# Southern Copper Corp/: Form 10-Q for the period ended Mar 31, 2024

- Company: [Southern Copper Corp/](/companies/scco.md) (CIK 1001838)
- Form: 10-Q
- Filed: 2024-04-30
- Accepted by EDGAR: Apr 30, 2024, 14:48 ET
- Period: 2024-03-31
- Accession: 0001558370-24-006251
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/1001838/000155837024006251/scco-20240331x10q.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/1001838/000155837024006251/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2024-03-31.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2024-01-01 to 2024-03-31 | $2.60bn | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Cost of revenue | 3 months, 2024-01-01 to 2024-03-31 | $1.16bn | us-gaap:CostOfRevenue |
| Selling, general and administrative | 3 months, 2024-01-01 to 2024-03-31 | $30.8m | us-gaap:SellingGeneralAndAdministrativeExpense |
| Operating income | 3 months, 2024-01-01 to 2024-03-31 | $1.19bn | us-gaap:OperatingIncomeLoss |
| Income tax | 3 months, 2024-01-01 to 2024-03-31 | $423.4m | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2024-01-01 to 2024-03-31 | $738.8m | us-gaap:ProfitLoss |
| Diluted EPS | 3 months, 2024-01-01 to 2024-03-31 | $0.95 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2024-01-01 to 2024-03-31 | $0.95 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2024-01-01 to 2024-03-31 | 773,100,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 3 months, 2024-01-01 to 2024-03-31 | $659.7m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 3 months, 2024-01-01 to 2024-03-31 | $213.8m | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Dividends paid | 3 months, 2024-01-01 to 2024-03-31 | $618.5m | us-gaap:PaymentsOfDividendsCommonStock |
| Cash and equivalents | at 2024-03-31 | $1.25bn | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2024-03-31 | $4.44bn | us-gaap:AssetsCurrent |
| Total assets | at 2024-03-31 | $16.79bn | us-gaap:Assets |
| Current liabilities | at 2024-03-31 | $1.34bn | us-gaap:LiabilitiesCurrent |
| Long-term debt | at 2024-03-31 | $6.26bn | us-gaap:LongTermDebtNoncurrent |
| Shareholders' equity | at 2024-03-31 | $7.54bn | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 58,353 characters.

*The following discussion provides information that management believes is relevant to an assessment and understanding of the condensed consolidated financial condition and results of operations of Southern Copper Corporation and its subsidiaries (collectively, “SCC”, “the Company”, “our”, and “we”). This item should be read in conjunction with our interim unaudited Condensed Consolidated Financial Statements and the notes thereto included in this quarterly report. Additionally, the following discussion and analysis should be read in conjunction with the Management Discussion and Analysis of Financial Condition and Results of Operations and the Consolidated Financial Statements included in Part II of our annual report on Form 10-K for the year ended December 31, 2023.*

EXECUTIVE OVERVIEW

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

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

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

- Sales structure: In the first quarter of 2024, approximately 78.6% of our revenue came from the sale of copper; 10.5% from molybdenum; 4.3% from silver; 2.7% from zinc; and 3.9% from various other products, including gold, sulfuric acid, and other materials.
- Copper: In the first quarter of 2024, the LME copper price decreased from an average of $4.05 per pound in the first quarter of 2023 to $3.83 (-5.4%). In addition to reports on significant reductions in projections for expected global copper production, we are also seeing strong market demand on the back of a resilient US economy and new demand from AI and decarbonization technologies. We believe the latter will play a preponderant role in driving demand for copper and should sustain attractive copper prices in the long run.

It is important to emphasize that copper plays a leading role in the global shift to clean energy, which correlates positively with our assertion that the underlying demand for copper will be strong in the long-term. In this scenario, we believe the current cycle of low prices should be short-lived.

- Molybdenum: Accounted for 10.5% of our sales in the first quarter of 2024 and is currently our most important by-product. Molybdenum prices averaged $19.84 per pound in the first quarter of 2024, compared to $32.04 in the same period of 2023, reflecting a decrease of 38.1%.

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

For the short term, we believe molybdenum prices will have good support due to a market deficit and higher demand coming from the aerospace and defense industries.

- Silver: Represented 4.3% of our sales in the first quarter of 2024. We believe that the prices for silver will be supported by intensive level of industrial use.
- Zinc: Average zinc prices dropped 21.8% in the first quarter of 2024 versus the figure in 2023. We believe zinc has very good long-term fundamentals due to high levels of industrial consumption and expected production. Zinc represented 2.7% of our sales in the first quarter of 2024.
- Production: For 2024, we expect to produce 948,800 tonnes of copper, an increase of 4.1% over 2023’s final results. Last year we drove our Pilares project to full capacity and initiated ramp-up at the Buenavista zinc concentrator. For 2024, we expect these two projects to contribute 43,800 tonnes of copper.

We also expect to produce 26,100 tonnes of molybdenum, which represents an increase of 2.4% over our 2023 production level. In 2024, we expect to produce 20.5 million ounces of silver, an increase of 11.4% compared to 2023 production results. Additionally, we expect to produce 120,300 tonnes of zinc from our mines, which represents an increase of 83.7% compared to our 2023 production level. This growth will be driven by the Buenavista Zinc concentrator. We expect this facility to produce 54,500 tonnes of zinc in 2024 and an average of 90,200 tonnes of zinc and 20,000 tonnes of copper per year over the next five years.

- Capital Investments: In the first quarter of 2024, we spent $213.8 million on capital investments; this represented 29.0% of net income and a decrease of 10.2% compared to the amount registered for the same period in 2023.

KEY MATTERS

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

**Earnings:** The table below highlights key financial and operational data of our Company for the three-month period ended March 31, 2024 and 2023 (in millions, except copper price, percentages and per share amounts):

| ​ ​ ​ | ​ ​ | ​ ​ ​ Three months ended March 31, 2024 | ​ | ​ ​ 2023 | ​ | ​ ​ Variance | ​ ​ | ​ ​ % Change | ​ ​ |
| --- | --- | ---: | --- | ---: | --- | ---: | --- | ---: | --- |
| Copper price LME | ​ | ​ 3.83 | ​ | ​ 4.05 | ​ | ​ (0.22) |  | (5.4)% | ​ |
| Pounds of copper sold | ​ | ​ 518.5 | ​ | ​ 504.3 | ​ | ​ 14.2 |  | 2.8% | ​ |
| Net sales | ​ | $2,599.8 | ​ | $2,793.9 | ​ | $(194.1) |  | (6.9)% | ​ |
| Operating income | ​ | $1,189.7 | ​ | $1,353.7 | ​ | $(164.0) |  | (12.1)% | ​ |
| Net income attributable to SCC | ​ | $736.0 | ​ | $813.2 | ​ | $(77.2) | ​ | (9.5)% | ​ |
| Earnings per share | ​ | $0.95 | ​ | $1.05 | ​ | $(0.10) | ​ | (9.5)% | ​ |
| Dividends per share | ​ | $0.80 | ​ | $1.00 | ​ | $(0.20) | ​ | (20.0)% | ​ |

Net sales in the first quarter of 2024 totaled $2,599.8 million, which represented a slight decrease of 6.9% compared to net sales in the same period of 2023. This decrease was influenced by lower prices of copper (-5.4% - LME), molybdenum (-38.1%) and zinc (-21.8%) and by a reduction in the sales volumes of silver (-3.4%) and zinc (-3.1%). The aforementioned drop in net sales was partially offset by higher sales volumes for copper (+2.8%) and molybdenum (+8.4%) and by an uptick in prices for silver (+3.6%).

Net income in the first quarter of 2024, attributable to SCC, was $736.0 million, reflecting a 9.5% decrease from the same period in 2023. This decline was primarily driven by a drop in sales due to low prices in the period, which was slightly offset by a 3.1% drop in the costs of sales.

**Production:** The table below highlights our mine production data for the three-month period ended March 31, 2024 and 2023:

| ​ ​ ​ ​ ​ | ​ ​ Three months ended March 31, 2024 | ​ ​ 2023 | ​ ​ Variance | ​ ​ ​ ​ ​ % Change ​ ​ |
| --- | ---: | ---: | ---: | ---: |
| Copper (in million pounds) | 529.6 | 492.2 | 37.4 | 7.6% |
| Molybdenum (in million pounds) | 15.6 | 14.2 | 1.4 | 9.5% |
| Silver (in million ounces) | 4.8 | 4.4 | 0.4 | 8.4% |
| Zinc (in million pounds) | 58.1 | 33.2 | 24.9 | 74.9% |

The table below highlights our mine production data for the three-month period ended March 31, 2024 and 2023:

| ​ ​ Copper (in million pounds): | ​ ​ ​ | ​ ​ Three Months Ended March 31, 2024 | ​ ​ 2023 | ​ ​ Variance | ​ ​ ​ ​ ​ % Change ​ ​ |
| --- | --- | ---: | ---: | ---: | ---: |
| Toquepala | ​ | 138.2 | 113.1 | 25.1 | 22.2% |
| Cuajone | ​ | 90.9 | 80.0 | 10.9 | 13.7% |
| La Caridad | ​ | 65.0 | 57.6 | 7.4 | 12.9% |
| Buenavista | ​ | 229.9 | 236.9 | (7.0) | (3.0)% |
| IMMSA | ​ | 5.6 | 4.6 | 1.0 | 22.4% |
| Total mined copper | ​ | 529.6 | 492.2 | 37.4 | 7.6% |

Copper mine production in the first quarter of 2024 increased 7.6% to stand at 529.6 million pounds. This increase was primarily driven by an uptick in production levels at Toquepala (+22.2% due to higher ore grades and recoveries), Cuajone (+13.7% due to an increase in processed mineral), La Caridad (+12.9% due to higher ore grades) and IMMSA (+22.4%; higher ore grades). This was partially offset by a reduction in production at the Buenavista (-3.0%) mine; this result was driven primarily by a drop in SX-EW cathode production and ore grades, which was partially offset by copper production from the new zinc concentrator. Additionally, we reported that our Buenavista operation experienced difficulties with its water supply during the last quarter of 2023. During the first quarter of 2024, we took action to procure the water requirements for this facility. Therefore, we believe we have ensured sufficient provisions to operate our Mexican facilities as forecasted in our annual plan.

Molybdenum production increased 9.5% in the first quarter of 2024 versus the figure in the same period in 2023. This was attributable to higher production at our Toquepala (+58.2%), Cuajone (+4.9%) and Buenavista (+2.6%) mines, which was primarily fueled by an increase in ore grades. This effect was offset mainly by a reduction in production at our La Caridad (-10.8%) mine, which was in turn driven by a drop in ore grades and recoveries.

Silver mine production increased 8.4% in the first quarter of 2024 compared to the same period of 2023. This was attributable to higher production at our Toquepala (+25.0%), La Caridad (+22.9%), Cuajone (+11.7%) and IMMSA (+10.9%) operations in quarter-on-quarter terms. This was slightly offset by a decrease in production at our Buenavista (-9.5%) mine.

Zinc production increased 74.9% in the first quarter of 2024 versus the figure for the same period in 2023. This result was attributable to production start-up at Buenavista zinc concentrator, which produced 9,695 tonnes over the period.

**Operating Cash Costs:** An overall benchmark that we use, which is a common industry metric to measure performance is operating cash costs per pound of copper produced. Operating cash cost is a non-GAAP measure that does not have a standardized meaning and may not be comparable to similarly titled measures provided by other companies. This non-GAAP information should not be considered in isolation or as substitute for measures of performance determined in accordance with GAAP. A reconciliation of our operating cash cost per pound of copper produced to the cost of sales (exclusive of depreciation, amortization and depletion) as presented in the consolidated statement of earnings is presented under the subheading, “Non-GAAP Information Reconciliation” on page 50. We disclose operating cash cost per pound of copper produced, both before and net of by-product revenues.

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

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

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

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

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

Our operating cash cost per pound of copper produced, before and net of by-product revenues, is presented in the table below for the three-month period ended March 31, 2024 and 2023:

### Operating cash cost per pound of copper produced (1)

### (In millions, except cost per pound and percentages)

| ​ ​ ​ | ​ ​ | ​ ​ ​ Three Months Ended March 31, 2024 | ​ | ​ ​ 2023 | ​ | ​ ​ Variance | ​ ​ ​ % Change ​ | ​ ​ ​ |
| --- | --- | ---: | --- | ---: | --- | ---: | ---: | --- |
| Total operating cash cost before by‑product revenues | ​ | $1,079.0 | ​ | $987.7 | ​ | $91.3 | 9.2% | ​ |
| Total by‑product revenues | ​ | $(532.2) | ​ | $(630.6) | ​ | $98.4 | (15.6)% | ​ |
| Total operating cash cost net of by‑product revenues | ​ | $546.8 | ​ | $357.1 | ​ | $189.7 | 53.1% | ​ |
| Total pounds of copper produced(2) | ​ | 510.8 | ​ | 473.0 | ​ | 37.8 | 8.0% | ​ |
| **Operating cash cost per pound before by‑product revenues** | **​** | **$2.11** | **​** | **$2.09** | **​** | **$0.02** | **1.1%** | **​** |
| **By‑products per pound revenues** | **​** | **$(1.04)** | **​** | **$(1.33)** | **​** | **$0.29** | **(21.7)%** | **​** |
| **Operating cash cost per pound net of by‑product revenues** | **​** | **$1.07** | **​** | **$0.76** | **​** | **$0.31** | **40.8%** | **​** |

(1) These are non-GAAP measures. Please see page 50 for reconciliation to GAAP measure.

(2) Net of metallurgical losses.

In the first quarter of 2024, our per-pound cash cost, excluding by-product revenues rose 9.2% year-over-year. This growth was primarily driven by an increase in production costs, which was partially offset by the unit effect generated by a 8.0% increase in pounds of copper produced. Our cash cost per pound net of by-product revenue for the first quarter of 2024 increased 40.8% year-over-year. This was attributable to a decrease in by-product revenue credits this quarter.

**Metal Prices:** The profitability of our operations is dependent on, and our financial performance is significantly affected by, the international market prices for the products we produce, and for copper, molybdenum, zinc and silver in particular.

We are subject to market risks arising from the volatility of copper and other metal prices. For the remaining nine months of 2024, assuming that expected metal production and sales are achieved, tax rates remain unchanged and no effects are generated by potential hedging programs, metal price sensitivity factors would indicate the following change in estimated net income attributable to SCC resulting from metal price changes:

| ​ ​ | ​ | ​ ​ 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) | ​ | $91.7 | ​ | $25.4 | ​ | $16.8 | ​ | $9.9 |

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

Segment information is included in our review of “Results of Operations” in this item and also in Note 13 “Segment and Related Information” of our condensed consolidated financial statements.

**Inflation and Exchange Rate Effect of the Peruvian Sol and the Mexican Peso:** Our functional currency is the U.S. dollar and our revenues are primarily denominated in U.S. dollars. Significant portions of our operating costs are denominated in Peruvian sol and Mexican pesos. Accordingly, when inflation and currency devaluation/appreciation of the Peruvian currency and Mexican currency occur, our operating results can be affected. In recent years, exchange rate volatility has been high but has had a limited effect on our results. Please see Item 3. “Quantitative and Qualitative Disclosures about Market Risk” for more detailed information.

**Capital Investment Programs**: We made capital investments of $213.8 million in the first quarter of 2024, compared to $238.1 million in the same period of 2023. In general, the capital investments and investment projects described below are intended to increase production, decrease costs or address social and environmental commitments.

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

**Projects in Mexico:**

Buenavista Zinc - Sonora: This project is located within the Buenavista deposit, where we have built a new concentrator plant. This facility has a production capacity of 100,000 tonnes of zinc and 20,000 tonnes of copper per year. When operating, the concentrator will double the Company’s zinc production capacity and will provide more than 2,000 jobs on the operating front.

Project update: the capital budget for the project is $439 million, of which $382.9 million had been invested as of March 31, 2024. Concentrator operation began in the first quarter of 2024. 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 20,000 tonnes of copper per year in the next five years.

El Pilar - Sonora: This low-capital intensity copper greenfield project is strategically located in Sonora, Mexico, approximately 45 kilometers from our Buenavista mine. Its copper oxide mineralization contains estimated proven and probable reserves of 317 million tonnes of ore with an average copper grade of 0.249%. We anticipate that El Pilar will operate as a conventional open-pit mine with an annual production capacity of 36,000 tonnes of copper cathodes. This operation will use highly cost efficient and environmentally friendly SX-EW technology. The budget for El Pilar is $310 million.

**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. The drainage works and removal of Eolic material for the main and lateral dam, as well as complementary operational works are completed. We have also installed two cyclone nests for the main dam, which are currently operating. Additionally, purchases are pending for equipment for tailings hauling. We intend to build administrative facilities down the line. This project has a total budget of $165.0 million, of which we have invested $152.3 million as of March 31, 2024.

Tia Maria - Arequipa: This greenfield project, located in Arequipa, Peru, will use state of the art SX-EW technology with the highest international environmental standards to produce 120,000 tonnes of SX- EW copper cathodes per year. The estimated capital budget for the project is $1.4 billion.

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

We reiterate our view that the initiation of construction activities at Tia Maria will generate significant economic opportunities for the Islay province and the Arequipa region. Given the current Peruvian economic situation, it is crucial to move ahead on projects that will stimulate a sustainable growth cycle. We expect to begin the construction phase of the project in the near future. We will make it a priority to hire local labor to fill the 9,000 jobs that we expect to generate during Tia Maria’s construction. Additionally, from day one of our operations, we will generate significant contributions to revenues in the Arequipa region.

### Potential projects:

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

El Arco - Baja California: This is a world-class copper deposit located in the central part of the Baja California peninsula with ore reserves of over 1,230 million tonnes with an average ore grade of 0.40% and 141 million tonnes of leach material with an average ore grade of 0.27%. The project includes an open-pit mine with a combined concentrator and SX-EW operations. Annual production is expected to total 190,000 tonnes of copper and 105,000 ounces of gold.

Project update: The Company has completed the environmental baseline study for the mine, concentrator and industrial facilities and will proceed to submit the Environmental Impact Statement (Manifestacion de Impacto Ambiental “MIA”)

to the Secretary of Environment and Natural Resources “SEMARNAT” to request the respective environmental impact permits. 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. 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. The estimated capital investment is $2,600 million and the project is expected to begin operating in 2030. We continue to engage in social and environmental improvements for the local communities and work on the project´s environmental impact assessment.

Project update: The Company continues to engage in coordinated efforts with the Peruvian authorities to eradicate illegal mining activity. Once this process is completed, we will resume the environmental impact assessment and initiate hydrogeological as well as geotechnical studies. We also will conduct a diamond drilling campaign for 40,000 meters to gather additional information on the characteristics of the Los Chancas deposit.

Michiquillay Project - Cajamarca: In June 2018, Southern Copper signed a contract for the acquisition of the Michiquillay project in Cajamarca, Peru. Michiquillay is a world class mining project with inferred mineral resources of 2,288 million tonnes with an estimated copper grade of 0.43%. When developed, we expect Michiquillay to produce 225,000 tonnes of copper per year (along with by-products of molybdenum, gold and silver) at a competitive cash-cost for an initial mine life of more than 25 years. We estimate an investment of approximately $2.5 billion will be required and expect production start-up by 2032. 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 March 31, 2024, we had drilled 80,000 meters and obtained 27,902 core samples for chemical analysis. Diamond drilling is underway, which will provide data for cross-section interpretation, geological modeling and resource evaluation. We expect to begin hydrogeological and geotechnical studies soon, and will also assess the results of metallurgical testing at the deposit.

The Company continues to work with the Michiquillay and La Encañada communities based on the guidelines of corresponding social agreements.

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

ENVIRONMENTAL, SOCIAL AND GOVERNANCE (“ESG”) PRACTICES

**Performance on ESG assessments conducted by rating agencies.** For the third consecutive year, we were included in S&P Global's Sustainability Yearbook. This means that thanks to our performance in this agency’s Corporate Sustainability Assessment evaluation, we are ranked among the top 15% of the best-rated companies in sustainability in mining and metals. Regarding the ESG Risk Ratings Report evaluation by Sustainalytics, SCC reduced its risk level by improving its score within the medium risk category from 27.5 in 2023 to 23.4 in 2024.

**Climate action.** In the first quarter of 2024, we received clean energy certificates from one of our electricity suppliers in Peru. With this, all the electrical energy we consumed in Peru in 2023 came from renewable sources. Measurements indicate that consumption of renewable electrical energy at SCC increased from 23% to 36% in 2023, which means we have already hit our 2027 target to ensure that 25% of our electricity supply is derived from renewable sources. Over the same period, greenhouse gas emissions dropped 7.5% in 2023 compared to 2022.

**Climate Governance.** Recently, a briefing from Chapter Zero, home of the Climate Governance Initiative, was held for the directors and management of Southern Copper Corporation to inform them about the risks and opportunities associated with climate change. This initiative, developed in collaboration with the World Economic Forum, aims to support non-executive directors and chairs in integrating climate action into their business strategy.

**Exceptional Company.** For the second consecutive year, we received the “Exceptional Company” award in Mexico, presented by the Business Coordinating Council, the Communication Council, and the Institute for the Promotion of Quality. On this occasion, the success of our Educational Center model was recognized after outstanding results were reported for mathematics and Spanish and English languages, which are above the national and regional average for the cohort of two thousand students from the four basic level schools sponsored by the Company in Mexico under a voluntary initiative to benefit our employees.

**Adding educational quality.** We inaugurated the High Performance School (COAR) in Tacna, the Peruvian region where our Toquepala mine operates. This campus houses three hundred outstanding students of the state educational system. Many of these students come from the most vulnerable areas of the region. The COAR facilities will allow them to continue their studies in state-of-the art classrooms, laboratories, libraries, residences and sports areas, thanks to an investment of $26.0 million through the works for taxes modality.

ACCOUNTING ESTIMATES

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

NEW ACCOUNTING DISCLOSURE RULES

The U.S. Securities and Exchange Commission released its final climate disclosure rule in March 2024. It requires that, when material, annual reports and registration statements include disclosures about greenhouse gas emissions under Scope 1 and Scope 2 as well as other climate-related subjects. The requirements for disclosure will begin phasing in for fiscal years beginning on or after January 1, 2025. As we examine the new rule's impacts, we anticipate updating the climate-related disclosures in our Form 10-K for the fiscal year of adoption when defined.

RESULTS OF OPERATIONS

The following highlights key financial results for the three-month period ended March 31, 2024 and 2023:

| ​ ​ ​ Statement of Earnings Data | ​ ​ | ​ ​ Three Months Ended March 31, 2024 | ​ | ​ ​ 2023 | ​ | ​ ​ Variance | ​ | ​ ​ ​ ​ % Change ​ | ​ ​ ​ |
| --- | --- | ---: | --- | ---: | --- | ---: | --- | ---: | --- |
| Net sales | ​ | $2,599.8 | ​ | $2,793.9 | ​ | $(194.1) | ​ | $(6.9)% | ​ |
| Operating costs and expenses | ​ | (1,410.1) | ​ | (1,440.2) | ​ | 30.1 | ​ | (2.1)% | ​ |
| Operating income | ​ | 1,189.7 | ​ | 1,353.7 | ​ | (164.0) | ​ | (12.1)% | ​ |
| Non‑operating income (expense) | ​ | (34.2) | ​ | (50.9) | ​ | 16.7 | ​ | (32.8)% | ​ |
| Income before income taxes | ​ | 1,155.5 | ​ | 1,302.8 | ​ | (147.3) | ​ | (11.3)% | ​ |
| Income taxes | ​ | ​ (423.4) | ​ | ​ (480.5) | ​ | ​ 57.1 | ​ | ​ (11.9)% | ​ |
| Equity earnings of affiliate | ​ | ​ 6.7 | ​ | ​ (6.4) | ​ | ​ 13.1 | ​ | ​ (204.7)% | ​ |
| Net income attributable to non‑controlling interest | ​ | (2.8) | ​ | (2.7) | ​ | (0.1) | ​ | 3.7% | ​ |
| Net income attributable to SCC | ​ | $736.0 | ​ | $813.2 | ​ | $(77.2) | ​ | $(9.5)% | ​ |

#### NET SALES

Net sales in the first quarter of 2024 totaled $2,599.8 million, which represented a slight decrease of 6.9% compared to net sales in the same period of 2023. This decrease was influenced by the drop reported for prices of copper (-5.4% - LME), molybdenum (-38.1%) and zinc (-21.8%) and by a reduction in the sales volumes of silver (-3.4%) and zinc (-3.1%). The aforementioned was partially offset by higher sales volumes for copper (+2.8%) and molybdenum (+8.4%) and by an uptick in prices for silver (+3.6%).

The table below outlines the average published market metals prices for our metals for the three-month period ended March 31, 2024 and 2023:

| ​ ​ ​ | ​ | ​ ​ Three Months Ended March 31, 2024 | ​ | ​ ​ 2023 | ​ | ​ ​ % Change ​ | ​ ​ ​ |
| --- | --- | ---: | --- | ---: | --- | ---: | --- |
| Copper price ($per pound—LME) | ​ | $3.83 | ​ | $4.05 | ​ | (5.4)% | ​ |
| Copper price ($per pound—COMEX) | ​ | $3.86 | ​ | $4.09 | ​ | (5.6)% | ​ |
| Molybdenum price ($per pound)(1) | ​ | $19.84 | ​ | $32.04 | ​ | (38.1)% | ​ |
| Zinc price ($per pound—LME) | ​ | $1.11 | ​ | $1.42 | ​ | (21.8)% | ​ |
| Silver price ($per ounce—COMEX) | ​ | $23.35 | ​ | $22.53 | ​ | 3.6% | ​ |

(1) Platts Metals Week Dealer Oxide

The table below provides our metal sales as a percentage of our total net sales for the three-month period ended March 31, 2024 and 2023:

| ​ ​ ​ ​ ​ ​ Sales as a percentage of total net sales | ​ ​ Three Months Ended March 31, 2024 | ​ ​ ​ 2023 ​ |
| --- | ---: | ---: |
| Copper | 78.6% | 76.9% |
| Molybdenum | 10.5% | 10.8% |
| Silver | 4.3% | 4.1% |
| Zinc | 2.7% | 3.3% |
| Other by‑products | 3.9% | 4.9% |
| **Total** | 100.0% | 100.0% |

The table below provides our copper sales by type of product for the three-month period ended March 31, 2024 and 2023. The difference in value between products is the level of processing. At the market price, concentrates take a discount since they require smelting and refining processes, while refined and rod copper receive premiums due to their purity and presentation.

| ​ ​ Copper Sales (million pounds) | ​ | ​ Three Months Ended March 31, 2024 | ​ | ​ 2023 | ​ | ​ Variance | ​ | ​ ​ ​ % Change ​ | ​ ​ |
| --- | --- | ---: | --- | ---: | --- | ---: | --- | ---: | --- |
| Refined (including SX‑EW) | ​ | 267.3 | ​ | 281.1 | ​ | (13.8) | ​ | (4.9)% | ​ |
| Rod | ​ | 91.8 | ​ | 90.2 | ​ | 1.6 | ​ | 1.8% | ​ |
| Concentrates and other | ​ | 159.4 | ​ | 133.0 | ​ | 26.4 | ​ | 19.8% | ​ |
| **Total** | ​ | 518.5 | ​ | 504.3 | ​ | 14.2 | ​ | 2.8% | ​ |

The table below provides our copper sales volume by type of product as a percentage of our total copper sales volume for the three-month period ended March 31, 2024 and 2023:

| ​ ​ ​ ​ Copper Sales by product type | ​ ​ Three months ended March 31, 2024 | ​ ​ 2023 |
| --- | ---: | ---: |
| Refined (including SX‑EW) | 51.6% | 55.7% |
| Rod | 17.7% | 17.9% |
| Concentrates and other | 30.7% | 26.4% |
| **Total** | 100.0% | 100.0% |

#### OPERATING COSTS AND EXPENSES

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

| ​ ​ ​ ​ ​ | ​ ​ Three months ended March 31, 2024 | ​ ​ ​ 2023 ​ |
| --- | ---: | ---: |
| Power | 13.0% | 14.6% |
| Labor | 11.8% | 11.1% |
| Fuel | 16.0% | 15.5% |
| Maintenance | 22.7% | 21.1% |
| Operating material | 19.4% | 20.6% |
| Other | 17.1% | 17.1% |
| Total | 100.0% | 100.0% |

First quarter: Operating costs and expenses were $1,410.1 million in the first quarter of 2024 compared to $1,440.2 million in the same period of 2023. The decrease of $30.1 million was primarily due to:

Operating cost and expenses for the first quarter of 2023 $ 1,440.2

Less: ​ ​ ​

- Decrease in volume and cost of metals purchased from third parties. ​ ​ (27.8)
- Decrease in other cost of sales (exclusive of depreciation, amortization and depletion), which is mainly attributable to: (8.8)

​ - Inventory variance (38.1) ​ ​

​ - Workers participation (12.9) ​ ​

​ - Sales expenses (8.2) ​ ​

​ - Leachable material (7.0) ​ ​

​ - Energy costs (3.4) ​ ​

​ - Natural gas (1.1) ​ ​

​ - Other net (4.0) ​ ​

​ - Repairing materials, principally heavy equipment spare parts 32.6 ​ ​

​ - Fuel 17.6 ​ ​

​ - Labor costs 15.6 ​ ​

Plus: ​ ​ ​

- Increase in depreciation, amortization and depletion expense. 5.3
- Increase in exploration expense. ​ 0.8
- Increase in selling, general and administrative expenses. ​ ​ 0.4

Operating cost and expenses for the first quarter of 2024 ​ $ 1,410.1

#### NON-OPERATING INCOME (EXPENSES)

Non-operating income (expense) represented a net expense of $34.2 million in the three-month period ended March 31, 2024 compared to a net expense of $50.9 million in the same period of 2023.

First quarter: The $16.7 million decrease in the expense level was due to:

- $8.5 million increase in other income, which includes a $19.4 million of insurance compensation net of 10.9 lower miscellaneous income.
- $2.2 million decrease in interest expense, net of capitalized interest and
- $6.0 million increase in interest income.

#### INCOME TAXES

| ​ ​ ​ ​ | ​ ​ ​ | ​ ​ ​ Three Months Ended March 31, 2024 | ​ ​ ​ ​ 2023 ​ |
| --- | --- | ---: | ---: |
| Provision for income taxes ($ in millions) | ​ | $423.4 ​ | $480.5 ​ |
| Effective income tax rate | ​ | 36.6% | 36.9% |

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

#### SEGMENT RESULT ANALYSIS

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

The table below presents information regarding the volume of our copper sales by segment for the three-month period ended March 31, 2024 and 2023:

| ​ ​ Copper Sales (million pounds) | ​ | ​ ​ Three Months Ended March 31, 2024 | ​ 2023 | ​ | ​ ​ Variance | ​ ​ ​ % Change ​ | ​ ​ |
| --- | --- | ---: | ---: | --- | ---: | ---: | --- |
| Peruvian operations | ​ | 215.0 | 187.8 | ​ | 27.2 | 14.5% | ​ |
| Mexican open‑pit | ​ | 307.1 | 315.9 | ​ | (8.8) | (2.8)% | ​ |
| Mexican IMMSA unit | ​ | 7.9 | 5.3 | ​ | 2.6 | 49.1% | ​ |
| Other and intersegment elimination | ​ | (11.5) | (4.7) | ​ | (6.8) | 144.7% | ​ |
| Total copper sales | ​ | 518.5 | 504.3 | ​ | 14.2 | 2.8% | ​ |

The table below presents information regarding the volume of sales by segment of our significant by-products for the three-month period ended March 31, 2024 and 2023:

| ​ ​ By‑product Sales (million pounds, except silver—million ounces) Peruvian operations: | ​ ​ ​ | ​ Three Months Ended March 31, 2024 ​ | ​ ​ | ​ 2023 ​ | ​ ​ | ​ Variance ​ | ​ ​ | ​ ​ ​ % Change ​ ​ ​ | ​ ​ ​ |
| --- | --- | ---: | --- | ---: | --- | ---: | --- | ---: | --- |
| Molybdenum contained in concentrate | ​ | 7.3 | ​ | 5.4 | ​ | 1.9 |  | 35.2% |  |
| Silver | ​ | 1.4 | ​ | 1.1 | ​ | 0.3 |  | 27.3% |  |
| Mexican open‑pit operations: | ​ | ​ | ​ | ​ | ​ |  |  | ​ |  |
| Molybdenum contained in concentrate | ​ | 8.2 | ​ | 8.9 | ​ | (0.7) |  | (7.9)% |  |
| Zinc | ​ | 4.8 | ​ | — | ​ | 4.8 | ​ | —% | ​ |
| Silver | ​ | 2.9 | ​ | 2.9 | ​ | — |  | —% |  |
| IMMSA unit | ​ | ​ | ​ | ​ | ​ |  |  | ​ |  |
| Zinc‑refined and in concentrate | ​ | 51.7 | ​ | 58.4 | ​ | (6.7) |  | (11.5)% |  |
| Silver | ​ | 1.7 | ​ | 1.9 | ​ | (0.2) |  | (10.5)% |  |
| Other and intersegment elimination | ​ | ​ | ​ | ​ | ​ |  |  | ​ |  |
| Silver | ​ | (0.9) | ​ | (0.8) | ​ | (0.1) |  | 12.5% |  |
| Total by‑product sales | ​ | ​ | ​ | ​ | ​ |  |  | ​ |  |
| Molybdenum contained in concentrate | ​ | 15.5 | ​ | 14.3 | ​ | 1.2 |  | 8.4% |  |
| Zinc‑refined and in concentrate | ​ | 56.6 | ​ | 58.4 | ​ | (1.8) |  | (3.1)% |  |
| Silver | ​ | 5.1 | ​ | 5.1 | ​ | — |  | (0.0)% |  |

### Peruvian Open-pit Operations:

| ​ ​ ​ | ​ ​ | ​ ​ Three Months Ended March 31, 2024 | ​ | ​ ​ 2023 | ​ ​ | ​ ​ Variance | ​ | ​ % Change | ​ ​ ​ ​ |
| --- | --- | ---: | --- | ---: | --- | ---: | --- | --- | ---: |
| Net sales | ​ | $1,028.7 | ​ | $1,025.7 | ​ | $3.0 | ​ | ​ | 0.3% |
| Operating costs and expenses | ​ | (571.2) | ​ | (576.5) | ​ | 5.3 | ​ | ​ | (0.9)% |
| Operating income | ​ | $457.5 | ​ | $449.2 | ​ | $8.3 | ​ | ​ | 1.8% |

Net sales in the first quarter of 2024 increased by $3.0 million versus the figure in 2023. This increase was driven by an uptick in sales volumes of copper (+14.5%), molybdenum (+35.2%), and silver (+27.3%), alongside a by higher silver prices (+3.6%). This positive effect was nonetheless offset by lower prices for copper (-5.4% - LME) and molybdenum (-38.1%).

Operating costs and expenses were $571.2 million in the first quarter of 2024 compared to $576.5 million in the same period of 2023. The decrease of $5.3 million was primarily due to:

| ​ | ​ ​ ​ | ​ ​ |
| --- | --- | --- |
| ​ | Operating costs and expenses for the first quarter of 2023 | $576.5 |
| ​ | Less: ​ | ​ |
| ​ | • Increase in other cost of sales (exclusive of depreciation, amortization and depletion), mainly attributable to: | ​ (14.5) |
| ​ | ​ - Inventory variance (11.3) | ​ ​ |
| ​ | ​ - Sales expenses (10.3) | ​ ​ |
| ​ | ​ - Workers Participation (7.8) | ​ ​ |
| ​ | ​ - Other net (0.2) | ​ ​ |
| ​ | ​ - Repairing materials, principally heavy equipment spare parts 15.1 | ​ ​ |
| ​ | • Decrease in depreciation, amortization and depletion expense. ​ | ​ (0.2) |
| ​ | Plus: ​ | ​ ​ |
| ​ | • Increase in cost of metals purchased from third parties. ​ | ​ 7.8 |
| ​ | • Increase in exploration expenses. ​ | ​ 1.2 |
| ​ | • Increase in selling, general and administrative expenses. ​ | 0.4 |
| ​ | Operating costs and expenses for the first quarter of 2024 ​ | $571.2 |

Mexican Open-pit Operations:

| ​ ​ ​ | ​ ​ ​ | ​ ​ Three Months Ended March 31, 2024 | ​ | ​ ​ 2023 | ​ ​ | ​ ​ Variance | ​ ​ | ​ % Change | ​ ​ ​ ​ | ​ ​ ​ |
| --- | --- | ---: | --- | ---: | --- | ---: | --- | --- | ---: | --- |
| Net sales | ​ | $1,466.0 | ​ | $1,626.9 | ​ | $(160.9) | ​ | ​ | (9.9)% | ​ |
| Operating costs and expenses | ​ | (715.0) | ​ | (711.1) | ​ | (3.9) | ​ |  | 0.5% | ​ |
| Operating income | ​ | $751.0 | ​ | $915.8 | ​ | $(164.8) | ​ | ​ | (18.0)% | ​ |

Net sales in the first quarter of 2024 decreased by $160.9 million versus the figure in 2023. This drop was driven by a reduction in the sales volumes of copper (-2.8%) and molybdenum (-7.9%) and by lower prices for copper (-5.4% - LME) and molybdenum (-38.1%). Higher silver prices (+3.6%) and production start-up at the new zinc concentrator slightly offset the aforementioned reduction.

Operating costs and expenses were $715.0 million in the first quarter of 2024 compared to $711.1 million in the same period of 2023. The increase of $3.9 million was primarily due to:

| ​ | ​ ​ ​ ​ ​ |
| --- | --- |
| ​ | Operating costs and expenses for the first quarter of 2023 $711.1 |
| ​ | Plus: ​ ​ ​ |
| ​ | • Increase in depreciation, amortization and depletion expense. 24.2 |
| ​ | • Increase in exploration expense. ​ 2.3 |
| ​ | • Increase in selling, general and administrative expenses. ​ 1.2 |
| ​ | • Increase in other cost of sales (exclusive of depreciation, amortization and depletion), which is mainly attributable to: 0.3 |
| ​ | ​ - Repairing materials, principally heavy equipment spare parts 17.1 ​ ​ |
| ​ | ​ - Fuel 15.3 ​ ​ |
| ​ | ​ - Energy costs (9.9) ​ ​ |
| ​ | ​ - Inventory variance (7.1) ​ ​ |
| ​ | ​ - Leachable material (5.2) ​ ​ |
| ​ | ​ - Workers participation (5.0) ​ ​ |
| ​ | ​ - Other net (4.9) ​ ​ |
| ​ | Less: ​ ​ ​ |
| ​ | • Decrease in volume and cost of metals purchased from third parties. ​ ​ (24.1) |
| ​ | Operating costs and expenses for the first quarter of 2024 ​ $715.0 |

46

Mexican Underground Operations (IMMSA):

| ​ ​ ​ | ​ | ​ ​ Three Months Ended March 31, 2024 | ​ | ​ ​ 2023 | ​ ​ | ​ ​ Variance | ​ ​ | ​ % Change | ​ ​ ​ | ​ ​ ​ |
| --- | --- | ---: | --- | ---: | --- | ---: | --- | --- | ---: | --- |
| Net sales | ​ | $146.4 | ​ | $179.5 | ​ | $(33.1) | ​ | ​ | (18.4)% | ​ |
| Operating costs and expenses | ​ | (153.2) | ​ | (178.1) | ​ | 24.9 | ​ |  | (14.0)% | ​ |
| Operating income | ​ | $(6.8) | ​ | $1.4 | ​ | $(8.2) | ​ | ​ | (585.7)% | ​ |

Net sales in the first quarter of 2024 decreased by $33.1 million versus the figure in 2023. This decline was primarily fueled by reduced sales volumes of zinc (-11.3%) and silver (-10.5%) and by lower prices for copper (-5.4% - LME) and zinc (-21.8%). Growth in sales volumes of copper (+49.1%) and higher silver prices (+3.6%) slightly offset the aforementioned decline.

Operating costs and expenses were $153.2 million in the first quarter of 2024 compared to $178.1 million in the same period of 2023. The decrease of $24.9 million was primarily due to:

Operating costs and expenses for the first quarter of 2023 $ 178.1

Less: ​ ​ ​

- Decrease in other cost of sales (exclusive of depreciation, amortization and depletion), which is mainly attributable to: (16.7)

​ - Inventory variance (19.7) ​ ​

​ - Exchange rate variance (5.2) ​ ​

​ - Other net (0.8) ​ ​

​ - Energy costs 4.6 ​ ​

​ - Labor costs 4.4 ​ ​

- Decrease in volume and cost of metals purchased from third parties. ​ ​ (9.1)
- Decreaser in exploration expense. ​ (0.4)
- Decrease in selling, general and administrative expenses. ​ (0.4)

Plus: ​ ​ ​

- Increase in depreciation, amortization and depletion expense. ​ 1.7

Operating costs and expenses for the first quarter of 2024 ​ $ 153.2

#### Intersegment Eliminations and Adjustments:

The net sales, operating costs and expenses and operating income discussed above will not be directly equal to amounts in our condensed consolidated statement of earnings because the adjustments of intersegment operating revenues and expenses must be taken into account. Please see Note 13 “Segment and Related Information” of the condensed consolidated financial statements.

### LIQUIDITY AND CAPITAL RESOURCES

### Cash flow:

The following table shows the cash flow for the three-month period ended March 31, 2024 and 2023 (in millions):

| ​ ​ | ​ | ​ ​ 2024 | ​ | ​ ​ 2023 | ​ | ​ ​ Variance | ​ ​ |
| --- | --- | ---: | --- | ---: | --- | ---: | --- |
| Net cash provided by operating activities | ​ | $659.7 | ​ | $1,185.2 | ​ | $(525.5) | ​ |
| Net cash used in investing activities | ​ | $56.2 | ​ | $(170.4) | ​ | $226.6 | ​ |
| Net cash used in financing activities | ​ | $(620.1) | ​ | $(774.7) | ​ | $154.6 | ​ |

### Net cash provided by operating activities:

The change in net cash from operating activities for the three-month period ended March 31, 2024 and 2023 include, in millions, the following significant items:

| ​ ​ | ​ | ​ ​ 2024 | ​ | ​ ​ 2023 | ​ | ​ ​ Variance | ​ | ​ % Change | ​ ​ ​ |
| --- | --- | ---: | --- | ---: | --- | ---: | --- | --- | ---: |
| Net income | ​ | $738.8 | ​ | $815.9 | ​ | $(77.1) | ​ | ​ | (9.4)% |
| Depreciation, amortization and depletion | ​ | 209.0 | ​ | 203.7 | ​ | 5.3 | ​ |  | 2.6% |
| (Benefit) provision for deferred income taxes | ​ | 19.1 | ​ | (18.4) | ​ | 37.5 | ​ |  | (203.8)% |
| Loss on foreign currency transaction effect | ​ | 3.8 | ​ | 6.5 | ​ | (2.7) | ​ |  | (41.5)% |
| Other adjustments to net income | ​ | (0.2) | ​ | 13.9 | ​ | (14.1) | ​ |  | (101.4)% |
| Operating assets and liabilities | ​ | (310.8) | ​ | 163.6 | ​ | (474.4) | ​ |  | (290.0)% |
| Net cash provided by operating activities | ​ | $659.7 | ​ | $1,185.2 | ​ | $(525.5) | ​ | ​ | (44.3)% |

Three months ended March 31, 2024: Net income was $738.8 million, which represented approximately 111.9% of the net operating cash flow. The cash flow from operating assets and liabilities decreased by $310.8 million due to the following:

- $301.6 million increase in other operating assets and liabilities, net.
- $8.2 million net increase in inventory
- $1.0 million decrease in net, accounts payable and receivable at our Peruvian and Mexican operations

Three months ended March 31, 2023: Net income was $815.9 million, which represented approximately 69% of the net operating cash flow. The operating cash flow increased by $163.6 million due to the following variances in operating assets and liabilities:

- $131.5 million decrease in trade accounts receivable, primarily driven by a negative impact of the accounting adjustment for a price variation on sales made and not yet collected, which was primarily associated with our molybdenum sales.
- $29.6 million net decrease in inventory; principally at our Mexican operations.
- $12.7 million increase in accounts payable and accrued liabilities, net.
- $(10.2) million increase in other operating assets and liabilities, net.

### Net cash used in investing activities:

Three months ended March 31, 2024: Net cash used in investing activities included $213.8 million for capital investments. Capital investments included:

- $143.3 million of investments at our Mexican operations:
- $31.8 million for the IMMSA unit,
- $31.6 million for the tailing deposits of new concentrator,
- $13.2 million for Buenavista Zinc project,
- $8.3 million for Bella Union mine,
- $45.6 million for various replacement and maintenance expenditures, and
- $12.8 million in capital expenditures incurred but not yet paid.
- $70.5 million of investments at our Peruvian operations:
- $5.3 HPGR optimization at Cuajone,
- $2.9 million for the maintenance workshops at Cuajone,
- $1.0 million for the relocation of the leaching crusher at Toquepala,
- $0.8 million for the Maintenance workshops at Toquepala concentrator,
- $0.2 Quebrada Honda filter plant,
- $56.5 million for various other replacement and maintenance expenditures, and
- $3.8 million in capital expenditures incurred but not yet paid.

Investment activities in the first three months of 2024 included $270.0 million of net proceeds of short-term investments.

Three months ended March 31, 2023: Net cash used in investing activities included $238.1 million for capital investments. The capital investments included:

- $148.3 million of investments at our Mexican operations:
- $19.4 million for the Buenavista-Zinc project,
- $2.3 million for the Pilares project,
- $14.1 million for the MexArco unit,
- $28.8 million at our IMMSA unit,
- $13.7 million for the tailing deposits of new concentrator
- $11.4 million for Bella Union mine,
- $55.9 million for various replacement and maintenance capital expenditures, and
- $2.7 million increase in capital expenditures incurred but not yet paid.
- $89.8 million of investments at our Peruvian operations:
- $18.5 million for the HPGR optimization at Cuajone,
- $5.5 million for the Quebrada Honda dam expansion,
- $2.6 million for the Quebrada Honda filter plant,
- $0.9 million for the relocation of facilities at Toquepala,
- $0.1 million for projects at the Ilo facilities,
- $51.9 million for various other replacement and maintenance capital expenditures, and
- $10.3 million decrease in capital expenditures incurred but not yet paid.

Investment activities in the first three months of 2023 included $67.7 million of net proceeds from short-term investments.

### Dividends:

On April 18, 2024, the Board of Directors authorized a quarterly stock dividend of 0.0104 shares of common stock per share of common stock, payable on May 23, 2024 to shareholders of record at the close of business on May 8, 2024.

In lieu of fractional shares, cash will be distributed to each shareholder who would otherwise have been entitled to receive a fractional share, based on a share price of $115.13, which is the average of the high and low share price on April 18, 2024

Shareholders will not be required to take any action to receive the stock dividend. After the payment date, shareholders' book entry accounts will be credited with the additional shares that represent the stock dividend. When shares are held in a brokerage account in the name of a broker, the additional shares will be distributed to the broker on the shareholder's behalf. The stock dividend is administered by Computershare, the Company's transfer agent.

Capital Investment and Exploration Programs:

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

Contractual Obligations:

There have been no material changes in our contractual obligations in the first quarter of 2024. Please see item 7 in Part II of our 2023 annual report on Form 10-K.

NON-GAAP INFORMATION RECONCILIATION

Operating cash cost: Following is a reconciliation of “Operating Cash Cost” (see page 37) to cost of sales (exclusive of depreciation, amortization and depletion) as reported in our consolidated statement of earnings, in millions of dollars and dollars per pound of copper in the table below:

| ​ ​ ​ ​ ​ | ​ ​ ​ | ​ ​ Three Months Ended March 31, 2024 ​ ​ $ millions | ​ ​ | ​ ​ $ per pound | ​ ​ ​ | ​ ​ Three Months Ended March 31, 2023 ​ ​ $ millions | ​ ​ | ​ ​ $ per pound | ​ ​ ​ ​ ​ |
| --- | --- | ---: | --- | ---: | --- | ---: | --- | ---: | --- |
| Cost of sales (exclusive of depreciation, amortization and depletion) | ​ | $1,157.6 | ​ | $2.27 | ​ | $1,194.2 | ​ | $2.53 | ​ |
| Add: | ​ |  | ​ | ​ | ​ |  | ​ | ​ | ​ |
| Selling, general and administrative | ​ | 30.8 | ​ | 0.06 | ​ | 30.4 | ​ | 0.06 | ​ |
| Sales premiums, net of treatment and refining charges | ​ | (4.9) | ​ | (0.01) | ​ | (7.4) | ​ | (0.02) | ​ |
| Less: | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ |
| Workers’ participation | ​ | (59.9) | ​ | (0.12) | ​ | (72.8) | ​ | (0.15) | ​ |
| Cost of metals purchased from third parties | ​ | (34.5) | ​ | (0.07) | ​ | (62.3) | ​ | (0.13) | ​ |
| Royalty charge and other, net | ​ | (6.0) | ​ | (0.01) | ​ | (45.3) | ​ | (0.10) | ​ |
| Inventory change | ​ | (4.1) | ​ | (0.01) | ​ | (49.1) | ​ | (0.10) | ​ |
| **Operating Cash Cost before by‑product revenues** | **​** | **$1,079.0** | **​** | **$2.11** | **​** | **$987.7** | **​** | **$2.09** | **​** |
| Add: | ​ |  | ​ |  | ​ |  | ​ |  | ​ |
| By‑product revenues(1) | ​ | (520.4) | ​ | ​ (1.02) | ​ | (620.6) | ​ | ​ (1.31) | ​ |
| Net revenue on sale of metal purchased from third parties | ​ | (11.8) | ​ | ​ (0.02) | ​ | (10.0) | ​ | ​ (0.02) | ​ |
| Add: | ​ |  | ​ |  | ​ |  | ​ |  | ​ |
| Total by‑product revenues | ​ | (532.2) | ​ | (1.04) | ​ | (630.6) | ​ | (1.33) | ​ |
| **Operating Cash Cost net of by‑product revenues** | **​** | **$546.8** | **​** | **$1.07** | **​** | **$357.1** | **​** | **$0.76** | **​** |

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

| ​ ​ ​ ​ ​ | ​ ​ ​ | ​ ​ Three Months Ended ​ March 31, 2024 ​ ​ $ millions | ​ ​ | ​ ​ $ per pound | ​ ​ ​ | ​ ​ Three Months Ended ​ March 31, 2023 ​ ​ $ millions | ​ ​ | ​ ​ $ per pound | ​ ​ ​ ​ ​ |
| --- | --- | ---: | --- | ---: | --- | ---: | --- | ---: | --- |
| Molybdenum | ​ | $(273.5) | ​ | $(0.54) | ​ | $(301.7) | ​ | $(0.64) | ​ |
| Silver | ​ | (102.1) | ​ | (0.20) | ​ | (112.2) | ​ | (0.24) | ​ |
| Zinc | ​ | (45.7) | ​ | (0.09) | ​ | (70.4) | ​ | (0.15) | ​ |
| Sulfuric Acid | ​ | (69.3) | ​ | (0.14) | ​ | (89.5) | ​ | (0.19) | ​ |
| Gold and others | ​ | (29.8) | ​ | (0.06) | ​ | (46.8) | ​ | (0.09) | ​ |
| **Total** | **​** | **$(520.4)** | **​** | **$(1.02)** | **​** | **$(620.6)** | **​** | **$(1.31)** | **​** |

## Market risk

As filed, 5,565 characters.

### Commodity price risk:

For additional information on metal price sensitivity, refer to “Metal Prices” in Part I, Item 2 of this quarterly report on Form 10-Q for the period ended March 31, 2024.

### Foreign currency exchange rate risk:

Our functional currency is the U.S. dollar. Portions of our operating costs are denominated in Peruvian soles and Mexican pesos. Given that our revenues are primarily denominated in U.S. dollars, when inflation or deflation in our Mexican or Peruvian operations is not offset by a change in the exchange rate of the sol or the peso to the dollar, our financial position, results of operations and cash flows could be affected by local cost conversion when expressed in U.S. dollars. In addition, the dollar value of our net monetary assets denominated in soles or pesos can be affected by an exchange rate variance of the sol or the peso, resulting in a re-measurement gain or loss in our financial statements. Recent inflation and exchange rate variances are provided in the table below for the three-month period ended March 31, 2024 and 2023:

| ​ ​ ​ ​ ​ ​ Peru: | ​ ​ Three Months Ended March 31, 2024 | ​ ​ ​ 2023 |
| --- | ---: | ---: |
| Peruvian inflation rate | 1.6% | 1.8% |
| Initial exchange rate | 3.713 | 3.820 |
| Closing exchange rate | 3.721 | 3.765 |
| Appreciation/(devaluation) | (0.2)% | 1.4% |
| Mexico: |  |  |
| Mexican inflation rate | 1.4% | 1.5% |
| Initial exchange rate | 16.894 | 19.362 |
| Closing exchange rate | 16.678 | 18.105 |
| Appreciation/(devaluation) | 1.3% | 6.5% |

### Change in monetary position:

Assuming an exchange rate variance of 10% at March 31, 2024, we estimate our net monetary position in Peruvian sol and Mexican peso would increase (decrease) our net earnings as follows:

*($ in millions)*

| ​ ​ ​ ​ | ​ | ​ ​ Effect in net earnings |
| --- | --- | ---: |
| Appreciation of 10% in U.S. dollar vs. Peruvian sol | ​ | $16.4 |
| Devaluation of 10% in U.S. dollar vs. Peruvian sol | ​ | $(20.0) |
| Appreciation of 10% in U.S. dollar vs. Mexican peso | ​ | $(32.0) |
| Devaluation of 10% in U.S. dollar vs. Mexican peso | ​ | $26.2 |

### Open sales risk:

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

### Short-term Investments:

For additional information on our trading securities and available-for-sale investments, refer to “Short-term Investments” in Part I, Item 1 of this quarterly report on Form 10-Q for the period ended March 31, 2024.

### Derivative Instruments:

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

### Cash Flow Hedges of Natural Gas

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

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

As of March 31, 2024, we held no derivative instruments.

Cautionary Statement:

Forward-looking statements in this report and in other Company statements include statements regarding expected commencement dates of mining or metal production operations, projected quantities of future metal production, anticipated production rates, operating efficiencies, costs and expenditures as well as projected demand or supply for the Company’s products. Actual results could differ materially depending upon factors including the risks and uncertainties relating to general U.S. and international economic and political conditions, the cyclical and volatile prices of copper, other commodities and supplies, including fuel and electricity, availability of materials, insurance coverage, equipment, required permits or approvals and financing, the occurrence of unusual weather or operating conditions, lower than expected ore grades, water and geological problems, the failure of equipment or processes to operate in accordance with specifications, failure to obtain financial assurance to meet closure and remediation obligations, labor relations, litigation and environmental risks as well as political and economic risk associated with foreign operations. Results of operations are directly affected by metal prices on commodity exchanges that can be volatile.

## Controls and procedures

As filed, 4,242 characters.

#### EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES

As of March 31, 2024, the Company conducted an evaluation under the supervision and with the participation of the Company’s disclosure committee and the Company’s management, including the Chief Executive Officer and Chief Financial Officer, of the effectiveness and the design and operation of the Company’s disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)). Based on that evaluation, the Chief Executive Officer and the Chief Financial Officer have concluded that the Company’s disclosure controls and procedures are effective as of March 31, 2024, to ensure that information required to be disclosed in reports filed or submitted under the Exchange Act is:

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

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

CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING

There were no changes in the Company’s internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934, as amended) that occurred during the three months ended March 31, 2024 that have materially affected, or are reasonably likely to materially affect, the Company’s internal controls over financial reporting.

### Report of Independent Registered Public Accounting Firm

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

### Results of Review of Interim Financial Statements

We have reviewed the accompanying condensed consolidated balance sheet of Southern Copper Corporation and subsidiaries (the “Company”) as of March 31, 2024, the related condensed consolidated statements of earnings, comprehensive income, cash flows and stockholders’ equity for the three-month periods ended March 31, 2024, and 2023, and the related notes (collectively referred to as the “interim financial information”). Based on our reviews, we are not aware of any material modifications that should be made to the accompanying interim financial information for it to be in conformity with accounting principles generally accepted in the United States of America.

We have previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheet of the Company as of December 31, 2023, and the related consolidated statements of earnings, comprehensive income, cash flows and stockholders’ equity for the year then ended (not presented herein); and in our report dated February 29, 2024, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying condensed consolidated balance sheet as of December 31, 2023, is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived.

### Basis for Review Results

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

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

Galaz, Yamazaki, Ruiz Urquiza, S.C.

Member of Deloitte Touche Tohmatsu Limited

|  |  |
| --- | --- |
|  | ​ |
| /s/ Paulina Ramos Ramirez | ​ |
| C.P.C. Paulina Ramos Ramirez | ​ |
| Mexico City, Mexico | ​ |
| April 30, 2024 | ​ |

## Risk factors

As filed, 1,590 characters.

The Company's operations and financial results are subject to various risks and uncertainties, including those described in “Risk Factors” included in Part I, Item 1A of our Annual report on Form 10-K for the year ended December 31, 2023 filed with the SEC on February 29, 2024. The following supplements and updates the risk factor previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2023.

### Mexican economic and political conditions, as well as drug related violence, may have an adverse impact on our business

On April 29 2023, Mexican Senate approved a fast-track bill that would impact the mining industry. The main aspects that will be affected by the legislation are changes in mining concession period from 50 to 30 years; new restrictions and conditions on water use; provide of guarantees for closure and remediation of operations, sets 5% contribution of net earnings to indigenous communities for new projects and finally significant changes to exploration activities.

In the future, the aforementioned changes could trigger amendments, additions and repeals to 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 would be no material impact on the Company's operations or financial condition, we cannot assure you that future developments in these laws will not affect our current business as well as our organic growth portfolio.

Filed Apr 30, 2024.
Source: SEC EDGAR, the filing index for accession 0001558370-24-006251. Last ingested by Listed: Nov 4, 2026, 00:34 ET. No prices; not investment advice.