SCC(SCCO) - 2025 Q2 - Quarterly Report

Part I. Financial Information Item 1. Condensed Consolidated Financial Statements (Unaudited) This section presents SCC's unaudited condensed consolidated financial statements for Q2 and H1 2025 and 2024, including earnings, comprehensive income, balance sheets, cash flows, and equity changes, with detailed notes Condensed Consolidated Statements of Earnings Net sales decreased by 2.2% in Q2 2025 but increased by 8.0% in H1 2025, while net income attributable to SCC rose by 2.4% and 13.8% respectively | Metric (in millions, except per share) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :----------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Net sales | $3,051.0 | $3,118.3 | $6,172.9 | $5,718.1 | | Operating income | $1,587.0 | $1,607.3 | $3,122.5 | $2,797.0 | | Income before income taxes | $1,543.9 | $1,530.6 | $3,022.4 | $2,686.2 | | Net income attributable to SCC | $973.4 | $950.2 | $1,919.4 | $1,686.2 | | Net earnings-basic and diluted (per share) | $1.21 | $1.21 | $2.39 | $2.15 | Condensed Consolidated Statements of Comprehensive Income Total comprehensive income attributable to SCC increased to $973.4 million in Q2 2025 and $1,919.4 million in H1 2025 | Metric (in millions) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Net income and comprehensive income | $976.7 | $953.8 | $1,925.8 | $1,692.6 | | Comprehensive income attributable to SCC | $973.4 | $950.2 | $1,919.4 | $1,686.2 | Condensed Consolidated Balance Sheets Total assets increased to $19,554.7 million by June 30, 2025, driven by current assets, while total liabilities decreased and equity rose | Metric (in millions) | June 30, 2025 | December 31, 2024 | | :------------------- | :------------ | :---------------- | | Total current assets | $7,002.4 | $6,174.3 | | Total assets | $19,554.7 | $18,713.5 | | Total current liabilities | $1,329.0 | $2,248.1 | | Long-term debt, net of current portion | $6,748.2 | $5,758.5 | | Total liabilities and equity | $19,554.7 | $18,713.5 | | Total equity | $10,053.4 | $9,238.1 | Condensed Consolidated Statements of Cash Flows Operating cash flow increased to $1,698.2 million in H1 2025, but investing activities significantly increased cash usage to $983.6 million | Metric (in millions) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Net cash provided by operating activities | $976.8 | $962.1 | $1,698.2 | $1,621.8 | | Net cash used in investing activities | $(692.9) | $(331.7) | $(983.6) | $(275.5) | | Net cash used in financing activities | $(1,060.4) | $— | $(627.5) | $(620.1) | | Cash and cash equivalents, at end of period | $3,334.9 | $1,875.3 | $3,334.9 | $1,875.3 | Condensed Consolidated Statements of Changes in Equity Total equity increased to $10,053.4 million by June 30, 2025, driven by net earnings and paid-in capital, offset by dividends | Metric (in millions) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Total Equity, beginning of period | $9,636.7 | $7,605.9 | $9,238.1 | $7,481.2 | | Net earnings | $973.4 | $950.2 | $1,919.4 | $1,686.2 | | Dividends declared and paid, common stock | $(557.4) | $— | $(1,110.7) | $(618.5) | | Total Equity, end of period | $10,053.4 | $8,560.2 | $10,053.4 | $8,560.2 | Notes to Condensed Consolidated Financial Statements This section provides detailed disclosures for the financial statements, covering business, investments, inventories, taxes, related parties, financing, leases, and other key areas NOTE 1— DESCRIPTION OF THE BUSINESS Southern Copper Corporation is an integrated copper and minerals producer, majority-owned by Grupo Mexico, with operations in Peru and Mexico - Southern Copper Corporation (SCC) is an integrated producer of copper and other minerals, with primary operations in Peru (Peruvian Branch) and Mexico (through subsidiaries)[20] - Grupo Mexico, through Americas Mining Corporation (AMC), owned 88.9% of SCC's capital stock as of June 30, 2025[20] - The Company also conducts exploration activities in Argentina, Chile, Mexico, and Peru[20] NOTE 2 — SHORT-TERM INVESTMENTS Short-term investments significantly increased to $675.4 million by June 30, 2025, primarily due to trading securities, while interest earned decreased | Investment Type | At June 30, 2025 (in millions) | At December 31, 2024 (in millions) | | :---------------- | :----------------------------- | :------------------------------- | | Trading securities | $675.3 | $245.2 | | Available-for-sale | $0.1 | $0.2 | | Total | $675.4 | $245.3 | | Metric (in millions) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Interest earned (Trading) | $7.2 | $7.6 | $9.5 | $13.7 | NOTE 3 — INVENTORIES Total current inventory decreased to $1,005.2 million by June 30, 2025, mainly due to reductions in work-in-process and supplies | Inventory Type (in millions) | At June 30, 2025 | At December 31, 2024 | | :--------------------------- | :--------------- | :------------------- | | Finished goods | $56.6 | $55.9 | | Work-in-process | $303.9 | $343.8 | | Ore stockpiles on leach pads (current) | $228.3 | $217.2 | | Supplies | $416.3 | $431.9 | | Total current inventory | $1,005.2 | $1,048.9 | | Ore stockpiles on leach pads (long-term) | $1,149.3 | $1,145.8 | - Total leaching costs capitalized as non-current inventory of ore stockpiles on leach pads amounted to $128.2 million for the six months ended June 30, 2025, slightly down from $128.8 million in 2024[26] NOTE 4 — INCOME TAXES The total income tax provision for H1 2025 increased to $1,108.7 million, with an effective rate of 36.7%, influenced by Mexican royalty rate increases | Tax Component (in millions) | 2025 (6 Months) | 2024 (6 Months) | | :-------------------------- | :-------------- | :-------------- | | Statutory income tax provision | $930.0 | $852.3 | | Peruvian royalty | $33.3 | $29.1 | | Mexican royalty | $94.7 | $75.7 | | Peruvian special mining tax | $50.7 | $45.0 | | Total income tax provision | $1,108.7 | $1,002.1 | | Effective income tax rate | 36.7% | 37.3% | - The increase in Mexican mining royalty in 2025 is partially due to an increase in the mining royalty rate from 7.5% to 8.5% and the additional royalty from 0.5% to 1%, effective January 1, 2025, and increased sales due to metal prices[29] - The Company made payments of $35.4 million for uncertain tax positions in Peru and recorded current and non-current liabilities that increased tax expense by approximately $13.9 million in Q2 2025[30] - New U.S. tax law updates (OBBBA) effective July 4, 2025, are not expected to be material, and Pillar Two updates have no current impact as relevant jurisdictions have not yet enacted them[31][33] NOTE 5 — RELATED PARTY TRANSACTIONS Related party receivables and payables increased by June 30, 2025, with significant increases in purchases from Grupo Mexico and affiliates | Balance (in millions) | At June 30, 2025 | At December 31, 2024 | | :-------------------- | :--------------- | :------------------- | | Related parties receivable current | $14.8 | $13.5 | | Related parties payable | $102.3 | $49.2 | | Activity (in millions) | 2025 (6 Months) | 2024 (6 Months) | | :--------------------- | :-------------- | :-------------- | | Total purchases from Grupo Mexico and affiliates | $225.0 | $191.6 | | Total sales to Grupo Mexico and affiliates | $59.3 | $37.6 | | Total purchases from other Larrea family companies | $1.7 | $1.7 | | Total sales to other Larrea family companies | $1.5 | $1.5 | - The Company holds a 44.2% equity participation in Compañia Minera Coimolache S.A. (Tantahuatay gold mine) and a 30.0% participation in Apu Coropuna S.R.L. (exploration activities), with evaluation underway to liquidate the latter due to unfavorable exploration results[50][51] NOTE 6 — FINANCING Minera Mexico issued $1.0 billion in fixed-rate senior notes due 2032 at 5.625% interest in February 2025, and the Company repaid $500 million in April 2025 - Minera Mexico S.A. de C.V. issued $1.0 billion of fixed-rate senior notes in February 2025, due in 2032 with an annual interest rate of 5.625%[52] - The new notes were assigned Baa1 (Moody's) and 'BBB+' (Fitch and S&P) debt ratings[55] - The Company repaid $500 million of fixed-rate senior unsecured notes on April 22, 2025[56] NOTE 7 — LEASES The Company's operating leases have a weighted average remaining term of six years and a 4.92% discount rate, with total lease expense of $57.7 million in H1 2025 - The weighted average remaining lease term for the Company's leases is approximately six years, with a weighted average discount rate of 4.92%[59] | Classification (in millions) | 2025 (6 Months) | 2024 (6 Months) | | :--------------------------- | :-------------- | :-------------- | | Cost of sales | $57.6 | $48.7 | | Exploration | $0.1 | $0.1 | | Total lease expense | $57.7 | $48.8 | | Year | Lease liabilities (in millions) | | :---------- | :------------------------------ | | 2025 | $57.7 | | 2026 | $115.1 | | 2027 | $114.6 | | 2028 | $114.0 | | 2029 | $112.9 | | After 2029 | $317.3 | | Total lease payments | $831.5 | | Less: interest on lease liabilities | $(130.9) | | Present value of lease payments | $700.7 | NOTE 8 — ASSET RETIREMENT OBLIGATION The ARO decreased to $509.9 million by June 30, 2025, primarily due to changes in estimates for Peruvian and Mexican operations - The Company maintains an ARO for mining properties in Peru and Mexico, with closure plans approved by MINEM in Peru[61][66] - In December 2024, the ARO for Mexican operations decreased by $119.2 million due to a review of closing activities and updated life-of-mine plans for Buenavista[67] | Metric (in millions) | 2025 (6 Months) | 2024 (6 Months) | | :------------------- | :-------------- | :-------------- | | Balance as of January 1 | $546.1 | $612.6 | | Changes in estimates | $(48.5) | $(7.7) | | Accretion expense | $12.2 | $14.3 | | Balance as of June 30 | $509.9 | $619.2 | NOTE 9 — BENEFIT PLANS Net periodic benefit cost for post-retirement defined benefit plans was a net benefit of $0.3 million for H1 2025, compared to a cost in 2024 | Component of Net Periodic Benefit Cost (in millions) | 2025 (6 Months) | 2024 (6 Months) | | :------------------------------------------------- | :-------------- | :-------------- | | Service cost | $1.2 | $1.3 | | Interest cost | $1.9 | $2.0 | | Expected return on plan assets | $(3.6) | $(3.2) | | Net periodic (benefit) cost | $(0.3) | $0.3 | | Component of Net Periodic Benefit Cost (Post-retirement health care, in millions) | 2025 (6 Months) | 2024 (6 Months) | | :------------------------------------------------------------------------------- | :-------------- | :-------------- | | Interest cost | $1.0 | $1.1 | | Net periodic benefit cost | $1.0 | $1.1 | NOTE 10 — COMMITMENTS AND CONTINGENCIES This section details environmental, litigation, labor, and other commitments, including $91.1 million in environmental investments and ongoing lawsuits Environmental matters The Company maintains environmental programs in Peru and Mexico, with $91.1 million in H1 2025 investments, and expects no material impact from new air quality standards | Environmental Capital Investments (in millions) | 2025 (6 Months) | 2024 (6 Months) | | :-------------------------------------------- | :-------------- | :-------------- | | Peruvian operations | $6.9 | $2.0 | | Mexican operations | $84.2 | $92.8 | | Total | $91.1 | $94.8 | - The Company believes it is in material compliance with applicable Peruvian and Mexican environmental laws and regulations[72][84] - New AQS for daily sulfur dioxide, cadmium, arsenic, and chromium are not expected to significantly impact the Company's operations[73][74] - Mexican mining law amendments (May 2023) reducing concession terms, restricting water use, and requiring guarantees for closure are being challenged, with no expected negative impacts on operations[82][83] Litigation matters Multiple lawsuits are pending against the Company, including six related to the Tia Maria project in Peru and ongoing cases for the Buenavista mine spill in Mexico - Six lawsuits are filed against the Peruvian Branch related to the Tia Maria project, challenging environmental approvals, project cancellation, and construction licenses[85] - The Supreme Court of Justice of Peru ratified the legality of the Tia Maria project's Environmental Impact Assessment (EIA) in February 2022, which should favorably impact pending cases[86] - In Mexico, a criminal complaint regarding the 2014 Buenavista mine spill was dismissed in 2018 but is under appeal; a new criminal complaint was filed in October 2023[97][98] - Several collective action and civil action lawsuits seeking economic compensation and environmental remediation for the Buenavista spill are pending in Mexican federal and state courts[100][101] Labor matters Peruvian labor agreements extend to 2027-2033, ensuring stable operations, while strikes at Mexican San Martin and Taxco mines remain unresolved since 2007 - 54.0% of the Company's 5,204 Peruvian employees were unionized as of June 30, 2025[106] - Long-term collective bargaining agreements (CBAs) were signed with all six Peruvian unions in late 2024 and early 2025, with the earliest expiring in 2027 and the latest in 2033[107][108][110] - Strikes at the San Martin and Taxco mines in Mexico have been ongoing since July 2007, with legal proceedings still pending resolution[112][114][116] - A T-MEC complaint regarding denial of free association rights at San Martin mine was dismissed by the arbitration panel in April 2024[115] Other commitments Significant commitments include the Michiquillay project acquisition, social responsibility programs in Peru, and power purchase agreements - The Michiquillay copper project in Peru was acquired for $400 million, with $375.0 million remaining to be paid if the Company decides to develop the project[119][120] - The preoperational period for Michiquillay was extended by three years in April 2025, requiring a $21.0 million cash consideration and an additional $15 million in social investments[122] - The Company has committed S/445.0 million (approx. $125.4 million) for social and infrastructure projects in the Tacna Region, with $28.8 million recorded as a present obligation[125][126] - In the Moquegua region, the Company has offered a contribution of S/1,000 million (approx. $281.8 million) to a development fund and committed S/251.3 million (approx. $70.8 million) to various projects[129] - As of June 30, 2025, the Company committed approximately $609.5 million to capital investment project developments[136] NOTE 11 — STOCKHOLDERS' EQUITY Treasury stock decreased in H1 2025, two common stock dividends were paid, and the Director's Stock Award Plan and Employee Stock Purchase Plans were updated | Treasury Stock (in millions) | 2025 (6 Months) | 2024 (6 Months) | | :--------------------------- | :-------------- | :-------------- | | Southern Copper common shares (Balance as of Jan 1) | $2,337.3 | $2,766.7 | | Southern Copper common shares (Balance as of Jun 30) | $1,998.4 | $2,567.0 | | Parent Company common shares (Balance as of Jan 1) | $363.4 | $382.3 | | Parent Company common shares (Balance as of Jun 30) | $373.5 | $379.3 | | Total Treasury stock balance as of June 30 | $2,371.9 | $2,946.2 | - The Company paid common stock dividends on February 27, 2025 ($143.2 million) and May 19, 2025 ($195.6 million)[139] - The Director's Stock Award Plan was extended for three years until January 27, 2031, and amended to provide an annual grant of 200 additional shares to eligible Directors[141] - A new Employee Stock Purchase Plan (2025 Plan) was offered in April 2025, allowing employees to purchase Grupo Mexico stock at $4.94 per share, with a bonus of 1 share for every 10 purchased after eight years[149] NOTE 12 — FAIR VALUE MEASUREMENT Financial instruments are classified into a fair value hierarchy, with long-term debt primarily Level 1 and short-term trading securities also Level 1 - The fair value hierarchy prioritizes inputs: Level 1 (quoted prices in active markets), Level 2 (observable inputs other than Level 1), and Level 3 (unobservable inputs)[154][155] | Liability (in millions) | June 30, 2025 Carrying Value | June 30, 2025 Fair Value | December 31, 2024 Carrying Value | December 31, 2024 Fair Value | | :-------------------- | :----------------------------- | :----------------------- | :------------------------------- | :--------------------------- | | Current portion of long-term debt (Level 1) | $— | $— | $499.8 | $498.4 | | Long-term debt (Level 1) | $6,697.1 | $6,755.2 | $5,707.3 | $5,653.6 | | Long-term debt (Level 2) | $51.2 | $53.7 | $51.2 | $53.1 | | Total long-term debt | $6,748.2 | $6,808.9 | $5,758.5 | $5,706.7 | - Short-term trading securities and provisionally priced sales of copper and molybdenum are classified as Level 1, while available-for-sale investments are Level 2[159][160] NOTE 13 — REVENUE Net sales decreased by 2.2% in Q2 2025 but increased by 8.0% in H1 2025, with copper remaining the largest revenue contributor at 74.1% | Metric (in millions) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Net sales | $3,051.0 | $3,118.3 | $6,172.9 | $5,718.1 | | Product Sales as % of Total Net Sales | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :------------------------------------ | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Copper | 74.1% | 75.9% | 76.0% | 77.1% | | Molybdenum | 11.6% | 12.2% | 10.6% | 11.4% | | Silver | 6.6% | 5.0% | 6.1% | 4.7% | | Zinc | 4.0% | 3.7% | 3.8% | 3.2% | - As of June 30, 2025, the Company has long-term contracts to deliver 215,000 tonnes of copper concentrates, 48,000 tonnes of copper cathodes, 21,824 tonnes of molybdenum concentrates, and 373,296 tonnes of sulfuric acid in 2025[167] | Provisionally Priced Sales (as of June 30, 2025) | Sales volume (million lbs.) | Priced at (per pound) | Month of settlement | | :----------------------------------------------- | :-------------------------- | :-------------------- | :------------------ | | Copper | 233.7 | $4.49 | July-Nov 2025 | | Molybdenum | 16.1 | $21.85 | July-Sep 2025 | NOTE 14 — SEGMENT AND RELATED INFORMATION The Company operates through three reportable segments: Peruvian, Mexican open-pit, and Mexican underground (IMMSA), evaluated by operating income and total assets - Southern Copper has three reportable segments: Peruvian operations, Mexican open-pit operations, and Mexican underground mining operations (IMMSA unit)[170] - The Chief Operating Decision Maker (CODM) evaluates segments based on operating income and total assets[172][173] | Segment (3 Months Ended June 30, 2025, in millions) | Net sales to external customers | Operating income | Capital investment | Total assets | | :------------------------------------------------ | :------------------------------ | :--------------- | :----------------- | :----------- | | Mexican Open-pit | $1,754.8 | $988.9 | $148.6 | $9,072.7 | | IMMSA Unit | $118.0 | $17.8 | $23.9 | $1,244.7 | | Peruvian Operations | $1,178.2 | $583.1 | $61.9 | $5,260.0 | | Consolidated | $3,051.0 | $1,587.0 | $235.7 | $19,554.7 | | Segment (6 Months Ended June 30, 2025, in millions) | Net sales to external customers | Operating income | Capital investment | Total assets | | :------------------------------------------------ | :------------------------------ | :--------------- | :----------------- | :----------- | | Mexican Open-pit | $3,504.2 | $1,954.4 | $283.2 | $9,072.7 | | IMMSA Unit | $224.5 | $36.2 | $45.3 | $1,244.7 | | Peruvian Operations | $2,444.2 | $1,144.6 | $222.1 | $5,260.0 | | Consolidated | $6,172.9 | $3,122.5 | $553.5 | $19,554.7 | NOTE 15 — EARNINGS PER SHARE Basic and diluted net earnings per share were $1.21 for Q2 2025 and $2.39 for H1 2025, with shares retroactively adjusted for a stock dividend | Metric (in millions, except per share) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :----------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Net income attributable to SCC | $973.4 | $950.2 | $1,919.4 | $1,686.2 | | Weighted average common shares outstanding | 807.8 | 785.6 | 804.1 | 783.2 | | Basic and diluted net income per share | $1.21 | $1.21 | $2.39 | $2.15 | - Earnings per share have been retroactively adjusted to reflect a stock dividend of 0.0099 shares per common share paid on May 19, 2025[176] NOTE 16 — SUBSEQUENT EVENTS The Board authorized a quarterly cash dividend of $0.80 per share and a stock dividend of 0.0101 shares, payable September 4, 2025, and approved a pension plan termination - On July 24, 2025, a quarterly cash dividend of $0.80 per share and a stock dividend of 0.0101 shares per common stock were authorized, payable September 4, 2025[177] - The Board authorized the termination of a noncontributory defined benefit pension plan for former U.S. and expatriate employees, with estimated costs of approximately $0.7 million[179] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's analysis of SCC's financial condition and operations, covering market outlook, metal prices, production, costs, capital investments, ESG, and liquidity EXECUTIVE OVERVIEW Southern Copper is a major copper producer with a positive long-term outlook, focusing on cost control and production, with significant by-product contributions from molybdenum, silver, and zinc - Southern Copper is one of the world's largest copper mining companies, with principal operations in Peru and Mexico, and exploration programs in Chile and Argentina[183] - The company maintains a very positive long-term outlook for copper, but high U.S. tariffs could affect global economic growth and copper demand[185] | Product | % of Sales (Q2 2025) | Price (Q2 2025) | YoY Change (Q2 2025) | | :-------- | :------------------- | :-------------- | :------------------- | | Copper | 74.1% | LME: $4.32/lb, COMEX: $4.72/lb | LME: -2.3%, COMEX: +3.7% | | Molybdenum | 11.6% | $20.57/lb | -5.2% | | Silver | 6.6% | $33.62/oz | +16.6% | | Zinc | 4.0% | $1.20/lb | -7.0% | - Expected 2025 production: 965,300 tonnes of copper (-0.9% YoY), 173,400 tonnes of zinc (+33% YoY), 28,700 tonnes of molybdenum (-1.0% YoY), and 22.8 million ounces of silver (+9% YoY)[188][191] - Capital investments in Q2 2025 were $235.7 million, a 29.0% decrease compared to Q2 2024[188] KEY MATTERS This section covers earnings, production, operating cash costs, metal prices, business segments, inflation, exchange rates, and capital investment programs Earnings Net sales decreased by 2.2% in Q2 2025 but increased by 8.0% in H1 2025, while net income attributable to SCC rose by 2.4% and 13.8% respectively | Metric (in millions, except per share) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | % Change | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | % Change | | :----------------------------------- | :--------------------------- | :--------------------------- | :------- | :--------------------------- | :--------------------------- | :------- | | Net sales | $3,051.0 | $3,118.3 | (2.2)% | $6,172.9 | $5,718.1 | 8.0% | | Operating income | $1,587.0 | $1,607.3 | (1.3)% | $3,122.5 | $2,797.0 | 11.6% | | Net income attributable to SCC | $973.4 | $950.2 | 2.4% | $1,919.4 | $1,686.2 | 13.8% | | Earnings per share | $1.22 | $1.22 | (0.3)% | $2.41 | $2.17 | 11.1% | | Dividends per share (cash and stock) | $1.40 | $1.20 | 16.7% | $2.80 | $2.00 | 40.0% | - Q2 2025 net sales decline was driven by a 3.0% decrease in copper sales volumes and lower LME prices for copper (-2.3%), molybdenum (-5.2%), and zinc (-7.0%)[192] - H1 2025 net sales growth was driven by higher sales volumes of zinc (+25.3%), copper (+0.3%), molybdenum (+6.1%), and silver (+14.0%), and higher prices for COMEX copper (+10.5%), LME copper (+3.6%), silver (+26.3%), and zinc (+3.3%)[194] Production Copper production decreased in Q2 and H1 2025 due to lower ore grades, while molybdenum, silver, and zinc production saw increases, particularly zinc due to the Buenavista concentrator | Metal (in million pounds/ounces) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | % Change | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | % Change | | :------------------------------- | :--------------------------- | :--------------------------- | :------- | :--------------------------- | :--------------------------- | :------- | | Copper | 526.9 | 534.6 | (1.4)% | 1,056.5 | 1,064.3 | (0.7)% | | Molybdenum | 17.5 | 16.9 | 3.5% | 34.4 | 32.5 | 5.9% | | Silver (million ounces) | 6.0 | 5.2 | 15.4% | 11.4 | 10.0 | 14.6% | | Zinc | 101.2 | 64.9 | 56.0% | 188.0 | 123.0 | 52.9% | - Q2 2025 copper production decrease was due to lower ore grades at Buenavista (-2.9%), La Caridad (-1.7%), and Cuajone (-1.0%), partially offset by Toquepala (+0.5%) and IMMSA (+5.2%)[196] - Zinc production growth in Q2 and H1 2025 was primarily driven by full-capacity operations at the Buenavista Zinc concentrator[199][202] Operating Cash Costs Operating cash cost per pound of copper, net of by-product revenues, decreased by 16.8% in Q2 2025 and 23.6% in H1 2025, driven by lower costs and increased by-product revenues - Operating cash cost per pound of copper produced is a non-GAAP measure, disclosed both before and net of by-product revenues[203][206] | Metric ($ per pound) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | % Change | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | % Change | | :------------------- | :--------------------------- | :--------------------------- | :------- | :--------------------------- | :--------------------------- | :------- | | Operating cash cost per pound before by-product revenues | $2.11 | $2.15 | (1.9)% | $2.08 | $2.13 | (2.4)% | | By-product revenues per pound | $(1.48) | $(1.40) | 6.1% | $(1.38) | $(1.22) | 13.5% | | Operating cash cost per pound net of by-product revenues | $0.63 | $0.76 | (16.8)% | $0.70 | $0.91 | (23.6)% | - The reduction in operating cash cost net of by-product revenues reflects effective cost management and higher by-product revenues, primarily from zinc and silver[213][214] Metal Prices Profitability is highly dependent on volatile international market prices for copper, molybdenum, zinc, and silver, with copper price changes having the largest impact on net earnings - The profitability of operations is significantly affected by international market prices for copper, molybdenum, zinc, and silver[215] | Metal | Change in metal prices (per pound/ounce) | Change in net earnings (in millions) | | :--------- | :--------------------------------------- | :----------------------------------- | | Copper | $0.10 | $62.5 | | Molybdenum | $1.00 | $17.6 | | Zinc | $0.10 | $12.5 | | Silver | $1.00 | $7.1 | Business Segments Southern Copper manages three reportable segments: Peruvian operations, Mexican open-pit operations, and Mexican underground mining operations (IMMSA unit), each producing copper and by-products - The Company's three reportable segments are Peruvian operations, Mexican open-pit operations, and Mexican underground mining operations (IMMSA unit)[216] - Peruvian operations include Toquepala and Cuajone mine complexes, producing copper with molybdenum, silver, and other by-products[216] - Mexican open-pit operations include La Caridad-Pilares and Buenavista mine complexes, producing copper with molybdenum, silver, and other by-products[216] Inflation and Exchange Rate Effect of the Peruvian Sol and the Mexican Peso The Company is exposed to exchange rate volatility due to significant operating costs in Peruvian sol and Mexican pesos, which can affect operating results and net monetary assets - The Company's functional currency is the U.S. dollar, with revenues primarily denominated in U.S. dollars[218] - Significant portions of operating costs are denominated in Peruvian sol and Mexican pesos, exposing the Company to exchange rate volatility[218] - Inflation and currency devaluation/appreciation of the Peruvian and Mexican currencies can affect operating results and the dollar value of net monetary assets[218] Capital Investment Programs The Company invested $553.5 million in H1 2025 for capital projects in Peru and Mexico, aiming to increase production, decrease costs, and fulfill social/environmental commitments - Capital investments totaled $553.5 million in H1 2025, compared to $545.6 million in H1 2024[219] - Investments in Peruvian projects could surpass $10.3 billion in the next decade, supported by government and community engagement[221][222] - Minera Mexico plans to invest over $600 million in 2025 for asset modernization, water usage, tailings management, and optimization/growth[228] Projects in Peru The Tia Maria greenfield project, with a budget of $1,802 million, is in early construction, expected to produce 120,000 tons of copper cathodes annually and generate significant economic benefits - Tia Maria project budget is $1,802 million, with an annual production capacity of 120,000 tons of SX-EW copper cathodes[224] - The project is in early construction, with 90% progress on access roads and platforms, and 1,376 new jobs created, 802 of which are local[225][226] - Tia Maria is expected to generate $18.2 billion in exports and contribute $3.8 billion in taxes and royalties during its first 20 years of operation[224] Projects in Mexico The Company is discussing $10.2 billion in Mexican investments, including the El Pilar project, which is expected to produce 36,000 tonnes of copper cathodes annually - The Company is seeking permits to advance $10.2 billion in Mexican investments[227] - El Pilar project has estimated proven and probable reserves of 317 million tonnes of ore with an average copper grade of 0.249%, with an annual production capacity of 36,000 tonnes of copper cathodes[229] - Other potential projects in the Mexican pipeline include Angangueo, Chalchihuites, and the Empalme Smelter[230] Potential projects Potential projects include Los Chancas and Michiquillay in Peru, and El Arco in Mexico, all world-class copper deposits requiring significant investment for future production - Los Chancas project (Peru) has indicated copper mineral resources of 98 million tonnes of oxides (0.45% Cu) and 52 million tonnes of sulfides (0.59% Cu), with an estimated capital investment of $2,600 million and expected annual production of 130,000 tonnes of copper and 7,500 tonnes of molybdenum by 2031[234] - Michiquillay project (Peru) has inferred mineral resources of 2,288 million tonnes (0.43% Cu), with an estimated investment of $2.5 billion for 225,000 tonnes of copper per year, expected to start production by 2032[236][237] - El Arco project (Mexico) is a world-class copper deposit with over 1,230 million tonnes of ore (0.40% Cu) and 141 million tonnes of leach material (0.27% Cu), with detailed engineering ongoing[239][240] ENVIRONMENTAL, SOCIAL AND GOVERNANCE ("ESG") PRACTICES Southern Copper is strengthening its sustainability, achieving independent verification for its ESG report, inclusion in FTSE4Good indices, and Copper Mark certification for all open-pit operations - SCC's Sustainable Development Report was verified by an independent third party for the first time[241] - The Company was included in FTSE4Good Developed, FTSE4Good US, and FTSE4Good US 100 sustainability indices, scoring 60% above the nonferrous metals' subsector average[243] - Key ESG achievements include a 24% reduction in lost time injury frequency rate since 2023, 39% renewable energy consumption in 2024, and Copper Mark certification for all open-pit operations[242] - SCC received international recognition for its participation in the Binational Mexico-United States Program for the Conservation of the Mexican Gray Wolf[245] - The Tía María project has created 1,376 new jobs, with 802 filled by local applicants, and hired 50 local suppliers[246] ACCOUNTING ESTIMATES Management makes significant accounting estimates for financial statements, including ore reserves, revenue, inventory, asset impairment, ARO, leases, deferred taxes, and fair value measurements - Key areas requiring significant accounting estimates include ore reserves, revenue recognition, ore stockpiles on leach pads, estimated impairment of assets, asset retirement obligations, determination of discount rates for lease liabilities, classification of operating vs. financial leases, valuation allowances for deferred tax assets, unrecognized tax benefits, and fair value of financial instruments[248][249] - Estimates are based on historical trends and available information, with changes recognized in the period new information becomes available[248] RESULTS OF OPERATIONS This section details the Company's financial performance for Q2 and H1 2025 and 2024, analyzing net sales, operating costs, non-operating income, income taxes, and segment results | Statement of Earnings Data (in millions) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | % Change | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | % Change | | :------------------------------------- | :--------------------------- | :--------------------------- | :------- | :--------------------------- | :--------------------------- | :------- | | Net sales | $3,051.0 | $3,118.3 | (2.2)% | $6,172.9 | $5,718.1 | 8.0% | | Operating costs and expenses | $(1,464.0) | $(1,511.0) | (3.1)% | $(3,050.4) | $(2,921.1) | 4.4% | | Operating income | $1,587.0 | $1,607.3 | (1.3)% | $3,122.5 | $2,797.0 | 11.6% | | Net income attributable to SCC | $973.4 | $950.2 | 2.4% | $1,919.4 | $1,686.2 | 13.8% | NET SALES Net sales decreased by 2.2% in Q2 2025 due to lower copper sales and metal prices, but increased by 8.0% in H1 2025 driven by higher sales volumes and improved prices - Q2 2025 net sales decline was primarily due to a 3.0% decrease in copper sales volumes and lower LME prices for copper (-2.3%), molybdenum (-5.2%), and zinc (-7.0%)[252] - H1 2025 net sales increased due to higher sales volumes of zinc (+25.3%), copper (+0.3%), molybdenum (+6.1%), and silver (+14.0%), and improved market prices for COMEX copper (+10.5%), LME copper (+3.6%), silver (+26.3%), and zinc (+3.3%)[253] | Metal Price ($ per pound/ounce) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | % Change | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | % Change | | :------------------------------ | :--------------------------- | :--------------------------- | :------- | :--------------------------- | :--------------------------- | :------- | | Copper (LME) | $4.32 | $4.42 | (2.3)% | $4.28 | $4.13 | 3.6% | | Copper (COMEX) | $4.72 | $4.55 | 3.7% | $4.65 | $4.21 | 10.5% | | Molybdenum | $20.57 | $21.69 | (5.2)% | $20.50 | $20.77 | (1.3)% | | Zinc (LME) | $1.20 | $1.29 | (7.0)% | $1.24 | $1.20 | 3.3% | | Silver (COMEX) | $33.62 | $28.84 | 16.6% | $32.96 | $26.09 | 26.3% | | Copper Sales (million pounds) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | % Change | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | % Change | | :---------------------------- | :--------------------------- | :--------------------------- | :------- | :--------------------------- | :--------------------------- | :------- | | Refined (including SX-EW) | 234.0 | 250.2 | (6.5)% | 484.4 | 517.6 | (6.4)% | | Rod | 86.3 | 88.9 | (3.0)% | 177.8 | 180.7 | (1.6)% | | Concentrates and other | 173.7 | 170.1 | 2.1% | 368.9 | 329.6 | 11.9% | | Total | 494.0 | 509.3 | (3.0)% | 1,031.0 | 1,027.8 | 0.3% | OPERATING COSTS AND EXPENSES Operating costs decreased by 3.1% in Q2 2025 due to lower inventory and fuel, but increased by 4.4% in H1 2025 due to higher workers' participation and repairing materials | Cost Component (% of total production cost) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :---------------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Power | 11.2% | 11.6% | 12.1% | 14.3% | | Labor | 12.3% | 11.9% | 12.1% | 11.3% | | Fuel | 14.4% | 15.9% | 14.8% | 15.2% | | Maintenance | 26.2% | 22.8% | 25.5% | 21.2% | | Operating material | 18.8% | 19.2% | 18.8% | 20.3% | | Other | 17.1% | 18.6% | 16.7% | 17.7% | - Q2 2025 operating costs decreased by $47.0 million, mainly due to inventory variance (-$41.4 million), operations contractors (-$20.0 million), fuel (-$15.5 million), and freight (-$15.0 million), partially offset by repairing materials (+$33.0 million)[256] - H1 2025 operating costs increased by $129.3 million, primarily due to workers' participation (+$53.0 million), repairing materials (+$52.1 million), and inventory variance (+$38.6 million), and increased volume/cost of metals purchased from third parties (+$16.3 million)[256] NON-OPERATING INCOME (EXPENSE) Non-operating income (expense) resulted in a net expense of $43.1 million in Q2 2025 and $100.1 million in H1 2025, both representing decreases in expense compared to prior periods | Non-Operating Income (Expense) (in millions) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :------------------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Net expense | $(43.1) | $(76.7) | $(100.1) | $(110.8) | - The $33.6 million decrease in Q2 2025 expense was due to a $17.7 million decrease in other income (expenses) (including a $5.7 million insurance compensation) and a $26.6 million increase in interest income, partially offset by a $10.7 million increase in interest expense[260] - The $10.7 million decrease in H1 2025 expense was due to a $15.1 million increase in other income (expenses) (including a $9.9 million asset impairment at Tia Maria) and a $22.2 million increase in interest expense, partially offset by a $48.0 million increase in interest income[260] INCOME TAXES The provision for income taxes for H1 2025 was $1,108.7 million, with an effective rate of 36.7%, reflecting changes in tax positions | Metric (in millions) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :------------------- | :--------------------------- | :--------------------------- | | Provision for income taxes | $1,108.7 | $1,002.1 | | Effective income tax rate | 36.7% | 37.3% | - The provision for income taxes includes income taxes for Peru, Mexico, and the United States, as well as mining royalties from Peru and Mexico and the Peruvian special mining tax[258] SEGMENT RESULT ANALYSIS This section analyzes the performance of Peruvian, Mexican open-pit, and Mexican underground (IMMSA) operations, detailing changes in sales volumes, net sales, and operating costs | Copper Sales (million pounds) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | % Change | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | % Change | | :---------------------------- | :--------------------------- | :--------------------------- | :------- | :--------------------------- | :--------------------------- | :------- | | Peruvian operations | 209.8 | 222.6 | (5.8)% | 456.1 | 437.6 | 4.2% | | Mexican open-pit | 282.4 | 292.1 | (3.3)% | 572.6 | 599.2 | (4.4)% | | Mexican IMMSA unit | 8.2 | 9.7 | (16.0)% | 13.4 | 17.6 | (23.8)% | | Total copper sales | 494.0 | 509.3 | (3.0)% | 1,031.0 | 1,027.8 | 0.3% | | By-product Sales (million pounds/ounces) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | % Change | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | % Change | | :--------------------------------------- | :--------------------------- | :--------------------------- | :------- | :--------------------------- | :--------------------------- | :------- | | Molybdenum (total) | 17.3 | 16.8 | 2.7% | 34.3 | 32.4 | 6.1% | | Zinc (total) | 98.1 | 86.0 | 14.0% | 178.6 | 142.6 | 25.3% | | Silver (total) | 6.0 | 5.3 | 13.9% | 11.7 | 10.3 | 14.0% | Peruvian Open-pit Operations Net sales for Peruvian operations decreased by 5.5% in Q2 2025 but increased by 7.4% in H1 2025, with operating costs showing similar trends | Metric (in millions) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | % Change | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | % Change | | :------------------- | :--------------------------- | :--------------------------- | :------- | :--------------------------- | :--------------------------- | :------- | | Net sales | $1,178.2 | $1,246.7 | (5.5)% | $2,444.2 | $2,275.4 | 7.4% | | Operating costs and expenses | $(595.1) | $(626.3) | (5.0)% | $(1,299.6) | $(1,197.6) | 8.5% | | Operating income | $583.1 | $620.4 | (6.0)% | $1,144.6 | $1,077.9 | 6.2% | - Q2 2025 net sales decline was mainly due to a 5.7% decrease in copper sales volume and lower LME copper (-2.3%) and molybdenum (-5.2%) prices[262] - H1 2025 net sales growth reflects improvements in sales volumes of copper (+4.2%), molybdenum (+6.8%), and silver (+15.0%), as well as higher LME copper (+3.6%) and silver (+26.3%) prices[263] Mexican Open-pit Operations Net sales for Mexican open-pit operations increased by 0.9% in Q2 2025 and 9.4% in H1 2025, driven by higher zinc and silver sales volumes and improved metal prices | Metric (in millions) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | % Change | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | % Change | | :------------------- | :--------------------------- | :--------------------------- | :------- | :--------------------------- | :--------------------------- | :------- | | Net sales | $1,754.8 | $1,738.5 | 0.9% | $3,504.2 | $3,204.4 | 9.4% | | Operating costs and expenses | $(765.9) | $(786.1) | (2.6)% | $(1,549.7) | $(1,501.1) | 3.2% | | Operating income | $988.9 | $952.4 | 3.8% | $1,954.4 | $1,703.3 | 14.7% | - Q2 2025 net sales growth was mainly driven by higher sales volumes of zinc (+63.3%) and silver (+11.5%), and higher prices for COMEX copper (+3.7%) and silver (+16.6%)[265] - H1 2025 net sales growth primarily reflects increases in sales volumes of molybdenum (+5.6%), silver (+10.3%), and zinc (+120.0%), along with positive metal price developments for COMEX copper (+10.5%), silver (+26.3%), and zinc (+3.3%)[266] Mexican Underground Operations (IMMSA) Net sales for the IMMSA unit decreased by 3.2% in Q2 2025 but increased by 0.9% in H1 2025, while operating costs increased significantly in Q2 | Metric (in millions) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | % Change | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | % Change | | :------------------- | :--------------------------- | :--------------------------- | :------- | :--------------------------- | :--------------------------- | :------- | | Net sales | $179.3 | $185.2 | (3.2)% | $334.7 | $331.6 | 0.9% | | Operating costs and expenses | $(161.5) | $(134.1) | 20.4% | $(298.5) | $(287.3) | 3.9% | | Operating income | $17.8 | $51.1 | (65.2)% | $36.2 | $44.4 | (18.3)% | - Q2 2025 net sales decline was primarily driven by a 16.0% reduction in copper sales volume and a 7.0% decrease in zinc prices[268] - H1 2025 net sales growth reflects favorable metal price trends for COMEX copper (+10.5%), silver (+26.3%), and zinc (+3.3%), and growth in silver sales volumes (+3.1%)[270] Intersegment Eliminations and Adjustments Intersegment operating revenues and expenses are adjusted to reconcile segment results with the condensed consolidated statement of earnings - Adjustments for intersegment operating revenues and expenses are made to reconcile segment results with consolidated financial statements[272] LIQUIDITY AND CAPITAL RESOURCES Operating cash flow increased in H1 2025, but investing activities significantly increased cash usage, with capital projects expected to be funded by cash, internal funds, and external financing | Cash Flow (in millions) | 2025 (6 Months) | 2024 (6 Months) | Variance | | :---------------------- | :-------------- | :-------------- | :------- | | Net cash provided by operating activities | $1,698.2 | $1,621.8 | $76.4 | | Net cash used in investing activities | $(983.6) | $(275.5) | $(708.1) | | Net cash used in financing activities | $(627.5) | $(620.1) | $(7.4) | Cash flow Net cash provided by operating activities increased by $76.4 million in H1 2025, while net cash used in investing activities significantly increased by $708.1 million | Cash Flow (in millions) | 2025 (6 Months) | 2024 (6 Months) | Variance | | :---------------------- | :-------------- | :-------------- | :------- | | Net cash provided by operating activities | $1,698.2 | $1,621.8 | $76.4 | | Net cash used in investing activities | $(983.6) | $(275.5) | $(708.1) | | Net cash used in financing activities | $(627.5) | $(620.1) | $(7.4) | Net cash provided by operating activities Net cash provided by operating activities increased by 4.7% to $1,698.2 million in H1 2025, driven by higher net income and deferred tax provisions, offset by changes in operating assets and liabilities | Metric (in milli