no. 45).
(8) Additional exploration drilling and production depletion in 2023 resulted in additional variations in mineral resources in 2023 . ​ 84 Table of Contents Santa Eulalia ​ The mining district of Santa Eulalia is located in the central part of the state of Chihuahua, Mexico, approximately 26 kilometers east of the city of Chihuahua, and is connected to the city of Chihuahua by a paved road (highway no. 45).
The SX-EW plant management quality system (including leaching operations) has been audited periodically since 2002 by an external audit company and found to be in compliance with the requirements of ISO 9001-2008 and ISO 14001-2015 standards. We are currently implementing the ISO 45000:2018 standard. ​ Slope stability ​ The Toquepala pit is approximately 1,005 meters deep.
The SX-EW plant management quality system (including leaching operations) has been audited periodically since 2002 by an external audit company and found to be in compliance with the requirements of ISO 9001-2015, ISO 14001-2015 and ISO 45000-2018 standard. ​ Slope stability ​ Overview of Toquepala Pit Depth: The Toquepala pit is approximately 1,005 meters deep, with plans to reach 1,665 meters.
(4) No estimates for molybdenum are reported for leachable material as this element cannot currently be recovered using the leach process envisaged. (5) The cut-off grade used for mineral resource estimation for sulfide material was 0.146% Cu.
These parameters are based on the 2022 year-end figures. (4) No estimates for molybdenum are reported for leachable material as this element cannot currently be recovered using the leach process envisaged. (5) The cut-off grade used for mineral resource estimation for sulfide material was 0.146% Cu.
The Cuajone mine is accessible by paved road from Lima or Tacna by the Pan-American Highway. The Quebrada Honda tailings storage facility (“TSF”) is about 120 km via local roads, south of the Cuajone operations. Access within the project area is via developed roads that are routinely maintained. Tacna, Moquegua, and Ilo have regularly scheduled air services from Lima.
The Quebrada Honda tailings storage facility (“TSF”) is about 120 km via local roads, south of the Cuajone operations. Access within the project area is via developed roads that are routinely maintained. Tacna, Moquegua, and Ilo have regularly scheduled air services from Lima.
(2) Mineral resources are reported exclusive of mineral reserves. 72 Table of Contents (3) For further information on assumptions used in preparing the estimates, including a detailed description of the cut-off determination, please refer to Chapter 11 of the El Pilar project technical report summary prepared by qualified persons, under Exhibit 96.9 of Form 10-K/A for the fiscal year ended December 31, 2021, filed on March 7, 2022.
(5) For further information on assumptions used in preparing the estimates, including a detailed description of the cut-off determination, please refer to Chapter 11 of the El Pilar project technical report summary prepared by qualified persons, under Exhibit 96.9 of Form 10-K/A for the fiscal year ended December 31, 2021, filed on March 7, 2022.
(2) Mineral resources are reported exclusive of mineral reserves. (3) Mineral resources are reported within a conceptual pit shell that is based on copper and molybdenum values only.
(2) Mineral resources are reported exclusive of mineral reserves. Mineral resources that are not mineral reserves do not have demonstrated economic viability. (3) Mineral resources are reported within a conceptual pit shell that is based on copper and molybdenum values only.
Results of geological surveying and drilling programs indicated that its mineralization consists of sulfides with 2.85 meters of width, 219 grams of silver, 6.60% of lead and 7.55% of zinc. Exploration at the Campo Medio area did not render positive results and exploration activities were suspended.
This prospect is located close to the west border of the Santa Eulalia mine. Results of geological surveying and drilling programs indicated that its mineralization consists of sulfides with 2.85 meters of width, 219 grams of silver, 6.60% of lead and 7.55% of zinc. Exploration at the Campo Medio area did not render positive results and exploration activities were suspended.
Other properties in Mexico ​ ​ ​ ​ ​ El Pilar Sonora (Mexico) ​ Development Predominantly consists of the copper oxide mineral chrysocolla. ​ Covers an area of 9,571.4 hectares in 19 concessions.
Other properties in Mexico ​ ​ ​ ​ ​ El Pilar Sonora (Mexico) ​ Development Predominantly consists of the copper oxide mineral chrysocolla. ​ Consists of 19 concessions covering approximately 9,571 hectares.
It is located within the Cananea mining district in the north-central part of the State of Sonora, Mexico. The property is located about 222 kilometers northeast of the city of Hermosillo, Sonora and 150 kilometers southeast of the city of Tucson, Arizona. The property covers an area of 89,220.5 hectares of mining concessions.
It is located within the Cananea mining district in the north-central part of the State of Sonora, Mexico. The property is located about 222 kilometers northeast of the city of Hermosillo, Sonora and 150 kilometers southeast of the city of Tucson, Arizona.
The Bella Union prospect is a mineralized copper and molybdenum breccia deposit; the site is located at less than one kilometer from the border of La Caridad pit. ​ The table below contains production information for 2022, 2021 and 2020 for La Caridad: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Variance ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2022 - 2021 ​ ​ 2022 2021 2020 Volume % Mine annual operating days 365 365 366 ​ Mine ​ ​ ​ ​ Total ore mined (kt) 34,099 34,876 34,949 (777.0) (2.2) % Copper grade (%) 0.303 0.340 0.361 (0.0) (10.9) % Leach material mined (kt) 30,113 35,230 29,561 (5,117.0) (14.5) % Leach material grade (%) 0.201 0.212 0.220 (0.0) (5.2) % Stripping ratio (x) 0.65 0.43 0.45 0.2 51.2 % Total material mined (kt) 106,251 100,412 93,373 5,839.0 5.8 % Concentrator ​ ​ ​ ​ ​ ​ Total material milled (kt) 34,114 34,929 34,858 (815.0) (2.3) % Copper recovery (%) 85.71 86.44 87.14 (0.7) (0.8) % Copper concentrate (kt) 385.3 456.8 473.1 (71.5) (15.7) % Copper in concentrate (kt) 88.5 102.7 109.7 (14.2) (13.8) % Copper concentrate average grade (%) 22.97 22.48 23.18 0.5 2.2 % SX ‑ EW plant ​ ​ ​ ​ ​ ​ Estimated leach recovery (%) 34.46 38.11 38.04 (3.7) (9.6) % SX‑EW cathode production (kt) 23.34 25.38 25.85 (2.0) (8.0) % Molybdenum ​ ​ ​ ​ ​ ​ Molybdenum grade (%) 0.034 0.035 0.036 (0.0) (2.9) % Molybdenum recovery (%) 81.67 82.44 82.82 (0.8) (0.9) % Molybdenum concentrate (kt) 17.8 18.9 19.3 (1.1) (5.8) % Molybdenum concentrate average grade (%) 53.58 53.92 54.48 (0.3) (0.6) % Molybdenum in concentrate (kt) 9.6 10.2 10.5 (0.6) (5.9) % Key: kt = thousand tonnes x = Stripping ratio obtained dividing waste by leachable material plus ore mined The copper and molybdenum grade are total grade. ​ 65 Table of Contents Geology ​ La Caridad is a porphyry copper deposit, that is currently the largest copper producer in Mexico and the youngest dated porphyry copper system in the American Southwest region.
The Bella Union prospect is a mineralized copper and molybdenum breccia deposit; the site is located at less than one kilometer from the border of La Caridad pit. ​ 67 Table of Contents The table below contains production information for 2023, 2022 and 2021 for La Caridad: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Variance ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2023 - 2022 ​ ​ 2023 2022 2021 Volume % Mine annual operating days 365 365 365 ​ Mine ​ ​ ​ ​ Total ore mined (kt) 34,886 34,099 34,876 787.0 2.3 % Copper grade (%) 0.296 0.303 0.340 (0.007) (2.3) % Leach material mined (kt) 15,099 30,113 35,230 (15,014.0) (49.9) % Leach material grade (%) 0.250 0.201 0.212 0.049 24.4 % Stripping ratio (x) 1.48 0.65 0.43 0.83 127.7 % Total material mined (kt) 124,090 106,251 100,412 17,839.0 16.8 % Concentrator ​ ​ ​ ​ ​ ​ Total material milled (kt) 35,128 34,114 34,929 1,014.0 3.0 % Copper recovery (%) 84.45 85.71 86.44 (1.26) (1.5) % Copper concentrate (kt) 387.2 385.3 456.8 1.9 0.5 % Copper in concentrate (kt) 87.8 88.5 102.7 (0.7) (0.8) % Copper concentrate average grade (%) 22.68 22.97 22.48 (0.29) (1.3) % SX ‑ EW plant ​ ​ ​ ​ ​ ​ Estimated leach recovery (%) 34.97 34.46 38.11 0.51 1.5 % SX ‑ EW cathode production (kt) 22.99 23.34 25.38 (0.35) (1.5) % Molybdenum ​ ​ ​ ​ ​ ​ Molybdenum grade (%) 0.039 0.034 0.035 0.005 14.7 % Molybdenum recovery (%) 82.71 81.67 82.44 1.04 1.3 % Molybdenum concentrate (kt) 21 17.8 18.9 3.2 18.0 % Molybdenum concentrate average grade (%) 54.15 53.58 53.92 0.57 1.1 % Molybdenum in concentrate (kt) 11.4 9.6 10.2 1.8 18.8 % Key: kt = thousand tonnes x = Stripping ratio obtained dividing waste by leachable material plus ore mined The copper and molybdenum grade are total grade. ​ Geology ​ La Caridad is a porphyry copper deposit, that is currently the largest copper producer in Mexico and the youngest dated porphyry copper system in the American Southwest region.
The porphyry mineralization and the porphyritic intrusion at Michiquillay appear to be related to, and controlled by, a regional-scale strike change on a series of pre-mineral west–northwest to northwest striking brittle–ductile fault zones.
Mineralization is zoned vertically due to oxidation and remobilization of copper by supergene processes. ​ The porphyry mineralization and the porphyritic intrusion at Michiquillay appear to be related to, and controlled by, a regional-scale strike change on a series of pre-mineral west–northwest to northwest striking brittle–ductile fault zones.
The concentrator has a current capacity of 94,500 tonnes of ore per day. ​ Ore extracted from the mine with a copper grade over 0.30% is currently sent to the concentrator and processed into copper concentrates and molybdenum concentrates. The copper concentrates are sent to the smelter and the molybdenum concentrate is sold to a Mexican customer.
The concentrator has a current capacity of 94,500 tonnes of ore per day. ​ 68 Table of Contents Ore extracted from the mine with a copper grade over 0.30% is currently sent to the concentrator and processed into copper concentrates and molybdenum concentrates.
These properties are also owned and operated by SCC. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Property Name ​ Location ​ Stage ​ Mineralization ​ Mineral rights and acreage Other properties in Peru ​ ​ ​ ​ ​ Tia Maria Arequipa (Peru) ​ Development Porphyry copper deposit; economic mineralization is oxide copper. ​ Covers an area of 34,790 hectares in 55 concessions.
These properties are also owned and operated by SCC. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Property Name ​ Location ​ Stage ​ Mineralization ​ Mineral rights and acreage Other properties in Peru ​ ​ ​ ​ ​ Tia Maria Arequipa (Peru) ​ Development Porphyry copper deposit; economic mineralization is oxide copper. ​ Consists of 57 concessions covering approximately 34,933 hectares.
IMMSA’s principal mining facilities are Charcas, Santa Barbara, San Martin, Santa Eulalia and Taxco. ​ 75 Table of Contents The table below contains production information for 2022, 2021 and 2020 for our Mexican IMMSA unit: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Variance ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2022 - 2021 ​ ​ 2022 2021 2020 Volume % Average annual operating days(*) ​ ​ 307 336 341 ​ ​ ​ ​ ​ Total material mined and milled (kt) 4,100 3,965 4,242 135 3.4 % Zinc: ​ ​ ​ ​ ​ ​ Average ore grade (%) 1.79 2.04 2.03 (0.25) (12.3) % Average recovery (%) 81.62 82.87 80.01 (1.25) (1.5) % Concentrate produced (kt) 124.0 135.1 133.6 (11.1) (8.2) % Concentrate average grade (%) 48.38 49.58 51.61 (1.20) (2.4) % Zinc in concentrate (kt) 60.0 67.0 68.9 (7.0) (10.4) % Lead: ​ ​ ​ ​ ​ ​ Average ore grade (%) 0.58 0.62 0.72 (0.04) (6.5) % Average recovery (%) 69.49 69.20 66.93 0.29 0.4 % Concentrate produced (kt) 32.5 33.8 38.5 (1.3) (3.8) % Concentrate average grade (%) 51.00 50.66 52.86 0.34 0.7 % Lead in concentrate (kt) 16.6 17.1 20.4 (0.5) (2.9) % Copper: ​ ​ ​ ​ ​ ​ Average ore grade (%) 0.39 0.41 0.44 (0.02) (4.9) % Average recovery (%) 56.71 53.71 55.02 3.00 5.6 % Concentrate produced (kt) 40.3 38.0 45.7 2.3 6.1 % Concentrate average grade (%) 22.65 22.94 22.52 (0.29) (1.3) % Copper in concentrate (kt) 9.1 8.7 10.3 0.4 4.6 % Silver: ​ ​ ​ ​ ​ ​ Average ore grade (ounces) 2.13 2.17 2.58 (0.04) (1.8) % Average recovery (%) 77.22 76.59 73.08 0.63 0.8 % Concentrate average grade (%) 34.3 ​ 31.9 36.6 2.4 7.5 % Silver in concentrates ((000) ounces) 6,749.6 6,588.5 7,982.8 161.1 2.4 % kt = thousand tonnes (*) Weighted average annual operating days based on total material mined and milled in the three active mines: Charcas, Santa Barbara and San Martin. ​ Charcas ​ The Charcas mining complex is located approximately 110 kilometers north of the city of San Luis Potosi in the State of San Luis Potosi, Mexico.
IMMSA’s principal mining facilities are Charcas, Santa Barbara, San Martin, Santa Eulalia and Taxco. ​ 78 Table of Contents The table below contains production information for 2023, 2022 and 2021 for our Mexican IMMSA unit: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Variance ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2023 - 2022 ​ ​ 2023 2022 2021 Volume % Average annual operating days(*) ​ ​ 301 307 336 ​ ​ ​ ​ ​ Total material mined and milled (kt) 4,346 4,100 3,965 246 6.0 % Zinc: ​ ​ ​ ​ ​ ​ Average ore grade (%) 1.88 1.79 2.04 0.09 5.0 % Average recovery (%) 80.22 81.62 82.87 (1.40) (1.7) % Concentrate produced (kt) 132.0 124.0 135.1 8.0 6.5 % Concentrate average grade (%) 49.64 48.38 49.58 1.26 2.6 % Zinc in concentrate (kt) 65.5 60.0 67.0 5.5 9.2 % Lead: ​ ​ ​ ​ ​ ​ Average ore grade (%) 0.63 0.58 0.62 0.05 8.6 % Average recovery (%) 68.78 69.49 69.20 (0.71) (1.0) % Concentrate produced (kt) 33.6 32.5 33.8 1.1 3.4 % Concentrate average grade (%) 55.71 51.00 50.66 4.71 9.2 % Lead in concentrate (kt) 18.7 16.6 17.1 2.1 12.7 % Copper: ​ ​ ​ ​ ​ ​ Average ore grade (%) 0.38 0.39 0.41 (0.01) (2.6) % Average recovery (%) 57.52 56.71 53.71 0.81 1.4 % Concentrate produced (kt) 43.9 40.3 38.0 3.6 8.9 % Concentrate average grade (%) 21.80 22.65 22.94 (0.85) (3.8) % Copper in concentrate (kt) 9.6 9.1 8.7 0.5 5.5 % Silver: ​ ​ ​ ​ ​ ​ Average ore grade (ounces) 1.97 2.13 2.17 (0.16) (7.5) % Average recovery (%) 77.88 77.22 76.59 0.66 0.9 % Concentrate average grade (%) 31.8 ​ 34.3 31.9 (2.5) (7.3) % Silver in concentrates ((000) ounces) 6,664.00 6,749.6 6,588.5 (85.6) (1.3) % kt = thousand tonnes (*) Weighted average annual operating days based on total material mined and milled in the three active mines: Charcas, Santa Barbara and San Martin. ​ Charcas ​ The Charcas mining complex is located approximately 110 kilometers north of the city of San Luis Potosi in the State of San Luis Potosi, Mexico.
Copper oxides are also present as a minor constituent. ​ ​ 53 Table of Contents Mineral resources ​ The following table contains the summary of copper mineral resources for Los Chancas as of December 31, 2022, based on long-term price assumptions of $3.80 per pound, fixed over the long-term period of time that mineral resources are expected to be produced: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Copper Amount (million tonnes) Grades Metallurgical recovery ​ Metal content (million pounds) Measured mineral resources ​ — ​ — % — % — Indicated mineral resources 150 ​ 0.50 % 82-84 % 1,648 Measured + Indicated mineral resources ​ 150 ​ 0.50 % 82-84 % 1,648 Inferred mineral resources ​ 1,433 ​ 0.45 % 82-84 % 14,165 ​ (1) Mineral resources are reported in situ and are current as at December 31, 2022.
Copper oxides are also present as a minor constituent. ​ Mineral resources ​ The following table contains the summary of copper mineral resources for Los Chancas as of December 31, 2023, based on long-term price assumptions of $3.80 per pound, fixed over the long-term period of time that mineral resources are expected to be produced: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Copper Amount (million tonnes) Grades Metallurgical recovery ​ Metal content (million pounds) Measured mineral resources ​ — ​ — % — % — Oxide ​ 98 ​ 0.45 ​ ​ ​ 975.2 Sulfide ​ 52 ​ 0.59 ​ ​ ​ 672.8 Indicated mineral resources 150 ​ 0.50 % 82-84 % 1,648 Measured + Indicated mineral resources ​ 150 ​ 0.50 % 82-84 % 1,648 Oxide ​ 33 ​ 0.38 ​ ​ ​ 277.4 Sulfide ​ 1,400 ​ 0.45 ​ ​ ​ 13,887.6 Inferred mineral resources ​ 1,433 ​ 0.45 % 82-84 % 14,165 ​ (1) Mineral resources are reported in situ and are current as at December 31, 2023.
The effectiveness of the controls are reviewed periodically to address changes in conditions and the degree of compliance with policies and procedures. ​ 86 Table of Contents EXPLORATION ACTIVITIES ​ We are engaged in ongoing extensive exploration to locate additional ore bodies in Peru, Mexico, Argentina, Ecuador and Chile.
The effectiveness of the controls are reviewed periodically to address changes in conditions and the degree of compliance with policies and procedures. ​ EXPLORATION ACTIVITIES ​ We are engaged in ongoing extensive exploration to locate additional ore bodies in Peru, Mexico, Argentina, Ecuador and Chile. We also conduct exploration in the areas of our current mining operations.
(6) For further information on assumptions used in preparing the estimates, including a detailed description of the cut-off determination, please refer to Chapter 12 of the Buenavista operations technical report summary prepared by qualified persons, under Exhibit 96.6 to this Form 10-K. ​ The variations registered for mineral resources and reserves from 2021 to 2022 were attributable to: - Mill Cutoff strategy was reduced from 0.30 TCU in year 2023 to break-even 0.12 TCU in year 2027 to LOM. - Production depletion from year 2022. ​ La Caridad ​ The La Caridad complex includes an open-pit mine, concentrator, smelter, copper refinery, precious metals refinery, rod plant, SX-EW plant, lime plant and two sulfuric acid plants. ​ La Caridad mine and mill are located about 23 kilometers southeast of the town of Nacozari in northeastern Sonora at an average altitude of 1,500 meters above mean sea level.
(8) For further information on assumptions used in preparing the estimates, including a detailed description of the cut-off determination, please refer to Chapter 12 of the Buenavista operations technical report summary prepared by qualified persons, under Exhibit 96.6 to the 2022 Form 10-K. 66 Table of Contents The variations registered for mineral reserves from 2022 to 2023 were attributable to mining depletion as per mine operations during year 2023 and updated end-of-year topography surfaces provided for 2022 and 2023 and rounding. ​ ​ La Caridad ​ The La Caridad complex includes an open-pit mine, concentrator, smelter, copper refinery, precious metals refinery, rod plant, SX-EW plant, lime plant and two sulfuric acid plants. ​ La Caridad mine and mill are located about 23 kilometers southeast of the town of Nacozari in northeastern Sonora at an average altitude of 1,500 meters above mean sea level.
The oxide zone is sub-parallel to topography. Brochantite and chrysocolla are the dominant copper oxide minerals, with subordinate azurite and malachite. Sulfide minerals within the supergene enrichment zone include chalcocite, covellite, digenite, cuprite, and native copper.
The major area of leaching is to the east, and vertically above, the primary mineralized zone. The oxide zone is sub-parallel to topography. Brochantite and chrysocolla are the dominant copper oxide minerals, with subordinate azurite and malachite. Sulfide minerals within the supergene enrichment zone include chalcocite, covellite, digenite, cuprite, and native copper.

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Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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At December 31, 2022, there were 863 holders of record of our common stock. ​ DIRECTORS’ STOCK AWARD PLAN: ​ The following table contains certain information related to our shares held as treasury stock for the Directors’ stock award plan as of December 31, 2022: ​ Equity Compensation Plan Information ​ ​ ​ ​ ​ ​ ​ ​ ​ Number of securities to be Weighted-average Number of securities ​ ​ issued upon exercise of ​ exercise price of ​ remaining available Plan Category ​ outstanding options ​ outstanding options ​ for future issuance Directors’ stock award plan N/A N/A 183,200 ​ For additional information see Note 14—“Stockholders Equity—Directors’ Stock Award Plan.” ​ SCC COMMON STOCK REPURCHASE PLAN: ​ In 2008, our BOD authorized a $500 million share repurchase program that has since been increased by the BOD and is currently authorized to $3 billion.
At December 31, 2023, there were 842 holders of record of our common stock. ​ DIRECTORS’ STOCK AWARD PLAN: ​ The following table contains certain information related to our shares held as treasury stock for the Directors’ stock award plan as of December 31, 2023: ​ Equity Compensation Plan Information ​ ​ ​ ​ ​ ​ ​ ​ ​ Number of securities to be Weighted-average Number of securities ​ ​ issued upon exercise of ​ exercise price of ​ remaining available Plan Category ​ outstanding options ​ outstanding options ​ for future issuance Directors’ stock award plan N/A N/A 171,200 ​ For additional information see Note 14—“Stockholders Equity—Directors’ Stock Award Plan.” ​ SCC COMMON STOCK REPURCHASE PLAN: ​ In 2008, our BOD authorized a $500 million share repurchase program that has since been increased by the BOD and is currently authorized to $3 billion.
The chart below analyzes the total return on SCC’s common stock for the period commencing December 31, 2017 and ending December 31, 2022, compared to the total return of the S&P 500 and the S&P Metals and Mining Select Industry Index for the same five-year period. ​ Comparison of Five Year Cumulative Total Return * SCC Stock, S&P 500 Index and S&P Metals and Mining Select Industry Index ** ​ ​ * Total return assumes reinvestment of dividends ** The comparison assumes $100 invested on December 31, 2017 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total Return per Year ​ 2018 2019 2020 2021 2022 SCC (33.0) % 44.6 % 59.0 % (0.4) % 3.5 % S&P 500 (6.2) % 28.9 % 16.3 % 26.9 % (19.4) % S&P M + MS (27.0) % 13.0 % 14.4 % 34.0 % 11.5 % ​ The foregoing Performance Graph and related information shall not be deemed “soliciting material” or “filed” with the SEC or subject to Section 18 of the Securities Exchange Act of 1934, as amended, nor shall such information be incorporated by reference into any future filing under the Securities Act of 1933 or Securities Exchange Act of 1934, each as amended, except to the extent that the Company specifically incorporates it by reference into such filing. ​ 90 Table of Contents
The chart below analyzes the total return on SCC’s common stock for the period commencing December 31, 2018 and ending December 31, 2023, compared to the total return of the S&P 500 and the S&P Metals and Mining Select Industry Index for the same five-year period. ​ Comparison of Five Year Cumulative Total Return * SCC Stock, S&P 500 Index and S&P Metals and Mining Select Industry Index ** ​ ​ * Total return assumes reinvestment of dividends ** The comparison assumes $100 invested on December 31, 2017 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total Return per Year ​ 2019 2020 2021 2022 2023 SCC 44.6 % 59.0 % (0.4) % 3.5 % 49.1 % S&P 500 28.9 % 16.3 % 26.9 % (19.4) % 24.2 % S&P M + MS 13.0 % 14.4 % 34.0 % 11.5 % 20.1 % ​ The foregoing Performance Graph and related information shall not be deemed “soliciting material” or “filed” with the SEC or subject to Section 18 of the Securities Exchange Act of 1934, as amended, nor shall such information be incorporated by reference into any future filing under the Securities Act of 1933 or Securities Exchange Act of 1934, each as amended, except to the extent that the Company specifically incorporates it by reference into such filing. ​ 92 Table of Contents
This repurchase program has no expiration date and may be modified or discontinued at any time. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Period ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total Maximum ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Number of ​ Number of ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Shares ​ Shares that ​ ​ ​ ​ ​ ​ ​ Total ​ ​ ​ ​ Purchased ​ May Yet Be ​ ​ ​ ​ ​ ​ ​ Number of ​ Average ​ as Part of ​ Purchased ​ ​ ​ ​ ​ ​ ​ Shares ​ Price Paid ​ Publicly ​ Under the ​ Total Cost From ​ To ​ Purchased ​ per Share ​ Announced Plan ​ Plan @ $60.39(1) ​ ($ in millions) 2008 2012 46,914,486 ​ $ 18.72 46,914,486 ​ 878.1 2013: 10,245,000 ​ 27.47 57,159,486 ​ 281.4 2014: 22,711,428 ​ 30.06 79,870,914 ​ 682.8 2015: 36,689,052 ​ 27.38 116,559,966 ​ 1,004.4 2016: 2,937,801 ​ 24.42 119,497,767 ​ 71.7 Total purchased 119,497,767 ​ $ 24.42 1,351,769 ​ $ 2,918.4 (1) NYSE closing price of SCC common shares at December 31, 2022. ​ The SCC share repurchase program has registered no activity since the third quarter of 2016.
This repurchase program has no expiration date and may be modified or discontinued at any time. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Period ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total Maximum ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Number of ​ Number of ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Shares ​ Shares that ​ ​ ​ ​ ​ ​ ​ Total ​ ​ ​ ​ Purchased ​ May Yet Be ​ ​ ​ ​ ​ ​ ​ Number of ​ Average ​ as Part of ​ Purchased ​ ​ ​ ​ ​ ​ ​ Shares ​ Price Paid ​ Publicly ​ Under the ​ Total Cost From ​ To ​ Purchased ​ per Share ​ Announced Plan ​ Plan @ $86.07(1) ​ ($ in millions) 2008 2012 46,914,486 ​ $ 18.72 46,914,486 ​ 878.1 2013: 10,245,000 ​ 27.47 57,159,486 ​ 281.4 2014: 22,711,428 ​ 30.06 79,870,914 ​ 682.8 2015: 36,689,052 ​ 27.38 116,559,966 ​ 1,004.4 2016: 2,937,801 ​ 24.42 119,497,767 ​ 71.7 Total purchased 119,497,767 ​ $ 24.42 948,453 ​ $ 2,918.4 (1) NYSE closing price of SCC common shares at December 31, 2023. ​ The SCC share repurchase program has registered no activity since the third quarter of 2016.
The NYSE closing price of SCC common shares at December 31, 2022 was $60.39 and the maximum number of shares that the Company could purchase at that price was 1.4 million. ​ As a result of the repurchase of shares of SCC’s common stock, Grupo Mexico’s direct and indirect ownership was 88.9% as of December 31, 2022 and 2021. 89 Table of Contents SHAREHOLDER RETURN PERFORMANCE PRESENTATION ​ Set forth below is a line graph comparing the yearly change in the cumulative total returns on the Company’s common stock against cumulative total return on the S&P 500 Stock Index and the S&P Metals and Mining Select Industry Index for the five-year period ending December 31, 2022.
The NYSE closing price of SCC common shares at December 31, 2023 was $86.07 and the maximum number of shares that the Company could purchase at that price was 0.9 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 December 31, 2023 and 2022. 91 Table of Contents SHAREHOLDER RETURN PERFORMANCE PRESENTATION ​ Set forth below is a line graph comparing the yearly change in the cumulative total returns on the Company’s common stock against cumulative total return on the S&P 500 Stock Index and the S&P Metals and Mining Select Industry Index for the five-year period ending December 31, 2023.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Our focus is to seek continuous improvement in the responsible use of 102 Table of Contents natural resources while complying with applicable legal standards for prevention, mitigation, control and remediation of environmental impacts. ​ The Company is committed to continually improve its management performance with respect to the aforementioned issues, which is why it has initiated a multi-year process to align its disclosures on climate change with the TCFD recommendations.
Our focus is to seek continuous improvement in the responsible use of natural resources while complying with applicable legal standards for prevention, mitigation, control and remediation of environmental impacts. ​ 104 Table of Contents The Company is committed to continually improve its management performance with respect to the aforementioned issues, which is why it has initiated a multi-year process to align its disclosures on climate change with the TCFD recommendations.
Current estimates of indicated copper mineral resources are 98 million tonnes of oxides with a copper content of 0.45% and 52 million tonnes of sulfides with a copper content of 0.59%. The Los Chancas project envisions an open-pit mine with a combined operation of concentrator and SX-EW processes to produce 130,000 tonnes of copper and 7,500 tonnes of molybdenum anually.
Current estimates of indicated copper mineral resources are 98 million tonnes of oxides with a copper content of 0.45% and 52 million tonnes of sulfides with a copper content of 0.59%. The Los Chancas project envisions an open-pit mine with a combined operation of concentrator and SX-EW processes to produce 130,000 tonnes of copper and 7,500 tonnes of molybdenum annually.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS ​ EXECUTIVE SUMMARY ​ This Management’s Discussion and Analysis of Financial Condition and Results of Operations relates to and should be read together with our Audited Consolidated Financial Statements as of and for each of the years in the three-year period ended December 31, 2022.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS ​ EXECUTIVE SUMMARY ​ This Management’s Discussion and Analysis of Financial Condition and Results of Operations relates to and should be read together with our Audited Consolidated Financial Statements as of and for each of the years in the three-year period ended December 31, 2023.
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 94 Table of Contents charge.
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 96 Table of Contents charge.
For information regarding our capital expenditure programs, please see the discussion under the caption “Capital Investment Program” under this Item 7. ​ CONTRACTUAL OBLIGATIONS ​ As of December 31, 2022, our most significant contractual obligations include interest and principal on debt, workers’ participation, pension and post-retirement obligations, payments for operating leases, asset retirement obligations, and commitments for purchasing energy and for capital investment projects. ​ Interest on debt is calculated at rates in effect at December 31, 2022.
For information regarding our capital expenditure programs, please see the discussion under the caption “Capital Investment Program” under this Item 7. ​ ​ CONTRACTUAL AND OTHER OBLIGATIONS ​ As of December 31, 2023, our most significant contractual obligations include interest and principal on debt, workers’ participation, pension and post-retirement obligations, payments for operating leases, asset retirement obligations, and commitments for purchasing energy and for capital investment projects. ​ Interest on debt is calculated at rates in effect at December 31, 2023.
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 118.
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 119.
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 98 Table of Contents material with an average ore grade of 0.27%.
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 average ore grade of 0.27%.
In the Mining and Infrastructure divisions, it has three main components: 1)Participatory Social Diagnosis to allow the communities to voice their concerns regarding human rights, 2) Social Management Plans that define actions to address those concerns, and 3)the Community Care Service (SAC), a tool that was designed with the advice of the United Nations High Commissioner for Human Rights Mexico Office and allows the community to immediately communicate its concerns to the Company. ​ Grupo Mexico also has a human rights’ due diligence process in place to protect the rights of employees (both the Company’s and those of contractors).
In the Mining and Infrastructure divisions, this process has three main components: 1)Participatory Social Diagnosis to allow the communities to voice their concerns regarding human rights, 2) Social Management Plans that define actions to address those concerns, and 3)the Community Care Service (SAC), a tool that was designed with the advice of the United Nations High Commissioner for Human Rights Mexico Office and allows the community to immediately communicate its concerns to the Company. ​ SCC also has a human rights’ due diligence process in place to protect the rights of employees (both the Company’s and those of contractors).
Working together with the communities, we have the opportunity to collaborate and forge a path based on common objectives for social and 101 Table of Contents economic development as we work to support the United Nations’ Sustainable Development Goals.
Working together with the communities, we have the opportunity to collaborate and forge a path based on common objectives for social and 103 Table of Contents economic development as we work to support the United Nations’ Sustainable Development Goals.
We continuously evaluate new projects on the basis of our long-term corporate objectives, strategic and operating fit, expected return on investment, required investment, estimated production, estimated cash-flow profile, social and environmental considerations, among other factors.
We continuously evaluate new projects on the basis of our long-term corporate objectives, strategic and operating fit, expected return on investment, required investment, estimated production, estimated cash-flow profile, social and environmental considerations, among other 100 Table of Contents factors.
In addition to our ongoing capital maintenance and replacement spending, our principal capital programs include the following: ​ Projects in Mexico: ​ Buenavista Zinc - Sonora: This project is located within the Buenavista deposit, where a new concentrator is being built. This facility has a production capacity of 100,000 tonnes of zinc and 20,000 tonnes of copper per year.
In addition to our ongoing capital maintenance and replacement spending, our principal capital programs include the following: ​ Projects in Mexico: ​ Buenavista Zinc - Sonora: This project is located within the Buenavista deposit, where we have built a new concentrator plant. This facility has a production capacity of 100,000 tonnes of zinc and 20,000 tonnes of copper per year.
We do not intend for this internet link to be an active link or to otherwise incorporate the contents of the website into this Report on Form 10-K. ​ Since 2016, Grupo Mexico has been participating annually in the evaluation on Climate Change of CDP 1 and in 2022 for the first time in the evaluation of Water Security.
We do not intend for this internet link to be an active link or to otherwise incorporate the contents of the website into this Report on Form 10-K. ​ Since 2016, SCC has been participating annually in the evaluation on Climate Change of CDP and in 2022, for the first time in the evaluation of Water Security.
Actual costs incurred in future periods could differ from amounts estimated. Additionally, future changes to environmental laws and regulations could increase the extent of reclamation and remediation work required to be performed by us.
Actual costs incurred in future periods could differ from amounts estimated. Additionally, future changes to environmental laws and regulations could increase the extent of reclamation 106 Table of Contents and remediation work required to be performed by us.
Please refer to Note 9 “Leases” of the consolidated financial statements. ​ Pension and post retirement obligations include the benefits expected to be paid under our pension and post-retirement benefit plans.
Please refer to Note 9 “Leases” of the consolidated financial statements. 117 Table of Contents Pension and post retirement obligations include the benefits expected to be paid under our pension and post-retirement benefit plans.
We are currently developing a new organic growth plan whose goal is to increase our copper volume production to 1.7 million tonnes by the end of this decade. ​ For 2023, the Board of Directors approved a capital investment program of $1,099.6 million. ​ KEY MATTERS ​ Below, we discuss several matters that we believe are important to understand our results of operations and financial condition.
We are currently developing a new organic growth plan whose goal is to increase our copper volume production to 1.3 million tonnes by the end of this decade. ​ For 2024, the Board of Directors approved a capital investment program of $1,103.7 million. ​ ​ KEY MATTERS ​ Below, we discuss several matters that we believe are important to understand our results of operations and financial condition.
In addition, the market prices of certain metals have on occasion been subject to rapid short-term changes due to economic concerns and financial investments. ​ For 2023, assuming that expected metal production and sales are achieved; 2022 tax rates are unchanged and giving no effects relative to potential hedging programs, metal price sensitivity factors indicate the following change in estimated annual net income attributable to SCC resulting from metal price changes: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 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) ​ $ 117.7 ​ $ 29.5 ​ $ 21.2 ​ $ 12.3 ​ Business Segments: We view our Company as having three reportable segments and manage it on the basis of these segments.
In addition, the market prices of certain metals have on occasion been subject to rapid short-term changes due to economic concerns and financial investments. ​ For 2024, assuming that expected metal production and sales are achieved; 2023 tax rates are unchanged and giving no effects relative to potential hedging programs, metal price sensitivity factors indicate the following change in estimated annual net income attributable to SCC resulting from metal price changes: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 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) ​ $ 122.0 ​ $ 34.0 ​ $ 21.3 ​ $ 13.3 ​ Business Segments: We view our Company as having three reportable segments and manage it on the basis of these segments.
Given the current Peruvian economic situation, it is crucial to move ahead on projects that will stimulate a sustainable growth cycle. We will make it a priority to hire local labor to fill the 9,000 jobs that we expect to generate during Tia Maria’s construction phase.
Given the current Peruvian economic situation, it is crucial to move ahead on projects that will stimulate a sustainable growth cycle. We expect to begin the construction phase of the project in the near future. We will make it a priority to hire local labor to fill the 9,000 jobs that we expect to generate during Tia Maria’s construction.
For instance, during the period from January 2013 through December 2022, the London Metal Exchange (LME) copper settlement price varied from a low of $1.96 per pound in 2016 to a record high of $4.87 per pound in 2022, and the Metals Week Molybdenum Dealer Oxide weekly average price ranged from a low of $4.30 per pound in 2015 to a high of $31.85 per pound in 2022.
For instance, during the period from January 2014 through December 2023, the London Metal Exchange (LME) copper settlement price varied from a low of $1.96 per pound in 2016 to a record high of $4.87 per pound in 2022, and the Metals Week Molybdenum Dealer Oxide weekly average price ranged from a low of $4.30 per pound in 2015 to a high of $38.50 per pound in 2023.
We expect to meet the cash requirements for these capital investments from cash on hand, internally generated funds and 115 Table of Contents from additional external financing if required.
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.
We are committed to continuously improving our environmental performance and to promoting the adoption of the best environmental practices at our operations to contribute to the transition to a green economy. To this end we have made a significant progress in certifying our operations environmental management systems in ISO 14001.
We are committed to continuously improving our environmental performance and to promoting the adoption of the best environmental practices at our operations to contribute to the transition to a green economy. To this end, we have certified all our operations environmental management systems in ISO 14001.
The work climate surveys, Complaint Hotline and the due diligence of suppliers are tools that enable the company to comply with the commitments included in the General Human Rights Policy.
The work climate surveys, Complaint Hotlines and the due diligence process of suppliers are tools 105 Table of Contents that enable the Company to comply with the commitments included in the General Human Rights Policy.
In May 2016, we signed an additional power purchase agreement for a maximum of 80MW with Kallpa, under which Kallpa will supply energy to the operations related to the Toquepala Expansion and to other minor projects for ten years starting on May 1, 2017 and ending after ten years of commercial operation of the Toquepala Expansion or on April 30, 2029; whichever occurs first.
In May 2016, we signed an additional power purchase agreement for a maximum of 80MW with Kallpa, under which Kallpa will supply energy to the operations related to the Toquepala Expansion and to other minor projects for ten years starting on May 1, 2017 and ending after ten years of commercial operation of the Toquepala Expansion or on April 30, 2029; whichever occurs first. ​ Additionally, we have a commitment to purchase power for our Mexican operations from MGE, a subsidiary of Grupo Mexico through 2032.
In addition, we believe that we will be able to access additional external financing on reasonable terms, if required. ​ As of December 31, 2022, $903.6 million of the Company´s total cash, cash equivalents and short-term investments of $2,278.0 million were held by foreign subsidiaries.
In addition, we believe that we will be able to access additional external financing on reasonable terms, if required. ​ As of December 31, 2023, $512.2 million of the Company´s total cash, cash equivalents and short-term investments of $1,750.8 million were held by foreign subsidiaries.
Silver represented 4.3% of our sales in 2022. ​ ● Zinc: Average zinc prices increased by 16.2% in 2022 compared with 2021. We consider zinc has very good long-term fundamentals due high levels of industrial consumption and expected production.
Silver represented 4.2% of our sales in 2023. ​ ● Zinc: Average zinc prices decreased by 24.1% in 2023 compared with 2022. We consider zinc has very good long-term fundamentals due high levels of industrial consumption and expected production.
Please see Item 7A “Quantitative and Qualitative Disclosures about Market Risk” for more detailed information. ​ Capital Investment Program: We made capital investments of $948.5 million in 2022 and $892.3 million in 2021.
Please see Item 7A “Quantitative and Qualitative Disclosures about Market Risk” for more detailed information. ​ Capital Investment Program: We made capital investments of $1,008.6 million in 2023 and $948.5 million in 2022.
The decrease in net income attributable to SCC in 2022 was mainly fueled by a drop in net sales and growth in operating costs. ​ ​ SEGMENT RESULTS ANALYSIS ​ We have three segments: the Peruvian operations, the Mexican open-pit operations and the Mexican underground mining operations.
The decrease in net income attributable to SCC in 2023 was mainly fueled by a drop in copper prices. ​ ​ SEGMENT RESULTS ANALYSIS ​ We have three segments: the Peruvian operations, the Mexican open-pit operations and the Mexican underground mining operations.
As the Company’s lease contracts do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at the inception date to determine the present value of lease payments. ​ RESULTS OF OPERATIONS ​ The following table highlights key financial results for each of the years in the three-year period ended December 31, 2022 (in millions): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Variance ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Statement of Earnings Data ​ 2022 2021 2020 ​ 2022 - 2021 2021 - 2020 Net sales ​ $ 10,047.9 ​ $ 10,934.1 ​ $ 7,984.9 ​ $ (886.2) ​ $ 2,949.2 Operating costs and expenses ​ (5,612.1) ​ (4,869.0) ​ (4,864.2) ​ (743.1) ​ (4.8) Operating income ​ 4,435.8 ​ 6,065.1 ​ 3,120.7 ​ (1,629.3) ​ 2,944.4 Non‑operating income (expense) ​ (188.0) ​ (368.3) ​ (374.9) ​ 180.3 ​ 6.6 Income before income taxes ​ 4,247.8 ​ 5,696.8 ​ 2,745.8 ​ (1,449.0) ​ 2,951.0 Income taxes ​ (1,477.5) ​ (2,425.5) ​ (1,237.9) ​ 948.0 ​ (1,187.6) Deferred income taxes ​ (118.6) ​ 126.3 ​ 63.5 ​ (244.9) ​ 62.8 Equity earnings of affiliate ​ (3.7) ​ 13.6 ​ 6.4 ​ (17.3) ​ 7.2 Net income attributable to non‑controlling interest ​ (9.5) ​ (14.1) ​ (7.4) ​ 4.6 ​ (6.7) Net income attributable to SCC ​ $ 2,638.5 ​ $ 3,397.1 ​ $ 1,570.4 ​ $ (758.6) ​ $ 1,826.7 ​ NET SALES ​ 2022-2021: Net sales in 2022 were $10,047.9, compared to $10,934.1 million in 2021, which represented a decrease of $886.2 million.
As the Company’s lease contracts do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at the inception date to determine the present value of lease payments. ​ RESULTS OF OPERATIONS ​ The following table highlights key financial results for each of the years in the three-year period ended December 31, 2023 (in millions): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Variance ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Statement of Earnings Data ​ 2023 2022 2021 ​ 2023 - 2022 2022 - 2021 Net sales ​ $ 9,895.8 ​ $ 10,047.9 ​ $ 10,934.1 ​ $ (152.1) ​ $ (886.2) Operating costs and expenses ​ (5,703.5) ​ (5,612.1) ​ (4,869.0) ​ (91.4) ​ (743.1) Operating income ​ 4,192.3 ​ 4,435.8 ​ 6,065.1 ​ (243.5) ​ (1,629.3) Non‑operating income (expense) ​ (236.5) ​ (188.0) ​ (368.3) ​ (48.5) ​ 180.3 Income before income taxes ​ 3,955.8 ​ 4,247.8 ​ 5,696.8 ​ (292.0) ​ (1,449.0) Income taxes ​ (1,578.0) ​ (1,477.5) ​ (2,425.5) ​ (100.5) ​ 948.0 Deferred income taxes ​ 59.1 ​ (118.6) ​ 126.3 ​ 177.7 ​ (244.9) Equity earnings of affiliate ​ (2.2) ​ (3.7) ​ 13.6 ​ 1.5 ​ (17.3) Net income attributable to non‑controlling interest ​ (9.5) ​ (9.5) ​ (14.1) ​ — ​ 4.6 Net income attributable to SCC ​ $ 2,425.2 ​ $ 2,638.5 ​ $ 3,397.1 ​ $ (213.3) ​ $ (758.6) ​ NET SALES ​ 2023-2022: Net sales in 2023 totaled $9,895.8 million, which represents a slight decrease compared to 2022 net sales of $10,047.9 million.
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, as defined above, is presented in the table below for the three years ended December 31, 2022: ​ Operating cash cost per pound of copper produced(1) (In millions, except cost per pound and percentages) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2022 - 2021 ​ 2021 - 2020 ​ ​ 2022 2021 2020 Value % Value % Total operating cash cost before by‑product revenues ​ $ 3,825.7 ​ $ 3,357.4 ​ $ 2,923.7 ​ $ 468.3 13.9 % $ 433.7 14.8 % Total by‑product revenues ​ $ (2,355.8) ​ $ (1,997.7) ​ $ (1,455.9) ​ $ (358.1) 17.9 % (541.8) 37.2 % Total operating cash cost net of by‑product revenues ​ $ 1,469.9 ​ $ 1,359.7 ​ $ 1,467.8 ​ $ 110.2 8.1 % $ (108.1) (7.4) % Total pounds of copper produced(2) ​ 1,894.7 ​ 2,041.7 ​ 2,136.1 ​ (147.0) (7.2) % (94.4) (4.4) % Operating cash cost per pound before by ‑ product revenues ​ $ 2.02 ​ $ 1.64 ​ $ 1.37 ​ $ 0.38 22.8 % $ 0.27 19.7 % By ‑ products per pound revenues ​ $ (1.24) ​ $ (0.97) ​ $ (0.68) ​ $ (0.27) 27.1 % $ (0.29) 42.6 % Operating cash cost per pound net of by ‑ product revenues ​ $ 0.78 ​ $ 0.67 ​ $ 0.69 ​ $ 0.11 16.5 % $ (0.02) (2.9) % (1) These are non-GAAP measures, see page 118 for reconciliation to GAAP measure.
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, as defined above, is presented in the table below for the three years ended December 31, 2023: ​ Operating cash cost per pound of copper produced(1) (In millions, except cost per pound and percentages) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2023 - 2022 ​ 2022 - 2021 ​ ​ 2023 2022 2021 Value % Value % Total operating cash cost before by‑product revenues ​ $ 4,235.0 ​ $ 3,825.7 ​ $ 3,357.4 ​ $ 409.3 10.7 % $ 468.3 13.9 % Total by‑product revenues ​ $ (2,243.8) ​ $ (2,355.8) ​ $ (1,997.7) ​ $ 112.0 (4.8) % (358.1) 17.9 % Total operating cash cost net of by‑product revenues ​ $ 1,991.2 ​ $ 1,469.9 ​ $ 1,359.7 ​ $ 521.3 35.5 % $ 110.2 8.1 % Total pounds of copper produced(2) ​ 1,935.4 ​ 1,894.7 ​ 2,041.7 ​ 40.7 2.1 % (147.0) (7.2) % Operating cash cost per pound before by ‑ product revenues ​ $ 2.19 ​ $ 2.02 ​ $ 1.64 ​ $ 0.17 8.4 % $ 0.38 22.8 % By ‑ products per pound revenues ​ $ (1.16) ​ $ (1.24) ​ $ (0.97) ​ $ 0.08 (6.8) % $ (0.27) 27.1 % Operating cash cost per pound net of by ‑ product revenues ​ $ 1.03 ​ $ 0.78 ​ $ 0.67 ​ $ 0.25 32.6 % $ 0.11 16.5 % (1) These are non-GAAP measures, see page 119 for reconciliation to GAAP measure.
As of December 31, 2022, our copper mineral reserves, calculated at a copper price of $3.30 per pound, totaled 99,502 million pounds of contained copper, at the following locations: ​ ​ ​ ​ Copper contained in ore reserves Million pounds Mexican open‑pit 34,941 Peruvian operations 45,287 Development projects 19,274 Total 99,502 ​ Outlook: Various key factors affect our outcome.
As of December 31, 2023, our copper mineral reserves, calculated at a copper price of $3.30 per pound, totaled 97,082 million pounds of contained copper, at the following locations: ​ ​ ​ ​ Copper contained in ore reserves Million pounds Mexican open‑pit 33,426 Peruvian operations 44,382 Development projects 19,274 Total 97,082 ​ Outlook: Various key factors affect our outcome.
We believe that community outreach must be based on transparency and trust and strive to promote long-lasting ties. ​ Our Community Development model has three components: 1) responsible coexistence: to foster a positive and healthy coexistence with our neighbor communities, and to have open and ongoing channels of communication to address complaints and concerns; 2) economic development: it is important to share the economic value our operations generate with the community, and 3) human development: to optimize the skills of members of the communities where we work, to ensure that these individuals become the principal drivers of development in their communities. ​ Our grievance mechanism for external stakeholders (Community Attention Service) operates at 100% of our sites.
We believe that community outreach must be based on transparency and trust and strive to promote long-lasting ties. ​ Our Community Development model has three components: 1) responsible coexistence: to foster a positive and healthy coexistence with our neighbor communities, and to have open and ongoing channels of communication to address complaints and concerns; 2) economic development: it is important to share the economic value our operations generate with the community, and 3) human development: to optimize the skills of members of the communities where we work, to ensure that these individuals become the principal drivers of development in their communities. ​ The primary tool to ensure a responsible coexistence is our grievance mechanism for external stakeholders (Community Attention Service) that operates at 100% of our sites and gives resolution to complaints in an average of three days. ​ For economic development, during 2023, we trained 2,087 people in mining communities: 833 for employment, 1,145 in regional vocational and productive skills and 109 from local businesses to support the development of small and medium mining suppliers.
As a result beginning in 2020, Grupo Mexico’s Sustainable Development Report includes sections on climate-related risks and opportunities, and more detailed information on new short, medium and long term climate targets, strategy and governance mechanisms, will be published in our holding 2022 Sustainability Development Report, as well as new emissions and energy metrics informed by SASB standards.
As a result beginning in 2020, Grupo Mexico’s Sustainable Development Report included sections on climate-related risks and opportunities, and more detailed information about new short, medium and long term Scope 1 and 2 climate targets, strategy and governance mechanisms, as well as new emissions and energy metrics informed by SASB standards.
The results of our impairment sensitivity analysis, which included a stress test using a copper price assumption of $2.00 per pound and a molybdenum price assumption of $4.00 per pound, showed projected discounted cash flows in excess of the carrying amounts of long-lived assets by margins ranging from 1.7 to 6.1 times such carrying amount. ​ We use an estimate of the future undiscounted net cash flows of the related asset or asset group over the remaining life to measure whether the assets are recoverable and measure any impairment compared to fair value. ​ 105 Table of Contents Leases : In 2019, the Company adopted the new leases standard and it resulted in the recognition of right-of-use assets and lease obligations on the Company´s balance sheet.
The results of our impairment sensitivity analysis, which included a stress test using a copper price assumption of $2.00 per pound and a molybdenum price assumption of $4.00 per pound, showed projected discounted cash flows in excess of the carrying amounts of long-lived assets by margins ranging from 1.7 to 4.3 times such carrying amount. ​ We use an estimate of the future undiscounted net cash flows of the related asset or asset group over the remaining life to measure whether the assets are recoverable and measure any impairment compared to fair value. ​ 107 Table of Contents Leases : The Company has concluded that all of its existing lease contracts are operating lease contracts.
This project has a total budget of $174.4 million, of which we have invested $153.6 million as of December 31, 2022. ​ Tia Maria - Arequipa: This greenfield project, located in Arequipa, Peru, will use state of the art SX-EW technology with the highest international environmental standards to produce 120,000 tonnes of SX- EW copper cathodes per year.
This project has a total budget of $165.0 million, of which we have invested $152. 3 million as of Dec ember 3 1 , 2023. ​ Tia Maria - Arequipa: This greenfield project, located in Arequipa, Peru, will use state of the art SX-EW technology with the highest international environmental standards to produce 120,000 tonnes of SX- EW copper cathodes per year.
Amounts in excess of 18 times a worker’s salary are distributed to governmental bodies. In Mexico, workers’ participation is determined using the guidelines established in the Mexican income tax law at a rate of 10% of pre-tax earnings as adjusted by the tax law. ​ Operating leases include lease payments for power generating facilities to MGE, vehicles and properties.
Amounts in excess of 18 times a worker’s salary are distributed to governmental bodies. In Mexico, workers’ participation is determined using the guidelines established in the Mexican income tax law at a rate of 10% of pre-tax earnings as adjusted by the tax law.
These matters include (i) earnings, (ii) production, (iii) “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. 92 Table of Contents Earnings: The table below highlights key financial and operational data of our Company for the three years ended December 31, 2022 (in millions, except copper price and per share amounts): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Variance ​ ​ 2022 2021 2020 2022 - 2021 2021 - 2020 Copper price LME ​ ​ 4.00 ​ ​ 4.23 ​ ​ 2.80 ​ ​ (0.23) ​ 1.43 Pounds of copper sold ​ ​ 1,920.4 ​ ​ 2,052.9 ​ ​ 2,305.9 ​ ​ (132.5) ​ (253.0) Net sales ​ $ 10,047.9 ​ $ 10,934.1 ​ $ 7,984.9 ​ $ (886.2) ​ $ 2,949.2 Operating income ​ $ 4,435.8 ​ $ 6,065.1 ​ $ 3,120.7 ​ $ (1,629.3) ​ $ 2,944.4 Income before income taxes ​ $ 4,247.8 ​ $ 5,696.8 ​ $ 2,745.8 ​ $ (1,449.0) ​ $ 2,951.0 Net income attributable to SCC ​ $ 2,638.5 ​ $ 3,397.1 ​ $ 1,570.4 ​ $ (758.6) ​ $ 1,826.7 Earnings per share ​ $ 3.41 ​ $ 4.39 ​ $ 2.03 ​ $ (0.98) ​ $ 2.36 Dividends per share ​ $ 3.50 ​ $ 3.20 ​ $ 1.50 ​ $ 0.30 ​ $ 1.70 ​ Net sales in 2022 of $10.0 billion were close to our historical high in 2021 of $10.9 million.
These matters include (i) earnings, (ii) production, (iii) “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. 94 Table of Contents Earnings: The table below highlights key financial and operational data of our Company for the three years ended December 31, 2023 (in millions, except copper price and per share amounts): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Variance ​ ​ 2023 2022 2021 2023 - 2022 2022 - 2021 Copper price LME ​ ​ 3.85 ​ ​ 4.00 ​ ​ 4.23 ​ ​ (0.15) ​ (0.23) Pounds of copper sold ​ ​ 1,961.8 ​ ​ 1,920.4 ​ ​ 2,052.9 ​ ​ 41.4 ​ (132.5) Net sales ​ $ 9,895.8 ​ $ 10,047.9 ​ $ 10,934.1 ​ $ (152.1) ​ $ (886.2) Operating income ​ $ 4,192.3 ​ $ 4,435.8 ​ $ 6,065.1 ​ $ (243.5) ​ $ (1,629.3) Income before income taxes ​ $ 3,955.8 ​ $ 4,247.8 ​ $ 5,696.8 ​ $ (292.0) ​ $ (1,449.0) Net income attributable to SCC ​ $ 2,425.2 ​ $ 2,638.5 ​ $ 3,397.1 ​ $ (213.3) ​ $ (758.6) Earnings per share ​ $ 3.14 ​ $ 3.41 ​ $ 4.39 ​ $ (0.27) ​ $ (0.98) Dividends per share ​ $ 4.00 ​ $ 3.50 ​ $ 3.20 ​ $ 0.50 ​ $ 0.30 ​ Net sales in 2023 totaled $9,895.8 million, which represented a slight decrease compared to net sales in 2022.
For further information, please see “Capital Investment Program” under this Item on page 97. ​ The 2022 investing activities also included net sales of short-term investments of $278.5 million. ​ 2021: Net cash used for investing activities in 2021 included $892.3 million for capital investments.
For further information, please see “Capital Investment Program” under this Item on page 99. ​ The 2023 investing activities also included net purchases of short-term investments of $391.0 million. ​ 2022: Net cash used for investing activities in 2022 included $948.5 million for capital investments.
Please see a detailed definition of these segments in Item 1 “Business—Business Reporting Segments.” ​ The following table presents the volume of sales by segment of copper and our significant by-products for each of the years in the three-year period ended December 31, 2022: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Variance Copper Sales (million pounds) ​ 2022 2021 2020 2022 - 2021 2021 - 2020 Peruvian operations ​ 792.8 ​ 859.8 ​ 964.2 ​ (67.0) (104.4) ​ Mexican open‑pit ​ 1,166.3 ​ 1,189.6 ​ 1,330.7 ​ (23.3) (141.1) ​ Mexican IMMSA unit ​ 25.0 ​ 24.3 ​ 31.7 ​ 0.7 (7.4) ​ Other and intersegment elimination ​ (63.7) ​ (20.8) ​ (20.7) ​ (42.9) (0.1) ​ Total copper sales ​ 1,920.4 ​ 2,052.9 ​ 2,305.9 ​ (132.5) (253.0) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Variance By ‑ product Sales (million pounds, except silver—million ounces) ​ 2022 2021 2020 2022 - 2021 2021 - 2020 Peruvian operations: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Molybdenum contained in concentrate 25.0 ​ 32.8 ​ 31.3 ​ (7.8) 1.5 ​ Silver 4.5 ​ 5.6 ​ 5.9 ​ (1.1) (0.3) ​ Mexican open‑pit operations: ​ ​ ​ ​ ​ ​ ​ Molybdenum contained in concentrate 32.9 ​ 34.0 ​ 35.4 ​ (1.1) (1.4) ​ Silver 11.2 ​ 10.0 ​ 11.7 ​ 1.2 (1.7) ​ IMMSA unit ​ ​ ​ ​ ​ ​ ​ Zinc‑refined and in concentrate 223.0 ​ 201.9 ​ 230.9 ​ 21.1 (29.0) ​ Silver 6.4 ​ 6.2 ​ 7.5 ​ 0.2 (1.3) ​ Other and intersegment elimination ​ ​ ​ ​ ​ ​ ​ Silver (3.3) ​ (2.6) ​ (2.7) ​ (0.7) 0.1 ​ Total by‑product sales ​ ​ ​ ​ ​ ​ ​ Molybdenum contained in concentrate 57.9 ​ 66.8 ​ 66.7 ​ (8.9) 0.1 ​ Zinc‑refined and in concentrate 223.0 ​ 201.9 ​ 230.9 ​ 21.1 (29.0) ​ Silver 18.8 ​ 19.2 ​ 22.4 ​ (0.4) (3.2) ​ ​ Peruvian Open-pit Operations: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Variance ​ 2022 ​ 2021 ​ 2020 ​ 2022 - 2021 2021 - 2020 Net sales $ 3,908.5 ​ $ 4,370.8 ​ $ 3,153.6 ​ $ (462.3) ​ $ 1,217.2 Operating costs and expenses (2,440.7) ​ (2,037.6) ​ (2,055.2) ​ (403.1) ​ 17.6 Operating income $ 1,467.8 ​ $ 2,333.2 ​ $ 1,098.4 ​ $ (865.4) ​ $ 1,234.8 ​ ​ 110 Table of Contents Net sales: ​ 2022-2021: Net sales in 2022 fell $462.3 million compared to the amount recorded in 2021 This was primarily driven by a decrease in sales volumes of copper (-7.8%), molybdenum (-24.0%) and silver (-19.4%) and by a reduction in prices for copper (-5.4% – LME) and silver (-13.6%).
Please see a detailed definition of these segments in Item 1 “Business—Business Reporting Segments.” ​ The following table presents the volume of sales by segment of copper and our significant by-products for each of the years in the three-year period ended December 31, 2023: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Variance Copper Sales (million pounds) ​ 2023 2022 2021 2023 - 2022 2022 - 2021 Peruvian operations ​ 805.8 ​ 792.8 ​ 859.8 ​ 13.0 (67.0) ​ Mexican open‑pit ​ 1,151.5 ​ 1,166.3 ​ 1,189.6 ​ (14.8) (23.3) ​ Mexican IMMSA unit ​ 26.3 ​ 25.0 ​ 24.3 ​ 1.3 0.7 ​ Other and intersegment elimination ​ (21.8) ​ (63.7) ​ (20.8) ​ 41.9 (42.9) ​ Total copper sales ​ 1,961.8 ​ 1,920.4 ​ 2,052.9 ​ 41.4 (132.5) ​ ​ 111 Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Variance By ‑ product Sales (million pounds, except silver—million ounces) ​ 2023 2022 2021 2023 - 2022 2022 - 2021 Peruvian operations: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Molybdenum contained in concentrate 22.1 ​ 25.0 ​ 32.8 ​ (2.9) (7.8) ​ Silver 4.4 ​ 4.5 ​ 5.6 ​ (0.1) (1.1) ​ Mexican open‑pit operations: ​ ​ ​ ​ ​ ​ ​ Molybdenum contained in concentrate 37.2 ​ 32.9 ​ 34.0 ​ 4.3 (1.1) ​ Silver 9.9 ​ 11.2 ​ 10.0 ​ (1.3) 1.2 ​ IMMSA unit ​ ​ ​ ​ ​ ​ ​ Zinc‑refined and in concentrate 219.7 ​ 223.0 ​ 201.9 ​ (3.3) 21.1 ​ Silver 6.9 ​ 6.4 ​ 6.2 ​ 0.5 0.2 ​ Other and intersegment elimination ​ ​ ​ ​ ​ ​ ​ Silver (3.2) ​ (3.3) ​ (2.6) ​ 0.1 (0.7) ​ Total by‑product sales ​ ​ ​ ​ ​ ​ ​ Molybdenum contained in concentrate 59.3 ​ 57.9 ​ 66.8 ​ 1.4 (8.9) ​ Zinc‑refined and in concentrate 219.7 ​ 223.0 ​ 201.9 ​ (3.3) 21.1 ​ Silver 18.0 ​ 18.8 ​ 19.2 ​ (0.8) (0.4) ​ ​ ​ Peruvian Open-pit Operations: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Variance ​ 2023 ​ 2022 ​ 2021 ​ 2023 - 2022 2022 - 2021 Net sales $ 3,854.3 ​ $ 3,908.5 ​ $ 4,370.8 ​ $ (54.2) ​ $ (462.3) Operating costs and expenses (2,380.9) ​ (2,440.7) ​ (2,037.6) ​ 59.8 ​ (403.1) Operating income $ 1,473.4 ​ $ 1,467.8 ​ $ 2,333.2 ​ $ 5.6 ​ $ (865.4) ​ Net sales: ​ 2023-2022: Net sales in 2023 fell $54.2 million versus the figure in 2022.
We stand at the ready to agilely and adeptly respond to all scenarios. ​ 117 Table of Contents NON-GAAP INFORMATION RECONCILIATION ​ Operating cash cost: Following is a reconciliation of “Operating Cash Cost” (see page 95) 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 in the table below: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2022 2021 2020 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ $ per ​ ​ $ per ​ ​ $ per ​ ​ $ millions ​ pound ​ $ millions ​ pound ​ $ millions ​ pound Cost of sales (exclusive of depreciation, amortization and depletion) ​ $ 4,649.1 ​ $ 2.45 ​ $ 3,894.4 ​ $ 1.90 ​ $ 3,929.8 ​ $ 1.84 Add: ​ ​ ​ ​ ​ ​ ​ ​ ​ Selling, general and administrative ​ 125.0 ​ 0.07 ​ 125.2 ​ 0.06 ​ 126.2 ​ 0.06 Sales premiums, net of treatment and refining charges ​ (21.0) ​ ​ (0.01) ​ (25.6) ​ (0.01) ​ 17.00 ​ 0.01 Less: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Workers’ participation ​ (282.9) ​ ​ (0.15) ​ (267.2) ​ (0.13) ​ (263.9) ​ (0.13) Cost of metals purchased from third parties ​ (316.8) ​ ​ (0.17) ​ (225.8) ​ (0.11) ​ (495.2) ​ (0.23) Royalty charge and other, net ​ (300.9) ​ ​ (0.16) ​ (158.6) ​ (0.08) ​ (171.6) ​ (0.08) Inventory change ​ (26.8) ​ ​ (0.01) ​ 15.0 ​ 0.01 ​ (218.6) ​ (0.10) Operating Cash Cost before by ‑ product revenues ​ $ 3,825.7 ​ $ 2.02 ​ $ 3,357.4 ​ $ 1.64 ​ $ 2,923.7 ​ $ 1.37 Add: ​ ​ ​ ​ ​ ​ By‑product revenues(1) ​ (2,327.2) ​ (1.22) ​ (1,974.8) ​ (0.96) ​ (1,375.9) ​ (0.64) Net revenue on sale of metal purchased from third parties ​ (28.6) ​ ​ (0.02) ​ (22.9) ​ (0.01) ​ (80.0) ​ (0.04) Total by‑product revenues ​ (2,355.8) ​ (1.24) ​ (1,997.7) ​ (0.97) ​ (1,455.9) ​ (0.68) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Operating Cash Cost net of by ‑ product revenues ​ 1,469.9 ​ 0.78 ​ 1,359.7 ​ 0.67 ​ 1,467.8 ​ 0.69 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total pounds of copper produced (in millions) ​ 1,894.7 ​ ​ 2,041.7 ​ ​ 2,136.1 ​ (1) By-product revenues included in our presentation of operating cash cost contain the following: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2022 2021 2020 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ $ per ​ ​ $ per ​ ​ $ per ​ ​ $ millions ​ pound ​ $ millions ​ pound ​ $ millions ​ pound Molybdenum ​ $ (1,192.7) ​ $ (0.63) ​ $ (1,053.1) ​ $ (0.51) ​ $ (510.3) ​ $ (0.24) Silver ​ (370.5) ​ (0.20) ​ (445.3) ​ (0.22) ​ (415.5) ​ (0.19) Zinc ​ (242.9) ​ (0.13) ​ (196.9) ​ (0.10) ​ (202.9) ​ (0.10) Sulfuric Acid ​ (395.8) ​ (0.21) ​ (164.6) ​ (0.08) ​ (135.9) ​ (0.06) Gold ​ (81.0) ​ (0.04) ​ (67.5) ​ (0.03) ​ (73.6) ​ (0.03) Other ​ (44.3) ​ (0.01) ​ (47.4) ​ (0.02) ​ (37.7) ​ (0.02) Total ​ $ (2,327.2) ​ $ (1.22) ​ $ (1,974.8) ​ $ (0.96) ​ $ (1,375.9) ​ $ (0.64) ​ The by-product revenue presented does not match with the sales value reported by segment on page 173 because the above table excludes purchases from third parties, which are reclassified to net revenue on sale of metal purchased from third parties. ​ 118 Table of Contents
These include committed purchase orders and executed contracts for our Mexican projects and for our Peruvian expansion projects. ​ ​ ​ 118 Table of Contents NON-GAAP INFORMATION RECONCILIATION ​ Operating cash cost: Following is a reconciliation of “Operating Cash Cost” (see page 96) 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 in the table below: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2023 2022 2021 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ $ per ​ ​ $ per ​ ​ $ per ​ ​ $ millions ​ pound ​ $ millions ​ pound ​ $ millions ​ pound Cost of sales (exclusive of depreciation, amortization and depletion) ​ $ 4,687.7 ​ $ 2.42 ​ $ 4,649.1 ​ $ 2.45 ​ $ 3,894.4 ​ $ 1.90 Add: ​ ​ ​ ​ ​ ​ ​ ​ ​ Selling, general and administrative ​ 127.2 ​ 0.07 ​ 125.0 ​ 0.07 ​ 125.2 ​ 0.06 Sales premiums, net of treatment and refining charges ​ (7.7) ​ ​ (0.00) ​ (21.0) ​ (0.01) ​ (25.6) ​ (0.01) Less: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Workers’ participation ​ (253.2) ​ ​ (0.13) ​ (282.9) ​ (0.15) ​ (267.2) ​ (0.13) Cost of metals purchased from third parties ​ (195.8) ​ ​ (0.10) ​ (316.8) ​ (0.17) ​ (225.8) ​ (0.11) Royalty charge and other, net ​ (116.7) ​ ​ (0.06) ​ (300.9) ​ (0.16) ​ (158.6) ​ (0.08) Inventory change ​ (6.5) ​ ​ (0.00) ​ (26.8) ​ (0.01) ​ 15.0 ​ 0.01 Operating Cash Cost before by ‑ product revenues ​ $ 4,235.0 ​ $ 2.19 ​ $ 3,825.7 ​ $ 2.02 ​ $ 3,357.4 ​ $ 1.64 Add: ​ ​ ​ ​ ​ ​ By ‑ product revenues(1) ​ (2,194.0) ​ (1.13) ​ (2,327.2) ​ (1.22) ​ (1,974.8) ​ (0.96) Net revenue on sale of metal purchased from third parties ​ (49.8) ​ ​ (0.03) ​ (28.6) ​ (0.02) ​ (22.9) ​ (0.01) Total by ‑ product revenues ​ (2,243.8) ​ (1.16) ​ (2,355.8) ​ (1.24) ​ (1,997.7) ​ (0.97) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Operating Cash Cost net of by ‑ product revenues ​ 1,991.2 ​ 1.03 ​ 1,469.9 ​ 0.78 ​ 1,359.7 ​ 0.67 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total pounds of copper produced (in millions) ​ 1,935.4 ​ ​ 1,894.7 ​ ​ 2,041.7 ​ (1) By-product revenues included in our presentation of operating cash cost contain the following: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2023 2022 2021 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ $ per ​ ​ $ per ​ ​ $ per ​ ​ $ millions ​ pound ​ $ millions ​ pound ​ $ millions ​ pound Molybdenum ​ $ (1,129.7) ​ $ (0.58) ​ $ (1,192.7) ​ $ (0.63) ​ $ (1,053.1) ​ $ (0.51) Silver ​ (390.6) ​ (0.20) ​ (370.5) ​ (0.20) ​ (445.3) ​ (0.22) Zinc ​ (226.0) ​ (0.12) ​ (242.9) ​ (0.13) ​ (196.9) ​ (0.10) Sulfuric Acid ​ (318.4) ​ (0.17) ​ (395.8) ​ (0.21) ​ (164.6) ​ (0.08) Gold ​ (77.4) ​ (0.04) ​ (81.0) ​ (0.04) ​ (67.5) ​ (0.03) Other ​ (51.9) ​ (0.03) ​ (44.3) ​ (0.01) ​ (47.4) ​ (0.02) Total ​ $ (2,194.0) ​ $ (1.13) ​ $ (2,327.2) ​ $ (1.22) ​ $ (1,974.8) ​ $ (0.96) ​ The by-product revenue presented does not match with the sales value reported by segment on page 175 because the above table excludes purchases from third parties, which are reclassified to net revenue on sale of metal purchased from third parties. ​ 119 Table of Contents
Net income attributable to SCC in 2021 was 116.3% higher than the figure reported in 2020; this was mainly due to higher metal prices and our strict cost control measures. ​ Production: The table below contains mine production data of our Company for the three years ended December 31, 2022: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Variance ​ ​ ​ ​ ​ ​ ​ ​ ​ 2022 - 2021 ​ 2021 - 2020 ​ ​ 2022 2021 2020 Volume % ​ Volume % Copper (in million pounds) 1,972.5 2,112.5 2,207.6 (140.0) (6.6) % (95.1) (4.3) % Molybdenum (in million pounds) 57.8 66.7 66.7 (8.9) (13.3) % — — % Zinc (in million pounds) 132.3 147.6 152.0 (15.3) (10.4) % (4.4) (2.9) % Silver (in million ounces) 18.6 19.0 21.5 (0.4) (2.1) % (2.5) (11.6) % ​ 93 Table of Contents The table below contains copper production data from each of our mines for the three years ended December 31, 2022: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Variance ​ ​ ​ ​ ​ ​ ​ ​ ​ 2022 - 2021 2021 - 2020 Copper (in million pounds): ​ 2022 2021 2020 Volume % Volume % Toquepala 444.2 505.7 562.4 (61.5) (12.2) % (56.7) (10.1) % Cuajone 309.4 372.6 371.8 (63.2) (17.0) % 0.8 0.2 % La Caridad 246.5 282.4 298.8 (35.9) (12.7) % (16.4) (5.5) % Buenavista 952.3 932.6 951.9 19.7 2.1 % (19.3) (2.0) % IMMSA 20.1 19.2 22.7 0.9 4.8 % (3.5) (15.4) % Total mined copper 1,972.5 2,112.5 2,207.6 (140.0) (6.6) % (95.1) (4.3) % ​ 2022 compared to 2021: ​ Copper mine production in 2022 fell 6.6% to 1,972.5 million pounds, down from 2,112.5 million pounds in 2021.
Net income attributable to SCC in 2022 was 22.3% below 2021’s net income; this was mainly due to higher costs of sales and a slight reduction in sales volumes. ​ Production: The table below contains mine production data of our Company for the three years ended December 31, 2023: Production: The table below contains mine production data of our Company for the three years ended December 31, 2023: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Variance ​ ​ ​ ​ ​ ​ ​ ​ ​ 2023 - 2022 ​ 2022 - 2021 ​ ​ 2023 2022 2021 Volume % ​ Volume % Copper (in million pounds) 2,008.4 1,972.5 2,112.5 35.9 1.8 % (140.0) (6.6) % Molybdenum (in million pounds) 59.2 57.8 66.7 1.3 2.3 % (8.9) (13.3) % Zinc (in million pounds) 144.4 132.3 147.6 12.1 9.2 % (15.3) (10.4) % Silver (in million ounces) 18.4 18.6 19.0 (0.2) (0.8) % (0.4) (2.1) % ​ 95 Table of Contents The table below contains copper production data from each of our mines for the three years ended December 31, 2023: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Variance ​ ​ ​ ​ ​ ​ ​ ​ ​ 2023 - 2022 2022 - 2021 Copper (in million pounds): ​ 2023 2022 2021 Volume % Volume % Toquepala 495.8 444.2 505.7 51.6 11.6 % (61.5) (12.2) % Cuajone 329.0 309.4 372.6 19.6 6.4 % (63.2) (17.0) % La Caridad 244.3 246.5 282.4 (2.2) (0.9) % (35.9) (12.7) % Buenavista 918.2 952.3 932.6 (34.1) (3.6) % 19.7 2.1 % IMMSA 21.1 20.1 19.2 1.0 4.7 % 0.9 4.8 % Total mined copper 2,008.4 1,972.5 2,112.5 35.9 1.8 % (140.0) (6.6) % ​ 2023 compared to 2022: ​ Copper mine production in 2023 increased 1.8% to 2,008.4 million pounds.
The report can be accessed at https://www.gmexico.com/en/Pages/development.aspx. We are referring our investors to Grupo Mexico's internet site for details on the aforementioned initiatives for informative purposes only.
In our 2023 Sustainability Development Report, we will include Scope 3 targets and preliminary capital allocation figures on decarbonization projects. The report can be accessed at https://www.gmexico.com/en/Pages/development.aspx. We are referring our investors to Grupo Mexico's internet site for details on the aforementioned initiatives for informative purposes only.
This included $571.4 million of investments at our Mexican operations and $320.9 million at our Peruvian operations.
This included $685.9 million of investments at our Mexican operations and $322.7 million at our Peruvian operations.
For further information, please see “Capital Investment Program” under this Item on page 97. 114 Table of Contents ​ The 2021 investing activities also included net purchases of short-term investments of $76.1 million. ​ Please see Management´s Discussion and Analysis of Financial Condition and Results of Operations, Liquidity and Capital Resources, Cash Flow, Net cash used in investing activities on the 2021 Form 10-K for details on activities in 2020. ​ Net cash used in financing activities: ​ 2022: Net cash used in financing activities in 2022 was $3,011.0 million and included a dividend distribution of $2,705.8 million; as well as a debt repayment of $300 million. ​ 2021: Net cash used in financing activities in 2021 was $2,480.2 million and included a dividend distribution of $2,473.8 million. ​ Please see Management´s Discussion and Analysis of Financial Condition and Results of Operations, Liquidity and Capital Resources, Cash Flow, Net cash used in financing activities on the 2021 Form 10-K for details on activities in 2020. ​ Other Liquidity Considerations ​ We expect that we will meet our cash requirements for 2023 and beyond from cash on hand and internally generated funds.
For further information, please see “Capital Investment Program” under this Item on page 99. ​ The 2022 investing activities also included net sales of short-term investments of $278.5 million. ​ ​ Net cash used in financing activities: ​ 2023: Net cash used in financing activities in 2023 was $3,101.2 million and included a dividend distribution of $3,092.4 million. ​ 2022: Net cash used in financing activities in 2022 was $3,011.0 million and included a dividend distribution of $2,705.8 million; as well as a debt repayment of $300 million. ​ ​ ​ 116 Table of Contents Other Liquidity Considerations ​ We expect that we will meet our cash requirements for 2024 and beyond from cash on hand and internally generated funds.
We also have an active ongoing exploration program in Chile, Argentina and Ecuador. ​ We believe we hold one of the world’s largest copper reserves and resources positions.
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 an active ongoing exploration program in Chile and Argentina. ​ We believe we hold one of the world’s largest copper reserves and resources positions.
In general, the capital investments and projects described below are intended to increase production, decrease costs or address social and environmental commitments. ​ 96 Table of Contents The table below contains information on our capital investments for the three years ended December 31, 2022 (in millions): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2022 2021 2020 Peruvian projects: ​ ​ ​ ​ ​ ​ ​ ​ ​ Toquepala expansion project ​ $ 6.6 ​ $ 21.8 ​ $ 5.1 Quebrada Honda dam expansion ​ 20.3 ​ 86.3 ​ 30.9 Relocation of facilities at Toquepala ​ 6.3 ​ 23.8 ​ 6.6 Toquepala mine truck acquisition ​ — ​ — ​ 9.7 Fresh water pipeline replacement at Suches ​ 10.6 ​ 6.2 ​ 14.3 Tailings disposal—Quebrada Honda dam ​ 1.5 ​ 0.8 ​ 0.4 Ilo sulfuric acid plant N°1 modification ​ — ​ 0.2 ​ 2.0 Building of the containment dike N°4 at Quebrada Santallana ​ ​ 0.7 ​ ​ 6.5 ​ ​ 9.5 Other projects ​ 104.5 ​ 28.8 ​ 21.5 Sub‑total projects ​ 150.5 ​ 174.4 ​ 100.0 Maintenance and replacement ​ 196.3 ​ 150.6 ​ 109.4 Net change in capital expenditures incurred but not yet paid ​ 8.2 ​ (4.1) ​ (14.4) Total Peruvian expenditures ​ 355.0 ​ 320.9 ​ 195.0 Mexican projects: ​ ​ ​ ​ ​ ​ ​ New Buenavista concentrator ​ 15.0 ​ 18.9 ​ 68.3 Buenavista Zinc project ​ ​ 99.8 ​ ​ 126.1 ​ ​ 58.4 Pilares Mine ​ ​ 29.6 ​ ​ 30.9 ​ ​ 33.4 Expansion of mine pit at Buenavista ​ 11.3 ​ 24.6 ​ 23.9 Lime plant - Sonora ​ ​ 19.3 ​ ​ 30.7 ​ ​ 9.3 Solutions system improvements of Tinajas ​ 0.2 ​ 0.7 ​ 10.0 Quebalix IV ​ 6.7 ​ 2.8 ​ 0.1 New tailing disposal deposit at Buenavista mine ​ 27.3 ​ 59.7 ​ 27.0 Over elevation of tailings deposit N° 7 at La Caridad mine ​ 2.8 ​ 1.4 ​ 11.0 Sonora River water restitution system in Moritas Basin ​ — ​ — ​ — San Martin mine restoration ​ ​ 1.6 ​ ​ 20.7 ​ ​ 21.1 Other projects ​ 169.8 ​ 59.2 ​ 17.9 Sub‑total projects ​ 383.4 ​ 375.7 ​ 280.4 Maintenance and replacement ​ 212.2 ​ 184.0 ​ 132.5 Net change in capital expenditures incurred but not yet paid ​ (2.1) ​ 11.7 ​ (15.7) Total Mexican expenditures ​ 593.5 ​ 571.4 ​ 397.2 Total capital investments ​ $ 948.5 ​ $ 892.3 ​ $ 592.2 ​ In 2023, we plan to invest $1,099.6 million in capital projects.
In general, the capital investments and projects described below are intended to increase production, decrease costs or address social and environmental commitments. ​ 98 Table of Contents The table below contains information on our capital investments for the three years ended December 31, 2023 (in millions): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2023 2022 2021 Peruvian projects: ​ ​ ​ ​ ​ ​ ​ ​ ​ Toquepala expansion project ​ $ 5.8 ​ $ 6.6 ​ $ 21.8 Quebrada Honda dam expansion ​ 8.4 ​ 20.3 ​ 86.3 Relocation of facilities at Toquepala ​ 0.9 ​ 6.3 ​ 23.8 HPGR optimization at Cuajone ​ ​ 54.2 ​ ​ 35.4 ​ ​ 0.9 Fresh water pipeline replacement at Suches ​ 0.9 ​ 10.6 ​ 6.2 Tailings disposal—Quebrada Honda dam ​ (2.2) ​ 1.5 ​ 0.8 Maintenance workshops at Toquepala concentrator ​ 9.7 ​ ​ 21.9 ​ ​ 6.3 Quebrada Honda filter plant ​ ​ 16.1 ​ ​ 18.3 ​ ​ 2.1 Maintenance workshops at Cuajone ​ ​ 17.2 ​ ​ 4.2 ​ ​ 0.9 Other projects ​ 15.6 ​ ​ 25.4 ​ ​ 25.3 Sub‑total projects ​ 126.6 ​ 150.5 ​ 174.4 Maintenance and replacement ​ 193.1 ​ 196.3 ​ 150.6 Net change in capital expenditures incurred but not yet paid ​ 3.0 ​ 8.2 ​ (4.1) Total Peruvian expenditures ​ 322.7 ​ 355.0 ​ 320.9 Mexican projects: ​ ​ ​ ​ ​ ​ ​ New Buenavista concentrator ​ 12.3 ​ 15.0 ​ 18.9 Buenavista Zinc project ​ ​ 66.5 ​ ​ 99.8 ​ ​ 126.1 Pilares Mine ​ ​ 33.5 ​ ​ 29.6 ​ ​ 30.9 Expansion of mine pit at Buenavista ​ 17.3 ​ 11.3 ​ 24.6 Lime plant - Sonora ​ ​ 9.7 ​ ​ 19.3 ​ ​ 30.7 MexCobre - Bella Union Mine ​ ​ 56.4 ​ ​ — ​ ​ — IMMSA - Mine development ​ ​ 39.4 ​ ​ 33.6 ​ ​ 11.0 Project MexArco ​ ​ 23.4 ​ ​ 22.6 ​ ​ 8.6 Shooting rehabilitation San Fernando ​ ​ 8.3 ​ ​ 7.2 ​ ​ 5.2 New tailing disposal deposit at Buenavista mine ​ 65.6 ​ 27.3 ​ 59.7 Over elevation of tailings deposit N° 7 at La Caridad mine ​ 5.8 ​ 2.8 ​ 1.4 San Martin mine restoration ​ ​ 0.7 ​ ​ 1.6 ​ ​ 20.7 Other projects ​ 112.1 ​ 113.3 ​ 37.9 Sub‑total projects ​ 451.0 ​ 383.4 ​ 375.7 Maintenance and replacement ​ 235.4 ​ 212.2 ​ 184.0 Net change in capital expenditures incurred but not yet paid ​ (0.5) ​ (2.1) ​ 11.7 Total Mexican expenditures ​ 685.9 ​ 593.5 ​ 571.4 Total capital investments ​ $ 1,008.6 ​ $ 948.5 ​ $ 892.3 ​ In 2024, we plan to invest $1,103.7 million in capital projects.
The furnace of the plant started operations in the second quarter of 2022, complying with the performance tests. ​ 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.
Mine life is estimated at 13 years. ​ ​ 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.
(2) Net of metallurgical losses. ​ 2022 compared to 2021: ​ As seen in the table above, our per pound cash cost before by-product revenues in 2022 was 22.8% higher than that recorded in 2021.
(2) Net of metallurgical losses. ​ 2023 compared to 2022: ​ As seen in the table above, our per pound cash cost before by-product revenues in 2023 was 8.4% higher than the figure in 2022. This result was mainly attributable to an increase in production costs.
Please see Note 19 “Segment and Related Information” of the consolidated financial statements. ​ LIQUIDITY AND CAPITAL RESOURCES ​ The following discussion relates to our liquidity and capital resources for each of the years in the three-year period ended December 31, 2022. ​ Cash Flow: ​ The following table shows the cash flow for the three year period ended December 31, 2022 (in millions): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Variance ​ ​ 2022 2021 2020 2022 - 2021 2021 - 2020 Net cash provided by operating activities ​ $ 2,802.5 ​ $ 4,292.4 ​ $ 2,783.6 ​ $ (1,489.9) ​ $ 1,508.8 Net cash used in investing activities ​ $ (666.8) ​ $ (972.9) ​ $ (915.8) ​ $ 306.1 ​ $ (57.1) Net cash used in financing activities ​ $ (3,011.0) ​ $ (2,480.2) ​ $ (1,563.3) ​ $ (530.8) ​ $ (916.9) ​ 113 Table of Contents Net cash provided by operating activities: ​ The 2022, 2021 and 2020 change in net cash from operating activities include (in millions): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Variance ​ 2022 2021 2020 2022 - 2021 2021 - 2020 Net income $ 2,648.0 ​ $ 3,411.2 ​ $ 1,577.8 ​ $ (763.2) ​ $ 1,833.4 Depreciation, amortization and depletion 796.3 ​ 806.0 ​ 775.6 ​ (9.7) ​ 30.4 Provision for deferred income taxes 118.6 ​ (126.3) ​ (63.5) ​ 244.9 ​ (62.8) Loss on foreign currency transaction effect 41.9 ​ (25.8) ​ 0.9 ​ 67.7 ​ (26.7) Other adjustments to net income 37.9 ​ 36.6 ​ 9.1 ​ 1.3 ​ 27.5 Operating assets and liabilities (840.2) ​ 190.7 ​ 483.7 ​ (1,030.9) ​ (293.0) Net cash provided by operating activities $ 2,802.5 ​ $ 4,292.4 ​ $ 2,783.6 ​ $ (1,489.9) ​ $ 1,508.8 ​ Significant items added to (deducted from) net income to arrive at operating cash flow include depreciation, amortization and depletion, deferred tax amounts and changes in operating assets and liabilities. ​ 2022: Net income was $2,648.0 million, which represented approximately 94.5% of the net operating cash flow. ​ Changes in operating assets and liabilities decreased cash flow by $840.2 million due the following variances: ● $(35.4) million increase in trade accounts receivable. ● $(7.7) million net increase in inventory; principally at our Mexican operations. ● $(718.0) million decrease in accounts payable and accrued liabilities, which was driven primarily by a decrease in accrued income taxes at our Mexican and Peruvian operations. ● $ (79.1) million increase in other operating assets and liabilities, net; this was mainly attributable to an increase in other accounts receivables at our Mexican operations mainly to workers. ​ 2021: Net income was $3,411.2 million, which represented approximately 79.5% of the net operating cash flow. ​ Changes in operating assets and liabilities increased cash flow by $190.7 million due to the following variances: ● $(289.8) million increase in trade accounts receivable, which was mainly attributable to the increase in metal prices in 2021. ● $4.7 million net decrease in inventory; this was primarily driven by increases of $91.8 million and $7.8 million in the work in process and finished goods inventories, respectively; which were in turn partially offset by $66.3 million and $38.1 million drops in the leachable materials and supplies inventories, respectively. ● $558.2 million increase in accounts payable and accrued liabilities, which was mainly due to the increase in accrued income taxes and workers’ participation at our Mexican and Peruvian operations. ● $(82.4) million increase in other operating assets and liabilities which included principally an increase in prepaid taxes in our Mexican operations.
Please see Note 19 “Segment and Related Information” of the consolidated financial statements. ​ ​ LIQUIDITY AND CAPITAL RESOURCES ​ The following discussion relates to our liquidity and capital resources for each of the years in the three-year period ended December 31, 2023. ​ Cash Flow: ​ The following table shows the cash flow for the three year period ended December 31, 2023 (in millions): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Variance ​ ​ 2023 2022 2021 2023 - 2022 2022 - 2021 Net cash provided by operating activities ​ $ 3,573.1 ​ $ 2,802.5 ​ $ 4,292.4 ​ $ 770.6 ​ $ (1,489.9) Net cash used in investing activities ​ $ (1,398.4) ​ $ (666.8) ​ $ (972.9) ​ $ (731.6) ​ $ 306.1 Net cash used in financing activities ​ $ (3,101.2) ​ $ (3,011.0) ​ $ (2,480.2) ​ $ (90.2) ​ $ (530.8) ​ 115 Table of Contents Net cash provided by operating activities: ​ The 2023, 2022 and 2021 change in net cash from operating activities include (in millions): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Variance ​ 2023 2022 2021 2023 - 2022 2022 - 2021 Net income $ 2,434.7 ​ $ 2,648.0 ​ $ 3,411.2 ​ $ (213.3) ​ $ (763.2) Depreciation, amortization and depletion 833.6 ​ 796.3 ​ 806.0 ​ 37.3 ​ (9.7) Provision for deferred income taxes (59.1) ​ 118.6 ​ (126.3) ​ (177.7) ​ 244.9 Loss on foreign currency transaction effect 10.4 ​ 41.9 ​ (25.8) ​ (31.5) ​ 67.7 Other adjustments to net income 17.4 ​ 21.5 ​ 18.7 ​ (4.1) ​ 2.8 Operating assets and liabilities 310.0 ​ (840.2) ​ 190.7 ​ 1,150.2 ​ (1,030.9) Net cash provided by operating activities $ 3,547.0 ​ $ 2,786.1 ​ $ 4,274.5 ​ $ 760.9 ​ $ (1,488.4) ​ Significant items added to (deducted from) net income to arrive at operating cash flow include depreciation, amortization and depletion, deferred tax amounts and changes in operating assets and liabilities. ​ 2023: Net income was $2,434.7 million, which represented 68.6% of the net operating cash flow. ​ Changes in operating assets and liabilities increased cash flow by $310.0 million due the following variances: ● $253.0 million decrease in trade accounts receivable, principally at our Mexican operations. ● $152.1 million increase in accounts payable and accrued liabilities, which was mainly driven by an increase in accrued income taxes at our Peruvian operations. ● $(60.4) million net increase in inventory; principally at our Mexican operations. ● $ (34.7) million increase in other operating assets and liabilities, net. ​ ​ Net cash used in investing activities: ​ 2023: Net cash used for investing activities in 2023 included $1,008.6 million for capital investments.
The aforementioned was partially offset by an increase in sales volume for zinc (+10.5%) and by an uptick in prices for molybdenum (+20.0%) and zinc (+16.2%). ​ Please see Management´s Discussion and Analysis of Financial Condition and Results of Operations, Results of Operations on the 2021 Form 10-K for details on variations between 2021 and 2020. ​ The table below outlines the average published market metals prices for our metals for each of the three years in the three-year period ended December 31, 2022: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ % Variance ​ ​ 2022 2021 2020 2022 - 2021 2021 - 2020 Copper price ($per pound—LME) ​ $ 4.00 ​ $ 4.23 ​ $ 2.80 ​ (5.4) % 51.1 % Copper price ($per pound—COMEX) ​ $ 4.01 ​ $ 4.24 ​ $ 2.80 ​ (5.4) % 51.4 % Molybdenum price ($per pound)(1) ​ $ 18.61 ​ $ 15.51 ​ $ 8.57 ​ 20.0 % 81.0 % Zinc price ($per pound—LME) ​ $ 1.58 ​ $ 1.36 ​ $ 1.03 ​ 16.2 % 32.0 % Silver price ($per ounce—COMEX) ​ $ 21.76 ​ $ 25.18 ​ $ 20.62 ​ (13.6) % 22.1 % (1) Platt’s Metals Week Dealer Oxide. ​ 106 Table of Contents The table below provides our metal sales as a percentage of our total net sales: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ ​ December 31, ​ Sales as a percentage of total net sales 2022 2021 ​ 2020 ​ Copper 75.0 % 80.7 % 81.6 % Molybdenum 11.9 % 9.6 % 6.4 % Silver 4.0 % 4.3 % 5.6 % Zinc 3.7 % 2.7 % 3.1 % Other by‑products 5.4 % 2.7 % 3.3 % Total 100.0 % 100.0 % 100.0 % ​ The table below provides our copper sales by type of product (in million pounds).
Net sales in 2023 were adversely affected by downward adjustments of $406.0 million arising from provisionally priced sales due to decreases in metal prices. ​ The table below outlines the average published market metals prices for our metals for each of the three years in the three-year period ended December 31, 2023: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ % Variance ​ ​ 2023 2022 2021 2023 - 2022 2022 - 2021 Copper price ($per pound—LME) ​ $ 3.85 ​ $ 4.00 ​ $ 4.23 ​ (3.8) % (5.4) % Copper price ($per pound—COMEX) ​ $ 3.86 ​ $ 4.01 ​ $ 4.24 ​ (3.7) % (5.4) % Molybdenum price ($per pound)(1) ​ $ 23.73 ​ $ 18.61 ​ $ 15.51 ​ 27.5 % 20.0 % Zinc price ($per pound—LME) ​ $ 1.20 ​ $ 1.58 ​ $ 1.36 ​ (24.1) % 16.2 % Silver price ($per ounce—COMEX) ​ $ 23.41 ​ $ 21.76 ​ $ 25.18 ​ 7.6 % (13.6) % (1) Platt’s Metals Week Dealer Oxide. ​ 108 Table of Contents The table below provides our metal sales as a percentage of our total net sales: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ ​ December 31, ​ Sales as a percentage of total net sales 2023 2022 ​ 2021 ​ Copper 76.7 % 75.0 % 80.7 % Molybdenum 11.4 % 11.9 % 9.6 % Silver 4.2 % 4.0 % 4.3 % Zinc 3.0 % 3.7 % 2.7 % Other by‑products 4.7 % 5.4 % 2.7 % Total 100.0 % 100.0 % 100.0 % ​ The table below provides our copper sales by type of product (in million pounds).
We believe these plans further improve the Company’s capacity to implement effective mitigation measures and contribute to the preservation and improvement of the environment at our operations. ​ Regarding our environmental risk management, we are aligning our tailings systems to the recently published ICMM's (International Council on Mining and Metals) Global Standard on Tailings Management and have improved our governance framework by implementing a brand-new Internal Committee for Review of Tailings Systems to bolster safety management and communication between operations and top management. ​ To reduce our dependency on underground water, the Company is working to identify new sources of water to use in its processes, including recycling wastewater from urban areas.
We believe these plans further improve the Company’s capacity to implement effective mitigation measures and contribute to the preservation and improvement of the environment at our operations. ​ Regarding our environmental risk management, we are aligning our tailings systems to the recently published ICMM's (International Council on Mining and Metals) Global Standard on Tailings Management and have improved our governance framework by implementing a brand-new Internal Committee for Review of Tailings Systems to bolster safety management and communication between operations and top management. ​ With the purpose of increasing our water efficiency, we are currently recovering about six thousand cubic meters of water per day through the new tailings filtering plant in Quebrada Honda, Peru, which is equivalent to 0.6 m3 of water per ton of tailings.
The budget for El Pilar is $310 million. The results from experimental pads in leaching process have confirmed adequate levels of copper recovery. The basic engineering study is finished and the Company continues developing the project and engage in onsite environmental activities. The SX-EW plant EPCM project has been awarded to a contractor and has started.
The budget for El Pilar is $310 million. ​ Project update: The results from experimental pads in the leaching process have confirmed adequate levels of copper recovery and we are evaluating different options to drive optimization. The basic engineering study has been completed and the Company is engaging in project development and onsite environmental activities.
Lease right-of-use assets and liabilities are recognized at the inception date based on the present value of lease payments over the lease term.
Right-of-use assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent an obligation by the Company to make lease payments that arise from the lease. Lease right-of-use assets and liabilities are recognized at the inception date based on the present value of lease payments over the lease term.
This project will significantly improve the overall mineral ore grade (combining the 0.78% expected from Pilares with 0.29% from La Caridad). The budget for Pilares is $159 million, most of which has already been invested. Pilares is currently operating and delivering copper mineral oxides to the SX-EW facilities of the Caridad operation.
This project will significantly improve the overall mineral ore grade (considering the 0.78% expected from Pilares with 0.29% from La Caridad). ​ Project update: The budget for Pilares is $176 million, of which $145 million has been invested. Pilares is fully integrated in our operations and is delivering copper ore to the La Caridad concentrator according to plans.
This was partially offset by lower prices for copper (-5.4%) and silver (-13.6%). ​ Please see Management´s Discussion and Analysis of Financial Condition and Results of Operations, Results of Operations, Segment Results Analysis on the 2021 Form 10-K for details on variations between 2021 and 2020. ​ 112 Table of Contents Operating costs and expenses: ​ 2022-2021 : Operating costs and expenses in 2022 increased by $94.5 million compared to 2021; this was principally due to: ​ ​ ​ ​ ​ ​ Operating costs and expenses for 2021 $ 511.4 Plus: ​ ​ ​ • Increase in cost of metals purchased from third parties. ​ ​ 49.9 • Increase in other cost of sales (exclusive of depreciation, amortization and depletion), mainly attributable to increases in labor costs (+9.4), other production costs (+24.8) and higher inventory consumption (+28.9); this was partially offset by a decrease in power costs (-9) and others (-12.2) ​ ​ 41.9 • Increase in depreciation, amortization and depletion expense. ​ ​ 2.8 • Increase in selling, general and administrative expenses. ​ 0.2 Less: ​ ​ ​ ​ • Decrease in exploration expenses. ​ ​ (0.3) Operating costs and expenses for 2022 ​ $ 605.9 ​ Please see Management´s Discussion and Analysis of Financial Condition and Results of Operations, Results of Operations, Segment Results Analysis on the 2021 Form 10-K for details on variations between 2021 and 2020. ​ Operating income: ​ 2022-2021: Operating income in 2022 fell $28.2 million YoY, which primarily reflects the $94.5 million increase in operating costs and expenses, which was partially offset by a $66.3 million increase in sales. ​ Please see Management´s Discussion and Analysis of Financial Condition and Results of Operations, Results of Operations, Segment Results Analysis on the 2021 Form 10-K for details on variations between 2021 and 2020. ​ 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 consolidated statement of earnings because the adjustments to intersegment operating revenues and expenses must be taken into account.
The aforementioned was partially offset by higher prices for silver (+7.6%) and sales volumes for copper (+5.0%) and silver (+6.6%). ​ ​ 114 Table of Contents Operating costs and expenses: ​ 2023-2022 : Operating costs and expenses in 2023 increased by $29.1 million compared to 2022; this was principally due to: ​ ​ ​ ​ ​ ​ Operating costs and expenses for 2022 ($ in millions) $ 605.9 Plus: ​ ​ • Increase in other cost of sales (exclusive of depreciation, amortization and depletion), mainly attributable to: ​ 58.0 ​ - Labor 19.4 ​ ​ ​ - Operations contractors 11.9 ​ ​ ​ - Energy 9.0 ​ ​ ​ - Inventory variance 8.8 ​ ​ ​ - Repairing materials 5.9 ​ ​ ​ - Other net 20.6 ​ ​ ​ - Workers participation (17.6) ​ ​ • Increase in depreciation, amortization and depletion expense. ​ ​ 12.8 • Increase in exploration expenses. ​ ​ 3.2 • Increase in selling, general and administrative expenses. ​ 0.2 Less: ​ ​ ​ • Decrease in cost of metals purchased from third parties. ​ ​ (45.1) Operating costs and expenses for 2023 ($ in millions) ​ $ 635.0 ​ ​ 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 consolidated statement of earnings because the adjustments to intersegment operating revenues and expenses must be taken into account.
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. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Variance Copper Sales (million pounds) ​ 2022 2021 2020 2022 - 2021 2021 - 2020 Refined (including SX‑EW) ​ 1,046.7 ​ 893.4 ​ 1,069.6 ​ 153.3 (176.2) ​ Rod ​ 411.5 ​ 470.3 ​ 389.0 ​ (58.8) 81.3 ​ Concentrates and other ​ 462.2 ​ 689.2 ​ 847.3 ​ (227.0) (158.1) ​ Total ​ 1,920.4 ​ 2,052.9 ​ 2,305.9 ​ (132.5) (253.0) ​ ​ The table below provides our copper sales volume by type of product as a percentage of our total copper sales volume: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended December 31, ​ Copper Sales by product type 2022 2021 2020 Refined (including SX‑EW) 54.5 % 43.5 % 46.4 % Rod 21.4 % 22.9 % 16.9 % Concentrates and other 24.1 % 33.6 % 36.7 % Total 100.0 % 100.0 % 100.0 % ​ OPERATING COSTS AND EXPENSES ​ The table below summarizes the production cost structure by major components for the three years ended 2022 as a percentage of total production cost: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended December 31, ​ ​ 2022 2021 ​ 2020 ​ Power 16.7 % 17.1 % 16.8 % Labor 10.8 % 13.4 % 13.5 % Fuel 16.8 % 14.4 % 11.2 % Maintenance 19.6 % 20.1 % 22.6 % Operating material 20.1 % 17.2 % 17.4 % Other 16.0 % 17.8 % 18.5 % Total 100.0 % 100.0 % 100.0 % ​ 107 Table of Contents 2022-2021: Operating costs and expenses in 2022 increased $743.1 million, compared to 2021, primarily due to: ​ ​ ​ ​ ​ ​ ​ ​ Operating cost and expenses for 2021 $ 4,869.0 ​ Less: ​ ​ ​ ​ • Decrease in depreciation, amortization and depletion expense.
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. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Variance Copper Sales (million pounds) ​ 2023 2022 2021 2023 - 2022 2022 - 2021 Refined (including SX‑EW) ​ 1,064.1 ​ 1,046.7 ​ 893.4 ​ 17.4 153.3 ​ Rod ​ 338.0 ​ 411.5 ​ 470.3 ​ (73.5) (58.8) ​ Concentrates and other ​ 559.7 ​ 462.2 ​ 689.2 ​ 97.5 (227.0) ​ Total ​ 1,961.8 ​ 1,920.4 ​ 2,052.9 ​ 41.4 (132.5) ​ ​ The table below provides our copper sales volume by type of product as a percentage of our total copper sales volume: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended December 31, ​ Copper Sales by product type 2023 2022 2021 Refined (including SX‑EW) 54.2 % 54.5 % 43.5 % Rod 17.2 % 21.4 % 22.9 % Concentrates and other 28.5 % 24.1 % 33.6 % Total 100.0 % 100.0 % 100.0 % ​ ​ OPERATING COSTS AND EXPENSES ​ The table below summarizes the production cost structure by major components for the three years ended 2023 as a percentage of total production cost: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended December 31, ​ ​ 2023 2022 ​ 2021 ​ Power 13.3 % 16.7 % 17.1 % Labor 11.6 % 10.8 % 13.4 % Fuel 15.7 % 16.8 % 14.4 % Maintenance 21.4 % 19.6 % 20.1 % Operating material 19.6 % 20.1 % 17.2 % Other 18.4 % 16.0 % 17.8 % Total 100.0 % 100.0 % 100.0 % ​ 109 Table of Contents 2023-2022: Operating costs and expenses in 2023 increased $91.4 million, compared to 2022, primarily due to: ​ ​ ​ ​ ​ ​ ​ ​ Operating cost and expenses for 2022 ($ in millions) $ 5,612.1 ​ Plus: ​ ​ ​ ​ • Increase in other cost of sales (exclusive of depreciation, amortization and depletion), which is mainly attributable to: 159.5 ​ ​ - Repairing materials, principally heavy equipment spare parts 126.6 ​ ​ ​ ​ - Labor costs 62.7 ​ ​ ​ ​ - Operating contractors 60.6 ​ ​ ​ ​ - Inventory variance 36.8 ​ ​ ​ ​ - Sales expenses 36.0 ​ ​ ​ ​ - Fuel 27.7 ​ ​ ​ ​ - Water 26.3 ​ ​ ​ ​ - Workers participation (123.1) ​ ​ ​ ​ - Energy costs (73.2) ​ ​ ​ ​ - Natural gas (17.6) ​ ​ ​ ​ - Other net (3.3) ​ ​ ​ • Increase in depreciation, amortization and depletion expense. 37.3 ​ • Increase in exploration expense. ​ 13.3 ​ • Increase in selling, general and administrative expenses. ​ 2.2 ​ Less: ​ ​ ​ ​ • Decrease in volume and cost of metals purchased from third parties. ​ ​ (120.9) ​ Operating cost and expenses for 2023 ($ in millions) ​ $ 5,703.5 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Variance NON ‑ OPERATING INCOME (EXPENSE) 2023 2022 2021 2023 - 2022 2022 - 2021 Interest expense ​ $ (376.3) ​ $ (387.1) ​ $ (387.9) ​ $ 10.8 ​ $ 0.8 Capitalized interest ​ 49.6 ​ 47.0 ​ 30.8 ​ 2.6 ​ 16.2 Other income (expense) ​ 3.6 ​ 117.1 ​ (18.4) ​ (113.5) ​ 135.5 Interest income ​ 86.6 ​ 35.0 ​ 7.2 ​ 51.6 ​ 27.8 Total non‑operating income (expense) ​ $ (236.5) ​ $ (188.0) ​ $ (368.3) ​ $ (48.5) ​ $ 180.3 ​ 2023-2022 : Non-operating income and expense were a net expense of $236.5 million in 2023, compared to a net expense of $188.0 million in 2022.
Michiquillay will become one of Peru´s largest copper mines and 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. ​ In 2021, the Company signed Social Agreements with the Michiquillay and the Encañada Communities.
Michiquillay will become one of Peru´s largest copper mines and 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. ​ Project update: As of December 31, 2023, we had drilled 63,000 meters and obtained 20,137 core samples for chemichal analysis.
It constitutes the main global reference for environmental reporting standards. 103 Table of Contents CRITICAL ACCOUNTING POLICIES AND ESTIMATES ​ Our significant accounting policies are discussed in Note 2 “Summary of Significant Accounting Policies” of the Notes to Consolidated Financial Statements, included in Item 8 “Financial Statements and Supplementary Data” of this Annual Report. ​ 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.
We are currently implementing a Diversity and Inclusion Strategic Plan, which focuses primarily on capacity building; communication campaigns; revision of human resources processes to promote greater participation and retention of women; and physical changes to working areas to address women’s needs. ​ CRITICAL ACCOUNTING POLICIES AND ESTIMATES ​ Our significant accounting policies are discussed in Note 2 “Summary of Significant Accounting Policies” of the Notes to Consolidated Financial Statements, included in Item 8 “Financial Statements and Supplementary Data” of this Annual Report. ​ 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.
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.
The estimated capital budget for the project is $1.4 billion. ​ The Company has been consistently working to promote the welfare of the population of the Islay province. As part of these efforts, we have implemented successful social programs in education, healthcare and productive development to improve the quality-of-life in the region.
Additionally, from day one of our operations, we will generate significant contributions to revenues in the Arequipa region. ​ Tia Maria’s project budget is approximately $1.4 billion, of which $329.8 million had been invested as of December 31, 2022 (Property net book value is $294.4 million). ​ Potential projects: ​ We have a number of other projects that we may develop in the future.
Additionally, from day one of our operations, we will generate significant contributions to revenues in the Arequipa region. ​ ​ Potential projects: ​ We have a number of other projects that we may develop in the future.
See Item 1 “Business—Cautionary Statement.” ​ 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.
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.
This decrease was attributable to a decrease in sales volumes of copper (-2.0%) and molybdenum (-3.1%) and to a decrease in the prices for copper (-5.4% – LME) and silver (-13.6%).
This decrease was driven by lower copper (-3.8% - LME) and zinc (-24.1%) prices, along with a reduction in the sales volumes of silver (-4.3%) and zinc (-1.4%). This impact was partially offset by increased sales volumes for copper (+2.2%) and molybdenum (+2.3%) and by better prices for molybdenum (+27.5%) and silver (+7.6%).
The effect of this change was an increase in the asset retirement obligation of $269.3 million, which was recorded in December 2020. 104 Table of Contents In 2022, after a detailed review of their closing activities, the Company recorded an adjustment in its asset retirement obligation provision of $43.3 million for Mexico and a $59.5 million for Peru. ​ Asset retirement obligations are further discussed in Note 10 “Asset Retirement Obligation” to the consolidated financial statements included herein. ​ Revenue Recognition : For certain of our sales of copper and molybdenum products, customer contracts allow for pricing based on a month subsequent to shipping, in most cases within the following three months and in a few cases, in a period that can exceed three months.
Any such increases in future costs could materially impact the amounts charged to operations for reclamation and remediation. ​ Asset retirement obligations are further discussed in Note 10 “Asset Retirement Obligation” to the consolidated financial statements included herein. ​ Revenue Recognition : For certain of our sales of copper and molybdenum products, customer contracts allow for pricing based on a month subsequent to shipping, in most cases within the following three months and in a few cases, in a period that can exceed three months.
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 project includes an open-pit mine with a combined concentrator and SX-EW operations.
In both questionnaires we achieved “B” result (third best score on a scale of eight levels), which is one level above the mining sector average score and the North America region overall score. ​ Additionally, given the importance of water for our operations and in the broader perspective of climate change, the Company appointed a Water Resources Director at the executive level.
In both questionnaires we achieved “B” result (third best score on a scale of eight levels), which is one level above the mining sector average score and the North America region overall score. ​ Additionally, we have participated in the sustainability evaluation carried out by S&P Global through the CSA since 2020.
These include, but are not limited to, the following: ​ ● Sales structure: In the last three years, approximately 79.0% of our revenues have come from the sale of coppe; 10.0% from molybdenum; 5.0% from silver; 3.0% from zinc; and 3.0% from various other products, including gold, sulfuric acid and other materials. ​ ● Copper: In the last quarter of 2022, the LME copper price decreased from an average of $4.40 per pound in the fourth quarter of 2021 to $3.63 (-17.5%), reflecting concerns about a possible recession in the US and Europe, that were partially offset by good news on a possible Chinese recovery.
These include, but are not limited to, the following: ​ ● Sales structure: In the last three years, approximately 77.6% of our revenues came from the sale of copper; 10.9% from molybdenum; 4.2% from silver; 3.1% from zinc; and 4.2% from various other products, including gold, sulfuric acid and other materials. ​ ● Copper: In 2023, representing approximately 76.7% of our sales, the LME copper price increased from an average of $ 3.63 per pound in the fourth quarter of 2022 to $ 3.71 (+2.2%) in the same period of 2023 At the beginning of the last quarter of 2023, we were expecting a market surplus for this year.
This decrease was driven by lower copper (-6.5%), molybdenum (-13.4%) and silver (-1.9%) sales volumes, and by a drop in copper (-5.4% - LME) and silver (-13.6%) prices; this effect was slightly offset by an increase in zinc (+10.5%) sales volumes and by higher prices for molybdenum (+20.0%) and zinc (+16.2%).
This decrease was influenced by lower copper (-3.8% - LME) and zinc (-24.1%) prices, along with a reduction in the sales volumes of silver (-4.3%) and zinc (-1.4%). The aforementioned was partially offset by higher sales volumes for copper (+2.2%) and molybdenum (+2.3%) and an uptick in prices for molybdenum (+27.5%) and silver (+7.6%).
This decrease was due to a reduction in production at our Toquepala (-27.8%; lower grades), Cuajone (-13.5%; lower recovery) and La Caridad (-6.3%; lower recovery) mines; this was offset by an increase in production at our Buenavista operations (+2.8%). ​ Zinc production fell 10.4% in 2022, driven by decreases in production at our Charcas (-16.0%) and Santa Barbara (-11.0%) operations due to lower ore grades. ​ Mined silver production fell 2.1% in 2022 in YoY terms; this was mainly due to a decrease in production at our Toquepala (17.2%), Cuajone (-14.6%) and La Caridad (-6.3%) operations, which was partially offset by an increase in production at the Buenavista (+9.1%) and IMMSA (+2.4%) operations. ​ Please see Management´s Discussion and Analysis of Financial Condition and Results of Operations, Key Matters, Production on the 2021 Form 10-K for details on variations between 2021 and 2020. ​ Operating Cash Costs: An overall benchmark used by us and a common industry metric to measure performance is operating cash costs per pound of copper produced.
This increase was due to higher production at all our mines, with the exception of Toquepala mine (-17.8%), where grades and recoveries dropped. ​ Mined zinc production rose 9.2 % in 2023, driven by increases in production at our Santa Barbara (+29.0%) and Charcas (+9.0%) mines due to higher grades. ​ Mined silver production fell 0.8 % in 2023 in YoY terms; this was mainly due to lower production at our Mexican operations, which was partially offset by an increase in production at our Peruvian operations. ​ Operating Cash Costs: An overall benchmark used by us and a common industry metric to measure performance is operating cash costs per pound of copper produced.
Zinc represented 2.7% of our sales in 2022. ​ ● Production: For 2023, we expect our copper production to reach 925,800 tonnes, an increase of 3.5% over final production in 2022.
Zinc represented 3.0% of our sales in 2023. ​ ● Production: For 2024, we expect our copper production to reach 935,900 tonnes, an increase of 2.7 % over final production in 2023. Last year we drove our Pilares project to full capacity and initiated ramp-up at the Buenavista zinc concentrator.
Molybdenum prices averaged $18.61 per pound in 2022, compared to $15.51 in 2021, a 20.0% increase. ​ Regarding this by-product, we believe that prices will be supported by global supply shortages and strong demand in China and the U.S. ​ ● Silver: We believe that silver prices will have support due to its industrial uses as well as being perceived as a value shelter in times of economic uncertainty.
Molybdenum prices averaged $23.73 per pound in 2023, compared to $18.61 in 2022, a 27.5% increase. ​ For 2024, we believe that prices will hold at the current level of about $19.00 per moly pound reflecting the supply/demand dynamics in a context of lower Asian production. ​ ● Silver: We believe that silver prices will have support due to its industrial uses as well as being perceived as a value shelter in times of economic uncertainty.
For further information on our disclosure on Human Capital Resources, see the section included in Part I, Item 1 of this Annual Report. ​ ​ CLIMATE CHANGE ​ SCC recognizes the importance and urgency of tackling climate change, and the Company is committed to support the objective of the Paris Agreement on climate change, preserve the environment, minimize the environmental footprint of our operations, and efficiently manage climate-related risks and opportunities.
During this event, 17 original short films, which were produced by some of the 747 students from communities that participated in the workshop, were screened. ​ CLIMATE CHANGE ​ SCC recognizes the importance and urgency of tackling climate change, and the Company is committed to support the objective of the Paris Agreement on climate change, preserve the environment, minimize the environmental footprint of our operations, and efficiently manage climate-related risks and opportunities.
For further details please see Item 5 “Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities—SCC common stock repurchase plan.” ​ Dividend: On January 26, 2023, the BOD authorized a dividend of $1.0 per share paid on March 1, 2023 to shareholders of record at the close of business on February 14, 2023. ​ FINANCING ​ Our total debt at December 31, 2022 was $6,251.2 million, compared to $6,547.6 million at December 31, 2021, net of the unamortized discount and issuance costs of notes issued under par for $100.0 million and $103.6 million as of December 31, 2022 and 2021 respectively.
Earnings of the Company’s Peruvian branch are not subject to transition taxes since they are taxed in the United States on a current basis. ​ Dividend: On January 25, 2024, the BOD authorized a dividend of $0.80 per share paid on February 29, 2024, to shareholders of record at the close of business on February 13, 2024. ​ ​ FINANCING ​ Our total debt at December 31, 2023 was $ 6,254.6 million, compared to $6,251.2 million at December 31, 2022, net of the unamortized discount and issuance costs of notes issued under par for $96.5 million and $100.0 million as of December 31, 2023 and 2022 respectively.
Additionally, we have a commitment to purchase power for our Mexican operations from MGE, a subsidiary of Grupo Mexico through 2032. See Note 13 “Commitment and Contingencies—Other commitments”. ​ Our long-term estimated power costs are subject to change as energy generation costs change and our forecasted power requirements through the life of the agreements change.
See Note 13 “Commitment and Contingencies—Other commitments”. ​ Our long-term estimated power costs are subject to change as energy generation costs change and our forecasted power requirements through the life of the agreements change. In addition, as of December 31, 2023, the Company has committed approximately $348.2 million for the development of its capital investment projects.
This result was partially offset by an increase in the by-product revenue credits. ​ Please see Management´s Discussion and Analysis of Financial Condition and Results of Operations, Key Matters, Operating Cash Costs on the 2021 Form 10-K for details on variations between 2021 and 2020. ​ 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, especially for copper, molybdenum, zinc and silver. ​ We are subject to market risks arising from the volatility of copper and other metals prices.
Our cash cost per pound net of by-product 97 Table of Contents revenues for 2023 was 32.6% above the figure for the same period of 2022 and was mainly attributable to an increase in the production cost of 16.2 cents per pound and a reduction of 8 cents in by-product revenue credits. ​ 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, especially for copper, molybdenum, zinc and silver. ​ We are subject to market risks arising from the volatility of copper and other metals prices.
This is 6.3% higher than in 2021, and represented 36.2% of net income. Our growth program to develop the full production potential of our Company is underway.
For 2025 and the coming years, we expect to produce over 170,000 tons of zinc per year on average. ​ ● Capital investments: Capital investments were $1,008.6 million for 2023. This is 6.3% higher than in 2022, and represented 41.2% of net income. Our growth program to develop the full production potential of our Company is underway.
The Company has completed the environmental baseline study for the mine and industrial facilities and is reviewing the basic engineering analysis to request the environmental impact permits. ​ Los Chancas—Apurimac: This greenfield project, located in Apurimac, Peru, is a copper and molybdenum porphyry deposit.
The Company is currently preparing studies for the port, power lines, townsites and auxiliary facilities. ​ Los Chancas—Apurimac: This greenfield project, located in Apurimac, Peru, is a copper and molybdenum porphyry deposit.
We expect to produce mineral for the Caridad concentrator at full capacity in the second quarter of 2023. 97 Table of Contents El Pilar - Sonora: This low-capital intensity copper greenfield project is strategically located in Sonora, Mexico, approximately 45 kilometers from our Buenavista mine.
Consequently, this will be the last time that we report on Pilares as a project. ​ El Pilar - Sonora: This low-capital intensity copper greenfield project is strategically located in Sonora, Mexico, approximately 45 kilometers from our Buenavista mine.
The $180.3 million decrease in net expense in 2022 was mainly due to: ​ ● $135.5 million decrease in other expense, net, which includes $25.2 million of insurance recovery from Carla Lacey case, $8.2 million of a reimbursement from SUNAT in Peru, $23.6 million adjustment for excess provisions in previous years, $10.6 million of lower rain damage expenses in Peru and $75.9 million of insurance recovery in Mexico. ● $0.8 million decrease in interest expense, ● $16.2 million increase in capitalized interest; which was partially offset by a ● $27.8 million increase in interest income. ​ Please see Management´s Discussion and Analysis of Financial Condition and Results of Operations, Results of Operations on the 2021 Form 10-K for details on variations between 2021 and 2020. ​ Income taxes ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ ​ December 31, ​ ​ 2022 2021 ​ 2020 ​ Provision for income taxes ($ in millions) ​ $ 1,596.1 ​ $ 2,299.2 ​ $ 1,174.4 ​ Effective income tax rate ​ 37.6 % ​ 40.4 % ​ 42.8 % ​ The income tax provision includes Peruvian, Mexican and U.S. federal income taxes. ​ 108 Table of Contents Components of income tax provision for 2022, 2021 and 2020 include the following ($ in millions): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2022 2021 2020 Statutory income tax provision ​ $ 1,361.6 ​ $ 1,874.6 ​ $ 1,020.9 Peruvian royalty ​ 35.8 ​ 97.8 ​ 31.4 Mexican royalty ​ 142.3 ​ 212.8 ​ 72.1 Peruvian special mining tax ​ 56.4 ​ 114.0 ​ 50.0 Total income tax provision ​ $ 1,596.1 ​ $ 2,299.2 ​ $ 1,174.4 ​ The decrease in the effective income tax rate in 2022 compared to the same period in 2021 was primarily attributable to adjustments made to the deferred tax liability in the Peruvian jurisdiction.
This was partially offset by ● $13.4 million decrease in interest expense net of capitalized interest and ● $51.6 million increase in interest income. ​ ​ Income taxes ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ ​ December 31, ​ ​ 2023 2022 ​ 2021 ​ Provision for income taxes ($ in millions) ​ $ 1,518.9 ​ $ 1,596.1 ​ $ 2,299.2 ​ Effective income tax rate ​ 38.4 % ​ 37.6 % ​ 40.4 % ​ The income tax provision includes Peruvian, Mexican and U.S. federal income taxes. ​ 110 Table of Contents Components of income tax provision for 2023, 2022 and 2021 include the following ($ in millions): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2023 2022 2021 Statutory income tax provision ​ $ 1,284.0 ​ $ 1,361.6 ​ $ 1,874.6 Peruvian royalty ​ 44.6 ​ 35.8 ​ 97.8 Mexican royalty ​ 118.6 ​ 142.3 ​ 212.8 Peruvian special mining tax ​ 71.7 ​ 56.4 ​ 114.0 Total income tax provision ​ $ 1,518.9 ​ $ 1,596.1 ​ $ 2,299.2 ​ The increase in the effective income tax rate in 2023 compared to the same period in 2022 was primarily attributable to uncertain tax positions recorded in the U.S., Peruvian and Mexican jurisdictions. ​ Equity earnings of affiliate ​ In 2023, 2022 and 2021 we recognized $(2.2) million, $(3.7) million and $13.6 million in equity earnings, respectively, which were associated with our 44.2% interest in the Tantahuatay mine. ​ Net Income attributable to the non-controlling interest ​ Net income attributable to the non-controlling interest in 2023 and in 2022 was $9.5 million, while in 2021, it was $14.1 million in 2021. ​ Net Income attributable to SCC ​ Our net income attributable to SCC in 2023 was $2,425.2 million, compared to $2,638.5 million in 2022.
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.
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.
This 8.1% reduction was driven primarily by a decrease in sales volume for copper (-6.5%), silver (-1.9%) and molybdenum (-13.4%) due to a lower production, and secondarily by a drop in prices for copper (-5.4%) and silver (-13.6%).
This decrease was primarily influenced by a reduction in copper prices (-3.8% - LME) and lower sales volumes for molybdenum (-11.5%) and silver (-3.3%). The impact of these factors was partially mitigated by an uptick in sales volumes for copper (+1.6%) and higher prices for molybdenum (+27.5%) and silver (+7.6%).
As of December 31, 2022, we have invested most of the $416 million budget. ​ Pilares - Sonora: Located six kilometers from La Caridad, this project consists of an open-pit mine operation with an annual production capacity of 35,000 tonnes of copper in concentrate.
We expect to produce 54,500 tonnes of zinc and 11,900 tonnes of copper in 2024 and an average of 90,200 tonnes of zinc and 20,700 of copper per year in the next five years. ​ 99 Table of Contents Pilares - Sonora: Located six kilometers from La Caridad, this is currently an open-pit mine operation with an annual production capacity of 35,000 tonnes of copper in concentrate.
Please consult Grupo Mexico Sustainability Report at https://www.gmexico.com/en/Pages/development.aspx to further information on SCC’s performance with regard to health and safety. ​ In 2022, the Mexican Government awarded our Caridad metallurgical operation, the distinction of “Safe and Healthy Workplace” for implementing improvements on safety, health and wellbeing of our workers while bolstering the productivity and quality of the workplace.
Please consult Grupo Mexico Sustainability Report at https://www.gmexico.com/en/Pages/development.aspx for further information on SCC’s performance with regard to health and safety. ​ In 2023, our unit in Ilo, located in Moquegua, Peru, achieved the first place in the Smelter and Refinery category of the XXVI Concurso Nacional de Seguridad Minera (National Competition for Mining Safety) organized by Instituto de Seguridad Minera (the Institute of Mining Safety).

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Mexican peso ​ $ 23.2 ​ The net monetary position is net of those assets and liabilities that are sol or peso denominated as of December 31, 2022. ​ Short-term investments: ​ For additional information on our trading securities and available-for-sale investments, refer to Note 3 Short-term Investments in Part II, Item 8 of this annual report. 119 Table of Contents Derivative Instruments: ​ From time to time, we use derivative instruments to manage our cash flows exposure to changes in commodity prices.
Mexican peso ​ $ 27.5 ​ The net monetary position is net of those assets and liabilities that are sol or peso denominated as of December 31, 2023. ​ Short-term investments: ​ For additional information on our trading securities and available-for-sale investments, refer to Note 3 Short-term Investments in Part II, Item 8 of this annual report. 120 Table of Contents Derivative Instruments: ​ From time to time, we use derivative instruments to manage our cash flows exposure to changes in commodity prices.
Recent inflation and exchange rate variances for the three years ended December 31, 2022 are provided in the table below: ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ ​ ​ December 31, ​ ​ 2022 2021 2020 ​ Peru: ​ Peruvian inflation rate 8.5 % 6.4 % 2.0 % ​ ​ ​ ​ ​ ​ ​ ​ Initial exchange rate 3.998 3.624 3.317 ​ Closing exchange rate 3.820 3.998 3.624 ​ Appreciation/(devaluation) 4.5 % (10.3) % (9.3) % ​ ​ ​ ​ ​ ​ ​ ​ Mexico: ​ Mexican inflation rate 7.8 % 7.4 % 3.2 % ​ ​ ​ ​ ​ ​ ​ ​ Initial exchange rate 20.584 19.949 18.845 ​ Closing exchange rate 19.362 20.584 19.949 ​ Appreciation/(devaluation) 5.9 % (3.2) % (5.9) % ​ Change in monetary position: ​ Assuming an exchange rate variance of 10% at December 31, 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.
Recent inflation and exchange rate variances for the three years ended December 31, 2023 are provided in the table below: ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ ​ ​ December 31, ​ ​ 2023 2022 2021 ​ Peru: ​ Peruvian inflation rate 3.2 % 8.5 % 6.4 % ​ ​ ​ ​ ​ ​ ​ ​ Initial exchange rate 3.820 3.998 3.624 ​ Closing exchange rate 3.713 3.820 3.998 ​ Appreciation/(devaluation) 2.8 % 4.5 % (10.3) % ​ ​ ​ ​ ​ ​ ​ ​ Mexico: ​ Mexican inflation rate 4.7 % 7.8 % 7.4 % ​ ​ ​ ​ ​ ​ ​ ​ Initial exchange rate 19.362 20.584 19.949 ​ Closing exchange rate 16.894 19.362 20.584 ​ Appreciation/(devaluation) 12.7 % 5.9 % (3.2) % ​ Change in monetary position: ​ Assuming an exchange rate variance of 10% at December 31, 2023, 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.
The Company did not identify any ineffective portions of these derivatives. ​ As of December 31, 2022, we held no derivative instruments. ​ ​ 120 Table of Contents
The Company did not identify any ineffective portions of these derivatives. As of December 31, 2023, the Company held no derivative instruments. ​ ​ 121 Table of Contents
Peruvian sol ​ $ 14.9 Devaluation of 10% in U.S. dollar vs. Peruvian sol ​ $ (18.2) Appreciation of 10% in U.S. dollar vs. Mexican peso ​ $ (19.0) Devaluation of 10% in U.S. dollar vs.
Peruvian sol ​ $ 18.3 Devaluation of 10% in U.S. dollar vs. Peruvian sol ​ $ (22.3) Appreciation of 10% in U.S. dollar vs. Mexican peso ​ $ (22.5) Devaluation of 10% in U.S. dollar vs.
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 ​ 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.
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 ​ In the third quarter of 2021, the Company acquired two derivative instruments that became effective in November 2021 and expired in March 2022.
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’s objective in using natural gas derivatives was to protect the stability of natural gas costs and manage exposure to natural gas price increases. The Company assessed these derivative instruments as Cash Flow Hedges. As such, the effective portions of said hedges were recorded as earnings in the same period or periods in which the hedged transaction affected earnings.
Removed
To protect natural gas costs from estimated price increases in the past winter season, in the third quarter of 2021, the Company acquired two derivative instruments that began in November 2021 and ended in March 2022. ​ We assessed these derivative instruments as Cash Flow Hedges.

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