Southern Copper (SCCO) 10-Q 30 Oct 09 2009 Q3 Quarterly report Financial data

CONDENSED CONSOLIDATED STATEMEN

CONDENSED CONSOLIDATED STATEMENT OF EARNINGS (USD $)
In Thousands, except Per Share data	3 Months Ended Sep. 30, 2009	3 Months Ended Sep. 30, 2008	9 Months Ended Sep. 30, 2009	9 Months Ended Sep. 30, 2008
Net sales	$1,151,769	$1,440,077	$2,598,276	$4,401,079
Operating costs and expenses:
Cost of sales (exclusive of depreciation, amortization and depletion shown separately below)	529,893	645,798	1,324,824	1,716,845
Selling, general and administrative	23,804	25,937	60,697	77,318
Depreciation, amortization and depletion	82,266	83,944	239,202	248,339
Exploration	7,075	8,452	17,498	25,504
Total operating costs and expenses	643,038	764,131	1,642,221	2,068,006
Operating income	508,731	675,946	956,055	2,333,073
Interest expense	(25,126)	(25,610)	(74,402)	(80,275)
Capitalized interest	(3,287)	2,305	2,156	4,834
Gain (loss) on derivative instruments	(37)	(13,621)	4,144	(12,700)
Other income (expense)	760	21,274	2,628	19,689
Interest income	845	9,764	6,018	39,360
Income before income taxes	481,886	670,058	896,599	2,303,981
Income taxes	167,661	249,700	327,099	764,614
Net income	314,225	420,358	569,500	1,539,367
Less: Net income attributable to the non-controlling interest	1,774	2,556	3,389	8,115
Net income attributable to SCC	$312,451	$417,802	$566,111	$1,531,252
Per common share amounts:
Net income attributable to SCC - basic (in dollars per share)	0.37	0.47	0.67	1.73
Net income attributable to SCC - diluted (in dollars per share)	0.37	0.47	0.67	1.73
Dividends paid to SCC common shareholders (in dollars per share)	0.1	0.57	0.26	1.61
Weighted average common shares outstanding - basic (in shares)	850,009	882,696	850,929	883,165
Weighted average common shares outstanding - diluted (in shares)	850,009	882,696	850,929	883,165

CONDENSED CONSOLIDATED BALANCE

CONDENSED CONSOLIDATED BALANCE SHEET (USD $)
In Thousands	Sep. 30, 2009	Dec. 31, 2008
Current assets:
Cash and cash equivalents	$413,280	$716,740
Short-term investments	25,956	62,376
Accounts receivable trade, less allowance for doubtful accounts (2009 - $4,611; 2008 - $4,811)	449,373	104,149
Accounts receivable other (including affiliates 2009 - $2,978; 2008 - $1,925)	17,315	29,439
Inventories	417,657	451,597
Deferred income tax	14,650	64,711
Other current assets	64,791	124,681
Total current assets	1,403,022	1,553,693
Property, net	3,942,922	3,810,508
Leachable material, net	119,520	156,294
Intangible assets, net	114,335	115,059
Deferred income tax	45,060	83,106
Other assets	51,661	45,664
Total assets	5,676,520	5,764,324
Current liabilities:
Current portion of long-term debt	10,000	10,000
Accounts payable	231,407	413,351
Accrued income taxes	17,904	34,378
Due to affiliated companies	5,079	8,965
Accrued workers' participation	93,427	205,466
Interest	18,983	40,968
Other accrued liabilities	35,307	24,335
Total current liabilities	412,107	737,463
Long-term debt	1,275,182	1,279,972
Deferred income taxes	120,766	169,342
Non-current taxes payable	73,171	70,266
Other liabilities and reserves	89,161	93,875
Asset retirement obligation	34,489	18,007
Total non-current liabilities	1,592,769	1,631,462
STOCKHOLDERS' EQUITY
Common stock	8,846	8,846
Additional paid-in capital	1,007,844	993,826
Retained earnings	3,258,501	2,916,517
Accumulated other comprehensive loss	(23,142)	(23,477)
Treasury stock	(597,233)	(514,453)
Total SCC stockholders' equity	3,654,816	3,381,259
Non-controlling interest	16,828	14,140
Total equity	3,671,644	3,395,399
Total liabilities and equity	$5,676,520	$5,764,324

1_CONDENSED CONSOLIDATED BALANC

CONDENSED CONSOLIDATED BALANCE SHEET (Parenthetical) (USD $)
In Thousands	Sep. 30, 2009	Dec. 31, 2008
BALANCE SHEET
Allowance for doubtful accounts	$4,611	$4,811
Accounts receivable from affiliates	$2,978	$1,925

2_CONDENSED CONSOLIDATED STATEM

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (USD $)
In Thousands	3 Months Ended Sep. 30, 2009	3 Months Ended Sep. 30, 2008	9 Months Ended Sep. 30, 2009	9 Months Ended Sep. 30, 2008
OPERATING ACTIVITIES
Net income attributable to SCC	$312,451	$417,802	$566,111	$1,531,252
Adjustments to reconcile net earnings to net cash provided from operating activities:
Depreciation, amortization and depletion	82,266	83,944	239,202	248,339
Capitalized leachable material				(2,246)
(Gain) loss on currency translation effect	(3,786)	(15,533)	9,599	6,498
Provision (benefit) for deferred income taxes	(13,274)	4,440	40,116	(10,290)
Gain on sale of property		(26,330)		(28,573)
(Gain) loss on sale of short-term investment	(881)	2,661	(3,200)	4,596
Unrealized (gain) loss on derivative instruments	(8,319)	(20,543)	(57,037)	(18,444)
Non-controlling interest	1,774	2,556	3,389	8,115
Cash provided from (used for) operating assets and liabilities:
Accounts receivable	(103,312)	109,372	(302,840)	23,617
Inventories	38,872	(943)	33,940	(44,238)
Accounts payable and accrued liabilities	(9,281)	28,057	(360,446)	(172,697)
Other operating assets and liabilities	84,113	114,857	127,895	66,563
Net cash provided from operating activities	380,623	700,340	296,729	1,612,492
INVESTING ACTIVITIES
Capital expenditures	(110,559)	(137,627)	(316,740)	(320,573)
Net proceeds from sale of short-term investments	8,815	11,816	39,620	30,295
Sale of property	858	55,447	2,798	59,727
Other		1,101		1,101
Net cash used for investing activities	(100,886)	(69,263)	(274,322)	(229,450)
FINANCING ACTIVITIES
Debt repaid			(5,000)	(155,025)
Dividends paid to common stockholders	(86,322)	(503,543)	(224,128)	(1,416,437)
Distributions to non-controlling interest	(381)	(2,387)	(570)	(9,123)
Repurchase of common shares	(337)	(68,471)	(71,903)	(68,471)
Other	351	61	990	855
Net cash used for financing activities	(86,689)	(574,340)	(300,611)	(1,648,201)
Effect of exchange rate changes on cash and cash equivalents	(15,308)	(31,348)	(25,256)	31,535
Increase (decrease) in cash and cash equivalents	177,740	25,389	(303,460)	(233,624)
Cash and cash equivalents, at beginning of period	235,540	1,150,259	716,740	1,409,272
Cash and cash equivalents, at end of period	$413,280	$1,175,648	$413,280	$1,175,648

Description of the Business

Description of the Business
	9 Months Ended Sep. 30, 2009 USD / shares
Notes to Condensed Consolidated Financial Statements
Description of the Business	A. In the opinion of Southern Copper Corporation, (the Company, Southern Copper or SCC), the accompanying unaudited condensed consolidated financial statements contain all adjustments (consisting only of normal recurring adjustments) necessary to state fairly the Companys financial position as of September30, 2009 and the results of operations and cash flows for the three and nine months ended September30, 2009 and 2008. The condensed consolidated financial statements for the three and nine months ended September30, 2009 have been subject to a review by Galaz, Yamazaki, Ruiz Urquiza S.C., a member firm of Deloitte Touche Tohmatsu, the Companys independent registered public accounting firm, whose report dated October30, 2009, is presented on page54. The results of operations for the three and nine months ended September30, 2009 and 2008 are not necessarily indicative of the results to be expected for the full year. The December31, 2008 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. The accompanying condensed consolidated financial statements should be read in conjunction with the consolidated financial statements at December31, 2008 and notes included in the Companys 2008 annual report on Form10-K.

Adoption of New Accounting Stan

Adoption of New Accounting Standards
	9 Months Ended Sep. 30, 2009 USD / shares
Notes to Condensed Consolidated Financial Statements
Adoption of New Accounting Standards:	B. Adoption of New Accounting Standards: On June30, 2009, the Financial Accounting Standards Board (FASB) issued Accounting Standard Update No.2009-01 (ASU No.2009-01) to amend topic Accounting Standard Codification 105 (ASC-105) Generally Accepted Accounting Principles an amendment based on Statement of Financial Accounting Standard No.168 the FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles. This amendment establishes the FASB Accounting Standards Codification (Codification) as the source of authoritative accounting principles recognized by the FASB to be applied by nongovernmental entities in the preparation of financial statements in conformity with GAAP. Rulesand interpretive releases of the Securities and Exchange Commission (SEC) under authority of federal securities laws are also sources of authoritative GAAP for SEC registrants. The Codification is effective for interim and annual periods ending on or after September15, 2009. Therefore, the Company is applying the Codification to its third-quarter interim financial statements. Starting with this ASU, the FASB only will issue ASUs which will not be considered as authoritative in their own right and will serve only to update the Codification. Prior authoritative literature: As of June30, 2009 the Company adopted the following pronouncements of the FASB which are now part of the Codification: In May2009, the FASB issued topic ASC 855 Subsequent Events (prior authoritative literature FAS 165 Subsequent Events) to establish general standards of accounting for and disclosures of events that occur after the balance sheet date but before financial statements are issued or are available to be issued. In particular, this topic sets forth: the period after the balance sheet date during which management of a reporting entity should evaluate events or transactions that may occur for potential recognition or disclosure in the financial statements; the circumstances under which an entity should recognize events or transactions occurring after the balance sheet date in its financial statements and the disclosures that an entity should make about events or transactions that occurred after the balance sheet date. This topic introduces the concept of financial statements being available to be issued. It requires the disclosure of the date through which an entity has evaluated subsequent events and the basis for that date, that is, whether that date represents the date the financial statements were issued or were available to be issued. This topic is effective for interim or annual reporting periods ending after June15, 2009 and therefore became effective for the Company as of June30, 2009. Please see disclosures required in Note Q, Subsequent events. In April2009, the FASB issued ASC 825-10-50 Disclosure about Fair Value of Financial Instruments (formerly FASB issued Staff Position (FSP) FAS 107-1) to require disclosures about fair value of financial instruments for interim reporting periods of publicly traded companies as well as in annual financial statements. This ASC also amends ASC 270 Interim Financial Reporting

Short-term Investments

Short-term Investments
	9 Months Ended Sep. 30, 2009 USD / shares
Notes to Condensed Consolidated Financial Statements
Short-term Investments:	C. Short-term Investments: Short-term investments were as follows (in millions): At Investments September30,2009 December31, 2008 Short-term investments in securities issued by public companies with a weighted average interest rate of 0.66% at September30, 2009 and 1.85% at December31, 2008 $ 26.0 $ 62.4 Short-term investments in securities consist of available for sale securities issued by public companies. Each security is independent of the others. Related to these investments for the three and nine months ended September30, 2009 the Company earned interest of $0.1 million and $0.7 million, respectively, compared with $0.8 million and $3.4 million in the same periods of 2008, which were recorded as interest income in the condensed consolidated statement of earnings. In addition, for the three and nine months ended September30, 2009, the Company redeemed $8.8 million and $39.6 million, respectively, of these investments, compared with $11.8 million and $30.3 million in the same periods of 2008. For the three and nine months ended September30, 2009 the Company recorded gains of $0.9 million and $3.2 million, respectively, compared with losses of $2.7 million and $4.6 million in the same periods of 2008. These gains/losses were recorded as other income (expense) in the condensed consolidated statement of earnings.

Inventories were as follows

Inventories were as follows
	9 Months Ended Sep. 30, 2009 USD / shares
Notes to Condensed Consolidated Financial Statements
Inventories were as follows:	D. Inventories were as follows: (in millions) September30,2009 December31,2008 Metals at lower of average cost or market: Finished goods $ 40.3 $ 46.7 Work-in-process 128.9 135.8 Supplies at average cost 248.4 269.1 Total inventories $ 417.6 $ 451.6

Income taxes

Income taxes
	9 Months Ended Sep. 30, 2009 USD / shares
Notes to Condensed Consolidated Financial Statements
Income taxes:	E. Income taxes: The income tax provision for the nine months ended September30, 2009 and 2008 were $327.1 million and $764.6 million, respectively. These provisions include income taxes for Peru, Mexico and the United States. The provision for income taxes was based on our effective tax rate of 36.5% for the nine months of 2009 as compared to 33.2% during the same period in 2008. The increase in the effective tax rate for the nine months ended September30, 2009 is largely due to the incremental U.S. tax provided on dividend distributions made by our Mexican subsidiary to the U.S. parent. This dividend distribution is taxable in the U.S. at the difference between the 35% U.S. statutory rate and the foreign tax credit rate of 28.0%. As of March27, 2009, Grupo Mexico, through its wholly-owned subsidiary, Americas Mining Corporation (AMC), became the beneficial owner of 80% of SCCs common stock. As a result of this new level of ownership, beginning March27, 2009 SCC will no longer file a separate U.S. federal income tax return and its operating results will be included in the AMC consolidated U.S.federal income tax return. In addition to now holding an 80% interest in SCC, AMC also owns 100% of ASARCO LLC (Asarco) and its subsidiaries. In accordance with paragraph 30-27 of ASC 740-10-30, it is expected that current and deferred taxes will be allocated to members of the AMC group as if each were a separate taxpayer. The Company has initiated discussions with AMC to put in place a tax sharing agreement in order to establish this allocation as well as other procedures and policies necessary for an equitable management of U.S. federal income tax matters. SCC provides current and deferred income taxes, as if it were a separate filer. Accounting for Uncertainty in Income Taxes There was no material changes in the unrecognized tax benefits in the nine months ended September30, 2009. In the United States, all tax years through 2004 are closed and generally are not subject to change. The tax years 2005, 2006 and 2007 are currently under IRS field examination, which commenced in November2008. Management does not expect that any of the open years will result in a cash payment within the preceding twelve months of September30, 2010. The Companys reasonable expectations about future resolutions of uncertain items did not materially change during the nine month period ended September30, 2009.

Provisionally Priced Sales

Provisionally Priced Sales
	9 Months Ended Sep. 30, 2009 USD / shares
Notes to Condensed Consolidated Financial Statements
Provisionally Priced Sales:	F. Provisionally Priced Sales: At September30, 2009, the Company has recorded provisionally priced sales of 22.6 million pounds of copper, at an average forward price of $2.80 per pound. Also the Company has recorded provisionally priced sales of 11.6 million pounds of molybdenum at the September30, 2009 market price of $13.55 per pound. These sales are subject to final pricing based on the average monthly LME or 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 September30, 2009: Copper(million lbs.) Priced at Month of Settlement 22.6 2.80 October2009 Molybdenum (million lbs.) Priced at Month of Settlement 3.1 13.55 October2009 2.9 13.55 November2009 3.3 13.55 December2009 2.3 13.55 January2010 11.6 13.55 Management believes that the final pricing of these sales will not have a material effect on the Companys financial position or results of operations.

Derivative Instruments

Derivative Instruments
	9 Months Ended Sep. 30, 2009 USD / shares
Notes to Condensed Consolidated Financial Statements
Derivative Instruments	G. Derivative Instruments The Company occasionally uses derivative instruments to manage its exposure to market risk from changes in commodity prices, interest rate and exchange rate risk exposures and to enhance return on assets. The Company does not enter into derivative contracts unless it anticipates a future activity that is likely to occur that will result in exposing the Company to market risk. Copper derivatives: From time to time the Company has entered into derivative contracts to protect a fixed copper or zinc price for a portion of its metal sales. The Company did not hold any copper or zinc derivative contracts in the nine months ended September30, 2009. In the nine months ended September30, 2008, the Company entered into copper collar and swap contracts to protect a portion of its 2008 sales of copper production. As a result, the Company recorded a gain of $18.5 million and $29.2 million in the third quarter and nine months of 2008, respectively. Related to the fair value of these copper derivative contracts the Company recorded an unrealized gain of $33.7 million at the end of September2008. These gains and losses were recorded in net sales in the condensed consolidated statement of earnings. Gas swaps: In 2009 and 2008 the Company entered into gas swap contracts to protect part of its gas consumptions as follows: Three months ended Nine months ended September30, September30, 2009 2008 2009 2008 Gas volume (MMBTUs) 122,000 305,000 122,000 305,000 Fixed price (per MMBTU) $ 3.6350 $ 8.2175 $ 3.6350 $ 8.2175 Gain (loss) (in millions) $ 0.1 $ (0.7 ) $ 0.1 $ (0.7 ) The gains (losses) obtained were charged to production cost. As of September30, 2009 the Company held a gas swap contract to protect 184,000 MMBTUs of its gas consumption with a fixed price of $3.6350 per MMBTU for the fourth quarter of 2009. Related to the settlement of this gas swap contract the Company recorded an unrealized gain of $0.2 million in the third quarter of 2009 which was included in the $0.1 million gain reported in the table above. Exchange rate derivatives, U.S. dollar/Mexican peso contracts: Because more than 85% of the Companys sales collections in Mexico are in U.S. dollars and many of its costs are in Mexican pesos, the Company entered into zero-cost derivative contracts with the purpose of protecting, within a range, against an appreciation of the Mexican peso to the U.S. dollar. Related to the exchange rate derivative contracts the Company recorded a loss of less than $0.1 million and a gain of $4.1 million for the three and nine months ended September30, 2009, compared with losses of $13.6 million and $12.7 million, respectively, in the same periods of 2008. These gains and losses were recorded as gain (loss) on derivative instruments in the condensed consolidated statements of earnings. At September30, 2009 the Company did not hold any exchange rate derivative contracts.

Asset Retirement Obligation

Asset Retirement Obligation
	9 Months Ended Sep. 30, 2009 USD / shares
Notes to Condensed Consolidated Financial Statements
Asset Retirement Obligation:	H. Asset Retirement Obligation: The Company maintains an estimated 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 has prepared and submitted the closure plans to the Peruvian Ministry of Energy and Mines (MEM). These plans have been reviewed by the responsible governmental agency and have been open to public discussion in the areas of the Companys operations. The closure plan for the Cuajone facility was approved by MEM in the third quarter of 2009 and the closure plan for Ilo facility was approved in October2009, it is anticipated that the closure plan for the Toquepala facility will be approved in the fourth quarter. As part of the closure plan, commencing in January2010 the Company will be required to make annual installments over a 34 year period of guarantees sufficient to provide the funds for the asset retirement obligation. In the near term future the Company plans to use the value of its Lima office complex as support for this obligation. The Company has adjusted its original retirement obligation for the Cuajone facility to record the liability established in the new agreement and will adjust its retirement obligation for Toquepala in the fourth quarter of 2009 (no adjustment is necessary for Ilo). The Company does not believe that such adjustment will have a material effect on its financial results. The closure cost recognized for this liability includes the agreed upon cost for Cuajone and the estimated cost for the Toquepala and Ilo operations, the tailings disposal, and dismantling the Toquepala and Cuajone concentrators, and the shops and auxiliary facilities. As of September30, 2009, the Company has made an estimated provision of $34.5 million for this liability in its financial statements, but expects to adjust this estimate in the fourth quarter of 2009 when closure plans for Toquepala and Ilo are finalized. The following table summarizes the asset retirement obligation activity for the nine months ended September30, 2009 and 2008 (in millions): 2009 2008 Balance as of January1 $ 18.0 $ 13.1 Changes in estimates 15.9 0.7 Additions Accretion expense 0.6 0.7 Balance as of September30, $ 34.5 $ 14.5

Related Party Transactions

Related Party Transactions
	9 Months Ended Sep. 30, 2009 USD / shares
Notes to Condensed Consolidated Financial Statements
Related Party Transactions:	I. Related Party Transactions: Receivable and payable balances with affiliated companies are shown below (in millions): September30,2009 December31,2008 Affiliate receivable: Grupo Mexico S.A.B de C.V. and affiliates $ 0.8 $ 0.8 Ferrocarril Mexicano S.A. de C.V. 0.8 0.3 Mexico Proyectos y Desarrollos S.A. de C.V. and affiliates 1.4 0.8 $ 3.0 $ 1.9 Affiliate payable: Grupo Mexico S.A.B. de C.V. and affiliates $ 5.1 $ 9.0 $ 5.1 $ 9.0 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 relating 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 Companys 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. Grupo Mexico, the Companys ultimate parent and the majority indirect stockholder of the Company, and its affiliates provide various services to the Company. These services are principally related to accounting, legal, tax, financial, treasury, human resources, price risk assessment and hedging, purchasing, procurement and logistics, sales and administrative and other support services. The Company pays Grupo Mexico Servicios S.A de C.V., a subsidiary of Grupo Mexico for these services. The total amount paid by the Company for such services in the nine months of 2009 and 2008 was $10.3 million and $9.6 million, respectively. The Company expects to continue to pay for these services in the future. The Companys Mexican operations paid fees of $8.4 million and $7.9 million in the nine months of 2009 and 2008, respectively, for freight services provided by Ferrocarril Mexicano S.A de C.V and $12.1 million and $16.0 million in the nine months of 2009 and 2008, respectively, for construction services provided by Mexico Constructora Industrial; both companies are subsidiaries of Grupo Mexico. The Larrea family controls a majority of the capital stock of Grupo Mexico, and has extensive interests in other businesses, including oil drilling services, construction, aviation, and real estate. The Company engages in certain transactions in the ordinary course of business with other entities controlled by the Larrea family relating to mining and refining services, the lease of office space, sale of vehicles and air transportation and construction services. In connection with this, the Company paid fees of $0.2 million and $1.7 million in the nine months of 2009 and 2008, respectively, for maintenance services and sale of vehicles provided by Mexico Compaia d

Benefit Plans

Benefit Plans
	9 Months Ended Sep. 30, 2009 USD / shares
Notes to Condensed Consolidated Financial Statements
Benefit Plans:	J. Benefit Plans: SCC Defined Benefit Pension Plans- The components of the net periodic benefit costs for the nine months ended September30 are as follows (in millions): 2009 2008 Interest cost $ 0.5 $ 0.5 Expected return on plan assets (0.4 ) (0.4 ) Amortization of net loss (gain) 0.1 0.1 Net periodic benefit costs $ 0.2 $ 0.2 SCC Post-retirement Health Care Plan- The components of the net periodic benefit costs for the post-retirement health care plan for the nine months ended September30, 2009 and 2008 are individually, and in total, less than $0.1 million. Minera Mexico Pension Plans- The components of the net periodic benefit costs for the nine months ended September30, 2009 and 2008 are as follows (in millions): 2009 2008 Interest cost $ 1.2 $ 1.5 Service cost 1.4 1.9 Expected return on plan assets (1.8 ) (2.3 ) Amortization of transition assets, net (0.4 ) (* ) Amortization of net actuarial loss (* ) (* ) Amortization of prior services cost 0.1 (* ) Net periodic benefit cost $ 0.5 $ 1.1 (*) amount is lower than $0.1 million Minera Mexico Post-retirement Health Care Plan- The components of the net periodic cost for the nine months ended September30, 2009 and 2008 are as follows (in millions): 2009 2008 Interest cost $ 2.9 $ 2.3 Service cost 0.4 0.5 Amortization of net loss (gain) 0.4 * Amortization of transition obligation 0.9 * Net periodic benefit cost $ 4.6 $ 2.8 (*) amount is lower than $0.1 million

Comprehensive Income

Comprehensive Income (in millions)
	9 Months Ended Sep. 30, 2009 USD / shares
Notes to Condensed Consolidated Financial Statements
Comprehensive Income (in millions):	K. Comprehensive Income (in millions): Three months endedSeptember30, Nine months endedSeptember30, 2009 2008 2009 2008 Net income $ 314.2 $ 420.4 $ 569.5 $ 1,539.4 Other comprehensive income (loss) net of tax: Additional decrease in liability for employee benefit obligation 0.3 0.3 Comprehensive income 314.5 420.4 569.8 1,539.4 Comprehensive income attributable to the non-controlling interest 1.8 2.6 3.4 8.1 Comprehensive income attributable to SCC $ 312.7 $ 417.8 $ 566.4 $ 1,531.3

Commitments and Contingencies

Commitments and Contingencies
	9 Months Ended Sep. 30, 2009 USD / shares
Notes to Condensed Consolidated Financial Statements
Commitments and Contingencies	L. Commitments and Contingencies Environmental matters: The Company has instituted extensive environmental conservation programs at its mining facilities in Peru and Mexico. The Companys environmental programs include, among other features, water recovery systems to conserve water and minimize 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. Peruvian operations The Companys operations are subject to applicable Peruvian environmental laws and regulations. The Peruvian government, through the MEM conducts annual audits of the Companys Peruvian mining and metallurgical operations. Through these environmental audits, matters related to environmental commitments, compliance with legal requirements, atmospheric emissions, and effluent monitoring are reviewed. The Company believes that it is in material compliance with applicable Peruvian environmental laws and regulations. In 2003 the Peruvian congress published a new law announcing future closure and remediation obligations for the mining industry. In accordance with the requirements of this law the Company has submitted the required closure plans to MEM and were open to public discussion. The closure plan for the Cuajone facility was approved by MEM in the third quarter of 2009, and the closure plan for the Ilo facility was approved in October2009. It is anticipated that the closure plan for the Toquepala facility, will be approved in the fourth quarter. As part of the closure plan, commencing in January2010 the Company will be required to make annual installments over a 34 year period of guarantees sufficient to provide the funds for the asset retirement obligation. See Note H, Asset retirement obligation, for further discussion of this matter. For the Companys Peruvian operations, environmental capital expenditures were $1.3 million and $5.1 million in the nine months ended September30, 2009 and 2008, respectively. Mexican operations The Companys 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 Companys Mexican operations is the Federal General Law of Ecological Balance and Environmental Protection, 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. PROFEPA may initiate administrative proceedings against companies that violate environmental laws, which in the most extreme cases may result in the temporary or permanent closing of non-complying facilities, the revocation of operating licenses and/or other sanctions or fines. Also, according to the Federal Criminal Code, PROFEPA must inform corresponding authorities regarding environmental non-compliance. Mexican environ

Segment and Related Information

Segment and Related Information
	9 Months Ended Sep. 30, 2009 USD / shares
Notes to Condensed Consolidated Financial Statements
Segment and Related Information:	M. Segment and Related Information: Company management views Southern Copper as having three operating segments and manages on the basis of these segments. Each of its segments report independently to the Chief Operating Officer and he focuses on operating income as a measure of performance to evaluate different segments, and to make decisions to allocate resources to the reported segments. The three segments identified are groups of mines 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. Intersegment sales are based on arms-length prices at the time of sale. These may not be reflective of actual prices realized by the Company due to various factors, including additional processing, timing of sales to outside customers and transportation cost. Added to the segment information is information regarding the Companys sales. The segments identified by the Company are: 1. Peruvian operations segment, which includes the Toquepala and Cuajone mine complexes and the smelting and refining plants, industrial railroad and port facilities which service both mines. 2. Mexican open pit operations segment, which includes La Caridad and Cananea mine complexes and the smelting and refining plants and support facilities which service both mines. 3. Mexican underground mining operations segment, which includes five underground mines that produce zinc, copper, silver and gold, a coal mine which produces coal and coke, and several industrial processing facilities for zinc and copper. This group is identified as the IMMSA unit. The Peruvian operations include two open pit copper mines whose mineral output is transported by rail to Ilo, Peru where it is processed at the Companys smelter and refinery, without distinguishing between the products of the two mines. The resulting product, anodes and refined copper, are then shipped to customers throughout the world. These shipments are recorded as revenue of the Companys Peruvian mines. The Mexican open pit segment includes two copper mines whose mineral output is processed in the same smelter and refinery without distinguishing between the products of the two mines. The resultant product, anodes and refined copper, are then shipped to customers throughout the world. These shipments are recorded as revenues of the Companys Mexican open pit mines. The Company has determined that it is necessary to classify the Peruvian open pit operations as a separate operating segment from the Mexican open pit operations due to the very distinct regulatory and political environments in which they operate. The Companys Chief Operating Officer must consider the operations in each country separately when analyzing results of the Company and making key decisions. The open pit mines in Peru must comply with stricter environmental rulesand must

Impact of New Accounting Standa

Impact of New Accounting Standards
	9 Months Ended Sep. 30, 2009 USD / shares
Notes to Condensed Consolidated Financial Statements
Impact of New Accounting Standards:	N. Impact of New Accounting Standards: In August2009, the FASB issued Accounting Standards Update No.2009-05, Fair Value Measurements and Disclosures (Topic 820). This amendment to the FASB Accounting Standards Codification provides clarification that in circumstances in which a quoted price in an active market for the identical liability is not available, a reporting entity is required to measure fair value using one or more of the following techniques: 1. A valuation technique that uses: a. The quoted price of the identical liability when traded as an asset. b. Quoted prices for similar liabilities or similar liabilities when traded as assets. 2. Another valuation technique that is consistent with the principles of Topic 820. Two examples would be an income approach, such as a present value technique, or a market approach, such as a technique that is based on the amount at the measurement date that the reporting entity would pay to transfer the identical liability or would receive to enter into the identical liability. The amendments in this Update also clarify that when estimating the fair value of a liability, a reporting entity is not required to include a separate input or adjustment to other inputs relating to the existence of a restriction that prevents the transfer of the liability. The amendments in this Update also clarify that both a quoted price in an active market for the identical liability at the measurement date and the quoted price for the identical liability when traded as an asset in an active market when no adjustments to the quoted price of the asset are required are Level 1 fair value measurements. The guidance provided in this Update is effective for the Company beginning in the fourth quarter of 2009. The Company does not expect any material impact on its financial position.

Stockholders' Equity

Stockholders' Equity
	1/1/2009 - 9/30/2009 USD / shares
Notes to Condensed Consolidated Financial Statements
Stockholders' Equity:	O. Stockholders Equity: Common stock: During the first quarter of 2009 Grupo Mexico, through its wholly owned subsidiary AMC, purchased 4.9 million shares. With this purchase and the Companys repurchase of its common shares, the indirect ownership of Grupo Mexico increased to 80% at March31, 2009 and remains at 80% at September30, 2009. Please see Note E, Income taxes, for disclosure about the U.S. federal income tax implications of this increase in ownership. In addition, the Company purchased 12,000 shares in the third quarter of 2009, at a cost of $0.3 million. Treasury Stock: Activity in treasury stock in the nine month period ended September30, 2009 and 2008 is as follows (in millions): 2009 2008 Southern Copper common shares Balance as of January1, $ 389.0 $ 4.4 Purchase of shares 71.9 68.5 Used for corporate purposes (0.2 ) (0.1 ) Balance as of September30, 460.7 72.8 Parent Company (Grupo Mexico) common shares Balance as of January1, 125.5 170.3 Other activity, including dividend, interest and currency translation effect 11.0 46.5 Balance as of September30, 136.5 216.8 Treasury stock balance as of September30, $ 597.2 $ 289.6 In the nine months ended September30, 2009 and 2008 the Company distributed 12,000 and 13,200 shares of Southern Copper, respectively, to Directors under the Directors Stock Award Plan. In the nine months ended September30, 2009 and 2008 the Company awarded 11.8 million shares and 14.5 million shares of Grupo Mexico, respectively, under the employee stock purchase plan. SCC share repurchase program: Pursuant to the $500 million share repurchase program authorized by the Companys Board of Directors in 2008, in the first quarter of 2009 the Company purchased 4.9 million shares of its common stock at a cost of $71.6 million. In addition the Company purchased 12,000 shares in the third quarter of 2009 at a cost of $0.3 million. These shares will be available for general corporate purposes. The Company may purchase additional shares from time to time, based on market conditions and other factors. This repurchase program has no expiration date and may be modified or discontinued at any time. The following table summarizes the repurchase program activity since its inception in 2008: Period Total Number of Shares Average Price Paid per Total Number of Shares Purchased as Partof Publicly Maximum Number of Shares that MayYet Be Purchased Under the Plan Total Cost ($in From To Purchased Share Announced Plan @ $30.69 million) 2008: 08/11/08 12/31/08 28,510,150 $ 13.49 28,510,150 384.6 First quarter 2009: 01/12/09 01/31/09 1,075,000 15.17 29,585,150 16.3 02/01/09 02/28/09 2,260,350 13.45 31,845,500 30.4 03/01/09 03/27/09 1,564,650 15.89 33,410,150 24.9 Total 4,900,000 14.61 71.6 Second Quarter 2009 Third

Financial instruments

Financial instruments
	9 Months Ended Sep. 30, 2009 USD / shares
Notes to Condensed Consolidated Financial Statements
Financial instruments:	P. Financial instruments: SFAS No.157 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 SFAS No.157 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 September30, 2009 (in millions): Balance at September30, 2009 Carrying Value Fair Value Liabilities: Long-term debt $ 1,285.2 $ 1,328.0 Fair values of assets and liabilities measured at fair value on a recurring basis were calculated as follows: Fair Value at Measurement Date Using: Fair Value as of Quoted prices in active markets for identical assets Significant other observable inputs Significant unobservable inputs 09/30/09 (Level 1) (Level 2) (Level 3) Assets: Short-term investments $ 26.0 $ 21.8 $ 4.2 Provisionally priced sales: Copper (47.0 ) (47.0 ) Molybdenum (16.9 ) (16.9 ) Liabilities: Derivative instruments 0.2 0.2 Total $ (37.7 ) $ 0.2 $ (42.1 ) $ 4.2 The table below sets forth a summary of changes in the fair value of the Companys Level 3 short-term investments (corporate bond, asset backed obligations, and mortgage backed securities) for the three and nine month periods ended September30, 2009. 3 months endedSeptember30, 2009 9 months ended September30, 2009 Balance at beginning of period $ 4.8 $ 11.0 Unrealized gain (loss) 0.1 (0.3 ) Purchases, sales, issuance and settlements (net) (5.8 ) Transfers in/out of Level 3 (0.7 ) (0.7 ) Balance at end of period $ 4.2 $ 4.2 The total amount of unrealized losses for the period was included in other income in the condensed c

Subsequent events

Subsequent events
	9 Months Ended Sep. 30, 2009 USD / shares
Notes to Condensed Consolidated Financial Statements
Subsequent events:	Q. Subsequent events: The Company evaluated subsequent events as of October30, 2009 which is the date the financial statements were ready to be issued. Dividends: On October19, 2009, the Board of Directors authorized a dividend of 18 cents per share payable on November24, 2009, to SCC shareholders of record at the close of business on November5, 2009.

Document And Entity Information

Document And Entity Information (USD $)
In Millions, except Share data	9 Months Ended Sep. 30, 2009	Oct. 31, 2009	Jun. 30, 2008
Document and Entity Information
Entity Registrant Name	SOUTHERN COPPER CORP/
Entity Central Index Key	0001001838
Document Type	10-Q
Document Period End Date	2009-09-30
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Well-known Seasoned Issuer	Yes
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Filer Category	Large Accelerated Filer
Entity Public Float			2481.7
Entity Common Stock, Shares Outstanding		850,000,000