Document_and_Entity_Informatio
Document and Entity Information (USD $) | 12 Months Ended | ||
In Millions, except Share data, unless otherwise specified | Dec. 31, 2014 | Jan. 31, 2015 | Jun. 30, 2014 |
Document and Entity Information | |||
Entity Registrant Name | SOUTHERN COPPER CORP/ | ||
Entity Central Index Key | 1001838 | ||
Document Type | 10-K | ||
Document Period End Date | 31-Dec-14 | ||
Amendment Flag | FALSE | ||
Current Fiscal Year End Date | -19 | ||
Entity Well-known Seasoned Issuer | Yes | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Large Accelerated Filer | ||
Entity Public Float | $4,425.80 | ||
Entity Common Stock, Shares Outstanding | 806,690,968 | ||
Document Fiscal Year Focus | 2014 | ||
Document Fiscal Period Focus | FY |
CONSOLIDATED_STATEMENTS_OF_EAR
CONSOLIDATED STATEMENTS OF EARNINGS (USD $) | 12 Months Ended | ||
In Thousands, except Per Share data, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
CONSOLIDATED STATEMENTS OF EARNINGS | |||
Net sales (including sales to related parties, see note 17) | $5,787,694 | $5,952,943 | $6,669,266 |
Operating costs and expenses: | |||
Cost of sales (exclusive of depreciation, amortization and depletion shown separately below) | 2,840,503 | 2,871,299 | 2,769,233 |
Selling, general and administrative | 103,412 | 102,579 | 101,297 |
Depreciation, amortization and depletion | 444,971 | 395,970 | 325,743 |
Exploration | 74,618 | 50,983 | 47,877 |
Environmental reclamation | 91,350 | ||
Legal fees related to SCC shareholder derivative lawsuit (Note 14) | 316,233 | ||
Total operating costs and expenses | 3,554,854 | 3,420,831 | 3,560,383 |
Operating income | 2,232,840 | 2,532,112 | 3,108,883 |
Interest expense | -265,278 | -265,551 | -201,785 |
Capitalized interest | 126,702 | 68,946 | 29,380 |
Other (expense) income | -40,841 | 17,106 | 21,833 |
Interest income | 15,283 | 19,985 | 15,231 |
Income before income taxes | 2,068,706 | 2,372,598 | 2,973,542 |
Income taxes (including royalty taxes, see Note 7) | 754,629 | 769,322 | 1,080,872 |
Net income before equity earnings of affiliate | 1,314,077 | 1,603,276 | 1,892,670 |
Equity earnings of affiliate, net of income tax | 23,861 | 20,905 | 48,702 |
Net income | 1,337,938 | 1,624,181 | 1,941,372 |
Less: Net income attributable to the non-controlling interest | 4,965 | 5,664 | 6,740 |
Net income attributable to SCC | $1,332,973 | $1,618,517 | $1,934,632 |
Per common share amounts attributable to SCC (1): | |||
Net earnings - basic and diluted | $1.61 | $1.92 | $2.28 |
Dividends paid | $0.46 | $0.68 | $4.06 |
Weighted average shares outstanding - basic and diluted | 828,199 | 842,668 | 848,346 |
CONSOLIDATED_STATEMENTS_OF_COM
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
COMPREHENSIVE INCOME: | |||
Net income | $1,337,938 | $1,624,181 | $1,941,372 |
Other comprehensive income (loss) net of tax: | |||
(Increase) decrease in pension and other post-retirement benefits (net of income tax of $0.8 million, $(1.4) million and $2.2 million) | -1,426 | 2,207 | -3,394 |
Derivative instruments classified as cash flow hedge: | |||
Decrease in prior period accumulated unrealized (gain) (net of income taxes of $3.5 million in 2012) | -5,452 | ||
Total other comprehensive gain (loss) | -1,426 | 2,207 | -8,846 |
Total comprehensive income | 1,336,512 | 1,626,388 | 1,932,526 |
Comprehensive income attributable to the non-controlling interest | 4,965 | 5,664 | 6,736 |
Comprehensive income attributable to SCC | $1,331,547 | $1,620,724 | $1,925,790 |
CONSOLIDATED_STATEMENTS_OF_COM1
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Parenthetical) (USD $) | 12 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | |||
Decrease (increase) in pension and other post-retirement benefits, income tax | $0.80 | ($1.40) | $2.20 |
Decrease in prior period accumulated unrealized (gain) loss, income taxes | $3.50 |
CONSOLIDATED_BALANCE_SHEETS
CONSOLIDATED BALANCE SHEETS (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Current assets: | ||
Cash and cash equivalents | $363,970 | $1,672,695 |
Restricted cash | 19,456 | |
Short-term investments | 338,589 | 208,268 |
Accounts receivable trade | 540,245 | 533,226 |
Accounts receivable other (including related parties 2014- $32,835 and 2013 - $38,062) | 81,635 | 64,552 |
Inventories | 836,464 | 693,942 |
Deferred income tax | 119,510 | 84,377 |
Other current assets | 189,920 | 158,990 |
Total current assets | 2,489,789 | 3,416,050 |
Property, net | 7,436,430 | 6,476,168 |
Leachable material | 512,718 | 395,177 |
Intangible assets, net | 109,872 | 110,219 |
Related parties receivable | 161,244 | 161,244 |
Deferred income tax | 553,948 | 180,707 |
Equity method investment | 66,723 | 57,142 |
Other assets | 221,186 | 199,322 |
Total assets | 11,551,910 | 10,996,029 |
Current liabilities: | ||
Current portion of long-term debt | 200,000 | |
Accounts payable (including related parties 2014- $69,083 and 2013- $28,373) | 549,667 | 493,263 |
Accrued income taxes | 80,101 | 7,474 |
Deferred income taxes | 13,360 | |
Accrued workers' participation | 198,009 | 192,371 |
Accrued interest | 70,824 | 70,787 |
Other accrued liabilities | 38,944 | 19,689 |
Total current liabilities | 1,150,905 | 783,584 |
Long-term debt | 4,006,031 | 4,204,915 |
Deferred income taxes | 385,545 | 244,875 |
Other liabilities and reserves | 56,697 | 76,000 |
Asset retirement obligation | 116,133 | 124,835 |
Total non-current liabilities | 4,564,406 | 4,650,625 |
Commitments and contingencies (Note 9) | ||
STOCKHOLDERS' EQUITY | ||
Common stock par value $0.01; shares authorized, 2014 and 2013 - 2,000,000; shares issued, 2014 and 2013 - 884,596 | 8,846 | 8,846 |
Additional paid-in capital | 3,344,669 | 3,340,349 |
Retained earnings | 4,346,818 | 3,394,827 |
Accumulated other comprehensive income | 4,813 | 6,239 |
Treasury stock, at cost, common shares | -1,900,686 | -1,216,599 |
Total Southern Copper Corporation stockholders' equity | 5,804,460 | 5,533,662 |
Non-controlling interest | 32,139 | 28,158 |
Total equity | 5,836,599 | 5,561,820 |
Total liabilities and equity | $11,551,910 | $10,996,029 |
CONSOLIDATED_BALANCE_SHEETS_Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
In Thousands, except Share data, unless otherwise specified | ||
CONSOLIDATED BALANCE SHEETS | ||
Accounts receivable other, related parties | $32,835 | $38,062 |
Accounts payable, related parties | $69,083 | $28,373 |
Common stock, par value (in dollars per share) | $0.01 | $0.01 |
Common stock, shares authorized | 2,000,000 | 2,000,000 |
Common stock, shares issued | 884,596 | 884,596 |
CONSOLIDATED_STATEMENTS_OF_CAS
CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
OPERATING ACTIVITIES | |||
Net income | $1,337,938 | $1,624,181 | $1,941,372 |
Adjustments to reconcile net earnings to net cash provided from operating activities: | |||
Depreciation, amortization and depletion | 444,971 | 395,970 | 325,743 |
Equity earnings of affiliate, net of dividends received | -9,581 | -10,088 | -17,666 |
(Gain) loss on currency translation effect | -53,967 | 13,089 | 15,174 |
(Benefit) provision for deferred income taxes | -233,794 | -97,188 | 55,807 |
Gain on sale of investment | -18,200 | ||
(Gain) loss on short-term investments | -10,623 | ||
Cash provided from (used for) operating assets and liabilities: | |||
Accounts receivable | -7,019 | 136,107 | -14,739 |
Inventories | -260,063 | -143,575 | -180,684 |
Accounts payable and accrued liabilities | 109,564 | -63,551 | -135,742 |
Other operating assets and liabilities | 27,844 | 2,279 | 43,520 |
Net cash provided from operating activities | 1,355,893 | 1,857,224 | 2,003,962 |
INVESTING ACTIVITIES | |||
Capital expenditures | -1,529,799 | -1,703,349 | -1,051,900 |
Purchase of short-term investments | -436,649 | -346,664 | -152,441 |
Proceeds on sale of short-term investment | 306,328 | 272,694 | 540,098 |
Proceeds on sale of investment | 18,200 | ||
Loan repaid by (granted to) related party | 22,706 | -37,599 | |
Sale of property | 4,924 | 4,618 | 15,072 |
Release of escrow deposit on long-term debt | 5,089 | ||
Net cash used for investing activities | -1,655,196 | -1,744,906 | -668,570 |
FINANCING ACTIVITIES | |||
Debt repaid | -10,000 | -10,000 | |
Debt incurred | 1,477,455 | ||
Capitalization of debt issuance cost | -7,685 | ||
Repurchase of common shares | -682,774 | -281,438 | -147,344 |
Dividends paid to common stockholders | -380,982 | -573,816 | -3,139,971 |
SCC shareholder derivative lawsuit | 2,108,221 | ||
Distributions to non-controlling interest | -961 | -1,350 | -3,613 |
Other | 247 | 1,275 | 1,035 |
Net cash (used for) provided from financing activities | -1,064,470 | -865,329 | 278,098 |
Effect of exchange rate changes on cash and cash equivalents | 55,048 | -33,782 | -2,120 |
(Decrease) increase in cash and cash equivalents | -1,308,725 | -786,793 | 1,611,370 |
Cash and cash equivalents, at beginning of year | 1,672,695 | 2,459,488 | |
Cash and cash equivalents, at end of year | 363,970 | 1,672,695 | 2,459,488 |
Cash paid during the year for: | |||
Interest | 261,975 | 262,490 | 189,217 |
Income taxes | 840,819 | 819,897 | 1,140,352 |
Workers' participation | 202,393 | 276,376 | 256,042 |
Supplemental schedule of non-cash operating, investing and financing activities: | |||
Decrease (increase) in pension and other post-retirement benefits | -1,426 | 2,207 | -3,394 |
Capital expenditures incurred but not yet paid | 33,758 | 28,769 | 13,653 |
Effect of common stock dividend: | |||
Retained earnings | 296,590 | ||
Treasury stock | -151,458 | ||
Additional paid-in capital | ($145,132) |
CONSOLIDATED_STATEMENTS_OF_CHA
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (USD $) | CAPITAL STOCK: | ADDITIONAL PAID-IN CAPITAL: | TREASURY STOCK: | TREASURY STOCK: | TREASURY STOCK: | RETAINED EARNINGS: | ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS): | STOCKHOLDERS' EQUITY | NON-CONTROLLING INTEREST | Total |
In Thousands, unless otherwise specified | Common Class A | Common Class B | ||||||||
Balance at Dec. 31, 2011 | $1,039,382 | ($734,123) | ($163,729) | $3,852,054 | $12,875 | $4,015,304 | $20,979 | $4,036,283 | ||
Increase (Decrease) in Stockholders' Equity | ||||||||||
SCC shareholder derivative lawsuit | 2,108,221 | |||||||||
Other activity of the period | 28,192 | |||||||||
Share repurchase program | -147,344 | -147,300 | ||||||||
Used for corporate purposes | 245 | |||||||||
Other activity, including dividend, interest and currency translation effect | -25,297 | |||||||||
Other comprehensive income (loss) | -8,843 | 1,932,526 | ||||||||
Net earnings | 1,934,632 | 6,740 | 1,934,632 | |||||||
Common stock dividend distribution | 145,132 | -3,436,560 | -3,613 | |||||||
Common stock distribution, per share $0.35 | 151,457 | |||||||||
Other activity | -146 | |||||||||
Balance at Dec. 31, 2012 | 8,846 | 3,320,927 | -729,765 | -189,026 | -918,791 | 2,350,126 | 4,032 | 4,765,140 | 23,960 | 4,789,100 |
Balance at Dec. 30, 2012 | 3,320,927 | |||||||||
Increase (Decrease) in Stockholders' Equity | ||||||||||
SCC shareholder derivative lawsuit | 2,108,200 | |||||||||
Balance at Dec. 31, 2012 | 8,846 | 3,320,927 | -729,765 | -189,026 | -918,791 | 2,350,126 | 4,032 | 4,765,140 | 23,960 | 4,789,100 |
Increase (Decrease) in Stockholders' Equity | ||||||||||
Other activity of the period | 19,422 | |||||||||
Share repurchase program | -281,438 | -281,400 | ||||||||
Used for corporate purposes | 224 | |||||||||
Other activity, including dividend, interest and currency translation effect | -16,594 | |||||||||
Other comprehensive income (loss) | 2,207 | 1,626,388 | ||||||||
Net earnings | 1,618,517 | 5,664 | 1,618,517 | |||||||
Common stock dividend distribution | -573,816 | -1,350 | ||||||||
Other activity | -116 | |||||||||
Balance at Dec. 31, 2013 | 8,846 | 3,340,349 | -1,010,979 | -205,620 | -1,216,599 | 3,394,827 | 6,239 | 5,533,662 | 28,158 | 5,561,820 |
Increase (Decrease) in Stockholders' Equity | ||||||||||
Other activity of the period | 4,320 | |||||||||
Share repurchase program | -682,774 | |||||||||
Used for corporate purposes | 249 | |||||||||
Other activity, including dividend, interest and currency translation effect | -1,562 | |||||||||
Other comprehensive income (loss) | -1,426 | 1,336,512 | ||||||||
Net earnings | 1,332,973 | 4,965 | 1,332,973 | |||||||
Common stock dividend distribution | -380,982 | -961 | ||||||||
Other activity | -23 | |||||||||
Balance at Dec. 31, 2014 | $8,846 | $3,344,669 | ($1,693,504) | ($207,182) | ($1,900,686) | $4,346,818 | $4,813 | $5,804,460 | $32,139 | $5,836,599 |
CONSOLIDATED_STATEMENTS_OF_CHA1
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (Parenthetical) (USD $) | 12 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
Dividends paid as cash dividend (in dollars per share) | $0.46 | $0.68 | $4.06 |
CAPITAL STOCK: | |||
Dividends paid as cash dividend (in dollars per share) | $0.46 | $0.68 | $3.71 |
TREASURY STOCK: | |||
Dividends paid as cash dividend (in dollars per share) | $0.35 |
DESCRIPTION_OF_THE_BUSINESS
DESCRIPTION OF THE BUSINESS: | 12 Months Ended |
Dec. 31, 2014 | |
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 December 31, 2014, Grupo Mexico through its wholly-owned subsidiary Americas Mining Corporation (“AMC”) owned 84.6% of the Company’s capital stock. The 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. | |
SUMMARY_OF_SIGNIFICANT_ACCOUNT
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: | 12 Months Ended |
Dec. 31, 2014 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: | |
NOTE 2-SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: | |
Principles of consolidation— | |
The consolidated financial statements include the accounts of subsidiaries of which the Company has voting control, in accordance with Accounting Standards Codification 810 Consolidation. Such financial statements are prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”). Certain prior year amounts have been reclassified to conform to the current year presentation. | |
Use of estimates— | |
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Significant items subject to such estimates and assumptions include the carrying value of ore reserves that are the basis for future cash flow estimates and amortization calculations; environmental reclamation, closure and retirement obligations; estimates of recoverable copper in mill and leach stockpiles; asset impairments (including estimates of future cash flows); unrecognized tax benefits; valuation allowances for deferred tax assets; and fair value of financial instruments. Management bases its estimates on the Company’s historical experience and on various other assumptions that are believed to be reasonable under the circumstances. Actual results could differ from those estimates. | |
Revenue recognition— | |
Substantially all of the Company’s copper and non-copper products are sold under annual or other longer-term contracts. | |
Revenue is recognized when title passes to the customer. The passing of title is based on terms of the contract, generally upon shipment. Copper and non-copper revenues are determined based on the monthly average of prevailing commodity prices according to the terms of the contracts. The Company provides allowances for doubtful accounts based upon historical bad debt and claims experience and periodic evaluation of specific customer accounts. | |
For certain of the Company’s sales of copper and molybdenum products, customer contracts allow for pricing based on a month subsequent to shipping, in most cases within the following three months and occasionally in some cases a few additional months. In such cases, revenue is recorded at a provisional price at the time of shipment. The provisionally priced copper sales are adjusted to reflect forward LME or COMEX copper prices at the end of each month until a final adjustment is made to the price of the shipments upon settlement with customers pursuant to the terms of the contract. In the case of molybdenum sales, for which there are no published forward prices, the provisionally priced sales are adjusted to reflect the market prices at the end of each month until a final adjustment is made to the price of the shipments upon settlement with customers pursuant to the terms of the contract. | |
These provisional pricing arrangements are accounted for separately from the contract as an embedded derivative instrument under ASC 815-30 “Derivatives and Hedging — Cash Flow Hedges.” The Company sells copper in concentrate, anode, blister and refined form at industry standard commercial terms. Net sales include the invoiced value of copper, zinc, silver, molybdenum, sulfuric acid and other metals and the corresponding fair value adjustment of the related forward contract of copper and molybdenum. | |
Shipping and handling fees and costs— | |
Amounts billed to customers for shipping and handling are classified as sales. Amounts incurred for shipping and handling are included in cost of sales (exclusive of depreciation, amortization and depletion). | |
Cash and cash equivalents— | |
Cash and cash equivalents include bank deposits, certificates of deposit and short-term investment funds with original maturities of three months or less at the date of purchase. The carrying value of cash and cash equivalents approximates fair value. | |
Short-term investments— | |
The Company accounts for short-term investments in accordance with ASC 320-10 “Investments Debt and Equity Securities — Recognition.” The Company determines the appropriate classification of all short-term investments as held-to-maturity, available-for-sale or trading at the time of purchase and re-evaluates such classifications as of each balance sheet date. Unrealized gains and losses on available-for-sale investments, net of taxes, are reported as a component of accumulated other comprehensive income (loss) in stockholders’ equity, unless such loss is deemed to be other than temporary. | |
Inventories— | |
The Company principally produces copper and, in the production process, obtains several by-products, including molybdenum, silver, zinc, sulfuric acid and other metals. | |
Metal inventories, consisting of work-in-process and finished goods, are carried at the lower of average cost or market. Costs incurred in the production of metal inventories exclude general and administrative costs. Once molybdenum, silver, zinc and other by-products are identified, they are transferred to their respective production facilities and the incremental cost required to complete production is assigned to their inventory value. | |
Work-in-process inventories represent materials that are in the process of being converted into a saleable product. Conversion processes vary depending on the nature of the copper ore and the specific mining operation. For sulfide ores, processing includes milling and concentrating and results in the production of copper and molybdenum concentrates. | |
Finished goods include saleable products (e.g., copper concentrates, copper anodes, copper cathodes, copper rod, molybdenum concentrate and other metallurgical products). | |
Supplies inventories are carried at the lower of average cost or market less a reserve for obsolescence. | |
Long-term inventory - Leachable material | |
The leaching process is an integral part of the mining operations carried out at the Company’s open-pit mines. The Company capitalizes the production cost of leachable material at its Toquepala, La Caridad and Buenavista mines recognizing it as inventory. The estimates of recoverable mineral content contained in the leaching dumps are supported by engineering studies. As the production cycle of the leaching process is significantly longer than the conventional process of concentrating, smelting and electrolytic refining, the Company includes on its balance sheet current leach inventory (included in work-in-process inventories) and long-term leach inventory. Through 2013, the cost attributed to the leach material was charged to cost of sales over a five-year period, which was considered the average estimated recovery period based on the historical recovery percentages of each mine. During the fourth quarter of 2014, the Company completed the construction of a new plant that has resulted in increased efficiency in production and use of leachable material. Accordingly, the Company changed its method of amortization to the units of production method. This change in estimate effected by a change in accounting principle will result in a better matching of costs to revenues as a result of the improved production levels expected from the new plant and will result in a better estimate of current and long-term leachable material inventory As the plant entered into operation in the fourth quarter of 2014, the impact to results in 2014 was not considered significant and totaled approximately $17 million recognized within cost of sales. . The Company anticipates that the impact in future periods will be significant as a result of expected increased production levels. | |
As of December 31, 2014 the Company has leachable inventory of $762.8 million of which $250.1 million was classified as a current asset. | |
Property- | |
Property is recorded at acquisition cost, net of accumulated depreciation and amortization. Cost includes major expenditures for improvements and replacements, which extend useful lives or increase capacity and interest costs associated with significant capital additions. Maintenance, repairs, normal development costs at existing mines and gains or losses on assets retired or sold are reflected in earnings as incurred. | |
Buildings and equipment are depreciated on the straight-line method over estimated lives from five to 40 years or the estimated life of the mine if shorter. | |
Mine development — | |
Mine development includes primarily the cost of acquiring land rights to an exploitable ore body, pre-production stripping costs at new mines that are commercially exploitable, costs associated with bringing new mineral properties into production and removal of overburden to prepare unique and identifiable areas outside the current mining area for such future production. Mine development costs are amortized on a unit of production basis over the remaining life of the mines. | |
There is a diversity of practices in the mining industry in the treatment of drilling and other related costs to delineate new ore reserves. The Company follows the practices outlined in the next two paragraphs in its treatment of drilling and related costs. | |
Drilling and other associated costs incurred in the Company’s efforts to delineate new resources, whether near-mine or Greenfield are expensed as incurred. These costs are classified as mineral exploration costs. Once the Company determines through feasibility studies that proven and probable reserves exist and that the drilling and other associated costs embody a probable future benefit that involves a capacity, singly or in combination with other assets, to contribute directly or indirectly to future net cash inflow, then the costs are classified as mine development costs. These mine development costs incurred prospectively to develop the property are capitalized as incurred, until the commencement of production, and are amortized using the units of production method over estimated life of the ore body. During the production stage, drilling and other related costs incurred to maintain production are included in production cost in the period in which they are incurred. | |
Drilling and other related costs incurred in the Company’s efforts to delineate a major expansion of reserves at an existing production property are expensed as incurred. Once the Company determines through feasibility studies that proven and probable incremental reserves exist and that the drilling and other associated costs embody a probable future benefit that involves a capacity, singly or in combination with other assets, to contribute directly or indirectly to future net cash inflow, then the costs are classified as mine development costs. These incremental mine development costs are capitalized as incurred, until the commencement of production and amortized using the units of production method over the estimated life of the ore body. A major expansion of reserves is one that increases total reserves at a property by approximately 10% or more. | |
For the years ended December 31, 2014, 2013 and 2012, the Company did not capitalize any drilling and related costs. The net balance of capitalized mine development costs at December 31, 2014 and 2013, were $34.8 million and $36.2 million, respectively. | |
Asset retirement obligations (reclamation and remediation costs)— | |
The fair value of a liability for asset retirement obligations is recognized in the period in which the liability is incurred. The liability is measured at fair value and is adjusted to its present value in subsequent periods as accretion expense is recorded. The corresponding asset retirement costs are capitalized as part of the carrying value of the related long-lived assets and depreciated over the asset’s useful life. | |
Intangible assets— | |
Intangible assets include primarily the excess amount paid over the book value for investment shares which are presented as mining concessions, and mining and engineering development studies. Intangible assets are carried at acquisition costs, net of accumulated amortization and are amortized principally on a unit of production basis over the estimated remaining life of the mines. Intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. | |
Debt issuance costs— | |
Debt issuance costs, which are included in other assets, are amortized using the effective interest method over the term of the related debt. | |
Ore reserves— | |
The Company periodically reevaluates estimates of its ore reserves, which represent the Company’s estimate as to the amount of unmined copper remaining in its existing mine locations that can be produced and sold at a profit. Such estimates are based on engineering evaluations derived from samples of drill holes and other openings, combined with assumptions about copper market prices and production costs at each of the respective mines. | |
The Company updates its estimate of ore reserves at the beginning of each year. In this calculation, the Company uses current metal prices which are defined as the average metal price over the preceding three years. The current price per pound of copper, as defined, was $3.36, $3.65 and $3.68 at the end of 2014, 2013 and 2012, respectively. The ore reserve estimates are used to determine the amortization of mine development and intangible assets. | |
Once the Company determines through feasibility studies that proven and probable reserves exist and that the drilling and other associated costs embody a probable future benefit that involves a capacity, singly or in combination with other assets, to contribute directly or indirectly to future net cash inflow, then the costs are classified as mine development costs and the Company discloses the related ore reserves. | |
Exploration— | |
Tangible and intangible costs incurred in the search for mineral properties are charged against earnings when incurred. | |
Income taxes— | |
Provisions for income taxes are based on taxes payable or refundable for the current year and deferred taxes on temporary differences between the amount of taxable income and pretax financial income and between the tax bases of assets and liabilities and their reported amounts in the financial statements. Deferred tax assets and liabilities are included in the financial statements at currently enacted income tax rates applicable to the period in which the deferred tax assets and liabilities are expected to be realized and settled as prescribed in ASC 740 “Income taxes.” As changes in tax laws or rates are enacted, deferred tax assets and liabilities are adjusted through the provision for income taxes. Deferred income tax assets are reduced by any benefits that, in the opinion of management, are more likely not to be realized. ASU No. 2013-11, “Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists” was effective for the Company’s fiscal year beginning January 1, 2014. As a result of the adoption of ASU No. 2013-11 on January 1, 2014, liabilities associated with Unrecognized Tax Benefits of Non-Current Tax Payable were reclassified to net against deferred income tax assets. In accordance with ASU 2013-11, the Company netted Unrecognized Tax Benefits against the foreign tax credit carryforward. | |
The Company’s operations involve dealing with uncertainties and judgments in the application of complex tax regulations in multiple jurisdictions. The final taxes paid are dependent upon many factors, including negotiations with taxing authorities in various jurisdictions and resolution of disputes arising from federal, state, and international tax audits. The Company recognizes potential liabilities and records tax liabilities for anticipated tax audit issues in the U.S. and other tax jurisdictions based on its estimate of whether, and the extent to which, additional taxes will be due. The Company follows the guidance of ASC 740 “Income taxes” to record these liabilities. (See Note 7 “Income taxes” of the consolidated financial statements for additional information). The Company adjusts these reserves in light of changing facts and circumstances; however, due to the complexity of some of these uncertainties, the ultimate resolution may result in a payment that is materially different from the Company’s current estimate of the tax liabilities. If its estimate of tax liabilities proves to be less than the ultimate assessment, an additional charge to expense would result. If payment of these amounts ultimately proves to be less than the recorded amounts, the reversal of the liabilities would result in tax benefits being recognized in the period when the Company determines the liabilities are no longer necessary. | |
The Company classifies income tax-related interest and penalties as income taxes in the financial statements, as well as interest and penalties, if any, related to unrecognized tax benefits. | |
Foreign exchange— | |
The Company’s functional currency is the U.S. dollar. As required by local law, both the Peruvian Branch and Minera Mexico maintain their books of accounts in Peruvian nuevos soles and Mexican pesos, respectively. | |
Foreign currency assets and liabilities are remeasured into U.S. dollars at current exchange rates. Gains and losses from foreign currency remeasurement are included in earnings of the period. | |
Gains and (losses) resulting from foreign currency transactions are included in “Cost of sales (exclusive of depreciation, amortization and depletion).” | |
Asset impairments - | |
The Company evaluates long-term assets when events or changes in economic circumstances indicate that the carrying amount of such assets may not be recoverable. These evaluations are based on business plans that are prepared using a time horizon that is reflective of the Company’s expectations of metal prices over its business cycle. The Company is currently using a long-term average copper price and an average molybdenum price for impairment tests. The results of its impairment tests using these long-term copper and molybdenum prices show no impairment in the carrying value of their assets. | |
In recent years testing using assumptions for long-term average prices have resulted in stricter evaluation for impairment analysis than would the higher three year average prices for copper and molybdenum prices. Should this situation reverse in the future with three year average prices below the long-term price assumption, the Company would assess the need to use the three year average prices in its evaluations. The Company uses an estimate of the future undiscounted net cash flows of the related asset or asset group over the remaining life to measure whether the assets are recoverable and measures any impairment by reference to fair value. | |
Other comprehensive income— | |
Comprehensive income represents changes in equity during a period, except those resulting from investments by owners and distributions to owners. During the fiscal years ended December 31, 2014, 2013 and 2012, the components of “other comprehensive income (loss)” were the unrealized gain (loss) on cash flow hedge derivative instruments, the unrecognized gain (loss) on employee benefit obligations and realized gain (loss) included in net income. | |
Business segments- | |
Company management views Southern Copper as having three reportable segments and manages it on the basis of these segments. The segments identified by the Company are: (1) the Peruvian operations, which include the two open-pit copper mines in Peru and the plants and services supporting such mines, (2) the Mexican open-pit copper mines, which include La Caridad and Buenavista mine complexes and their supporting facilities and (3) the Mexican underground mining operations, which include five underground mines that produce zinc, copper, silver and gold, a coal mine and a zinc refinery. Please see Note 18 “Segments and Related Information.” | |
Senior Management Officers of the Company focus on operating income as measure 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. | |
PROPOSED ACCOUNTING STANDARDS | |
In February 2013, the Financial Accounting Standards Board (FASB) issued the Accounting Standard Updates (“ASU”) 2013-04, “Liabilities (Topic 405): Obligations Resulting from Joint and Several Liability Arrangements for which the Total Amount of the Obligation is Fixed at the Reporting Date.” The amendments in this ASU require an entity to measure joint and several obligations as the sum of the amount the reporting entity agreed to pay on the basis of its arrangement among its co-obligors and any additional amount the reporting entity expects to pay on behalf of its co-obligors. The amendments in this guidance are effective for fiscal years, and interim periods within those years, beginning after December 15, 2014. The Company will apply this guidance in any future arrangement and does not expect this guidance to have a material impact on its consolidated financial information. | |
In May 2014, the FASB issued ASU 2014-09 “Revenue from Contracts with Customers” (Topic 606). The objective of the new revenue standard is to provide a single comprehensive revenue recognition model for all contracts with customers to improve comparability within industries, across industries and across capital markets. | |
The core principle of the standard is that the Company should recognize revenue to represent the transfer of promised goods or services to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services. | |
The Company should apply the following five steps to achieve the core principle: | |
Step 1: Identify the contract(s) with a customer. | |
Step 2: Identify the performance obligations (promises) in the contract. | |
Step 3: Determine the transaction price. | |
Step 4: Allocate the transaction price to the performance obligations in the contract. | |
Step 5: Recognize revenue when (or as) the Company satisfies a performance obligation. | |
The guidance also specifies the accounting for some costs to obtain or fulfill a contract with a customer. Additionally, the Company should disclose sufficient qualitative and quantitative information to enable users of financial statements to understand the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. | |
This revenue standard is effective for the first interim period within annual reporting periods beginning after December 15, 2016, and early adoption is not permitted. The Company does not expect this guidance to have a material impact on the consolidated financial information. | |
SHORTTERM_INVESTMENTS
SHORT-TERM INVESTMENTS: | 12 Months Ended | |||||||
Dec. 31, 2014 | ||||||||
SHORT-TERM INVESTMENTS: | ||||||||
SHORT-TERM INVESTMENTS: | ||||||||
NOTE 3- SHORT-TERM INVESTMENTS: | ||||||||
Short-term investments were as follows ($ in millions): | ||||||||
At December 31, | ||||||||
2014 | 2013 | |||||||
Trading securities | $ | 333.7 | $ | 202.6 | ||||
Weighted average interest rate | 0.78 | % | 3.78 | % | ||||
Available-for-sale | $ | 4.9 | $ | 5.7 | ||||
Weighted average interest rate | 0.44 | % | 0.42 | % | ||||
Total | $ | 338.6 | $ | 208.3 | ||||
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, as of December 31, 2014 and 2013, included corporate bonds and asset and mortgage backed obligations. As of December 31, 2014 and 2013, 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 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 consolidated statement of earnings. | ||||||||
The following table summarizes the activity of these investments by category (in millions): | ||||||||
Years ended December 31, | ||||||||
2014 | 2013 | |||||||
Trading: | ||||||||
Interest earned | $ | 4.9 | $ | 5.2 | ||||
Unrealized gain (loss) at December 31, | $ | 2.1 | $ | (1.9 | ) | |||
Available-for-sale: | ||||||||
Interest earned | (*) | (*) | ||||||
Investment redeemed | $ | 0.8 | $ | 0.8 | ||||
(*) Less than $0.1 million | ||||||||
At December 31, 2014 and 2013, contractual maturities of the available-for-sale debt securities are as follows (in millions): | ||||||||
2014 | 2013 | |||||||
One year or less | $ | 0.3 | $ | 0.4 | ||||
Maturing after one year through five years | — | — | ||||||
Maturing after five years through ten years | 0.1 | 0.2 | ||||||
Due after 10 years | 4.5 | 5.1 | ||||||
Total debt securities | $ | 4.9 | $ | 5.7 | ||||
INVENTORIES
INVENTORIES: | 12 Months Ended | |||||||
Dec. 31, 2014 | ||||||||
INVENTORIES: | ||||||||
INVENTORIES: | ||||||||
NOTE 4-INVENTORIES: | ||||||||
As of December 31, | ||||||||
(in millions) | 2014 | 2013 | ||||||
Inventory, current: | ||||||||
Metals at lower of average cost or market: | ||||||||
Finished goods | $ | 84.6 | $ | 84.2 | ||||
Work-in-process | 450.5 | 305.4 | ||||||
Supplies at average cost | 301.4 | 304.3 | ||||||
Total current inventory | $ | 836.5 | $ | 693.9 | ||||
Inventory, long-term: | ||||||||
Leach stockpiles | $ | 512.7 | $ | 395.2 | ||||
Total leaching costs added as long-term inventory of leachable material amounted to $401.3 million, $306.8 million and $225.5 million in 2014, 2013 and 2012, respectively. Long-term leaching inventories recognized as cost of sales amounted to $177.5 million, $109.3 million and $68.5 million in 2014, 2013 and 2012, respectively. | ||||||||
PROPERTY
PROPERTY: | 12 Months Ended | |||||||
Dec. 31, 2014 | ||||||||
PROPERTY: | ||||||||
PROPERTY: | ||||||||
NOTE 5-PROPERTY: | ||||||||
As of December 31, | ||||||||
(in millions) | 2014 | 2013 | ||||||
Buildings and equipment | $ | 9,173.70 | $ | 8,107.20 | ||||
Construction in progress | 2,755.90 | 2,567.00 | ||||||
Mine development | 255 | 250.7 | ||||||
Land, other than mineral | 100.1 | 61.8 | ||||||
Total property | 12,284.70 | 10,986.70 | ||||||
Accumulated depreciation, amortization and depletion | (4,848.3 | ) | (4,510.5 | ) | ||||
Total property, net | $ | 7,436.40 | $ | 6,476.20 | ||||
Construction in progress increased in 2014 as a result of spending on the Company’s expansion projects. For more detailed information, please see Item 7, Management Discussion and Analysis of Financial Condition and Results of Operations — “Capital Investment Program.” | ||||||||
Depreciation and depletion expense for the years ended December 31, 2014, 2013 and 2012, amounted to $443.0 million, $393.6 million and $323.6 million, respectively. | ||||||||
INTANGIBLE_ASSETS
INTANGIBLE ASSETS: | 12 Months Ended | |||||||
Dec. 31, 2014 | ||||||||
INTANGIBLE ASSETS: | ||||||||
INTANGIBLE ASSETS: | ||||||||
NOTE 6-INTANGIBLE ASSETS: | ||||||||
As of December 31, | ||||||||
(in millions) | 2014 | 2013 | ||||||
Mining concessions | $ | 121.2 | $ | 121.2 | ||||
Mine engineering and development studies | 6 | 6 | ||||||
Software | 13.8 | 12.2 | ||||||
141 | 139.4 | |||||||
Accumulated amortization: | ||||||||
Mining concessions | (33.9 | ) | (33.0 | ) | ||||
Mine engineering and development studies | (5.2 | ) | (4.9 | ) | ||||
Software | (9.0 | ) | (8.3 | ) | ||||
(48.1 | ) | (46.2 | ) | |||||
Goodwill | 17 | 17 | ||||||
Intangible assets, net | $ | 109.9 | $ | 110.2 | ||||
Amortization of intangibles for the years ended December 31, 2014, 2013 and 2012, amounted to $1.9 million, $2.4 million and $2.2 million, respectively. Estimated amortization are as follows: | ||||||||
Estimated amortization expense (in millions): | ||||||||
2015-2019 | $ | 7.6 | ||||||
Average annual | $ | 1.5 | ||||||
The goodwill was generated in 1997 as a result of purchasing a third party interest in the Buenavista mine. | ||||||||
INCOME_TAXES
INCOME TAXES: | 12 Months Ended | ||||||||||
Dec. 31, 2014 | |||||||||||
INCOME TAXES: | |||||||||||
INCOME TAXES: | |||||||||||
NOTE 7-INCOME TAXES: | |||||||||||
The components of the provision for income taxes are as follows: | |||||||||||
Years ended December 31, | |||||||||||
(in millions) | 2014 | 2013 | 2012 | ||||||||
U.S. federal and state: | |||||||||||
Current | $ | — | $ | — | $ | (0.1 | ) | ||||
Deferred | (194.1 | ) | (139.3 | ) | (108.6 | ) | |||||
Uncertain tax positions | 10.7 | — | 147.4 | ||||||||
(183.4 | ) | (139.3 | ) | 38.7 | |||||||
Foreign (Peru and Mexico): | |||||||||||
Current | 987.1 | 866.3 | 1,025.10 | ||||||||
Deferred | (49.1 | ) | 42.3 | 17.1 | |||||||
938 | 908.6 | 1,042.20 | |||||||||
Total provision for income taxes | $ | 754.6 | $ | 769.3 | $ | 1,080.90 | |||||
The source of income is as follows: | |||||||||||
For the years ended December 31, | |||||||||||
(in millions) | 2014 | 2013 | 2012 | ||||||||
Earnings by location: | |||||||||||
U.S. | $ | (1.7 | ) | $ | 0.1 | $ | (0.1 | ) | |||
Foreign | |||||||||||
Peru | 605.8 | 773.8 | 846 | ||||||||
Mexico | 1,464.60 | 1,598.70 | 2,127.60 | ||||||||
2,070.40 | 2,372.50 | 2,973.60 | |||||||||
Earnings before taxes on income | $ | 2,068.70 | $ | 2,372.60 | $ | 2,973.50 | |||||
The reconciliation of the statutory income tax rate to the effective tax rate is as follows (in percentage points): | |||||||||||
For the years ended December 31, | |||||||||||
2014 | 2013 | 2012 | |||||||||
Expected tax at U.S. statutory rate | 35 | % | 35 | % | 35 | % | |||||
Foreign tax at other than statutory rate, net of foreign tax credit benefit | (0.9 | ) | (0.2 | ) | (0.5 | ) | |||||
Percentage depletion | (5.2 | ) | (5.0 | ) | (4.2 | ) | |||||
Other permanent differences | 4.6 | 3.5 | 3.7 | ||||||||
Increase (decrease) in unrecognized tax benefits for uncertain tax positions | 0.5 | — | 5 | ||||||||
Repatriated foreign earnings | (0.4 | ) | (1.4 | ) | (1.7 | ) | |||||
Amounts (over) / under provided in prior years | 2.2 | 0.4 | (0.6 | ) | |||||||
Other | 0.7 | 0.1 | (0.4 | ) | |||||||
Effective income tax rate | 36.5 | % | 32.4 | % | 36.3 | % | |||||
The Company files income tax returns in three jurisdictions, Peru, Mexico and the United States. For the three years presented above, the statutory income tax rates for Peru and Mexico were 30% and 35% for the United States. While the largest components of income taxes are the Peruvian and Mexican taxes, the Company is a domestic U.S. entity. Therefore, the rate used in the above reconciliation is the U.S. statutory rate. | |||||||||||
For all of the years presented, both the Peruvian branch and Minera Mexico filed separate tax returns in their respective tax jurisdictions. Although the tax rules and regulations imposed in the separate tax jurisdictions may vary significantly, similar permanent items exist, such as items which are nondeductible or nontaxable. Some permanent differences relate specifically to SCC such as the allowance in the United States for percentage depletion. SCC’s taxable income for the fiscal years 2012 through 2014, was, or will be, included in the U.S. federal income tax return of AMC, its parent company; see U.S. tax matters, below. For financial reporting and presentation purposes SCC is providing current and deferred income taxes, as if it remains a separate U.S. tax filer apart from AMC. | |||||||||||
Deferred taxes include the U.S., Peruvian and Mexican tax effects of the following types of temporary differences and carryforwards: | |||||||||||
As of December 31, | |||||||||||
(in millions) | 2014 | 2013 | |||||||||
Assets: | |||||||||||
Inventories | $ | 32.5 | $ | 18.7 | |||||||
Capitalized exploration expenses | 27.8 | 29.4 | |||||||||
U.S. foreign tax credit carryforward, net of FIN 48 liability | 144.8 | 52.6 | |||||||||
U.S. tax effect of Peruvian deferred tax liability | 251.4 | 68 | |||||||||
Reserves | 101.7 | 35 | |||||||||
Other | 19.8 | 27.9 | |||||||||
Total deferred tax assets | 578 | 231.6 | |||||||||
Liabilities: | |||||||||||
Property, plant and equipment | (213.0 | ) | (105.8 | ) | |||||||
Deferred charges | (74.9 | ) | (79.6 | ) | |||||||
Mexican tax on consolidated dividends | (5.7 | ) | (31.5 | ) | |||||||
Outside basis difference | — | (7.4 | ) | ||||||||
Other | (9.8 | ) | (0.1 | ) | |||||||
Total deferred tax liabilities | (303.4 | ) | (224.4 | ) | |||||||
Total net deferred tax assets / (liabilities) | $ | 274.6 | $ | 7.2 | |||||||
U.S. Tax Matters— | |||||||||||
In September 2013 the Internal Revenue Service (“IRS”) issued the final Tangible Property Regulations. These regulations are effective January 1, 2014 with some elective retroactive application available. These regulations look to provide a framework for distinguishing capital expenditures from deductible business expenses and they attempt to find the middle ground where taxpayers and the IRS often disagreed. The Company has reviewed these regulations and has concluded that they should not have a material effect on its financial statements. | |||||||||||
As of December 31, 2014, the Company considers its ownership of the stock of Minera Mexico to be essentially permanent in duration. The excess of the amount for financial reporting over the tax basis of the investment in this stock is estimated to be at least $5.3 billion. | |||||||||||
As of December 31, 2014, $37.7 million of the Company’s cash, cash equivalents, restricted cash and short-term investments of $722.0 million was held by foreign subsidiaries. The cash, cash equivalents and short-term investments maintained in the Company’s foreign operations are generally used to cover local operating and investment expenses. The Company had provided a deferred tax liability of $7.4 million as of December 31, 2013 for the U.S. income tax effects of $76.2 million of foreign earnings that may potentially be repatriated in the future. At December 31, 2014 Minera Mexico has determined that it has no remittable earnings available for dividends to the United States due to its internal financial obligations and current expansion, and that at the end of 2014 it has met the indefinite reversal criteria of ASC 740-30-25-17 that it intends to reinvest its earnings indefinitely. Any distribution of earning from the Company’s Mexican subsidiaries to the United States is subject to a U.S. federal income tax that equates to approximately 10% of the amount of the distribution, after considering foreign tax credit utilization. Distributions of earnings from the Company’s Peruvian branch to the United States are not subject to repatriation taxes. The Company’s Peruvian operations are not foreign subsidiaries. Rather they are mainly comprised of operations that are treated as a branch of the Company’s U.S. operations from a tax perspective. | |||||||||||
At December 31, 2014, there were $447.0 million of foreign tax credits available for carryback or carryforward. These credits have a one year carryback and a ten year carryforward period and can only be used to reduce U.S. income tax on foreign earnings. There were no other unused U.S. tax credits at December 31, 2014. These credits can expire as follows: | |||||||||||
Year | Amount | ||||||||||
2016 | $ | 19.0 | |||||||||
2018 | 20.4 | ||||||||||
2019 | 63.7 | ||||||||||
2020 | 42.0 | ||||||||||
2021 | 11.7 | ||||||||||
2022 | 84.1 | ||||||||||
2023 | 69.2 | ||||||||||
2024 | 136.9 | ||||||||||
Total | $ | 447.0 | |||||||||
These foreign tax credits are presented above on a gross basis and have not been reduced here for any unrecognized tax benefits. ASU No. 2013-11, “Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists” is effective prospectively for the Company’s fiscal year beginning January 1, 2014. In accordance with ASU 2013-11 The Company has recorded $302.2 million of an unrecognized tax benefit as an offset to our deferred tax asset for foreign tax credits. The remaining foreign tax credits of $144.8 million will be used to offset future liabilities but can expire if not utilized by 2023 ($7.9M) and 2024 ($136.9M). | |||||||||||
Since March 2009, Grupo Mexico, through its wholly-owned subsidiary AMC, owns an interest in excess of 80% of SCC. Accordingly, SCC’s results are included in the consolidated results of the Grupo Mexico subsidiary for U.S. federal income tax reporting. SCC provides current and deferred income taxes, as if it were filing a separate income tax return. | |||||||||||
Peruvian Tax Matters- | |||||||||||
The Company obtains income tax credits in Peru for value-added taxes paid in connection with the purchase of goods and services employed in its operations and capital equipment and records these credits as a prepaid expense. Under current Peruvian law, the Company is entitled to use the credits against its Peruvian income tax liability or to receive a refund. The carrying value of these Peruvian tax credits approximates their net realizable value. | |||||||||||
Royalty mining charge: In 2011, the Peruvian congress approved an amendment to the mining royalty charge. 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%. For 2014 hereinafter, 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 $32.4 million, $34.8 million and $51.0 million of royalty charge in 2014, 2013 and 2012, respectively, of which $7.5 million was included in income taxes in 2014. | |||||||||||
Special Mining tax: In 2011, the Peruvian government enacted a tax for the mining industry. This 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 made provision for this tax of $35.3 million, $25.5 million and $49.6 million in 2014, 2013 and 2012, respectively. These provisions are included as “income taxes” in the consolidated statement of earnings. | |||||||||||
As of December 31, 2014, the income tax rate was 30% and the dividend tax rate was 4.1%. In the last quarter of 2014, the Peruvian congress enacted tax law changes to both the income tax and dividend tax rates that become effective on January 1, 2015. The new rates are as follows: | |||||||||||
Year | Income | Dividend | |||||||||
Tax Rate | Tax Rate | ||||||||||
2015- 2016 | 28 | % | 6.8 | % | |||||||
2017- 2018 | 27 | % | 8.0 | % | |||||||
2019 and later | 26 | % | 9.3 | % | |||||||
The recalculation of the deferred tax liability for the Peruvian jurisdiction using the new tax rates did not have a material effect on the deferred tax liability or the financial statements of the Company. | |||||||||||
Mexican Tax Matters- | |||||||||||
In 2013, the Mexican Congress enacted tax law changes that became effective on January 1, 2014. Among others, this new law establishes: | |||||||||||
· | A mining royalty at the rate of 7.5% on taxable Earnings Before Taxes adjusted as defined by Mexican tax regulations; that had a net after tax cost of $79.3 million. | ||||||||||
· | An additional royalty of 0.5% over gross income from sales of gold, silver and platinum; | ||||||||||
· | The replacement of the consolidation tax regime that creates a more restrictive tax consolidation regimen; | ||||||||||
· | A 10% withholding on dividends distributed to Mexican individuals or foreign residents (individuals or corporations) and applies to net income generated after 2013; | ||||||||||
· | A new environmental tax on the sale and importation of fossil fuels that had an annual estimated cost of approximately $9.4 million, and was included in cost of fuel | ||||||||||
· | Limits (at 47 or 53%) deductions for tax-exempt salaries as well as for contributions to pension plans; | ||||||||||
· | The requirement to maintain the Mexican statutory income tax rate at 30% thereby eliminating the scheduled reductions for 2014 and 2015; and | ||||||||||
· | The elimination of the flat tax. | ||||||||||
Related to these tax changes, in 2013 the Company recognized a deferred income tax provision of $34.7 million. | |||||||||||
Accounting for Uncertainty in Income Taxes- | |||||||||||
The total amount of unrecognized tax benefits in 2014, 2013 and 2012, was as follows (in millions): | |||||||||||
2014 | 2013 | 2012 | |||||||||
Unrecognized tax benefits, opening balance | $ | 221.2 | $ | 221.2 | $ | 70.6 | |||||
Gross increases — tax positions in prior period | 55.1 | — | 39.7 | ||||||||
Gross decreases — tax positions in prior period | — | — | 0.2 | ||||||||
Gross increases — current-period tax positions | 43.1 | — | 110.7 | ||||||||
98.2 | — | 150.6 | |||||||||
Unrecognized tax benefits, ending balance | $ | 319.4 | $ | 221.2 | $ | 221.2 | |||||
The amount of unrecognized tax benefits that, if recognized, would affect the effective tax rate was $319.4 million and $221.2 million at December 31, 2014 and 2013, respectively. These amounts relate entirely to U.S. income tax matters. The Company has no unrecognized Peruvian or Mexican tax benefits. | |||||||||||
As of December 31, 2014 and 2013, the Company’s liability for uncertain tax positions included no amount for accrued interest and penalties due to the excess foreign tax credits. | |||||||||||
The following tax years remain open to examination and adjustment in the Company’s three major tax jurisdictions: | |||||||||||
Peru: | 2011 up to 2014 (years 2011 and 2012 are being examined in 2015) | ||||||||||
U.S.: | 2008 and all subsequent years | ||||||||||
Mexico: | 2010 and all subsequent years | ||||||||||
Management does not expect that any of the open years will result in a cash payment within the upcoming twelve months ending December 31, 2015. The Company’s reasonable expectations about future resolutions of uncertain items did not materially change during the year ended December 31, 2014. | |||||||||||
WORKERS_PARTICIPATION
WORKERS' PARTICIPATION: | 12 Months Ended | ||||||||||
Dec. 31, 2014 | |||||||||||
WORKERS' PARTICIPATION: | |||||||||||
WORKERS' PARTICIPATION: | |||||||||||
NOTE 8-WORKERS’ PARTICIPATION: | |||||||||||
The Company’s operations in Peru and Mexico are subject to statutory workers’ participation. | |||||||||||
In Peru, the provision for workers’ participation is calculated at 8% of pre-tax earnings. The current portion of this participation, which is accrued during the year, is based on the Peruvian Branch’s taxable income and is distributed to workers following determination of final results for the year. The annual amount payable to an individual worker is capped at the worker’s salary for an 18 month period. Amounts determined in excess of the 18 months of worker’s salary is no longer made as a payment to the worker and is levied first for the benefit of the “Fondo Nacional de Capacitacion Laboral y de Promocion del Empleo” (National Workers’ Training and Employment Promotion Fund) until this entity receives from all employers in its region an amount equivalent to 2,200 Peruvian taxable units (approximately $2.8 million in 2014). Any remaining excess is levied as payment for the benefit of the regional governments. These levies fund worker training, employment promotion, entrepreneurship and various other programs. | |||||||||||
In Mexico, workers’ participation is determined using the guidelines established in the Mexican income tax law at a rate of 10% of pre-tax earnings as adjusted by the tax law. In December 2013, the Mexican Congress approved some amendments to the tax law, as consequence the Company recorded a deferred workers’ participation provision of $16.3 million. | |||||||||||
The provision for workers’ participation is allocated to “Cost of sales (exclusive of depreciation, amortization and depletion)” and to “selling, general and administrative” in the consolidated statement of earnings, proportional to the number of workers in the production and administrative areas, respectively. Workers’ participation expense for the three years ended December 31, 2014 was as follows (in millions): | |||||||||||
2014 | 2013 | 2012 | |||||||||
Current | $ | 221.2 | $ | 201.6 | $ | 263.1 | |||||
Deferred | (11.4 | ) | 31.4 | 14.3 | |||||||
$ | 209.8 | $ | 233 | $ | 277.4 | ||||||
ASSET_RETIREMENT_OBLIGATION
ASSET RETIREMENT OBLIGATION: | 12 Months Ended | |||||||
Dec. 31, 2014 | ||||||||
ASSET RETIREMENT OBLIGATION: | ||||||||
ASSET RETIREMENT OBLIGATION: | ||||||||
NOTE 9-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’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 reviews of closing plans every five years. Currently and for the near-term future, the Company has pledged the value of its Lima office complex as support for this obligation. The accepted value of the Lima office building for this purpose is $27.8 million. Through December 2014, the Company has provided guarantees of $17.9 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 smelter and refinery in Ilo, and the shops and auxiliary facilities at the three units. In 2014, the Company reviewed ASC 410-20 Asset Retirement Obligation rule and adjusted the liability by $36.3 million at its Peruvian operations. A comparable adjustment was applied against the deferred asset recognized in property. The net effect of these adjustments did not change the Company’s net income. | ||||||||
In 2010, the Company communicated to the Mexican federal environmental authorities its closure plans for the copper smelter plant at San Luis Potosi. The Company initiated a program for plant demolition and soil remediation. In January 2014, the Company approved an increase in the budget for this program to $62.4 million, of which the Company has spent $46.9 million through December 31, 2014. Plant demolition and construction of a confinement area at the south of the property were completed in 2012 and the Company expects to complete soil remediation and the construction of a second confinement area during the second quarter of 2015. The Company expects that once the site is remediated, a decision will be made on whether sell or develop the property. | ||||||||
In 2012, the Company 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, among other things, the remediation caused by the closure of the San Luis Potosi smelter in 2010. Consequently, according to ASC- 410-20 on December 31, 2012 the Company recorded an asset retirement obligation of $25.1 million and increased net property by $20.3 million. The overall cost recognized for mining closure includes the estimated costs of dismantling concentrators, smelter and refinery plants, shops and other facilities. | ||||||||
The following table summarizes the asset retirement obligation activity for years ended December 31, 2014 and 2013 (in millions): | ||||||||
2014 | 2013 | |||||||
Balance as of January 1 | $ | 124.8 | $ | 122.3 | ||||
Changes in estimates | (9.6 | ) | — | |||||
Additions | — | — | ||||||
Closure payments | (12.2 | ) | (6.3 | ) | ||||
Accretion expense | 13.1 | 8.8 | ||||||
Balance as of December 31, | $ | 116.1 | $ | 124.8 | ||||
FINANCING
FINANCING: | 12 Months Ended | ||||||||||||||
Dec. 31, 2014 | |||||||||||||||
FINANCING: | |||||||||||||||
FINANCING: | |||||||||||||||
NOTE 10-FINANCING: | |||||||||||||||
Long-term debt: | |||||||||||||||
Carrying value as of | |||||||||||||||
Issuance | Face | December 31, | |||||||||||||
(in millions) | Date | Due Date | amount | 2014 | 2013 | ||||||||||
6.375% Senior unsecured notes | 2005 | 2015 | $ | 200 | $ | 199.8 | $ | 199.7 | |||||||
5.375% Senior unsecured notes | 2010 | 2020 | 400 | 398.8 | 398.6 | ||||||||||
3.500% Senior unsecured notes | 2012 | 2022 | 300 | 299.2 | 299.1 | ||||||||||
9.250% Yankee Bonds | 1998 | 2028 | 125 | 51.1 | 51.1 | ||||||||||
7.500% Senior unsecured notes | 2005/2006 | 2035 | 1,000 | 985.8 | 985.5 | ||||||||||
6.750% Senior unsecured notes | 2010 | 2040 | 1,100 | 1,092.20 | 1,092.10 | ||||||||||
5.250% Senior unsecured notes | 2012 | 2042 | 1,200 | 1,179.10 | 1,178.80 | ||||||||||
Total debt | 4,206.00 | 4,204.90 | |||||||||||||
Less, current portion | (200.0 | ) | — | ||||||||||||
Total long-term debt | $ | 4,006.00 | $ | 4,204.90 | |||||||||||
The difference between the face amount and the balance as of December 31, 2014 and 2013 of the senior unsecured notes is the unamortized issuance discount, which is being amortized over the term of the related debt. | |||||||||||||||
The bonds, referred above as “Yankee bonds”, contain a covenant requiring Minera Mexico to maintain a ratio of EBITDA to interest expense of not less than 2.5 to 1.0 as such terms are defined in the debt instrument. At December 31, 2014, Minera Mexico was in compliance with this covenant. | |||||||||||||||
Between July 2005 and November 2012 the Company issued senior unsecured notes six times totaling $4.2 billion as listed above. Interest on the notes is paid semi-annually in arrears. The notes rank pari passu with each other and rank pari passu in right of payment with all of the Company’s other existing and future unsecured and unsubordinated indebtedness. | |||||||||||||||
The indentures relating to the notes contain certain restrictive covenants, including limitations on liens, limitations on sale and leaseback transactions, rights of the holders of the notes upon the occurrence of a change of control triggering event, limitations on subsidiary indebtedness and limitations on consolidations, mergers, sales or conveyances. Certain of these covenants cease to be applicable before the notes mature if the Company obtains an investment grade rating. The Company obtained investment grade rating in 2005. The Company has registered these notes under the Securities Act of 1933, as amended. The Company may issue additional debt from time to time pursuant to certain of the indentures. | |||||||||||||||
Related to these notes, the Company capitalized $28.9 million of issuance costs which unamortized balance is included in “Other assets,” non-current on the consolidated balance sheet and are being amortized as interest expense over the life of the loans. At December 31, 2014 and 2013, the balance of capitalized debt issuance costs was $25.2 million and $26.1 million, respectively. Amortization charged to interest expense was $0.9 million, $0.8 million and $0.6 million in 2014, 2013 and 2012, respectively. | |||||||||||||||
If the Company experiences a Change of Control Triggering Event, the Company must offer to repurchase the notes at a purchase price equal to 101% of the principal amount thereof, plus accrued and unpaid interest, if any. A Change of Control Trigger Event means a Change of Control (as defined) and a rating decline (as defined), that is, if the rating of the notes, by at least one of the rating agencies shall be decreased by one or more gradations. | |||||||||||||||
At December 31, 2014, the Company was in compliance with the covenants of the notes. | |||||||||||||||
Aggregate maturities of the outstanding borrowings at December 31, 2014, are as follows: | |||||||||||||||
Years | Principal Due (*) | ||||||||||||||
(in millions) | |||||||||||||||
2015 | $ | 200.0 | |||||||||||||
2016 | — | ||||||||||||||
2017 | — | ||||||||||||||
2018 | — | ||||||||||||||
Thereafter | 4,051.2 | ||||||||||||||
Total | $ | 4,251.2 | |||||||||||||
(*)Total debt maturities do not include the debt discount valuation account of $45.2 million. | |||||||||||||||
BENEFIT_PLANS
BENEFIT PLANS: | 12 Months Ended | ||||||||||
Dec. 31, 2014 | |||||||||||
BENEFIT PLANS: | |||||||||||
BENEFIT PLANS: | |||||||||||
NOTE 11-BENEFIT PLANS: | |||||||||||
Post retirement defined benefit plan: | |||||||||||
The Company has two noncontributory defined benefit pension plans covering former salaried employees in the United States and certain former expatriate employees in Peru (the “Expatriate Plan”). Effective October 31, 2000, the Board of Directors amended the qualified pension plan to suspend the accrual of benefits. | |||||||||||
In October 2014, the Society of Actuaries (SOA) issued new mortality tables based on a comprehensive study of private retirement plans. Effective December 31, 2014, the Company elected to update the mortality assumption to the new SOA tables. | |||||||||||
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 “Mexican Plan”). | |||||||||||
The components of net periodic benefit costs calculated in accordance with ASC 715 “Compensation retirement benefits,” using December 31 as a measurement date, consist of the following: | |||||||||||
Years ended December 31, | |||||||||||
(in millions) | 2014 | 2013 | 2012 | ||||||||
Service cost | $ | 1 | $ | 1.1 | $ | 1 | |||||
Interest cost | 1.1 | 1 | 1.1 | ||||||||
Expected return on plan assets | (3.3 | ) | (3.4 | ) | (3.6 | ) | |||||
Amortization of transition assets, net | 0.1 | — | — | ||||||||
Amortization of net actuarial loss | (0.4 | ) | (0.7 | ) | (0.8 | ) | |||||
Amortization of net loss/(gain) | 0.2 | 0.2 | 0.1 | ||||||||
Net periodic benefit cost | $ | (1.3 | ) | $ | (1.8 | ) | $ | (2.2 | ) | ||
The change in benefit obligation and plan assets and a reconciliation of funded status are as follows: | |||||||||||
As of December 31, | |||||||||||
(in millions) | 2014 | 2013 | |||||||||
Change in benefit obligation: | |||||||||||
Projected benefit obligation at beginning of year | $ | 26.8 | $ | 27.9 | |||||||
Service cost | 1 | 1.1 | |||||||||
Interest cost | 1.1 | 1 | |||||||||
Actuarial gain census | — | (0.3 | ) | ||||||||
Benefits paid | (1.9 | ) | (2.2 | ) | |||||||
Actuarial (gain)/loss | (1.6 | ) | 0.3 | ||||||||
Actuarial gain assumption changes | 2.2 | (1.0 | ) | ||||||||
Inflation adjustment | (1.8 | ) | — | ||||||||
Projected benefit obligation at end of year | $ | 25.8 | $ | 26.8 | |||||||
Change in plan assets: | |||||||||||
Fair value of plan assets at beginning of year | $ | 60.6 | $ | 61.9 | |||||||
Actual return on plan assets | 3.7 | (0.2 | ) | ||||||||
Employer contributions | (0.5 | ) | 0.1 | ||||||||
Benefits paid | (1.1 | ) | (0.9 | ) | |||||||
Currency exchange rate adjustment | (5.0 | ) | (0.3 | ) | |||||||
Fair value of plan assets at end of year | $ | 57.7 | $ | 60.6 | |||||||
Funded status at end of year: | $ | 31.9 | $ | 33.8 | |||||||
ASC-715 amounts recognized in statement of financial position consists of: | |||||||||||
Non-current assets | $ | 31.9 | $ | 33.8 | |||||||
Total | $ | 31.9 | $ | 33.8 | |||||||
ASC-715 amounts recognized in accumulated other comprehensive income (net of income taxes of $0.4 million and $1.5 million in 2014 and 2013, respectively) consists of: | |||||||||||
Net loss (gain) | $ | (1.3 | ) | $ | (1.7 | ) | |||||
Prior service cost | 1.6 | 0.1 | |||||||||
Total | $ | 0.3 | $ | (1.6 | ) | ||||||
The following table summarizes the changes in accumulated other comprehensive income for the years ended December 31, related to the defined benefit pension plan, net of income tax: | |||||||||||
(in millions) | 2014 | 2013 | |||||||||
Reconciliation of accumulated other comprehensive income: | |||||||||||
Accumulated other comprehensive income at beginning of plan year | $ | (1.6 | ) | $ | (3.6 | ) | |||||
Net loss/(gain) amortized during the year | 0.1 | 0.3 | |||||||||
Net loss/(gain) occurring during the year | 0.2 | 1.6 | |||||||||
Amortization of transition obligation | (0.1 | ) | — | ||||||||
Currency exchange rate adjustment | 1.7 | 0.1 | |||||||||
Net adjustment to accumulated other comprehensive income (net of income taxes of $(1.1) million and $(1.3) million in 2014 and 2013, respectively) | 1.9 | 2 | |||||||||
Accumulated other comprehensive income at end of plan year | $ | 0.3 | $ | (1.6 | ) | ||||||
The following table summarizes the amounts in accumulative other comprehensive income amortized and recognized as a component of net periodic benefit cost in 2014 and 2013, net of income tax: | |||||||||||
(in millions) | 2014 | 2013 | |||||||||
Net loss / (gain) | $ | 0.2 | $ | 1.6 | |||||||
Amortization of net (loss) gain | 0.1 | 0.3 | |||||||||
Amortization of transition obligation | (0.1 | ) | — | ||||||||
Total amortization expenses | $ | 0.2 | $ | 1.9 | |||||||
The assumptions used to determine the pension obligations are: | |||||||||||
Expatriate Plan | 2014 | 2013 | 2012 | ||||||||
Discount rate | 3.50 | % | 4.25 | % | 3.35 | % | |||||
Expected long-term rate of return on plan asset | 4.50 | % | 4.50 | % | 4.50 | % | |||||
Rate of increase in future compensation level | N/A | N/A | N/A | ||||||||
Mexican Plan(*) | 2014 | 2013 | 2012 | ||||||||
Discount rate | 6.70 | % | 7.10 | % | 6.50 | % | |||||
Expected long-term rate of return on plan asset | 6.70 | % | 7.10 | % | 6.50 | % | |||||
Rate of increase in future compensation level | 4.00 | % | 4.00 | % | 4.00 | % | |||||
(*)These rates are based on Mexican pesos as pension obligations are denominated in pesos. | |||||||||||
The scheduled maturities of the benefits expected to be paid in each of the next five years, and thereafter, are as follows: | |||||||||||
Years | Expected | ||||||||||
Benefit Payments | |||||||||||
(in millions) | |||||||||||
2015 | $ | 7.2 | |||||||||
2016 | 1.5 | ||||||||||
2017 | 1.4 | ||||||||||
2018 | 1.5 | ||||||||||
2019 | 1.6 | ||||||||||
2020 to 2023 | 8.3 | ||||||||||
Total | $ | 21.5 | |||||||||
Expatriate Plan | |||||||||||
The Company’s funding policy is to contribute amounts to the qualified plan sufficient to meet the minimum funding requirements set forth in the Employee Retirement Income Security Act of 1974 plus such additional amounts as the Company may determine to be appropriate. | |||||||||||
Plan assets are invested in a group annuity contract with Metropolitan Life Insurance Company (“MetLife”). The Contract invests in the MetLife General Account Payment Fund (the “Money Fund”) and the MetLife Broad Market Bond Fund (the “Bond Fund”) managed by BlackRock, Inc. | |||||||||||
The Money Fund seeks to earn interest and maintain a $1.00 per share net asset value, by investing in U.S. Dollar-denominated money market securities. | |||||||||||
The Bond Fund seeks to outperform the Barclays ® U.S. Aggregate Bond Index, net of fees, over a full market cycle. The Bond Fund invests in publicly traded, investment grade securities. These may include corporate securities, mortgage securities, treasuries and cash, agency securities, commercial mortgage backed securities and other investment vehicles adhering to the fund’s investment objectives. | |||||||||||
Plan assets are invested with the objective of maximizing returns with an acceptable level of risk and maintaining adequate liquidity to fund expected benefit payments. The Company’s policy for determining asset mix-targets to meet investment objectives includes periodic consultation with recognized third party investment consultants. | |||||||||||
The expected long-term rate of return on plan assets is reviewed annually, taking into consideration asset allocations, historical returns and the current economic environment. Based on these factors the Company expects its assets will earn an average of 4.50% per annum assuming its long-term mix will be consistent with its current mix. | |||||||||||
Mexican Plan | |||||||||||
Minera Mexico’s policy for determining asset mix targets includes periodic consultation with recognized third party investment consultants. The expected long-term rate of return on plan assets is updated periodically, taking into consideration assets allocations, historical returns and the current economic environment. The fair value of plan assets is impacted by general market conditions. If actual returns on plan assets vary from the expected returns, actual results could differ. | |||||||||||
The plan assets are managed by three financial institutions, Scotiabank Inverlat S.A., Banco Santander and IXE Banco, S.A. 27% of the funds are invested in Mexican government securities, including treasury certificates and development bonds of the Mexican government. The remaining 73% is invested in common shares of Grupo Mexico. | |||||||||||
The plan assets are invested without restriction in active markets that are accessible when required and are therefore considered as level 1, in accordance with ASC 820 “Fair Value Measurement.” | |||||||||||
These plans accounted for approximately 30% of benefit obligations. The following table represents the asset mix of the investment portfolio as of December 31: | |||||||||||
2014 | 2013 | ||||||||||
Asset category: | |||||||||||
Equity securities | 73 | % | 74 | % | |||||||
Treasury bills | 27 | % | 26 | % | |||||||
100 | % | 100 | % | ||||||||
The amount of contributions that the Company expects to pay to the plan during 2015 is $6.3 million, which includes $3.4 million of pending payments to former Buenavista workers. | |||||||||||
Post-retirement Health Care Plan | |||||||||||
Peru: 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.” | |||||||||||
Mexico: Through 2007, the Buenavista unit provided health care services free of charge to employees and retired unionized employees and their families through its own hospital at the Buenavista unit. In 2011, the Company signed an agreement with the Secretary of Health of the State of Sonora to provide these services to its retired workers and their families. The new workers of Buenavista del Cobre will receive health services from the Mexican Institute of Social Security as is the case for all Mexican workers. | |||||||||||
The components of net period benefit costs are as follows: | |||||||||||
Years ended December 31, | |||||||||||
(in millions) | 2014 | 2013 | 2012 | ||||||||
Interest cost | $ | 1.3 | $ | 1.7 | $ | 1.5 | |||||
Amortization of transition obligation | — | — | — | ||||||||
Amortization of prior service cost/ (credit) | (0.3 | ) | — | (0.3 | ) | ||||||
Net periodic benefit cost | $ | 1 | $ | 1.7 | $ | 1.2 | |||||
The change in benefit obligation and a reconciliation of funded status are as follows: | |||||||||||
As of December 31, | |||||||||||
(in millions) | 2014 | 2013 | |||||||||
Change in benefit obligation: | |||||||||||
Projected benefit obligation at beginning of year | $ | 21.7 | $ | 27.2 | |||||||
Interest cost | 1.3 | 1.7 | |||||||||
Actuarial loss/ (gain) — claims cost | (0.2 | ) | — | ||||||||
Benefits paid | (0.6 | ) | (0.1 | ) | |||||||
Actuarial (gain)/loss | (3.2 | ) | (6.8 | ) | |||||||
Actuarial gain assumption changes | 0.4 | (0.2 | ) | ||||||||
Inflation adjustment | (2.3 | ) | (0.1 | ) | |||||||
Projected benefit obligation at end of year | $ | 17.1 | $ | 21.7 | |||||||
Change in plan assets: | |||||||||||
Fair value of plan assets at beginning of year | $ | — | $ | — | |||||||
Employer contributions | 0.1 | 0.1 | |||||||||
Benefits paid | (0.1 | ) | (0.1 | ) | |||||||
Fair value of plan assets at end of year | $ | — | $ | — | |||||||
Funded status at end of year: | $ | (17.1 | ) | $ | (21.7 | ) | |||||
ASC-715 amounts recognized in statement of financial position consists of: | |||||||||||
Current liabilities | $ | (0.1 | ) | $ | (0.1 | ) | |||||
Non-current liabilities | (17.0 | ) | (21.6 | ) | |||||||
Total | $ | (17.1 | ) | $ | (21.7 | ) | |||||
ASC-715 amounts recognized in accumulated other comprehensive income consists of: | |||||||||||
Net loss (gain) | $ | (4.8 | ) | $ | (4.3 | ) | |||||
Prior service cost (credit) | (0.1 | ) | (0.1 | ) | |||||||
Total (net of income taxes of $ 3.3 million and $3.0 million in 2014 and 2013, respectively) | $ | (4.9 | ) | $ | (4.4 | ) | |||||
The following table summarizes the changes in accumulated other comprehensive income for the years ended December 31, related to the post-retirement health care plan, net of income tax: | |||||||||||
As of December 31, | |||||||||||
(in millions) | 2014 | 2013 | |||||||||
Reconciliation of accumulated other comprehensive income: | |||||||||||
Accumulated other comprehensive income at beginning of plan year | $ | (4.4 | ) | $ | (0.2 | ) | |||||
Net loss/(gain) occurring during the year | (1.8 | ) | (4.2 | ) | |||||||
Net loss/(gain) amortized during the year | 0.1 | — | |||||||||
Currency exchange rate adjustment | 1.2 | — | |||||||||
Net adjustment to accumulated other comprehensive income (net of income taxes of $3.3 million and $3.0 million in 2014 and 2013, respectively) | (0.5 | ) | (4.2 | ) | |||||||
Accumulated other comprehensive income at end of plan year | $ | (4.9 | ) | $ | (4.4 | ) | |||||
The following table summarizes the amounts in accumulative other comprehensive income amortized and recognized as a component of net periodic benefit cost in 2014 and 2013, net of income tax: | |||||||||||
As of December 31, | |||||||||||
(in millions) | 2014 | 2013 | |||||||||
Net loss / (gain) | $ | (1.8 | ) | $ | (4.2 | ) | |||||
Amortization of net (loss) gain | 0.1 | — | |||||||||
Total amortization expenses | $ | (1.7 | ) | $ | (4.2 | ) | |||||
The discount rates used in the calculation of other post-retirement benefits and cost as of December 31 were: | |||||||||||
2014 | 2013 | 2012 | |||||||||
Expatriate health plan | |||||||||||
Discount rate | 3.50 | % | 4.25 | % | 4.25 | % | |||||
Mexican health plan | |||||||||||
Weighted average discount rate | 6.70 | % | 7.1 | % | 6.50 | % | |||||
The benefits expected to be paid in each of the next five years, and thereafter, are as follows: | |||||||||||
Year | Expected | ||||||||||
Benefit Payments | |||||||||||
(in millions) | |||||||||||
2015 | $ | 1.0 | |||||||||
2016 | 1.1 | ||||||||||
2017 | 1.1 | ||||||||||
2018 | 1.2 | ||||||||||
2019 | 1.3 | ||||||||||
2020 to 2023 | 13.3 | ||||||||||
Total | $ | 19.0 | |||||||||
Expatriate Health Plan | |||||||||||
For measurement purposes, a 5.8% annual rate of increase in the per capita cost of covered health care benefits was assumed for 2014. The rate is assumed to decrease gradually to 4.6%. | |||||||||||
Assumed health care cost trend rates can have a significant effect on amounts reported for health care plans. However, because of the size of the Company’s plan, a one percentage-point change in assumed health care trend rate would not have a significant effect. | |||||||||||
Mexican Health Plan | |||||||||||
For measurement purposes, a 4.0% annual rate of increase in the per capita cost of covered health care benefits was assumed for 2014 and remains at that level thereafter. | |||||||||||
An increase in other benefit cost trend rates have a significant effect on the amount of the reported obligations, as well as component cost of the other benefit plan. One percentage-point change in assumed other benefits cost trend rates would have the following effects: | |||||||||||
One Percentage Point | |||||||||||
(in millions) | Increase | Decrease | |||||||||
Effect on total service and interest cost components | $ | 1.3 | $ | 0.8 | |||||||
Effect on the post-retirement benefit obligation | $ | 17.2 | $ | 13.7 | |||||||
NONCONTROLLING_INTEREST
NON-CONTROLLING INTEREST: | 12 Months Ended |
Dec. 31, 2014 | |
NON-CONTROLLING INTEREST | |
NON-CONTROLLING INTEREST | |
NOTE 12-NON-CONTROLLING INTEREST: | |
For all the years presented, in the consolidated statement of earnings the income attributable to non-controlling interest is based on the earnings of the Company’s Peruvian Branch. | |
The non-controlling interest of the Company’s Peruvian Branch is for investment shares, formerly named labor shares. These shares were generated by legislation in place in Peru from the 1970s through 1991; such legislation provided for the participation of mining workers in the profits of the enterprises for which they worked. This participation was divided between equity and cash. The investment shares included in the non-controlling interest on the balance sheet are the still outstanding equity distributions made to the Peruvian Branch’s employees. | |
In prior years, the Company acquired some Peruvian investment shares in exchange for newly issued common shares of the Company and through purchases at market value. These acquisitions were accounted for as purchases of non-controlling interests. The excess paid over the carrying value was assigned to intangible assets and is being amortized based on production. As a result of these acquisitions, the remaining investment shareholders hold a 0.71% interest in the Peruvian Branch and are entitled to a pro rata participation in the cash distributions made by the Peruvian Branch. The shares are recorded as a non-controlling interest in the Company’s financial statements. | |
COMMITMENTS_AND_CONTINGENCIES
COMMITMENTS AND CONTINGENCIES: | 12 Months Ended | ||||||||||
Dec. 31, 2014 | |||||||||||
COMMITMENTS AND CONTINGENCIES: | |||||||||||
COMMITMENTS AND CONTINGENCIES: | |||||||||||
NOTE 13-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 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 expenditures in years 2014, 2013 and 2012, were as follows (in millions): | |||||||||||
2014 | 2013 | 2012 | |||||||||
Peruvian operations | $ | 127.0 | $ | 76.9 | $ | 27.0 | |||||
Mexican operations | 24.4 | 39.8 | 20.7 | ||||||||
Total | $ | 151.4 | $ | 116.7 | $ | 47.7 | |||||
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 closure and reclamation. In accordance with the requirements of this law, the Company’s closure plans were approved by MINEM. As part of the closure plans, the Company is providing guarantees to ensure that sufficient funds will be available for the asset retirement obligation. See Note 9 “Asset retirement obligation,” for further discussion of this matter. | |||||||||||
In 2008, the Peruvian government enacted environmental regulations establishing more stringent air quality standards (“AQS”) for daily sulfur dioxide (“SO2”) emissions for the Peruvian territory. These regulations, as amended in 2013, recognize distinct zones/areas, as atmospheric basins. As part of these regulations, MINAM was required to carry-out a 12 month ambient air monitoring period, prior to January 1, 2014, to establish SO2 levels. Those areas with a mean 24-hour SO2 concentration equal or less than 20 micrograms per cubic meter (“ug/m3”) are required to develop programs to maintain this level of compliance. Those areas or cities exceeding the mean 24-hour SO2 concentration of 20 ug/m3 will be required to establish an action plan to address this problem and are required to achieve the 20 ug/m3 AQS in the future. Meanwhile they are required to achieve mean 24-hour AQS equal to 80 ug/m3 of SO2. MINAM has established three atmospheric basins that require further attention to comply with 80ug/m3 of SO2. The Ilo basin is one of these three areas and the Company’s smelter and refinery are part of the area. A supreme decree issued on April 8, 2014, indicates that the Company should review its compliance with these regulations and develop a modification plan to reach compliance. The Company is working with an environmental technical study group, established by a MINAM resolution to identify air quality issues and develop plans to comply with the pertinent regulations. | |||||||||||
In 2013, the Peruvian government enacted new soil environmental quality standards (“SQS”) applicable to any existing facility or project that generates or could generate risk of soil contamination in its area of operation or influence. In March 2014, MINAM issued a supreme decree which establishes additional provisions for the gradual implementation of SQS. Under this rule the Company has twelve months to identify contaminated sites in and around its facilities and present a report of identified contaminated sites. If such sites exist, the Company must submit a decontamination plan for approval within 24 months from the date it is notified by the authority. This decontamination plan shall include remediation actions, a schedule and compliance deadlines. Also, under this rule, if deemed necessary, the Company may request a one year extension, given sound justification. Soil confirmation tests must be carried out after completion of decontamination actions (within the approved schedule) and results must be presented to the authorities within 30 days after receiving such results. Non-compliance with this obligation or with decontamination goals will carry penalties, although no specific sanctions have been established yet. During compliance schedule, companies cannot be penalized for non-compliance with the SQS. In the fourth quarter of 2014, the Company selected the consultant to carry out soil samplings, studies and other requirements of the rules. | |||||||||||
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. 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. | |||||||||||
In January 2011, Article 180 of the General Law was amended. This amendment, gives 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, natural resources, flora, fauna or human health, because it will be sufficient to argue that the harm may be caused. In addition, in 2011, amendments to the Civil Federal Procedures Code (“CFPC”) were published in the Official Gazette and are now in force. 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 June 2013, the Environmental Liability Federal Law was published in the Official Gazette and became effective one month thereafter. The law establishes general guidelines in order to determine which environmental actions will be considered to cause environmental harm that will give rise to administrative responsibilities (remediation or compensations), criminal responsibilities as well as monetary fines. | |||||||||||
On August 6, 2014, an accidental spill of approximately 40,000 cubic meters of copper sulfate solution occurred at a leaching pond that was under construction ten kilometers away from the mine of Buenavista del Cobre, S.A. de C.V. (“BVC”) a subsidiary of the Company. The accident was caused by a rock collapse that affected the system’s pumping station and by a construction defect in the seal of a pipe in the leaching system containment dam, a part of the new SX-EW III plant. This solution reached the Bacanuchi River, a branch of the Sonora River. All the immediate actions were properly taken in order to contain the spill, and to comply with all the legal requirements. | |||||||||||
On August 19, 2014, PROFEPA, as part of the administrative proceeding initiated after the spill, announced the filing of a criminal complaint against BVC and those determined to be responsible for the environmental damages. The criminal complaint filed by PROFEPA against BVC is in the procedural stages. The Company is vigorously defending against it. According to the Mexican Environmental Responsibilities Federal Law, administrative fines and sanctions could go upward to 40 million Mexican pesos (approximately $3 million). Additional sanctions or fines may be imposed, including the cost of cleanup and remediation of the polluted sites, as well as economic compensation to individuals who may have suffered damages as a result of the spill, provided that direct damages are proven. | |||||||||||
On September 15, 2014, BVC, in agreement with the Mexican Federal Government, established a trust of up to two billion pesos (approximately $150 million) to support the remedial efforts that BVC had already undertaken, to comply with the environmental remediation plan and to pay, as the case may be, material damages to the riverside residents of the seven counties affected by the spill. In 2014, BVC estimated the contingent liability at $91.4 million, of which $16.4 million had been paid previous to the establishment of the trust, and approximately one billion pesos (approximately $74.9 million) was deposited in the trust. These funds have been available and have been used to compensate claims as they have arisen. This deposit was classified as restricted cash and was recorded as an operating expense in the 2014 results. A technical committee was created to manage the funds, comprised of representatives from the federal government, the Company and specialists assisted by a team of environmental experts. The trust established by the Company and the administrative agreement executed with the corresponding Federal authorities, serves as an alternative mechanism for dispute resolution to mitigate public and private litigation risks. | |||||||||||
On November 27, 2014, a remediation program was presented before SEMARNAT, the federal agency of environment and natural resources, which was approved on January 6, 2015. | |||||||||||
On December 31, 2014, PROFEPA initiated an administrative proceeding directly derived from the spill, which is still in its initial stages. The National Commission for Water (“CONAGUA”), and the Federal Commission for the Protection against Sanitary Risks (“COFEPRIS”), have initiated certain proceedings, not directly linked to the spill, to monitor Company’s compliance with the applicable environmental laws. In addition, the Company has been served with three collective action lawsuits seeking damages for injuries related to the spill, which are in an early procedural stages. For a description of collective actions in Mexico refer to the 2011 amendments to the CFPC described above. The Company asserts that these lawsuits are without merit and is vigorously defending against them. | |||||||||||
The Company reasonably 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. | |||||||||||
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 expenditures. | |||||||||||
Litigation matters: | |||||||||||
Garcia Ataucuri and Others against SCC’s Peruvian Branch: | |||||||||||
In April 1996, the Branch was served with a complaint filed in Peru by Mr. Garcia Ataucuri and approximately 900 former employees seeking the delivery of a substantial number of “labor shares” (acciones laborales) plus dividends on such shares, to be issued to each former employee in proportion to their time of employment with SCC’s Peruvian Branch, pursuant to a former Peruvian mandated profit sharing law. | |||||||||||
The labor share litigation is based on claims of former employees for ownership of labor shares that the plaintiffs state that the Branch did not issue during the 1970s until 1979 under such former Peruvian mandated profit sharing law. In 1971, the Peruvian government enacted legislation providing that mining workers would have a 10% participation in the pre-tax profits of their employing enterprises. This participation was distributed 40% in cash and 60% in an equity interest of the enterprise. In 1978, the equity portion, which was originally delivered to a mining industry workers’ organization, was set at 5.5% of pre-tax profits and was delivered, mainly in the form of “labor shares” to individual workers. The cash portion was set at 4.0% of pre-tax earnings and was delivered to individual employees also in proportion to their time of employment with the Branch. In 1992, the workers’ participation was set at 8%, with 100% payable in cash and the equity participation was eliminated from the law. | |||||||||||
In relation to the issuance of “labor shares” by the Branch in Peru, the Branch is a defendant in the following lawsuits: | |||||||||||
1) | Mr. Garcia Ataucuri seeks delivery, to himself and each of the approximately 900 former employees of the Peruvian Branch, of the 3,876,380,679.65 old soles or 38,763,806.80 “labor shares” (acciones laborales), as required by Decree Law 22333 (a former profit sharing law), to be issued proportionally to each former employee in accordance with the time of employment of such employee with SCC’s Branch in Peru, plus dividends on such shares. The 38,763,806.80 labor shares sought in the complaint, with a face value of 100.00 old soles each, represent 100% of the labor shares issued by the Branch during the 1970s until 1979 for all of its employees during that period. The plaintiffs do not represent 100% of the Branch´s eligible employees during that period. | ||||||||||
It should be noted that the lawsuit refers to a prior Peruvian currency called “sol de oro” or old soles, which was later changed to the “inti”, and then into today´s “nuevo sol.” Due to a past period of high inflation between 1985 and 1990, one billion of old soles is equivalent to today’s one nuevo sol. | |||||||||||
After lengthy proceedings before the civil courts in Peru on September 19, 2001, on appeal by the Branch, the Peruvian Supreme Court annulled the proceedings noting that the civil courts lacked jurisdiction and that the matter had to be decided by a labor court (the “2000 appeal”). | |||||||||||
In October 2007, in a separate proceeding initiated by the plaintiffs, the Peruvian Constitutional Court nullified the September 19, 2001 Peruvian Supreme Court decision and ordered the Supreme Court to decide again on the merits of the case accepting or denying the 2000 appeal. | |||||||||||
In May 2009, the Supreme Court rejected the 2000 appeal of the Branch affirming the adverse decision of the appellate civil court and lower civil court. While the Supreme Court has ordered SCC’s Peruvian Branch to deliver the labor shares and dividends, it has clearly stated that SCC’s Peruvian Branch may prove, by all legal means, its assertion that the labor shares and dividends were distributed to the former employees in accordance with the profit sharing law then in effect, an assertion which SCC’s Peruvian Branch continues to make. None of the court decisions state the manner by which the Branch must comply with the delivery of such labor shares or make a liquidation of the amount to be paid for past dividends and interest, if any. | |||||||||||
On June 9, 2009, SCC’s Peruvian Branch filed a proceeding of relief before a civil court in Peru seeking the nullity of the 2009 Supreme Court decision and, in a separate proceeding, a request for a precautionary measure. The civil court rendered a favorable decision on the nullity and the precautionary measure, suspending the enforcement of the Supreme Court decision, for the reasons indicated above and other reasons. In February 2012, the Branch was notified that the civil court had reversed its prior decisions. On appeal by the Peruvian Branch the Superior Court affirmed the lower court’s decisions regarding the nullity of the 2009 Supreme Court decision and the precautionary measure. As a result, the nullity of the precautionary measure became final and is not appealable. However, the nullity of the 2009 Supreme Court decision was appealed by the Branch before the Constitutional Court. On April 10, 2014, the Constitutional Court denied the Company’s appeal and affirmed the lower court’s decision. In view of this, SCC’s Peruvian Branch continues to analyze the manner in which the competent lower court will enforce the Supreme Court’s decision and its financial impact. | |||||||||||
2) | In addition, there are filed against SCC’s Branch the following lawsuits, involving approximately 800 plaintiffs, which seek the same number of labor shares as in the Garcia Ataucuri case, plus interest, labor shares resulting from capital increases and dividends: Armando Cornejo Flores and others v. SCC’s Peruvian Branch (filed May 10, 2006); Alejandro Zapata Mamani and others v. SCC’s Peruvian Branch (filed June 27, 2008); Edgardo Garcia Ataucuri, in representation of 216 of SCC’s Peruvian Branch former workers, v. SCC’s Peruvian Branch (filed May 2011); Juan Guillermo Oporto Carpio v. SCC’s Peruvian Branch (filed August 2011); Rene Mercado Caballero v. SCC’s Peruvian Branch (filed November 2011); Enrique Salazar Alvarez and others v. SCC’s Peruvian Branch (filed December 2011); Jesus Mamani Chura and others v. SCC’s Peruvian Branch (filed March 2012); Armando Cornejo Flores, in representation of 37 of SCC’s Peruvian Branch former workers v. SCC’s Peruvian Branch (filed March 2012), Porfirio Ochochoque Mamani and others v. SCC’s Peruvian Branch (filed July 2012); Alfonso Claudio Flores Jimenez and others v. SCC’s Peruvian Branch (filed July 2013) and Micaela Laura Alvarez de Vargas and others v. SCC’s Peruvian Branch (filed August 2013). SCC’s Peruvian Branch has answered the complaints and denied the validity of the claims. | ||||||||||
SCC’s Peruvian Branch asserts that the labor shares were distributed to the former employees in accordance with the profit sharing law then in effect. The Peruvian Branch has not made a provision for these lawsuits because it believes that it has meritorious defenses to the claims asserted in the complaints. Additionally, the amount of this contingency cannot be reasonably estimated by management at this time. | |||||||||||
The “Virgen Maria” Mining Concessions of the Tia Maria Mining Project | |||||||||||
The Tia Maria project includes various mining concessions, totaling 32,989.64 hectares. One of the concessions is the “Virgen Maria” mining concession totaling 943.72 hectares or 2.9% of the total mining concessions. | |||||||||||
Related to the “Virgen Maria” mining concessions, the Company is party to the following lawsuits: | |||||||||||
a) | Exploraciones de Concesiones Metalicas S.A.C. (“Excomet”): In August 2009, a lawsuit was filed against SCC’s Branch by the former stockholders of Excomet. The plaintiffs allege that the acquisition of Excomet’s shares by the Branch is null and void because the $2 million purchase price paid by the Branch for the shares of Excomet was not fairly negotiated by the plaintiffs and the Branch. In 2005, the Branch acquired the shares of Excomet after lengthy negotiations with the plaintiffs, and after the plaintiffs, which were all the stockholders of Excomet, approved the transaction in a general stockholders’ meeting. Excomet was at the time owner of the “Virgen Maria” mining concession. In October 2011, the civil court dismissed the case on the grounds that the claim had been barred by the statute of limitations. On appeal by the plaintiffs, the superior court reversed the lower court’s decision and remanded it to the lower court for further proceedings. As of December 31, 2014, the case remains pending resolution without further developments. | ||||||||||
b) | Sociedad Minera de Responsabilidad Limitada Virgen Maria de Arequipa (SMRL Virgen Maria): In August 2010, a lawsuit was filed against SCC’s Branch and others by SMRL Virgen Maria, a company which until July 2003 owned the mining concession Virgen Maria. SMRL Virgen Maria sold this mining concession in July 2003 to Excomet (see a) above). The plaintiff alleges that the sale of the mining concession Virgen Maria to Excomet is null and void because the persons who attended the shareholders’ meeting of SMRL Virgen Maria, at which the purchase was agreed upon, were not the real owners of the shares. The plaintiff is also pursuing the nullity of all the subsequent acts regarding the mining property (acquisition of the shares of Excomet by SCC’s Branch, noted above, and the sale of this concession to SCC’s Branch by Excomet). In October 2011, the civil court dismissed the case on the grounds that the claim had been barred by the statute of limitations. Upon appeal by the plaintiffs, the superior court remanded the proceedings to the lower court, ordering the issuance of a new decision. On June 25, 2013, the lower court dismissed the case due to procedural defects. Upon appeal by the plaintiff, on December 2, 2013, the Superior Court reversed the lower court’s decision due to procedural defects and ordered the issuance of a new resolution. In July 2014, once again the lower court dismissed the case on the grounds that the claim had barred by the statute of limitations. The plaintiff appealed this resolution before the Superior Court. As of December 31, 2014, the case remains pending resolution without further developments. | ||||||||||
c) | Omar Nunez Melgar: In May 2011, Mr. Omar Nunez Melgar commenced a lawsuit against the Peruvian Mining and Metallurgical Institute and MINEM challenging the denial of his request of a new mining concession that conflicted with SCC’s Branch’s Virgen Maria mining concession. SCC’s Branch has been made a party to the proceedings as the owner of the Virgen Maria concession. SCC’s Branch has answered the complaint and denied the validity of the claim. As of December 31, 2014, the case remains pending resolution without further developments. | ||||||||||
The Company asserts that the lawsuits are without merit and is vigorously defending against these lawsuits. | |||||||||||
Special Regional Pasto Grande Project (“Pasto Grande Project”) | |||||||||||
In the last quarter of 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 tailing dams also with proper governmental authorization, since 1995. SCC’s Peruvian Branch asserts that the lawsuit is without merit and is vigorously defending against the lawsuit. Upon a motion filed by the Peruvian Branch, the lower court has included the MINEM as a defendant in this lawsuit. MINEM has answered the complaint and denied the validity of the claim. As of December 31, 2014, the case remains pending resolution without further developments. | |||||||||||
Labor matters: | |||||||||||
Peruvian operations: Approximately 69% of the Company’s 4,524 Peruvian employees were unionized at December 31, 2014. There are seven separate unions, three of them at each major production area that represent the majority of the Company´s workers; and four smaller unions that represent the balance of workers. The Company conducted negotiations with the unions whose collective bargaining agreements expired in 2012. In 2013, the Company signed three-year agreements with all the unions. The agreements included, among other things, annual salary increases of 6.5%, 5% and 5% for each of the three years. | |||||||||||
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”) led by Napoleon Gomez Urrutia to other less politicized unions. | |||||||||||
However, the workers of the San Martin and Taxco mines, who are still under the National Mining Union, have been on strike since July 2007. On December 10, 2009, a federal court confirmed the legality of the San Martin strike. In order to recover the control of the San Martin mine and resume operations, the Company filed a court petition on January 27, 2011 requesting that the court, among other things, define the termination payment for each unionized worker. The court denied the petition alleging that, according to federal labor law, the union was the only legitimate party to file such petition. On appeal by the Company, on May 13, 2011, the Mexican federal tribunal accepted the petition. In July 2011, the National Mining Union appealed the favorable court decision before the Supreme Court. On November 7, 2012, the Supreme Court affirmed the decision of the federal tribunal. The Company filed a new proceeding before the labor court on the basis of the Supreme Court decision, which recognized the right of the labor court to define responsibility for the strike and the termination payment for each unionized worker. A favorable decision of the labor court in this new proceeding would have the effect of terminating the protracted strike at San Martin. As of December 31, 2014, the case remains pending resolution without further developments. | |||||||||||
In the case of the Taxco mine, following the workers refusal to allow exploration of new reserves, the Company commenced litigation seeking to terminate the labor relationship with workers of the Taxco mine (including the related collective bargaining agreement). On September 1, 2010, the federal labor court issued a ruling approving the termination of the collective bargaining agreement and all the individual labor contracts of the workers affiliated with the Mexican mining union at the Taxco mine. The mining union appealed the labor court ruling before a federal court. In September 2011, the federal court accepted the union’s appeal and requested that the federal labor court review the procedure. After several legal proceedings on January 25, 2013, the Company filed a new proceeding before the labor court. On June 16, 2014, the labor court denied the petition of the Company. The resolution issued by the labor court was challenged by the Company before a federal court. Considering the above decision of the Supreme Court, there could be grounds for a favorable decision to end the protracted strike at the Taxco Unit. As of December 31, 2014, the resolution of this case remains pending. | |||||||||||
It is expected that operations at these mines will remain suspended until these labor issues are resolved. | |||||||||||
In view of these lengthy strikes, the Company has reviewed the carrying value of the San Martin and Taxco mines to ascertain whether impairment exists. The Company concluded that there is a non-material impairment of the assets located at these mines. | |||||||||||
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: | |||||||||||
The EIA for the Tia Maria project was approved by MINEM in 2014. The Company expects to receive authorization to move forward with the project’s construction phase in the first quarter of 2015. The project budget is $1.4 billion, of which $353.6 million has been expended through 2014. When completed, Tia Maria is expected to produce 120,000 tons of copper per year. | |||||||||||
In connection with the Tia Maria project, in 2014 the Company established a S/.100 million fund (approximately $33 million) for the benefit of social and infrastructure improvements in the neighboring communities to Tia Maria. Through December 31, 2014 S/.0.7 million have been expended on improvement projects. | |||||||||||
Toquepala Concentrator Expansion: | |||||||||||
The EIA for the Toquepala concentrator expansion was approved by MINEM in December 2014. The Company expects to receive authorization to move forward with the construction phase in second quarter of 2015. The project budget is $1.2 billion, of which $346.0 million has been expended through 2014. When completed, this expansion project is expected to increase annual production capacity by 100,000 tons of copper and 3,100 tons of molybdenum. | |||||||||||
In connection with this project, 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 $148.9 million), of which S/. 45.0 million (approximately $15.1 million), has been expended through 2014. | |||||||||||
Power purchase agreements | |||||||||||
· | Enersur: In 1997, SCC signed a power purchase agreement with an independent power company, Enersur S.A. under which SCC agreed to purchase all of its power needs for its current Peruvian operations from Enersur for twenty years, through April 2017. | ||||||||||
· | Electroperu S.A.: In June 2014, the Company signed a power purchase agreement for 120 megawatt (“MW”) with the state company Electroperu S.A., under which Electroperu S.A. will supply energy for the Peruvian operations for twenty years starting on April 17, 2017 and ending on April 30, 2037. | ||||||||||
· | Kallpa Generacion S.A. (“Kallpa”): In July 2014, the Company signed 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. | ||||||||||
Mexican operations | |||||||||||
Power purchase agreement - MGE | |||||||||||
MGE, a subsidiary of Grupo Mexico, has completed the construction of the two power plants in Mexico designed to supply power to some of the Company’s Mexican operations. It is expected that MGE will supply approximately 12% of its power output to third-party energy users. These plants are natural gas-fired combined cycle power generating units, with a net total capacity of 516.2 megawatts. In 2012, the Company signed a power purchase agreement with MGE through 2032. The first plant was completed in June 2013 and the second in the second quarter of 2014. MGE already has the authorization for the interconnection with the Mexican electrical system to start operations at the second plant. The first plant began to supply power to the Company in December 2013, and the second plant is ready to supply once the demand in the mine requires it. | |||||||||||
For an estimate of the Company’s contractual obligations for power purchases, please see, “Contractual Obligations” under Item 7. Management Discussion and Analysis of Financial Condition and Results of Operations. | |||||||||||
Commitment for Capital projects | |||||||||||
As of December 31, 2014, the Company has committed approximately $401.5 million for the development of its capital investment projects at its Mexican operations. | |||||||||||
Tax contingency matters: | |||||||||||
Tax contingencies are provided for under ASC 740-10-50-15 Uncertain tax position (see Note 7 “Income taxes”). | |||||||||||
STOCKHOLDERS_EQUITY
STOCKHOLDERS' EQUITY: | 12 Months Ended | |||||||||||||||
Dec. 31, 2014 | ||||||||||||||||
STOCKHOLDERS' EQUITY: | ||||||||||||||||
STOCKHOLDERS' EQUITY: | ||||||||||||||||
NOTE 14-STOCKHOLDERS’ EQUITY | ||||||||||||||||
Delaware Court Decision Related to SCC Shareholder Derivative Lawsuit: | ||||||||||||||||
On October 9, 2012 the Company received from AMC, its majority shareholder, $2,108.2 million in satisfaction of the judgment issued pursuant to the decision of the Court of Chancery of Delaware, which concluded that the Company paid an excessive price to AMC in the 2005 merger between the Company and Minera Mexico, S.A. de C.V. From the aforementioned sum received from AMC, the Company paid $316.2 million of legal fees and expenses to the plaintiff’s attorneys to satisfy the court ordered award of attorneys’ fees and expenses. The effect of this award was recorded in the Company’s 2012 results. The $2,108.2 million awarded to the Company was included in the capital accounts (additional paid-in capital) on the balance sheet. Additionally, the Company recorded an operating expense of $316.2 million in its 2012 results for the legal fees related to this award. | ||||||||||||||||
Treasury Stock: | ||||||||||||||||
Activity in treasury stock in the years 2014 and 2013 was as follows (in millions): | ||||||||||||||||
2014 | 2013 | |||||||||||||||
Southern Copper common shares | ||||||||||||||||
Balance as of January 1, | $ | 1,011.00 | $ | 729.8 | ||||||||||||
Purchase of shares | 682.8 | 281.4 | ||||||||||||||
Used for corporate purposes | (0.3 | ) | (0.2 | ) | ||||||||||||
Balance as of December 31, | 1,693.50 | 1,011.00 | ||||||||||||||
Parent Company (Grupo Mexico) common shares | ||||||||||||||||
Balance as of January 1, | 205.6 | 189 | ||||||||||||||
Other activity, including dividend, interest and currency translation effect | 1.6 | 16.6 | ||||||||||||||
Balance as of December 31, | 207.2 | 205.6 | ||||||||||||||
Treasury stock balance as of December 31, | $ | 1,900.70 | $ | 1,216.60 | ||||||||||||
SCC shares of common stock in treasury: | ||||||||||||||||
At December 31, 2014 and 2013, treasury stock holds 71,977,964 shares and 49,278,536 shares of SCC’s common stock with a cost of $1,693.5 million and $1,011.0 million, respectively. The shares of SCC’s common stock held in treasury are used for Director’s stock award plans and available for general corporate purposes. | ||||||||||||||||
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 $3 billion. Pursuant to this program, the Company purchased common stock as shown in the table below. These shares are available for general corporate purposes. The Company may purchase additional shares of its common stock from time to time, based on market conditions and other factors. This repurchase program has no expiration date and may be modified or discontinued at any time. | ||||||||||||||||
Maximum Number | ||||||||||||||||
Total Number of | of Shares that May | |||||||||||||||
Total Number of | Average Price | Shares Purchased as | Yet Be Purchased | Total Cost | ||||||||||||
Period | Shares | Paid per | Part of Publicly | Under the Plan | ($ in | |||||||||||
From | To | Purchased | Share | Announced Plan | @ $28.20 (1) | millions) | ||||||||||
2008 | 2011 | 42,472,150 | $ | 17.20 | 42,472,150 | $ | 730.8 | |||||||||
2012:00:00 | 4,442,336 | 33.17 | 46,914,486 | 147.3 | ||||||||||||
2013:00:00 | 10,245,000 | 27.47 | 57,159,486 | 281.4 | ||||||||||||
2014:00:00 | ||||||||||||||||
1/1/14 | 1/31/14 | 1,768,000 | 28.06 | 58,927,486 | 49.6 | |||||||||||
3/1/14 | 3/21/14 | 106,079 | 27.04 | 59,033,565 | 2.9 | |||||||||||
Total first quarter | 1,874,079 | 28.00 | 52.5 | |||||||||||||
6/1/14 | 6/30/14 | 450,532 | 28.92 | 59,484,097 | 13.0 | |||||||||||
Total second quarter | 450,532 | 28.92 | 13.0 | |||||||||||||
7/1/14 | 7/31/14 | 724,516 | 33.04 | 60,208,613 | 23.9 | |||||||||||
8/1/14 | 8/31/14 | 4,926,534 | 32.09 | 65,135,147 | 158.1 | |||||||||||
9/1/14 | 9/30/14 | 4,498,263 | 31.44 | 69,633,410 | 141.4 | |||||||||||
Total third quarter | 10,149,313 | 31.87 | 323.4 | |||||||||||||
10/1/14 | 10/31/14 | 5,821,213 | 28.86 | 75,454,623 | 168.0 | |||||||||||
11/1/14 | 11/30/14 | 1,286,767 | 29.50 | 76,741,390 | 38.0 | |||||||||||
12/1/14 | 12/31/14 | 3,129,524 | 28.08 | 79,870,914 | 87.9 | |||||||||||
Total fourth quarter | 10,237,504 | 28.70 | 293.9 | |||||||||||||
Total purchased | 79,870,914 | $ | 23.07 | 5,593,347 | -2 | $ | 1,842.3 | |||||||||
(1) NYSE closing price of SCC common shares at December 31, 2014. | ||||||||||||||||
(2) Maximum number of shares will increase by approximately 35.5 million shares, with the Board authorized increase of $1 billion approved on January 29, 2015. | ||||||||||||||||
As a result of the repurchase of shares of SCC’s common stock, Grupo Mexico’s direct and indirect ownership was 84.6% as of December 31, 2014 and 82.3% at December 31, 2013. | ||||||||||||||||
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 will receive 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. The fair value of the award is measured each year at the date of the grant. | ||||||||||||||||
The activity of this plan for the years ended December 31, 2014 and 2013 was as follows: | ||||||||||||||||
2014 | 2013 | |||||||||||||||
Total SCC shares reserved for the plan | 600,000 | 600,000 | ||||||||||||||
Total shares granted at January 1, | (297,600 | ) | (285,600 | ) | ||||||||||||
Granted in the period | (12,000 | ) | (12,000 | ) | ||||||||||||
Total shares granted at December 31, | (309,600 | ) | (297,600 | ) | ||||||||||||
Remaining shares reserved | 290,400 | 302,400 | ||||||||||||||
Parent Company common shares: | ||||||||||||||||
At December 31, 2014 and 2013, there were in treasury 89,950,310 and 75,262,919 of Grupo Mexico’s common shares, respectively. | ||||||||||||||||
Employee Stock Purchase Plan: | ||||||||||||||||
2007 Plan: In January 2007, the Company offered to eligible employees a stock purchase plan (the “Employee Stock Purchase Plan”) through a trust that acquires shares of Grupo Mexico stock for sale to its employees, employees of subsidiaries and certain affiliated companies. The purchase price is established at the approximate fair market value on the grant date. 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 one share for every ten shares purchased by the employee. | ||||||||||||||||
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/termination 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 years ended December 31, 2014, 2013 and 2012 and the remaining balance of the unrecognized compensation expense under the Employee Stock Purchase Plan, were as follows: | ||||||||||||||||
2014 | 2013 | 2012 | ||||||||||||||
Stock based compensation expense | $ | 2.1 | $ | 2.1 | $ | 2.1 | ||||||||||
Unrecognized compensation expense | — | $ | 2.1 | $ | 4.2 | |||||||||||
The following table presents the stock award activity of the Employee Stock Purchase Plan for the years ended December 31, 2014 and 2013: | ||||||||||||||||
Shares | Unit Weighted Average | |||||||||||||||
Grant Date Fair Value | ||||||||||||||||
Outstanding shares at January 1, 2014 | 4,449,599 | $ | 1.16 | |||||||||||||
Granted | — | — | ||||||||||||||
Exercised | (150,987 | ) | 1.16 | |||||||||||||
Forfeited | — | 1.16 | ||||||||||||||
Outstanding shares at December 31, 2014 | 4,298,612 | 1.16 | ||||||||||||||
Outstanding shares at January 1, 2013 | 6,955,572 | $ | 1.16 | |||||||||||||
Granted | — | — | ||||||||||||||
Exercised | (2,474,814 | ) | 1.16 | |||||||||||||
Forfeited | (31,159 | ) | 1.16 | |||||||||||||
Outstanding shares at December 31, 2013 | 4,449,599 | 1.16 | ||||||||||||||
2010 Plan: During 2010, 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, employees of subsidiaries, and certain affiliated companies. The purchase price was established at 26.51 Mexican pesos (approximately $2.05) for the initial subscription. The terms of the New Employee Stock Purchase Plan are similar to the terms of the Employee Stock Purchase Plan. | ||||||||||||||||
The stock based compensation expense for the years ended December 31, 2014, 2013 and 2012 and the remaining balance of the unrecognized compensation expense under the New Employee Stock Purchase Plan, were as follows: | ||||||||||||||||
2014 | 2013 | 2012 | ||||||||||||||
Stock based compensation expense | $ | 0.6 | $ | 0.6 | $ | 0.6 | ||||||||||
Unrecognized compensation expense | $ | 2.0 | $ | 2.6 | $ | 3.2 | ||||||||||
The unrecognized compensation expense under this plan is expected to be recognized over the remaining four year period. | ||||||||||||||||
The following table presents the stock award activity of the New Employee Stock Purchase Plan for the years ended December 31, 2014 and 2013: | ||||||||||||||||
Shares | Unit Weighted Average | |||||||||||||||
Grant Date Fair Value | ||||||||||||||||
Outstanding shares at January 1, 2014 | 3,012,464 | $ | 2.05 | |||||||||||||
Granted | — | — | ||||||||||||||
Exercised | (724,573 | ) | 2.05 | |||||||||||||
Forfeited | — | — | ||||||||||||||
Outstanding shares at December 31, 2014 | 2,287,891 | 2.05 | ||||||||||||||
Outstanding shares at January 1, 2013 | 2,944,742 | $ | 2.05 | |||||||||||||
Granted | 226,613 | 2.05 | ||||||||||||||
Exercised | (38,098 | ) | 2.05 | |||||||||||||
Forfeited | (120,793 | ) | 2.05 | |||||||||||||
Outstanding shares at December 31, 2013 | 3,012,464 | 2.05 | ||||||||||||||
Executive Stock Purchase Plan: | ||||||||||||||||
Grupo Mexico also offers a stock purchase plan for certain members of its executive management and the executive management of its subsidiaries and certain affiliated companies. Under this plan, participants will receive incentive cash bonuses which are used to purchase shares of Grupo Mexico which are deposited in a trust. | ||||||||||||||||
FAIR_VALUE_MEASUREMENT
FAIR VALUE MEASUREMENT: | 12 Months Ended | |||||||||||||
Dec. 31, 2014 | ||||||||||||||
FAIR VALUE MEASUREMENT: | ||||||||||||||
FAIR VALUE MEASUREMENT | ||||||||||||||
NOTE 15- 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 consolidated balance sheet as of December 31, 2014 (in millions): | ||||||||||||||
Balance at December 31, 2014 | ||||||||||||||
Carrying Value | Fair Value | |||||||||||||
Liabilities: | ||||||||||||||
Long-term debt | $ | 4,206.0 | $ | 4,369.6 | ||||||||||
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 case of the Yankee bonds and the 6.375% senior unsecured notes due date July 2015 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 of December 31, 2014 and 2013, as follows (in millions): | ||||||||||||||
Fair Value at Measurement Date Using: | ||||||||||||||
Description | Fair Value | Quoted prices in | Significant | Significant | ||||||||||
as of | active markets for | other | unobservable | |||||||||||
December | identical assets | observable | inputs | |||||||||||
31, 2014 | (Level 1) | inputs | (Level 3) | |||||||||||
(Level 2) | ||||||||||||||
Assets: | ||||||||||||||
Short term investment: | ||||||||||||||
- Trading securities | $ | 333.7 | $ | 333.7 | — | $ | — | |||||||
- Available-for-sale debt securities: | ||||||||||||||
Corporate bonds | 0.3 | — | $ | 0.3 | — | |||||||||
Asset backed securities | — | — | — | — | ||||||||||
Mortgage backed securities | 4.6 | — | 4.6 | — | ||||||||||
Accounts receivable: | ||||||||||||||
- Embedded derivatives - Not classified as hedges: | ||||||||||||||
Provisionally priced sales: | ||||||||||||||
Copper | 202.2 | 202.2 | — | — | ||||||||||
Molybdenum | 105.5 | 105.5 | — | — | ||||||||||
Total | $ | 646.3 | $ | 641.4 | $ | 4.9 | $ | — | ||||||
Fair Value at Measurement Date Using: | ||||||||||||||
Description | Fair Value | Quoted prices in | Significant | Significant | ||||||||||
as of | active markets for | other | unobservable | |||||||||||
December | identical assets | observable | inputs | |||||||||||
31, 2013 | (Level 1) | inputs | (Level 3) | |||||||||||
(Level 2) | ||||||||||||||
Assets: | ||||||||||||||
Short term investment: | ||||||||||||||
- Trading securities | $ | 202.6 | $ | 202.6 | — | $ | — | |||||||
- Available-for-sale debt securities: | ||||||||||||||
Corporate bonds | 0.4 | — | $ | 0.4 | — | |||||||||
Asset backed securities | 0.1 | — | 0.1 | — | ||||||||||
Mortgage backed securities | 5.2 | — | 5.2 | — | ||||||||||
Accounts receivable: | ||||||||||||||
- Embedded derivatives - Not classified as hedges: | ||||||||||||||
Provisionally priced sales: | ||||||||||||||
Copper | 53.9 | 53.9 | — | — | ||||||||||
Molybdenum | 100.2 | 100.2 | — | — | ||||||||||
Total | $ | 362.4 | $ | 356.7 | $ | 5.7 | $ | — | ||||||
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. | ||||||||||||||
CONCENTRATION_OF_RISK
CONCENTRATION OF RISK: | 12 Months Ended | ||||||||||
Dec. 31, 2014 | |||||||||||
CONCENTRATION OF RISK: | |||||||||||
CONCENTRATION OF RISK: | |||||||||||
NOTE 16-CONCENTRATION OF RISK: | |||||||||||
The Company operates four open-pit copper mines, five underground poly-metallic mines, two smelters and eight refineries in Peru and Mexico and substantially all of its assets are located in these countries. There can be no assurances that the Company’s operations and assets that are subject to the jurisdiction of the governments of Peru and Mexico will not be adversely affected by future actions of such governments. Much of the Company’s products are exported from Peru and Mexico to customers principally in the United States, Europe, Asia and South America. | |||||||||||
Financial instruments, which potentially subject the Company to a concentration of credit risk, consist primarily of cash and cash equivalents, short-term investments and trade accounts receivable. | |||||||||||
The Company invests or maintains available cash with various banks, principally in the United States, Mexico, Europe and Peru, or in commercial papers of highly-rated companies. As part of its cash management process, the Company regularly monitors the relative credit standing of these institutions. At December 31, 2014, SCC had invested its cash and cash equivalents and short-term investments as follows: | |||||||||||
% of total | % in one institution | ||||||||||
Country | $ in million | cash (1) | of country | of total cash | |||||||
United States | $ | 210.8 | 30.0 | % | 47.1 | % | 14.1 | % | |||
Switzerland | 389.6 | 55.5 | % | 100.0 | % | 55.5 | % | ||||
Peru | 83.9 | 11.9 | % | 79.7 | % | 9.5 | % | ||||
Mexico | 18.3 | 2.6 | % | 62.4 | % | 1.6 | % | ||||
Total cash and short-term investment | $ | 702.6 | 100.0 | % | |||||||
-1 | 97.2% of the Company’s cash is in U.S. dollars. | ||||||||||
During the normal course of business, the Company provides credit to its customers. Although the receivables resulting from these transactions are not collateralized, the Company has not experienced significant problems with the collection of receivables. | |||||||||||
The Company is exposed to credit loss in cases where the financial institutions with which it has entered into derivative transactions (commodity, foreign exchange and currency/interest rate swaps) are unable to pay when they owe funds as a result of protection agreements with them. To minimize the risk of such losses, the Company only uses highly-rated financial institutions that meet certain requirements. The Company also periodically reviews the creditworthiness of these institutions to ensure that they are maintaining their ratings. The Company does not anticipate that any of the financial institutions will default on their obligations. | |||||||||||
The Company’s largest customers as percentage of accounts receivable and total sales were as follows: | |||||||||||
2014 | 2013 | 2012 | |||||||||
Accounts receivable trade as of December 31, | |||||||||||
Five largest customers | 31.2 | % | 37.1 | % | 40.0 | % | |||||
Largest customer | 8.0 | % | 12.2 | % | 10.4 | % | |||||
Total sales in year | |||||||||||
Five largest customers | 34.3 | % | 28.7 | % | 28.8 | % | |||||
Largest customer | 8.2 | % | 8.4 | % | 7.4 | % | |||||
RELATED_PARTY_TRANSACTIONS
RELATED PARTY TRANSACTIONS: | 12 Months Ended | ||||||||||
Dec. 31, 2014 | |||||||||||
RELATED PARTY TRANSACTIONS: | |||||||||||
RELATED PARTY TRANSACTIONS: | |||||||||||
NOTE 17-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, 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): | |||||||||||
As of December 31, | |||||||||||
2014 | 2013 | ||||||||||
Related parties receivable current: | |||||||||||
Grupo Mexico | $ | 0.7 | $ | 0.8 | |||||||
Mexico Generadora de Energia S. de R.L. (“MGE”) | 31.9 | 18.8 | |||||||||
Compania Perforadora Mexico S.A.P.I. de C.V. and affiliates | 0.2 | 0.7 | |||||||||
Compania Minera Coimolache S.A. | — | 17.2 | |||||||||
Mexico Proyectos y Desarrollos, S.A. de C.V. and affiliates | — | 0.6 | |||||||||
$ | 32.8 | $ | 38.1 | ||||||||
Related parties receivable non-current: | |||||||||||
MGE | $ | 161.2 | $ | 161.2 | |||||||
Related parties payable: | |||||||||||
Grupo Mexico | $ | 2.8 | $ | 3.3 | |||||||
MGE | 45.2 | 14.4 | |||||||||
Asarco LLC | 13.8 | 6.2 | |||||||||
Higher Technology S.A.C. | 0.2 | 0.1 | |||||||||
Breaker, S.A. de C.V. and affiliates (“Breaker”) | 0.7 | 0.3 | |||||||||
Sempertrans and affiliates | — | 0.1 | |||||||||
Mexico Transportes Aereos S.A. de C.V. (“Mextransport”) | 1.3 | 0.6 | |||||||||
Mexico Proyectos y Desarrollos S.A. de C.V. and affiliates | 1.7 | — | |||||||||
Ferrocarril Mexicano S.A. de C.V. | 1.8 | 3.3 | |||||||||
Eolica El Retiro, S.A.P.I. de C.V. | 1.6 | — | |||||||||
$ | 69.1 | $ | 28.3 | ||||||||
Purchase and sale activity: | |||||||||||
Grupo Mexico and affiliates: | |||||||||||
The following table summarize the purchase and sale activities with Grupo Mexico and its affiliates in 2014, 2013 and 2012 (in millions): | |||||||||||
2014 | 2013 | 2012 | |||||||||
Purchase activity | |||||||||||
Grupo Mexico | $ | 13.9 | $ | 13.8 | $ | 13.9 | |||||
Asarco LLC | 47.9 | 98.0 | 58.6 | ||||||||
Ferrocarril Mexicano, S.A. de C.V. | 22.7 | 19.7 | 13.9 | ||||||||
Mexico Proyectos y Desarrollos S.A. de C.V. and affiliates | 61.4 | 54.4 | 49.5 | ||||||||
MGE | 178.4 | 14.4 | — | ||||||||
Compania Perforadora Mexico S.A.P.I. de C.V. and affiliates | 3.1 | 6.1 | 2.2 | ||||||||
Eolica El Retiro, S.A.P.I. de C.V. | 7.6 | — | — | ||||||||
Total purchases | $ | 335.0 | $ | 206.4 | $ | 138.1 | |||||
Sales activity | |||||||||||
Asarco LLC | $ | 24.7 | $ | 88.7 | $ | 23.5 | |||||
Mexico Proyectos y Desarrollos S.A. de C.V. and affiliates | 0.8 | 0.8 | 0.5 | ||||||||
Compania Perforadora Mexico S.A.P.I. de C.V. and affiliates | 0.6 | 0.6 | — | ||||||||
MGE | 96.5 | 27.3 | — | ||||||||
Total sales | $ | 122.6 | $ | 117.4 | $ | 24.0 | |||||
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 pays Grupo Mexico for these services and expects to continue these services in the future. | |||||||||||
The Company’s Mexican operations paid fees for freight services provided by Ferrocarril Mexicano, S.A de C.V., for construction services provided by Mexico Proyectos y Desarrollos, S.A. de C.V. and its affiliates, and for drilling services provided by Compania Perforadora Mexico S.A.P.I. de C.V. All of these companies are subsidiaries of Grupo Mexico. | |||||||||||
The Company’s Mexican operations purchased scrap and other residual copper mineral from Asarco, 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, Controladora de Infraestructura Energetica Mexico, S. A. de C. V., an indirect subsidiary of Grupo Mexico, acquired 99.999% of MGE through a capital subscription of 1,928.6 million 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 million to the Company’s Mexican operations partially reducing the total debt. At December 31, 2012, the outstanding balance of $184.0 million was restructured as subordinated debt of MGE with an interest rate of 5.75%. MGE will repay its debt to the Company using a percentage of its profits until such time as the debt is satisfied. At December 31, 2014 the remaining balance of the debt was $161.2 million and was recorded as non-current related party receivable on the consolidated balance sheet. Related to this loan, the Company recorded interest income of $9.4 million and $9.9 million in 2014 and 2013, respectively. | |||||||||||
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 completed construction of its first power plant in June 2013 and the second plant, in the second quarter of 2014. MGE already has the authorization for interconnection with the Mexican electrical system to start operations at the second plant. MGE began supplying power to the Company in December 2013. It is expected that MGE will supply portion of its power output to third-party energy users. See also Note 13 — “Commitments and Contingencies — Other commitments.” | |||||||||||
On August 4, 2014, Mexico Generadora de Energia Eolica S. de R.L. de C.V, an indirect subsidiary of Grupo Mexico, acquired Eolica el Retiro. Eolica el Retiro is a windfarm that has 37 wind turbines. This company started operations in January 2014 and started to sell power to IMMSA and other subsidiaries of Grupo Mexico in the third quarter of 2014. | |||||||||||
The Company sold copper cathodes, rod and anodes, as well as sulfuric acid, silver, gold and lime to Asarco. 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 summarize the purchase and sales activities with other Larrea family companies in 2014, 2013 and 2012 (in millions): | |||||||||||
Mextransport: | 2014 | 2013 | 2012 | ||||||||
Purchase activity | $ | 2.5 | $ | 2.7 | $ | 2.7 | |||||
Sales activity | $ | 0.3 | $ | 0.3 | $ | 0.9 | |||||
The Larrea family controls a majority of the capital stock of Grupo Mexico, and has extensive interests in other businesses, including 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 the lease of office space and air transportation. | |||||||||||
Companies with relationships to SCC executive officers: | |||||||||||
The following table summarize the purchase activities with companies with relationships to SCC executive officers in 2014, 2013 and 2012 (in millions): | |||||||||||
2014 | 2013 | 2012 | |||||||||
Higher Technology S.A.C. | $ | 3.2 | $ | 2.2 | $ | 3.1 | |||||
Servicios y Fabricaciones Mecanicas S.A.C. | 1.3 | 0.4 | 0.2 | ||||||||
Sempertrans | 1.2 | 1.1 | 0.3 | ||||||||
Breaker | 10.1 | 3.9 | 2.3 | ||||||||
Pigoba, S.A. de C.V. | 0.6 | 0.3 | 0.8 | ||||||||
Total purchased | $ | 16.4 | $ | 7.9 | $ | 6.7 | |||||
The Company purchased industrial materials from Higher Technology S.A.C. and paid fees for maintenance services provided by Servicios y Fabricaciones Mecanicas S.A.C. Mr. Carlos Gonzalez, the son of SCC’s Chief Executive Officer, has a proprietary interest in these companies. | |||||||||||
The Company purchased industrial material from Sempertrans and its affiliates, which employ Mr. Alejandro Gonzalez as a sales representative. Also, the Company purchased industrial material from Pigoba, S.A. de C.V., a company in which Mr. Alejandro Gonzalez has a proprietary interest. Mr. Alejandro Gonzalez is the son of SCC’s Chief Executive Officer. | |||||||||||
The Company purchased industrial material and services from Breaker, S.A. de C.V., a company in which Mr. Jorge Gonzalez, son-in-law of SCC’s Chief Executive Officer, has a proprietary interest, and from Breaker Peru S.A.C., a company in which Mr. Jorge Gonzalez, son-in-law and Mr. Carlos Gonzalez, son of SCC’s Chief Executive Officer have a proprietary interest. | |||||||||||
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. To support the cost of the development of Tantahuatay, the Company loaned $56.6 million to Coimolache. The repayment of this loan was completed in August 2014. | |||||||||||
It is anticipated that in the future the Company will enter into similar transactions with these same parties. | |||||||||||
SEGMENT_AND_RELATED_INFORMATIO
SEGMENT AND RELATED INFORMATION: | 12 Months Ended | ||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||
SEGMENT AND RELATED INFORMATION: | |||||||||||||||||
SEGMENT AND RELATED INFORMATION: | |||||||||||||||||
NOTE 18-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. | |||||||||||||||||
Intersegment sales are based on arm´s 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 Company’s sales. The segments identified by the Company are: | |||||||||||||||||
1 | Peruvian operations, which include the Toquepala and Cuajone mine complexes and the smelting and refining plants, including a precious metals plant, industrial railroad and port facilities that service both mines. The Peruvian operations produce copper, with production of by-products of molybdenum, silver and other material. | ||||||||||||||||
2 | Mexican open-pit operations, which include La Caridad and Buenavista mine complexes and the smelting and refining plants, including a precious metals plant and a copper rod plant and support facilities that service both mines. The Mexican open-pit operations produce copper, with production of by-products of molybdenum, silver and other material. | ||||||||||||||||
3 | Mexican underground mining operations, which include five underground mines that produce zinc, copper, silver and gold, a coal mine which produces coal and coke, and a zinc refinery. 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 Company’s Ilo 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 Company’s 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 Company’s 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 Company’s Senior Management Officers 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 rules and must continually deal with a political climate that has a very distinct vision of the mining industry as compared to Mexico. In addition, the collective bargaining agreement contracts are negotiated differently in each of the countries. These key differences result in the Company taking varying decisions with regards to open-pit operations in the two countries. | |||||||||||||||||
The IMMSA segment includes five mines whose minerals are processed in the same refinery. This segment also includes an underground coal mine. Sales of product from this segment are recorded as revenues of the Company’s IMMSA unit. While the Mexican underground mines are subject to a very similar regulatory environment of the Mexican open-pit mines, the nature of the products and processes of two Mexican operations vary distinctly. These differences cause the Company’s Senior Management Officers to take a very different approach when analyzing results and making decisions regarding the two Mexican operations. | |||||||||||||||||
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 Company’s segments is as follows: | |||||||||||||||||
Year Ended December 31, 2014 | |||||||||||||||||
(in millions) | |||||||||||||||||
Mexican | Mexican | Peruvian | Corporate, other | Consolidated | |||||||||||||
Open-pit | IMMSA | Operations | and eliminations | ||||||||||||||
Unit | |||||||||||||||||
Net sales outside of segments | $ | 2,954.20 | $ | 351.7 | $ | 2,481.80 | $ | — | $ | 5,787.70 | |||||||
Intersegment sales | — | 90.4 | — | (90.4 | ) | — | |||||||||||
Cost of sales (exclusive of depreciation, amortization and depletion) | 1,146.60 | 335 | 1,416.60 | (57.7 | ) | 2,840.50 | |||||||||||
Selling, general and administrative | 37.2 | 16.3 | 44.8 | 5.1 | 103.4 | ||||||||||||
Depreciation, amortization and depletion | 225.5 | 33.4 | 198.4 | (12.3 | ) | 445 | |||||||||||
Exploration | 3.8 | 29.5 | 13.6 | 27.7 | 74.6 | ||||||||||||
Environmental reclamation | 91.4 | — | — | — | 91.4 | ||||||||||||
Operating income | $ | 1,449.70 | $ | 27.9 | $ | 808.4 | $ | (53.2 | ) | 2,232.80 | |||||||
Less: | |||||||||||||||||
Interest, net | (123.3 | ) | |||||||||||||||
Other income (expense) | (40.8 | ) | |||||||||||||||
Income taxes | (754.6 | ) | |||||||||||||||
Equity earnings of affiliate | 23.9 | ||||||||||||||||
Non-controlling interest | (5.0 | ) | |||||||||||||||
Net income attributable to SCC | $ | 1,333.00 | |||||||||||||||
Capital expenditures | $ | 1,125.30 | $ | 46.7 | $ | 353.8 | $ | 9 | $ | 1,534.80 | |||||||
Property, net | $ | 4,418.50 | $ | 389 | $ | 2,561.40 | $ | 67.5 | $ | 7,436.40 | |||||||
Total assets | $ | 6,780.40 | $ | 843.5 | $ | 3,417.90 | $ | 510.1 | $ | 11,551.90 | |||||||
Year Ended December 31, 2013 | |||||||||||||||||
(in millions) | |||||||||||||||||
Mexican | Mexican | Peruvian | Corporate, other | Consolidated | |||||||||||||
Open-pit | IMMSA | Operations | and eliminations | ||||||||||||||
Unit | |||||||||||||||||
Net sales outside of segments | $ | 2,976.00 | $ | 362.3 | $ | 2,614.60 | $ | — | $ | 5,952.90 | |||||||
Intersegment sales | — | 96.9 | — | (96.9 | ) | — | |||||||||||
Cost of sales (exclusive of depreciation, amortization and depletion) | 1,308.90 | 320.8 | 1,358.60 | (117.0 | ) | 2,871.30 | |||||||||||
Selling, general and administrative | 35.4 | 15.1 | 49.7 | 2.3 | 102.5 | ||||||||||||
Depreciation, amortization and depletion | 179 | 31 | 177.2 | 8.8 | 396 | ||||||||||||
Exploration | 3.2 | 27.2 | 10.2 | 10.4 | 51 | ||||||||||||
Operating income | $ | 1,449.50 | $ | 65.1 | $ | 1,018.90 | $ | (1.4 | ) | 2,532.10 | |||||||
Less: | |||||||||||||||||
Interest, net | (176.6 | ) | |||||||||||||||
Other income (expense) | 17.1 | ||||||||||||||||
Income taxes | (769.3 | ) | |||||||||||||||
Equity earnings of affiliate | 20.9 | ||||||||||||||||
Non-controlling interest | (5.7 | ) | |||||||||||||||
Net income attributable to SCC | $ | 1,618.50 | |||||||||||||||
Capital expenditures | $ | 1,263.50 | $ | 60.6 | $ | 372.3 | $ | 6.9 | $ | 1,703.30 | |||||||
Property, net | $ | 3,579.90 | $ | 378.2 | $ | 2,451.40 | $ | 66.7 | $ | 6,476.20 | |||||||
Total assets | $ | 6,010.30 | $ | 895.6 | $ | 3,539.30 | $ | 550.8 | $ | 10,996.00 | |||||||
Year Ended December 31, 2012 | |||||||||||||||||
(in millions) | |||||||||||||||||
Mexican | Mexican | Peruvian | Corporate | Total | |||||||||||||
Open-pit | IMMSA Unit | Operations | and other | Consolidated | |||||||||||||
eliminations | |||||||||||||||||
Net sales outside of segments | $ | 3,339.00 | $ | 378 | $ | 2,952.30 | $ | — | $ | 6,669.30 | |||||||
Intersegment sales | 135 | (135.0 | ) | — | |||||||||||||
Cost of sales (exclusive of depreciation, amortization and depletion) | 1,228.20 | 292.4 | 1,380.50 | (131.9 | ) | 2,769.20 | |||||||||||
Selling, general and administrative | 34.4 | 14.6 | 48.5 | 3.8 | 101.3 | ||||||||||||
Depreciation, amortization and depletion | 145.6 | 25.2 | 160.3 | (5.3 | ) | 325.8 | |||||||||||
Exploration | 5.2 | 28.2 | 9.5 | 5 | 47.9 | ||||||||||||
Legal fees related to the SCC shareholder derivative lawsuit | — | — | — | 316.2 | 316.2 | ||||||||||||
Operating income | $ | 1,925.60 | $ | 152.6 | $ | 1,353.50 | $ | (322.8 | ) | 3,108.90 | |||||||
Less: | |||||||||||||||||
Interest, net | (157.2 | ) | |||||||||||||||
Other income (expense) | 21.8 | ||||||||||||||||
Income taxes | (1,080.9 | ) | |||||||||||||||
Equity earnings of affiliate | 48.7 | ||||||||||||||||
Non-controlling interest | (6.7 | ) | |||||||||||||||
Income attributable to SCC | $ | 1,934.60 | |||||||||||||||
Capital expenditures | $ | 822.8 | $ | 56 | $ | 257.9 | $ | (84.8 | ) | $ | 1,051.90 | ||||||
Property, net | $ | 2,444.90 | $ | 350.9 | $ | 2,231.40 | $ | 129.5 | $ | 5,156.70 | |||||||
Total assets | $ | 4,241.40 | $ | 873.1 | $ | 3,353.00 | $ | 1,916.20 | $ | 10,383.70 | |||||||
SALES VALUE PER SEGMENT: | |||||||||||||||||
Year Ended December 31, 2014 | |||||||||||||||||
(in millions) | Mexican | Mexican | Peruvian | Corporate, other | Total | ||||||||||||
Open-pit | IMMSA Unit | Operations | & Eliminations | Consolidated | |||||||||||||
Copper | $ | 2,380.10 | $ | 46.4 | $ | 2,137.90 | $ | (46.4 | ) | $ | 4,518.00 | ||||||
Molybdenum | 299.8 | — | 207.1 | — | 506.9 | ||||||||||||
Silver | 146.7 | 88 | 71.6 | (33.0 | ) | 273.3 | |||||||||||
Zinc | — | 209.8 | — | — | 209.8 | ||||||||||||
Other | 127.6 | 97.9 | 65.2 | (11.0 | ) | 279.7 | |||||||||||
Total | $ | 2,954.20 | $ | 442.1 | $ | 2,481.80 | $ | (90.4 | ) | $ | 5,787.70 | ||||||
Year Ended December 31, 2013 | |||||||||||||||||
(in millions) | Mexican | Mexican | Peruvian | Corporate, other | Total | ||||||||||||
Open-pit | IMMSA Unit | Operations | & Eliminations | Consolidated | |||||||||||||
Copper | $ | 2,365.50 | $ | 48.4 | $ | 2,289.30 | $ | (48.4 | ) | $ | 4,654.80 | ||||||
Molybdenum | 241.3 | — | 147.9 | — | 389.2 | ||||||||||||
Silver | 242.7 | 110 | 79.7 | (38.7 | ) | 393.7 | |||||||||||
Zinc | — | 200.9 | — | — | 200.9 | ||||||||||||
Other | 126.5 | 99.9 | 97.7 | (9.8 | ) | 314.3 | |||||||||||
Total | $ | 2,976.00 | $ | 459.2 | $ | 2,614.60 | $ | (96.9 | ) | $ | 5,952.90 | ||||||
Year Ended December 31, 2012 | |||||||||||||||||
(in millions) | Mexican | Mexican | Peruvian | Corporate, other | Total | ||||||||||||
Open-pit | IMMSA Unit | Operations | & Eliminations | Consolidated | |||||||||||||
Copper | $ | 2,604.90 | $ | 62.3 | $ | 2,532.00 | $ | (62.3 | ) | $ | 5,136.90 | ||||||
Molybdenum | 271.3 | — | 179.2 | — | 450.5 | ||||||||||||
Silver | 280.5 | 161.5 | 113.6 | (60.3 | ) | 495.3 | |||||||||||
Zinc | — | 195.9 | — | — | 195.9 | ||||||||||||
Other | 182.3 | 93.3 | 127.5 | (12.4 | ) | 390.7 | |||||||||||
Total | $ | 3,339.00 | $ | 513 | $ | 2,952.30 | $ | (135.0 | ) | $ | 6,669.30 | ||||||
NET SALES AND GEOGRAPHICAL INFORMATION: | |||||||||||||||||
Net sales to respective countries were as follows: | |||||||||||||||||
Years Ended December 31, | |||||||||||||||||
(in millions) | 2014 | 2013 | 2012 | ||||||||||||||
Mexico | $ | 1,708.9 | $ | 1,403.3 | $ | 1,676.4 | |||||||||||
United States | 1,059.3 | 1,031.2 | 1,567.4 | ||||||||||||||
Europe | 892.6 | 1,057.5 | 1,365.1 | ||||||||||||||
Asia | 933.9 | 907.2 | 763.4 | ||||||||||||||
Brazil | 372.4 | 471.0 | 449.0 | ||||||||||||||
Chile | 401.5 | 366.1 | 443.5 | ||||||||||||||
Peru | 282.2 | 324.8 | 296.2 | ||||||||||||||
Other countries | 136.9 | 391.8 | 108.3 | ||||||||||||||
Total | $ | 5,787.7 | $ | 5,952.9 | $ | 6,669.3 | |||||||||||
PROVISIONAL SALES PRICE: | |||||||||||||||||
At December 31, 2014, the Company has recorded provisionally priced sales of copper at average forward prices per pound, and molybdenum at the year-end market price per pound. These sales are subject to final pricing based on the average monthly copper prices on the London Metal Exchange (“LME”) or New York Commodities Exchange (“COMEX”) and Dealer Oxide molybdenum prices in the future month of settlement. | |||||||||||||||||
Following are the provisionally priced copper and molybdenum sales outstanding at December 31, 2014: | |||||||||||||||||
Sales volume | Priced at | Month of settlement | |||||||||||||||
(million lbs.) | (per pound) | ||||||||||||||||
Copper | 70.4 | 2.873 | January through April 2015 | ||||||||||||||
Molybdenum | 11.7 | 9.00 | January through March 2015 | ||||||||||||||
Provisional sales price adjustments included in accounts receivable and net sales were as follows at December, 31 (in millions): | |||||||||||||||||
As of December 31, | |||||||||||||||||
2014 | 2013 | ||||||||||||||||
Copper | $ | (9.6 | ) | $ | 1 | ||||||||||||
Molybdenum | (16.5 | ) | 0.6 | ||||||||||||||
Total | $ | (26.1 | ) | $ | 1.6 | ||||||||||||
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. | |||||||||||||||||
LONG-TERM SALES CONTRACTS: | |||||||||||||||||
The following are the significant outstanding long-term contracts: | |||||||||||||||||
Under the terms of a sales contract with Mitsui & Co. Ltd. (“Mitsui”), the Company was required to supply Mitsui with 48,000 tons of copper cathodes annually through 2013 to the Asian Market. Premium levels were agreed upon annually based on world market terms. 90,000 tons related to a prior contract (period 1994-2000) will be supplied as follows: 48,000 tons in 2014 and 42,000 tons in 2015. | |||||||||||||||||
In 2013, a new long term copper sales agreement was signed with Mitsui for five years, with shipments beginning in 2015. Mitsui and the Company will negotiate market terms and conditions for annual contracts no later than November 30 of the year prior to shipment. The contract considers the following annual volumes of copper cathodes; 6,000 tons for 2015 and 48,000 tons for each of the years from 2016 through 2019. The contract volume would increase by 24,000 tons the year after Tia Maria reaches full production capacity. Failure to reach an agreement on market terms would cancel the annual contract but not the long-term agreement. Under the terms of the agreement all shipments would be to Asia and there are no exclusivity rights for Mitsui or commissions included. This contract may be renewed for additional five year periods, upon the agreement of both parties. | |||||||||||||||||
Under the terms of a sales contract with Molibdenos y Metales, S.A., SPCC Peru Branch is required to supply 30,800 tons of molybdenum concentrates from 2014 through 2016. This contract may be extended for one more calendar year during each October to maintain a three year period unless either party decides to terminate the agreement. The sale price of the molybdenum concentrates is based on the monthly average of the high and low Metals Week Dealer Oxide quotation. The roasting charge deduction is agreed based on international market terms. | |||||||||||||||||
Under the terms of a sales contract with Molymex, S.A. de C.V., Minera Mexico is required to supply at least the 85% of its molybdenum concentrates production from 2012 through 2015. The sale price of the molybdenum concentrate is based on the monthly average of the high and low Metals Week Dealer Oxide quotation. The roasting charge deduction is negotiated based on international market terms. | |||||||||||||||||
QUARTERLY_DATA_unaudited
QUARTERLY DATA (unaudited) | 12 Months Ended | ||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||
QUARTERLY DATA (unaudited) | |||||||||||||||||
QUARTERLY DATA (unaudited) | |||||||||||||||||
NOTE 19-QUARTERLY DATA (unaudited) | |||||||||||||||||
(in millions, except per share data) | |||||||||||||||||
2014 | |||||||||||||||||
1st | 2nd | 3rd | 4th | Year | |||||||||||||
Net sales | $ | 1,354.4 | $ | 1,487.4 | $ | 1,474.6 | $ | 1,471.3 | $ | 5,787.7 | |||||||
Gross profit | $ | 602.0 | $ | 644.7 | $ | 641.6 | $ | 613.9 | $ | 2,502.2 | |||||||
Operating income | $ | 562.9 | $ | 597.3 | $ | 547.1 | $ | 525.5 | $ | 2,232.8 | |||||||
Net income | $ | 324.6 | $ | 338.4 | $ | 325.8 | $ | 349.2 | $ | 1,338.0 | |||||||
Net income attributable to SCC | $ | 323.4 | $ | 337.3 | $ | 324.3 | $ | 348.0 | $ | 1,333.0 | |||||||
Per share amounts attributable to SCC: | |||||||||||||||||
Net earnings basic and diluted | $ | 0.39 | $ | 0.40 | $ | 0.39 | $ | 0.43 | $ | 1.61 | |||||||
Dividend per share | $ | 0.12 | $ | 0.10 | $ | 0.12 | $ | 0.12 | $ | 0.46 | |||||||
2013 | |||||||||||||||||
1st | 2nd | 3rd | 4th | Year | |||||||||||||
Net sales | $ | 1,623.0 | $ | 1,410.2 | $ | 1,384.5 | $ | 1,535.2 | $ | 5,952.9 | |||||||
Gross profit | $ | 805.7 | $ | 604.4 | $ | 617.0 | $ | 658.5 | $ | 2,685.6 | |||||||
Operating income | $ | 770.0 | $ | 565.3 | $ | 580.9 | $ | 615.9 | $ | 2,532.1 | |||||||
Net income | $ | 497.0 | $ | 374.1 | $ | 345.6 | $ | 407.5 | $ | 1,624.2 | |||||||
Net income attributable to SCC | $ | 495.4 | $ | 372.7 | $ | 344.2 | $ | 406.2 | $ | 1,618.5 | |||||||
Per share amounts attributable to SCC: | |||||||||||||||||
Net earnings basic and diluted | $ | 0.59 | $ | 0.44 | $ | 0.41 | $ | 0.48 | $ | 1.92 | |||||||
Dividend per share | $ | 0.24 | $ | 0.20 | $ | 0.12 | $ | 0.12 | $ | 0.68 | |||||||
SUBSEQUENT_EVENTS
SUBSEQUENT EVENTS | 12 Months Ended |
Dec. 31, 2014 | |
SUBSEQUENT EVENTS: | |
SUBSEQUENT EVENTS: | |
NOTE 20—SUBSEQUENT EVENTS | |
DIVIDENDS: | |
On January 29, 2015, the Board of Directors authorized a dividend of $0.10 per share payable on March 3, 2015 to shareholders of record at the close of business on February 17, 2015. | |
SHARE REPURCHASE PROGRAM: | |
On January 29, 2015 the Board of Directors approved an increase in the share repurchase program to $3 billion from $2 billion. | |
Schedule_II_Valuation_and_Qual
Schedule II - Valuation and Qualifying Accounts and Reserves | 12 Months Ended | |||||||||||
Dec. 31, 2014 | ||||||||||||
SUBSEQUENT EVENTS: | ||||||||||||
Schedule II Valuation and Qualifying Accounts and Reserves | ||||||||||||
Valuation and Qualifying Accounts and Reserves (in millions): | ||||||||||||
Additions | ||||||||||||
Balance at | Charged to | Additions | Deduction/ | Balance at | ||||||||
beginning of | costs and | Application | end of period | |||||||||
period | expenses | |||||||||||
Reserve deducted in balance sheet to which applicable: | ||||||||||||
Accounts Receivable: | ||||||||||||
2014 | 0.3 | — | — | — | 0.3 | |||||||
2013 | — | 0.3 | 0.3 | |||||||||
2012 | — | — | — | — | — | |||||||
Notes issued under par: | ||||||||||||
2014 | 46.2 | 1.1 | — | — | 45.1 | |||||||
2013 | 47.3 | 1.1 | — | — | 46.2 | |||||||
2012 | 25.4 | 0.5 | 22.4 | — | 47.3 | |||||||
Deferred Tax Assets: | ||||||||||||
2014 | — | — | — | — | — | |||||||
2013 | — | — | — | — | — | |||||||
2012 | 2.2 | — | — | 2.2 | — | |||||||
SUMMARY_OF_SIGNIFICANT_ACCOUNT1
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (Policies) | 12 Months Ended |
Dec. 31, 2014 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: | |
Principles of consolidation | |
Principles of consolidation— | |
The consolidated financial statements include the accounts of subsidiaries of which the Company has voting control, in accordance with Accounting Standards Codification 810 Consolidation. Such financial statements are prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”). Certain prior year amounts have been reclassified to conform to the current year presentation. | |
Use of estimates | |
Use of estimates— | |
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Significant items subject to such estimates and assumptions include the carrying value of ore reserves that are the basis for future cash flow estimates and amortization calculations; environmental reclamation, closure and retirement obligations; estimates of recoverable copper in mill and leach stockpiles; asset impairments (including estimates of future cash flows); unrecognized tax benefits; valuation allowances for deferred tax assets; and fair value of financial instruments. Management bases its estimates on the Company’s historical experience and on various other assumptions that are believed to be reasonable under the circumstances. Actual results could differ from those estimates. | |
Revenue recognition | |
Revenue recognition— | |
Substantially all of the Company’s copper and non-copper products are sold under annual or other longer-term contracts. | |
Revenue is recognized when title passes to the customer. The passing of title is based on terms of the contract, generally upon shipment. Copper and non-copper revenues are determined based on the monthly average of prevailing commodity prices according to the terms of the contracts. The Company provides allowances for doubtful accounts based upon historical bad debt and claims experience and periodic evaluation of specific customer accounts. | |
For certain of the Company’s sales of copper and molybdenum products, customer contracts allow for pricing based on a month subsequent to shipping, in most cases within the following three months and occasionally in some cases a few additional months. In such cases, revenue is recorded at a provisional price at the time of shipment. The provisionally priced copper sales are adjusted to reflect forward LME or COMEX copper prices at the end of each month until a final adjustment is made to the price of the shipments upon settlement with customers pursuant to the terms of the contract. In the case of molybdenum sales, for which there are no published forward prices, the provisionally priced sales are adjusted to reflect the market prices at the end of each month until a final adjustment is made to the price of the shipments upon settlement with customers pursuant to the terms of the contract. | |
These provisional pricing arrangements are accounted for separately from the contract as an embedded derivative instrument under ASC 815-30 “Derivatives and Hedging — Cash Flow Hedges.” The Company sells copper in concentrate, anode, blister and refined form at industry standard commercial terms. Net sales include the invoiced value of copper, zinc, silver, molybdenum, sulfuric acid and other metals and the corresponding fair value adjustment of the related forward contract of copper and molybdenum. | |
Shipping and handling fees and costs | |
Shipping and handling fees and costs— | |
Amounts billed to customers for shipping and handling are classified as sales. Amounts incurred for shipping and handling are included in cost of sales (exclusive of depreciation, amortization and depletion). | |
Cash and cash equivalents | |
Cash and cash equivalents— | |
Cash and cash equivalents include bank deposits, certificates of deposit and short-term investment funds with original maturities of three months or less at the date of purchase. The carrying value of cash and cash equivalents approximates fair value. | |
Short-term investments | |
Short-term investments— | |
The Company accounts for short-term investments in accordance with ASC 320-10 “Investments Debt and Equity Securities — Recognition.” The Company determines the appropriate classification of all short-term investments as held-to-maturity, available-for-sale or trading at the time of purchase and re-evaluates such classifications as of each balance sheet date. Unrealized gains and losses on available-for-sale investments, net of taxes, are reported as a component of accumulated other comprehensive income (loss) in stockholders’ equity, unless such loss is deemed to be other than temporary. | |
Inventories | |
Inventories— | |
The Company principally produces copper and, in the production process, obtains several by-products, including molybdenum, silver, zinc, sulfuric acid and other metals. | |
Metal inventories, consisting of work-in-process and finished goods, are carried at the lower of average cost or market. Costs incurred in the production of metal inventories exclude general and administrative costs. Once molybdenum, silver, zinc and other by-products are identified, they are transferred to their respective production facilities and the incremental cost required to complete production is assigned to their inventory value. | |
Work-in-process inventories represent materials that are in the process of being converted into a saleable product. Conversion processes vary depending on the nature of the copper ore and the specific mining operation. For sulfide ores, processing includes milling and concentrating and results in the production of copper and molybdenum concentrates. | |
Finished goods include saleable products (e.g., copper concentrates, copper anodes, copper cathodes, copper rod, molybdenum concentrate and other metallurgical products). | |
Supplies inventories are carried at the lower of average cost or market less a reserve for obsolescence. | |
Long-term inventory - Leachable material | |
Long-term inventory - Leachable material | |
The leaching process is an integral part of the mining operations carried out at the Company’s open-pit mines. The Company capitalizes the production cost of leachable material at its Toquepala, La Caridad and Buenavista mines recognizing it as inventory. The estimates of recoverable mineral content contained in the leaching dumps are supported by engineering studies. As the production cycle of the leaching process is significantly longer than the conventional process of concentrating, smelting and electrolytic refining, the Company includes on its balance sheet current leach inventory (included in work-in-process inventories) and long-term leach inventory. Through 2013, the cost attributed to the leach material was charged to cost of sales over a five-year period, which was considered the average estimated recovery period based on the historical recovery percentages of each mine. During the fourth quarter of 2014, the Company completed the construction of a new plant that has resulted in increased efficiency in production and use of leachable material. Accordingly, the Company changed its method of amortization to the units of production method. This change in estimate effected by a change in accounting principle will result in a better matching of costs to revenues as a result of the improved production levels expected from the new plant and will result in a better estimate of current and long-term leachable material inventory As the plant entered into operation in the fourth quarter of 2014, the impact to results in 2014 was not considered significant and totaled approximately $17 million recognized within cost of sales. . The Company anticipates that the impact in future periods will be significant as a result of expected increased production levels. | |
As of December 31, 2014 the Company has leachable inventory of $762.8 million of which $250.1 million was classified as a current asset. | |
Property | |
Property- | |
Property is recorded at acquisition cost, net of accumulated depreciation and amortization. Cost includes major expenditures for improvements and replacements, which extend useful lives or increase capacity and interest costs associated with significant capital additions. Maintenance, repairs, normal development costs at existing mines and gains or losses on assets retired or sold are reflected in earnings as incurred. | |
Buildings and equipment are depreciated on the straight-line method over estimated lives from five to 40 years or the estimated life of the mine if shorter. | |
Mine development | |
Mine development — | |
Mine development includes primarily the cost of acquiring land rights to an exploitable ore body, pre-production stripping costs at new mines that are commercially exploitable, costs associated with bringing new mineral properties into production and removal of overburden to prepare unique and identifiable areas outside the current mining area for such future production. Mine development costs are amortized on a unit of production basis over the remaining life of the mines. | |
There is a diversity of practices in the mining industry in the treatment of drilling and other related costs to delineate new ore reserves. The Company follows the practices outlined in the next two paragraphs in its treatment of drilling and related costs. | |
Drilling and other associated costs incurred in the Company’s efforts to delineate new resources, whether near-mine or Greenfield are expensed as incurred. These costs are classified as mineral exploration costs. Once the Company determines through feasibility studies that proven and probable reserves exist and that the drilling and other associated costs embody a probable future benefit that involves a capacity, singly or in combination with other assets, to contribute directly or indirectly to future net cash inflow, then the costs are classified as mine development costs. These mine development costs incurred prospectively to develop the property are capitalized as incurred, until the commencement of production, and are amortized using the units of production method over estimated life of the ore body. During the production stage, drilling and other related costs incurred to maintain production are included in production cost in the period in which they are incurred. | |
Drilling and other related costs incurred in the Company’s efforts to delineate a major expansion of reserves at an existing production property are expensed as incurred. Once the Company determines through feasibility studies that proven and probable incremental reserves exist and that the drilling and other associated costs embody a probable future benefit that involves a capacity, singly or in combination with other assets, to contribute directly or indirectly to future net cash inflow, then the costs are classified as mine development costs. These incremental mine development costs are capitalized as incurred, until the commencement of production and amortized using the units of production method over the estimated life of the ore body. A major expansion of reserves is one that increases total reserves at a property by approximately 10% or more. | |
For the years ended December 31, 2014, 2013 and 2012, the Company did not capitalize any drilling and related costs. The net balance of capitalized mine development costs at December 31, 2014 and 2013, were $34.8 million and $36.2 million, respectively. | |
Asset retirement obligations (reclamation and remediation costs) | |
Asset retirement obligations (reclamation and remediation costs)— | |
The fair value of a liability for asset retirement obligations is recognized in the period in which the liability is incurred. The liability is measured at fair value and is adjusted to its present value in subsequent periods as accretion expense is recorded. The corresponding asset retirement costs are capitalized as part of the carrying value of the related long-lived assets and depreciated over the asset’s useful life. | |
Intangible assets | |
Intangible assets— | |
Intangible assets include primarily the excess amount paid over the book value for investment shares which are presented as mining concessions, and mining and engineering development studies. Intangible assets are carried at acquisition costs, net of accumulated amortization and are amortized principally on a unit of production basis over the estimated remaining life of the mines. Intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. | |
Debt issuance costs | |
Debt issuance costs— | |
Debt issuance costs, which are included in other assets, are amortized using the effective interest method over the term of the related debt. | |
Ore reserves | |
Ore reserves— | |
The Company periodically reevaluates estimates of its ore reserves, which represent the Company’s estimate as to the amount of unmined copper remaining in its existing mine locations that can be produced and sold at a profit. Such estimates are based on engineering evaluations derived from samples of drill holes and other openings, combined with assumptions about copper market prices and production costs at each of the respective mines. | |
The Company updates its estimate of ore reserves at the beginning of each year. In this calculation, the Company uses current metal prices which are defined as the average metal price over the preceding three years. The current price per pound of copper, as defined, was $3.36, $3.65 and $3.68 at the end of 2014, 2013 and 2012, respectively. The ore reserve estimates are used to determine the amortization of mine development and intangible assets. | |
Once the Company determines through feasibility studies that proven and probable reserves exist and that the drilling and other associated costs embody a probable future benefit that involves a capacity, singly or in combination with other assets, to contribute directly or indirectly to future net cash inflow, then the costs are classified as mine development costs and the Company discloses the related ore reserves. | |
Exploration | |
Exploration— | |
Tangible and intangible costs incurred in the search for mineral properties are charged against earnings when incurred. | |
Income taxes | |
Income taxes— | |
Provisions for income taxes are based on taxes payable or refundable for the current year and deferred taxes on temporary differences between the amount of taxable income and pretax financial income and between the tax bases of assets and liabilities and their reported amounts in the financial statements. Deferred tax assets and liabilities are included in the financial statements at currently enacted income tax rates applicable to the period in which the deferred tax assets and liabilities are expected to be realized and settled as prescribed in ASC 740 “Income taxes.” As changes in tax laws or rates are enacted, deferred tax assets and liabilities are adjusted through the provision for income taxes. Deferred income tax assets are reduced by any benefits that, in the opinion of management, are more likely not to be realized. ASU No. 2013-11, “Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists” was effective for the Company’s fiscal year beginning January 1, 2014. As a result of the adoption of ASU No. 2013-11 on January 1, 2014, liabilities associated with Unrecognized Tax Benefits of Non-Current Tax Payable were reclassified to net against deferred income tax assets. In accordance with ASU 2013-11, the Company netted Unrecognized Tax Benefits against the foreign tax credit carryforward. | |
The Company’s operations involve dealing with uncertainties and judgments in the application of complex tax regulations in multiple jurisdictions. The final taxes paid are dependent upon many factors, including negotiations with taxing authorities in various jurisdictions and resolution of disputes arising from federal, state, and international tax audits. The Company recognizes potential liabilities and records tax liabilities for anticipated tax audit issues in the U.S. and other tax jurisdictions based on its estimate of whether, and the extent to which, additional taxes will be due. The Company follows the guidance of ASC 740 “Income taxes” to record these liabilities. (See Note 7 “Income taxes” of the consolidated financial statements for additional information). The Company adjusts these reserves in light of changing facts and circumstances; however, due to the complexity of some of these uncertainties, the ultimate resolution may result in a payment that is materially different from the Company’s current estimate of the tax liabilities. If its estimate of tax liabilities proves to be less than the ultimate assessment, an additional charge to expense would result. If payment of these amounts ultimately proves to be less than the recorded amounts, the reversal of the liabilities would result in tax benefits being recognized in the period when the Company determines the liabilities are no longer necessary. | |
The Company classifies income tax-related interest and penalties as income taxes in the financial statements, as well as interest and penalties, if any, related to unrecognized tax benefits. | |
Foreign exchange | |
Foreign exchange— | |
The Company’s functional currency is the U.S. dollar. As required by local law, both the Peruvian Branch and Minera Mexico maintain their books of accounts in Peruvian nuevos soles and Mexican pesos, respectively. | |
Foreign currency assets and liabilities are remeasured into U.S. dollars at current exchange rates. Gains and losses from foreign currency remeasurement are included in earnings of the period. | |
Gains and (losses) resulting from foreign currency transactions are included in “Cost of sales (exclusive of depreciation, amortization and depletion).” | |
Asset impairments | |
Asset impairments - | |
The Company evaluates long-term assets when events or changes in economic circumstances indicate that the carrying amount of such assets may not be recoverable. These evaluations are based on business plans that are prepared using a time horizon that is reflective of the Company’s expectations of metal prices over its business cycle. The Company is currently using a long-term average copper price and an average molybdenum price for impairment tests. The results of its impairment tests using these long-term copper and molybdenum prices show no impairment in the carrying value of their assets. | |
In recent years testing using assumptions for long-term average prices have resulted in stricter evaluation for impairment analysis than would the higher three year average prices for copper and molybdenum prices. Should this situation reverse in the future with three year average prices below the long-term price assumption, the Company would assess the need to use the three year average prices in its evaluations. The Company uses an estimate of the future undiscounted net cash flows of the related asset or asset group over the remaining life to measure whether the assets are recoverable and measures any impairment by reference to fair value. | |
Other comprehensive income | |
Other comprehensive income— | |
Comprehensive income represents changes in equity during a period, except those resulting from investments by owners and distributions to owners. During the fiscal years ended December 31, 2014, 2013 and 2012, the components of “other comprehensive income (loss)” were the unrealized gain (loss) on cash flow hedge derivative instruments, the unrecognized gain (loss) on employee benefit obligations and realized gain (loss) included in net income. | |
Business segments | |
Business segments- | |
Company management views Southern Copper as having three reportable segments and manages it on the basis of these segments. The segments identified by the Company are: (1) the Peruvian operations, which include the two open-pit copper mines in Peru and the plants and services supporting such mines, (2) the Mexican open-pit copper mines, which include La Caridad and Buenavista mine complexes and their supporting facilities and (3) the Mexican underground mining operations, which include five underground mines that produce zinc, copper, silver and gold, a coal mine and a zinc refinery. Please see Note 18 “Segments and Related Information.” | |
Senior Management Officers of the Company focus on operating income as measure 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. | |
PROPOSED ACCOUNTING STANDARDS | |
PROPOSED ACCOUNTING STANDARDS | |
In February 2013, the Financial Accounting Standards Board (FASB) issued the Accounting Standard Updates (“ASU”) 2013-04, “Liabilities (Topic 405): Obligations Resulting from Joint and Several Liability Arrangements for which the Total Amount of the Obligation is Fixed at the Reporting Date.” The amendments in this ASU require an entity to measure joint and several obligations as the sum of the amount the reporting entity agreed to pay on the basis of its arrangement among its co-obligors and any additional amount the reporting entity expects to pay on behalf of its co-obligors. The amendments in this guidance are effective for fiscal years, and interim periods within those years, beginning after December 15, 2014. The Company will apply this guidance in any future arrangement and does not expect this guidance to have a material impact on its consolidated financial information. | |
In May 2014, the FASB issued ASU 2014-09 “Revenue from Contracts with Customers” (Topic 606). The objective of the new revenue standard is to provide a single comprehensive revenue recognition model for all contracts with customers to improve comparability within industries, across industries and across capital markets. | |
The core principle of the standard is that the Company should recognize revenue to represent the transfer of promised goods or services to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services. | |
The Company should apply the following five steps to achieve the core principle: | |
Step 1: Identify the contract(s) with a customer. | |
Step 2: Identify the performance obligations (promises) in the contract. | |
Step 3: Determine the transaction price. | |
Step 4: Allocate the transaction price to the performance obligations in the contract. | |
Step 5: Recognize revenue when (or as) the Company satisfies a performance obligation. | |
The guidance also specifies the accounting for some costs to obtain or fulfill a contract with a customer. Additionally, the Company should disclose sufficient qualitative and quantitative information to enable users of financial statements to understand the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. | |
This revenue standard is effective for the first interim period within annual reporting periods beginning after December 15, 2016, and early adoption is not permitted. The Company does not expect this guidance to have a material impact on the consolidated financial information. | |
SHORTTERM_INVESTMENTS_Tables
SHORT-TERM INVESTMENTS: (Tables) | 12 Months Ended | |||||||
Dec. 31, 2014 | ||||||||
SHORT-TERM INVESTMENTS: | ||||||||
Schedule of short-term investments | ||||||||
Short-term investments were as follows ($ in millions): | ||||||||
At December 31, | ||||||||
2014 | 2013 | |||||||
Trading securities | $ | 333.7 | $ | 202.6 | ||||
Weighted average interest rate | 0.78 | % | 3.78 | % | ||||
Available-for-sale | $ | 4.9 | $ | 5.7 | ||||
Weighted average interest rate | 0.44 | % | 0.42 | % | ||||
Total | $ | 338.6 | $ | 208.3 | ||||
Summary of activities in short-term investments | ||||||||
The following table summarizes the activity of these investments by category (in millions): | ||||||||
Years ended December 31, | ||||||||
2014 | 2013 | |||||||
Trading: | ||||||||
Interest earned | $ | 4.9 | $ | 5.2 | ||||
Unrealized gain (loss) at December 31, | $ | 2.1 | $ | (1.9 | ) | |||
Available-for-sale: | ||||||||
Interest earned | (*) | (*) | ||||||
Investment redeemed | $ | 0.8 | $ | 0.8 | ||||
(*) Less than $0.1 million | ||||||||
Schedule of contractual maturities of the Company's available for sale debt securities | ||||||||
At December 31, 2014 and 2013, contractual maturities of the available-for-sale debt securities are as follows (in millions): | ||||||||
2014 | 2013 | |||||||
One year or less | $ | 0.3 | $ | 0.4 | ||||
Maturing after one year through five years | — | — | ||||||
Maturing after five years through ten years | 0.1 | 0.2 | ||||||
Due after 10 years | 4.5 | 5.1 | ||||||
Total debt securities | $ | 4.9 | $ | 5.7 | ||||
INVENTORIES_Tables
INVENTORIES: (Tables) | 12 Months Ended | |||||||
Dec. 31, 2014 | ||||||||
INVENTORIES: | ||||||||
Schedule of inventories | ||||||||
As of December 31, | ||||||||
(in millions) | 2014 | 2013 | ||||||
Inventory, current: | ||||||||
Metals at lower of average cost or market: | ||||||||
Finished goods | $ | 84.6 | $ | 84.2 | ||||
Work-in-process | 450.5 | 305.4 | ||||||
Supplies at average cost | 301.4 | 304.3 | ||||||
Total current inventory | $ | 836.5 | $ | 693.9 | ||||
Inventory, long-term: | ||||||||
Leach stockpiles | $ | 512.7 | $ | 395.2 | ||||
PROPERTY_Tables
PROPERTY: (Tables) | 12 Months Ended | |||||||
Dec. 31, 2014 | ||||||||
PROPERTY: | ||||||||
Schedule of major classes of property, plant and equipment | ||||||||
As of December 31, | ||||||||
(in millions) | 2014 | 2013 | ||||||
Buildings and equipment | $ | 9,173.70 | $ | 8,107.20 | ||||
Construction in progress | 2,755.90 | 2,567.00 | ||||||
Mine development | 255 | 250.7 | ||||||
Land, other than mineral | 100.1 | 61.8 | ||||||
Total property | 12,284.70 | 10,986.70 | ||||||
Accumulated depreciation, amortization and depletion | (4,848.3 | ) | (4,510.5 | ) | ||||
Total property, net | $ | 7,436.40 | $ | 6,476.20 | ||||
INTANGIBLE_ASSETS_Tables
INTANGIBLE ASSETS: (Tables) | 12 Months Ended | |||||||
Dec. 31, 2014 | ||||||||
INTANGIBLE ASSETS: | ||||||||
Schedule of major classes of intangible assets and goodwill | ||||||||
As of December 31, | ||||||||
(in millions) | 2014 | 2013 | ||||||
Mining concessions | $ | 121.2 | $ | 121.2 | ||||
Mine engineering and development studies | 6 | 6 | ||||||
Software | 13.8 | 12.2 | ||||||
141 | 139.4 | |||||||
Accumulated amortization: | ||||||||
Mining concessions | (33.9 | ) | (33.0 | ) | ||||
Mine engineering and development studies | (5.2 | ) | (4.9 | ) | ||||
Software | (9.0 | ) | (8.3 | ) | ||||
(48.1 | ) | (46.2 | ) | |||||
Goodwill | 17 | 17 | ||||||
Intangible assets, net | $ | 109.9 | $ | 110.2 | ||||
Schedule of amortization of intangibles in the last three years and estimated amortization for future periods | ||||||||
Estimated amortization expense (in millions): | ||||||||
2015-2019 | $ | 7.6 | ||||||
Average annual | $ | 1.5 | ||||||
INCOME_TAXES_Tables
INCOME TAXES: (Tables) | 12 Months Ended | ||||||||||
Dec. 31, 2014 | |||||||||||
INCOME TAXES: | |||||||||||
Components of the provision for income taxes | |||||||||||
Years ended December 31, | |||||||||||
(in millions) | 2014 | 2013 | 2012 | ||||||||
U.S. federal and state: | |||||||||||
Current | $ | — | $ | — | $ | (0.1 | ) | ||||
Deferred | (194.1 | ) | (139.3 | ) | (108.6 | ) | |||||
Uncertain tax positions | 10.7 | — | 147.4 | ||||||||
(183.4 | ) | (139.3 | ) | 38.7 | |||||||
Foreign (Peru and Mexico): | |||||||||||
Current | 987.1 | 866.3 | 1,025.10 | ||||||||
Deferred | (49.1 | ) | 42.3 | 17.1 | |||||||
938 | 908.6 | 1,042.20 | |||||||||
Total provision for income taxes | $ | 754.6 | $ | 769.3 | $ | 1,080.90 | |||||
Schedule of source of income | |||||||||||
For the years ended December 31, | |||||||||||
(in millions) | 2014 | 2013 | 2012 | ||||||||
Earnings by location: | |||||||||||
U.S. | $ | (1.7 | ) | $ | 0.1 | $ | (0.1 | ) | |||
Foreign | |||||||||||
Peru | 605.8 | 773.8 | 846 | ||||||||
Mexico | 1,464.60 | 1,598.70 | 2,127.60 | ||||||||
2,070.40 | 2,372.50 | 2,973.60 | |||||||||
Earnings before taxes on income | $ | 2,068.70 | $ | 2,372.60 | $ | 2,973.50 | |||||
Reconciliation of the statutory income tax rate to the effective tax rate | |||||||||||
The reconciliation of the statutory income tax rate to the effective tax rate is as follows (in percentage points): | |||||||||||
For the years ended December 31, | |||||||||||
2014 | 2013 | 2012 | |||||||||
Expected tax at U.S. statutory rate | 35 | % | 35 | % | 35 | % | |||||
Foreign tax at other than statutory rate, net of foreign tax credit benefit | (0.9 | ) | (0.2 | ) | (0.5 | ) | |||||
Percentage depletion | (5.2 | ) | (5.0 | ) | (4.2 | ) | |||||
Other permanent differences | 4.6 | 3.5 | 3.7 | ||||||||
Increase (decrease) in unrecognized tax benefits for uncertain tax positions | 0.5 | — | 5 | ||||||||
Repatriated foreign earnings | (0.4 | ) | (1.4 | ) | (1.7 | ) | |||||
Amounts (over) / under provided in prior years | 2.2 | 0.4 | (0.6 | ) | |||||||
Other | 0.7 | 0.1 | (0.4 | ) | |||||||
Effective income tax rate | 36.5 | % | 32.4 | % | 36.3 | % | |||||
Schedule of deferred tax assets and liabilities | |||||||||||
As of December 31, | |||||||||||
(in millions) | 2014 | 2013 | |||||||||
Assets: | |||||||||||
Inventories | $ | 32.5 | $ | 18.7 | |||||||
Capitalized exploration expenses | 27.8 | 29.4 | |||||||||
U.S. foreign tax credit carryforward, net of FIN 48 liability | 144.8 | 52.6 | |||||||||
U.S. tax effect of Peruvian deferred tax liability | 251.4 | 68 | |||||||||
Reserves | 101.7 | 35 | |||||||||
Other | 19.8 | 27.9 | |||||||||
Total deferred tax assets | 578 | 231.6 | |||||||||
Liabilities: | |||||||||||
Property, plant and equipment | (213.0 | ) | (105.8 | ) | |||||||
Deferred charges | (74.9 | ) | (79.6 | ) | |||||||
Mexican tax on consolidated dividends | (5.7 | ) | (31.5 | ) | |||||||
Outside basis difference | — | (7.4 | ) | ||||||||
Other | (9.8 | ) | (0.1 | ) | |||||||
Total deferred tax liabilities | (303.4 | ) | (224.4 | ) | |||||||
Total net deferred tax assets / (liabilities) | $ | 274.6 | $ | 7.2 | |||||||
Summary of expire of foreign tax credits | |||||||||||
Year | Amount | ||||||||||
2016 | $ | 19.0 | |||||||||
2018 | 20.4 | ||||||||||
2019 | 63.7 | ||||||||||
2020 | 42.0 | ||||||||||
2021 | 11.7 | ||||||||||
2022 | 84.1 | ||||||||||
2023 | 69.2 | ||||||||||
2024 | 136.9 | ||||||||||
Total | $ | 447.0 | |||||||||
Summary of income tax rate and dividend tax rate due to change in enacted tax law | |||||||||||
Year | Income | Dividend | |||||||||
Tax Rate | Tax Rate | ||||||||||
2015- 2016 | 28 | % | 6.8 | % | |||||||
2017- 2018 | 27 | % | 8.0 | % | |||||||
2019 and later | 26 | % | 9.3 | % | |||||||
Schedule of reconciliation of amount of unrecognized tax benefits | |||||||||||
The total amount of unrecognized tax benefits in 2014, 2013 and 2012, was as follows (in millions): | |||||||||||
2014 | 2013 | 2012 | |||||||||
Unrecognized tax benefits, opening balance | $ | 221.2 | $ | 221.2 | $ | 70.6 | |||||
Gross increases — tax positions in prior period | 55.1 | — | 39.7 | ||||||||
Gross decreases — tax positions in prior period | — | — | 0.2 | ||||||||
Gross increases — current-period tax positions | 43.1 | — | 110.7 | ||||||||
98.2 | — | 150.6 | |||||||||
Unrecognized tax benefits, ending balance | $ | 319.4 | $ | 221.2 | $ | 221.2 | |||||
WORKERS_PARTICIPATION_Tables
WORKERS' PARTICIPATION: (Tables) | 12 Months Ended | ||||||||||
Dec. 31, 2014 | |||||||||||
WORKERS' PARTICIPATION: | |||||||||||
Workers' participation expense | Workers’ participation expense for the three years ended December 31, 2014 was as follows (in millions): | ||||||||||
2014 | 2013 | 2012 | |||||||||
Current | $ | 221.2 | $ | 201.6 | $ | 263.1 | |||||
Deferred | (11.4 | ) | 31.4 | 14.3 | |||||||
$ | 209.8 | $ | 233 | $ | 277.4 | ||||||
ASSET_RETIREMENT_OBLIGATION_Ta
ASSET RETIREMENT OBLIGATION: (Tables) | 12 Months Ended | |||||||
Dec. 31, 2014 | ||||||||
ASSET RETIREMENT OBLIGATION: | ||||||||
Summary of the asset retirement obligation activity | ||||||||
The following table summarizes the asset retirement obligation activity for years ended December 31, 2014 and 2013 (in millions): | ||||||||
2014 | 2013 | |||||||
Balance as of January 1 | $ | 124.8 | $ | 122.3 | ||||
Changes in estimates | (9.6 | ) | — | |||||
Additions | — | — | ||||||
Closure payments | (12.2 | ) | (6.3 | ) | ||||
Accretion expense | 13.1 | 8.8 | ||||||
Balance as of December 31, | $ | 116.1 | $ | 124.8 | ||||
FINANCING_Tables
FINANCING: (Tables) | 12 Months Ended | ||||||||||||||
Dec. 31, 2014 | |||||||||||||||
FINANCING: | |||||||||||||||
Schedule of long-term debt | |||||||||||||||
Carrying value as of | |||||||||||||||
Issuance | Face | December 31, | |||||||||||||
(in millions) | Date | Due Date | amount | 2014 | 2013 | ||||||||||
6.375% Senior unsecured notes | 2005 | 2015 | $ | 200 | $ | 199.8 | $ | 199.7 | |||||||
5.375% Senior unsecured notes | 2010 | 2020 | 400 | 398.8 | 398.6 | ||||||||||
3.500% Senior unsecured notes | 2012 | 2022 | 300 | 299.2 | 299.1 | ||||||||||
9.250% Yankee Bonds | 1998 | 2028 | 125 | 51.1 | 51.1 | ||||||||||
7.500% Senior unsecured notes | 2005/2006 | 2035 | 1,000 | 985.8 | 985.5 | ||||||||||
6.750% Senior unsecured notes | 2010 | 2040 | 1,100 | 1,092.20 | 1,092.10 | ||||||||||
5.250% Senior unsecured notes | 2012 | 2042 | 1,200 | 1,179.10 | 1,178.80 | ||||||||||
Total debt | 4,206.00 | 4,204.90 | |||||||||||||
Less, current portion | (200.0 | ) | — | ||||||||||||
Total long-term debt | $ | 4,006.00 | $ | 4,204.90 | |||||||||||
Schedule of aggregate maturities of the outstanding borrowings | |||||||||||||||
Aggregate maturities of the outstanding borrowings at December 31, 2014, are as follows: | |||||||||||||||
Years | Principal Due (*) | ||||||||||||||
(in millions) | |||||||||||||||
2015 | $ | 200.0 | |||||||||||||
2016 | — | ||||||||||||||
2017 | — | ||||||||||||||
2018 | — | ||||||||||||||
Thereafter | 4,051.2 | ||||||||||||||
Total | $ | 4,251.2 | |||||||||||||
(*)Total debt maturities do not include the debt discount valuation account of $45.2 million. | |||||||||||||||
BENEFIT_PLANS_Tables
BENEFIT PLANS: (Tables) | 12 Months Ended | ||||||||||
Dec. 31, 2014 | |||||||||||
Post retirement defined benefit plan | |||||||||||
Components of net periodic benefit costs | |||||||||||
Schedule of the components of net periodic benefit costs | Years ended December 31, | ||||||||||
(in millions) | 2014 | 2013 | 2012 | ||||||||
Service cost | $ | 1 | $ | 1.1 | $ | 1 | |||||
Interest cost | 1.1 | 1 | 1.1 | ||||||||
Expected return on plan assets | (3.3 | ) | (3.4 | ) | (3.6 | ) | |||||
Amortization of transition assets, net | 0.1 | — | — | ||||||||
Amortization of net actuarial loss | (0.4 | ) | (0.7 | ) | (0.8 | ) | |||||
Amortization of net loss/(gain) | 0.2 | 0.2 | 0.1 | ||||||||
Net periodic benefit cost | $ | (1.3 | ) | $ | (1.8 | ) | $ | (2.2 | ) | ||
Schedule of changes in the benefit obligation and plan assets, the funded status of the plans and the amount recognized in balance sheet and accumulated other comprehensive income | |||||||||||
As of December 31, | |||||||||||
(in millions) | 2014 | 2013 | |||||||||
Change in benefit obligation: | |||||||||||
Projected benefit obligation at beginning of year | $ | 26.8 | $ | 27.9 | |||||||
Service cost | 1 | 1.1 | |||||||||
Interest cost | 1.1 | 1 | |||||||||
Actuarial gain census | — | (0.3 | ) | ||||||||
Benefits paid | (1.9 | ) | (2.2 | ) | |||||||
Actuarial (gain)/loss | (1.6 | ) | 0.3 | ||||||||
Actuarial gain assumption changes | 2.2 | (1.0 | ) | ||||||||
Inflation adjustment | (1.8 | ) | — | ||||||||
Projected benefit obligation at end of year | $ | 25.8 | $ | 26.8 | |||||||
Change in plan assets: | |||||||||||
Fair value of plan assets at beginning of year | $ | 60.6 | $ | 61.9 | |||||||
Actual return on plan assets | 3.7 | (0.2 | ) | ||||||||
Employer contributions | (0.5 | ) | 0.1 | ||||||||
Benefits paid | (1.1 | ) | (0.9 | ) | |||||||
Currency exchange rate adjustment | (5.0 | ) | (0.3 | ) | |||||||
Fair value of plan assets at end of year | $ | 57.7 | $ | 60.6 | |||||||
Funded status at end of year: | $ | 31.9 | $ | 33.8 | |||||||
ASC-715 amounts recognized in statement of financial position consists of: | |||||||||||
Non-current assets | $ | 31.9 | $ | 33.8 | |||||||
Total | $ | 31.9 | $ | 33.8 | |||||||
ASC-715 amounts recognized in accumulated other comprehensive income (net of income taxes of $0.4 million and $1.5 million in 2014 and 2013, respectively) consists of: | |||||||||||
Net loss (gain) | $ | (1.3 | ) | $ | (1.7 | ) | |||||
Prior service cost | 1.6 | 0.1 | |||||||||
Total | $ | 0.3 | $ | (1.6 | ) | ||||||
Schedule of changes in accumulated other comprehensive income | |||||||||||
(in millions) | 2014 | 2013 | |||||||||
Reconciliation of accumulated other comprehensive income: | |||||||||||
Accumulated other comprehensive income at beginning of plan year | $ | (1.6 | ) | $ | (3.6 | ) | |||||
Net loss/(gain) amortized during the year | 0.1 | 0.3 | |||||||||
Net loss/(gain) occurring during the year | 0.2 | 1.6 | |||||||||
Amortization of transition obligation | (0.1 | ) | — | ||||||||
Currency exchange rate adjustment | 1.7 | 0.1 | |||||||||
Net adjustment to accumulated other comprehensive income (net of income taxes of $(1.1) million and $(1.3) million in 2014 and 2013, respectively) | 1.9 | 2 | |||||||||
Accumulated other comprehensive income at end of plan year | $ | 0.3 | $ | (1.6 | ) | ||||||
Summary of the amounts in accumulative other comprehensive income amortized and recognized as a component of net periodic benefit cost, net of tax | (in millions) | 2014 | 2013 | ||||||||
Net loss / (gain) | $ | 0.2 | $ | 1.6 | |||||||
Amortization of net (loss) gain | 0.1 | 0.3 | |||||||||
Amortization of transition obligation | (0.1 | ) | — | ||||||||
Total amortization expenses | $ | 0.2 | $ | 1.9 | |||||||
Scheduled maturities of the benefits expected to be paid in each of the next five years, and thereafter | Years | Expected | |||||||||
Benefit Payments | |||||||||||
(in millions) | |||||||||||
2015 | $ | 7.2 | |||||||||
2016 | 1.5 | ||||||||||
2017 | 1.4 | ||||||||||
2018 | 1.5 | ||||||||||
2019 | 1.6 | ||||||||||
2020 to 2023 | 8.3 | ||||||||||
Total | $ | 21.5 | |||||||||
Post-retirement Health Care Plan | |||||||||||
Components of net periodic benefit costs | |||||||||||
Schedule of the components of net periodic benefit costs | Years ended December 31, | ||||||||||
(in millions) | 2014 | 2013 | 2012 | ||||||||
Interest cost | $ | 1.3 | $ | 1.7 | $ | 1.5 | |||||
Amortization of transition obligation | — | — | — | ||||||||
Amortization of prior service cost/ (credit) | (0.3 | ) | — | (0.3 | ) | ||||||
Net periodic benefit cost | $ | 1 | $ | 1.7 | $ | 1.2 | |||||
Schedule of changes in the benefit obligation and plan assets, the funded status of the plans and the amount recognized in balance sheet and accumulated other comprehensive income | |||||||||||
As of December 31, | |||||||||||
(in millions) | 2014 | 2013 | |||||||||
Change in benefit obligation: | |||||||||||
Projected benefit obligation at beginning of year | $ | 21.7 | $ | 27.2 | |||||||
Interest cost | 1.3 | 1.7 | |||||||||
Actuarial loss/ (gain) — claims cost | (0.2 | ) | — | ||||||||
Benefits paid | (0.6 | ) | (0.1 | ) | |||||||
Actuarial (gain)/loss | (3.2 | ) | (6.8 | ) | |||||||
Actuarial gain assumption changes | 0.4 | (0.2 | ) | ||||||||
Inflation adjustment | (2.3 | ) | (0.1 | ) | |||||||
Projected benefit obligation at end of year | $ | 17.1 | $ | 21.7 | |||||||
Change in plan assets: | |||||||||||
Fair value of plan assets at beginning of year | $ | — | $ | — | |||||||
Employer contributions | 0.1 | 0.1 | |||||||||
Benefits paid | (0.1 | ) | (0.1 | ) | |||||||
Fair value of plan assets at end of year | $ | — | $ | — | |||||||
Funded status at end of year: | $ | (17.1 | ) | $ | (21.7 | ) | |||||
ASC-715 amounts recognized in statement of financial position consists of: | |||||||||||
Current liabilities | $ | (0.1 | ) | $ | (0.1 | ) | |||||
Non-current liabilities | (17.0 | ) | (21.6 | ) | |||||||
Total | $ | (17.1 | ) | $ | (21.7 | ) | |||||
ASC-715 amounts recognized in accumulated other comprehensive income consists of: | |||||||||||
Net loss (gain) | $ | (4.8 | ) | $ | (4.3 | ) | |||||
Prior service cost (credit) | (0.1 | ) | (0.1 | ) | |||||||
Total (net of income taxes of $ 3.3 million and $3.0 million in 2014 and 2013, respectively) | $ | (4.9 | ) | $ | (4.4 | ) | |||||
Schedule of changes in accumulated other comprehensive income | |||||||||||
As of December 31, | |||||||||||
(in millions) | 2014 | 2013 | |||||||||
Reconciliation of accumulated other comprehensive income: | |||||||||||
Accumulated other comprehensive income at beginning of plan year | $ | (4.4 | ) | $ | (0.2 | ) | |||||
Net loss/(gain) occurring during the year | (1.8 | ) | (4.2 | ) | |||||||
Net loss/(gain) amortized during the year | 0.1 | — | |||||||||
Currency exchange rate adjustment | 1.2 | — | |||||||||
Net adjustment to accumulated other comprehensive income (net of income taxes of $3.3 million and $3.0 million in 2014 and 2013, respectively) | (0.5 | ) | (4.2 | ) | |||||||
Accumulated other comprehensive income at end of plan year | $ | (4.9 | ) | $ | (4.4 | ) | |||||
Summary of the amounts in accumulative other comprehensive income amortized and recognized as a component of net periodic benefit cost, net of tax | |||||||||||
As of December 31, | |||||||||||
(in millions) | 2014 | 2013 | |||||||||
Net loss / (gain) | $ | (1.8 | ) | $ | (4.2 | ) | |||||
Amortization of net (loss) gain | 0.1 | — | |||||||||
Total amortization expenses | $ | (1.7 | ) | $ | (4.2 | ) | |||||
Scheduled maturities of the benefits expected to be paid in each of the next five years, and thereafter | Year | Expected | |||||||||
Benefit Payments | |||||||||||
(in millions) | |||||||||||
2015 | $ | 1.0 | |||||||||
2016 | 1.1 | ||||||||||
2017 | 1.1 | ||||||||||
2018 | 1.2 | ||||||||||
2019 | 1.3 | ||||||||||
2020 to 2023 | 13.3 | ||||||||||
Total | $ | 19.0 | |||||||||
Expatriate Plan | Post retirement defined benefit plan | |||||||||||
Components of net periodic benefit costs | |||||||||||
Schedule of assumptions used to determine the pension obligation and seniority premiums as of year-end and the net cost | |||||||||||
Expatriate Plan | 2014 | 2013 | 2012 | ||||||||
Discount rate | 3.50 | % | 4.25 | % | 3.35 | % | |||||
Expected long-term rate of return on plan asset | 4.50 | % | 4.50 | % | 4.50 | % | |||||
Rate of increase in future compensation level | N/A | N/A | N/A | ||||||||
Expatriate Plan | Post-retirement Health Care Plan | |||||||||||
Components of net periodic benefit costs | |||||||||||
Schedule of assumptions used to determine the pension obligation and seniority premiums as of year-end and the net cost | |||||||||||
2014 | 2013 | 2012 | |||||||||
Expatriate health plan | |||||||||||
Discount rate | 3.50 | % | 4.25 | % | 4.25 | % | |||||
Mexican Health Plan | Post retirement defined benefit plan | |||||||||||
Components of net periodic benefit costs | |||||||||||
Schedule of assumptions used to determine the pension obligation and seniority premiums as of year-end and the net cost | |||||||||||
Mexican Plan(*) | 2014 | 2013 | 2012 | ||||||||
Discount rate | 6.70 | % | 7.10 | % | 6.50 | % | |||||
Expected long-term rate of return on plan asset | 6.70 | % | 7.10 | % | 6.50 | % | |||||
Rate of increase in future compensation level | 4.00 | % | 4.00 | % | 4.00 | % | |||||
(*)These rates are based on Mexican pesos as pension obligations are denominated in pesos. | |||||||||||
Schedule of asset mix of the investment portfolio | |||||||||||
2014 | 2013 | ||||||||||
Asset category: | |||||||||||
Equity securities | 73 | % | 74 | % | |||||||
Treasury bills | 27 | % | 26 | % | |||||||
100 | % | 100 | % | ||||||||
Mexican Health Plan | Post-retirement Health Care Plan | |||||||||||
Components of net periodic benefit costs | |||||||||||
Schedule of assumptions used to determine the pension obligation and seniority premiums as of year-end and the net cost | Mexican health plan | ||||||||||
Weighted average discount rate | 6.70 | % | 7.1 | % | 6.50 | % | |||||
Schedule of effects of one percentage-point change in assumed other benefits cost trend rates | |||||||||||
One Percentage Point | |||||||||||
(in millions) | Increase | Decrease | |||||||||
Effect on total service and interest cost components | $ | 1.3 | $ | 0.8 | |||||||
Effect on the post-retirement benefit obligation | $ | 17.2 | $ | 13.7 | |||||||
COMMITMENTS_AND_CONTINGENCIES_
COMMITMENTS AND CONTINGENCIES: (Tables) | 12 Months Ended | ||||||||||
Dec. 31, 2014 | |||||||||||
COMMITMENTS AND CONTINGENCIES: | |||||||||||
Schedule of environmental capital expenditures | |||||||||||
Environmental capital expenditures in years 2014, 2013 and 2012, were as follows (in millions): | |||||||||||
2014 | 2013 | 2012 | |||||||||
Peruvian operations | $ | 127.0 | $ | 76.9 | $ | 27.0 | |||||
Mexican operations | 24.4 | 39.8 | 20.7 | ||||||||
Total | $ | 151.4 | $ | 116.7 | $ | 47.7 | |||||
STOCKHOLDERS_EQUITY_Tables
STOCKHOLDERS' EQUITY: (Tables) | 12 Months Ended | |||||||||||||||
Dec. 31, 2014 | ||||||||||||||||
Share based compensation plan | ||||||||||||||||
Schedule of activity in treasury stock | ||||||||||||||||
Activity in treasury stock in the years 2014 and 2013 was as follows (in millions): | ||||||||||||||||
2014 | 2013 | |||||||||||||||
Southern Copper common shares | ||||||||||||||||
Balance as of January 1, | $ | 1,011.00 | $ | 729.8 | ||||||||||||
Purchase of shares | 682.8 | 281.4 | ||||||||||||||
Used for corporate purposes | (0.3 | ) | (0.2 | ) | ||||||||||||
Balance as of December 31, | 1,693.50 | 1,011.00 | ||||||||||||||
Parent Company (Grupo Mexico) common shares | ||||||||||||||||
Balance as of January 1, | 205.6 | 189 | ||||||||||||||
Other activity, including dividend, interest and currency translation effect | 1.6 | 16.6 | ||||||||||||||
Balance as of December 31, | 207.2 | 205.6 | ||||||||||||||
Treasury stock balance as of December 31, | $ | 1,900.70 | $ | 1,216.60 | ||||||||||||
Schedule of share repurchase program activity | ||||||||||||||||
Maximum Number | ||||||||||||||||
Total Number of | of Shares that May | |||||||||||||||
Total Number of | Average Price | Shares Purchased as | Yet Be Purchased | Total Cost | ||||||||||||
Period | Shares | Paid per | Part of Publicly | Under the Plan | ($ in | |||||||||||
From | To | Purchased | Share | Announced Plan | @ $28.20 (1) | millions) | ||||||||||
2008 | 2011 | 42,472,150 | $ | 17.20 | 42,472,150 | $ | 730.8 | |||||||||
2012:00:00 | 4,442,336 | 33.17 | 46,914,486 | 147.3 | ||||||||||||
2013:00:00 | 10,245,000 | 27.47 | 57,159,486 | 281.4 | ||||||||||||
2014:00:00 | ||||||||||||||||
1/1/14 | 1/31/14 | 1,768,000 | 28.06 | 58,927,486 | 49.6 | |||||||||||
3/1/14 | 3/21/14 | 106,079 | 27.04 | 59,033,565 | 2.9 | |||||||||||
Total first quarter | 1,874,079 | 28.00 | 52.5 | |||||||||||||
6/1/14 | 6/30/14 | 450,532 | 28.92 | 59,484,097 | 13.0 | |||||||||||
Total second quarter | 450,532 | 28.92 | 13.0 | |||||||||||||
7/1/14 | 7/31/14 | 724,516 | 33.04 | 60,208,613 | 23.9 | |||||||||||
8/1/14 | 8/31/14 | 4,926,534 | 32.09 | 65,135,147 | 158.1 | |||||||||||
9/1/14 | 9/30/14 | 4,498,263 | 31.44 | 69,633,410 | 141.4 | |||||||||||
Total third quarter | 10,149,313 | 31.87 | 323.4 | |||||||||||||
10/1/14 | 10/31/14 | 5,821,213 | 28.86 | 75,454,623 | 168.0 | |||||||||||
11/1/14 | 11/30/14 | 1,286,767 | 29.50 | 76,741,390 | 38.0 | |||||||||||
12/1/14 | 12/31/14 | 3,129,524 | 28.08 | 79,870,914 | 87.9 | |||||||||||
Total fourth quarter | 10,237,504 | 28.70 | 293.9 | |||||||||||||
Total purchased | 79,870,914 | $ | 23.07 | 5,593,347 | -2 | $ | 1,842.3 | |||||||||
(1) NYSE closing price of SCC common shares at December 31, 2014. | ||||||||||||||||
(2) Maximum number of shares will increase by approximately 35.5 million shares, with the Board authorized increase of $1 billion approved on January 29, 2015. | ||||||||||||||||
Schedule of activity in Directors' Stock Award Plan | ||||||||||||||||
2014 | 2013 | |||||||||||||||
Total SCC shares reserved for the plan | 600,000 | 600,000 | ||||||||||||||
Total shares granted at January 1, | (297,600 | ) | (285,600 | ) | ||||||||||||
Granted in the period | (12,000 | ) | (12,000 | ) | ||||||||||||
Total shares granted at December 31, | (309,600 | ) | (297,600 | ) | ||||||||||||
Remaining shares reserved | 290,400 | 302,400 | ||||||||||||||
Employee Stock Purchase Plan | ||||||||||||||||
Share based compensation plan | ||||||||||||||||
Schedule of stock based compensation expense and unrecognized compensation expense | ||||||||||||||||
2014 | 2013 | 2012 | ||||||||||||||
Stock based compensation expense | $ | 2.1 | $ | 2.1 | $ | 2.1 | ||||||||||
Unrecognized compensation expense | — | $ | 2.1 | $ | 4.2 | |||||||||||
Schedule of stock award activity | ||||||||||||||||
Shares | Unit Weighted Average | |||||||||||||||
Grant Date Fair Value | ||||||||||||||||
Outstanding shares at January 1, 2014 | 4,449,599 | $ | 1.16 | |||||||||||||
Granted | — | — | ||||||||||||||
Exercised | (150,987 | ) | 1.16 | |||||||||||||
Forfeited | — | 1.16 | ||||||||||||||
Outstanding shares at December 31, 2014 | 4,298,612 | 1.16 | ||||||||||||||
Outstanding shares at January 1, 2013 | 6,955,572 | $ | 1.16 | |||||||||||||
Granted | — | — | ||||||||||||||
Exercised | (2,474,814 | ) | 1.16 | |||||||||||||
Forfeited | (31,159 | ) | 1.16 | |||||||||||||
Outstanding shares at December 31, 2013 | 4,449,599 | 1.16 | ||||||||||||||
New Employee Stock Purchase Plan | ||||||||||||||||
Share based compensation plan | ||||||||||||||||
Schedule of stock based compensation expense and unrecognized compensation expense | ||||||||||||||||
2014 | 2013 | 2012 | ||||||||||||||
Stock based compensation expense | $ | 0.6 | $ | 0.6 | $ | 0.6 | ||||||||||
Unrecognized compensation expense | $ | 2.0 | $ | 2.6 | $ | 3.2 | ||||||||||
Schedule of stock award activity | ||||||||||||||||
Shares | Unit Weighted Average | |||||||||||||||
Grant Date Fair Value | ||||||||||||||||
Outstanding shares at January 1, 2014 | 3,012,464 | $ | 2.05 | |||||||||||||
Granted | — | — | ||||||||||||||
Exercised | (724,573 | ) | 2.05 | |||||||||||||
Forfeited | — | — | ||||||||||||||
Outstanding shares at December 31, 2014 | 2,287,891 | 2.05 | ||||||||||||||
Outstanding shares at January 1, 2013 | 2,944,742 | $ | 2.05 | |||||||||||||
Granted | 226,613 | 2.05 | ||||||||||||||
Exercised | (38,098 | ) | 2.05 | |||||||||||||
Forfeited | (120,793 | ) | 2.05 | |||||||||||||
Outstanding shares at December 31, 2013 | 3,012,464 | 2.05 | ||||||||||||||
FAIR_VALUE_MEASUREMENT_Tables
FAIR VALUE MEASUREMENT: (Tables) | 12 Months Ended | |||||||||||||
Dec. 31, 2014 | ||||||||||||||
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 consolidated balance sheet as of December 31, 2014 (in millions): | |||||||||||||
Balance at December 31, 2014 | ||||||||||||||
Carrying Value | Fair Value | |||||||||||||
Liabilities: | ||||||||||||||
Long-term debt | $ | 4,206.0 | $ | 4,369.6 | ||||||||||
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 of December 31, 2014 and 2013, as follows (in millions): | |||||||||||||
Fair Value at Measurement Date Using: | ||||||||||||||
Description | Fair Value | Quoted prices in | Significant | Significant | ||||||||||
as of | active markets for | other | unobservable | |||||||||||
December | identical assets | observable | inputs | |||||||||||
31, 2014 | (Level 1) | inputs | (Level 3) | |||||||||||
(Level 2) | ||||||||||||||
Assets: | ||||||||||||||
Short term investment: | ||||||||||||||
- Trading securities | $ | 333.7 | $ | 333.7 | — | $ | — | |||||||
- Available-for-sale debt securities: | ||||||||||||||
Corporate bonds | 0.3 | — | $ | 0.3 | — | |||||||||
Asset backed securities | — | — | — | — | ||||||||||
Mortgage backed securities | 4.6 | — | 4.6 | — | ||||||||||
Accounts receivable: | ||||||||||||||
- Embedded derivatives - Not classified as hedges: | ||||||||||||||
Provisionally priced sales: | ||||||||||||||
Copper | 202.2 | 202.2 | — | — | ||||||||||
Molybdenum | 105.5 | 105.5 | — | — | ||||||||||
Total | $ | 646.3 | $ | 641.4 | $ | 4.9 | $ | — | ||||||
Fair Value at Measurement Date Using: | ||||||||||||||
Description | Fair Value | Quoted prices in | Significant | Significant | ||||||||||
as of | active markets for | other | unobservable | |||||||||||
December | identical assets | observable | inputs | |||||||||||
31, 2013 | (Level 1) | inputs | (Level 3) | |||||||||||
(Level 2) | ||||||||||||||
Assets: | ||||||||||||||
Short term investment: | ||||||||||||||
- Trading securities | $ | 202.6 | $ | 202.6 | — | $ | — | |||||||
- Available-for-sale debt securities: | ||||||||||||||
Corporate bonds | 0.4 | — | $ | 0.4 | — | |||||||||
Asset backed securities | 0.1 | — | 0.1 | — | ||||||||||
Mortgage backed securities | 5.2 | — | 5.2 | — | ||||||||||
Accounts receivable: | ||||||||||||||
- Embedded derivatives - Not classified as hedges: | ||||||||||||||
Provisionally priced sales: | ||||||||||||||
Copper | 53.9 | 53.9 | — | — | ||||||||||
Molybdenum | 100.2 | 100.2 | — | — | ||||||||||
Total | $ | 362.4 | $ | 356.7 | $ | 5.7 | $ | — | ||||||
CONCENTRATION_OF_RISK_Tables
CONCENTRATION OF RISK: (Tables) | 12 Months Ended | ||||||||||
Dec. 31, 2014 | |||||||||||
CONCENTRATION OF RISK: | |||||||||||
Schedule of concentration risk for cash equivalents and short- term investments | At December 31, 2014, SCC had invested its cash and cash equivalents and short-term investments as follows: | ||||||||||
% of total | % in one institution | ||||||||||
Country | $ in million | cash (1) | of country | of total cash | |||||||
United States | $ | 210.8 | 30.0 | % | 47.1 | % | 14.1 | % | |||
Switzerland | 389.6 | 55.5 | % | 100.0 | % | 55.5 | % | ||||
Peru | 83.9 | 11.9 | % | 79.7 | % | 9.5 | % | ||||
Mexico | 18.3 | 2.6 | % | 62.4 | % | 1.6 | % | ||||
Total cash and short-term investment | $ | 702.6 | 100.0 | % | |||||||
-1 | 97.2% of the Company’s cash is in U.S. dollars. | ||||||||||
Schedule of company's largest customers as percentage of accounts receivable and total sales | |||||||||||
2014 | 2013 | 2012 | |||||||||
Accounts receivable trade as of December 31, | |||||||||||
Five largest customers | 31.2 | % | 37.1 | % | 40.0 | % | |||||
Largest customer | 8.0 | % | 12.2 | % | 10.4 | % | |||||
Total sales in year | |||||||||||
Five largest customers | 34.3 | % | 28.7 | % | 28.8 | % | |||||
Largest customer | 8.2 | % | 8.4 | % | 7.4 | % | |||||
RELATED_PARTY_TRANSACTIONS_Tab
RELATED PARTY TRANSACTIONS: (Tables) | 12 Months Ended | ||||||||||
Dec. 31, 2014 | |||||||||||
Related party transactions | |||||||||||
Receivable and payable balances with related parties | |||||||||||
Receivable and payable balances with related parties are shown below (in millions): | |||||||||||
As of December 31, | |||||||||||
2014 | 2013 | ||||||||||
Related parties receivable current: | |||||||||||
Grupo Mexico | $ | 0.7 | $ | 0.8 | |||||||
Mexico Generadora de Energia S. de R.L. (“MGE”) | 31.9 | 18.8 | |||||||||
Compania Perforadora Mexico S.A.P.I. de C.V. and affiliates | 0.2 | 0.7 | |||||||||
Compania Minera Coimolache S.A. | — | 17.2 | |||||||||
Mexico Proyectos y Desarrollos, S.A. de C.V. and affiliates | — | 0.6 | |||||||||
$ | 32.8 | $ | 38.1 | ||||||||
Related parties receivable non-current: | |||||||||||
MGE | $ | 161.2 | $ | 161.2 | |||||||
Related parties payable: | |||||||||||
Grupo Mexico | $ | 2.8 | $ | 3.3 | |||||||
MGE | 45.2 | 14.4 | |||||||||
Asarco LLC | 13.8 | 6.2 | |||||||||
Higher Technology S.A.C. | 0.2 | 0.1 | |||||||||
Breaker, S.A. de C.V. and affiliates (“Breaker”) | 0.7 | 0.3 | |||||||||
Sempertrans and affiliates | — | 0.1 | |||||||||
Mexico Transportes Aereos S.A. de C.V. (“Mextransport”) | 1.3 | 0.6 | |||||||||
Mexico Proyectos y Desarrollos S.A. de C.V. and affiliates | 1.7 | — | |||||||||
Ferrocarril Mexicano S.A. de C.V. | 1.8 | 3.3 | |||||||||
Eolica El Retiro, S.A.P.I. de C.V. | 1.6 | — | |||||||||
$ | 69.1 | $ | 28.3 | ||||||||
Grupo Mexico and Affiliates | |||||||||||
Related party transactions | |||||||||||
Purchase and sales activities with related parties | |||||||||||
The following table summarize the purchase and sale activities with Grupo Mexico and its affiliates in 2014, 2013 and 2012 (in millions): | |||||||||||
2014 | 2013 | 2012 | |||||||||
Purchase activity | |||||||||||
Grupo Mexico | $ | 13.9 | $ | 13.8 | $ | 13.9 | |||||
Asarco LLC | 47.9 | 98.0 | 58.6 | ||||||||
Ferrocarril Mexicano, S.A. de C.V. | 22.7 | 19.7 | 13.9 | ||||||||
Mexico Proyectos y Desarrollos S.A. de C.V. and affiliates | 61.4 | 54.4 | 49.5 | ||||||||
MGE | 178.4 | 14.4 | — | ||||||||
Compania Perforadora Mexico S.A.P.I. de C.V. and affiliates | 3.1 | 6.1 | 2.2 | ||||||||
Eolica El Retiro, S.A.P.I. de C.V. | 7.6 | — | — | ||||||||
Total purchases | $ | 335.0 | $ | 206.4 | $ | 138.1 | |||||
Sales activity | |||||||||||
Asarco LLC | $ | 24.7 | $ | 88.7 | $ | 23.5 | |||||
Mexico Proyectos y Desarrollos S.A. de C.V. and affiliates | 0.8 | 0.8 | 0.5 | ||||||||
Compania Perforadora Mexico S.A.P.I. de C.V. and affiliates | 0.6 | 0.6 | — | ||||||||
MGE | 96.5 | 27.3 | — | ||||||||
Total sales | $ | 122.6 | $ | 117.4 | $ | 24.0 | |||||
Companies with relationship to the controlling group | |||||||||||
Related party transactions | |||||||||||
Purchase and sales activities with related parties | |||||||||||
The following table summarize the purchase and sales activities with other Larrea family companies in 2014, 2013 and 2012 (in millions): | |||||||||||
Mextransport: | 2014 | 2013 | 2012 | ||||||||
Purchase activity | $ | 2.5 | $ | 2.7 | $ | 2.7 | |||||
Sales activity | $ | 0.3 | $ | 0.3 | $ | 0.9 | |||||
Companies with relationship to SCC executive officers' families | |||||||||||
Related party transactions | |||||||||||
Purchase activity with related parties | |||||||||||
The following table summarize the purchase activities with companies with relationships to SCC executive officers in 2014, 2013 and 2012 (in millions): | |||||||||||
2014 | 2013 | 2012 | |||||||||
Higher Technology S.A.C. | $ | 3.2 | $ | 2.2 | $ | 3.1 | |||||
Servicios y Fabricaciones Mecanicas S.A.C. | 1.3 | 0.4 | 0.2 | ||||||||
Sempertrans | 1.2 | 1.1 | 0.3 | ||||||||
Breaker | 10.1 | 3.9 | 2.3 | ||||||||
Pigoba, S.A. de C.V. | 0.6 | 0.3 | 0.8 | ||||||||
Total purchased | $ | 16.4 | $ | 7.9 | $ | 6.7 | |||||
SEGMENT_AND_RELATED_INFORMATIO1
SEGMENT AND RELATED INFORMATION: (Tables) | 12 Months Ended | ||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||
SEGMENT AND RELATED INFORMATION: | |||||||||||||||||
Schedule of financial information relating to Company's segments | |||||||||||||||||
Year Ended December 31, 2014 | |||||||||||||||||
(in millions) | |||||||||||||||||
Mexican | Mexican | Peruvian | Corporate, other | Consolidated | |||||||||||||
Open-pit | IMMSA | Operations | and eliminations | ||||||||||||||
Unit | |||||||||||||||||
Net sales outside of segments | $ | 2,954.20 | $ | 351.7 | $ | 2,481.80 | $ | — | $ | 5,787.70 | |||||||
Intersegment sales | — | 90.4 | — | (90.4 | ) | — | |||||||||||
Cost of sales (exclusive of depreciation, amortization and depletion) | 1,146.60 | 335 | 1,416.60 | (57.7 | ) | 2,840.50 | |||||||||||
Selling, general and administrative | 37.2 | 16.3 | 44.8 | 5.1 | 103.4 | ||||||||||||
Depreciation, amortization and depletion | 225.5 | 33.4 | 198.4 | (12.3 | ) | 445 | |||||||||||
Exploration | 3.8 | 29.5 | 13.6 | 27.7 | 74.6 | ||||||||||||
Environmental reclamation | 91.4 | — | — | — | 91.4 | ||||||||||||
Operating income | $ | 1,449.70 | $ | 27.9 | $ | 808.4 | $ | (53.2 | ) | 2,232.80 | |||||||
Less: | |||||||||||||||||
Interest, net | (123.3 | ) | |||||||||||||||
Other income (expense) | (40.8 | ) | |||||||||||||||
Income taxes | (754.6 | ) | |||||||||||||||
Equity earnings of affiliate | 23.9 | ||||||||||||||||
Non-controlling interest | (5.0 | ) | |||||||||||||||
Net income attributable to SCC | $ | 1,333.00 | |||||||||||||||
Capital expenditures | $ | 1,125.30 | $ | 46.7 | $ | 353.8 | $ | 9 | $ | 1,534.80 | |||||||
Property, net | $ | 4,418.50 | $ | 389 | $ | 2,561.40 | $ | 67.5 | $ | 7,436.40 | |||||||
Total assets | $ | 6,780.40 | $ | 843.5 | $ | 3,417.90 | $ | 510.1 | $ | 11,551.90 | |||||||
Year Ended December 31, 2013 | |||||||||||||||||
(in millions) | |||||||||||||||||
Mexican | Mexican | Peruvian | Corporate, other | Consolidated | |||||||||||||
Open-pit | IMMSA | Operations | and eliminations | ||||||||||||||
Unit | |||||||||||||||||
Net sales outside of segments | $ | 2,976.00 | $ | 362.3 | $ | 2,614.60 | $ | — | $ | 5,952.90 | |||||||
Intersegment sales | — | 96.9 | — | (96.9 | ) | — | |||||||||||
Cost of sales (exclusive of depreciation, amortization and depletion) | 1,308.90 | 320.8 | 1,358.60 | (117.0 | ) | 2,871.30 | |||||||||||
Selling, general and administrative | 35.4 | 15.1 | 49.7 | 2.3 | 102.5 | ||||||||||||
Depreciation, amortization and depletion | 179 | 31 | 177.2 | 8.8 | 396 | ||||||||||||
Exploration | 3.2 | 27.2 | 10.2 | 10.4 | 51 | ||||||||||||
Operating income | $ | 1,449.50 | $ | 65.1 | $ | 1,018.90 | $ | (1.4 | ) | 2,532.10 | |||||||
Less: | |||||||||||||||||
Interest, net | (176.6 | ) | |||||||||||||||
Other income (expense) | 17.1 | ||||||||||||||||
Income taxes | (769.3 | ) | |||||||||||||||
Equity earnings of affiliate | 20.9 | ||||||||||||||||
Non-controlling interest | (5.7 | ) | |||||||||||||||
Net income attributable to SCC | $ | 1,618.50 | |||||||||||||||
Capital expenditures | $ | 1,263.50 | $ | 60.6 | $ | 372.3 | $ | 6.9 | $ | 1,703.30 | |||||||
Property, net | $ | 3,579.90 | $ | 378.2 | $ | 2,451.40 | $ | 66.7 | $ | 6,476.20 | |||||||
Total assets | $ | 6,010.30 | $ | 895.6 | $ | 3,539.30 | $ | 550.8 | $ | 10,996.00 | |||||||
Year Ended December 31, 2012 | |||||||||||||||||
(in millions) | |||||||||||||||||
Mexican | Mexican | Peruvian | Corporate | Total | |||||||||||||
Open-pit | IMMSA Unit | Operations | and other | Consolidated | |||||||||||||
eliminations | |||||||||||||||||
Net sales outside of segments | $ | 3,339.00 | $ | 378 | $ | 2,952.30 | $ | — | $ | 6,669.30 | |||||||
Intersegment sales | 135 | (135.0 | ) | — | |||||||||||||
Cost of sales (exclusive of depreciation, amortization and depletion) | 1,228.20 | 292.4 | 1,380.50 | (131.9 | ) | 2,769.20 | |||||||||||
Selling, general and administrative | 34.4 | 14.6 | 48.5 | 3.8 | 101.3 | ||||||||||||
Depreciation, amortization and depletion | 145.6 | 25.2 | 160.3 | (5.3 | ) | 325.8 | |||||||||||
Exploration | 5.2 | 28.2 | 9.5 | 5 | 47.9 | ||||||||||||
Legal fees related to the SCC shareholder derivative lawsuit | — | — | — | 316.2 | 316.2 | ||||||||||||
Operating income | $ | 1,925.60 | $ | 152.6 | $ | 1,353.50 | $ | (322.8 | ) | 3,108.90 | |||||||
Less: | |||||||||||||||||
Interest, net | (157.2 | ) | |||||||||||||||
Other income (expense) | 21.8 | ||||||||||||||||
Income taxes | (1,080.9 | ) | |||||||||||||||
Equity earnings of affiliate | 48.7 | ||||||||||||||||
Non-controlling interest | (6.7 | ) | |||||||||||||||
Income attributable to SCC | $ | 1,934.60 | |||||||||||||||
Capital expenditures | $ | 822.8 | $ | 56 | $ | 257.9 | $ | (84.8 | ) | $ | 1,051.90 | ||||||
Property, net | $ | 2,444.90 | $ | 350.9 | $ | 2,231.40 | $ | 129.5 | $ | 5,156.70 | |||||||
Total assets | $ | 4,241.40 | $ | 873.1 | $ | 3,353.00 | $ | 1,916.20 | $ | 10,383.70 | |||||||
Schedule of sales value per segment | |||||||||||||||||
Year Ended December 31, 2014 | |||||||||||||||||
(in millions) | Mexican | Mexican | Peruvian | Corporate, other | Total | ||||||||||||
Open-pit | IMMSA Unit | Operations | & Eliminations | Consolidated | |||||||||||||
Copper | $ | 2,380.10 | $ | 46.4 | $ | 2,137.90 | $ | (46.4 | ) | $ | 4,518.00 | ||||||
Molybdenum | 299.8 | — | 207.1 | — | 506.9 | ||||||||||||
Silver | 146.7 | 88 | 71.6 | (33.0 | ) | 273.3 | |||||||||||
Zinc | — | 209.8 | — | — | 209.8 | ||||||||||||
Other | 127.6 | 97.9 | 65.2 | (11.0 | ) | 279.7 | |||||||||||
Total | $ | 2,954.20 | $ | 442.1 | $ | 2,481.80 | $ | (90.4 | ) | $ | 5,787.70 | ||||||
Year Ended December 31, 2013 | |||||||||||||||||
(in millions) | Mexican | Mexican | Peruvian | Corporate, other | Total | ||||||||||||
Open-pit | IMMSA Unit | Operations | & Eliminations | Consolidated | |||||||||||||
Copper | $ | 2,365.50 | $ | 48.4 | $ | 2,289.30 | $ | (48.4 | ) | $ | 4,654.80 | ||||||
Molybdenum | 241.3 | — | 147.9 | — | 389.2 | ||||||||||||
Silver | 242.7 | 110 | 79.7 | (38.7 | ) | 393.7 | |||||||||||
Zinc | — | 200.9 | — | — | 200.9 | ||||||||||||
Other | 126.5 | 99.9 | 97.7 | (9.8 | ) | 314.3 | |||||||||||
Total | $ | 2,976.00 | $ | 459.2 | $ | 2,614.60 | $ | (96.9 | ) | $ | 5,952.90 | ||||||
Year Ended December 31, 2012 | |||||||||||||||||
(in millions) | Mexican | Mexican | Peruvian | Corporate, other | Total | ||||||||||||
Open-pit | IMMSA Unit | Operations | & Eliminations | Consolidated | |||||||||||||
Copper | $ | 2,604.90 | $ | 62.3 | $ | 2,532.00 | $ | (62.3 | ) | $ | 5,136.90 | ||||||
Molybdenum | 271.3 | — | 179.2 | — | 450.5 | ||||||||||||
Silver | 280.5 | 161.5 | 113.6 | (60.3 | ) | 495.3 | |||||||||||
Zinc | — | 195.9 | — | — | 195.9 | ||||||||||||
Other | 182.3 | 93.3 | 127.5 | (12.4 | ) | 390.7 | |||||||||||
Total | $ | 3,339.00 | $ | 513 | $ | 2,952.30 | $ | (135.0 | ) | $ | 6,669.30 | ||||||
Schedule of net sales by countries | |||||||||||||||||
Years Ended December 31, | |||||||||||||||||
(in millions) | 2014 | 2013 | 2012 | ||||||||||||||
Mexico | $ | 1,708.9 | $ | 1,403.3 | $ | 1,676.4 | |||||||||||
United States | 1,059.3 | 1,031.2 | 1,567.4 | ||||||||||||||
Europe | 892.6 | 1,057.5 | 1,365.1 | ||||||||||||||
Asia | 933.9 | 907.2 | 763.4 | ||||||||||||||
Brazil | 372.4 | 471.0 | 449.0 | ||||||||||||||
Chile | 401.5 | 366.1 | 443.5 | ||||||||||||||
Peru | 282.2 | 324.8 | 296.2 | ||||||||||||||
Other countries | 136.9 | 391.8 | 108.3 | ||||||||||||||
Total | $ | 5,787.7 | $ | 5,952.9 | $ | 6,669.3 | |||||||||||
Schedule of provisionally priced copper and molybdenum sales outstanding | |||||||||||||||||
Following are the provisionally priced copper and molybdenum sales outstanding at December 31, 2014: | |||||||||||||||||
Sales volume | Priced at | Month of settlement | |||||||||||||||
(million lbs.) | (per pound) | ||||||||||||||||
Copper | 70.4 | 2.873 | January through April 2015 | ||||||||||||||
Molybdenum | 11.7 | 9.00 | January through March 2015 | ||||||||||||||
Schedule of provisional sales price adjustments included in accounts receivable and net sales | |||||||||||||||||
Provisional sales price adjustments included in accounts receivable and net sales were as follows at December, 31 (in millions): | |||||||||||||||||
As of December 31, | |||||||||||||||||
2014 | 2013 | ||||||||||||||||
Copper | $ | (9.6 | ) | $ | 1 | ||||||||||||
Molybdenum | (16.5 | ) | 0.6 | ||||||||||||||
Total | $ | (26.1 | ) | $ | 1.6 | ||||||||||||
QUARTERLY_DATA_unaudited_Table
QUARTERLY DATA (unaudited) (Tables) | 12 Months Ended | ||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||
QUARTERLY DATA (unaudited) | |||||||||||||||||
Schedule of quarterly financial data | (in millions, except per share data) | ||||||||||||||||
2014 | |||||||||||||||||
1st | 2nd | 3rd | 4th | Year | |||||||||||||
Net sales | $ | 1,354.4 | $ | 1,487.4 | $ | 1,474.6 | $ | 1,471.3 | $ | 5,787.7 | |||||||
Gross profit | $ | 602.0 | $ | 644.7 | $ | 641.6 | $ | 613.9 | $ | 2,502.2 | |||||||
Operating income | $ | 562.9 | $ | 597.3 | $ | 547.1 | $ | 525.5 | $ | 2,232.8 | |||||||
Net income | $ | 324.6 | $ | 338.4 | $ | 325.8 | $ | 349.2 | $ | 1,338.0 | |||||||
Net income attributable to SCC | $ | 323.4 | $ | 337.3 | $ | 324.3 | $ | 348.0 | $ | 1,333.0 | |||||||
Per share amounts attributable to SCC: | |||||||||||||||||
Net earnings basic and diluted | $ | 0.39 | $ | 0.40 | $ | 0.39 | $ | 0.43 | $ | 1.61 | |||||||
Dividend per share | $ | 0.12 | $ | 0.10 | $ | 0.12 | $ | 0.12 | $ | 0.46 | |||||||
2013 | |||||||||||||||||
1st | 2nd | 3rd | 4th | Year | |||||||||||||
Net sales | $ | 1,623.0 | $ | 1,410.2 | $ | 1,384.5 | $ | 1,535.2 | $ | 5,952.9 | |||||||
Gross profit | $ | 805.7 | $ | 604.4 | $ | 617.0 | $ | 658.5 | $ | 2,685.6 | |||||||
Operating income | $ | 770.0 | $ | 565.3 | $ | 580.9 | $ | 615.9 | $ | 2,532.1 | |||||||
Net income | $ | 497.0 | $ | 374.1 | $ | 345.6 | $ | 407.5 | $ | 1,624.2 | |||||||
Net income attributable to SCC | $ | 495.4 | $ | 372.7 | $ | 344.2 | $ | 406.2 | $ | 1,618.5 | |||||||
Per share amounts attributable to SCC: | |||||||||||||||||
Net earnings basic and diluted | $ | 0.59 | $ | 0.44 | $ | 0.41 | $ | 0.48 | $ | 1.92 | |||||||
Dividend per share | $ | 0.24 | $ | 0.20 | $ | 0.12 | $ | 0.12 | $ | 0.68 | |||||||
DESCRIPTION_OF_THE_BUSINESS_De
DESCRIPTION OF THE BUSINESS: (Details) | Dec. 31, 2014 | Dec. 31, 2013 |
DESCRIPTION OF THE BUSINESS: | ||
Percentage of ownership interest held by the parent company | 84.60% | 82.30% |
SUMMARY_OF_SIGNIFICANT_ACCOUNT2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (Details) (USD $) | 3 Months Ended | 12 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
segment | ||||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: | ||||
Average estimated recovery period of long-term leach stockpiles | 5 years | |||
Increase in total reserves at a property to qualify as a major expansion (as a percent) | 10.00% | |||
Period considered for calculation of average metal price | 3 years | |||
Current price of copper (in dollars per pound) | 3.36 | 3.36 | 3.65 | 3.68 |
Impairment in the carrying value of long-term assets | $0 | |||
Number of years of average prices for copper and molybdenum used for impairment analysis | 3 years | |||
Leachable material inventories recognized in cost of sales | 17,000,000 | 177,500,000 | 109,300,000 | 68,500,000 |
Current leachable inventory | 762,800,000 | 762,800,000 | ||
Leachable inventory classified as a current asset | 250,100,000 | 250,100,000 | ||
Number of reportable segments | 3 | |||
Financial information related to segments | ||||
Total property, net | 7,436,430,000 | 7,436,430,000 | 6,476,168,000 | |
Maximum | ||||
Financial information related to segments | ||||
Maximum period after shipping within which pricing is based by customer contracts in most cases | 3 months | |||
Estimated useful lives of buildings and equipment | 40 years | |||
Minimum | ||||
Financial information related to segments | ||||
Estimated useful lives of buildings and equipment | 5 years | |||
Mine development | ||||
Financial information related to segments | ||||
Property, plant and equipment, cost capitalization | $34.80 | $36.20 | ||
Mexican IMMSA Unit | ||||
Financial information related to segments | ||||
Number of underground poly metal mines | 5 | |||
Total property, net | 389,000,000 | 389,000,000 | 378,200,000 | 350,900,000 |
Peruvian Operations | ||||
Financial information related to segments | ||||
Number of open-pit copper mines | 2 | |||
Total property, net | $2,561,400,000 | $2,561,400,000 | $2,451,400,000 | $2,231,400,000 |
SHORTTERM_INVESTMENTS_Details
SHORT-TERM INVESTMENTS: (Details) (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Investments | ||
Trading Securities, Debt | $333,700,000 | $202,600,000 |
Weighted average interest rate (as a percent) | 0.78% | 3.78% |
Available for sale | 4,900,000 | 5,700,000 |
Weighted average interest rate (as a percent) | 0.44% | 0.42% |
Total short-term investments | 338,589,000 | 208,268,000 |
Trading: | ||
Interest earned | 4,900,000 | 5,200,000 |
Unrealized gain (loss) at the end of the period | 2,100,000 | -1,900,000 |
Available-for-sale | ||
Investment redeemed | 800,000 | 800,000 |
Contractual maturities of the Company's available for sale debt securities | ||
One year or less | 300,000 | 400,000 |
Maturing after five years through ten years | 100,000 | 200,000 |
Due after 10 years | 4,500,000 | 5,100,000 |
Total debt securities | 4,900,000 | 5,700,000 |
Maximum | ||
Available-for-sale | ||
Interest earned | $100,000 | $100,000 |
INVENTORIES_Details
INVENTORIES: (Details) (USD $) | 3 Months Ended | 12 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
Metals at lower of average cost or market: | ||||
Finished goods | $84,600,000 | $84,600,000 | $84,200,000 | |
Work-in-process | 450,500,000 | 450,500,000 | 305,400,000 | |
Supplies at average cost | 301,400,000 | 301,400,000 | 304,300,000 | |
Total current inventory | 836,464,000 | 836,464,000 | 693,942,000 | |
Inventory, long-term: | ||||
Leach stockpiles | 512,718,000 | 512,718,000 | 395,177,000 | |
Leaching costs capitalized as long-term inventory of leachable material | 401,300,000 | 306,800,000 | 225,500,000 | |
Leachable material inventories recognized in cost of sales | $17,000,000 | $177,500,000 | $109,300,000 | $68,500,000 |
PROPERTY_Details
PROPERTY: (Details) (USD $) | 12 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
Property | |||
Total property | $12,284,700,000 | $10,986,700,000 | |
Accumulated depreciation, amortization and depletion | -4,848,300,000 | -4,510,500,000 | |
Property, Plant and Equipment, Net, Total | 7,436,430,000 | 6,476,168,000 | |
Depreciation and depletion expense | 443,000,000 | 393,600,000 | 323,600,000 |
Buildings and equipment | |||
Property | |||
Total property | 9,137,700,000 | 8,107,200,000 | |
Construction in progress | |||
Property | |||
Total property | 2,755,900,000 | 2,567,000,000 | |
Mine development | |||
Property | |||
Total property | 255,000,000 | 250,700,000 | |
Land, other than mineral | |||
Property | |||
Total property | $100,100,000 | $61,800,000 |
INTANGIBLE_ASSETS_Details
INTANGIBLE ASSETS: (Details) (USD $) | 12 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
Intangible assets | |||
Intangible assets excluding goodwill, gross | $141,000,000 | $139,400,000 | |
Accumulated amortization | -48,100,000 | -46,200,000 | |
Goodwill | 17,000,000 | 17,000,000 | |
Intangible Assets, Net (Including Goodwill), Total | 109,872,000 | 110,219,000 | |
Amortization expense: | |||
Amortization expense | 1,900,000 | 2,400,000 | 2,200,000 |
Estimated amortization expense: | |||
2015-2019 | 7,600,000 | ||
Average annual | 1,500,000 | ||
Mining concessions | |||
Intangible assets | |||
Intangible assets excluding goodwill, gross | 121,200,000 | 121,200,000 | |
Accumulated amortization | -33,900,000 | -33,000,000 | |
Mine engineering and development studies | |||
Intangible assets | |||
Intangible assets excluding goodwill, gross | 6,000,000 | 6,000,000 | |
Accumulated amortization | -5,200,000 | -4,900,000 | |
Software | |||
Intangible assets | |||
Intangible assets excluding goodwill, gross | 13,800,000 | 12,200,000 | |
Accumulated amortization | ($9,000,000) | ($8,300,000) |
INCOME_TAXES_Details
INCOME TAXES: (Details) (USD $) | 12 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
U.S. federal and state: | |||
Current | ($100,000) | ||
Deferred | -194,100,000 | -139,300,000 | -108,600,000 |
Uncertain tax positions | 10,700,000 | 147,400,000 | |
Provision for income taxes | -183,400,000 | -139,300,000 | 38,700,000 |
Foreign (Peru and Mexico): | |||
Current | 987,100,000 | 866,300,000 | 1,025,100,000 |
Deferred | -49,100,000 | 42,300,000 | 17,100,000 |
Provision for income taxes | 938,000,000 | 908,600,000 | 1,042,200,000 |
Income Tax Expense (Benefit), Total | 754,629,000 | 769,322,000 | 1,080,872,000 |
Earnings by location: | |||
U.S. | -1,700,000 | 100,000 | -100,000 |
Peru | 605,800,000 | 773,800,000 | 846,000,000 |
Mexico | 1,464,600,000 | 1,598,700,000 | 2,127,600,000 |
Foreign | 2,070,400,000 | 2,372,500,000 | 2,973,600,000 |
Income before income taxes | $2,068,706,000 | $2,372,598,000 | $2,973,542,000 |
INCOME_TAXES_Details_2
INCOME TAXES: (Details 2) | 12 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
item | |||
Reconciliation of the statutory income tax rate to the effective tax rate | |||
Expected tax at U.S. statutory rate (as a percent) | 35.00% | 35.00% | 35.00% |
Foreign tax at other than statutory rate, net of foreign tax credit benefit (as a percent) | -0.90% | -0.20% | -0.50% |
Percentage depletion (as a percent) | -5.20% | -5.00% | -4.20% |
Other permanent differences (as a percent) | 4.60% | 3.50% | 3.70% |
Increase (decrease) in unrecognized tax benefits for uncertain tax positions (as a percent) | 0.50% | 5.00% | |
Repatriated foreign earnings (as a percent) | -0.40% | -1.40% | -1.70% |
Amounts (over) / under provided in prior years (as a percent) | 2.20% | 0.40% | -0.60% |
Other (as a percent) | 0.70% | 0.10% | -0.40% |
Effective income tax rate | 36.50% | 32.40% | 36.30% |
U.S. statutory rate (as a percent) | 35.00% | 35.00% | 35.00% |
Number of jurisdictions where company files income tax returns | 3 | ||
Duration for which statutory tax rates for Peru and Mexico are considered to determine effective tax rate | 3 years | ||
Peru | |||
Reconciliation of the statutory income tax rate to the effective tax rate | |||
Expected tax at U.S. statutory rate (as a percent) | 30.00% | 30.00% | 30.00% |
U.S. statutory rate (as a percent) | 30.00% | 30.00% | 30.00% |
Mexico | |||
Reconciliation of the statutory income tax rate to the effective tax rate | |||
Expected tax at U.S. statutory rate (as a percent) | 35.00% | 35.00% | 35.00% |
U.S. statutory rate (as a percent) | 35.00% | 35.00% | 35.00% |
INCOME_TAXES_Details_3
INCOME TAXES: (Details 3) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 | Mar. 31, 2009 |
In Millions, unless otherwise specified | |||
Assets: | |||
Inventories | $32.50 | $18.70 | |
Capitalized exploration expenses | 27.8 | 29.4 | |
U.S. foreign tax credit carryforward, net of FIN 48 liability | 144.8 | 52.6 | |
U.S. tax effect of Peruvian deferred tax liability | 251.4 | 68 | |
Reserves | 101.7 | 35 | |
Other | 19.8 | 27.9 | |
Total deferred tax assets | 578 | 231.6 | |
Liabilities: | |||
Property, plant and equipment | -213 | -105.8 | |
Deferred charges | -74.9 | -79.6 | |
Mexican tax on consolidated dividends | -5.7 | -31.5 | |
Outside basis difference | -7.4 | ||
Other | -9.8 | -0.1 | |
Total deferred tax liabilities | -303.4 | -224.4 | |
Total net deferred tax assets / (liabilities) | 274.6 | 7.2 | |
Other U.S. tax credits | $0 | ||
Related party transactions | |||
Percentage of ownership interest held by the parent company | 84.60% | 82.30% | |
AMC | Minimum | |||
Related party transactions | |||
Percentage of ownership interest held by the parent company | 80.00% |
INCOME_TAXES_Details_4
INCOME TAXES: (Details 4) (USD $) | 12 Months Ended | |||
In Millions, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
Foreign tax credits | ||||
Unrecognized tax benefits | $319.40 | $221.20 | $221.20 | $70.60 |
Foreign | ||||
Foreign tax credits | ||||
Tax credits carryback period | 1 year | |||
Tax credits carryforward period | 10 years | |||
Foreign tax credit carryforward | 447 | |||
Unrecognized tax benefits | 302.2 | |||
Foreign tax credit carryforward net of unrecognized | 144.8 | |||
2016 | Foreign | ||||
Foreign tax credits | ||||
Foreign tax credit carryforward | 19 | |||
2018 | Foreign | ||||
Foreign tax credits | ||||
Foreign tax credit carryforward | 20.4 | |||
2019 | Foreign | ||||
Foreign tax credits | ||||
Foreign tax credit carryforward | 63.7 | |||
2020 | Foreign | ||||
Foreign tax credits | ||||
Foreign tax credit carryforward | 42 | |||
2021 | Foreign | ||||
Foreign tax credits | ||||
Foreign tax credit carryforward | 11.7 | |||
2022 | Foreign | ||||
Foreign tax credits | ||||
Foreign tax credit carryforward | 84.1 | |||
2023 | Foreign | ||||
Foreign tax credits | ||||
Foreign tax credit carryforward | 69.2 | |||
Foreign tax credit carryforward net of unrecognized | 7.9 | |||
2024 | Foreign | ||||
Foreign tax credits | ||||
Foreign tax credit carryforward | 136.9 | |||
Foreign tax credit carryforward net of unrecognized | $136.90 |
INCOME_TAXES_Details_5
INCOME TAXES: (Details 5) | 12 Months Ended | 0 Months Ended | 12 Months Ended | 0 Months Ended | ||||||||||||||||||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2014 | Dec. 31, 2014 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2012 | Dec. 31, 2014 | Dec. 31, 2014 | Dec. 31, 2014 | Dec. 31, 2014 | Dec. 31, 2014 | Dec. 31, 2014 | Jan. 01, 2014 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Jan. 01, 2014 | Jan. 01, 2014 | |
USD ($) | USD ($) | USD ($) | Foreign subsidiaries | Peru | Peru | Peru | Peru | Peru | Peru | Peru | Peru | Peru | Peru | Peru | United States | Mexico | Mexico | Mexico | Mexico | Mexico | Mexico | |
USD ($) | USD ($) | PEN | USD ($) | PEN | USD ($) | PEN | 2015 - 2016 | 2017 - 2018 | 2019 and later | Minimum | Maximum | Minera Mexico | USD ($) | USD ($) | Minimum | Maximum | ||||||
USD ($) | ||||||||||||||||||||||
Income Taxes | ||||||||||||||||||||||
Excess of financial reporting over tax basis for stock in subsidiary | $5,300,000,000 | |||||||||||||||||||||
Cash, cash equivalents,restricted cash and short-term investments | 722,000,000 | 37,700,000 | ||||||||||||||||||||
Short-term investments | 338,589,000 | 208,268,000 | ||||||||||||||||||||
Foreign earnings that may be repatriated | 76,200,000 | |||||||||||||||||||||
Special mine tax (as a percent) | 2.00% | 8.40% | ||||||||||||||||||||
Operating income margin (as a percent) | 10.00% | |||||||||||||||||||||
Increment in operating income margin (as a percent) | 5.00% | 85.00% | ||||||||||||||||||||
Increase in special mining tax rate for each 5% increase up to 85% increase in operating income margin (as a percent) | 0.40% | 0.40% | ||||||||||||||||||||
Provision for special mining tax | 35,300,000 | 25,500,000 | 49,600,000 | |||||||||||||||||||
Income tax rate ( as a percent) | 35.00% | 35.00% | 35.00% | 30.00% | 30.00% | 30.00% | 30.00% | 30.00% | 30.00% | 28.00% | 27.00% | 26.00% | 35.00% | 35.00% | 35.00% | |||||||
Dividend tax rate | 4.10% | 4.10% | 6.80% | 8.00% | 9.30% | |||||||||||||||||
Mining royalty tax (as a percent) | 1.00% | 12.00% | 7.50% | |||||||||||||||||||
Royalty charge assessed as a percentage of net sales | 1.00% | 1.00% | ||||||||||||||||||||
Increment in operating income margin for royalty tax (as a percent) | 5.00% | 10.00% | ||||||||||||||||||||
Increase in royalty tax rate for each 5% increase up to 12% increase in operating income margin (as a percent) | 0.75% | 0.75% | ||||||||||||||||||||
Royalty charge | 32,400,000 | 34,800,000 | 51,000,000 | |||||||||||||||||||
Provision for royalty tax | 7,500,000 | |||||||||||||||||||||
Additional royalty tax over gross income from sales of gold, silver and platinum (as a percent) | 0.50% | |||||||||||||||||||||
Withholding on dividends distributed to individuals or foreign residents (as a percent) | 10.00% | |||||||||||||||||||||
Deductions for tax-exempt salaries and for contributions to pension plans (as a percent) | 47.00% | 53.00% | ||||||||||||||||||||
Mexican statutory tax rate (as a percent) | 30.00% | |||||||||||||||||||||
Mining Royalty Amount on Earnings before taxes | 79,300,000 | |||||||||||||||||||||
Annual estimated cost resulted due to new environmental tax on the sale and importation of fossil fuels | 9,400,000 | |||||||||||||||||||||
Recognized deferred income tax charge | -233,794,000 | -97,188,000 | 55,807,000 | 34,700,000 | ||||||||||||||||||
Changes in unrecognized tax benefits | ||||||||||||||||||||||
Unrecognized tax benefits, opening balance | 221,200,000 | 221,200,000 | 70,600,000 | |||||||||||||||||||
Gross increases tax positions in prior period | 55,100,000 | 39,700,000 | ||||||||||||||||||||
Gross decreases tax positions in prior period | 200,000 | |||||||||||||||||||||
Gross increases current-period tax positions | 43,100,000 | 110,700,000 | ||||||||||||||||||||
Unrecognized Tax Benefits, Period Increase (Decrease), Total | 98,200,000 | 150,600,000 | ||||||||||||||||||||
Unrecognized tax benefits, ending balance | 319,400,000 | 221,200,000 | 221,200,000 | |||||||||||||||||||
Amount of unrecognized tax benefits that, if recognized, would affect the effective tax rate | $319,400,000 | $319,400,000 |
WORKERS_PARTICIPATION_Details
WORKERS' PARTICIPATION: (Details) (USD $) | 12 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Statutory workers' participation | |||
Current | $221.20 | $201.60 | $263.10 |
Deferred | -11.4 | 31.4 | 14.3 |
Workers' participation expense (in USD) | 209.8 | 233 | 277.4 |
Peru | |||
Statutory workers' participation | |||
Provision for workers' participation as a percentage of pre-tax earnings | 8.00% | ||
Number of months for which an individual worker's salary is capped for consideration of annual individual worker participation | 18 months | ||
Maximum taxable units contributed by employer to benefit fund (in Peruvian taxable units) | 2,200 | ||
Maximum employer contribution to benefit fund (in USD) | 2.8 | ||
Mexico | |||
Statutory workers' participation | |||
Provision for workers' participation as a percentage of pre-tax earnings | 10.00% | ||
Deferred workers participation provision | $16.30 |
ASSET_RETIREMENT_OBLIGATION_De
ASSET RETIREMENT OBLIGATION: (Details) (USD $) | 12 Months Ended | 1 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | Jan. 31, 2014 | |
item | |||
Period after which successive reviews are required by the law (in years) | 5 years | ||
Accepted value of the Lima office building | $27,800,000 | ||
Cumulative guarantee amount | 17,900,000 | ||
Number of units with future closure costs recognized as an asset retirement obligation | 3 | ||
Decrease in asset retirement obligation | -36,300,000 | ||
Environmental reclamation | 91,350,000 | ||
Increase to net property due to closure of mine | 20,300,000 | ||
Asset retirement obligation activity | |||
Balance at the beginning of the period | 124,800,000 | 122,300,000 | 124,800,000 |
Changes in estimates | -9,600,000 | ||
Additions | 25,100,000 | ||
Payments | -12,200,000 | -6,300,000 | |
Accretion expense | 13,100,000 | 8,800,000 | |
Balance at the end of the period | 116,100,000 | 124,800,000 | |
Mexico | |||
Plant demolition and soil remediation budgeted cost | 62,400,000 | ||
Environmental reclamation | $46,900,000 |
FINANCING_Details
FINANCING: (Details) (USD $) | 12 Months Ended | 89 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Nov. 30, 2012 | |
item | ||||
FINANCING | ||||
Total debt | $4,206,000,000 | $4,204,900,000 | ||
Less, current portion | -200,000,000 | |||
Long-term Debt, Excluding Current Maturities, Total | 4,006,031,000 | 4,204,915,000 | ||
Face amount of debt | 4,200,000,000 | |||
Number of times for which senior unsecured notes were issued | 6 | |||
Debt issuance cost capitalized | 25,200,000 | 26,100,000 | ||
Amortization charged to interest expense | 900,000 | 800,000 | 600,000 | |
Percentage of principal amount at which notes may be required to be repurchased in event of change of control in the entity | 101.00% | |||
Minimum | ||||
FINANCING | ||||
Number of rating agencies that could cause a change of control triggering event | 1 | |||
Number of decreased gradations that could cause a change of control triggering event | 1 | |||
6.375% Senior unsecured notes due 2015 | ||||
FINANCING | ||||
Total debt | 199,800,000 | 199,700,000 | ||
Face amount of debt | 200,000,000 | |||
Interest rate (as a percent) | 6.38% | |||
5.375% Notes due 2020 | ||||
FINANCING | ||||
Total debt | 398,800,000 | 398,600,000 | ||
Face amount of debt | 400,000,000 | |||
Interest rate (as a percent) | 5.38% | |||
3.500% Senior unsecured notes due 2022 | ||||
FINANCING | ||||
Total debt | 299,200,000 | 299,100,000 | ||
Face amount of debt | 300,000,000 | |||
Interest rate (as a percent) | 3.50% | |||
6.750% Senior unsecured notes due 2040 | ||||
FINANCING | ||||
Total debt | 1,092,200,000 | 1,092,100,000 | ||
Face amount of debt | 1,100,000,000 | |||
Interest rate (as a percent) | 6.75% | |||
5.250% Senior unsecured notes due 2042 | ||||
FINANCING | ||||
Total debt | 1,179,100,000 | 1,178,800,000 | ||
Face amount of debt | 1,200,000,000 | |||
Interest rate (as a percent) | 5.25% | |||
9.250% Yankee Bonds due 2028 | ||||
FINANCING | ||||
Total debt | 51,100,000 | 51,100,000 | ||
Face amount of debt | 125,000,000 | |||
Interest rate (as a percent) | 9.25% | |||
9.250% Yankee Bonds due 2028 | Minera Mexico | Minimum | ||||
FINANCING | ||||
Ratio of EBITDA to interest expense | 2.5 | |||
7.500% Senior unsecured notes due 2035 | ||||
FINANCING | ||||
Total debt | 985,800,000 | 985,500,000 | ||
Face amount of debt | 1,000,000,000 | |||
Interest rate (as a percent) | 7.50% | |||
Debt issuance cost capitalized | $28,900,000 |
FINANCING_Details_2
FINANCING: (Details 2) (USD $) | Dec. 31, 2014 |
In Millions, unless otherwise specified | |
Aggregate maturities of the outstanding borrowings | |
2015 | $200 |
2016 | 0 |
2017 | 0 |
2018 | 0 |
Thereafter | 4,051.20 |
Total | 4,251.20 |
Debt discount | $45.20 |
BENEFIT_PLANS_Details
BENEFIT PLANS: (Details) (USD $) | 12 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
BENEFIT PLANS: | |||
Number of expatriate noncontributory defined benefit pension plans | 2 | ||
Post retirement defined benefit plan | |||
Defined benefit plan, net periodic benefit cost | |||
Service cost | $1 | $1.10 | $1 |
Interest cost | 1.1 | 1 | 1.1 |
Expected return on plan assets | -3.3 | -3.4 | -3.6 |
Amortization of transition assets, net | 0.1 | ||
Amortization of net actuarial gain | -0.4 | -0.7 | -0.8 |
Amortization of net loss (gain) | 0.2 | 0.2 | 0.1 |
Net periodic benefit costs | -1.3 | -1.8 | -2.2 |
Change in benefit obligation: | |||
Projected benefit obligation at beginning of year | 26.8 | 27.9 | |
Service cost | 1 | 1.1 | 1 |
Interest cost | 1.1 | 1 | 1.1 |
Actuarial gain census | 0 | -0.3 | |
Benefits paid | -1.9 | -2.2 | |
Actuarial (gain)/loss | -1.6 | 0.3 | |
Actuarial gain assumption changes | 2.2 | -1 | |
Inflation adjustment | -1.8 | ||
Projected benefit obligation at end of year | 25.8 | 26.8 | 27.9 |
Change in plan assets: | |||
Fair value of plan assets at beginning of year | 60.6 | 61.9 | |
Actual return on plan assets | 3.7 | -0.2 | |
Employer contributions | -0.5 | 0.1 | |
Benefits paid | -1.1 | -0.9 | |
Currency exchange rate adjustment | -5 | -0.3 | |
Fair value of plan assets at end of year | 57.7 | 60.6 | 61.9 |
Funded status at end of year | 31.9 | 33.8 | |
Amounts recognized in statement of financial position | |||
Non-current assets | 31.9 | 33.8 | |
Total | 31.9 | 33.8 | |
Amounts recognized in accumulated other comprehensive income | |||
Net loss (gain) | -1.3 | -1.7 | |
Prior service cost (credit) | 1.6 | 0.1 | |
Total, net of tax | 0.3 | -1.6 | -3.6 |
Net loss (gain), income taxes | 0.4 | 1.5 | |
Reconciliation of accumulated other comprehensive income: | |||
Accumulated other comprehensive income at beginning of plan year | -1.6 | -3.6 | |
Net loss/(gain) amortized during the year | 0.1 | 0.3 | |
Net loss/(gain) occurring during the year | 0.2 | 1.6 | |
Amortization of transition obligation | -0.1 | ||
Currency exchange rate adjustment | 1.7 | 0.1 | |
Net adjustment to accumulated other comprehensive income | 1.9 | 2 | |
Accumulated other comprehensive income at end of plan year | 0.3 | -1.6 | -3.6 |
Net adjustment to accumulated other comprehensive income, income taxes | -1.1 | -1.3 | |
Amounts in accumulative other comprehensive income amortized and recognized as a component of net periodic benefit cost, net of income tax | |||
Net loss / (gain) | 0.2 | 1.6 | |
Amortization of net (loss) gain | 0.1 | 0.3 | |
Amortization of transition obligation | -0.1 | ||
Total amortization expenses | 0.2 | 1.9 | |
Expected Benefit Payments | |||
2015 | 7.2 | ||
2016 | 1.5 | ||
2017 | 1.4 | ||
2018 | 1.5 | ||
2019 | 1.6 | ||
2020 to 2023 | 8.3 | ||
Total | 21.5 | ||
Post retirement defined benefit plan | Expatriate Plan | |||
Assumptions used to determine the pension obligation and seniority premiums as of year-end and the net cost in the ensuing year | |||
Discount rate (as a percent) | 3.50% | 4.25% | 3.35% |
Expected long-term rate of return on plan asset (as a percent) | 4.50% | 4.50% | 4.50% |
Post retirement defined benefit plan | Mexican Health Plan | |||
Assumptions used to determine the pension obligation and seniority premiums as of year-end and the net cost in the ensuing year | |||
Discount rate (as a percent) | 6.70% | 7.10% | 6.50% |
Expected long-term rate of return on plan asset (as a percent) | 6.70% | 7.10% | 6.50% |
Rate of increase in future compensation level (as a percent) | 4.00% | 4.00% | 4.00% |
Post-retirement Health Care Plan | |||
Defined benefit plan, net periodic benefit cost | |||
Interest cost | 1.3 | 1.7 | 1.5 |
Amortization of prior service cost (credit) | -0.3 | -0.3 | |
Net periodic benefit costs | 1 | 1.7 | 1.2 |
Change in benefit obligation: | |||
Projected benefit obligation at beginning of year | 21.7 | 27.2 | |
Interest cost | 1.3 | 1.7 | 1.5 |
Actuarial loss/ (gain) - claims cost | -0.2 | ||
Benefits paid | -0.6 | -0.1 | |
Actuarial (gain)/loss | -3.2 | -6.8 | |
Actuarial gain assumption changes | 0.4 | -0.2 | |
Inflation adjustment | -2.3 | -0.1 | |
Projected benefit obligation at end of year | 17.1 | 21.7 | 27.2 |
Change in plan assets: | |||
Fair value of plan assets at beginning of year | 0 | ||
Employer contributions | 0.1 | 0.1 | |
Benefits paid | -0.1 | -0.1 | |
Fair value of plan assets at end of year | 0 | 0 | |
Funded status at end of year | -17.1 | -21.7 | |
Amounts recognized in statement of financial position | |||
Current liabilities | -0.1 | -0.1 | |
Non-current liabilities | -17 | -21.6 | |
Total | -17.1 | -21.7 | |
Amounts recognized in accumulated other comprehensive income | |||
Net loss (gain) | -4.8 | -4.3 | |
Prior service cost (credit) | -0.1 | -0.1 | |
Total, net of tax | -4.9 | -4.4 | -0.2 |
Net loss (gain), income taxes | 3.3 | 3 | |
Reconciliation of accumulated other comprehensive income: | |||
Accumulated other comprehensive income at beginning of plan year | -4.4 | -0.2 | |
Net loss/(gain) occurring during the year | -1.8 | -4.2 | |
Amortization of transition obligation | 0.1 | ||
Currency exchange rate adjustment | 1.2 | ||
Net adjustment to accumulated other comprehensive income | -0.5 | -4.2 | |
Accumulated other comprehensive income at end of plan year | -4.9 | -4.4 | -0.2 |
Net adjustment to accumulated other comprehensive income, income taxes | 3.3 | 3 | |
Amounts in accumulative other comprehensive income amortized and recognized as a component of net periodic benefit cost, net of income tax | |||
Net loss / (gain) | -1.8 | -4.2 | |
Amortization of transition obligation | 0.1 | ||
Total amortization expenses | -1.7 | -4.2 | |
Expected Benefit Payments | |||
2015 | 1 | ||
2016 | 1.1 | ||
2017 | 1.1 | ||
2018 | 1.2 | ||
2019 | 1.3 | ||
2020 to 2023 | 13.3 | ||
Total | 19 | ||
Post-retirement Health Care Plan | Expatriate Plan | |||
Assumptions used to determine the pension obligation and seniority premiums as of year-end and the net cost in the ensuing year | |||
Discount rate (as a percent) | 3.50% | 4.25% | 4.25% |
Expected Benefit Payments | |||
Assumed trend rate for covered health care benefit cost (as a percent) | 5.80% | ||
Assumed ultimate trend rate for health care benefit cost (as a percent) | 4.60% | ||
Post-retirement Health Care Plan | Mexican Health Plan | |||
Expected Benefit Payments | |||
Assumed trend rate for covered health care benefit cost (as a percent) | 4.00% | ||
Effect of one percentage-point change in assumed other benefit cost trend rates | |||
Effect of one percentage-point increase on total service and interest cost components | 1.3 | ||
Effect of one percentage-point decrease on total service and interest cost components | 0.8 | ||
Effect of one percentage-point increase on post-retirement benefit obligation | 17.2 | ||
Effect of one percentage-point decrease on post-retirement benefit obligation | $13.70 | ||
Post-retirement Health Care Plan | Weighted average | Mexican Health Plan | |||
Assumptions used to determine the pension obligation and seniority premiums as of year-end and the net cost in the ensuing year | |||
Discount rate (as a percent) | 6.70% | 7.10% | 6.50% |
BENEFIT_PLANS_Details_2
BENEFIT PLANS: (Details 2) (USD $) | 12 Months Ended | ||
In Millions, except Per Share data, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Post retirement defined benefit plan | Expatriate Plan | |||
Benefit plans | |||
Net asset value (in dollars per share) | $1 | ||
Assumptions used to determine the pension obligation and seniority premiums as of year-end and the net cost in the ensuing year | |||
Discount rate (as a percent) | 3.50% | 4.25% | 3.35% |
Expected long-term rate of return on plan asset (as a percent) | 4.50% | 4.50% | 4.50% |
Post retirement defined benefit plan | Mexican Health Plan | |||
Assumptions used to determine the pension obligation and seniority premiums as of year-end and the net cost in the ensuing year | |||
Discount rate (as a percent) | 6.70% | 7.10% | 6.50% |
Expected long-term rate of return on plan asset (as a percent) | 6.70% | 7.10% | 6.50% |
Number of financial institutions managing plan assets | 3 | ||
Plan obligations as a percentage of benefit obligation | 30.00% | ||
Asset allocation (as a percent) | 100.00% | 100.00% | |
Expected employer contribution in next fiscal year | $6.30 | ||
Pending payments to former Buenavista workers | $3.40 | ||
Post retirement defined benefit plan | Parent Company (Grupo Mexico) common shares | Mexican Health Plan | |||
Assumptions used to determine the pension obligation and seniority premiums as of year-end and the net cost in the ensuing year | |||
Asset allocation (as a percent) | 73.00% | ||
Post retirement defined benefit plan | Equity securities | Mexican Health Plan | |||
Assumptions used to determine the pension obligation and seniority premiums as of year-end and the net cost in the ensuing year | |||
Asset allocation (as a percent) | 73.00% | 74.00% | |
Post retirement defined benefit plan | Treasury bills | Mexican Health Plan | |||
Assumptions used to determine the pension obligation and seniority premiums as of year-end and the net cost in the ensuing year | |||
Asset allocation (as a percent) | 27.00% | 26.00% | |
Post-retirement Health Care Plan | Expatriate Plan | |||
Assumptions used to determine the pension obligation and seniority premiums as of year-end and the net cost in the ensuing year | |||
Discount rate (as a percent) | 3.50% | 4.25% | 4.25% |
NONCONTROLLING_INTEREST_Detail
NON-CONTROLLING INTEREST: (Details) | Dec. 31, 2014 |
NON-CONTROLLING INTEREST | |
Investment shareholders' interest in Peruvian Branch (as a percent) | 0.71% |
COMMITMENTS_AND_CONTINGENCIES_1
COMMITMENTS AND CONTINGENCIES: (Details) | 0 Months Ended | 12 Months Ended | 0 Months Ended | 9 Months Ended | 12 Months Ended | |||||||||||||||
In Millions, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Sep. 15, 2014 | Sep. 15, 2014 | Aug. 06, 2014 | Sep. 30, 2014 | Dec. 31, 2014 | Dec. 31, 2014 | Dec. 31, 2014 | Dec. 31, 2014 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2014 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
item | USD ($) | USD ($) | USD ($) | Buenavista del Cobre, S.A. de C.V | Buenavista del Cobre, S.A. de C.V | Buenavista del Cobre, S.A. de C.V | Buenavista del Cobre, S.A. de C.V | Buenavista del Cobre, S.A. de C.V | Buenavista del Cobre, S.A. de C.V | Buenavista del Cobre, S.A. de C.V | Buenavista del Cobre, S.A. de C.V | Peru | Peru | Peru | Peru | Mexico | Mexico | Mexico | Mexico | |
USD ($) | MXN | m3 | country | USD ($) | MXN | Maximum | Maximum | USD ($) | USD ($) | USD ($) | Maximum | USD ($) | USD ($) | USD ($) | person | |||||
km | USD ($) | MXN | item | category | ||||||||||||||||
Environmental costs | ||||||||||||||||||||
Environmental capital expenditure | $151.40 | $116.70 | $47.70 | $127 | $76.90 | $27 | $24.40 | $39.80 | $20.70 | |||||||||||
Period required for ambient air monitoring as per environmental regulation | 12 months | |||||||||||||||||||
Revised air quality standards for sulfur dioxide as per new environmental regulation (in micrograms per cubic meter) | 20 | |||||||||||||||||||
Air quality standards level for sulfur dioxide to be maintained when emission is excess than specified as per new environmental regulation (in micrograms per cubic meter) | 80 | |||||||||||||||||||
Number of atmospheric basins established that require further attention | 3 | |||||||||||||||||||
Number of categories of collective actions | 3 | |||||||||||||||||||
Minimum number of people claiming injury due to collective action initiative in Civil Federal Procedures Code (CFPC) | 30 | |||||||||||||||||||
Volume of copper sulfate solution (in cubic meters) | 40,000 | |||||||||||||||||||
Distance of pond under construction from mine (in kilometers) | 10 | |||||||||||||||||||
Amount of administrative fines and sanctions (in pesos) | 3 | 40 | ||||||||||||||||||
Amount committed to the Mexican Federal Government to establish a trust (in peso) | 150 | 2,000 | ||||||||||||||||||
Number of countries in which riverside residents are affected by the spill | 7 | |||||||||||||||||||
Amount deposited in the trust (in peso) | 74.9 | 1,000 | ||||||||||||||||||
Estimated contingent liability | 91.4 | |||||||||||||||||||
Amount already paid | $16.40 | |||||||||||||||||||
Number of lawsuits | 3 |
COMMITMENTS_AND_CONTINGENCIES_2
COMMITMENTS AND CONTINGENCIES: (Details 2) (USD $) | 12 Months Ended | 3 Months Ended | 12 Months Ended | 1 Months Ended | |||
In Millions, unless otherwise specified | Dec. 31, 2014 | Mar. 31, 2013 | Dec. 31, 1992 | Dec. 31, 1978 | Dec. 31, 1971 | Apr. 30, 1996 | Aug. 31, 2009 |
ha | person | ||||||
Tia Maria | |||||||
Litigation matter | |||||||
Area of mining concession (in hectares) | 32,989.64 | ||||||
Virgen Maria | |||||||
Litigation matter | |||||||
Area of mining concession (in hectares) | 943.72 | ||||||
Percentage of mining concession | 2.90% | ||||||
Garcia Ataucuri litigation | |||||||
Litigation matter | |||||||
Number of plaintiffs involved in lawsuits filed | 800 | ||||||
Number of former Branch workers | 216 | ||||||
Number of former Branch workers | 37 | ||||||
Peru | |||||||
Litigation matter | |||||||
Statutory participation of mine workers in pre-tax profit (as a percent) | 8.00% | 10.00% | |||||
Statutory participation of mine workers in pre-tax profit paid in cash (as a percent) | 100.00% | 4.00% | 40.00% | ||||
Statutory participation of mine workers in pre-tax profit received as equity interest of enterprise (as a percent) | 60.00% | ||||||
Percentage of pre-tax profits delivered as "labor shares" | 5.50% | ||||||
Percentage of labor unionized | 6900.00% | ||||||
Total number of workers | 4,524 | ||||||
Number of labor unions | 7 | ||||||
Number of labor unions represent majority of workers | 3 | ||||||
Number of labor unions other than majority workers unions | 4 | ||||||
Term of collective bargaining agreement | 3 years | ||||||
Percentage of annual salary increase as per collective bargaining agreement in year 2013 | 6.50% | ||||||
Percentage of annual salary increase as per collective bargaining agreement in year 2014 | 5.00% | ||||||
Percentage of annual salary increase as per collective bargaining agreement in year 2015 | 5.00% | ||||||
Peru | Garcia Ataucuri and Others against SCC's Peruvian Branch | |||||||
Litigation matter | |||||||
Number of former employees who filed the complaint | 900 | ||||||
Damages sought by the plaintiff(includes old soles and labor shares) | 38,763,806.80 | ||||||
Face value of one labor share | 100 | ||||||
Labor shares issued by the Branch (as a percent) | 100.00% | ||||||
Plaintiffs do not represent the percent of SCC's eligible employees | 100.00% | ||||||
Soles de oro equivalent to today's one nuevo sol | 1,000,000,000 | ||||||
Peru | Exploraciones de Concesiones Metalicas S.A.C. ("Excomet") | |||||||
Litigation matter | |||||||
Purchase price of shares paid to former stockholders | $2 |
COMMITMENTS_AND_CONTINGENCIES_3
COMMITMENTS AND CONTINGENCIES: (Details 3) | 12 Months Ended | 1 Months Ended | ||||||||||
Dec. 31, 2014 | Dec. 31, 2014 | Dec. 31, 2014 | Dec. 31, 2014 | Dec. 31, 2014 | Dec. 31, 2014 | Dec. 31, 2005 | Dec. 31, 2014 | Dec. 31, 2014 | Dec. 31, 2014 | Jun. 30, 2014 | Jul. 31, 2014 | |
USD ($) | Tia Maria | Tia Maria | Toquepala Concentrator Expansion | Toquepala Concentrator Expansion | MGE | MGE | MGE | Copper | Molybdenum | Power purchase agreements | Power purchase agreements | |
Peru | Peru | Peru | Peru | item | Mexico | Toquepala Concentrator Expansion | Toquepala Concentrator Expansion | Electroperu S.A | Kallpa | |||
USD ($) | PEN | USD ($) | PEN | MW | Peru | Peru | Peru | Peru | ||||
T | item | T | T | MW | MW | |||||||
Other commitments: | ||||||||||||
Project Budget | $1,400,000,000 | $1,200,000,000 | ||||||||||
Amount expended in current year | 353,600,000 | 346,000,000 | ||||||||||
Annual production ( in tons) | 120,000 | 120,000 | ||||||||||
Amount committed to funding for social and infrastructure improvement projects | 100,000 | 148,900,000 | 445,000,000 | |||||||||
Amount expended for funding social and infrastructure improvement projects | 33,000,000 | 700,000 | 15,100,000 | 45,000,000 | ||||||||
Estimated increase in annual production (in tons) | 100,000 | 3,100 | ||||||||||
Term of power purchase agreement related to sale of power plant | 20 years | 10 years | ||||||||||
Number of megawatt supply energy for which the entity signed the agreement | 120 | 120 | ||||||||||
Number of power plants | 2 | 2 | ||||||||||
Percentage of supply to third-party energy users | 12.00% | |||||||||||
Net total capacity (in megawatts) | 516.2 | |||||||||||
Commitments for Capital Projects | $401,500,000 |
STOCKHOLDERS_EQUITY_Details
STOCKHOLDERS' EQUITY: (Details) (USD $) | 1 Months Ended | 3 Months Ended | 12 Months Ended | 48 Months Ended | 84 Months Ended | 0 Months Ended | 12 Months Ended | 0 Months Ended | ||||||||||||
Dec. 31, 2014 | Nov. 30, 2014 | Oct. 31, 2014 | Sep. 30, 2014 | Aug. 31, 2014 | Jul. 31, 2014 | Jun. 30, 2014 | Mar. 21, 2014 | Jan. 31, 2014 | Dec. 31, 2014 | Sep. 30, 2014 | Jun. 30, 2014 | Jun. 30, 2013 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | Dec. 31, 2014 | Oct. 09, 2012 | Dec. 31, 2014 | Dec. 31, 2012 | |
Loss Contingency, Information about Litigation Matters [Abstract] | ||||||||||||||||||||
Legal fees related to SCC shareholder derivative lawsuit (Note 14) | $316,233,000 | |||||||||||||||||||
Activity in treasury stock | ||||||||||||||||||||
Balance at the beginning of the period | 1,216,599,000 | 1,216,599,000 | ||||||||||||||||||
Purchase of shares | 87,900,000 | 38,000,000 | 168,000,000 | 141,400,000 | 158,100,000 | 23,900,000 | 13,000,000 | 2,900,000 | 49,600,000 | 293,900,000 | 323,400,000 | 13,000,000 | 52,500,000 | 281,400,000 | 147,300,000 | 730,800,000 | 1,842,300,000 | |||
Balance at the end of the period | 1,900,686,000 | 1,900,686,000 | 1,216,599,000 | 1,900,686,000 | 1,900,686,000 | |||||||||||||||
Subsidiaries [Member] | ||||||||||||||||||||
Activity in treasury stock | ||||||||||||||||||||
Treasury stock balance at the end of the period (in shares) | 71,977,964 | 71,977,964 | 49,278,536 | 71,977,964 | 71,977,964 | |||||||||||||||
Parent Company (Grupo Mexico) common shares | ||||||||||||||||||||
Activity in treasury stock | ||||||||||||||||||||
Treasury stock balance at the end of the period (in shares) | 89,950,310 | 89,950,310 | 75,262,919 | 89,950,310 | 89,950,310 | |||||||||||||||
Americas Mining Corporation Member | ||||||||||||||||||||
Loss Contingency, Information about Litigation Matters [Abstract] | ||||||||||||||||||||
SCC shareholder derivative lawsuit | 2,108,200,000 | |||||||||||||||||||
Legal fees related to SCC shareholder derivative lawsuit (Note 14) | 316,200,000 | |||||||||||||||||||
Accural - Legal fees related to SCC shareholders dervative lawsuit | 316,200,000 | 316,200,000 | ||||||||||||||||||
TREASURY STOCK: | Subsidiaries [Member] | ||||||||||||||||||||
Activity in treasury stock | ||||||||||||||||||||
Balance at the beginning of the period | 1,011,000,000 | 729,800,000 | 1,011,000,000 | |||||||||||||||||
Purchase of shares | 281,400,000 | 682,800,000 | ||||||||||||||||||
Used for corporate purposes | -200,000 | -300,000 | ||||||||||||||||||
Balance at the end of the period | 1,693,500,000 | 1,693,500,000 | 1,011,000,000 | 1,693,500,000 | 1,693,500,000 | |||||||||||||||
TREASURY STOCK: | Parent Company (Grupo Mexico) common shares | ||||||||||||||||||||
Activity in treasury stock | ||||||||||||||||||||
Balance at the beginning of the period | 205,600,000 | 189,000,000 | 205,600,000 | |||||||||||||||||
Other activity, including dividend, interest and currency translation effect | 16,600,000 | 1,600,000 | ||||||||||||||||||
Balance at the end of the period | 207,200,000 | 207,200,000 | 205,600,000 | 207,200,000 | 207,200,000 | |||||||||||||||
ADDITIONAL PAID-IN CAPITAL: | ||||||||||||||||||||
Loss Contingency, Information about Litigation Matters [Abstract] | ||||||||||||||||||||
SCC shareholder derivative lawsuit | ($2,108,221,000) | ($2,108,200,000) |
STOCKHOLDERS_EQUITY_Details_2
STOCKHOLDERS' EQUITY: (Details 2) (USD $) | 0 Months Ended | 1 Months Ended | 3 Months Ended | 12 Months Ended | 48 Months Ended | 84 Months Ended | ||||||||||||||
Jan. 29, 2015 | Dec. 31, 2014 | Nov. 30, 2014 | Oct. 31, 2014 | Sep. 30, 2014 | Aug. 31, 2014 | Jul. 31, 2014 | Jun. 30, 2014 | Mar. 21, 2014 | Jan. 31, 2014 | Dec. 31, 2014 | Sep. 30, 2014 | Jun. 30, 2014 | Jun. 30, 2013 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | Dec. 31, 2014 | Jan. 29, 2015 | Dec. 31, 2008 | |
SCC share repurchase program: | ||||||||||||||||||||
Amount authorized for share repurchase program | $3,000,000,000 | $3,000,000,000 | $3,000,000,000 | $500,000,000 | ||||||||||||||||
Total Number of Shares Purchased | 3,129,524 | 1,286,767 | 5,821,213 | 4,498,263 | 4,926,534 | 724,516 | 450,532 | 106,079 | 1,768,000 | 10,237,504 | 10,149,313 | 450,532 | 1,874,079 | 10,245,000 | 4,442,336 | 42,472,150 | 79,870,914 | |||
Average Price Paid per Share (in dollars per share) | $28.08 | $29.50 | $28.86 | $31.44 | $32.09 | $33.04 | $28.92 | $27.04 | $28.06 | $28.70 | $31.87 | $28.92 | $28 | $27.47 | $33.17 | $17.20 | $23.07 | |||
Total Number of Shares Purchased as Part of Publicly Announced Plan | 79,870,914 | 76,741,390 | 75,454,623 | 69,633,410 | 65,135,147 | 60,208,613 | 59,484,097 | 59,033,565 | 58,927,486 | 79,870,914 | 69,633,410 | 59,484,097 | 57,159,486 | 46,914,486 | 42,472,150 | 79,870,914 | ||||
Maximum Number of Shares that May Yet Be Purchased Under the Plan @ $29.11 | 5,593,347 | 5,593,347 | 5,593,347 | |||||||||||||||||
Total Cost | 87,900,000 | 38,000,000 | 168,000,000 | 141,400,000 | 158,100,000 | 23,900,000 | 13,000,000 | 2,900,000 | 49,600,000 | 293,900,000 | 323,400,000 | 13,000,000 | 52,500,000 | 281,400,000 | 147,300,000 | 730,800,000 | 1,842,300,000 | |||
Percentage of Ownership by Parent | 84.60% | 84.60% | 82.30% | 84.60% | ||||||||||||||||
Maximum number of shared | 35,500,000 | |||||||||||||||||||
Increase in amount authorized for share repurchase program | $1,000,000,000 |
STOCKHOLDERS_EQUITY_Details_3
STOCKHOLDERS' EQUITY: (Details 3) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Directors' Stock Award Plan | ||
Share based compensation plan | ||
Common shares received on election as director | 1,200 | |
Additional shares issued at each annual general meeting | 1,200 | |
Total SCC shares reserved for the plan | 600,000 | 600,000 |
Activity in directors' stock award plan | ||
Granted at the beginning of the period (in shares) | -297,600 | -285,600 |
Granted in the period (in shares) | -12,000 | -12,000 |
Granted at the end of the period (in shares) | -309,600 | -297,600 |
Remaining shares reserved | 290,400 | 302,400 |
Employee Stock Purchase Plan | ||
Share based compensation | ||
Percentage of title acquired by employee in every two years on shares paid in previous two years | 50.00% | |
The period describing the expiration of the contribution period and the bonus eligibility | 8 years | |
Bonus shares granted to participant (as a ratio) | 0.1 |
STOCKHOLDERS_EQUITY_Details_4
STOCKHOLDERS' EQUITY: (Details 4) | 12 Months Ended | |||||||
In Millions, except Share data, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2010 | Dec. 31, 2010 |
Employee Stock Purchase Plan | Employee Stock Purchase Plan | Employee Stock Purchase Plan | New Employee Stock Purchase Plan | New Employee Stock Purchase Plan | New Employee Stock Purchase Plan | New Employee Stock Purchase Plan | New Employee Stock Purchase Plan | |
USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | MXN | |
Information related to compensation cost | ||||||||
Stock based compensation expense | $2.10 | $2.10 | $2.10 | $0.60 | $0.60 | $0.60 | ||
Unrecognized compensation expense | $2.10 | $4.20 | $2 | $2.60 | $3.20 | |||
Period over which unrecognized compensation expense expected to be recognized | 4 years | |||||||
Stock award activity, Shares | ||||||||
Outstanding shares at the beginning of the period | 4,449,599 | 6,955,572 | 3,012,464 | 2,944,742 | ||||
Granted (in shares) | 226,613 | |||||||
Exercised (in shares) | -150,987 | -2,474,814 | -724,573 | -38,098 | ||||
Forfeited (in shares) | -31,159 | -120,793 | ||||||
Outstanding shares at the end of the period | 4,298,612 | 4,449,599 | 6,955,572 | 2,287,891 | 3,012,464 | 2,944,742 | ||
Unit Weighted Average Grant Date Fair Value | ||||||||
Outstanding shares at the beginning of the period (in dollars per share) | $1.16 | $1.16 | $2.05 | $2.05 | ||||
Granted (in dollars per share) | $2.05 | |||||||
Exercised (in dollars per share) | $1.16 | $1.16 | $2.05 | $2.05 | ||||
Forfeited (in dollars per share) | $1.16 | $1.16 | $2.05 | |||||
Outstanding shares at the end of the period (in dollars per share) | $1.16 | $1.16 | $1.16 | $2.05 | $2.05 | $2.05 | ||
Purchase price for initial subscription (in dollars per share) | $2.05 | 26.51 |
FAIR_VALUE_MEASUREMENT_Details
FAIR VALUE MEASUREMENT (Details) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
In Millions, unless otherwise specified | ||
Liabilities: | ||
Long-term debt, Carrying Value | $4,206 | $4,204.90 |
Long-term debt, Fair Value | 4,369.60 | |
6.375% Senior unsecured notes due 2015 | ||
Liabilities: | ||
Long-term debt, Carrying Value | 199.8 | 199.7 |
Interest rate (as a percent) | 6.38% | |
Fair value measurements recurring | Fair value as of the end of the period | ||
Short term Investment: | ||
Trading securities investment | 333.7 | 202.6 |
Derivative: | ||
Total assets, fair value | 646.3 | 362.4 |
Fair value measurements recurring | Fair value as of the end of the period | Copper | ||
Derivative: | ||
Provisionally priced sales | 202.2 | 53.9 |
Fair value measurements recurring | Fair value as of the end of the period | Molybdenum | ||
Derivative: | ||
Provisionally priced sales | 105.5 | 100.2 |
Fair value measurements recurring | Fair value as of the end of the period | Corporate bonds | ||
Available-for-sale debt securities: | ||
Available-for-sale debt securities | 0.3 | 0.4 |
Fair value measurements recurring | Fair value as of the end of the period | Asset backed securities | ||
Available-for-sale debt securities: | ||
Available-for-sale debt securities | 0.1 | |
Fair value measurements recurring | Fair value as of the end of the period | Mortgage backed securities | ||
Available-for-sale debt securities: | ||
Available-for-sale debt securities | 4.6 | 5.2 |
Fair value measurements recurring | Quoted prices in active markets for identical assets (Level 1) | ||
Short term Investment: | ||
Trading securities investment | 333.7 | 202.6 |
Derivative: | ||
Total assets, fair value | 641.4 | 356.7 |
Fair value measurements recurring | Quoted prices in active markets for identical assets (Level 1) | Copper | ||
Derivative: | ||
Provisionally priced sales | 202.2 | 53.9 |
Fair value measurements recurring | Quoted prices in active markets for identical assets (Level 1) | Molybdenum | ||
Derivative: | ||
Provisionally priced sales | 105.5 | 100.2 |
Fair value measurements recurring | Significant other observable inputs (Level 2) | ||
Derivative: | ||
Total assets, fair value | 4.9 | 5.7 |
Fair value measurements recurring | Significant other observable inputs (Level 2) | Corporate bonds | ||
Available-for-sale debt securities: | ||
Available-for-sale debt securities | 0.3 | 0.4 |
Fair value measurements recurring | Significant other observable inputs (Level 2) | Asset backed securities | ||
Available-for-sale debt securities: | ||
Available-for-sale debt securities | 0.1 | |
Fair value measurements recurring | Significant other observable inputs (Level 2) | Mortgage backed securities | ||
Available-for-sale debt securities: | ||
Available-for-sale debt securities | $4.60 | $5.20 |
CONCENTRATION_OF_RISK_Details
CONCENTRATION OF RISK: (Details) (USD $) | 12 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
CONCENTRATION OF RISK: | |||
Number of open-pit copper mines | 4 | ||
Number of underground poly metallic mines | 5 | ||
Number of smelters | 2 | ||
Number of refineries | 8 | ||
Cash equivalents | |||
Concentration of risk | |||
Total cash and short-term investment | 702.6 | ||
Percentage of total cash | 100.00% | ||
Percentage of cash in US dollars | 97.20% | ||
Cash equivalents | United States | |||
Concentration of risk | |||
Total cash and short-term investment | 210.8 | ||
Percentage of total cash | 30.00% | ||
Percentage invested in one institution of country | 47.10% | ||
Percentage invested in one institution of total cash | 14.10% | ||
Cash equivalents | Peru | |||
Concentration of risk | |||
Total cash and short-term investment | 83.9 | ||
Percentage of total cash | 11.90% | ||
Percentage invested in one institution of country | 79.70% | ||
Percentage invested in one institution of total cash | 9.50% | ||
Cash equivalents | Mexico | |||
Concentration of risk | |||
Total cash and short-term investment | 18.3 | ||
Percentage of total cash | 2.60% | ||
Percentage invested in one institution of country | 62.40% | ||
Percentage invested in one institution of total cash | 1.60% | ||
Cash equivalents | Switzerland | |||
Concentration of risk | |||
Total cash and short-term investment | 389.6 | ||
Percentage of total cash | 55.50% | ||
Percentage invested in one institution of country | 100.00% | ||
Percentage invested in one institution of total cash | 55.50% | ||
Accounts receivable trade | Five largest customers | |||
Concentration of risk | |||
Percentage of accounts receivable and total sales | 31.20% | 37.10% | 40.00% |
Accounts receivable trade | Largest customer | |||
Concentration of risk | |||
Percentage of accounts receivable and total sales | 8.00% | 12.20% | 10.40% |
Total sales | Five largest customers | |||
Concentration of risk | |||
Percentage of accounts receivable and total sales | 34.30% | 28.70% | 28.80% |
Total sales | Largest customer | |||
Concentration of risk | |||
Percentage of accounts receivable and total sales | 8.20% | 8.40% | 7.40% |
RELATED_PARTY_TRANSACTIONS_Det
RELATED PARTY TRANSACTIONS: (Details) | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | 31-May-10 | Mar. 31, 2012 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2005 | Mar. 31, 2012 | Mar. 31, 2012 | Mar. 31, 2012 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2014 | Aug. 04, 2014 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2013 |
USD ($) | USD ($) | Grupo Mexico and Affiliates | Grupo Mexico and Affiliates | Grupo Mexico and Affiliates | Grupo Mexico | Grupo Mexico | Grupo Mexico | Asarco LLC ("Asarco") | Asarco LLC ("Asarco") | Asarco LLC ("Asarco") | Ferrocarril Mexicano, S.A. de C.V. | Ferrocarril Mexicano, S.A. de C.V. | Ferrocarril Mexicano, S.A. de C.V. | Mexico Proyectos y Desarrollos, S.A. de C.V. and affiliates | Mexico Proyectos y Desarrollos, S.A. de C.V. and affiliates | Mexico Proyectos y Desarrollos, S.A. de C.V. and affiliates | Compania Perforadora Mexico S.A.P.I. de C.V. | Compania Perforadora Mexico S.A.P.I. de C.V. | Compania Perforadora Mexico S.A.P.I. de C.V. | MGE | MGE | MGE | MGE | MGE | MGE | MGE | MGE | MGE | Mexico Transportes Aereos S.A. de C.V. ("Mextransport") | Mexico Transportes Aereos S.A. de C.V. ("Mextransport") | Mexico Transportes Aereos S.A. de C.V. ("Mextransport") | Companies with relationship to SCC executive officers' families | Companies with relationship to SCC executive officers' families | Companies with relationship to SCC executive officers' families | Higher Technology S.A.C. | Higher Technology S.A.C. | Higher Technology S.A.C. | Servicios y Fabricaciones Mecanicas S.A.C. | Servicios y Fabricaciones Mecanicas S.A.C. | Servicios y Fabricaciones Mecanicas S.A.C. | Sempertrans | Sempertrans | Sempertrans | PIGOBA, S.A. de C.V. | PIGOBA, S.A. de C.V. | PIGOBA, S.A. de C.V. | Eolica El Retiro, S.A.P.I de C.V. | Eolica El Retiro, S.A.P.I de C.V. | Breaker, S.A. de C.V and affiliates ("Breaker") | Breaker, S.A. de C.V and affiliates ("Breaker") | Breaker, S.A. de C.V and affiliates ("Breaker") | Equity investment in affiliate | Equity investment in affiliate | Sempertrans and affiliates | |
USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | item | Maximum | Controladora de Infraestructura Energetica Mexico, S. A. de C. V. | Controladora de Infraestructura Energetica Mexico, S. A. de C. V. | USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | item | USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | |||
USD ($) | MXN | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Related party transactions | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Related parties receivables current: | $32,835,000 | $38,062,000 | $700,000 | $800,000 | $600,000 | $200,000 | $700,000 | $31,900,000 | $18,800,000 | $17,200,000 | |||||||||||||||||||||||||||||||||||||||||||||
Related parties receivable non-current: | 161,244,000 | 161,244,000 | 161,200,000 | 161,200,000 | 184,000,000 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Related parties payables: | 69,083,000 | 28,373,000 | 2,800,000 | 3,300,000 | 13,800,000 | 6,200,000 | 1,800,000 | 3,300,000 | 1,700,000 | 45,200,000 | 14,400,000 | 1,300,000 | 600,000 | 200,000 | 100,000 | 1,600,000 | 700,000 | 300,000 | 100,000 | ||||||||||||||||||||||||||||||||||||
Total purchases from related parties | 335,000,000 | 206,400,000 | 138,100,000 | 13,900,000 | 13,800,000 | 13,900,000 | 47,900,000 | 98,000,000 | 58,600,000 | 22,700,000 | 19,700,000 | 13,900,000 | 61,400,000 | 54,400,000 | 49,500,000 | 3,100,000 | 6,100,000 | 2,200,000 | 178,400,000 | 14,400,000 | 2,500,000 | 2,700,000 | 2,700,000 | 16,400,000 | 7,900,000 | 6,700,000 | 3,200,000 | 2,200,000 | 3,100,000 | 1,300,000 | 400,000 | 200,000 | 1,200,000 | 1,100,000 | 300,000 | 600,000 | 300,000 | 800,000 | 7,600,000 | 10,100,000 | 3,900,000 | 2,300,000 | |||||||||||||
Sales revenues from related parties | 24,700,000 | 88,700,000 | 23,500,000 | 800,000 | 800,000 | 500,000 | 600,000 | 600,000 | 96,500,000 | 27,300,000 | 300,000 | 300,000 | 900,000 | ||||||||||||||||||||||||||||||||||||||||||
Total sales revenues from related parties | 122,600,000 | 117,400,000 | 24,000,000 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Number of power plants | 2 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Line of credit | 350,000,000 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Interest rate (as a percent) | 4.40% | 5.75% | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Ownership percentage | 0.00% | 100.00% | 100.00% | 44.20% | |||||||||||||||||||||||||||||||||||||||||||||||||||
Value of interest acquired | 150,000,000 | 1,928,600,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Loan repaid | 150,000,000 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Loan granted | 56,600,000 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Interest earned | $9,400,000 | $9,900,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Number of wind turbines | 37 |
SEGMENT_AND_RELATED_INFORMATIO2
SEGMENT AND RELATED INFORMATION: (Details) (USD $) | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2014 | Sep. 30, 2014 | Jun. 30, 2014 | Mar. 31, 2014 | Dec. 31, 2013 | Sep. 30, 2013 | Jun. 30, 2013 | Mar. 31, 2013 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
segment | |||||||||||
country | |||||||||||
SEGMENT AND RELATED INFORMATION: | |||||||||||
Number of reportable segments | 3 | ||||||||||
Financial information related to segments | |||||||||||
Number of countries having open-pit operations | 2 | ||||||||||
Financial information relating to segments | |||||||||||
Net sales | $5,787,700,000 | $5,952,900,000 | $6,669,300,000 | ||||||||
Cost of sales (exclusive of depreciation, amortization and depletion) | 2,840,503,000 | 2,871,299,000 | 2,769,233,000 | ||||||||
Selling, general and administrative | 103,412,000 | 102,579,000 | 101,297,000 | ||||||||
Depreciation, amortization and depletion | 444,971,000 | 395,970,000 | 325,743,000 | ||||||||
Exploration | 74,618,000 | 50,983,000 | 47,877,000 | ||||||||
Environmental reclamation | 91,350,000 | ||||||||||
Legal fees related to SCC shareholder derivative lawsuit (Note 14) | 316,233,000 | ||||||||||
Operating income | 525,500,000 | 547,100,000 | 597,300,000 | 562,900,000 | 615,900,000 | 580,900,000 | 565,300,000 | 770,000,000 | 2,232,840,000 | 2,532,112,000 | 3,108,883,000 |
Interest, net | -123,300,000 | -176,600,000 | -157,200,000 | ||||||||
Other (expense) income | -40,841,000 | 17,106,000 | 21,833,000 | ||||||||
Income taxes | -754,629,000 | -769,322,000 | -1,080,872,000 | ||||||||
Equity earnings of affiliate | 23,861,000 | 20,905,000 | 48,702,000 | ||||||||
Non-controlling interest | -4,965,000 | -5,664,000 | -6,740,000 | ||||||||
Net income attributable to SCC | 348,000,000 | 324,300,000 | 337,300,000 | 323,400,000 | 406,200,000 | 344,200,000 | 372,700,000 | 495,400,000 | 1,332,973,000 | 1,618,517,000 | 1,934,632,000 |
Capital expenditure | 1,534,800,000 | 1,703,300,000 | 1,051,900,000 | ||||||||
Property, net | 7,436,430,000 | 6,476,168,000 | 7,436,430,000 | 6,476,168,000 | |||||||
Total assets | 11,551,910,000 | 10,996,029,000 | 11,551,910,000 | 10,996,029,000 | |||||||
Mexican Open-Pit | |||||||||||
Financial information related to segments | |||||||||||
Number of open-pit copper mines | 2 | ||||||||||
Financial information relating to segments | |||||||||||
Net sales | 2,954,200,000 | 2,976,000,000 | 3,339,000,000 | ||||||||
Cost of sales (exclusive of depreciation, amortization and depletion) | 1,146,600,000 | 1,308,900,000 | 1,228,200,000 | ||||||||
Selling, general and administrative | 37,200,000 | 35,400,000 | 34,400,000 | ||||||||
Depreciation, amortization and depletion | 225,500,000 | 179,000,000 | 145,600,000 | ||||||||
Exploration | 3,800,000 | 3,200,000 | 5,200,000 | ||||||||
Environmental reclamation | 91,400,000 | ||||||||||
Operating income | 1,449,700,000 | 1,449,500,000 | 1,925,600,000 | ||||||||
Capital expenditure | 1,125,300,000 | 1,263,500,000 | 822,800,000 | ||||||||
Property, net | 4,418,500,000 | 3,579,900,000 | 4,418,500,000 | 3,579,900,000 | 2,444,900,000 | ||||||
Total assets | 6,780,400,000 | 6,010,300,000 | 6,780,400,000 | 6,010,300,000 | 4,241,400,000 | ||||||
Mexican IMMSA Unit | |||||||||||
Financial information related to segments | |||||||||||
Number of underground poly metal mines | 5 | ||||||||||
Financial information relating to segments | |||||||||||
Net sales | 351,700,000 | 362,300,000 | 378,000,000 | ||||||||
Intersegment sales | 90,400,000 | 96,900,000 | 135,000,000 | ||||||||
Cost of sales (exclusive of depreciation, amortization and depletion) | 335,000,000 | 320,800,000 | 292,400,000 | ||||||||
Selling, general and administrative | 16,300,000 | 15,100,000 | 14,600,000 | ||||||||
Depreciation, amortization and depletion | 33,400,000 | 31,000,000 | 25,200,000 | ||||||||
Exploration | 29,500,000 | 27,200,000 | 28,200,000 | ||||||||
Operating income | 27,900,000 | 65,100,000 | 152,600,000 | ||||||||
Capital expenditure | 46,700,000 | 60,600,000 | 56,000,000 | ||||||||
Property, net | 389,000,000 | 378,200,000 | 389,000,000 | 378,200,000 | 350,900,000 | ||||||
Total assets | 843,500,000 | 895,600,000 | 843,500,000 | 895,600,000 | 873,100,000 | ||||||
Peruvian Operations | |||||||||||
Financial information related to segments | |||||||||||
Number of open-pit copper mines | 2 | ||||||||||
Financial information relating to segments | |||||||||||
Net sales | 2,481,800,000 | 2,614,600,000 | 2,952,300,000 | ||||||||
Cost of sales (exclusive of depreciation, amortization and depletion) | 1,416,600,000 | 1,358,600,000 | 1,380,500,000 | ||||||||
Selling, general and administrative | 44,800,000 | 49,700,000 | 48,500,000 | ||||||||
Depreciation, amortization and depletion | 198,400,000 | 177,200,000 | 160,300,000 | ||||||||
Exploration | 13,600,000 | 10,200,000 | 9,500,000 | ||||||||
Operating income | 808,400,000 | 1,018,900,000 | 1,353,500,000 | ||||||||
Capital expenditure | 353,800,000 | 372,300,000 | 257,900,000 | ||||||||
Property, net | 2,561,400,000 | 2,451,400,000 | 2,561,400,000 | 2,451,400,000 | 2,231,400,000 | ||||||
Total assets | 3,417,900,000 | 3,539,300,000 | 3,417,900,000 | 3,539,300,000 | 3,353,000,000 | ||||||
Corporate, other and eliminations | |||||||||||
Financial information relating to segments | |||||||||||
Intersegment sales | -90,400,000 | -96,900,000 | -135,000,000 | ||||||||
Cost of sales (exclusive of depreciation, amortization and depletion) | -57,700,000 | -117,000,000 | -131,900,000 | ||||||||
Selling, general and administrative | 5,100,000 | 2,300,000 | 3,800,000 | ||||||||
Depreciation, amortization and depletion | -12,300,000 | 8,800,000 | -5,300,000 | ||||||||
Exploration | 10,400,000 | 5,000,000 | |||||||||
Legal fees related to SCC shareholder derivative lawsuit (Note 14) | 316,200,000 | ||||||||||
Operating income | -53,200,000 | -1,400,000 | -322,800,000 | ||||||||
Capital expenditure | 9,000,000 | 6,900,000 | -84,800,000 | ||||||||
Property, net | 67,500,000 | 66,700,000 | 67,500,000 | 66,700,000 | 129,500,000 | ||||||
Total assets | $510,100,000 | $550,800,000 | $510,100,000 | $550,800,000 | $1,916,200,000 |
SEGMENT_AND_RELATED_INFORMATIO3
SEGMENT AND RELATED INFORMATION: (Details 2) (USD $) | 3 Months Ended | 12 Months Ended | |||||||||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Sep. 30, 2014 | Jun. 30, 2014 | Mar. 31, 2014 | Dec. 31, 2013 | Sep. 30, 2013 | Jun. 30, 2013 | Mar. 31, 2013 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
SALES VALUE PER SEGMENT: | |||||||||||
Net sales outside of segments | $1,471,300 | $1,474,600 | $1,487,400 | $1,354,400 | $1,535,200 | $1,384,500 | $1,410,200 | $1,623,000 | $5,787,694 | $5,952,943 | $6,669,266 |
Copper | |||||||||||
SALES VALUE PER SEGMENT: | |||||||||||
Net sales outside of segments | 4,518,000 | 4,654,800 | 5,136,900 | ||||||||
Molybdenum | |||||||||||
SALES VALUE PER SEGMENT: | |||||||||||
Net sales outside of segments | 506,900 | 389,200 | 450,500 | ||||||||
Silver | |||||||||||
SALES VALUE PER SEGMENT: | |||||||||||
Net sales outside of segments | 273,300 | 393,700 | 495,300 | ||||||||
Zinc | |||||||||||
SALES VALUE PER SEGMENT: | |||||||||||
Net sales outside of segments | 209,800 | 200,900 | 195,900 | ||||||||
Other | |||||||||||
SALES VALUE PER SEGMENT: | |||||||||||
Net sales outside of segments | 279,700 | 314,300 | 390,700 | ||||||||
Mexican Open-Pit | |||||||||||
SALES VALUE PER SEGMENT: | |||||||||||
Net sales outside of segments | 2,954,200 | 2,976,000 | 3,339,000 | ||||||||
Mexican Open-Pit | Copper | |||||||||||
SALES VALUE PER SEGMENT: | |||||||||||
Net sales outside of segments | 2,380,100 | 2,365,500 | 2,604,900 | ||||||||
Mexican Open-Pit | Molybdenum | |||||||||||
SALES VALUE PER SEGMENT: | |||||||||||
Net sales outside of segments | 299,800 | 241,300 | 271,300 | ||||||||
Mexican Open-Pit | Silver | |||||||||||
SALES VALUE PER SEGMENT: | |||||||||||
Net sales outside of segments | 146,700 | 242,700 | 280,500 | ||||||||
Mexican Open-Pit | Other | |||||||||||
SALES VALUE PER SEGMENT: | |||||||||||
Net sales outside of segments | 127,600 | 126,500 | 182,300 | ||||||||
Mexican IMMSA Unit | |||||||||||
SALES VALUE PER SEGMENT: | |||||||||||
Net sales outside of segments | 442,100 | 459,200 | 513,000 | ||||||||
Mexican IMMSA Unit | Copper | |||||||||||
SALES VALUE PER SEGMENT: | |||||||||||
Net sales outside of segments | 46,400 | 48,400 | 62,300 | ||||||||
Mexican IMMSA Unit | Silver | |||||||||||
SALES VALUE PER SEGMENT: | |||||||||||
Net sales outside of segments | 88,000 | 110,000 | 161,500 | ||||||||
Mexican IMMSA Unit | Zinc | |||||||||||
SALES VALUE PER SEGMENT: | |||||||||||
Net sales outside of segments | 209,800 | 200,900 | 195,900 | ||||||||
Mexican IMMSA Unit | Other | |||||||||||
SALES VALUE PER SEGMENT: | |||||||||||
Net sales outside of segments | 97,900 | 99,900 | 93,300 | ||||||||
Peruvian Operations | |||||||||||
SALES VALUE PER SEGMENT: | |||||||||||
Net sales outside of segments | 2,481,800 | 2,614,600 | 2,952,300 | ||||||||
Peruvian Operations | Copper | |||||||||||
SALES VALUE PER SEGMENT: | |||||||||||
Net sales outside of segments | 2,137,900 | 2,289,300 | 2,532,000 | ||||||||
Peruvian Operations | Molybdenum | |||||||||||
SALES VALUE PER SEGMENT: | |||||||||||
Net sales outside of segments | 207,100 | 147,900 | 179,200 | ||||||||
Peruvian Operations | Silver | |||||||||||
SALES VALUE PER SEGMENT: | |||||||||||
Net sales outside of segments | 71,600 | 79,700 | 113,600 | ||||||||
Peruvian Operations | Other | |||||||||||
SALES VALUE PER SEGMENT: | |||||||||||
Net sales outside of segments | 65,200 | 97,700 | 127,500 | ||||||||
Corporate, other and eliminations | |||||||||||
SALES VALUE PER SEGMENT: | |||||||||||
Net sales outside of segments | -90,400 | -96,900 | -135,000 | ||||||||
Corporate, other and eliminations | Copper | |||||||||||
SALES VALUE PER SEGMENT: | |||||||||||
Net sales outside of segments | -46,400 | -48,400 | -62,300 | ||||||||
Corporate, other and eliminations | Silver | |||||||||||
SALES VALUE PER SEGMENT: | |||||||||||
Net sales outside of segments | -33,000 | -38,700 | -60,300 | ||||||||
Corporate, other and eliminations | Other | |||||||||||
SALES VALUE PER SEGMENT: | |||||||||||
Net sales outside of segments | ($11,000) | ($9,800) | ($12,400) |
SEGMENT_AND_RELATED_INFORMATIO4
SEGMENT AND RELATED INFORMATION: (Details 3) (USD $) | 3 Months Ended | 12 Months Ended | |||||||||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Sep. 30, 2014 | Jun. 30, 2014 | Mar. 31, 2014 | Dec. 31, 2013 | Sep. 30, 2013 | Jun. 30, 2013 | Mar. 31, 2013 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Schedule of revenue by geographical location | |||||||||||
Revenue Mineral Sales, Total | $1,471,300 | $1,474,600 | $1,487,400 | $1,354,400 | $1,535,200 | $1,384,500 | $1,410,200 | $1,623,000 | $5,787,694 | $5,952,943 | $6,669,266 |
Mexico | |||||||||||
Schedule of revenue by geographical location | |||||||||||
Revenue Mineral Sales, Total | 1,708,900 | 1,403,300 | 1,676,400 | ||||||||
United States | |||||||||||
Schedule of revenue by geographical location | |||||||||||
Revenue Mineral Sales, Total | 1,059,300 | 1,031,200 | 1,567,400 | ||||||||
Europe | |||||||||||
Schedule of revenue by geographical location | |||||||||||
Revenue Mineral Sales, Total | 892,600 | 1,057,500 | 1,365,100 | ||||||||
Asia | |||||||||||
Schedule of revenue by geographical location | |||||||||||
Revenue Mineral Sales, Total | 933,900 | 907,200 | 763,400 | ||||||||
Brazil | |||||||||||
Schedule of revenue by geographical location | |||||||||||
Revenue Mineral Sales, Total | 372,400 | 471,000 | 449,000 | ||||||||
Chile | |||||||||||
Schedule of revenue by geographical location | |||||||||||
Revenue Mineral Sales, Total | 401,500 | 366,100 | 443,500 | ||||||||
Peru | |||||||||||
Schedule of revenue by geographical location | |||||||||||
Revenue Mineral Sales, Total | 282,200 | 324,800 | 296,200 | ||||||||
Other countries | |||||||||||
Schedule of revenue by geographical location | |||||||||||
Revenue Mineral Sales, Total | $136,900 | $391,800 | $108,300 |
SEGMENT_AND_RELATED_INFORMATIO5
SEGMENT AND RELATED INFORMATION: (Details 4) (USD $) | 12 Months Ended | |
In Millions, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 |
Provisionally priced sales | ||
Provisional price sales adjustment amounts included in net sales | ($26.10) | $1.60 |
Copper | ||
Provisionally priced sales | ||
Provisional price sales adjustment amounts included in accounts receivable | -9.6 | 1 |
Copper | January through April 2015 | ||
Provisionally priced sales | ||
Nonmonetary notional amount of commodity (in million lbs.) | 70,400,000 | |
Provisional price | 2.873 | |
Molybdenum | ||
Provisionally priced sales | ||
Provisional price sales adjustment amounts included in accounts receivable | ($16.50) | $0.60 |
Molybdenum | January through March 2015 | ||
Provisionally priced sales | ||
Nonmonetary notional amount of commodity (in million lbs.) | 11,700,000 | |
Provisional price | 9 |
SEGMENT_AND_RELATED_INFORMATIO6
SEGMENT AND RELATED INFORMATION: (Details 5) | 12 Months Ended |
Dec. 31, 2014 | |
T | |
Copper cathodes | Mitsui | |
Long-term sales contract | |
Quantity to be supplied (in tons) | 48,000 |
Quantity to be supplied related to prior contract (period 1994-2000) (in tons) | 90,000 |
Quantity to be supplied related to prior contract in 2014 (in tons) | 48,000 |
Quantity to be supplied related to prior contract in 2015 (in tons) | 42,000 |
Quantity to be supplied related to additional annual contract in 2015 (in tons) | 6,000 |
Quantity to be supplied related to additional annual contract from 2016 until 2019 (in tons) | 48,000 |
Additional term in which contract may be renewed | 5 years |
Copper cathodes | Mitsui | Tia Maria | |
Long-term sales contract | |
Quantity to be supplied following the full startup of project (in tons) | 24,000 |
Molybdenum concentrates | Molibdenos y Metales | |
Long-term sales contract | |
Quantity to be supplied (in tons) | 30,800 |
Period for which contract can be extended | 1 year |
Minimum period for which contract is to be maintained | 3 years |
Molybdenum concentrates | Molymex | |
Long-term sales contract | |
Minimum percentage of total production required to be supplied | 85.00% |
QUARTERLY_DATA_unaudited_Detai
QUARTERLY DATA (unaudited) (Details) (USD $) | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2014 | Sep. 30, 2014 | Jun. 30, 2014 | Mar. 31, 2014 | Dec. 31, 2013 | Sep. 30, 2013 | Jun. 30, 2013 | Mar. 31, 2013 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
QUARTERLY DATA (unaudited) | |||||||||||
Net sales | $1,471,300,000 | $1,474,600,000 | $1,487,400,000 | $1,354,400,000 | $1,535,200,000 | $1,384,500,000 | $1,410,200,000 | $1,623,000,000 | $5,787,694,000 | $5,952,943,000 | $6,669,266,000 |
Gross profit | 613,900,000 | 641,600,000 | 644,700,000 | 602,000,000 | 658,500,000 | 617,000,000 | 604,400,000 | 805,700,000 | 2,502,200,000 | 2,685,600,000 | |
Operating income | 525,500,000 | 547,100,000 | 597,300,000 | 562,900,000 | 615,900,000 | 580,900,000 | 565,300,000 | 770,000,000 | 2,232,840,000 | 2,532,112,000 | 3,108,883,000 |
Net income | 349,200,000 | 325,800,000 | 338,400,000 | 324,600,000 | 407,500,000 | 345,600,000 | 374,100,000 | 497,000,000 | 1,337,938,000 | 1,624,181,000 | 1,941,372,000 |
Net income attributable to SCC | $348,000,000 | $324,300,000 | $337,300,000 | $323,400,000 | $406,200,000 | $344,200,000 | $372,700,000 | $495,400,000 | $1,332,973,000 | $1,618,517,000 | $1,934,632,000 |
Per share amounts attributable to SCC: | |||||||||||
Net earnings basic and diluted (in dollars per share) | $0.43 | $0.39 | $0.40 | $0.39 | $0.48 | $0.41 | $0.44 | $0.59 | $1.61 | $1.92 | $2.28 |
Dividend per share | $0.12 | $0.12 | $0.10 | $0.12 | $0.12 | $0.12 | $0.20 | $0.24 | $0.46 | $0.68 | $4.06 |
SUBSEQUENT_EVENTS_Details
SUBSEQUENT EVENTS (Details) (USD $) | 0 Months Ended | |||
In Millions, except Per Share data, unless otherwise specified | Jan. 29, 2015 | Dec. 31, 2014 | Dec. 31, 2008 | Dec. 31, 2013 |
SHARE REPURCHASE PROGRAM: | ||||
Quarterly cash dividend authorized (in cents per share) | $0.10 | |||
Amount authorized for share repurchase program | $3,000 | $500 | ||
Subsequent Event | ||||
SHARE REPURCHASE PROGRAM: | ||||
Amount authorized for share repurchase program | $3,000 | $2,000 |
Schedule_II_Valuation_and_Qual1
Schedule II - Valuation and Qualifying Accounts and Reserves (Details) (USD $) | 12 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Accounts Receivable | |||
Valuation and Qualifying Accounts and Reserves | |||
Additions | $0.30 | ||
Balance at end of period | 0.3 | 0.3 | |
Notes issued under par | |||
Valuation and Qualifying Accounts and Reserves | |||
Balance at beginning of period | 46.2 | 47.3 | 25.4 |
Charged to costs and expenses | 1.1 | 1.1 | 0.5 |
Additions | 22.4 | ||
Balance at end of period | 45.1 | 46.2 | 47.3 |
Deferred Tax Assets | |||
Valuation and Qualifying Accounts and Reserves | |||
Balance at beginning of period | 2.2 | ||
Deductions/Applications | $2.20 |