Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2019 | Apr. 26, 2019 | |
Document and Entity Information | ||
Entity Registrant Name | SOUTHERN COPPER CORP/ | |
Entity Central Index Key | 0001001838 | |
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2019 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Common Stock, Shares Outstanding | 773,044,469 | |
Document Fiscal Year Focus | 2019 | |
Document Fiscal Period Focus | Q1 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS - USD ($) shares in Millions, $ in Millions | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS | ||
Net sales (including sales to related parties, see Note 7) | $ 1,753.4 | $ 1,841.1 |
Operating cost and expenses: | ||
Cost of sales (exclusive of depreciation, amortization and depletion shown separately below) | 844.1 | 876.5 |
Selling, general and administrative | 28.5 | 24.1 |
Depreciation, amortization and depletion | 181.6 | 162 |
Exploration | 5.5 | 5.2 |
Total operating costs and expenses | 1,059.7 | 1,067.8 |
Operating income | 693.7 | 773.3 |
Interest expense | (90.1) | (90.3) |
Capitalized interest | 12.3 | 21.1 |
Other income (expense) | 5.4 | (2.3) |
Interest income | 3.7 | 2.6 |
Income before income taxes | 625 | 704.4 |
Income taxes (including royalty taxes, see Note 4) | 237.9 | 236.6 |
Net income before equity earnings of affiliate | 387.1 | 467.8 |
Equity earnings of affiliate, net of income tax | 2.1 | 4.1 |
Net income | 389.2 | 471.9 |
Less: Net income attributable to the non-controlling interest | 1 | 1.2 |
Net income attributable to SCC | $ 388.2 | $ 470.7 |
Per common share amounts attributable to SCC: | ||
Net earnings - basic and diluted | $ 0.50 | $ 0.61 |
Dividends paid | $ 0.40 | $ 0.30 |
Weighted average shares outstanding - basic and diluted | 773 | 773 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | ||
Net income and comprehensive income | $ 389.2 | $ 471.9 |
Comprehensive income attributable to the non-controlling interest | 1 | 1.2 |
Comprehensive income attributable to SCC | $ 388.2 | $ 470.7 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Millions | Mar. 31, 2019 | Dec. 31, 2018 |
Current assets: | ||
Cash and cash equivalents | $ 737 | $ 844.6 |
Short-term investments | 213.5 | 213.8 |
Accounts receivable trade | 876.6 | 822.4 |
Accounts receivable other (including related parties 2019 - $98.2 and 2018 - $101.5) | 158.8 | 150.2 |
Inventories | 1,035.6 | 1,032.7 |
Prepaid taxes | 129.6 | 87 |
Other current assets | 31.3 | 29.3 |
Total current assets | 3,182.4 | 3,180 |
Property and mine development, net | 9,383.6 | 9,403.8 |
Ore stockpiles on leach pads | 1,182 | 1,177.4 |
Intangible assets, net | 147.3 | 147.7 |
Right-of-use assets | 1,092.5 | |
Deferred income tax | 367.5 | 400.9 |
Equity method investment | 104.7 | 103.6 |
Other assets | 82.6 | 71.4 |
Total assets | 15,542.6 | 14,484.8 |
Current liabilities: | ||
Accounts payable (including related parties 2019 - $66.4 and 2018 - $75.3) | 587.3 | 673.4 |
Accrued income taxes | 118 | 232.8 |
Accrued workers' participation | 188.2 | 206.7 |
Accrued interest | 133.1 | 83.9 |
Lease liabilities current | 65.8 | |
Other accrued liabilities | 31 | 19.5 |
Total current liabilities | 1,123.4 | 1,216.3 |
Long-term debt | 5,960.9 | 5,960.1 |
Lease liabilities | 1,026.7 | |
Deferred income taxes | 206.5 | 202.6 |
Non-current taxes payable | 207.1 | 207.1 |
Other liabilities and reserves | 76.6 | 68.2 |
Asset retirement obligation | 248.6 | 217.7 |
Total non-current liabilities | 7,726.4 | 6,655.7 |
Commitments and contingencies (Note 9) | ||
STOCKHOLDERS' EQUITY | ||
Common stock | 8.8 | 8.8 |
Additional paid-in capital | 3,400.4 | 3,393.7 |
Retained earnings | 6,265.7 | 6,186.9 |
Accumulated other comprehensive income | (2.4) | (2.4) |
Treasury stock, at cost, common shares | (3,026) | (3,019.6) |
Total Southern Copper Corporation stockholders' equity | 6,646.5 | 6,567.4 |
Non-controlling interest | 46.3 | 45.4 |
Total equity | 6,692.8 | 6,612.8 |
Total liabilities and equity | $ 15,542.6 | $ 14,484.8 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Millions | Mar. 31, 2019 | Dec. 31, 2018 |
CONDENSED CONSOLIDATED BALANCE SHEETS | ||
Accounts receivable other, related parties | $ 98.2 | $ 101.5 |
Accounts payable, related parties | $ 66.4 | $ 75.3 |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
OPERATING ACTIVITIES | ||
Net income | $ 389.2 | $ 471.9 |
Adjustments to reconcile net income to net cash provided from operating activities: | ||
Depreciation, amortization and depletion | 181.6 | 162 |
Equity earnings of affiliate, net of dividends received | (1.1) | (0.3) |
Loss on foreign currency transaction effect | 2.3 | 26.4 |
Benefit from deferred income taxes | 38.9 | (23.9) |
Other, net | 3.6 | (1.2) |
Change in operating assets and liabilities: | ||
(Increase) decrease in accounts receivable | (54.2) | 16.7 |
(Increase) in inventories | (7.5) | (59.4) |
(Decrease) increase in accounts payable and accrued liabilities | (132.9) | 83.4 |
(Decrease) increase in other operating assets and liabilities | (48.6) | (25.8) |
Net cash provided by operating activities | 371.3 | 649.8 |
INVESTING ACTIVITIES | ||
Capital investments | (173.1) | (295.7) |
Proceeds from (purchase of) short-term investments, net | 0.3 | (6) |
Proceeds from sale of property | 0.3 | |
Net cash used in investing activities | (172.8) | (301.4) |
FINANCING ACTIVITIES | ||
Cash dividends paid to common stockholders | (309.2) | (231.9) |
SCC shareholder derivative - received from AMC | 36.5 | |
SCC shareholder derivative lawsuit - dividend paid | (36.5) | |
Other | (0.1) | (0.9) |
Net cash used in financing activities | (309.3) | (232.8) |
Effect of exchange rate changes on cash and cash equivalents | 3.2 | (52.2) |
Net (decrease) increase in cash and cash equivalents | (107.6) | 63.4 |
Cash and cash equivalents at beginning of period | 844.6 | 1,004.8 |
Cash and cash equivalents at end of period | $ 737 | $ 1,068.2 |
CONDENSED CONSOLIDATED STATEM_4
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY - USD ($) $ in Millions | CAPITAL STOCK: | ADDITIONAL PAID-IN CAPITAL: | TREASURY STOCK:Southern Copper common shares | TREASURY STOCK:Parent Company (Grupo Mexico) common shares | TREASURY STOCK: | RETAINED EARNINGS: | ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS): | STOCKHOLDERS' EQUITY | NON-CONTROLLING INTEREST | Total |
Balance at beginning of period at Dec. 31, 2017 | $ 8.8 | $ 3,373.3 | $ (2,768.7) | $ (232.4) | $ 5,726.2 | $ 0.5 | $ 6,107.7 | $ 41.7 | $ 6,149.4 | |
Increase (Decrease) in Stockholders' Equity | ||||||||||
Net earnings | 470.7 | 1.2 | 470.7 | |||||||
Dividends/distributions declared and paid | (231.9) | (0.3) | ||||||||
Other activity, including dividend, interest and foreign currency transaction effect | (6.5) | |||||||||
Other activity of the period | 6.8 | |||||||||
Balance at end of period at Mar. 31, 2018 | 8.8 | 3,380.1 | (2,768.7) | (238.9) | $ (3,007.6) | 5,965 | 0.5 | 6,346.8 | 42.6 | 6,389.4 |
Balance at beginning of period at Dec. 31, 2018 | 8.8 | 3,393.7 | (2,768.3) | (251.3) | 6,186.9 | (2.4) | 6,567.4 | 45.4 | 6,612.8 | |
Increase (Decrease) in Stockholders' Equity | ||||||||||
Net earnings | 388.2 | 1 | 388.2 | |||||||
Dividends/distributions declared and paid | (309.2) | (0.1) | ||||||||
SCC shareholder derivative lawsuit - received from AMC | 36.5 | (36.5) | ||||||||
SCC shareholder derivative lawsuit - dividend paid | (36.5) | 36.5 | ||||||||
Other activity, including dividend, interest and foreign currency transaction effect | (6.4) | |||||||||
Other activity of the period | 6.7 | (0.2) | ||||||||
Balance at end of period at Mar. 31, 2019 | $ 8.8 | $ 3,400.4 | $ (2,768.3) | $ (257.7) | $ (3,026) | $ 6,265.7 | $ (2.4) | $ 6,646.5 | $ 46.3 | $ 6,692.8 |
CONDENSED CONSOLIDATED STATEM_5
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (Parenthetical) - $ / shares | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY | ||
Dividends paid as cash dividend (in dollars per share) | $ 0.40 | $ 0.30 |
DESCRIPTION OF THE BUSINESS_
DESCRIPTION OF THE BUSINESS: | 3 Months Ended |
Mar. 31, 2019 | |
DESCRIPTION OF THE BUSINESS: | |
DESCRIPTION OF THE BUSINESS: | NOTE 1 – DESCRIPTION OF THE BUSINESS: The Company is a majority-owned, indirect subsidiary of Grupo Mexico S.A.B. de C.V. (“Grupo Mexico”). At March 31, 2019, Grupo Mexico through its wholly-owned subsidiary Americas Mining Corporation (“AMC”) owned 88.9% of the Company’s capital stock. The condensed consolidated financial statements presented herein consist of the accounts of Southern Copper Corporation ("SCC" or the “Company”), a Delaware corporation, and its subsidiaries. The Company is an integrated producer of copper and other minerals, and operates mining, smelting and refining facilities in Peru and Mexico. The Company conducts its primary operations in Peru through a registered branch (the "Peruvian Branch" or “Branch” or “SPCC Peru Branch”). The Peruvian Branch is not a corporation separate from the Company. The Company's Mexican operations are conducted through subsidiaries. The Company also conducts exploration activities in Argentina, Chile, Ecuador, Mexico and Peru. In the opinion of the Company, the accompanying unaudited condensed consolidated financial statements contain all adjustments (consisting only of normal recurring adjustments) necessary to state fairly the Company’s financial position as of March 31, 2019 and the results of operations, comprehensive income, cash flows and changes in equity for the three months ended March 31, 2019 and 2018. The results of operations for the three months ended March 31, 2019 are not necessarily indicative of the results to be expected for the full year. The December 31, 2018 balance sheet data was derived from audited financial statements, but does not include all disclosures required by generally accepted accounting principles in the United States of America (“GAAP”). The accompanying condensed consolidated financial statements should be read in conjunction with the consolidated financial statements at December 31, 2018 and notes included in the Company’s 2018 annual report on Form 10-K. |
SHORT-TERM INVESTMENTS_
SHORT-TERM INVESTMENTS: | 3 Months Ended |
Mar. 31, 2019 | |
SHORT-TERM INVESTMENTS: | |
SHORT-TERM INVESTMENTS: | NOTE 2 – SHORT-TERM INVESTMENTS: Short-term investments were as follows ($ in millions): At March 31, At December 31, 2019 2018 Trading securities $ 212.7 $ 213.1 Weighted average interest rate 2.5 % 2.2 % Available-for-sale $ 0.8 $ 0.7 Weighted average interest rate 0.7 % 0.7 % Total $ 213.5 $ 213.8 Trading securities consist of bonds issued by public companies and are publicly traded. Each financial instrument is independent of the others. The Company has the intention to sell these bonds in the short-term. Available-for-sale investments consist of securities issued by public companies. Each security is independent of the others and at March 31, 2019 and December 31, 2018, included corporate bonds and asset and mortgage backed obligations. As of March 31, 2019 and December 31, 2018, gross unrealized gains and losses on available-for-sale securities were not material. Related to these investments the Company earned interest, which was recorded as interest income in the condensed consolidated statement of earnings. Also, the Company redeemed some of these securities and recognized gains (losses) due to changes in fair value, which were recorded as other income (expense) in the condensed consolidated statement of earnings. The following table summarizes the activity of these investments by category (in millions): Three months ended March 31, 2019 2018 Trading: Interest earned $ 0.1 $ 0.1 Unrealized (loss) gain at the end of the period $ (0.1) $ (0.1) Available-for-sale: Interest earned (*) (*) Investment redeemed $ — $ 0.1 (*) Less than $0.1 million. |
INVENTORIES_
INVENTORIES: | 3 Months Ended |
Mar. 31, 2019 | |
INVENTORIES: | |
INVENTORIES: | NOTE 3 - INVENTORIES: Inventories were as follows: At March 31, At December 31, (in millions) 2019 2018 Inventory, current: Metals at average cost: Finished goods $ 54.1 $ 69.6 Work-in-process 250.7 256.8 Ore stockpiles on leach pads 351.7 328.0 Supplies at average cost: 379.1 378.3 Total current inventory $ 1,035.6 $ 1,032.7 Inventory, non-current: Ore stockpiles on leach pads $ 1,182.0 $ 1,177.4 In the first quarter 2019 and 2018, total leaching costs capitalized as non-current inventory of ore stockpiles on leach pads amounted to $122.3 million and $126.5 million, respectively. Leaching inventories recognized in cost of sales amounted to $94.1 million and $79.5 million for the first quarter 2019 and 2018, respectively. |
INCOME TAXES_
INCOME TAXES: | 3 Months Ended |
Mar. 31, 2019 | |
INCOME TAXES: | |
INCOME TAXES: | NOTE 4 – INCOME TAXES: The income tax provision and the effective income tax rate for the first quarter 2019 and 2018 consisted of ($ in millions): 2019 2018 Statutory income tax provision $ 214.7 $ 212.3 Peruvian royalty 0.4 1.7 Mexican royalty 16.7 16.1 Peruvian special mining tax 6.1 6.5 Income tax provision $ 237.9 $ 236.6 Effective income tax rate 38.1 % 33.6 % These provisions include income taxes for Peru, Mexico and the United States. In addition, the Mexican royalty, the Peruvian royalty and the Peruvian special mining tax are included in the income tax provision. The increase in the effective tax rate for the first quarter of 2019 from the same period in the prior year is primarily due to the movement in exchange gain or loss from the appreciation in 2019 of the Mexican peso versus the U.S. dollar measured against the devaluation of the Mexican peso in the same period of 2018, and a SAB 118 adjustment to the valuation allowance in the first quarter of 2018, which is not applicable for the first quarter of 2019. Peruvian royalty and special mining tax : The mining royalty charge is based on operating income margins with graduated rates ranging from 1% to 12% of operating profits, with a minimum royalty charge assessed at 1% of net sales. If the operating income margin is 10% or less, the royalty charge is 1% and for each 5% increment in the operating income margin, the royalty charge rate increases by 0.75%, up to a maximum of 12%. The minimum royalty charge assessed at 1% of net sales is recorded as cost of sales and those amounts assessed against operating income are included in the income tax provision. The Company has accrued $6.0 million and $7.1 million of royalty charge in the first quarter 2019 and 2018, respectively, of which $0.4 million and $1.7 million were included in income taxes in 2019 and 2018, respectively. The special mining tax is based on operating income and its rate ranges from 2% to 8.4%. It begins at 2% for operating income margin up to 10% and increases by 0.4% of operating income for each additional 5% of operating income until 85% of operating income is reached. The Company has accrued $6.1 million and $6.5 million of special mining tax as part of the income tax provision for the first quarter 2019 and 2018, respectively. Mexican mining royalty : Mexico has a mining royalty charge of 7.5% on earnings before taxes as defined by Mexican tax regulations and an additional royalty charge of 0.5% over gross income from sales of gold, silver and platinum. The Company has accrued $16.7 million and $16.1 million of royalty taxes as part of the income tax provision for the first quarter 2019 and 2018, respectively. In the first quarter of 2019, the Company has paid $85.9 million for year 2018 mining royalty. Accounting for uncertainty in income taxes: In the first quarter of 2019, there were no changes in the Company’s uncertain tax positions. |
REVENUE_
REVENUE: | 3 Months Ended |
Mar. 31, 2019 | |
REVENUE: | |
REVENUE: | NOTE 5 – REVENUE: On January 1, 2018, the Company adopted FASB Accounting Standards Codification Topic 606 (“ASC 606”), Revenue from Contracts with Customers. Upon adoption by the Company, no cumulative effect adjustment was required to be recognized, as the adoption of the standard did not result in a change to the way the Company recognizes its revenue. The Company’s net sales were $1,753.4 million in the three months ended March 31, 2019, compared to $1,841.1 million in the same period of 2018. The geographic breakdown of the Company’s sales is as follows (in millions): Three Months Ended March 31, 2019 Mexican Mexican Peruvian Corporate & Open-Pit IMMSA Unit Operations Elimination Consolidated The Americas: Mexico $ 351.3 $ 86.8 $ — $ (19.9) $ 418.2 United States 279.0 1.4 6.7 — 287.1 Peru 1.6 — 85.7 — 87.3 Brazil — 7.2 48.3 — 55.5 Chile 1.1 — 20.0 — 21.1 Other American countries 12.8 0.5 1.8 — 15.1 Europe: Switzerland 225.4 12.0 110.4 — 347.8 Italy 29.2 5.5 47.3 — 82.0 Spain 45.5 — — — 45.5 Other European countries 22.9 5.8 53.9 — 82.6 Asia: Singapore 58.5 1.8 52.6 — 112.9 Japan 9.8 — 117.5 — 127.3 Other Asian countries 35.0 0.1 35.9 — 71.0 Total $ 1,072.1 $ 121.1 $ 580.1 $ (19.9) $ 1,753.4 Three Months Ended March 31, 2018 Mexican Mexican Peruvian Corporate & Open-Pit IMMSA Unit Operations Elimination Consolidated The Americas: Mexico $ 368.8 $ 111.3 $ — $ (19.6) $ 460.5 United States 248.4 5.0 41.5 — 294.9 Peru — — 93.5 — 93.5 Brazil — 12.6 62.9 — 75.5 Chile — — 36.0 — 36.0 Other American countries 12.6 0.8 1.0 — 14.4 Europe: Switzerland 82.3 9.2 43.8 — 135.3 Italy 8.3 5.5 82.2 — 96.0 Spain 44.5 — — — 44.5 Other European countries 51.8 4.6 25.7 — 82.1 Asia: Singapore 143.9 — 132.5 — 276.4 Japan 44.2 — 115.2 — 159.4 Other Asian countries 63.8 0.2 8.6 — 72.6 Total $ 1,068.6 $ 149.2 $ 642.9 $ (19.6) $ 1,841.1 The following table presents information regarding the sales value by reporting segment of the Company’s significant products for the three months ended March 31, 2019 and 2018 (in millions): Three Months Ended March 31, 2019 Mexican Mexican Peruvian Corporate & Open-Pit IMMSA Unit Operations Elimination Consolidated Copper $ 895.1 $ 11.0 $ 522.4 $ (12.9) $ 1,415.6 Molybdenum 90.1 — 28.2 — 118.3 Zinc — 77.1 — (0.4) 76.7 Silver 50.4 17.3 14.9 (5.8) 76.8 Other 36.5 15.7 14.6 (0.8) 66.0 Total $ 1,072.1 $ 121.1 $ 580.1 $ (19.9) $ 1,753.4 Three Months Ended March 31, 2018 Mexican Mexican Peruvian Corporate & Open-Pit IMMSA Unit Operations Elimination Consolidated Copper $ 909.4 $ 11.2 $ 564.0 $ (11.2) $ 1,473.4 Molybdenum 91.0 — 45.3 — 136.3 Zinc — 95.0 — (0.1) 94.9 Silver 42.6 20.6 15.4 (7.5) 71.1 Other 25.6 22.4 18.2 (0.8) 65.4 Total $ 1,068.6 $ 149.2 $ 642.9 $ (19.6) $ 1,841.1 The opening and closing balances of receivables by reporting segment of the Company were as follows (in millions): Mexican Mexican Peruvian Corporate & Open-Pit IMMSA Unit Operations Elimination Consolidated As of March 31, 2019: Trade receivables $ 543.9 $ 54.0 $ 278.7 $ — $ 876.6 Related parties 89.2 — — 9.0 $ 98.2 As of December 31, 2018: Trade receivables $ 505.9 $ 50.5 $ 266.0 $ — $ 822.4 Related parties 81.6 — — 19.9 101.5 As of March 31, 2019, the Company has long-term contracts with promises to deliver the following products in 2019: Copper concentrates (in tons) 1,090,000 Copper cathodes (in tons) 48,000 Molybdenum concentrates (in tons) 24,106 Sulfuric acid (in tons) 331,620 Provisionally priced sales : At March 31, 2019, the Company has recorded provisionally priced sales of copper at average forward prices per pound, and molybdenum at the March 31, 2019 market price per pound. These sales are subject to final pricing based on the average monthly London Metal Exchange (“LME”), or New York Commodities Exchange (“COMEX”), copper prices and Dealer Oxide molybdenum prices in the future month of settlement. Following are the provisionally priced copper and molybdenum sales outstanding at March 31, 2019: Sales volume Priced at (million lbs.) (per pound) Month of settlement Copper 105.0 $ 2.94 April through July 2019 Molybdenum 10.2 $ 12.13 April through June 2019 The provisional sales price adjustment included in accounts receivable and net sales at March, 31, 2019 includes positive adjustments of $2.8 million and $4.1 million for copper and molybdenum, respectively. Management believes that the final pricing of these sales will not have a material effect on the Company’s financial position or results of operations. |
ASSET RETIREMENT OBLIGATION_
ASSET RETIREMENT OBLIGATION: | 3 Months Ended |
Mar. 31, 2019 | |
ASSET RETIREMENT OBLIGATION: | |
ASSET RETIREMENT OBLIGATION: | NOTE 6 - ASSET RETIREMENT OBLIGATION: The Company maintains an asset retirement obligation for its mining properties in Peru, as required by the Peruvian Mine Closure Law. In accordance with the requirements of this law the Company’s closure plans were approved by the Peruvian Ministry of Energy and Mines (“MINEM”). As part of the closure plans, the Company is required to provide annual guarantees over the estimated life of the mines, based on a present value approach, and to furnish the funds for the asset retirement obligation. This law requires a review of closing plans every five years. Currently and for the near-term future, the Company has pledged the value of its Lima office complex and a warehouse in Lima as support for this obligation. The accepted values of these facilities, for this purpose,are of $45.3 million. Through March 2019, the Company has provided guarantees of $37.8 million. The closure cost recognized for this liability includes the cost, as outlined in its closure plans, of dismantling the Toquepala and Cuajone concentrators, the Ilo smelter and refinery, and the shops and auxiliary facilities at the three units. In March 2016, MINEM approved the Mining Closure Plan for the Toquepala expansion project. The closure plan for the Tia Maria project was approved in February 2017. The Company, however, has not recorded a retirement obligation for the Tia Maria project as the construction permit has not been received, and work on the project is on hold. The Company believes that under these circumstances the recording of a retirement obligation is not appropriate. In accordance with requirements of Peruvian law, the Company in December 2017 and February 2018, submitted to MINEM revised closure plans for the Cuajone mine and the Ilo facilities respectively. The revised closure plan for the Ilo facility was approved in January 2019 and after comments received from MINEM, the Company submitted a new revised closure plan for the Cuajone mine. As result of these new estimates, in the first quarter of 2019, the Company has increased the asset retirement obligation by $28.1 million. In 2010, the Company announced to the Mexican federal environmental authorities its closure plans for the copper smelter plant at San Luis Potosi. The Company developed a program for plant demolition and soil remediation with a cost of $66.2 million. In 2016, the environmental authorities approved the conclusion of the remediation effort. The Company continues studying the possibilities for this property in order to decide whether to sell or develop the property. The Company has recognized an estimated asset retirement obligation for its mining properties in Mexico as part of its environmental commitment. Even though there is currently no enacted law, statute, ordinance, written or oral contract requiring the Company to carry out mine closure and environmental remediation activities, the Company believes that a constructive obligation presently exists based on the remediation requirements caused by the closure of any facility. The overall cost recognized for mining closure in Mexico includes the estimated costs of dismantling concentrators, smelter and refinery plants, shops and other facilities. During 2018, the Company made a change in the estimate for the asset retirement obligation in its Mexican operations, mainly due to a change in the discount rate used to determine such obligation. The effect of this change was a reduction in the asset retirement obligation of $10.4 million, which was recorded in the second quarter of 2018. The following table summarizes the asset retirement obligation activity for the three months ended March 31, 2019 and 2018 (in millions): 2019 2018 Balance as of January 1 $ 217.7 $ 222.5 Changes in estimates 28.1 (5.2) Payments (0.2) — Accretion expense 3.0 3.2 Balance as of March 31, $ 248.6 $ 220.5 |
RELATED PARTY TRANSACTIONS_
RELATED PARTY TRANSACTIONS: | 3 Months Ended |
Mar. 31, 2019 | |
RELATED PARTY TRANSACTIONS: | |
RELATED PARTY TRANSACTIONS: | NOTE 7 – RELATED PARTY TRANSACTIONS: The Company has entered into certain transactions in the ordinary course of business with parties that are controlling shareholders or their affiliates. These transactions include the lease of office space, air transportation and construction services and products and services related to mining and refining. The Company lends and borrows funds among affiliates for acquisitions and other corporate purposes. These financial transactions bear interest and are subject to review and approval by senior management, as are all related party transactions. It is the Company’s policy that the Audit Committee of the Board of Directors shall review all related party transactions. The Company is prohibited from entering or continuing a material related party transaction that has not been reviewed and approved or ratified by the Audit Committee. Receivable and payable balances with related parties are shown below (in millions): At March 31, At December 31, 2019 2018 Related parties receivable current : Grupo Mexico and affiliates: Asarco LLC $ 74.6 $ 74.4 AMC — 11.0 AMMINCO Apoyo Administrativo, S.A. de C.V. (“AMMINCO”) — 0.2 Compania Perforadora Mexico, S.A.P.I. de C.V. and affiliates 1.0 1.4 Ferrocarril Mexicano, S.A. de C.V. 0.1 0.1 Grupo Mexico 2.7 2.7 Mexico Generadora de Energia, S. de R.L. (“MGE”) 18.0 10.3 Mexico Proyectos y Desarrollos, S.A. de C.V. and affiliates (“MPD”) 0.5 0.6 Related to the controlling group: Boutique Bowling de Mexico, S.A. de C.V. 0.3 0.3 Empresarios Industriales de Mexico, S.A. de C.V. 0.1 — Mexico Transportes Aereos, S.A. de C.V. ("Mextransport") 0.5 0.1 Operadora de Cinemas, S.A. de C.V. 0.4 0.4 $ 98.2 $ 101.5 Related parties payable: Grupo Mexico and affiliates: Asarco LLC $ 6.6 $ 4.1 AMMINCO 2.4 8.0 Eolica El Retiro, S.A.P.I. de C.V. 1.0 1.0 Ferrocarril Mexicano, S.A. de C.V. 7.6 6.4 Grupo Mexico 0.8 0.6 MGE 36.7 40.6 MPD 11.2 14.4 Related to the controlling group: Boutique Bowling de Mexico, S.A. de C.V. 0.1 0.1 Operadora de Cinemas, S.A. de C.V. (*) 0.1 $ 66.4 $ 75.3 (*) amount is lower than $0.1 million Purchase and sale activity: Grupo Mexico and affiliates: The following table summarizes the purchase and sale activities with Grupo Mexico and its affiliates in the three months ended March 31, 2019 and 2018 (in millions): 2019 2018 Purchase activity Asarco LLC $ 10.0 $ 6.8 AMMINCO 2.4 — Eolica El Retiro 0.8 0.6 Ferrocarril Mexicano, S.A de C.V. 10.6 10.0 Grupo Mexico 2.5 4.5 MGE 55.2 61.9 MPD 10.8 15.9 Total purchases $ 92.3 $ 99.7 Sales activity Asarco LLC $ 2.0 $ 36.5 MGE 15.1 23.2 Total sales $ 17.1 $ 59.7 Grupo Mexico, the parent and the majority indirect stockholder of the Company, and its affiliates provide various services to the Company. These services are primarily related to accounting, legal, tax, financial, treasury, human resources, price risk assessment and hedging, purchasing, procurement and logistics, sales and administrative and other support services. The Company´s Mexican operations pay Grupo Mexico and the Company´s Peruvian operations pay AMMINCO for these services and expect to continue requiring these services in the future. In the first quarter of 2019, the Company made donations of $3.4 million to Fundacion Grupo Mexico A.C., an organization dedicated to promoting the social and economic development of the communities close to the Company’s Mexican operations. In addition, in December 2018, in accordance with the Company´s tax sharing agreement with its parent, the Company´s Peruvian operations advanced $11 million to AMC for the payment of the Company’s portion of the GILTI tax that later was determined not to be necessary. In the first quarter of 2019, this amount was reimbursed to the Company. The Company’s Mexican operations paid fees for freight services provided by Ferrocarril Mexicano, S.A de C.V. and for construction services provided by Mexico Proyectos y Desarrollos, S.A. de C.V. and its affiliates. All of these companies are subsidiaries of Grupo Mexico. The Company’s Mexican operations purchased scrap and other residual copper mineral from Asarco LLC, and power from MGE. Both companies are subsidiaries of Grupo Mexico. In 2005, the Company organized MGE, as a subsidiary of Minera Mexico, for the construction of two power plants to supply power to the Company’s Mexican operations. In May 2010, the Company’s Mexican operations granted a $350 million line of credit to MGE for the construction of the power plants. That line of credit was due on December 31, 2012 and carried an interest rate of 4.4%. In the first quarter of 2012, an indirect subsidiary of Grupo Mexico, acquired 99.999% of MGE through a capital subscription of 1,928.6 million of Mexican pesos (approximately $150 million), reducing Minera Mexico’s participation to less than 0.001%. As consequence of this change in control, MGE became an indirect subsidiary of Grupo Mexico. Additionally, at the same time, MGE paid $150 In 2012, the Company signed a power purchase agreement with MGE, whereby MGE will supply some of the Company’s Mexican operations with power through 2032. MGE has two natural gas-fired combined cycle power generating units, with a net total capacity of 516.2 megawatts and has been supplying power to the Company since December 2013. Currently, MGE is supplying 2.1% of its power output to third-party energy users; compared to 14% at March 31, 2018. In 2014, Mexico Generadora de Energia Eolica, S. de R.L. de C.V, an indirect subsidiary of Grupo Mexico, located in Oaxaca, Mexico, acquired Eolica el Retiro. Eolica el Retiro is a windfarm with 37 wind turbines. This company started operations in January 2014 and started to sell power to Industrial Minera Mexico and subsidiaries (IMMSA) and other subsidiaries of Grupo Mexico in the third quarter of 2014. Currently, Eolica el Retiro is supplying approximately 20.9% of its power output to IMMSA. The Company sold copper cathodes, rod and anodes, as well as sulfuric acid, silver, gold and lime to Asarco LLC. In addition, the Company received fees for building rental and maintenance services provided to Mexico Proyectos y Desarrollos, S.A. de C.V. and its affiliates and to Perforadora Mexico, S.A.P.I. de C.V., and for natural gas and services provided to MGE; all subsidiaries of Grupo Mexico. Companies with relationships to the controlling group: The following table summarizes the purchase and sales activities with other Larrea family companies in the three months ended March 31, 2019 and 2018 (in millions): 2019 2018 Purchase activity Boutique Bowling de Mexico, S.A. de C.V. $ 0.1 $ 0.1 Operadora de Cinemas, S.A. de C.V. (*) (*) Mextransport — 0.2 Total purchases $ 0.1 $ 0.3 Sales activity Boutique Bowling de Mexico, S.A. de C.V. $ (*) $ 0.1 Empresarios Industriales de Mexico, S.A. de C.V. — Operadora de Cinemas, S.A. de C.V. (*) (*) Mextransport 0.5 0.1 Total sales $ 0.6 $ 0.2 (*) amount is lower than $0.1 million The Larrea family controls a majority of the capital stock of Grupo Mexico, and has extensive interests in other businesses, including transportation, real estate and entertainment. The Company engages in certain transactions in the ordinary course of business with other entities controlled by the Larrea family relating to the lease of office space, air transportation and entertainment. The Company’s Mexican operations paid fees for entertainment services provided by Boutique Bowling de Mexico, S.A de C.V. and Operadora de Cinemas, S.A. de C.V. Both companies are controlled by the Larrea family. In addition, the Company received fees for building rental and maintenance provided to Boutique Bowling de Mexico S.A. de C.V., Operadora de Cinemas S.A. de C.V and Mextransport. The Company´s Mexican operations also received fees for surveillance services provided to Empresarios Industriales de Mexico, S.A. de C.V. This is a company controlled by the Larrea family. Equity Investment in Affiliate: The Company has a 44.2% participation in Compania Minera Coimolache S.A. (“Coimolache”), which it accounts for on the equity method. Coimolache owns Tantahuatay, a gold mine located in the northern part of Peru. It is anticipated that in the future the Company will enter into similar transactions with these same parties. In the first quarter of 2019, the Company did not have purchase or sales activities with companies having relationships with SCC executive officers. |
BENEFIT PLANS_
BENEFIT PLANS: | 3 Months Ended |
Mar. 31, 2019 | |
BENEFIT PLANS: | |
BENEFIT PLANS: | NOTE 8 – BENEFIT PLANS: Post retirement defined benefit plans: The Company has two noncontributory defined benefit pension plans covering former salaried employees in the United States and certain former expatriate employees in Peru. Effective October 31, 2000, the Board of Directors amended the qualified pension plan to suspend the accrual of benefits. In addition, the Company’s Mexican subsidiaries have a defined contribution pension plan for salaried employees and a non-contributory defined benefit pension plan for union employees. The components of net periodic benefit costs for the three months ended March 31, 2019 and 2018 are as follows (in millions): 2019 2018 Service cost $ 0.3 $ 0.3 Interest cost 0.4 0.4 Expected return on plan assets (0.8) (0.9) Amortization of net actuarial loss (*) (*) Amortization of net loss/(gain) (*) (*) Net periodic benefit costs $ (0.1) $ (0.2) (*) amount is lower than $0.1 million Post-retirement health care plans: United States: The Company adopted a post-retirement health care plan for retired salaried employees eligible for Medicare in 1996. The Company manages the plan and is currently providing health benefits to retirees. The plan is accounted for in accordance with ASC 715 “Compensation retirement benefits”. In Mexico, health services are provided by the Mexican Social Security Institute. The components of net periodic benefit cost for the three months ended March 31, 2019 and 2018 are as follows (in millions): 2019 2018 Interest cost $ 0.2 $ 0.2 Amortization of net loss (gain) (*) (*) Amortization of prior service cost (credit) (*) (*) Net periodic benefit cost $ 0.2 $ 0.2 (*) amount is lower than $0.1 million |
COMMITMENTS AND CONTINGENCIES_
COMMITMENTS AND CONTINGENCIES: | 3 Months Ended |
Mar. 31, 2019 | |
COMMITMENTS AND CONTINGENCIES: | |
COMMITMENTS AND CONTINGENCIES: | NOTE 9 – COMMITMENTS AND CONTINGENCIES: Environmental matters: The Company has instituted extensive environmental conservation programs at its mining facilities in Peru and Mexico. The Company’s environmental programs include, among others, water recovery systems to conserve water and minimize the impact on nearby streams, reforestation programs to stabilize the surface of the tailings dams and the implementation of scrubbing technology in the mines to reduce dust emissions. Environmental capital investments in the three months ended March 31, 2019 and 2018 were as follows (in millions): 2019 2018 Peruvian operations $ 10.2 $ 6.5 Mexican operations 9.0 19.9 $ 19.2 $ 26.4 Peruvian operations : The Company’s operations are subject to applicable Peruvian environmental laws and regulations. The Peruvian government, through the Ministry of Environment (“MINAM”) conducts annual audits of the Company’s Peruvian mining and metallurgical operations. Through these environmental audits, matters related to environmental obligation, compliance with legal requirements, atmospheric emissions, effluent monitoring and waste management are reviewed. The Company believes that it is in material compliance with applicable Peruvian environmental laws and regulations. Peruvian law requires that companies in the mining industry provide assurances for future mine closure and remediation. In accordance with the requirements of this law, the Company’s closure plans were approved by MINEM. See Note 6 “Asset retirement obligation,” for further discussion of this matter. Air Quality Standards (“AQS”): In June 2017, MINAM enacted a supreme decree which defines new AQS for daily sulfur dioxide in the air. The Company believes that these new AQS will allow Peruvian industry to be more competitive with other countries. As of March 31, 2019, the Company maintains a lower daily average level of µg/m3 of SO2, than those required by the new AQS. Soil Environmental Quality Standards (“SQS”): In 2013, the Peruvian government enacted SQS applicable to any existing facility or project that generates or could generate the risk of soil contamination in its area of operation or influence. In March 2014, MINAM issued a supreme decree, which established additional provisions for the gradual implementation of SQS. In accordance with the regulatory requirements, the Company has been working on a characterization phase and a Soil Decontamination Plan (“SDP”) for environmentally impacted sites in each of its operating units (Toquepala, Cuajone, and Ilo) with the assistance of consulting companies. It is estimated that the Toquepala and Cuajone SDP will be presented to the authorities for review and approval at the end of the second quarter of 2019, and the Ilo SDP will be submitted during the third quarter of 2019. While the Company believes that there is a reasonable possibility that a potential loss contingency may exist, it cannot currently reasonably estimate the amount of the contingency. The Company believes that a reasonable determination of the loss will be possible once the characterization study and the SDP are substantially completed and approved, which is expected for 2020. At that time the Company will be in a position to estimate the remediation cost. Furthermore, the Company does not believe that it can estimate a reasonable range of possible costs until the noted studies have substantially progressed and therefore is not able to disclose a range of costs that is meaningful. Mexican operations : The Company’s operations are subject to applicable Mexican federal, state and municipal environmental laws, to Mexican official standards, and to regulations for the protection of the environment, including regulations relating to water supply, water quality, air quality, noise levels and hazardous and solid waste. The principal legislation applicable to the Company’s Mexican operations is the Federal General Law of Ecological Balance and Environmental Protection (the “General Law”), which is enforced by the Federal Bureau of Environmental Protection (“PROFEPA”). PROFEPA monitors compliance with environmental legislation and enforces Mexican environmental laws, regulations and official standards. It may also initiate administrative proceedings against companies that violate environmental laws, which in the most extreme cases may result in the temporary or permanent shutdown of non-complying facilities, the revocation of operating licenses and/or other sanctions or fines. In 2011, the General Law was amended, giving an individual or entity the ability to contest administrative acts, including environmental authorizations, permits or concessions granted, without the need to demonstrate the actual existence of harm to the environment as long as it can be argued that the harm may be caused. In addition, in 2011, amendments to the Civil Federal Procedures Code (“CFPC”) were enacted. These amendments establish three categories of collective actions by means of which 30 or more people claiming injury derived from environmental, consumer protection, financial services and economic competition issues will be considered to be sufficient in order to have a legitimate interest to seek through a civil procedure restitution or economic compensation or suspension of the activities from which the alleged injury derived. The amendments to the CFPC may result in more litigation, with plaintiffs seeking remedies, including suspension of the activities alleged to cause harm. In 2013, the Environmental Liability Federal Law was enacted. The law establishes general guidelines for actions to be considered to likely cause environmental harm. If a possible determination regarding harm occurs, environmental clean-up and remedial actions sufficient to restore environment to a pre-existing condition should be taken. Under this law, if restoration is not possible, compensation measures should be provided. Criminal penalties and monetary fines can be imposed under this law. On February 2019, the Mexican Supreme Court confirmed the constitutionality of an ecological tax to extractive activities developed in the state of Zacatecas, which taxes the environmental remediation actions, emissions of certain gases to the atmosphere, emissions of pollutant substances to the soil or water, and waste storage within the state territory. The Company is evaluating the potential impact of this new environmental regulation in its financial position. The Company believes that all of its facilities in Peru and Mexico are in material compliance with applicable environmental, mining and other laws and regulations. The Company also believes that continued compliance with environmental laws of Mexico and Peru will not have a material adverse effect on the Company’s business, properties, result of operations, financial condition or prospects and will not result in material capital investments. Litigation matters : Peruvian operations The Tia Maria Mining Project There are three lawsuits filed against the Peruvian Branch of the Company related to the Tia Maria project. The lawsuits seek (i) to declare null and void the resolution which approved the Environmental Impact Assessment of the project; (ii) the cancellation of the project and the withdrawal of mining activities in the area and (iii) to declare null and void the mining concession application of the Tia Maria project. The lawsuits were filed by Messrs. Jorge Isaac del Carpio Lazo (filed May 22, 2015), Ernesto Mendoza Padilla (filed May 26, 2015) and Juan Alberto Guillen Lopez (filed June 18, 2015). The del Carpio Lazio case was rejected by the court of first instance on November 14, 2016. The plaintiff filed an appeal before the Superior Court on January 3, 2017. On January 9, 2018, the lawyers of both parties presented their respective positions before the Appellate Court. On March 8, 2018, the Appellate Court issued its final decision, which upholds the first instance ruling. On April 27, 2018, the plaintiff filed an extraordinary appeal before the Supreme Court. As of March 31, 2019, the case remains pending resolution. The Mendoza Padilla case was initially rejected by the lower court on July 8, 2015. This ruling was confirmed by the Superior Court on June 14, 2016. On July 12, 2016, the case was appealed before the Constitutional Court. As of March 31, 2019, the case remains pending resolution without further developments. The Guillen Lopez case is currently before the lower court. As of March 31, 2019, the case remains pending resolution without further developments. The Company asserts that these lawsuits are without merit and is vigorously defending against them. The potential contingency amount for these cases cannot be reasonably estimated by management at this time. Special Regional Pasto Grande Project (“Pasto Grande Project”) In 2012, the Pasto Grande Project, an entity of the Regional Government of Moquegua, filed a lawsuit against SCC’s Peruvian Branch alleging property rights over a certain area used by the Peruvian Branch and seeking the demolition of the tailings dam where SCC’s Peruvian Branch has deposited its tailings from the Toquepala and Cuajone operations since 1995. The Peruvian Branch has had title to use the area in question since 1960 and has constructed and operated the tailings dams with proper governmental authorization, since 1995. Upon a motion filed by the Peruvian Branch, the lower court has included MINEM as a defendant in this lawsuit. MINEM has answered the complaint and denied the validity of the claim. As of March 31, 2019, the case remains pending resolution without further developments. SCC’s Peruvian Branch asserts that the lawsuit is without merit and is vigorously defending against it. The amount of this contingency cannot be reasonably estimated by management at this time. Mexican operations The Accidental Spill at Buenavista Mine of 2014 In relation to the 2014 accidental spill of copper sulfate solution that occurred at a leaching pond of the Buenavista mine, the following legal procedures are pending against the Company: On August 19, 2014, PROFEPA, as part of the administrative proceeding initiated after the spill, announced the filing of a criminal complaint against Buenavista del Cobre S.A. de C.V. (“BVC”), a subsidiary of the Company, in order to determine those responsible for the environmental damages. During the second quarter of 2018, the criminal complaint was dismissed. This decision was appealed and remains pending resolution as of March 31, 2019. Through the first half of 2015, six collective action lawsuits were filed in federal courts in Mexico City and Sonora against two subsidiaries of the Company seeking economic compensation, clean up and remedial activities in order to restore the environment to its pre-existing conditions. Two of the collective action lawsuits have been dismissed by the court. The plaintiffs in the four remaining lawsuits are: Acciones Colectivas de Sinaloa, A.C. which established two collective actions, Defensa Colectiva A.C.; and Ana Luisa Salazar Medina et al. which has been granted a collective action certification. The remaining plaintiffs have requested cautionary measures on the construction of facilities for the monitoring of public health services and the prohibition of the closure of the Río Sonora Trust. As of March 31, 2019, regarding the case of Ana Luisa Salazar Medina et al, the trial date has expired. Since the plaintiffs were notified of the expiration of their claims and did not appeal the resolution, this lawsuit has concluded, without responsibility for Buenavista del Cobre, S.A. de C.V. The other cases remain pending resolution as of March 31, 2019. Similarly, during 2015, eight civil action lawsuits were filed against BVC in the state courts of Sonora seeking damages for alleged injuries and for moral damages as a consequence of the spill. The plaintiffs in the state court lawsuits are: Jose Vicente Arriola Nunez et al; Santana Ruiz Molina et al; Andres Nogales Romero et al; Teodoro Javier Robles et al; Gildardo Vasquez Carvajal et al; Rafael Noriega Souffle et al; Grupo Banamichi Unido de Sonora El Dorado, S.C. de R.L. de C.V; and Marcelino Mercado Cruz. In 2016, three additional civil action lawsuits, claiming similar damages, were filed by Juan Melquicedec Lebaron; Blanca Lidia Valenzuela Rivera et al and Ramona Franco Quijada et al. In 2017, BVC was served with thirty-three additional civil action lawsuits, claiming similar damages. The lawsuits were filed by Francisco Javier Molina Peralta et al; Anacleto Cohen Machini et al; Francisco Rafael Alvarez Ruiz et al; Jose Alberto Martinez Bracamonte et al; Gloria del Carmen Ramirez Duarte et al; Flor Margarita Sabori et al; Blanca Esthela Ruiz Toledo et al; Julio Alfonso Corral Domínguez et al; Maria Eduwiges Bracamonte Villa et al; Francisca Marquez Dominguez et al; Jose Juan Romo Bravo et al; Jose Alfredo Garcia Leyva et al; Gloria Irma Dominguez Perez et al; Maria del Refugio Romero et al; Miguel Rivas Medina et al; Yolanda Valenzuela Garrobo et al; Maria Elena Garcia Leyva et al; Manuel Alfonso Ortiz Valenzuela et al; Francisco Alberto Arvayo Romero et al; Maria del Carmen Villanueva Lopez et al; Manuel Martin Garcia Salazar; Miguel Garcia Arguelles et al; Dora Elena Rodriguez Ochoa et al; Honora Eduwiges Ortiz Rodriguez et al; Francisco Jose Martinez Lopez et al; Maria Eduwiges Lopez Bustamante; Rodolfo Barron Villa et al, Jose Carlos Martinez Fernandez et al, Maria de los Angeles Fabela et al; Rafaela Edith Haro et al; Luz Mercedes Cruz et al; Juan Pedro Montaño et al; and Juana Irma Alday Villa. During the first quarter of 2018, BVC was served with another civil action lawsuit, claiming similar damages. The lawsuit was filed by Alma Angelina Del Cid Rivera et al. During the last quarter of 2018, BVC was served with other three civil action lawsuits, claiming similar damages, such lawsuits were filed by Los Corrales de la Estancia, S.C. de R.L.; Jose Antonio Navarro; Jesus Maria Peña Molina, et al. As of March 31, 2019, these cases remain pending resolution. During 2015, four constitutional lawsuits (juicios de amparo) were filed before Federal Courts against various authorities and against a subsidiary of the Company, arguing; (i) the alleged lack of a waste management program approved by SEMARNAT; (ii) the alleged lack of a remediation plan approved by SEMARNAT with regard to the August 2014 spill; (iii) the alleged lack of community approval regarding the environmental impact authorizations granted by SEMARNAT to one subsidiary of the Company; and (iv) the alleged inactivity of the authorities with regard of the spill in August 2014. The plaintiffs of these lawsuits are: Francisca Garcia Enriquez, et al which established two lawsuits, Francisco Ramon Miranda, et al and Jesus David Lopez Peralta et al. During the third quarter of 2016, four additional constitutional lawsuits, claiming similar damages were filed by Mario Alberto Salcido et al; Maria Elena Heredia Bustamante et al; Martin Eligio Ortiz Gamez et al; and Maria de los Angeles Enriquez Bacame et al. During the third quarter of 2017, BVC was served with another constitutional lawsuit filed by Francisca García Enriquez et al. In 2018, BVC was served with two additional constitutional lawsuits that were filed against SEMARNAT by Norberto Bustamante et al. Regarding the constitutional lawsuit filed by Maria Elena Heredia Bustamante et al; in which it was claimed the lack of community approval regarding the authorization granted by SEMARNAT to build the new BVC tailings dam, on September 5, 2018, the Supreme Court of Justice issued a resolution which established that such authorization was granted to BVC in compliance with the applicable legislation. However, SEMARNAT must carry out a public meeting to inform the community of the technical aspects required to build the dam, potential impacts and prevention measures, with no material effects to BVC’s operations. As of March 31, 2019, the remaining cases are still pending resolution. It is not currently possible to determine the extent of the damages sought in these state and federal lawsuits but the Company considers that these lawsuits are without merit. Accordingly, the Company is vigorously defending against them. Nevertheless, the Company considers that none of the legal proceedings resulting from the spill, individually or in the aggregate, would have a material effect on its financial position or results of operations. Corporate operations Carla Lacey, on behalf of herself and all other similarly situated stockholders of Southern Copper Corporation, and derivatively on behalf of Southern Copper Corporation As previously reported, a purported class action derivative lawsuit filed in the Delaware Court of Chancery was served on the Company and its Directors in February 2016 relating to the 2012 capitalization of 99.999% of MGE by Controladora de Infraestructura Energetica Mexico, S.A. de C.V., an indirect subsidiary of Grupo Mexico (the “CIEM Capitalization”), the Company’s entry into a power purchase agreement with MGE in 2012 (the “MGE Power Purchase Agreement”), and the 2012 restructuring of a loan from the Company's Mexican Operations to MGE for the construction of two power plants to supply power to the Company’s Mexican operations (the “MGE Loan Restructuring”). The action purports to be brought on behalf of the Company and its common stockholders. The complaint alleges, among other things, that the CIEM Capitalization, the MGE Power Purchase Agreement and the MGE Loan Restructuring were the result of breaches of fiduciary duties and the Company’s charter. On March 20, 2018, the parties reached an agreement-in-principle to settle the action. On March 23, 2018, the parties informed the Court of the settlement-in-principle to resolve all claims asserted by Plaintiff against Defendants in the action and requested that the Court stay the action in its entirety pending filing by the parties of a stipulation of settlement. The Parties filed the executed stipulation on August 22, 2018. Under the proposed settlement, Grupo Mexico or Americas Mining would pay to the Company $50 million in cash less any attorneys’ fees (including costs) awarded by the Court to Plaintiff’s counsel (the “Net Settlement Amount”) in return for a release of all derivative and direct claims. A settlement hearing was held on November 27, 2018. On December 27, 2018, the Court issued its ruling approving the $50 million settlement. Pursuant to the Court’s ruling, Plaintiff’s counsel was awarded $13.5 million (for attorneys’ fees, expenses, and a $5,000 incentive fee award to plaintiff Carla Lacey). The remaining $36.5 million was distributed via a special dividend on February 21, 2019 to the Company’s public stockholders (other than the director defendants, Grupo Mexico, Americas Mining, or any entity in which Grupo Mexico or Americas Mining has or had a direct or indirect controlling interest) who held shares of common stock of the Company as of February 11, 2019. As result of the payment of the settlement, the claims against the Defendants have been dismissed with prejudice. In April 2019, a derivative lawsuit was filed against the Company, certain of its current and former Directors, and Grupo Mexico in the Delaware Court of Chancery relating to certain construction contracts, contracts for the purchase and sale of minerals, and transportation contracts entered into between the Company’s subsidiaries and subsidiaries of Grupo Mexico. The complaint alleges, among other things, that the construction contracts, the mineral contracts and the transportation contracts were unfair as a result of breaches of fiduciary duties and the Company’s charter. The complaint seeks, among other things, unspecified monetary damages. The complaint and the summons have not yet been served. The Company believes it has a meritorious defense to this action and that the action will not have an adverse effect on its financial position. Labor matters : Peruvian operations: 70% of the Company’s 4,835 Peruvian employees were unionized at March 31, 2019. Currently, there are six separate unions, one large union and five smaller unions. In June 2018, the Company signed a three-year collective bargaining agreement with one of the smaller unions. This agreement includes, among other things, annual salary increases of 5% for each year starting September 2018, and a signing bonus of S/ 45,000 (approximately $13,600) which was recorded as labor expense. In August 2018, the Company signed a three-year collective bargaining agreement with three additional unions. This agreement includes, among other things, annual salary increases of 5% for each year starting December 2018, and a signing bonus of S/ 45,000 (approximately $13,600) which was recorded as labor expense. In March 2019, the Company signed an agreement with one additional union. The agreement also includes annual salary increases of 5% for each year starting September 2018, and a signing bonus of S/ 45,000 (approximately $13,600) which was recorded as labor expense As of March 31, 2019, the Company continues negotiations on collective bargaining agreements with one unsigned union. Mexican operations: In recent years, the Mexican operations have experienced a positive improvement of their labor environment, as its workers opted to change their affiliation from the Sindicato Nacional de Trabajadores Mineros, Metalurgicos y Similares de la Republica Mexicana (the “National Mining Union”) to other less politicized unions. The workers of the San Martin mine were on strike since July 2007. On February 28, 2018, the striking workers of the San Martín mine of IMMSA held an election to vote on the union that will hold the collective bargaining agreement at the San Martín mine. The Federacion Nacional de Sindicatos Independientes (the National Federation of Independent Unions), won the vote by a majority. Nevertheless, the vote was challenged by the National Mining Union. On June 26, 2018, the Federal Mediation and Arbitration Board issued a ruling recognizing the election results. Due to the agreement between workers and the Company to end the protracted strike, on August 22, 2018, the Federal Mediation and Arbitration Board authorized the restart of operations of the San Martín mine. Such authorization was challenged by the National Mining Union. On April 4, 2019, the Federal Mediation and Arbitration Board recognized again the election results from February 28, 2018; in which the National Federation of Independent Unions won by a majority. The Company is working on a rehabilitation plan to restart operations at the San Martin mine with a budget of $87 million. At March 31, 2019 the plan is in progress with a total expense of $34.9 million. The Company continues with plans to restore mining operations and expects to restore copper production in the second quarter of 2019. In the case of the Taxco mine, its workers have been on strike since July 2007. After several legal procedures, in August 2015, the Supreme Court decided to assert jurisdiction over the case and to rule on it directly. As of March 31, 2019, the case remains pending resolution without further developments. It is expected that operations at the Taxco mine will remain suspended until the labor issues are resolved. In view of the lengthy strike, the Company has reviewed the carrying value of the Taxco mine to ascertain whether impairment exists. The Company concluded that there is a non-material impairment of the assets located at this mine. Other legal matters : The Company is involved in various other legal proceedings incidental to its operations, but the Company does not believe that decisions adverse to it in any such proceedings, individually or in the aggregate, would have a material effect on its financial position or results of operations. Other commitments: Peruvian Operations Tia Maria: On August 1, 2014, the Company received the final approval of Tia Maria´s Environmental Impact Assessment (“EIA”). However, the issuance of the project´s construction permit has been delayed due to pressures from anti-mining groups. The Company continues working with community groups in order to resolve open issues concerning the project. The Company is also working jointly with the Peruvian government to obtain the construction license for this 120,000 ton (annual) SX-EW copper greenfield project. The Company expects the license to be issued in the first half of 2019. Tia Maria´s project budget is approximately $1.4 billion, of which $333.3 million has been invested through March 31, 2019. When completed, it is expected to produce 120,000 tons of copper cathodes per year. This project will use state-of-the-art SX-EW technology with the highest international environmental standards. SX-EW facilities are the most environmentally friendly in the industry as they do not require a smelting process and consequently, no emissions are released into the atmosphere. The project will only use seawater, transporting it more than 25 kilometers to 1,000 meters above sea level, and includes a desalinization plant which will be constructed at a cost of $95 million. Consequently, the Tambo river water resources will be used solely for farming and human consumption. The Company expects the project to generate 9,000 jobs (3,600 direct and 5,400 indirect) during the construction phase. When in operation, Tia Maria will directly employ 600 workers and indirectly provide jobs to another 4,200. Through its expected twenty-year life, the project related services will create significant business opportunities in the Arequipa region. In view of the delay in this project, the Company continues to review the carrying value of this asset to ascertain whether impairment exists. Should the Tia Maria project not move forward, the Company is confident that most of the project equipment will continue to be used productively, through reassignment to other mine locations operated by the Company. The Company believes that an impairment loss, if any, will not be material. Michiquillay: In June 2018, the Company signed a contract for the acquisition of the Michiquillay copper project in Cajamarca, Peru, at a purchase price of $400 million. Michiquillay is a world class mining project with estimated mineralized material of 1,150 million tons and a copper grade of 0.63%. It is expected to produce 225,000 tons of copper per year (along with by-products of molybdenum, gold and silver) for an initial mine life of more than 25 years. The Company paid $12.5 million at the signing of the contract. The balance of $387.5 million will be paid if the Company decides to develop the project and it is not a present obligation. Toquepala Concentrator Expansion: In April 2015, the construction permit for the Toquepala expansion project was approved by the MINEM. The project budget is $1,320 million, of which $1,240.9 million has been invested through March 31, 2019. When completed, this project is expected to increase Toquepala’s annual copper production to 258,000 tons in 2019, a 52% production increase, when compared to 2018. Corporate Social Responsibility: The Company has a corporate social responsibility policy to maintain and promote continuity of its mining operations and obtain the best results. The main objective of this policy is to integrate its operations with the local communities in the areas of influence of its operations by creating a permanent positive relationship with them, in order to develop the optimum social conditions and to promote sustainable development in the area. Accordingly, the Company has made the following commitments: Tacna Region: In connection with the Toquepala concentrator expansion, the Company has committed to fund various social and infrastructure improvement projects in Toquepala’s neighboring communities. The total amount committed for these purposes is S/ 445.0 million (approximately $131.7 million). Moquegua Region: In the Moquegua region, the Company is part of a “development roundtable” in which the local municipal authorities, the community representatives and the Company discuss the social needs and the way the Company could contribute to sustainable development in the region. As part of this, the roundtable is discussing the creation of a Moquegua Region Development Fund for which the Company has offered a contribution of S/ 700 million (approximately $207.2 million). While final funding is not yet settled, the Company has committed to contribute S/ 108.5 million (approximately $32.1 million) in advance, which is being utilized in an educational project and S/ 48.4 million (approximately $14.3 million) for a residual water treatment plant in Ilo, a sea-wall embankment and a fresh water facility at El Algarrobal. In addition, the Company has committed S/ 202.0 million (approximately $59.8 million) for the construction of six infrastructure projects in the Moquegua region under the “social investment for taxes” (obras por impuestos) program which allows the Company to use these amounts as an advance payment of taxes. These commitments are subject to the continuity of the respective mine operations and, as such, are not considered to be present obligations of the Company. Therefore, the Company has not recorded a liability in its condensed consolidated financial statements. Power purchase agreements: · Electroperu S.A.: In June 2014, the Company entered into a power purchase agreement for 120 megawatt (“MW”) with the state power company Electroperu S.A., under which Electroperu S.A. began supplying energy for the Peruvian operations for twenty years starting on April 17, 2017. · Kallpa Generacion S.A. (“Kallpa”): In July 2014, the Company entered into a power purchase agreement for 120MW with Kallpa, an independent Israeli owned power company, under which Kallpa will supply energy for the Peruvian operations for ten years starting on April 17, 2017 and ending on April 30, 2027. In May 2016, the Company signed an additional power purchase agreement for a maximum of 80MW with Kallpa, under which Kallpa began supplying energy for the Peruvian operations related to the Toquepala Expansion and other minor projects for ten years starting on May 1, 2017 and ending after ten years of commercial operation of the Toquepala Expansion or on April 30, 2029; whichever occurs first. Mexican operations Power purchase agreements: · MGE: In 2012, the Company signed a power purchase agreement with MGE, an indirect subsidiary of Grupo Mexico, to supply power to some of the Company’s Mexican operations through 2032. For further information, please see Note 7 “Related party transactions”. · Eolica el Retiro S.A.P.I. de C.V.: In 2013, the Company signed a power purchase agreement with Eolica el Retiro, S.A.P.I de C.V. a windfarm energy producer that is an indirect subsidiary of Grupo Mexico, to supply power to some of the Company´s Mexican operations. For further information, please see Note 7 “Related party transactions”. Corporate operations Commitment for Capital projects: As of March 31, 2019, the Company has committed approximately $177.7 million for the development of its capital investment projects at its operations. Tax contingency matters: Tax contingencies are provided for under ASC 740-10-50-15 Uncertain tax position (see Note 4 “Income taxes”). |
SEGMENT AND RELATED INFORMATION
SEGMENT AND RELATED INFORMATION: | 3 Months Ended |
Mar. 31, 2019 | |
SEGMENT AND RELATED INFORMATION: | |
SEGMENT AND RELATED INFORMATION: | NOTE 10 – SEGMENT AND RELATED INFORMATION: Company management views Southern Copper as having three reportable segments and manages it on the basis of these segments. The reportable segments identified by the Company are: the Peruvian operations, the Mexican open-pit operations and the Mexican underground mining operations segment identified as the IMMSA unit. The three reportable segments identified are groups of mines, each of which constitute an operating segment, with similar economic characteristics, type of products, processes and support facilities, similar regulatory environments, similar employee bargaining contracts and similar currency risks. In addition, each mine within the individual group earns revenues from similar type of customers for their products and services and each group incurs expenses independently, including commercial transactions between groups. Financial information is regularly prepared for each of the three segments and the results of the Company’s operations are regularly reported to Senior Management on the segment basis. Senior Management of the Company focus on operating income and on total assets as measures of performance to evaluate different segments and to make decisions to allocate resources to the reported segments. These are common measures in the mining industry. Financial information relating to Southern Copper’s segments is as follows: Three Months Ended March 31, 2019 (in millions) Mexican Mexican Peruvian Corporate, other Open-Pit IMMSA Unit Operations and eliminations Consolidated Net sales outside of segments $ 1,072.1 $ 101.2 $ 580.1 — $ 1,753.4 Intersegment sales — 19.9 — $ (19.9) — Cost of sales (exclusive of depreciation, amortization and depletion) 419.6 100.0 348.0 (23.5) 844.1 Selling, general and administrative 16.3 1.8 9.6 0.8 28.5 Depreciation, amortization and depletion 85.0 12.9 74.9 8.8 181.6 Exploration 0.4 2.0 2.9 0.2 5.5 Operating income $ 550.8 $ 4.4 $ 144.7 $ (6.2) 693.7 Less: Interest, net (74.1) Other income (expense) 5.4 Income taxes (237.9) Equity earnings of affiliate 2.1 Non-controlling interest (1.0) Net income attributable to SCC $ 388.2 Capital investment $ 58.6 $ 25.0 $ 88.4 $ 1.1 $ 173.1 Property and mine development, net $ 4,780.6 $ 460.9 $ 3,798.4 $ 343.7 $ 9,383.6 Total assets $ 8,375.0 $ 942.2 $ 4,636.6 $ 1,588.8 $ 15,542.6 Three Months Ended March 31, 2018 (in millions) Mexican Mexican Peruvian Corporate, other Open-pit IMMSA Unit Operations and eliminations Consolidated Net sales outside of segments $ 1,068.6 $ 129.6 $ 642.9 — $ 1,841.1 Intersegment sales — 19.6 — $ (19.6) — Cost of sales (exclusive of depreciation, amortization and depletion) 411.3 95.6 389.8 (20.2) 876.5 Selling, general and administrative 11.9 2.4 9.4 0.4 24.1 Depreciation, amortization and depletion 92.5 11.0 51.8 6.7 162.0 Exploration 0.6 1.3 2.6 0.7 5.2 Operating income $ 552.3 $ 38.9 $ 189.3 $ (7.2) 773.3 Less: Interest, net (66.6) Other income (expense) (2.3) Income taxes (236.6) Equity earnings of affiliate 4.1 Non-controlling interest (1.2) Net income attributable to SCC $ 470.7 Capital investment $ 64.7 $ 12.6 $ 216.3 $ 2.1 $ 295.7 Property and mine development, net $ 4,577.4 $ 434.6 $ 3,443.5 $ 663.0 $ 9,118.5 Total assets $ 8,338.7 $ 950.1 $ 4,382.0 $ 367.3 $ 14,038.1 |
STOCKHOLDERS' EQUITY_
STOCKHOLDERS' EQUITY: | 3 Months Ended |
Mar. 31, 2019 | |
STOCKHOLDERS' EQUITY: | |
STOCKHOLDERS' EQUITY: | NOTE 11 – STOCKHOLDERS’EQUITY: Treasury Stock: Activity in treasury stock in the three-month period ended March 31, 2019 and 2018 is as follows (in millions): 2019 2018 Southern Copper common shares Balance as of January 1, $ 2,768.3 $ 2,768.7 Purchase of shares — — Balance as of March 31, 2,768.3 2,768.7 Parent Company (Grupo Mexico) common shares Balance as of January 1, 251.3 232.4 Other activity, including dividend, interest and foreign currency transaction effect 6.4 6.5 Balance as of March 31, 257.7 238.9 Treasury stock balance as of March 31, $ 3,026.0 $ 3,007.6 Southern Copper Common Shares: At March 31, 2019 and 2018, there were in treasury 111,551,617 and 111,567,617 SCC’s common shares, respectively. SCC share repurchase program: In 2008, the Company’s Board of Directors (“BOD”) authorized a $500 million share repurchase program that has since been increased by the BOD and is currently authorized to $3 billion. The NYSE closing price of SCC common shares at March 31, 2019 was $39.68 and the maximum number of shares that the Company could purchase at that price is 2.1 million shares. As a result of the repurchase of shares of SCC’s common stock, Grupo Mexico’s direct and indirect ownership was 88.9% as of March 31, 2019. There has not been any activity in the SCC share repurchase program since the third quarter of 2016. Directors’ Stock Award Plan: The Company established a stock award compensation plan for certain directors who are not compensated as employees of the Company. Under this plan, participants received 1,200 shares of common stock upon election and 1,200 additional shares following each annual meeting of stockholders thereafter. 600,000 shares of Southern Copper common stock have been reserved for this plan. On April 26, 2018, the Company's Board of Directors and the stockholders approved a five-year extension of the Plan until January 29, 2023 and an increase of the shares award from 1,200 to 1,600. The fair value of the award is measured each year at the date of the grant. Parent Company common shares: At March 31, 2019 and 2018 there were in treasury 100,181,108 and 104,479,600 of Grupo Mexico’s common shares, respectively. Employee Stock Purchase Plan: 2015 Plan : In January 2015, the Company offered to eligible employees a new stock purchase plan through a trust that acquires series B shares of Grupo Mexico stock for sale to its employees, and employees of subsidiaries, and certain affiliated companies. The purchase price was established at 38.44 Mexican pesos (approximately $2.63) for the initial subscription, which expires in January 2023. Every two years employees will be able to acquire title to 50% of the shares paid in the previous two years. The employees will pay for shares purchased through monthly payroll deductions over the eight year period of the plan. At the end of the eight year period, the Company will grant the participant a bonus of 1 share for every 10 shares purchased by the employee. Any future subscription will be at the average market price at the date of acquisition or the grant date. If Grupo Mexico pays dividends on shares during the eight year period, the participants will be entitled to receive the dividend in cash for all shares that have been fully purchased and paid as of the date that the dividend is paid. If the participant has only partially paid for shares, the entitled dividends will be used to reduce the remaining liability owed for purchased shares. In the case of voluntary or involuntary resignation/termination of the employee, the Company will pay to the employee the fair market sales price at the date of resignation of the fully paid shares, net of costs and taxes. When the fair market sales value of the shares is higher than the purchase price, the Company will apply a deduction over the amount to be paid to the employee based on a decreasing schedule specified in the plan. In case of retirement or death of the employee, the Company will render the buyer or his legal beneficiary, the fair market sales value as of the date of retirement or death of the shares effectively paid, net of costs and taxes. The stock based compensation expense for the first quarter 2019 and 2018 and the unrecognized compensation expense under this plan were as follows (in millions): 2019 2018 Stock based compensation expense $ 0.2 $ 0.2 Unrecognized compensation expense $ 2.4 $ 3.0 The following table presents the activity of this plan for the three months ended March 31, 2019 and 2018: Unit Weighted Average Shares Grant Date Fair Value Outstanding shares at January 1, 2019 1,840,336 $ 2.63 Granted — — Exercised (247,670) 2.63 Forfeited — — Outstanding shares at March 31, 2019 1,592,666 $ 2.63 Outstanding shares at January 1, 2018 2,293,120 $ 2.63 Granted — — Exercised (1,873) 2.63 Forfeited — — Outstanding shares at March 31, 2018 2,291,247 $ 2.63 2018 Plan: In November 2018, the Company offered to eligible employees a new stock purchase plan (the “New Employee Stock Purchase Plan”) through a trust that acquires series B shares of Grupo Mexico stock for sale to its employees, and employees of subsidiaries, and certain affiliated companies. The purchase price was established at 37.89 Mexican pesos (approximately $1.86) for the initial subscription, which expires in October 2026. Every two years employees will be able to acquire title to 50% of the shares paid in the previous two years. The employees will pay for shares purchased through monthly payroll deductions over the eight year period of the plan. At the end of the eight year period, the Company will grant the participant a bonus of 1 share for every 10 shares purchased by the employee. Any future subscription will be at the average market price at the date of acquisition or the grant date. If Grupo Mexico pays dividends on shares during the eight year period, the participants will be entitled to receive the dividend in cash for all shares that have been fully purchased and paid as of the date that the dividend is paid. If the participant has only partially paid for shares, the entitled dividends will be used to reduce the remaining liability owed for purchased shares. In the case of voluntary or involuntary resignation/termination of the employee, the Company will pay to the employee the fair market sales price at the date of resignation of the fully paid shares, net of costs and taxes. When the fair market sales value of the shares is higher than the purchase price, the Company will apply a deduction over the amount to be paid to the employee based on a decreasing schedule specified in the plan. In case of retirement or death of the employee, the Company will render the buyer or his legal beneficiary, the fair market sales value as of the date of retirement or death of the shares effectively paid, net of costs and taxes. The stock based compensation expense for the three months ended March 31, 2019 and the unrecognized compensation expense under this plan were as follows (in millions): 2019 Stock based compensation expense $ 0.1 Unrecognized compensation expense $ 3.5 The following table presents the stock award activity of this plan for the three months ended March 31, 2019: Unit Weighted Average Shares Grant Date Fair Value Outstanding shares at January 1, 2019 2,782,424 $ 1.86 Granted — — Exercised — — Forfeited — — Outstanding shares at March 31, 2019 2,782,424 $ 1.86 Non-controlling interest: The following table presents the non-controlling interest activity for the three months ended March 31, 2019 and 2018: 2019 2018 Balance as of January 1, $ 45.4 $ 41.7 Net earnings 1.0 1.2 Dividend paid (0.1) (0.3) Balance as of March 31, $ 46.3 $ 42.6 |
FAIR VALUE MEASUREMENT_
FAIR VALUE MEASUREMENT: | 3 Months Ended |
Mar. 31, 2019 | |
FAIR VALUE MEASUREMENT: | |
FAIR VALUE MEASUREMENT: | NOTE 12 – FAIR VALUE MEASUREMENT: Subtopic 820-10 of ASC “Fair value measurement and disclosures – Overall” establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy under Subtopic 820-10 are described below: Level 1 - Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities. Level 2 - Inputs that are observable, either directly or indirectly, but do not qualify as Level 1 inputs. (i.e., quoted prices for similar assets or liabilities). Level 3 - Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e., supported by little or no market activity). The carrying amounts of certain financial instruments, including cash and cash equivalents, accounts receivable (other than accounts receivable associated with provisionally priced sales) and accounts payable approximate fair value due to their short maturities. Consequently, such financial instruments are not included in the following table that provides information about the carrying amounts and estimated fair values of other financial instruments that are not measured at fair value in the condensed consolidated balance sheet as of March 31, 2019 and December 31, 2018 (in millions): At March 31, 2019 At December 31, 2018 Carrying Value Fair Value Carrying Value Fair Value Liabilities: Long-term debt level 1 $ 5,211.3 $ 6,055.4 $ 5,210.7 $ 5,540.0 Long-term debt level 2 749.6 776.9 749.4 761.7 Total long-term debt $ 5,960.9 $ 6,832.3 $ 5,960.1 $ 6,301.7 Long-term debt is carried at amortized cost and its estimated fair value is based on quoted market prices classified as Level 1 in the fair value hierarchy except for the cases of the Yankee bonds, the notes due 2020 and the notes due 2022, which qualify as Level 2 in the fair value hierarchy as they are based on quoted priced in market that are not active. Fair values of assets and liabilities measured at fair value on a recurring basis were calculated as follows as of March 31, 2019 and December 31, 2018 (in millions): Fair Value at Measurement Date Using: Quoted prices in Significant other Significant Fair Value as active markets for observable unobservable of March identical assets inputs inputs Description 31, 2019 (Level 1) (Level 2) (Level 3) Assets: Short term investment: - Trading securities $ 212.7 $ 212.7 $ — $ — - Available-for-sale debt securities: Corporate bonds — — — — Asset backed securities 0.4 — 0.4 — Mortgage backed securities 0.4 — 0.4 — Accounts receivable: - Embedded derivatives - Not classified as hedges: Provisionally priced sales: Copper 308.4 308.4 — — Molybdenum 124.1 124.1 — — Total $ 646.0 $ 645.2 $ 0.8 $ — Fair Value at Measurement Date Using: Quoted prices in Significant other Significant Fair Value as active markets for observable unobservable of December identical assets inputs inputs Description 31, 2018 (Level 1) (Level 2) (Level 3) Assets: Short term investment: - Trading securities $ 213.1 $ 213.1 $ — $ — - Available-for-sale debt securities: Corporate bonds — — — — Asset backed securities 0.4 — 0.4 — Mortgage backed securities 0.3 — 0.3 — Accounts receivable: - Embedded derivatives - Not classified as hedges: Provisionally priced sales: Copper 274.3 274.3 — — Molybdenum 107.4 107.4 — — Total $ 595.5 $ 594.8 $ 0.7 $ — The Company’s short-term trading securities investments are classified as Level 1 because they are valued using quoted prices of the same securities as they consist of bonds issued by public companies and publicly traded. The Company’s short-term available-for-sale investments are classified as Level 2 because they are valued using quoted prices for similar investments. The Company’s accounts receivables associated with provisionally priced copper sales are valued using quoted market prices based on the forward price on the LME or on the COMEX. Such value is classified within Level 1 of the fair value hierarchy. Molybdenum prices are established by reference to the publication Platt’s Metals Week and are considered Level 1 in the fair value hierarchy. |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: | 3 Months Ended |
Mar. 31, 2019 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: | NOTE 13 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: ADOPTION OF LEASES STANDARD The Company has adopted FASB ASC 842, Leases, effective January 1, 2019, applying the transition approach which permits it to recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. Consequently, the financial statements for prior periods were not modified. At the date of adoption, the Company assessed that the adoption of the new leases standard has resulted in the recognition of right of use assets and lease obligations of approximately $1,115.9 million, which was recorded in the Company’s balance sheet as of January 1, 2019. During 2018, the Company developed an implementation plan with a cross-functional team, which performed a completeness assessment over the lease contracts of the Company, established new policies, procedures and internal controls related to the new standard. As result of its analysis, the Company has concluded that all of its existing lease contracts at January 1, 2019, have been classified as operating lease contracts. Additionally, the Company has elected the short-term lease recognition exemption (short-term lease practical expedient) by class of underlying asset (which results in off-balance-sheet accounting for the lease). The new standard had a material impact on the Company’s balance sheet, but did not have a material impact on its income statement and had no impact on cash flows. SIGNIFICANT ACCOUNTING POLICIES With the exception of the change in the Company's leases policy as a result of the adoption of ASC 842, as described above, there have been no new or material changes to the significant accounting policies discussed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018, that are of significance, or potential significance to the Company. Leases - The Company adopted FASB ASC 842, Leases, effective January 1, 2019. The Company determined if a contract is or contained a lease at its inception. The Company evaluated if a contract gave the right to obtain substantially all of the economic benefits from use of an identified asset and the right to direct the use of the asset, in order to determine if a contract contained a lease. All of the Company’s existing lease contracts are operating lease contracts. For these leases, the Company recognized right-of-use assets and the corresponding operating lease liabilities on its consolidated balance sheet. Right-of-use assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent an obligation by the Company to make lease payments which arise from the lease. Lease right-of-use assets and liabilities are recognized at the inception date based on the present value of lease payments over the lease term. As the Company’s lease contracts do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at the inception date in order to determine the present value of lease payments. Lease expense for lease payments is recognized on a straight-line basis over the lease term, in the cost of sales and operating expenses. |
LEASES_
LEASES: | 3 Months Ended |
Mar. 31, 2019 | |
LEASES: | |
LEASES: | NOTE 14 – LEASES: The Company has operating leases for power generating facilities, vehicles and properties. Leases with an initial term of 12 months or less, underlying asset value of $10,000 (US dollars) or less and total nominal contract value of $100,000 (US dollars) or less are not recorded on the balance sheet; the Company recognizes lease expense for these leases on a straight-line basis over the lease term. Some of the Company’s leases include both lease and non-lease components which are accounted for separately. The Company’s leases have remaining lease terms of two years to 14 years, and do not include options to extend the leases. The Company’s lease agreements do not contain options to purchase the leased assets or to terminate the leases before the expiration date. In addition, the Company’s lease contracts do not have any material residual value guarantees or material restrictive covenants. As none of the Company’s leases provides an implicit rate, the Company uses its incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. The weighted average remaining lease term for the Company’s leases is 10 years, and the weighted average discount rate for these leases is 3.56%. The operating lease expense recognized in the three months ended March 31, 2019 was classified as follows (in millions): Classification 2019 Cost of sales (exclusive of depreciation, amortization and depletion) $ 28.8 Selling, general and administrative 0.1 Exploration (*) Total lease expense $ 28.9 (*) amount is lower than $0.1 million The Company’s short-term lease costs for the three months ended March 31, 2019 was $0.2 million. Maturities of lease liabilities were as follows: Year Lease liabilities (in millions) 2019 $ 86.7 2020 115.4 2021 115.3 2022 112.1 2023 111.1 After 2023 929.1 Total lease payments $ 1,469.7 Less: interest on lease liabilities (377.2) Present value of lease payments $ 1,092.5 |
SUBSEQUENT EVENTS_
SUBSEQUENT EVENTS: | 3 Months Ended |
Mar. 31, 2019 | |
SUBSEQUENT EVENTS: | |
SUBSEQUENT EVENTS: | NOTE 15 – SUBSEQUENT EVENTS: Dividends : On April 11, 2019, the Board of Directors authorized a dividend of $0.40 per share payable on May 17, 2019 to shareholders of record at the close of business on May 03, 2019. |
SUMMARY OF SIGNIFICANT ACCOUN_2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (Policies) | 3 Months Ended |
Mar. 31, 2019 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: | |
Leases | Leases - The Company adopted FASB ASC 842, Leases, effective January 1, 2019. The Company determined if a contract is or contained a lease at its inception. The Company evaluated if a contract gave the right to obtain substantially all of the economic benefits from use of an identified asset and the right to direct the use of the asset, in order to determine if a contract contained a lease. All of the Company’s existing lease contracts are operating lease contracts. For these leases, the Company recognized right-of-use assets and the corresponding operating lease liabilities on its consolidated balance sheet. Right-of-use assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent an obligation by the Company to make lease payments which arise from the lease. Lease right-of-use assets and liabilities are recognized at the inception date based on the present value of lease payments over the lease term. As the Company’s lease contracts do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at the inception date in order to determine the present value of lease payments. Lease expense for lease payments is recognized on a straight-line basis over the lease term, in the cost of sales and operating expenses. |
SHORT-TERM INVESTMENTS_ (Tables
SHORT-TERM INVESTMENTS: (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
SHORT-TERM INVESTMENTS: | |
Schedule of short-term investments | Short-term investments were as follows ($ in millions): At March 31, At December 31, 2019 2018 Trading securities $ 212.7 $ 213.1 Weighted average interest rate 2.5 % 2.2 % Available-for-sale $ 0.8 $ 0.7 Weighted average interest rate 0.7 % 0.7 % Total $ 213.5 $ 213.8 |
Summary of activity investments | The following table summarizes the activity of these investments by category (in millions): Three months ended March 31, 2019 2018 Trading: Interest earned $ 0.1 $ 0.1 Unrealized (loss) gain at the end of the period $ (0.1) $ (0.1) Available-for-sale: Interest earned (*) (*) Investment redeemed $ — $ 0.1 (*) Less than $0.1 million. |
INVENTORIES_ (Tables)
INVENTORIES: (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
INVENTORIES: | |
Schedule of inventories | At March 31, At December 31, (in millions) 2019 2018 Inventory, current: Metals at average cost: Finished goods $ 54.1 $ 69.6 Work-in-process 250.7 256.8 Ore stockpiles on leach pads 351.7 328.0 Supplies at average cost: 379.1 378.3 Total current inventory $ 1,035.6 $ 1,032.7 Inventory, non-current: Ore stockpiles on leach pads $ 1,182.0 $ 1,177.4 |
INCOME TAXES_ (Tables)
INCOME TAXES: (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
INCOME TAXES: | |
Schedule of income tax provision and effective income tax rate | The income tax provision and the effective income tax rate for the first quarter 2019 and 2018 consisted of ($ in millions): 2019 2018 Statutory income tax provision $ 214.7 $ 212.3 Peruvian royalty 0.4 1.7 Mexican royalty 16.7 16.1 Peruvian special mining tax 6.1 6.5 Income tax provision $ 237.9 $ 236.6 Effective income tax rate 38.1 % 33.6 % |
REVENUE_ (Tables)
REVENUE: (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
REVENUE: | |
Summary of company's sales by geographic wise and segment wise | The geographic breakdown of the Company’s sales is as follows (in millions): Three Months Ended March 31, 2019 Mexican Mexican Peruvian Corporate & Open-Pit IMMSA Unit Operations Elimination Consolidated The Americas: Mexico $ 351.3 $ 86.8 $ — $ (19.9) $ 418.2 United States 279.0 1.4 6.7 — 287.1 Peru 1.6 — 85.7 — 87.3 Brazil — 7.2 48.3 — 55.5 Chile 1.1 — 20.0 — 21.1 Other American countries 12.8 0.5 1.8 — 15.1 Europe: Switzerland 225.4 12.0 110.4 — 347.8 Italy 29.2 5.5 47.3 — 82.0 Spain 45.5 — — — 45.5 Other European countries 22.9 5.8 53.9 — 82.6 Asia: Singapore 58.5 1.8 52.6 — 112.9 Japan 9.8 — 117.5 — 127.3 Other Asian countries 35.0 0.1 35.9 — 71.0 Total $ 1,072.1 $ 121.1 $ 580.1 $ (19.9) $ 1,753.4 Three Months Ended March 31, 2018 Mexican Mexican Peruvian Corporate & Open-Pit IMMSA Unit Operations Elimination Consolidated The Americas: Mexico $ 368.8 $ 111.3 $ — $ (19.6) $ 460.5 United States 248.4 5.0 41.5 — 294.9 Peru — — 93.5 — 93.5 Brazil — 12.6 62.9 — 75.5 Chile — — 36.0 — 36.0 Other American countries 12.6 0.8 1.0 — 14.4 Europe: Switzerland 82.3 9.2 43.8 — 135.3 Italy 8.3 5.5 82.2 — 96.0 Spain 44.5 — — — 44.5 Other European countries 51.8 4.6 25.7 — 82.1 Asia: Singapore 143.9 — 132.5 — 276.4 Japan 44.2 — 115.2 — 159.4 Other Asian countries 63.8 0.2 8.6 — 72.6 Total $ 1,068.6 $ 149.2 $ 642.9 $ (19.6) $ 1,841.1 The following table presents information regarding the sales value by reporting segment of the Company’s significant products for the three months ended March 31, 2019 and 2018 (in millions): Three Months Ended March 31, 2019 Mexican Mexican Peruvian Corporate & Open-Pit IMMSA Unit Operations Elimination Consolidated Copper $ 895.1 $ 11.0 $ 522.4 $ (12.9) $ 1,415.6 Molybdenum 90.1 — 28.2 — 118.3 Zinc — 77.1 — (0.4) 76.7 Silver 50.4 17.3 14.9 (5.8) 76.8 Other 36.5 15.7 14.6 (0.8) 66.0 Total $ 1,072.1 $ 121.1 $ 580.1 $ (19.9) $ 1,753.4 Three Months Ended March 31, 2018 Mexican Mexican Peruvian Corporate & Open-Pit IMMSA Unit Operations Elimination Consolidated Copper $ 909.4 $ 11.2 $ 564.0 $ (11.2) $ 1,473.4 Molybdenum 91.0 — 45.3 — 136.3 Zinc — 95.0 — (0.1) 94.9 Silver 42.6 20.6 15.4 (7.5) 71.1 Other 25.6 22.4 18.2 (0.8) 65.4 Total $ 1,068.6 $ 149.2 $ 642.9 $ (19.6) $ 1,841.1 |
Schedule of opening and closing balances of receivables by reporting segment | The opening and closing balances of receivables by reporting segment of the Company were as follows (in millions): Mexican Mexican Peruvian Corporate & Open-Pit IMMSA Unit Operations Elimination Consolidated As of March 31, 2019: Trade receivables $ 543.9 $ 54.0 $ 278.7 $ — $ 876.6 Related parties 89.2 — — 9.0 $ 98.2 As of December 31, 2018: Trade receivables $ 505.9 $ 50.5 $ 266.0 $ — $ 822.4 Related parties 81.6 — — 19.9 101.5 |
Schedule long term contracts by products | As of March 31, 2019, the Company has long-term contracts with promises to deliver the following products in 2019: Copper concentrates (in tons) 1,090,000 Copper cathodes (in tons) 48,000 Molybdenum concentrates (in tons) 24,106 Sulfuric acid (in tons) 331,620 |
Schedule of provisionally priced copper and molybdenum sales outstanding | Following are the provisionally priced copper and molybdenum sales outstanding at March 31, 2019: Sales volume Priced at (million lbs.) (per pound) Month of settlement Copper 105.0 $ 2.94 April through July 2019 Molybdenum 10.2 $ 12.13 April through June 2019 |
ASSET RETIREMENT OBLIGATION_ (T
ASSET RETIREMENT OBLIGATION: (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
ASSET RETIREMENT OBLIGATION: | |
Summary of asset retirement obligation activity | The following table summarizes the asset retirement obligation activity for the three months ended March 31, 2019 and 2018 (in millions): 2019 2018 Balance as of January 1 $ 217.7 $ 222.5 Changes in estimates 28.1 (5.2) Payments (0.2) — Accretion expense 3.0 3.2 Balance as of March 31, $ 248.6 $ 220.5 |
RELATED PARTY TRANSACTIONS_ (Ta
RELATED PARTY TRANSACTIONS: (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
RELATED PARTY TRANSACTIONS: | |
Schedule of receivable and payable balances with related parties | Receivable and payable balances with related parties are shown below (in millions): At March 31, At December 31, 2019 2018 Related parties receivable current : Grupo Mexico and affiliates: Asarco LLC $ 74.6 $ 74.4 AMC — 11.0 AMMINCO Apoyo Administrativo, S.A. de C.V. (“AMMINCO”) — 0.2 Compania Perforadora Mexico, S.A.P.I. de C.V. and affiliates 1.0 1.4 Ferrocarril Mexicano, S.A. de C.V. 0.1 0.1 Grupo Mexico 2.7 2.7 Mexico Generadora de Energia, S. de R.L. (“MGE”) 18.0 10.3 Mexico Proyectos y Desarrollos, S.A. de C.V. and affiliates (“MPD”) 0.5 0.6 Related to the controlling group: Boutique Bowling de Mexico, S.A. de C.V. 0.3 0.3 Empresarios Industriales de Mexico, S.A. de C.V. 0.1 — Mexico Transportes Aereos, S.A. de C.V. ("Mextransport") 0.5 0.1 Operadora de Cinemas, S.A. de C.V. 0.4 0.4 $ 98.2 $ 101.5 Related parties payable: Grupo Mexico and affiliates: Asarco LLC $ 6.6 $ 4.1 AMMINCO 2.4 8.0 Eolica El Retiro, S.A.P.I. de C.V. 1.0 1.0 Ferrocarril Mexicano, S.A. de C.V. 7.6 6.4 Grupo Mexico 0.8 0.6 MGE 36.7 40.6 MPD 11.2 14.4 Related to the controlling group: Boutique Bowling de Mexico, S.A. de C.V. 0.1 0.1 Operadora de Cinemas, S.A. de C.V. (*) 0.1 $ 66.4 $ 75.3 (*) amount is lower than $0.1 million |
Grupo Mexico and affiliates | |
RELATED PARTY TRANSACTIONS: | |
Schedule of purchase and sales activities with related parties | The following table summarizes the purchase and sale activities with Grupo Mexico and its affiliates in the three months ended March 31, 2019 and 2018 (in millions): 2019 2018 Purchase activity Asarco LLC $ 10.0 $ 6.8 AMMINCO 2.4 — Eolica El Retiro 0.8 0.6 Ferrocarril Mexicano, S.A de C.V. 10.6 10.0 Grupo Mexico 2.5 4.5 MGE 55.2 61.9 MPD 10.8 15.9 Total purchases $ 92.3 $ 99.7 Sales activity Asarco LLC $ 2.0 $ 36.5 MGE 15.1 23.2 Total sales $ 17.1 $ 59.7 |
Related to the controlling group | |
RELATED PARTY TRANSACTIONS: | |
Schedule of purchase and sales activities with related parties | The following table summarizes the purchase and sales activities with other Larrea family companies in the three months ended March 31, 2019 and 2018 (in millions): 2019 2018 Purchase activity Boutique Bowling de Mexico, S.A. de C.V. $ 0.1 $ 0.1 Operadora de Cinemas, S.A. de C.V. (*) (*) Mextransport — 0.2 Total purchases $ 0.1 $ 0.3 Sales activity Boutique Bowling de Mexico, S.A. de C.V. $ (*) $ 0.1 Empresarios Industriales de Mexico, S.A. de C.V. — Operadora de Cinemas, S.A. de C.V. (*) (*) Mextransport 0.5 0.1 Total sales $ 0.6 $ 0.2 (*) amount is lower than $0.1 million |
BENEFIT PLANS_ (Tables)
BENEFIT PLANS: (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Post retirement defined benefit plans and defined contribution plan | |
Components of net periodic benefit costs | |
Schedule of the components of net periodic benefit costs | The components of net periodic benefit costs for the three months ended March 31, 2019 and 2018 are as follows (in millions): 2019 2018 Service cost $ 0.3 $ 0.3 Interest cost 0.4 0.4 Expected return on plan assets (0.8) (0.9) Amortization of net actuarial loss (*) (*) Amortization of net loss/(gain) (*) (*) Net periodic benefit costs $ (0.1) $ (0.2) |
Post-retirement Health care plans | |
Components of net periodic benefit costs | |
Schedule of the components of net periodic benefit costs | The components of net periodic benefit cost for the three months ended March 31, 2019 and 2018 are as follows (in millions): 2019 2018 Interest cost $ 0.2 $ 0.2 Amortization of net loss (gain) (*) (*) Amortization of prior service cost (credit) (*) (*) Net periodic benefit cost $ 0.2 $ 0.2 (*) amount is lower than $0.1 million |
COMMITMENTS AND CONTINGENCIES_
COMMITMENTS AND CONTINGENCIES: (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
COMMITMENTS AND CONTINGENCIES: | |
Schedule of environmental capital investments | Environmental capital investments in the three months ended March 31, 2019 and 2018 were as follows (in millions): 2019 2018 Peruvian operations $ 10.2 $ 6.5 Mexican operations 9.0 19.9 $ 19.2 $ 26.4 |
SEGMENT AND RELATED INFORMATI_2
SEGMENT AND RELATED INFORMATION: (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
SEGMENT AND RELATED INFORMATION: | |
Schedule of financial information relating to Company's segments | Three Months Ended March 31, 2019 (in millions) Mexican Mexican Peruvian Corporate, other Open-Pit IMMSA Unit Operations and eliminations Consolidated Net sales outside of segments $ 1,072.1 $ 101.2 $ 580.1 — $ 1,753.4 Intersegment sales — 19.9 — $ (19.9) — Cost of sales (exclusive of depreciation, amortization and depletion) 419.6 100.0 348.0 (23.5) 844.1 Selling, general and administrative 16.3 1.8 9.6 0.8 28.5 Depreciation, amortization and depletion 85.0 12.9 74.9 8.8 181.6 Exploration 0.4 2.0 2.9 0.2 5.5 Operating income $ 550.8 $ 4.4 $ 144.7 $ (6.2) 693.7 Less: Interest, net (74.1) Other income (expense) 5.4 Income taxes (237.9) Equity earnings of affiliate 2.1 Non-controlling interest (1.0) Net income attributable to SCC $ 388.2 Capital investment $ 58.6 $ 25.0 $ 88.4 $ 1.1 $ 173.1 Property and mine development, net $ 4,780.6 $ 460.9 $ 3,798.4 $ 343.7 $ 9,383.6 Total assets $ 8,375.0 $ 942.2 $ 4,636.6 $ 1,588.8 $ 15,542.6 Three Months Ended March 31, 2018 (in millions) Mexican Mexican Peruvian Corporate, other Open-pit IMMSA Unit Operations and eliminations Consolidated Net sales outside of segments $ 1,068.6 $ 129.6 $ 642.9 — $ 1,841.1 Intersegment sales — 19.6 — $ (19.6) — Cost of sales (exclusive of depreciation, amortization and depletion) 411.3 95.6 389.8 (20.2) 876.5 Selling, general and administrative 11.9 2.4 9.4 0.4 24.1 Depreciation, amortization and depletion 92.5 11.0 51.8 6.7 162.0 Exploration 0.6 1.3 2.6 0.7 5.2 Operating income $ 552.3 $ 38.9 $ 189.3 $ (7.2) 773.3 Less: Interest, net (66.6) Other income (expense) (2.3) Income taxes (236.6) Equity earnings of affiliate 4.1 Non-controlling interest (1.2) Net income attributable to SCC $ 470.7 Capital investment $ 64.7 $ 12.6 $ 216.3 $ 2.1 $ 295.7 Property and mine development, net $ 4,577.4 $ 434.6 $ 3,443.5 $ 663.0 $ 9,118.5 Total assets $ 8,338.7 $ 950.1 $ 4,382.0 $ 367.3 $ 14,038.1 |
STOCKHOLDERS' EQUITY_ (Tables)
STOCKHOLDERS' EQUITY: (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
STOCKHOLDERS' EQUITY: | |
Schedule of activity in treasury stock | Activity in treasury stock in the three-month period ended March 31, 2019 and 2018 is as follows (in millions): 2019 2018 Southern Copper common shares Balance as of January 1, $ 2,768.3 $ 2,768.7 Purchase of shares — — Balance as of March 31, 2,768.3 2,768.7 Parent Company (Grupo Mexico) common shares Balance as of January 1, 251.3 232.4 Other activity, including dividend, interest and foreign currency transaction effect 6.4 6.5 Balance as of March 31, 257.7 238.9 Treasury stock balance as of March 31, $ 3,026.0 $ 3,007.6 |
Summary of non-controlling interest activity | The following table presents the non-controlling interest activity for the three months ended March 31, 2019 and 2018: 2019 2018 Balance as of January 1, $ 45.4 $ 41.7 Net earnings 1.0 1.2 Dividend paid (0.1) (0.3) Balance as of March 31, $ 46.3 $ 42.6 |
Employee Stock Purchase 2015 Plan | |
STOCKHOLDERS' EQUITY: | |
Schedule of stock based compensation expense and unrecognized compensation expense | The stock based compensation expense for the first quarter 2019 and 2018 and the unrecognized compensation expense under this plan were as follows (in millions): 2019 2018 Stock based compensation expense $ 0.2 $ 0.2 Unrecognized compensation expense $ 2.4 $ 3.0 |
Schedule of stock award activity | Unit Weighted Average Shares Grant Date Fair Value Outstanding shares at January 1, 2019 1,840,336 $ 2.63 Granted — — Exercised (247,670) 2.63 Forfeited — — Outstanding shares at March 31, 2019 1,592,666 $ 2.63 Outstanding shares at January 1, 2018 2,293,120 $ 2.63 Granted — — Exercised (1,873) 2.63 Forfeited — — Outstanding shares at March 31, 2018 2,291,247 $ 2.63 |
Employee Stock Purchase 2018 Plan | |
STOCKHOLDERS' EQUITY: | |
Schedule of stock based compensation expense and unrecognized compensation expense | The stock based compensation expense for the three months ended March 31, 2019 and the unrecognized compensation expense under this plan were as follows (in millions): 2019 Stock based compensation expense $ 0.1 Unrecognized compensation expense $ 3.5 |
Schedule of stock award activity | The following table presents the stock award activity of this plan for the three months ended March 31, 2019: Unit Weighted Average Shares Grant Date Fair Value Outstanding shares at January 1, 2019 2,782,424 $ 1.86 Granted — — Exercised — — Forfeited — — Outstanding shares at March 31, 2019 2,782,424 $ 1.86 |
FAIR VALUE MEASUREMENT_ (Tables
FAIR VALUE MEASUREMENT: (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
FAIR VALUE MEASUREMENT: | |
Schedule of carrying amount and estimated fair values of the Company's financial instruments | Consequently, such financial instruments are not included in the following table that provides information about the carrying amounts and estimated fair values of other financial instruments that are not measured at fair value in the condensed consolidated balance sheet as of March 31, 2019 and December 31, 2018 (in millions): At March 31, 2019 At December 31, 2018 Carrying Value Fair Value Carrying Value Fair Value Liabilities: Long-term debt level 1 $ 5,211.3 $ 6,055.4 $ 5,210.7 $ 5,540.0 Long-term debt level 2 749.6 776.9 749.4 761.7 Total long-term debt $ 5,960.9 $ 6,832.3 $ 5,960.1 $ 6,301.7 |
Schedule of fair values of assets and liabilities measured at fair value on a recurring basis | Fair values of assets and liabilities measured at fair value on a recurring basis were calculated as follows as of March 31, 2019 and December 31, 2018 (in millions): Fair Value at Measurement Date Using: Quoted prices in Significant other Significant Fair Value as active markets for observable unobservable of March identical assets inputs inputs Description 31, 2019 (Level 1) (Level 2) (Level 3) Assets: Short term investment: - Trading securities $ 212.7 $ 212.7 $ — $ — - Available-for-sale debt securities: Corporate bonds — — — — Asset backed securities 0.4 — 0.4 — Mortgage backed securities 0.4 — 0.4 — Accounts receivable: - Embedded derivatives - Not classified as hedges: Provisionally priced sales: Copper 308.4 308.4 — — Molybdenum 124.1 124.1 — — Total $ 646.0 $ 645.2 $ 0.8 $ — Fair Value at Measurement Date Using: Quoted prices in Significant other Significant Fair Value as active markets for observable unobservable of December identical assets inputs inputs Description 31, 2018 (Level 1) (Level 2) (Level 3) Assets: Short term investment: - Trading securities $ 213.1 $ 213.1 $ — $ — - Available-for-sale debt securities: Corporate bonds — — — — Asset backed securities 0.4 — 0.4 — Mortgage backed securities 0.3 — 0.3 — Accounts receivable: - Embedded derivatives - Not classified as hedges: Provisionally priced sales: Copper 274.3 274.3 — — Molybdenum 107.4 107.4 — — Total $ 595.5 $ 594.8 $ 0.7 $ — |
LEASES_ (Tables)
LEASES: (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
LEASES: | |
Schedule of the operating lease expense recognized | The operating lease expense recognized in the three months ended March 31, 2019 was classified as follows (in millions): Classification 2019 Cost of sales (exclusive of depreciation, amortization and depletion) $ 28.8 Selling, general and administrative 0.1 Exploration (*) Total lease expense $ 28.9 |
Schedule of Maturities of lease liabilities | Year Lease liabilities (in millions) 2019 $ 86.7 2020 115.4 2021 115.3 2022 112.1 2023 111.1 After 2023 929.1 Total lease payments $ 1,469.7 Less: interest on lease liabilities (377.2) Present value of lease payments $ 1,092.5 |
DESCRIPTION OF THE BUSINESS_ (D
DESCRIPTION OF THE BUSINESS: (Details) | Mar. 31, 2019 |
DESCRIPTION OF THE BUSINESS: | |
Percentage of ownership interest held by the parent company | 88.90% |
SHORT-TERM INVESTMENTS_ (Detail
SHORT-TERM INVESTMENTS: (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | Dec. 31, 2018 | |
Short-term investment: | |||
Trading securities | $ 212.7 | $ 213.1 | |
Weighted average interest rate (as a percent) | 2.50% | 2.20% | |
Available-for-sale | $ 0.8 | $ 0.7 | |
Weighted average interest rate (as a percent) | 0.70% | 0.70% | |
Total | $ 213.5 | $ 213.8 | |
Trading: | |||
Interest earned | 0.1 | $ 0.1 | |
Unrealized (loss) gain at the end of the period | (0.1) | (0.1) | |
Available-for-sale: | |||
Interest earned | 3.7 | 2.6 | |
Investment redeemed | 0.1 | ||
Maximum | |||
Available-for-sale: | |||
Interest earned | $ 0.1 | $ 0.1 |
INVENTORIES_ (Details)
INVENTORIES: (Details) - USD ($) $ in Millions | 3 Months Ended | ||
Mar. 31, 2019 | Mar. 31, 2018 | Dec. 31, 2018 | |
Metals at average cost: | |||
Finished goods | $ 54.1 | $ 69.6 | |
Work-in-process | 250.7 | 256.8 | |
Ore stockpiles on leach pads | 351.7 | 328 | |
Supplies at average cost | 379.1 | 378.3 | |
Total current inventory | 1,035.6 | 1,032.7 | |
Inventory, non-current: | |||
Ore stockpiles on leach pads | 1,182 | $ 1,177.4 | |
Total leaching costs capitalized as non-current inventory of ore stockpiles | 122.3 | $ 126.5 | |
Long-term leaching inventories recognized as cost of sales | $ 94.1 | $ 79.5 |
INCOME TAXES_ (Details)
INCOME TAXES: (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Income Taxes | ||
Statutory income tax provision | $ 214.7 | $ 212.3 |
Peruvian royalty | 0.4 | 1.7 |
Mexican royalty | 16.7 | 16.1 |
Peruvian special mining tax | 6.1 | 6.5 |
Total income tax provision | $ 237.9 | $ 236.6 |
Effective income tax rate (as a percent) | 38.10% | 33.60% |
Changes in the entity's uncertain tax positions | $ 0 | |
Peru | ||
Income Taxes | ||
Peruvian royalty | $ 0.4 | $ 1.7 |
Increment in operating income margin for royalty tax (as a percent) | 5.00% | |
Increase in royalty tax rate for each 5% increase up to 12% increase in operating income margin (as a percent) | 0.75% | |
Royalty charges | $ 6 | 7.1 |
Increase in special mining tax rate for each 5% increase up to 85% increase in operating income margin (as a percent) | 0.40% | |
Increment in operating income margin (as a percent) | 5.00% | |
Accrued special mining tax | $ 6.1 | 6.5 |
Peru | Minimum | ||
Income Taxes | ||
Mining royalty tax (as a percent) | 1.00% | |
Royalty charge assessed as a percentage of net sales | 1.00% | |
Special mine tax (as a percent) | 2.00% | |
Increment in operating income margin (as a percent) | 2.00% | |
Peru | Maximum | ||
Income Taxes | ||
Mining royalty tax (as a percent) | 12.00% | |
Operating income margin for royalty tax (as a percent) | 10.00% | |
Increment in operating income margin for royalty tax (as a percent) | 12.00% | |
Special mine tax (as a percent) | 8.40% | |
Operating income margin (as a percent) | 10.00% | |
Increment in operating income margin (as a percent) | 85.00% | |
Mexico | ||
Income Taxes | ||
Mexican royalty | $ 16.7 | $ 16.1 |
Mining royalty tax (as a percent) | 7.50% | |
Additional royalty tax over net sales from sales of gold, silver and platinum (as a percent) | 0.50% | |
Royalty expense paid | $ 85.9 |
REVENUE_ - Revenue by Geographi
REVENUE: - Revenue by Geographical Areas (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Revenue Recognition | ||
Net sales | $ 1,753.4 | $ 1,841.1 |
Corporate, other and eliminations | ||
Revenue Recognition | ||
Net sales | (19.9) | (19.6) |
Mexican Open-pit | Operating segment | ||
Revenue Recognition | ||
Net sales | 1,072.1 | 1,068.6 |
Mexican IMMSA Unit | Operating segment | ||
Revenue Recognition | ||
Net sales | 121.1 | 149.2 |
Peruvian Operations | Operating segment | ||
Revenue Recognition | ||
Net sales | 580.1 | 642.9 |
Mexico | ||
Revenue Recognition | ||
Net sales | 418.2 | 460.5 |
Mexico | Corporate, other and eliminations | ||
Revenue Recognition | ||
Net sales | (19.9) | (19.6) |
Mexico | Mexican Open-pit | Operating segment | ||
Revenue Recognition | ||
Net sales | 351.3 | 368.8 |
Mexico | Mexican IMMSA Unit | Operating segment | ||
Revenue Recognition | ||
Net sales | 86.8 | 111.3 |
United States | ||
Revenue Recognition | ||
Net sales | 287.1 | 294.9 |
United States | Mexican Open-pit | Operating segment | ||
Revenue Recognition | ||
Net sales | 279 | 248.4 |
United States | Mexican IMMSA Unit | Operating segment | ||
Revenue Recognition | ||
Net sales | 1.4 | 5 |
United States | Peruvian Operations | Operating segment | ||
Revenue Recognition | ||
Net sales | 6.7 | 41.5 |
Peru | ||
Revenue Recognition | ||
Net sales | 87.3 | 93.5 |
Peru | Mexican Open-pit | Operating segment | ||
Revenue Recognition | ||
Net sales | 1.6 | |
Peru | Peruvian Operations | Operating segment | ||
Revenue Recognition | ||
Net sales | 85.7 | 93.5 |
Brazil | ||
Revenue Recognition | ||
Net sales | 55.5 | 75.5 |
Brazil | Mexican IMMSA Unit | Operating segment | ||
Revenue Recognition | ||
Net sales | 7.2 | 12.6 |
Brazil | Peruvian Operations | Operating segment | ||
Revenue Recognition | ||
Net sales | 48.3 | 62.9 |
Chile | ||
Revenue Recognition | ||
Net sales | 21.1 | 36 |
Chile | Mexican Open-pit | Operating segment | ||
Revenue Recognition | ||
Net sales | 1.1 | |
Chile | Peruvian Operations | Operating segment | ||
Revenue Recognition | ||
Net sales | 20 | 36 |
Other American countries | ||
Revenue Recognition | ||
Net sales | 15.1 | 14.4 |
Other American countries | Mexican Open-pit | Operating segment | ||
Revenue Recognition | ||
Net sales | 12.8 | 12.6 |
Other American countries | Mexican IMMSA Unit | Operating segment | ||
Revenue Recognition | ||
Net sales | 0.5 | 0.8 |
Other American countries | Peruvian Operations | Operating segment | ||
Revenue Recognition | ||
Net sales | 1.8 | 1 |
Switzerland | ||
Revenue Recognition | ||
Net sales | 347.8 | 135.3 |
Switzerland | Mexican Open-pit | Operating segment | ||
Revenue Recognition | ||
Net sales | 225.4 | 82.3 |
Switzerland | Mexican IMMSA Unit | Operating segment | ||
Revenue Recognition | ||
Net sales | 12 | 9.2 |
Switzerland | Peruvian Operations | Operating segment | ||
Revenue Recognition | ||
Net sales | 110.4 | 43.8 |
Italy | ||
Revenue Recognition | ||
Net sales | 82 | 96 |
Italy | Mexican Open-pit | Operating segment | ||
Revenue Recognition | ||
Net sales | 29.2 | 8.3 |
Italy | Mexican IMMSA Unit | Operating segment | ||
Revenue Recognition | ||
Net sales | 5.5 | 5.5 |
Italy | Peruvian Operations | Operating segment | ||
Revenue Recognition | ||
Net sales | 47.3 | 82.2 |
Spain | ||
Revenue Recognition | ||
Net sales | 45.5 | 44.5 |
Spain | Mexican Open-pit | Operating segment | ||
Revenue Recognition | ||
Net sales | 45.5 | 44.5 |
Other European Countries | ||
Revenue Recognition | ||
Net sales | 82.6 | 82.1 |
Other European Countries | Mexican Open-pit | Operating segment | ||
Revenue Recognition | ||
Net sales | 22.9 | 51.8 |
Other European Countries | Mexican IMMSA Unit | Operating segment | ||
Revenue Recognition | ||
Net sales | 5.8 | 4.6 |
Other European Countries | Peruvian Operations | Operating segment | ||
Revenue Recognition | ||
Net sales | 53.9 | 25.7 |
Singapore | ||
Revenue Recognition | ||
Net sales | 112.9 | 276.4 |
Singapore | Mexican Open-pit | Operating segment | ||
Revenue Recognition | ||
Net sales | 58.5 | 143.9 |
Singapore | Mexican IMMSA Unit | Operating segment | ||
Revenue Recognition | ||
Net sales | 1.8 | |
Singapore | Peruvian Operations | Operating segment | ||
Revenue Recognition | ||
Net sales | 52.6 | 132.5 |
Japan | ||
Revenue Recognition | ||
Net sales | 127.3 | 159.4 |
Japan | Mexican Open-pit | Operating segment | ||
Revenue Recognition | ||
Net sales | 9.8 | 44.2 |
Japan | Peruvian Operations | Operating segment | ||
Revenue Recognition | ||
Net sales | 117.5 | 115.2 |
Other Asian countries | ||
Revenue Recognition | ||
Net sales | 71 | 72.6 |
Other Asian countries | Mexican Open-pit | Operating segment | ||
Revenue Recognition | ||
Net sales | 35 | 63.8 |
Other Asian countries | Mexican IMMSA Unit | Operating segment | ||
Revenue Recognition | ||
Net sales | 0.1 | 0.2 |
Other Asian countries | Peruvian Operations | Operating segment | ||
Revenue Recognition | ||
Net sales | $ 35.9 | $ 8.6 |
REVENUE_ - Revenue by Segment (
REVENUE: - Revenue by Segment (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Revenue Recognition | ||
Net sales | $ 1,753.4 | $ 1,841.1 |
Corporate, other and eliminations | ||
Revenue Recognition | ||
Net sales | (19.9) | (19.6) |
Mexican Open-pit | Operating segment | ||
Revenue Recognition | ||
Net sales | 1,072.1 | 1,068.6 |
Mexican IMMSA Unit | Operating segment | ||
Revenue Recognition | ||
Net sales | 121.1 | 149.2 |
Peruvian Operations | Operating segment | ||
Revenue Recognition | ||
Net sales | 580.1 | 642.9 |
Copper | ||
Revenue Recognition | ||
Net sales | 1,415.6 | 1,473.4 |
Copper | Corporate, other and eliminations | ||
Revenue Recognition | ||
Net sales | (12.9) | (11.2) |
Copper | Mexican Open-pit | Operating segment | ||
Revenue Recognition | ||
Net sales | 895.1 | 909.4 |
Copper | Mexican IMMSA Unit | Operating segment | ||
Revenue Recognition | ||
Net sales | 11 | 11.2 |
Copper | Peruvian Operations | Operating segment | ||
Revenue Recognition | ||
Net sales | 522.4 | 564 |
Molybdenum | ||
Revenue Recognition | ||
Net sales | 118.3 | 136.3 |
Molybdenum | Mexican Open-pit | Operating segment | ||
Revenue Recognition | ||
Net sales | 90.1 | 91 |
Molybdenum | Peruvian Operations | Operating segment | ||
Revenue Recognition | ||
Net sales | 28.2 | 45.3 |
Zinc | ||
Revenue Recognition | ||
Net sales | 76.7 | 94.9 |
Zinc | Corporate, other and eliminations | ||
Revenue Recognition | ||
Net sales | (0.4) | (0.1) |
Zinc | Mexican IMMSA Unit | Operating segment | ||
Revenue Recognition | ||
Net sales | 77.1 | 95 |
Silver | ||
Revenue Recognition | ||
Net sales | 76.8 | 71.1 |
Silver | Corporate, other and eliminations | ||
Revenue Recognition | ||
Net sales | (5.8) | (7.5) |
Silver | Mexican Open-pit | Operating segment | ||
Revenue Recognition | ||
Net sales | 50.4 | 42.6 |
Silver | Mexican IMMSA Unit | Operating segment | ||
Revenue Recognition | ||
Net sales | 17.3 | 20.6 |
Silver | Peruvian Operations | Operating segment | ||
Revenue Recognition | ||
Net sales | 14.9 | 15.4 |
Other | ||
Revenue Recognition | ||
Net sales | 66 | 65.4 |
Other | Corporate, other and eliminations | ||
Revenue Recognition | ||
Net sales | (0.8) | (0.8) |
Other | Mexican Open-pit | Operating segment | ||
Revenue Recognition | ||
Net sales | 36.5 | 25.6 |
Other | Mexican IMMSA Unit | Operating segment | ||
Revenue Recognition | ||
Net sales | 15.7 | 22.4 |
Other | Peruvian Operations | Operating segment | ||
Revenue Recognition | ||
Net sales | $ 14.6 | $ 18.2 |
REVENUE_ - Receivables by repor
REVENUE: - Receivables by reporting segment (Details) $ in Millions | 3 Months Ended | |
Mar. 31, 2019USD ($)T | Dec. 31, 2018USD ($) | |
Opening and closing balances of receivables | ||
Trade receivables | $ 876.6 | $ 822.4 |
Related parties | 98.2 | 101.5 |
Corporate, other and eliminations | ||
Opening and closing balances of receivables | ||
Related parties | $ 9 | 19.9 |
Copper concentrates | ||
Long Term Contracts | ||
Long term contracts | T | 1,090,000 | |
Copper cathodes | ||
Long Term Contracts | ||
Long term contracts | T | 48,000 | |
Molybdenum concentrates | ||
Long Term Contracts | ||
Long term contracts | T | 24,106 | |
Sulfuric acid | ||
Long Term Contracts | ||
Long term contracts | T | 331,620 | |
Mexican Open-pit | Operating segment | ||
Opening and closing balances of receivables | ||
Trade receivables | $ 543.9 | 505.9 |
Related parties | 89.2 | 81.6 |
Mexican IMMSA Unit | Operating segment | ||
Opening and closing balances of receivables | ||
Trade receivables | 54 | 50.5 |
Peruvian Operations | Operating segment | ||
Opening and closing balances of receivables | ||
Trade receivables | $ 278.7 | $ 266 |
REVENUE_ - Provisionally prices
REVENUE: - Provisionally prices sales (Details) lb in Millions, $ in Millions | Mar. 31, 2019USD ($)lb$ / item |
Copper | |
Provisionally priced sales: | |
Provisional price sales adjustment amounts included in accounts receivable and net sales | $ | $ 2.8 |
Copper | April 2019 to July 2019 | |
Provisionally priced sales: | |
Sales volume (in million lbs.) | lb | 105 |
Provisional price | $ / item | 2.94 |
Molybdenum | |
Provisionally priced sales: | |
Provisional price sales adjustment amounts included in accounts receivable and net sales | $ | $ 4.1 |
Molybdenum | April 2019 to June 2019 | |
Provisionally priced sales: | |
Sales volume (in million lbs.) | lb | 10.2 |
Provisional price | $ / item | 12.13 |
ASSET RETIREMENT OBLIGATION_ (D
ASSET RETIREMENT OBLIGATION: (Details) $ in Millions | 3 Months Ended | ||
Mar. 31, 2019USD ($)item | Jun. 30, 2018USD ($) | Mar. 31, 2018USD ($) | |
Asset retirement obligation activity | |||
Balance at the beginning of the year | $ 217.7 | $ 220.5 | $ 222.5 |
Changes in estimates | 28.1 | (5.2) | |
Closure Payments | (0.2) | ||
Accretion expense | 3 | 3.2 | |
Balance at the end of the year | $ 248.6 | $ 220.5 | |
Peru | |||
ASSET RETIREMENT OBLIGATION: | |||
Period after which successive reviews are required by the law (in years) | 5 years | ||
Accepted value of the Lima office complex and warehouse | $ 45.3 | ||
Cumulative guarantee amount | $ 37.8 | ||
Number of units with future closure costs recognized as an asset retirement obligation | item | 3 | ||
Asset retirement obligation activity | |||
Changes in estimates | $ 28.1 | ||
Mexico | |||
Environmental cost | |||
Plant demolition and soil remediation cost | $ 66.2 | ||
Asset retirement obligation activity | |||
Changes in estimates | $ (10.4) |
RELATED PARTY TRANSACTIONS_ (De
RELATED PARTY TRANSACTIONS: (Details) $ in Millions, $ in Millions | Aug. 04, 2014item | May 31, 2010USD ($) | Mar. 31, 2019USD ($) | Mar. 31, 2018USD ($) | Mar. 31, 2012USD ($) | Dec. 31, 2012itemMW | Dec. 31, 2005item | Dec. 31, 2018USD ($) | Mar. 31, 2012MXN ($) | Mar. 31, 2012USD ($) |
RELATED PARTY TRANSACTIONS: | ||||||||||
Related parties receivable current: | $ 98.2 | $ 101.5 | ||||||||
Related parties payable: | 66.4 | 75.3 | ||||||||
Total purchases | 0.1 | $ 0.3 | ||||||||
Total sales | 0.6 | 0.2 | ||||||||
Grupo Mexico and affiliates | ||||||||||
RELATED PARTY TRANSACTIONS: | ||||||||||
Total purchases | 92.3 | 99.7 | ||||||||
Total sales | 17.1 | 59.7 | ||||||||
Asarco LLC | ||||||||||
RELATED PARTY TRANSACTIONS: | ||||||||||
Related parties receivable current: | 74.6 | 74.4 | ||||||||
Related parties payable: | 6.6 | 4.1 | ||||||||
Total purchases | 10 | 6.8 | ||||||||
Total sales | 2 | 36.5 | ||||||||
AMC | ||||||||||
RELATED PARTY TRANSACTIONS: | ||||||||||
Related parties receivable current: | 11 | |||||||||
AMMINCO | ||||||||||
RELATED PARTY TRANSACTIONS: | ||||||||||
Related parties receivable current: | 0.2 | |||||||||
Related parties payable: | 2.4 | 8 | ||||||||
Total purchases | 2.4 | |||||||||
Compania Perforadora Mexico, S.A.P.I. de C.V. and affiliates | ||||||||||
RELATED PARTY TRANSACTIONS: | ||||||||||
Related parties receivable current: | 1 | 1.4 | ||||||||
Eolica El Retiro, S.A.P.I. de C.V. | ||||||||||
RELATED PARTY TRANSACTIONS: | ||||||||||
Related parties payable: | 1 | 1 | ||||||||
Total purchases | 0.8 | 0.6 | ||||||||
Number of wind turbines | item | 37 | |||||||||
Percentage of supply to third-party energy users | 20.90% | |||||||||
Ferrocarril Mexicano, S.A. de C.V. | ||||||||||
RELATED PARTY TRANSACTIONS: | ||||||||||
Related parties receivable current: | 0.1 | 0.1 | ||||||||
Related parties payable: | 7.6 | 6.4 | ||||||||
Total purchases | 10.6 | 10 | ||||||||
Grupo Mexico | ||||||||||
RELATED PARTY TRANSACTIONS: | ||||||||||
Related parties receivable current: | 2.7 | 2.7 | ||||||||
Related parties payable: | 0.8 | 0.6 | ||||||||
Total purchases | 2.5 | 4.5 | ||||||||
Donations | 3.4 | |||||||||
Mexico Generadora de Energia, S. de R.L. ("MGE") | ||||||||||
RELATED PARTY TRANSACTIONS: | ||||||||||
Related parties receivable current: | 18 | 10.3 | ||||||||
Related parties payable: | 36.7 | 40.6 | ||||||||
Total purchases | 55.2 | 61.9 | ||||||||
Total sales | 15.1 | $ 23.2 | ||||||||
Maximum amount of line of credit granted to related party | $ 350 | |||||||||
Interest rate (as a percent) | 4.40% | |||||||||
Loan repaid | $ 150 | |||||||||
Mexico Generadora de Energia, S. de R.L. ("MGE") | Mexico | ||||||||||
RELATED PARTY TRANSACTIONS: | ||||||||||
Number of power plants | item | 2 | 2 | ||||||||
Number of natural gas-fired combined cycle power generating units | item | 2 | |||||||||
Net total capacity (in megawatts) | MW | 516.2 | |||||||||
Percentage of supply to third-party energy users | 14.00% | 2.10% | ||||||||
Mexico Generadora de Energia, S. de R.L. ("MGE") | Minera Mexico | Maximum | ||||||||||
RELATED PARTY TRANSACTIONS: | ||||||||||
Ownership percentage | 0.001% | 0.001% | ||||||||
Mexico Generadora de Energia, S. de R.L. ("MGE") | Controladora de Infraestructura Energetica Mexico, S. A. de C. V. | ||||||||||
RELATED PARTY TRANSACTIONS: | ||||||||||
Percentage of interest acquired | 99.999% | 99.999% | ||||||||
Value of interest acquired | $ 1,928.6 | $ 150 | ||||||||
Mexico Generadora de Energia, S. de R.L. ("MGE") | Controladora de Infraestructura Energetica Mexico, S. A. de C. V. | Mexico | ||||||||||
RELATED PARTY TRANSACTIONS: | ||||||||||
Percentage of interest acquired | 99.999% | |||||||||
Mexico Proyectos y Desarrollos, S.A. de C.V. and affiliates ("MPD") | ||||||||||
RELATED PARTY TRANSACTIONS: | ||||||||||
Related parties receivable current: | 0.5 | 0.6 | ||||||||
Related parties payable: | 11.2 | 14.4 | ||||||||
Total purchases | 10.8 | $ 15.9 | ||||||||
Boutique Bowling de Mexico, S.A. de C.V. | ||||||||||
RELATED PARTY TRANSACTIONS: | ||||||||||
Related parties receivable current: | 0.3 | 0.3 | ||||||||
Related parties payable: | 0.1 | 0.1 | ||||||||
Total purchases | 0.1 | 0.1 | ||||||||
Total sales | 0.1 | |||||||||
Boutique Bowling de Mexico, S.A. de C.V. | Maximum | ||||||||||
RELATED PARTY TRANSACTIONS: | ||||||||||
Total sales | 0.1 | |||||||||
Empresarios Industriales de Mexico, S.A. de C.V | ||||||||||
RELATED PARTY TRANSACTIONS: | ||||||||||
Related parties receivable current: | 0.1 | |||||||||
Total sales | 0.1 | |||||||||
Mexico Transportes Aereos, S.A. de C.V. ("Mextransport") | ||||||||||
RELATED PARTY TRANSACTIONS: | ||||||||||
Related parties receivable current: | 0.5 | 0.1 | ||||||||
Total purchases | 0.2 | |||||||||
Total sales | 0.5 | 0.1 | ||||||||
Operadora de Cinemas S.A. de C.V. | ||||||||||
RELATED PARTY TRANSACTIONS: | ||||||||||
Related parties receivable current: | 0.4 | 0.4 | ||||||||
Related parties payable: | $ 0.1 | |||||||||
Total purchases | 0.1 | 0.1 | ||||||||
Operadora de Cinemas S.A. de C.V. | Maximum | ||||||||||
RELATED PARTY TRANSACTIONS: | ||||||||||
Related parties payable: | 0.1 | |||||||||
Total sales | $ 0.1 | $ 0.1 | ||||||||
Equity investment in affiliate | ||||||||||
RELATED PARTY TRANSACTIONS: | ||||||||||
Ownership percentage | 44.20% |
BENEFIT PLANS_ (Details)
BENEFIT PLANS: (Details) $ in Millions | 3 Months Ended | |
Mar. 31, 2019USD ($)plan | Mar. 31, 2018USD ($) | |
Benefit plans | ||
Number of noncontributory defined benefit pension plans | plan | 2 | |
Defined benefit plan, net periodic benefit costs | ||
Amortization of net loss (gain) | $ 0.1 | $ 0.1 |
Post retirement defined benefit plans and defined contribution plan | ||
Defined benefit plan, net periodic benefit costs | ||
Service cost | 0.3 | 0.3 |
Interest cost | 0.4 | 0.4 |
Expected return on plan assets | (0.8) | (0.9) |
Net periodic benefit cost | (0.1) | (0.2) |
Post retirement defined benefit plans and defined contribution plan | Maximum | ||
Defined benefit plan, net periodic benefit costs | ||
Amortization of net actuarial loss | 0.1 | 0.1 |
Amortization of net loss (gain) | 0.1 | 0.1 |
Post-retirement Health care plans | ||
Defined benefit plan, net periodic benefit costs | ||
Interest cost | 0.2 | 0.2 |
Net periodic benefit cost | 0.2 | 0.2 |
Post-retirement Health care plans | Maximum | ||
Defined benefit plan, net periodic benefit costs | ||
Amortization of prior service cost (credit) | $ 0.1 | $ 0.1 |
COMMITMENTS AND CONTINGENCIES_2
COMMITMENTS AND CONTINGENCIES: - Environmental matters (Details) $ in Millions | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2019USD ($) | Mar. 31, 2018USD ($) | Dec. 31, 2011categoryperson | |
Environmental costs | |||
Environmental capital investment | $ 19.2 | $ 26.4 | |
Peru | |||
Environmental costs | |||
Environmental capital investment | 10.2 | 6.5 | |
Mexico | |||
Environmental costs | |||
Environmental capital investment | $ 9 | $ 19.9 | |
Number of categories of collective actions | category | 3 | ||
Minimum number of people claiming injury due to collective action initiative in Civil Federal Procedures Code (CFPC) | person | 30 |
COMMITMENTS AND CONTINGENCIES_3
COMMITMENTS AND CONTINGENCIES: - Litigation matters (Details) | Dec. 27, 2018USD ($) | Aug. 22, 2018USD ($) | Mar. 31, 2019lawsuit | Sep. 30, 2016lawsuit | Jun. 30, 2015lawsuititem | Dec. 31, 2015lawsuititem | Dec. 31, 2012item | Dec. 31, 2005item | Dec. 31, 2017lawsuit | Dec. 31, 2016item | Mar. 31, 2012 |
Litigation Matter | |||||||||||
Number of collective action lawsuits | 6 | ||||||||||
Number of collective action lawsuits dismissed | 2 | ||||||||||
Remaining number of lawsuits | 4 | ||||||||||
Number of civil actions seeking damages | 33 | ||||||||||
Number Of Constitutional Action Lawsuits | 4 | ||||||||||
Number of subsidiaries to which environmental impact authorizations were granted | item | 1 | ||||||||||
Number of subsidiaries against which lawsuits were filed | item | 2 | ||||||||||
Tia Maria | |||||||||||
Litigation Matter | |||||||||||
Number of lawsuits | 3 | ||||||||||
Grupo Mexico and Americas Mining | |||||||||||
Litigation Matter | |||||||||||
Amount of Litigation settlement award | $ | $ 50,000,000 | ||||||||||
Amount of litigation settlement | $ | $ 50,000,000 | ||||||||||
Attorneys fees | $ | 13,500,000 | ||||||||||
Incentive fee | $ | 5,000 | ||||||||||
Special dividend | $ | $ 36,500,000 | ||||||||||
Buenavista del Cobre, S.A. de C.V | |||||||||||
Litigation Matter | |||||||||||
Number of civil actions seeking damages | item | 8 | 3 | |||||||||
Mexico Generadora de Energia, S. de R.L. ("MGE") | Controladora de Infraestructura Energetica Mexico, S. A. de C. V. | |||||||||||
Litigation Matter | |||||||||||
Acquisition percentage | 99.999% | ||||||||||
Mexico | Mexico Generadora de Energia, S. de R.L. ("MGE") | |||||||||||
Litigation Matter | |||||||||||
Number of power plants | item | 2 | 2 | |||||||||
Mexico | Mexico Generadora de Energia, S. de R.L. ("MGE") | Controladora de Infraestructura Energetica Mexico, S. A. de C. V. | |||||||||||
Litigation Matter | |||||||||||
Acquisition percentage | 99.999% | ||||||||||
Francisca Garcia Enriquez | |||||||||||
Litigation Matter | |||||||||||
Number of additional constitutional lawsuits filed | 2 | ||||||||||
Mario Alberto Salcido et al; Maria Elena Heredia Bustamante et al; Martin Eligio Ortiz Gamez et al and Maria de los Angeles Enriquez Bacame et al | |||||||||||
Litigation Matter | |||||||||||
Number of additional constitutional lawsuits filed | 4 | ||||||||||
Norberto Bustamante et al | |||||||||||
Litigation Matter | |||||||||||
Number of additional constitutional lawsuits filed | 2 |
COMMITMENTS AND CONTINGENCIES_4
COMMITMENTS AND CONTINGENCIES: - Labor matters (Details) | 1 Months Ended | 3 Months Ended | ||||||
Mar. 31, 2019PEN (S/)item | Mar. 31, 2019USD ($)item | Aug. 31, 2018PEN (S/)item | Aug. 31, 2018USD ($)item | Jun. 30, 2018PEN (S/) | Jun. 30, 2018USD ($) | Mar. 31, 2019USD ($)item | Aug. 22, 2018USD ($) | |
Peru | Labor Matters | ||||||||
Labor matters | ||||||||
Percentage of labor unionized | 70.00% | 70.00% | 70.00% | |||||
Total number of workers | 4,835 | |||||||
Number of labor unions | 6 | |||||||
Number of labor unions represent majority of workers | 1 | |||||||
Number of labor unions other than majority workers unions | 5 | |||||||
Term of agreement | 3 years | 3 years | 3 years | 3 years | ||||
Annual salary increase (as a percent) | 5.00% | 5.00% | 5.00% | 5.00% | 5.00% | 5.00% | ||
Labor expense | S/ 45,000 | $ 13,600 | S/ 45,000 | $ 13,600 | S/ 45,000 | $ 13,600 | ||
Number of additional unions | 1 | 1 | 3 | 3 | ||||
Number of unsigned unions | 1 | 1 | 1 | |||||
Mexico | San Martin | ||||||||
Labor matters | ||||||||
Budgeted cost for rehabilitation of mine | $ | $ 87,000,000 | |||||||
Total expense incurred on rehabilitation of mine till date | $ | $ 34,900,000 |
COMMITMENTS AND CONTINGENCIES_5
COMMITMENTS AND CONTINGENCIES: - Others (Details) $ in Thousands, S/ in Millions | 1 Months Ended | 3 Months Ended | ||||
Jun. 30, 2018USD ($)T | May 31, 2016MW | Jul. 31, 2014MW | Jun. 30, 2014MW | Mar. 31, 2019PEN (S/)itemmkmT | Mar. 31, 2019USD ($)itemmkmT | |
Other commitments: | ||||||
Commitment for capital projects | $ 177,700 | |||||
Tia Maria | Peru | ||||||
Other commitments: | ||||||
Project budget | 1,400,000 | |||||
Amount spend as of the current date | $ 333,300 | |||||
Annual production ( in tons) | T | 120,000 | 120,000 | ||||
Distance of sea water transportation | km | 25 | 25 | ||||
Height above sea level of the desalinization plant | m | 1,000 | 1,000 | ||||
Additional investment in desalinization plant | $ 95,000 | |||||
Number of jobs expected to be generated | item | 9,000 | 9,000 | ||||
Number of Direct Jobs Expected to be Generated | 3,600 | 3,600 | ||||
Number of Indirect Jobs Expected to be Generated | 5,400 | 5,400 | ||||
Number of workers expected to be directly employed | item | 600 | 600 | ||||
Number of workers expected to be indirectly employed | item | 4,200 | 4,200 | ||||
Term life of environmental project (in years) | 20 years | 20 years | ||||
Toquepala Concentrator Expansion | Peru | ||||||
Other commitments: | ||||||
Project budget | $ 1,320,000 | |||||
Amount spend as of the current date | 1,240,900 | |||||
Amount committed to funding for social and infrastructure improvement projects | S/ 445.0 | 131,700 | ||||
Development Fund Moquegua Region | Peru | ||||||
Other commitments: | ||||||
Amount committed to funding for social and infrastructure improvement projects | S/ 700.0 | $ 207,200 | ||||
Copper | Michiquillay | Peru | ||||||
Other commitments: | ||||||
Annual production ( in tons) | T | 225,000 | |||||
Contingent contractual obligation | $ 400,000 | |||||
Estimated mineralized material (in tons) | T | 1,150,000,000 | |||||
Copper grade percentage | 0.63% | |||||
Initial mine life | 25 years | |||||
Contractual obligation paid on project | $ 12,500 | |||||
Remaining amount to pay if project is developed | $ 387,500 | |||||
Copper | Toquepala Concentrator Expansion | Peru | ||||||
Other commitments: | ||||||
Estimated increase in annual production (in tons) | T | 258,000 | 258,000 | ||||
Estimated increase in annual production (in percent) | 52.00% | 52.00% | ||||
Educational Project | Development Fund Moquegua Region | Peru | ||||||
Other commitments: | ||||||
Amount committed to funding for social and infrastructure improvement projects | S/ 108.5 | $ 32,100 | ||||
Water Treatment | Development Fund Moquegua Region | Peru | ||||||
Other commitments: | ||||||
Amount committed to funding for social and infrastructure improvement projects | 48.4 | 14,300 | ||||
Social Investment For Taxes | Development Fund Moquegua Region | Peru | ||||||
Other commitments: | ||||||
Amount committed to funding for social and infrastructure improvement projects | S/ 202.0 | $ 59,800 | ||||
Number of Infrastructure Projects Agreed for Construction | 6 | 6 | ||||
Electroperu S.A | Power purchase agreements | Peru | ||||||
Other commitments: | ||||||
Purchase agreement, contracted power capacity (in megawatts) | MW | 120 | |||||
Term of power purchase agreement related to sale of power plant | 20 years | |||||
Kallpa | Power purchase agreements | Peru | ||||||
Other commitments: | ||||||
Purchase agreement, contracted power capacity (in megawatts) | MW | 120 | |||||
Term of power purchase agreement related to sale of power plant | 10 years | 10 years | ||||
Kallpa | Power purchase agreements | Peru | Maximum | ||||||
Other commitments: | ||||||
Purchase agreement, contracted power capacity (in megawatts) | MW | 80 |
SEGMENT AND RELATED INFORMATI_3
SEGMENT AND RELATED INFORMATION: (Details) $ in Millions | 3 Months Ended | ||
Mar. 31, 2019USD ($)segment | Mar. 31, 2018USD ($) | Dec. 31, 2018USD ($) | |
Financial information related to segments | |||
Number of reportable segments | segment | 3 | ||
Financial information relating to segments | |||
Net sales | $ 1,753.4 | $ 1,841.1 | |
Cost of sales (exclusive of depreciation, amortization and depletion) | 844.1 | 876.5 | |
Selling, general and administrative | 28.5 | 24.1 | |
Depreciation, amortization and depletion | 181.6 | 162 | |
Exploration | 5.5 | 5.2 | |
Operating income | 693.7 | 773.3 | |
Interest, net | (74.1) | (66.6) | |
Other income (expense) | 5.4 | (2.3) | |
Income taxes | (237.9) | (236.6) | |
Equity earnings of affiliate, net of income tax | 2.1 | 4.1 | |
Non-controlling interest | (1) | (1.2) | |
Net income attributable to SCC | 388.2 | 470.7 | |
Capital investment | 173.1 | 295.7 | |
Property and mine development, net | 9,383.6 | 9,118.5 | $ 9,403.8 |
Total assets | 15,542.6 | 14,038.1 | $ 14,484.8 |
Intersegment sales | |||
Financial information relating to segments | |||
Net sales | (19.9) | (19.6) | |
Corporate, other and eliminations | |||
Financial information relating to segments | |||
Net sales | (19.9) | (19.6) | |
Cost of sales (exclusive of depreciation, amortization and depletion) | (23.5) | (20.2) | |
Selling, general and administrative | 0.8 | 0.4 | |
Depreciation, amortization and depletion | 8.8 | 6.7 | |
Exploration | 0.2 | 0.7 | |
Operating income | (6.2) | (7.2) | |
Capital investment | 1.1 | 2.1 | |
Property and mine development, net | 343.7 | 663 | |
Total assets | 1,588.8 | 367.3 | |
Reportable subsegments | |||
Financial information relating to segments | |||
Net sales | 1,753.4 | 1,841.1 | |
Mexican Open-pit | Operating segment | |||
Financial information relating to segments | |||
Net sales | 1,072.1 | 1,068.6 | |
Cost of sales (exclusive of depreciation, amortization and depletion) | 419.6 | 411.3 | |
Selling, general and administrative | 16.3 | 11.9 | |
Depreciation, amortization and depletion | 85 | 92.5 | |
Exploration | 0.4 | 0.6 | |
Operating income | 550.8 | 552.3 | |
Capital investment | 58.6 | 64.7 | |
Property and mine development, net | 4,780.6 | 4,577.4 | |
Total assets | 8,375 | 8,338.7 | |
Mexican Open-pit | Reportable subsegments | Operating segment | |||
Financial information relating to segments | |||
Net sales | 1,072.1 | 1,068.6 | |
Mexican IMMSA Unit | Operating segment | |||
Financial information relating to segments | |||
Net sales | 121.1 | 149.2 | |
Cost of sales (exclusive of depreciation, amortization and depletion) | 100 | 95.6 | |
Selling, general and administrative | 1.8 | 2.4 | |
Depreciation, amortization and depletion | 12.9 | 11 | |
Exploration | 2 | 1.3 | |
Operating income | 4.4 | 38.9 | |
Capital investment | 25 | 12.6 | |
Property and mine development, net | 460.9 | 434.6 | |
Total assets | 942.2 | 950.1 | |
Mexican IMMSA Unit | Intersegment sales | |||
Financial information relating to segments | |||
Net sales | 19.9 | 19.6 | |
Mexican IMMSA Unit | Reportable subsegments | Operating segment | |||
Financial information relating to segments | |||
Net sales | 101.2 | 129.6 | |
Peruvian Operations | Operating segment | |||
Financial information relating to segments | |||
Net sales | 580.1 | 642.9 | |
Cost of sales (exclusive of depreciation, amortization and depletion) | 348 | 389.8 | |
Selling, general and administrative | 9.6 | 9.4 | |
Depreciation, amortization and depletion | 74.9 | 51.8 | |
Exploration | 2.9 | 2.6 | |
Operating income | 144.7 | 189.3 | |
Capital investment | 88.4 | 216.3 | |
Property and mine development, net | 3,798.4 | 3,443.5 | |
Total assets | 4,636.6 | 4,382 | |
Peruvian Operations | Reportable subsegments | Operating segment | |||
Financial information relating to segments | |||
Net sales | $ 580.1 | $ 642.9 |
STOCKHOLDERS' EQUITY_ - Treasur
STOCKHOLDERS' EQUITY: - Treasury Stock (Details) - USD ($) $ in Millions | 3 Months Ended | 135 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | Mar. 31, 2019 | |
Activity in treasury stock | |||
Balance at the beginning of the period | $ 3,019.6 | ||
Purchase of shares | $ 2,900 | ||
Balance at the end of the period | $ 3,026 | $ 3,007.6 | $ 3,026 |
Southern Copper common shares | |||
Activity in treasury stock | |||
Treasury stock balance at the end of the period (in shares) | 111,551,617 | 111,567,617 | 111,551,617 |
TREASURY STOCK: | Southern Copper common shares | |||
Activity in treasury stock | |||
Balance at the beginning of the period | $ 2,768.3 | $ 2,768.7 | |
Balance at the end of the period | 2,768.3 | 2,768.7 | $ 2,768.3 |
TREASURY STOCK: | Parent Company (Grupo Mexico) common shares | |||
Activity in treasury stock | |||
Balance at the beginning of the period | 251.3 | 232.4 | |
Other activity, including dividend, interest and foreign currency transaction effect | 6.4 | 6.5 | |
Balance at the end of the period | $ 257.7 | $ 238.9 | $ 257.7 |
STOCKHOLDERS' EQUITY_ - Repurch
STOCKHOLDERS' EQUITY: - Repurchase Program (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions | 135 Months Ended | |
Mar. 31, 2019 | Dec. 31, 2008 | |
SCC share repurchase program: | ||
Amount authorized for share repurchase program | $ 3,000 | $ 500 |
Number of Shares Purchased | 119.5 | |
Maximum Number of Shares that May Yet Be Purchased Under the Plan @ $39.68 | 2.1 | |
Cost of purchase of shares | $ 2,900 | |
Closing price of NYSE (in dollars per share) | $ 39.68 | |
Percentage of ownership by parent | 88.90% |
STOCKHOLDERS' EQUITY_ - Directo
STOCKHOLDERS' EQUITY: - Directors' Stock Award Plan (Details) - shares | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Parent Company (Grupo Mexico) common shares | ||
Share based Compensation Plan | ||
Treasury stock balance at the end of the period (in shares) | 100,181,108 | 104,479,600 |
Directors' Stock Award Plan | ||
Share based Compensation Plan | ||
Common shares received on election as director | 1,200 | |
Additional shares issued at each annual general meeting | 1,200 | |
Total SCC shares reserved for the plan | 600,000 | |
Period of extension of plan | 5 years | |
Increased share awards issued to directors | 1,600 |
STOCKHOLDERS' EQUITY - Compensa
STOCKHOLDERS' EQUITY - Compensation Plan (Details) $ / shares in Units, $ in Millions | 1 Months Ended | 3 Months Ended | ||||
Nov. 30, 2018$ / shares | Nov. 30, 2018$ / shares | Jan. 31, 2015$ / shares | Jan. 31, 2015$ / shares | Mar. 31, 2019USD ($)$ / sharesshares | Mar. 31, 2018USD ($)$ / sharesshares | |
Employee Stock Purchase 2015 Plan | ||||||
Information related to compensation cost | ||||||
Purchase price for initial subscription (in dollars per share) | (per share) | $ 2.63 | $ 38.44 | ||||
Percentage of title acquired by employee in every two years on shares paid in previous two years | 50.00% | |||||
Period of plan | 8 years | |||||
Ratio of bonus shares granted to participant | 0.1 | |||||
Stock based compensation expense | $ | $ 0.2 | $ 0.2 | ||||
Unrecognized compensation expense | $ | $ 2.4 | $ 3 | ||||
Stock award activity, Shares | ||||||
Outstanding shares at the beginning of the period | shares | 1,840,336 | 2,293,120 | ||||
Exercised (in shares) | shares | (247,670) | (1,873) | ||||
Outstanding shares at the end of the period | shares | 1,592,666 | 2,291,247 | ||||
Unit Weighted Average Grant Date Fair Value | ||||||
Outstanding shares at the beginning of the period (in dollars per share) | $ / shares | $ 2.63 | $ 2.63 | ||||
Exercised (in dollars per share) | $ / shares | 2.63 | 2.63 | ||||
Outstanding shares at the end of the period (in dollars per share) | $ / shares | $ 2.63 | $ 2.63 | ||||
Employee Stock Purchase 2018 Plan | ||||||
Information related to compensation cost | ||||||
Purchase price for initial subscription (in dollars per share) | (per share) | $ 1.86 | $ 37.89 | ||||
Percentage of title acquired by employee in every two years on shares paid in previous two years | 50.00% | |||||
Period of plan | 8 years | |||||
Ratio of bonus shares granted to participant | 0.1 | |||||
Stock based compensation expense | $ | $ 0.1 | |||||
Unrecognized compensation expense | $ | $ 3.5 | |||||
Stock award activity, Shares | ||||||
Outstanding shares at the beginning of the period | shares | 2,782,424 | |||||
Outstanding shares at the end of the period | shares | 2,782,424 | |||||
Unit Weighted Average Grant Date Fair Value | ||||||
Outstanding shares at the beginning of the period (in dollars per share) | $ / shares | $ 1.86 | |||||
Outstanding shares at the end of the period (in dollars per share) | $ / shares | $ 1.86 |
STOCKHOLDERS' EQUITY_ - Non Con
STOCKHOLDERS' EQUITY: - Non Controlling Interest (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Non-controlling interest activity | ||
Balance at the beginning of the period | $ 45.4 | $ 41.7 |
Net earnings | 1 | 1.2 |
Dividend paid | (0.1) | (0.3) |
Balance at the end of the period | $ 46.3 | $ 42.6 |
FINANCIAL INSTRUMENTS_ (Details
FINANCIAL INSTRUMENTS: (Details) - USD ($) $ in Millions | Mar. 31, 2019 | Dec. 31, 2018 |
Liabilities: | ||
Long-term debt, Carrying Value | $ 5,960.9 | $ 5,960.1 |
Long-term debt, Fair Value | 6,832.3 | 6,301.7 |
Short-term investment: | ||
Trading securities | 212.7 | 213.1 |
Available-for-sale debt securities: | ||
Available-for-sale Securities, Current, Total | 0.8 | 0.7 |
Quoted prices in active markets for identical assets (Level 1) | ||
Liabilities: | ||
Long-term debt, Carrying Value | 5,211.3 | 5,210.7 |
Long-term debt, Fair Value | 6,055.4 | 5,540 |
Significant other observable inputs (Level 2) | ||
Liabilities: | ||
Long-term debt, Carrying Value | 749.6 | 749.4 |
Long-term debt, Fair Value | 776.9 | 761.7 |
Fair value measurements recurring | Fair value as of the end of the period | ||
Short-term investment: | ||
Trading securities | 212.7 | 213.1 |
Derivative: | ||
Total assets, fair value | 646 | 595.5 |
Fair value measurements recurring | Fair value as of the end of the period | Copper | ||
Derivative: | ||
Provisionally priced sales | 308.4 | 274.3 |
Fair value measurements recurring | Fair value as of the end of the period | Molybdenum | ||
Derivative: | ||
Provisionally priced sales | 124.1 | 107.4 |
Fair value measurements recurring | Asset backed securities | Fair value as of the end of the period | ||
Available-for-sale debt securities: | ||
Available-for-sale debt securities | 0.4 | 0.4 |
Fair value measurements recurring | Mortgage backed securities | Fair value as of the end of the period | ||
Available-for-sale debt securities: | ||
Available-for-sale debt securities | 0.4 | 0.3 |
Fair value measurements recurring | Quoted prices in active markets for identical assets (Level 1) | ||
Short-term investment: | ||
Trading securities | 212.7 | 213.1 |
Derivative: | ||
Total assets, fair value | 645.2 | 594.8 |
Fair value measurements recurring | Quoted prices in active markets for identical assets (Level 1) | Copper | ||
Derivative: | ||
Provisionally priced sales | 308.4 | 274.3 |
Fair value measurements recurring | Quoted prices in active markets for identical assets (Level 1) | Molybdenum | ||
Derivative: | ||
Provisionally priced sales | 124.1 | 107.4 |
Fair value measurements recurring | Significant other observable inputs (Level 2) | ||
Available-for-sale debt securities: | ||
Available-for-sale Securities, Current, Total | 0.8 | 0.7 |
Fair value measurements recurring | Significant other observable inputs (Level 2) | Asset backed securities | ||
Available-for-sale debt securities: | ||
Available-for-sale debt securities | 0.4 | 0.4 |
Fair value measurements recurring | Significant other observable inputs (Level 2) | Mortgage backed securities | ||
Available-for-sale debt securities: | ||
Available-for-sale debt securities | $ 0.4 | $ 0.3 |
SUMMARY OF SIGNIFICANT ACCOUN_3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (Details) - USD ($) $ in Millions | Mar. 31, 2019 | Jan. 01, 2019 |
LEASES: | ||
Right-of-use assets | $ 1,092.5 | $ 1,115.9 |
Lease obligation | $ 1,092.5 | $ 1,115.9 |
LEASES_ (Details)
LEASES: (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2019 | Jan. 01, 2019 | |
Lessee, Lease, Description [Line Items] | ||
The weighted average remaining lease term | 10 years | |
The weighted average discount rate | 3.56% | |
Total lease expense | $ 28,900,000 | |
Short term lease costs | 200,000 | |
Maturities of lease liabilities | ||
2019 | 86,700,000 | |
2020 | 115,400,000 | |
2021 | 115,300,000 | |
2022 | 112,100,000 | |
2023 | 111,100,000 | |
After 2023 | 929,100,000 | |
Total lease payments | 1,469,700,000 | |
Less: interest on lease liabilities | 377,200,000 | |
Present value of lease payments | 1,092,500,000 | $ 1,115,900,000 |
Cost of sales (exclusive of depreciation, amortization and depletion) | ||
Lessee, Lease, Description [Line Items] | ||
Total lease expense | 28,800,000 | |
Selling, general and administrative | ||
Lessee, Lease, Description [Line Items] | ||
Total lease expense | $ 100,000 | |
Minimum | ||
Lessee, Lease, Description [Line Items] | ||
Remaining lease terms | 2 years | |
Maximum | ||
Lessee, Lease, Description [Line Items] | ||
Underlying asset value | $ 10,000 | |
Total nominal contract value | $ 100,000 | |
Remaining lease terms | 14 years | |
Maximum | Exploration | ||
Lessee, Lease, Description [Line Items] | ||
Total lease expense | $ 100,000 |
SUBSEQUENT EVENTS_ (Details)
SUBSEQUENT EVENTS: (Details) | Apr. 11, 2019$ / shares |
Subsequent Events | |
SUBSEQUENT EVENTS: | |
Quarterly dividend authorized (in dollars per share) | $ 0.40 |