10-Q 1 a14-14049_110q.htm 10-Q

Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended: June 30, 2014

or

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 1-14066

SOUTHERN COPPER CORPORATION

(Exact name of registrant as specified in its charter)

Delaware |  | 13-3849074
(State or other jurisdiction of incorporation or organization) |  | (I.R.S. Employer Identification No.)

1440 East Missouri Avenue, Suite 160, Phoenix, AZ |  | 85014
(Address of principal executive offices) |  | (Zip Code)

Registrant’s telephone number, including area code: (602) 264-1375

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definitions of “large accelerated filer”, “accelerated filer and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer x |  | Accelerated filer o
Non-accelerated filer o |  | Smaller reporting company o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes o No x

As of July 31, 2014 there were outstanding 832,280,423 shares of Southern Copper Corporation common stock, par value $0.01 per share.

Table of Contents

Southern Copper Corporation (“SCC”)

INDEX TO FORM 10-Q

|  | Page No.
Part I. Financial Information: |
Item. 1 | Condensed Consolidated Financial Statements (Unaudited) |
| Condensed Consolidated Statement of Earnings for the three and six months ended June 30, 2014 and 2013 | 3
| Condensed Consolidated Statement of Comprehensive Income for the three and six months ended June 30, 2014 and 2013 | 4
| Condensed Consolidated Balance Sheet as of June 30, 2014 and December 31, 2013 | 5
| Condensed Consolidated Statement of Cash Flows for the three and six months ended June 30, 2014 and 2013 | 6
| Notes to Condensed Consolidated Financial Statements | 7-27
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 28-45
Item 3. | Quantitative and Qualitative Disclosure about Market Risk | 46-47
Item 4. | Controls and Procedures | 48
| Report of Independent Registered Public Accounting Firm | 49
Part II. Other Information: |
Item 1. | Legal Proceedings | 50
Item 1A. | Risk Factors | 50
Item 2. | Unregistered Sale of Equity Securities and Use of Proceeds | 50
Item 4. | Mine Safety Disclosures | 50
Item 6. | Exhibits | 51-52
| Signatures | 53
| List of Exhibits | 54-55
Exhibit 15 | Independent Accountants’ Awareness Letter |
Exhibit 31.1 | Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
Exhibit 31.2 | Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
Exhibit 32.1 | Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
Exhibit 32.2 | Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
Exhibit 101 | Financial statements for the three and six months ended June 30, 2014 Formatted in XBRL: (i) the Condensed Consolidated Statement of Earnings, (ii) the Condensed Consolidated Statement of Comprehensive Income, (iii) the Condensed Consolidated Balance Sheet, (iv) the Condensed Consolidated Statement of Cash Flows, and (v) the Notes to Condensed Consolidated Financial Statements, tagged in detail. | Submitted electronically with this report

2

Table of Contents

PART I — FINANCIAL INFORMATION

Item 1. Condensed Consolidated Financial Statements

Southern Copper Corporation

CONDENSED CONSOLIDATED STATEMENT OF EARNINGS

(Unaudited)

|  | Three Months Ended |  | Six Months Ended |
|  | June 30, |  | June 30, |
|  | 2014 |  | 2013 |  | 2014 |  | 2013 |
|  | (in thousands, except per share amounts) |
Net sales (including sales to related parties, see note 7) |  | $ | 1,487,412 |  | $ | 1,410,223 |  | $ | 2,841,795 |  | $ | 3,033,225 |
Operating costs and expenses: |  |  |  |  |  |  |  |  |
Cost of sales (exclusive of depreciation, amortization and depletion shown separately below) |  | 726,589 |  | 711,231 |  | 1,368,483 |  | 1,433,980 |
Selling, general and administrative |  | 25,398 |  | 27,452 |  | 49,896 |  | 52,826 |
Depreciation, amortization and depletion |  | 116,091 |  | 93,516 |  | 226,544 |  | 184,088 |
Exploration |  | 22,068 |  | 11,651 |  | 36,679 |  | 21,975 |
Total operating costs and expenses |  | 890,146 |  | 843,850 |  | 1,681,602 |  | 1,692,869 |
Operating income |  | 597,266 |  | 566,373 |  | 1,160,193 |  | 1,340,356 |
Interest expense |  | (66,075 | ) | (66,487 | ) | (131,215 | ) | (131,777 | )
Capitalized interest |  | 29,162 |  | 15,707 |  | 53,765 |  | 27,946 |
Other income (expense) |  | (5,779 | ) | 16,935 |  | (9,985 | ) | 17,783 |
Interest income |  | 3,715 |  | 4,306 |  | 8,252 |  | 10,275 |
Income before income taxes |  | 558,289 |  | 536,834 |  | 1,081,010 |  | 1,264,583 |
Income taxes (including royalty taxes see note 4): |  | 225,769 |  | 167,870 |  | 429,931 |  | 406,749 |
Net income before equity earnings of affiliate |  | 332,520 |  | 368,964 |  | 651,079 |  | 857,834 |
Equity earnings of affiliate, net of income tax |  | 5,861 |  | 5,141 |  | 11,899 |  | 13,304 |
Net income |  | 338,381 |  | 374,105 |  | 662,978 |  | 871,138 |
Less: Net income attributable to the non-controlling interest |  | 1,129 |  | 1,368 |  | 2,337 |  | 3,009 |
Net income attributable to SCC |  | $ | 337,252 |  | $ | 372,737 |  | $ | 660,641 |  | $ | 868,129 |
Per common share amounts attributable to SCC: |  |  |  |  |  |  |  |  |
Net income - basic and diluted |  | $ | 0.40 |  | $ | 0.44 |  | $ | 0.79 |  | $ | 1.03 |
Dividends paid |  | $ | 0.10 |  | $ | 0.20 |  | $ | 0.22 |  | $ | 0.44 |
Weighted average common shares outstanding - basic and diluted |  | 833,391 |  | 844,986 |  | 833,590 |  | 845,267 |

The accompanying notes are an integral part of these condensed consolidated financial statements.

3

Table of Contents

Southern Copper Corporation

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

(Unaudited)

|  | Three Months Ended |  | Six Months Ended |
|  | June 30, |  | June 30, |
|  | 2014 |  | 2013 |  | 2014 |  | 2013 |
|  | (in thousands) |
Net income |  | $ | 338,381 |  | $ | 374,105 |  | $ | 662,978 |  | $ | 871,138 |
Other comprehensive income (loss) net of tax: - Amortization of actuarial gain net of income tax of (for the three months ended June 30, 2014: $43 and 2013: $126 and for the six months ended June 30, 2014: $145 and 2013: $251) |  | (65 | ) | (189 | ) | (217 | ) | (376 | )
Total comprehensive income |  | $ | 338,316 |  | $ | 373,916 |  | $ | 662,761 |  | $ | 870,762 |
Comprehensive income attributable to the non-controlling interest |  | $ | 1,129 |  | $ | 1,368 |  | $ | 2,337 |  | $ | 3,009 |
Comprehensive income attributable to SCC |  | $ | 337,187 |  | $ | 372,548 |  | $ | 660,424 |  | $ | 867,753 |

The accompanying notes are an integral part of these condensed consolidated financial statements.

4

Table of Contents

Southern Copper Corporation

CONDENSED CONSOLIDATED BALANCE SHEET

(Unaudited)

|  | June 30, |  | December 31, |
|  | 2014 |  | 2013 |
|  | (in thousands) |
ASSETS |  |  |  |  |
Current assets: |  |  |  |  |
Cash and cash equivalents |  | $ | 1,335,364 |  | $ | 1,672,695 |
Short-term investments |  | 289,883 |  | 208,268 |
Accounts receivable trade |  | 583,143 |  | 533,226 |
Accounts receivable other (including related parties 2014 - $10,832 and 2013 - $38,062) |  | 66,065 |  | 64,552 |
Inventories |  | 754,626 |  | 693,942 |
Deferred income tax |  | 133,289 |  | 84,377 |
Other current assets |  | 150,282 |  | 158,990 |
Total current assets |  | 3,312,652 |  | 3,416,050 |
Property, net |  | 6,933,719 |  | 6,476,168 |
Leachable material |  | 495,238 |  | 395,177 |
Intangible assets, net |  | 110,473 |  | 110,219 |
Related parties receivable |  | 161,244 |  | 161,244 |
Deferred income tax |  | 213,776 |  | 180,707 |
Equity method investment |  | 64,140 |  | 57,142 |
Other assets |  | 216,690 |  | 199,322 |
Total assets |  | $ | 11,507,932 |  | $ | 10,996,029 |
LIABILITIES |  |  |  |  |
Current liabilities: |  |  |  |  |
Current portion of long-term debt |  | $ | 200,000 |  | — |
Accounts payable (including related parties 2014 -$24,994 and 2013 - $28,373) |  | 508,898 |  | $ | 493,263 |
Accrued income taxes |  | 91,789 |  | 7,474 |
Accrued workers’ participation |  | 120,854 |  | 192,371 |
Accrued interest |  | 69,772 |  | 70,787 |
Other accrued liabilities |  | 34,285 |  | 19,689 |
Total current liabilities |  | 1,025,598 |  | 783,584 |
Long-term debt |  | 4,005,467 |  | 4,204,915 |
Deferred income taxes |  | 271,756 |  | 244,875 |
Other liabilities and reserves |  | 76,760 |  | 76,000 |
Asset retirement obligation |  | 151,497 |  | 124,835 |
Total non-current liabilities |  | 4,505,480 |  | 4,650,625 |
Commitments and contingencies (Note 9) |  |  |  |  |
STOCKHOLDERS’ EQUITY |  |  |  |  |
Common stock |  | 8,846 |  | 8,846 |
Additional paid-in capital |  | 3,350,602 |  | 3,340,349 |
Retained earnings |  | 3,872,096 |  | 3,394,827 |
Accumulated other comprehensive income |  | 6,022 |  | 6,239 |
Treasury stock, at cost, common shares |  | (1,290,684 | ) | (1,216,599 | )
Total Southern Copper Corporation stockholders’ equity |  | 5,946,882 |  | 5,533,662 |
Non-controlling interest |  | 29,972 |  | 28,158 |
Total equity |  | 5,976,854 |  | 5,561,820 |
Total liabilities and equity |  | $ | 11,507,932 |  | $ | 10,996,029 |

The accompanying notes are an integral part of these condensed consolidated financial statements.

5

Table of Contents

Southern Copper Corporation

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

(Unaudited)

|  | Three Months Ended |  | Six Months Ended |
|  | June 30, |  | June 30, |
|  | 2014 |  | 2013 |  | 2014 |  | 2013 |
|  | (in thousands) |
OPERATING ACTIVITIES |  |  |  |  |  |  |  |  |
Net income |  | $ | 338,381 |  | $ | 374,105 |  | $ | 662,978 |  | $ | 871,138 |
Adjustments to reconcile net earnings to net cash provided from operating activities: |  |  |  |  |  |  |  |  |
Depreciation, amortization and depletion |  | 116,091 |  | 93,516 |  | 226,544 |  | 184,088 |
Equity earnings of affiliate, net of dividends received |  | (3,583 | ) | 2,654 |  | (6,997 | ) | (5,509 | )
Loss (gain) on currency translation effect |  | (119 | ) | (2,831 | ) | (5,807 | ) | 11,063 |
Provision (benefit) for deferred income taxes |  | 27,498 |  | 16,426 |  | (56,822 | ) | 10,681 |
Cash provided from (used for) operating assets and liabilities: |  |  |  |  |  |  |  |  |
Accounts receivable |  | (39,843 | ) | 101,299 |  | (49,917 | ) | 180,963 |
Inventories |  | (58,684 | ) | (32,512 | ) | (160,745 | ) | (63,627 | )
Accounts payable and accrued liabilities |  | (27,234 | ) | (252,402 | ) | 42,079 |  | (187,892 | )
Other operating assets and liabilities |  | (3,738 | ) | 2,184 |  | 32,216 |  | (103,994 | )
Net cash provided from operating activities |  | 348,769 |  | 302,439 |  | 683,529 |  | 896,911 |
INVESTING ACTIVITIES |  |  |  |  |  |  |  |  |
Capital expenditures |  | (375,635 | ) | (385,454 | ) | (699,361 | ) | (702,252 | )
Proceeds from (purchase of) short-term investments, net |  | (16,873 | ) | (188,445 | ) | (81,615 | ) | (258,635 | )
Loan repaid by related party |  | — |  | 2,679 |  | — |  | 13,252 |
Sale of property |  | 4,587 |  | 803 |  | 4,881 |  | 1,027 |
Net cash used in investing activities |  | (387,921 | ) | (570,417 | ) | (776,095 | ) | (946,608 | )
FINANCING ACTIVITIES |  |  |  |  |  |  |  |  |
Debt repaid |  | — |  | (5,000 | ) | — |  | (5,000 | )
Dividends paid to common stockholders |  | (83,346 | ) | (169,102 | ) | (183,372 | ) | (372,034 | )
Distributions to non-controlling interest |  | (197 | ) | (394 | ) | (499 | ) | (866 | )
Repurchase of common shares |  | (13,030 | ) | (64,560 | ) | (65,509 | ) | (64,560 | )
Other |  | 528 |  | 532 |  | 801 |  | 790 |
Net cash used in financing activities |  | (96,045 | ) | (238,524 | ) | (248,579 | ) | (441,670 | )
Effect of exchange rate changes on cash and cash equivalents |  | (2,540 | ) | (16,166 | ) | 3,814 |  | (28,439 | )
Increase (decrease) in cash and cash equivalents |  | (137,737 | ) | (522,668 | ) | (337,331 | ) | (519,806 | )
Cash and cash equivalents, at beginning of period |  | 1,473,101 |  | 2,462,350 |  | 1,672,695 |  | 2,459,488 |
Cash and cash equivalents, at end of period |  | $ | 1,335,364 |  | $ | 1,939,682 |  | $ | 1,335,364 |  | $ | 1,939,682 |

The accompanying notes are an integral part of these condensed consolidated financial statements.

6

Table of Contents

Southern Copper Corporation

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

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 June 30, 2014, Grupo Mexico through its wholly-owned subsidiary Americas Mining Corporation (“AMC”) owned 82.5% of the Company’s capital stock. The condensed consolidated financial statements presented herein consist of the accounts of Southern Copper Corporation (“SCC” or the “Company”), a Delaware corporation, and its subsidiaries. The Company is an integrated producer of copper and other minerals, and operates mining, smelting and refining facilities in Peru and Mexico. The Company conducts its primary operations in Peru through a registered branch (the “Peruvian Branch” or “Branch” or “SPCC Peru Branch”). The Peruvian Branch is not a corporation separate from the Company. The Company’s Mexican operations are conducted through subsidiaries. The Company also conducts exploration activities in Argentina, Chile, Ecuador, Mexico and Peru.

In the opinion of Southern Copper Corporation, (the “Company” or “SCC”), the accompanying unaudited condensed consolidated financial statements contain all adjustments (consisting only of normal recurring adjustments) necessary to state fairly the Company’s financial position as of June 30, 2014 and the results of operations, comprehensive income and cash flows for the three and six months ended June 30, 2014 and 2013. The results of operations for the three and six months ended June 30, 2014 and 2013 are not necessarily indicative of the results to be expected for the full year. The December 31, 2013 balance sheet data was derived from audited financial statements, but does not include all disclosures required by generally accepted accounting principles in the United States of America (U.S. GAAP). The accompanying condensed consolidated financial statements should be read in conjunction with the consolidated financial statements at December 31, 2013 and notes included in the Company’s 2013 annual report on Form 10-K.

NOTE 2 — SHORT-TERM INVESTMENTS:

Short-term investments were as follows ($ in millions):

|  | At June 30, 2014 |  | At December 31, 2013 |
Trading securities |  | $ | 284.4 |  | $ | 202.6 |
Weighted average interest rate |  | 1.80 | % | 3.78 | %
Available for sale |  | $ | 5.5 |  | $ | 5.7 |
Weighted average interest rate |  | 0.41 | % | 0.42 | %
Total |  | $ | 289.9 |  | $ | 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 at June 30, 2014 and December 31, 2013, included corporate bonds and asset and mortgage backed obligations. As of June 30, 2014 and December 31, 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 condensed consolidated statement of earnings. Also the Company redeemed some of these securities and recognized gains (losses) due to changes in fair value, which were recorded as other income (expense) in the condensed consolidated statement of earnings.

7

Table of Contents

The following table summarizes the activity of these investments by category (in millions):

|  | Three months ended |  | Six months ended |
|  | June 30, |  | June 30, |
|  | 2014 |  | 2013 |  | 2014 |  | 2013 |
Trading securities: |  |  |  |  |  |  |  |  |
Interest earned |  | $ | 1.1 |  | $ | 1.4 |  | $ | 2.5 |  | $ | 2.0 |
Unrealized gain (loss) at the end of the period |  | $ | 1.7 |  | $ | 3.4 |  | $ | 1.7 |  | $ | 3.4 |
Available for sale: |  |  |  |  |  |  |  |  |
Interest earned |  | (* | ) | (* | ) | (* | ) | (* | )
Investment redeemed |  | $ | 0.2 |  | $ | 0.4 |  | $ | 0.2 |  | $ | 0.4 |

(*) Less than $0.1 million

NOTE 3 - INVENTORIES:

Inventories were as follows:

(in millions) |  | At June 30, 2014 |  | At December 31, 2013 |
Inventory, current: |  |  |  |  |
Metals at lower of average cost or market: |  |  |  |  |
Finished goods |  | $ | 98.3 |  | $ | 84.2 |
Work-in-process |  | 346.9 |  | 305.4 |
Supplies at average cost |  | 309.4 |  | 304.3 |
Total current inventory |  | $ | 754.6 |  | $ | 693.9 |
Inventory, long-term |  |  |  |  |
Leach stockpiles |  | $ | 495.2 |  | $ | 395.2 |

During the six months ended June 30, 2014 and 2013 total leaching costs capitalized as long-term inventory of leachable material amounted to $181.2 million and $142.5 million, respectively. Leachable material inventories recognized in cost of sales amounted to $79.5 million and $54.6 million for the six months ended June 30, 2014 and 2013, respectively.

NOTE 4 — INCOME TAXES:

The income tax provision and the effective income tax rate for the first six months of 2014 and 2013 were as follows ($ in millions):

|  | 2014 |  | 2013 |
Income tax provision |  | $ | 429.9 |  | $ | 406.8 |
Effective income tax rate |  | 39.8 | % | 32.2 | %

These provisions include income taxes for Peru, Mexico and the United States. The increase in the effective tax rate for the first half of 2014 from the same period in the prior year is primarily due to a new Mexican royalty tax instituted for 2014, which added 4.7% to the first six months effective tax rate. Other items that added to the increase in the effective tax rate are taxes allocable to dividends from Mexico which are taxed at a higher rate, the effect of capitalization of interest expense and the effect of the deduction for percentage depletion for U.S. tax purposes.

Components of the income tax provision for the six month periods of 2014 and 2013 include the following ($ in millions):

|  | 2014 |  | 2013 |
Statutory income tax provision |  | $ | 361.6 |  | $ | 380.7 |
Peruvian royalty |  | 2.1 |  | 5.0 |
Mexican royalty |  | 46.6 |  | — |
Peruvian special mining tax |  | 19.6 |  | 21.1 |
Total income tax provision |  | $ | 429.9 |  | $ | 406.8 |

8

Table of Contents

Royalty mining charge:

Peruvian operations: In 2011, the Peruvian congress approved an amendment to the mining royalty charge. The new mining royalty charge is based on operating income margins with graduated rates ranging from 1% to 12% of operating profits, with a minimum royalty charge assessed at 1% of net sales. If the operating income margin is 10% or less, the royalty charge is 1% and for each 5% increment in the operating income margin, the royalty charge rate increases by 0.75%, up to a maximum of 12%. The minimum royalty charge assessed at 1% of net sales is recorded as cost of sales and those amounts assessed against operating income are included in the income tax provision. The Company has accrued $14.4 million and $17.7 million of royalty charge in the first six months of 2014 and 2013, respectively, of which $2.1 million and $5.0 million, respectively, were included in income taxes.

Mexican operations: In December 2013, the Mexican government enacted a new law which, among other things, established a mining royalty charge of 7.5% on taxable EBITDA and an additional royalty charge of 0.5% on the net sales value of gold, silver and platinum. These charges became effective January 2014 and the Company has accrued $46.6 million of royalty taxes as part of the income tax provision for the first six months of 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 has accrued $19.6 million and $21.0 million of special mining tax in the income tax provision for the first six months of 2014 and 2013, respectively.

Accounting for uncertainty in income taxes:

In the second quarter and first six months of 2014, there were no changes in the Company’s uncertain tax positions.

In July 2013, the Financial Accounting Standards Board, or “FASB,” issued Accounting Standard Update No. 2013-11 on the presentation of unrecognized tax benefits. The update clarifies that unrecognized tax benefits related to a net operating loss carryforward, or similar tax loss, or tax credit carryforward, should generally be presented in the financial statements as a reduction to a deferred tax asset. The amendments in this update are effective for fiscal years, and interim periods within those years, beginning after December 15, 2013. Accordingly the Company is presenting applicable uncertain tax positions as reductions to deferred income tax assets in the Condensed Consolidated Balance Sheet as of December 31, 2013 and June 30, 2014.

NOTE 5 — PROVISIONALLY PRICED SALES:

At June 30, 2014, the Company has recorded provisionally priced sales of copper at average forward prices per pound, and molybdenum at the June 30, 2014 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 June 30, 2014:

Copper (million lbs.) |  | Priced at |  | Month of Settlement |
31.3 |  | $ | 3.19 |  | July and August 2014 |

Molybdenum (million lbs.) |  | Priced at |  | Month of Settlement |
8.5 |  | $ | 13.3 |  | July to September 2014 |

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.

9

Table of Contents

NOTE 6 - 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 June 2014, the Company has provided guarantees of $14.2 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, including the Ilo marine trestle. In the last quarter of 2012, the Company submitted updates to the closure plans for Toquepala, Cuajone and Ilo in accordance with the law. As a result of these revised plans, the Company adjusted its asset retirement obligation.

In 2010, the Company announced to the Mexican federal environmental authorities the closure of 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 $39.3 million through June 30, 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 by the end of 2014. 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, or 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 the six months ended June 30, 2014 and 2013 (in millions):

|  | 2014 |  | 2013 |
Balance as of January 1 |  | $ | 124.8 |  | $ | 122.3 |
Changes in estimates |  | 26.7 |  | — |
Closure payments |  | (3.6 | ) | (0.9 | )
Accretion expense |  | 3.6 |  | 4.2 |
Balance as of June 30, |  | $ | 151.5 |  | $ | 125.6 |

NOTE 7 — RELATED PARTY TRANSACTIONS:

The Company has entered into certain transactions in the ordinary course of business with parties that are controlling shareholders or their affiliates. These transactions include the lease of office space, air transportation, 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):

10

Table of Contents

|  | As of |
|  | June 30, 2014 |  | December 31, 2013 |
Related parties receivable current: |  |  |  |  |
Grupo Mexico and affiliates |  | $ | 0.9 |  | $ | 0.8 |
Mexico Generadora de Energia S. de R.L. (“MGE”) |  | — |  | 18.8 |
Compania Perforadora Mexico, S.A.P.I. de C.V. and affiliates |  | 1.0 |  | 0.7 |
Compania Minera Coimolache S.A. |  | 5.6 |  | 17.2 |
Mexico Proyectos y Desarrollos, S.A. de C.V. and affiliates |  | 3.3 |  | 0.6 |
|  | $ | 10.8 |  | $ | 38.1 |
Related parties receivable non-current: |  |  |  |  |
MGE |  | $ | 161.2 |  | $ | 161.2 |
Related parties payable: |  |  |  |  |
Grupo Mexico and affiliates |  | $ | 6.1 |  | $ | 3.3 |
MGE |  | 9.9 |  | 14.4 |
Asarco LLC |  | 6.1 |  | 6.2 |
Higher Technology S.A.C. |  | 0.1 |  | 0.1 |
Breaker S.A. de C.V and affiliates (“Breaker”) |  | 1.1 |  | 0.3 |
Sempertrans and affiliates |  | 0.1 |  | 0.1 |
Mexico Transportes Aereos, S.A. de C.V. (“Mextransport”) |  | 0.3 |  | 0.6 |
Mexico Proyectos y Desarrollos, S.A. de C.V. and affiliates |  | 0.1 |  | — |
Ferrocarril Mexicano, S.A. de C.V. |  | 1.2 |  | 3.3 |
|  | $ | 25.0 |  | $ | 28.3 |

Purchase and sale activities:

Grupo Mexico and its affiliates:

The following table summarizes the purchase and sale activities with Grupo Mexico and its affiliates in the six months ended June 30, 2014 and 2013 (in millions):

|  | As of June 30, |
|  | 2014 |  | 2013 |
Purchases activity |  |  |  |  |
Grupo Mexico and affiliates |  | $ | 6.9 |  | $ | 6.9 |
Asarco LLC. |  | 24.6 |  | 70.7 |
Ferrocarril Mexicano S.A de C.V. |  | 11.6 |  | 11.1 |
Mexico Proyectos y Desarrollos, S.A. de C.V. and affiliates |  | 55.9 |  | 26.6 |
MGE |  | 91.7 |  | — |
Cia Perforadora Mexico S.A.P.I. de C.V and affiliates |  | 1.9 |  | 2.6 |
Total purchases |  | $ | 192.6 |  | $ | 117.9 |
Sales activity |  |  |  |  |
Asarco LLC |  | $ | 21.7 |  | $ | 71.8 |
Mexico Proyectos y Desarrollos, S.A. de C.V. and affiliates |  | 0.4 |  | 0.4 |
Cia Perforadora Mexico S.A.P.I. de C.V and affiliates |  | 0.3 |  | 0.3 |
MGE |  | 48.8 |  | 0.7 |
Total sales |  | $ | 71.2 |  | $ | 73.2 |

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 paying for 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.

11

Table of Contents

The Company’s Mexican operations purchased scrap and other residual copper mineral from Asarco, and from MGE, power. Both companies are subsidiaries of Grupo Mexico.

The Company paid fees for engineering, construction and consulting services provided by subsidiaries of Mexico Proyectos y Desarrollos, S.A. de C. V, a subsidiary 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 these power plants. The 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 of Mexican pesos (approximately $150 million), reducing Minera Mexico’s participation to less than 0.001%. As consequence of this change in control, MGE became an indirect subsidiary of Grupo Mexico. Additionally, at the same time, MGE paid $150 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 June 30, 2014 the remaining balance of the debt was $161.2 million and was recorded as non-current related party receivable on the condensed consolidated balance sheet. Related to this loan, the Company received interest income of $4.7 million and $5.0 million in the first six months of 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 first quarter of 2014. MGE is currently awaiting 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 a portion of its power output to third-party energy users. See also Note 9 - Commitments and Contingencies, Other commitments.

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 with the controlling group:

The following tables summarize the purchase and sales activities with other Larrea family companies in the six months ended June 30, 2014 and 2013 (in millions):

|  | As of June 30, |
|  | 2014 |  | 2013 |
Mextransport: |  |  |  |  |
Purchase activity |  | $ | 1.1 |  | $ | 1.5 |
Sales activity |  | $ | 0.1 |  | $ | 0.2 |

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 with SCC executive officers:

The following table summarizes the purchase activities with companies with relationships with SCC executive officers in the six months ended June 30, 2014 and 2013 (in millions):

|  | As of June 30, |
|  | 2014 |  | 2013 |
Higher Technology S.A.C. |  | $ | 0.8 |  | $ | 1.0 |
Servicios y Fabricaciones Mecanicas S.A.C. |  | 0.7 |  | 0.1 |
Sempertrans and affiliates |  | 0.8 |  | 0.5 |
Breaker |  | 3.6 |  | 2.0 |
Pigoba S.A. de C.V. |  | 0.1 |  | 0.1 |
Total purchases |  | $ | 6.0 |  | $ | 3.7 |

12

Table of Contents

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 France Belting Technology and Sempertrans Belchatow SP Z.O.O. in which Mr. Alejandro Gonzalez is employed 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 of SCC’s Chief Executive Officer 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 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 $56.6 million to Coimolache. Conditions and balance of the loan as of June 30, 2014 are as follows ($ in millions):

|  | Loan |
Total loan granted |  | $56.6 |
Interest rate |  | 6 months Libor + 3% (approximately 3.35%) |
Remaining balance at June 30, 2014 |  | $5.6 |

Interest:

|  | Three months ended |  | Six months ended |
|  | June 30, |  | June 30, |
|  | 2014 |  | 2013 |  | 2014 |  | 2013 |
Interest earned |  | $ | 0.1 |  | $ | 0.2 |  | $ | 0.2 |  | $ | 0.6 |

Additionally, on April 2, 2013, Coimolache paid to the Company $16.5 million as a return of funds expensed during the exploration stage of the Tantahuatay mine. This amount was recorded as other income in our condensed consolidated statement of income.

NOTE 8- BENEFIT PLANS:

Post retirement defined benefit plans

The Company has two noncontributory defined benefit pension plans covering former salaried employees in the United States and certain former employees in Peru. Effective October 31, 2000, the Board of Directors amended the qualified pension plan to suspend the accrual of benefits.

In addition, our Mexican subsidiaries have a defined contribution pension plan for salaried employees and a noncontributory defined benefit pension plan for union employees.

The components of the net periodic benefit costs for the six months ended June 30, 2014 and 2013 are as follows (in millions):

|  | 2014 |  | 2013 |
Service cost |  | $ | 0.6 |  | $ | 0.7 |
Interest cost |  | 0.7 |  | 0.5 |
Expected return on plan assets |  | (1.8 | ) | (1.8 | )
Amortization of net actuarial loss |  | (0.2 | ) | (0.4 | )
Amortization of net loss (gain) |  | (* | ) | 0.1 |
Net periodic benefit costs |  | $ | (0.7 | ) | $ | (0.9 | )

(*) amount is lower than $0.1 million

13

Table of Contents

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 plan is unfunded. 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 components of the net periodic benefit cost for the six months ended June 30, 2014 and 2013 are as follows (in millions):

|  | 2014 |  | 2013 |
Interest cost |  | $ | 0.7 |  | $ | 0.8 |
Amortization of net loss (gain) |  | (0.2 | ) | (* | )
Amortization of prior service cost (credit) |  | (* | ) | (* | )
Net periodic benefit cost |  | $ | 0.5 |  | $ | 0.8 |

(*) amount is lower than $0.1 million

NOTE 9 — COMMITMENTS AND CONTINGENCIES:

Environmental matters:

The Company has instituted extensive environmental conservation programs at its mining facilities in Peru and Mexico. The Company’s environmental programs include, among others, water recovery systems to conserve water and minimize 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 the six months ended June 30, 2014 and 2013 were as follows (in millions):

|  | 2014 |  | 2013 |
Peruvian operations |  | $ | 57.6 |  | $ | 32.4 |
Mexican operations |  | 7.7 |  | 21.2 |
|  | $ | 65.3 |  | $ | 53.6 |

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 6, “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, such 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 to 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. However, 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, provides that the Company should review its compliance with these regulations and develop a modification plan to reach compliance. The plan must be reported to the government within one year, or by April 8, 2015.

14

Table of Contents

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 said results. Non-compliance with this obligation or with decontamination goals will carry penalties according to an existing sanction scale. However, companies cannot be penalized for non-compliance with the soil SQS during the compliance schedule. In the second quarter of 2014, the Company began the process of seeking bids from third-party testing consultants to prepare the necessary studies, as well as any 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.

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.

15

Table of Contents

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 the said 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); Indalecio Carlos Perez Cano and others v. SCC Peruvian Branch (filed March 2012); 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 Flores Jimenez and

16

Table of Contents

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 June 30, 2014, the case remains in the discovery stage.

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. As of June 30, 2014, the case remains pending 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 June 30, 2014, the case remains pending 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 June 30, 2014, the case remains pending without further developments.

17

Table of Contents

Labor matters:

In recent years the Company has experienced a positive labor environment in its operations in Mexico and Peru which is allowing an increase in productivity as well as helping to achieve the goals of its capital expansion program.

Peruvian operations: Approximately 67% of the Company’s 4,500 Peruvian employees were unionized at June 30, 2014, represented by seven separate unions. Three of these unions, one at each major production area, represent the majority of the Company´s workers. There are also four smaller unions, representing 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 June 30, 2014, the resolution of this case is still pending.

On August 1, 2013, the National Union of Workers Engaged in Exploration, Exploitation and Processing of Mines in the Mexican Republic, which is the union operating at Mexicana del Cobre and IMMSA, filed a new petition before the labor authorities to replace the National Mining Union at the San Martin mine, because it believes that it represents more workers at the San Martin mine than the National Mining Union. As of June 30, 2014, the resolution of this case is still pending.

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 the basis of the Supreme Court decision in the San Martin case, which recognized the right of the labor court to define responsibility for the strike and the termination payment for each unionized worker. On June 16, 2014, the labor court denied the petition of the Company. The resolution issued by the labor court will be vigorously challenged by the Company before a federal court, by considering that it was issued against the Supreme Court decision. A favorable decision would have the effect of terminating the protracted strike at Taxco.

It is expected that operations at these mines will remain suspended until these labor issues are resolved.

In view of these length strikes, the Company has reviewed the carrying value of the San Martin and Taxco mines to ascertain whether impairment exists. The Company concluded that the assets located at these mines are not impaired.

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.

18

Table of Contents

Other Contingencies:

Tia Maria:

Tia Maria, a Peruvian investment project, was suspended by governmental action in April 2011 in light of protests and disruptions carried out by a small group of activists who alleged, among other things, that the project would result in severe environmental contamination and the diversion of agricultural water resources.

The Company prepared a new Environmental Impact Assessment (“EIA”) study taking into account local community concerns and new government guidance. The Company considers that this new EIA will alleviate the concerns previously raised by the Tia Maria project’s neighboring communities, provide them with an independent source of information and reaffirm the validity of the Company’s assessment of the project.

In the fourth quarter of 2013, the Company successfully held the two workshops and the public hearing required as part of the EIA approval process and also submitted the new EIA for the Tia Maria project to MINEM. The Company responded to comments received from the governmental authorities and other stakeholders on May 26, 2014. The Company expects to receive approval of this study during the third quarter of 2014 and move forward with this project, with the goal of production start-up in the first quarter of 2017. However, no assurances can be given as to the specific timing of such approval. For further developments please see Note 14.

The Company has legal and valid title to the Tia Maria mining concessions and the over-lapping surface land in the area. None of above noted activities have in any way challenged, revoked, impaired or annulled the Company´s legal rights to the Tia Maria mining concessions and/or the over-lapping surface land titles acquired in the past. All the Company’s property rights on these areas are in full force.

In view of the delay in this project, the Company has reviewed the carrying value of this asset to ascertain whether impairment exists. Total spending on the project, through June 30, 2014, was $537.0 million of which $189.5 million has been reassigned to other Company operations. The Company does not believe that an impairment exists.

Other commitments:

Peruvian Operations

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 120MWh 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 120MWh 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.

Toquepala Concentrator Expansion

In connection with the EIA for the Toquepala expansion project, some community groups raised concerns related to water usage and pollution. As a result of these issues the Peruvian government started discussions with the local communities and the regional authorities to resolve this impasse. In February 2013, the Company reached a final agreement with the province of Candarave, one of the provinces neighboring the Toquepala unit, which commits the Company to funding S/.255 million (approximately $100 million) for development projects in the province. In the second quarter of 2013, the Company made a first contribution of S/.45 million (approximately $17 million) to the development fund of the Candarave province The Company continued working with the authorities of the Candarave province and in June 2013 signed an agreement with the National Water Authority, local authorities and the Candarave Board of Water Users for the hydrogeological study of the Locumba river basin in order to improve the water utilization in the province.

19

Table of Contents

In November 2013, the Company reached a final agreement with the Jorge Basadre province which commits the Company to fund S/.100 million (approximately $36 million) for social development projects in the province. In addition, the Company has agreed to fund various other social programs with the use of advance income tax payments.

The contributions to Candarave and Jorge Basadre provinces are contingent upon receiving approval for the project and will be expended through the life of the Toquepala expansion project. With these agreements the Company is close to establishing accords with the principal communities and interested parties in the area.

On April 16, 2014, the Company successfully held the public hearing required as a pre-condition for approval of the project’s EIA. On July 1, 2014, the Company received comments and observations from the authorities and stakeholders, related to the EIA for the Toquepala concentrator expansion and expects to answer them during the third quarter of 2014. The Company expects to continue the development of this project which will increase annual production by 100,000 tons of copper and 3,100 tons of molybdenum.

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. In 2012, the Company signed a power purchase agreement with MGE, whereby MGE will supply the Company with power through 2032. The first plant was completed in June 2013 and the second in the first quarter of 2014. MGE is currently waiting 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.

Commitment for Capital projects:

As of June 30, 2014, the Company has committed $368.3 million for the expansion programs at the Mexican operations. These funds are scheduled to be expended in the next twelve months.

Tax contingency matters:

Tax contingencies are provided for under ASC 740-10-50-15 Uncertain tax positions (see Note 4, “Income taxes”).

NOTE 10 — SEGMENT AND RELATED INFORMATION:

Company management views Southern Copper as having three reportable segments and manages it on the basis of these segments. The reportable segments identified by the Company are: the Peruvian operations, the Mexican open-pit operations and the Mexican underground mining operations segment identified as the IMMSA unit.

The three reportable segments identified are groups of mines, each of which constitute an operating segment, with similar economic characteristics, type of products, processes and support facilities, similar regulatory environments, similar employee bargaining contracts and similar currency risks. In addition, each mine within the individual group earns revenues from similar type of customers for their products and services and each group incurs expenses independently, including commercial transactions between groups.

Financial information is regularly prepared for each of the three segments and the results of the Company’s operations are regularly reported to the Senior Management Officers on the segment basis. The Senior Management Officers 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.

20

Table of Contents

Financial information relating to Southern Copper’s segments is as follows:

|  | Three Months Ended June 30, 2014 |
|  | (in millions) |
|  | Mexican Open-pit |  | Mexican IMMSA Unit |  | Peruvian Operations |  | Corporate, other and eliminations |  | Consolidated |
Net sales outside of segments |  | $ | 772.3 |  | $ | 87.5 |  | $ | 627.6 |  | — |  | $ | 1,487.4 |
Intersegment sales |  | — |  | 22.4 |  | — |  | $ | (22.4 | ) | — |
Cost of sales (exclusive of depreciation, amortization and depletion) |  | 312.0 |  | 83.1 |  | 347.1 |  | (15.6 | ) | 726.6 |
Selling, general and administrative |  | 9.1 |  | 3.9 |  | 11.2 |  | 1.2 |  | 25.4 |
Depreciation, amortization and depletion |  | 54.9 |  | 7.8 |  | 48.4 |  | 5.0 |  | 116.1 |
Exploration |  | 0.8 |  | 7.4 |  | 5.8 |  | 8.1 |  | 22.1 |
Operating income |  | $ | 395.5 |  | $ | 7.7 |  | $ | 215.1 |  | $ | (21.1 | ) | 597.2 |
Less: |  |  |  |  |  |  |  |  |  |  |
Interest, net |  |  |  |  |  |  |  |  |  | (33.2 | )
Other income (expense) |  |  |  |  |  |  |  |  |  | (5.7 | )
Income taxes |  |  |  |  |  |  |  |  |  | (225.8 | )
Equity earnings of affiliate |  |  |  |  |  |  |  |  |  | 5.9 |
Non-controlling interest |  |  |  |  |  |  |  |  |  | (1.1 | )
Net income attributable to SCC |  |  |  |  |  |  |  |  |  | $ | 337.3 |
Capital expenditure |  | $ | 267.8 |  | $ | 9.2 |  | $ | 97.6 |  | $ | 1.0 |  | $ | 375.6 |
Property, net |  | $ | 3,918.8 |  | $ | 379.8 |  | $ | 2,503.8 |  | $ | 131.3 |  | $ | 6,933.7 |
Total assets |  | $ | 5,976.8 |  | $ | 896.6 |  | $ | 3,431.3 |  | $ | 1,203.2 |  | $ | 11,507.9 |

|  | Three Months Ended June 30, 2013 |
|  | (in millions) |
|  | Mexican Open-pit |  | Mexican IMMSA Unit |  | Peruvian Operations |  | Corporate, other and eliminations |  | Consolidated |
Net sales outside of segments |  | $ | 724.1 |  | $ | 90.0 |  | $ | 596.1 |  | — |  | $ | 1,410.2 |
Intersegment sales |  | — |  | 25.4 |  | — |  | $ | (25.4 | ) | — |
Cost of sales (exclusive of depreciation, amortization and depletion) |  | 336.9 |  | 88.4 |  | 317.6 |  | (31.7 | ) | 711.2 |
Selling, general and administrative |  | 9.1 |  | 3.9 |  | 13.2 |  | 1.3 |  | 27.5 |
Depreciation, amortization and depletion |  | 43.2 |  | 7.1 |  | 42.2 |  | 1.0 |  | 93.5 |
Exploration |  | 0.8 |  | 6.6 |  | 2.5 |  | 1.7 |  | 11.6 |
Operating income |  | $ | 334.1 |  | $ | 9.4 |  | $ | 220.6 |  | $ | 2.3 |  | 566.4 |
Less: |  |  |  |  |  |  |  |  |  |  |
Interest, net |  |  |  |  |  |  |  |  |  | (46.5 | )
Other income (expense) |  |  |  |  |  |  |  |  |  | 16.9 |
Income taxes |  |  |  |  |  |  |  |  |  | (167.8 | )
Equity earnings of affiliate |  |  |  |  |  |  |  |  |  | 5.1 |
Non-controlling interest |  |  |  |  |  |  |  |  |  | (1.4 | )
Net income attributable to SCC |  |  |  |  |  |  |  |  |  | $ | 372.7 |
Capital expenditure |  | $ | 307.6 |  | $ | 13.5 |  | $ | 63.9 |  | $ | 0.5 |  | $ | 385.5 |
Property, net |  | $ | 2,964.5 |  | $ | 367.1 |  | $ | 2,234.7 |  | $ | 70.1 |  | $ | 5,636.4 |
Total assets |  | $ | 4,927.8 |  | $ | 865.7 |  | $ | 3,411.0 |  | $ | 1,449.8 |  | $ | 10,654.3 |

21

Table of Contents

|  | Six Months Ended June 30, 2014 |
|  | (in millions) |
|  | Mexican Open-pit |  | Mexican IMMSA Unit |  | Peruvian Operations |  | Corporate, other and eliminations |  | Consolidated |
Net sales outside of segments |  | $ | 1,420.3 |  | $ | 183.6 |  | $ | 1,237.9 |  | — |  | $ | 2,841.8 |
Intersegment sales |  | — |  | 46.8 |  | — |  | $ | (46.8 | ) | — |
Cost of sales (exclusive of depreciation, amortization and depletion) |  | 541.4 |  | 167.6 |  | 670.2 |  | (10.7 | ) | 1,368.5 |
Selling, general and administrative |  | 17.7 |  | 7.6 |  | 22.4 |  | 2.2 |  | 49.9 |
Depreciation, amortization and depletion |  | 109.6 |  | 15.6 |  | 95.6 |  | 5.7 |  | 226.5 |
Exploration |  | 1.7 |  | 12.4 |  | 7.7 |  | 14.9 |  | 36.7 |
Operating income |  | $ | 749.9 |  | $ | 27.2 |  | $ | 442.0 |  | $ | (58.9 | ) | 1,160.2 |
Less: |  |  |  |  |  |  |  |  |  |  |
Interest, net |  |  |  |  |  |  |  |  |  | (69.3 | )
Other income (expense) |  |  |  |  |  |  |  |  |  | (10.0 | )
Income taxes |  |  |  |  |  |  |  |  |  | (429.9 | )
Equity earnings of affiliate |  |  |  |  |  |  |  |  |  | 11.9 |
Non-controlling interest |  |  |  |  |  |  |  |  |  | (2.3 | )
Net income attributable to SCC |  |  |  |  |  |  |  |  |  | $ | 660.6 |
Capital expenditure |  | $ | 523.0 |  | $ | 18.3 |  | $ | 155.4 |  | $ | 2.7 |  | $ | 699.4 |
Property, net |  | $ | 3,918.8 |  | $ | 379.8 |  | $ | 2,503.8 |  | $ | 131.3 |  | $ | 6,933.7 |
Total assets |  | $ | 5,976.8 |  | $ | 896.6 |  | $ | 3,431.3 |  | $ | 1,203.2 |  | $ | 11,507.9 |

|  | Six Months Ended June 30, 2013 |
|  | (in millions) |
|  | Mexican Open-pit |  | Mexican IMMSA Unit |  | Peruvian Operations |  | Corporate, other and eliminations |  | Consolidated |
Net sales outside of segments |  | $ | 1,586.7 |  | $ | 179.9 |  | $ | 1,266.6 |  | — |  | $ | 3,033.2 |
Intersegment sales |  | — |  | 57.4 |  | — |  | $ | (57.4 | ) | — |
Cost of sales (exclusive of depreciation, amortization and depletion) |  | 717.5 |  | 161.5 |  | 630.7 |  | (75.7 | ) | 1,434.0 |
Selling, general and administrative |  | 17.9 |  | 7.7 |  | 25.3 |  | 1.9 |  | 52.8 |
Depreciation, amortization and depletion |  | 83.5 |  | 13.8 |  | 83.6 |  | 3.2 |  | 184.1 |
Exploration |  | 1.7 |  | 12.7 |  | 4.9 |  | 2.7 |  | 22.0 |
Operating income |  | $ | 766.1 |  | $ | 41.6 |  | $ | 522.1 |  | $ | 10.5 |  | 1,340.3 |
Less: |  |  |  |  |  |  |  |  |  |  |
Interest, net |  |  |  |  |  |  |  |  |  | (93.5 | )
Other income (expense) |  |  |  |  |  |  |  |  |  | 17.8 |
Income taxes |  |  |  |  |  |  |  |  |  | (406.8 | )
Equity earnings of affiliate |  |  |  |  |  |  |  |  |  | 13.3 |
Non-controlling interest |  |  |  |  |  |  |  |  |  | (3.0 | )
Net income attributable to SCC |  |  |  |  |  |  |  |  |  | $ | 868.1 |
Capital expenditure |  | $ | 567.2 |  | $ | 31.4 |  | $ | 103.2 |  | $ | 0.5 |  | $ | 702.3 |
Property, net |  | $ | 2,964.5 |  | $ | 367.1 |  | $ | 2,234.7 |  | $ | 70.1 |  | $ | 5,636.4 |
Total assets |  | $ | 4,927.8 |  | $ | 865.7 |  | $ | 3,411.0 |  | $ | 1,449.8 |  | $ | 10,654.3 |

22

Table of Contents

NOTE 11 — STOCKHOLDERS´EQUITY:

Treasury Stock:

Activity in treasury stock in the six-month period ended June 30, 2014 and 2013 is as follows (in millions):

|  | 2014 |  | 2013 |
Southern Copper common shares |  |  |  |  |
Balance as of January 1, |  | $ | 1,011.0 |  | $ | 729.8 |
Purchase of shares |  | 65.5 |  | 64.5 |
Stock dividend |  |  |  | — |
Used for corporate purposes |  | (0.3 | ) | (0.2 | )
Balance as of June 30, |  | 1,076.2 |  | 794.1 |
Parent Company (Grupo Mexico) common shares |  |  |  |  |
Balance as of January 1, |  | 205.6 |  | 189.0 |
Other activity, including dividend, interest and currency translation effect |  | 8.8 |  | 10.9 |
Balance as of June 30, |  | 214.4 |  | 199.9 |
Treasury stock balance as of June 30, |  | $ | 1,290.6 |  | $ | 994.0 |

The following table summarizes share distributions in the first six months of 2014 and 2013:

|  | 2014 |  | 2013 |
Southern Copper common shares |  |  |  |  |
Directors’ Stock Award Plan |  | 12,000 |  | 12,000 |
Parent Company (Grupo Mexico) common shares |  |  |  |  |
Employee stock purchase plan (shares in millions) |  | 0.7 |  | 2.4 |

Southern Copper Common Shares:

At June 30, 2014 and 2013, there were in treasury 51,591,147 and 41,192,136 SCC’s common shares, respectively.

SCC share repurchase program:

In 2008, the Company´s Board of Directors authorized a $500 million share repurchase program. On July 28, 2011, the Company´s Board of Directors authorized an increase of the share repurchase program to $1 billion and on October 17, 2013, the Company’s Board of Directors authorized an additional increase to $2 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.

Period |  | Total Number of |  | Average Price Paid |  | Total Number of Shares Purchased as Part of Publicly |  | Maximum Number of Shares that May Yet Be Purchased Under |  | Total Cost |
From |  | To |  | Shares Purchased |  | per Share |  | Announced Plan |  | the Plan @ $30.37 (*) |  | ($ in millions) |
2008: |  |  |  | 28,510,150 |  | $ | 13.49 |  | 28,510,150 |  |  |  | $ | 384.7 |
2009: |  |  |  | 4,912,000 |  | 14.64 |  | 33,422,150 |  |  |  | 71.9 |
2010: |  |  |  | 15,600 |  | 29.69 |  | 33,437,750 |  |  |  | 0.5 |
2011: |  |  |  | 9,034,400 |  | 30.29 |  | 42,472,150 |  |  |  | 273.7 |
2012: |  |  |  | 4,442,336 |  | 33.17 |  | 46,914,486 |  |  |  | 147.3 |
2013: |  |  |  | 10,245,000 |  | 27.47 |  | 57,159,486 |  |  |  | 281.4 |
2014: |  |  |  |  |  |  |  |  |  |  |  |  |
01/01/14 |  | 01/31/14 |  | 1,768,000 |  | 28.06 |  | 58,927,486 |  |  |  | 49.6 |
03/01/14 |  | 03/21/14 |  | 106,079 |  | 27.04 |  | 59,033,565 |  |  |  | 2.9 |
Total first quarter |  |  |  | 1,874,079 |  | 28.00 |  |  |  |  |  | 52.5 |
06/01/14 |  | 06/30/14 |  | 450,532 |  | 28.92 |  | 59,484,097 |  |  |  | 13.0 |
Total second quarter |  |  |  | 450,532 |  | 28.92 |  |  |  |  |  | 13.0 |
Total purchased |  |  |  | 59,484,097 |  | $ | 20.59 |  |  |  | 25,518,495 |  | $ | 1,225.0 |

(*) NYSE closing price of SCC common shares at June 30, 2014.

23

Table of Contents

As a result of the repurchase of shares of SCC’s common stock, Grupo Mexico’s direct and indirect ownership was 82.5% as of June 30, 2014.

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 the plan in the six-month period ended June 30, 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 June 30, |  | (309,600 | ) | (297,600 | )
Remaining shares reserved |  | 290,400 |  | 302,400 |

Parent Company common shares:

At June 30, 2014 and 2013 there were in treasury 72,078,019 and 77,832,273 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 six months ended June 30, 2014 and 2013, under the Employee Stock Purchase Plan and the unrecognized compensation expense as of June 30, 2014 and 2013 under this plan were as follows (in millions):

|  | 2014 |  | 2013 |
Stock based compensation expense |  | $ | 1.1 |  | $ | 1.1 |
Unrecognized compensation expense |  | $ | 1.0 |  | $ | 3.1 |

The unrecognized compensation expense under this plan is expected to be recognized over the remaining six-month period.

The following table presents the stock award activity of the Employee Stock Purchase Plan for the six months ended June 30, 2014 and 2013:

24

Table of Contents

|  | Shares |  | Unit Weighted Average Grant Date Fair Value |
Outstanding shares at January 1, 2014 |  | 4,449,599 |  | $ | 1.16 |
Granted |  | — |  | — |
Exercised |  | (58,663 | ) | 1.16 |
Forfeited |  | — |  | — |
Outstanding shares at June 30, 2014 |  | 4,390,936 |  | $ | 1.16 |
Outstanding shares at January 1, 2013 |  | 6,955,572 |  | $ | 1.16 |
Granted |  | — |  | — |
Exercised |  | (2,385,483 | ) | 1.16 |
Forfeited |  | (31,159 | ) | 1.16 |
Outstanding shares at June 30, 2013 |  | 4,538,930 |  | $ | 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 six months ended June 30, 2014 and 2013, under the New Employee Stock Purchase Plan and the unrecognized compensation expense as of June 30, 2014 and 2013 under this plan were as follows (in millions):

|  | 2014 |  | 2013 |
Stock based compensation expense |  | $ | 0.1 |  | $ | 0.1 |
Unrecognized compensation expense |  | $ | 2.4 |  | $ | 2.9 |

The unrecognized compensation expense under this plan is expected to be recognized over the remaining four year and six month period.

The following table presents the stock award activity of the New Employee Stock Purchase Plan for the six months ended June 30, 2013 and 2012:

|  | Shares |  | Unit Weighted Average Grant Date Fair Value |
Outstanding shares at January 1, 2014 |  | 3,012,464 |  | $ | 2.05 |
Granted |  | — |  | — |
Exercised |  | (669,157 | ) | 2.05 |
Forfeited |  | — |  | — |
Outstanding shares at June 30, 2014 |  | 2,343,307 |  | $ | 2.05 |
Outstanding shares at January 1, 2013 |  | 2,944,742 |  | $ | 2.05 |
Granted |  | — |  | — |
Exercised |  | (10,308 | ) | 2.05 |
Forfeited |  | (64,551 | ) | 2.05 |
Outstanding shares at June 30, 2013 |  | 2,869,883 |  | $ | 2.05 |

NOTE 12 — NON-CONTROLLING INTEREST:

The following table presents the non-controlling interest activity for the six months ended June 30, 2014 and 2013 (in millions):

|  | 2014 |  | 2013 |
Balance as of January 1, |  | $ | 28.2 |  | $ | 24.0 |
Net earnings |  | 2.3 |  | 3.0 |
Dividend paid |  | (0.5 | ) | (0.9 | )
Other |  | — |  | (0.1 | )
Balance as of June 30, |  | $ | 30.0 |  | $ | 26.0 |

25

Table of Contents

NOTE 13 — FINANCIAL INSTRUMENTS:

Subtopic 810-10 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 810-10 are described below:

Level 1 - Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.

Level 2 - Inputs that are observable, either directly or indirectly, but do not qualify as Level 1 inputs (i.e., quoted prices for similar assets or liabilities).

Level 3 - Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e., supported by little or no market activity).

The carrying amounts of certain financial instruments, including cash and cash equivalents, accounts receivable (other than accounts receivable associated with provisionally priced sales) and accounts payable approximate fair value due to their short maturities. Consequently, such financial instruments are not included in the following table that provides information about the carrying amounts and estimated fair values of other financial instruments that are not measured at fair value in the condensed consolidated balance sheet as of June 30, 2014 and December 31, 2013 (in millions):

|  | As of June 30, 2014 |  | As of December 31, 2013 |
|  | Carrying Value |  | Fair Value |  | Carrying Value |  | Fair Value |
Liabilities: |  |  |  |  |  |  |  |  |
Long-term debt |  | $ | 4,205.5 |  | $ | 4,495.3 |  | $ | 4,204.9 |  | $ | 4,088.8 |

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.

Fair values of assets and liabilities measured at fair value on a recurring basis were calculated as follows as of June 30, 2014 and December 31, 2013:

|  | Fair Value at Measurement Date Using: |  | Fair Value at Measurement Date Using: |
|  | Fair Value as of June 30, |  | Quoted prices in active markets for identical assets |  | Significant other observable inputs |  | Significant unobservable inputs |  | Fair Value as of December |  | Quoted prices in active markets for identical assets |  | Significant other observable inputs |  | Significant unobservable inputs |
Description |  | 2014 |  | (Level 1) |  | (Level 2) |  | (Level 3) |  | 31, 2013 |  | (Level 1) |  | (Level 2) |  | (Level 3) |
Assets: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Short term investment: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
- Trading securities |  | $ | 284.4 |  | $ | 284.4 |  |  |  |  |  | $ | 202.6 |  | $ | 202.6 |  |  |  |  |
- Available for sale debt securities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Corporate bonds |  | 0.4 |  |  |  | $ | 0.4 |  |  |  | 0.4 |  |  |  | $ | 0.4 |  |  |
Asset backed obligations |  | 0.1 |  |  |  | 0.1 |  |  |  | 0.1 |  |  |  | 0.1 |  |  |
Mortgage backed securities |  | 5.0 |  |  |  | 5.0 |  |  |  | 5.2 |  |  |  | 5.2 |  |  |
Accounts receivable: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
- Derivatives — Not classified as hedges: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Provisionally priced sales: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Copper |  | 99.7 |  | 99.7 |  |  |  |  |  | 53.9 |  | 53.9 |  |  |  |  |
Molybdenum |  | 113.4 |  | 113.4 |  | — |  | — |  | 100.2 |  | 100.2 |  | — |  | — |
Total |  | $ | 503.0 |  | $ | 497.5 |  | $ | 5.5 |  | $ | — |  | $ | 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.

26

Table of Contents

Molybdenum prices are established by reference to the publication Platt’s Metals Week and are considered Level 1 in the fair value hierarchy.

NOTE 14 — SUBSEQUENT EVENTS:

Dividends:

On July 24, 2014 the Board of Directors authorized a quarterly dividend of 12 cents per share payable on August 28, 2014 to SCC shareholders of record at the close of business on August 15, 2014.

Tia Maria:

On August 1, 2014 the MINEM approved the Environmental Impact Assessment study for the Tia Maria project. The Company expects to start work on the project by the end of this year. Please see Note 9, Commitments and Contingencies, other Contingencies, Tia Maria.

27

Table of Contents

Part I

Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion provides information that management believes is relevant to an assessment and understanding of the condensed consolidated financial condition and results of operations of Southern Copper Corporation and its subsidiaries (collectively, “SCC” the “Company” “our” and “we”). This item should be read in conjunction with our interim unaudited Condensed Consolidated Financial Statements and the notes thereto included in this quarterly report. Additionally, the following discussion and analysis should be read in conjunction with the Management Discussion and Analysis of Financial Condition and Results of Operations and the Consolidated Financial Statements included in Part II of our annual report on Form 10-K for the year ended December 31, 2013.

EXECUTIVE OVERVIEW

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

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

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

· Changes in copper and molybdenum prices: The average LME copper price was $3.14 per pound in the first half of 2014, 8.2% lower than in the first half of 2013. The average silver price in the first half of 2014 also decreased 24.5% from the average price in the first half of 2013. Meanwhile, average molybdenum and zinc prices in the first half of 2014 increased 5.9% and 5.7%, respectively, from the average prices in the first half of 2013. During the first half of 2014 per pound LME spot copper prices ranged from $2.92 to $3.37. The LME spot price for copper closed at $3.15 per pound on June 30, 2014.

· Sales structure: In the first half of 2014 approximately 76% of our revenue came from the sale of copper, 10% from molybdenum, 5% from silver, 4% from zinc and 5% from various other products, including gold, sulfuric acid and other materials.

· Copper: During the second quarter of 2014, we have seen relative softness in copper prices, which have decreased by about 4% when compared to the first quarter of this year. Simultaneously however, we have been seeing the copper market’s future fundamentals improving positively. As of July 23, 2014, inventories at the three major warehouses (LME, COMEX and Shanghai) have decreased by 221,000 tons or 46% from their position at the beginning of 2014.

As we have indicated in the past, we believe copper demand is improving due, in large part, to the synchronized economic recovery of the United States, Europe and Japan, which together represent about 54% of the world GDP and consume directly about 31% of the world’s refined copper production.

Regarding the world’s main copper consumer, China, we believe that recent Chinese Strategic Reserve purchases as well as an expected copper demand rebound of this country for the second half of this year will support global copper demand growth in 2014.

On the supply side, we think that several structural factors, such as scrap scarcity, delays in projects startups, technical problems, labor unrest and other difficulties will continue to affect supply from new projects and existing operations, as well as scrap production.

28

Table of Contents

As a consequence of these factors, we think there is now a small probability of a surplus market for 2014.

Molybdenum: Our most significant by-product, represented 10% of our sales in the first half of 2014. In the second quarter we saw a growing demand for molybdenum in Europe that has supported prices 35% higher than the first quarter of 2014. This price increase seems to be contrary with the outlook of higher supply due to a 10% worldwide growth coming from our Buenavista operation, as well as from Sierra Gorda, Toromocho and Caserones, among other projects.

Even though the current scenario for molybdenum prices is not positive, it is important to note that about 50% of the supply of this metal comes from primary or dedicated molybdenum mines, which have a cash cost in the range of $9-$12 per pound. This creates a natural barrier for the molybdenum market to adjust production volume and thereby protect low cost secondary molybdenum producers such as our Company.

Silver: Represented 5% of our sales in the first half of 2014. Silver prices averaged $20.04 per ounce in the first half of 2014, 24.5% lower than its price in the first half of 2013. We believe that silver prices will have strong support due to its industrial uses as well as being perceived as a value shelter in times of economic uncertainty.

Zinc: Represented 4% of our sales in the first half of 2014. We also believe that zinc has very good long term fundamentals due to its significant industrial consumption and expected mine production shutdowns. In the last 12 months, zinc inventories have decreased significantly, improving this market´s fundamentals. We are expecting an increasing price scenario for zinc in the next few years.

· Production: For 2014, we are expecting to produce 672,400 tons of copper from our mines. The construction of the new 120,000 ton capacity SX-EW III plant at Buenavista was completed and started commercial production this June. We expect it to be at full capacity by the end of the third quarter of 2014 and contribute to our 2014 production with 53,400 tons.

We expect to produce 22,000 tons of molybdenum in 2014, 10.6% more than our 2013 production and a new Company record.

We now expect to produce and sell 15 million ounces of silver and produce 82,000 tons of zinc in 2014. This is a reduction from our previous outlook, due to lower silver and zinc grades and some temporary disruptions at our zinc mines.

· Cost: Our operating costs and expenses for the first half 2014 and 2013 were as follows ($ in millions):

|  |  |  |  |  | Variance |
|  | 2014 |  | 2013 |  | $ |  | % |
Operating costs and expenses |  | $ | 1,681.6 |  | $ | 1,692.9 |  | $ | (11.3 | ) | (0.7 | )%

The decrease was largely due to lower cost of sales, as result of a temporary build-up of copper inventory as well as lower sales of metal purchased from third parties.

· Capital Investments. In the first six months of 2014, we spent $699.4 million on capital expenditures, which represents 106% of net income. We continue with the development of our capital expansion program which aims to increase copper production capacity by approximately 87% from 630,000 tons in 2013 to 1,175,000 tons by 2017.

· Tax changes in Peru: On July 12, 2014, the Peruvian government enacted a new law with certain tax and administrative changes in order to promote investments in Peru. The law includes several tax and environmental changes that could positively affect our Company. Changes include providing more favorable terms for tax stability agreements for both new investments and for the inclusion of major expansions in these stability agreements. In addition, these proposals cap interest accumulations on some contested assessments and penalties. Other provisions provide for more flexibility in the implementation of environmental regulations.

KEY MATTERS:

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

29

Table of Contents

Earnings: The table below highlights key financial and operational data for our Company for the three and six months ended June 30, 2014 and 2013 (in millions, except per share amounts):

|  | Three months ended June 30, |  | Six months ended June 30, |
|  | 2014 |  | 2013 |  | Variance |  | 2014 |  | 2013 |  | Variance |
Net sales |  | $ | 1,487 |  | $ | 1,410 |  | $ | 77 |  | $ | 2,842 |  | $ | 3,033 |  | $ | (191 | )
Net income attributable to SCC |  | $ | 337 |  | $ | 373 |  | $ | (36 | ) | $ | 661 |  | $ | 868 |  | $ | (207 | )
Earnings per share |  | $ | 0.40 |  | $ | 0.44 |  | $ | (0.04 | ) | $ | 0.79 |  | $ | 1.03 |  | $ | (0.24 | )
Dividends per share |  | $ | 0.10 |  | $ | 0.20 |  | $ | (0.10 | ) | $ | 0.22 |  | $ | 0.44 |  | $ | (0.22 | )
Pounds of copper sold |  | 354 |  | 331 |  | 23 |  | 684 |  | 675 |  | 9 |

Net sales and net income in the first six months of 2014 were lower than in the first six months of 2013 by $191 million and $207 million, respectively. These decreases were mainly the result of lower prices for copper and silver, partially offset by increases in molybdenum and zinc prices. Silver and zinc sales volume decreased in the first six months of 2014 by 21.8% and 1.9%, respectively, compared with the first six months of 2013, this was partially offset by higher sales volume of copper 1.2% and molybdenum 21.4%.

Production: The table below highlights mine production data for our Company for the three and six months ended June 30, 2014 and 2013:

|  | Three months ended June 30, |  | Six months ended June 30, |
|  |  |  |  |  | Variance |  |  |  |  |  | Variance |
|  | 2014 |  | 2013 |  | Volume |  | % |  | 2014 |  | 2013 |  | Volume |  | % |
Copper (in million pounds) |  | 364.5 |  | 325.1 |  | 39.4 |  | 12.1 | % | 724.3 |  | 654.7 |  | 69.6 |  | 10.6 | %
Molybdenum (in million pounds) |  | 12.8 |  | 9.9 |  | 2.9 |  | 29.6 | % | 25.1 |  | 20.5 |  | 4.6 |  | 22.4 | %
Zinc (in million pounds) |  | 36.4 |  | 59.6 |  | (23.2 | ) | (39.0 | )% | 82.3 |  | 111.4 |  | (29.1 | ) | (26.1 | )%
Silver (in million ounces) |  | 3.2 |  | 3.4 |  | (0.2 | ) | (4.7 | )% | 6.6 |  | 6.5 |  | 0.1 |  | 1.7 | %

The table below highlights copper production data at each of our mines for the three and six months ended June 30, 2014 and 2013:

|  | Three Months Ended June 30, |  | Six Months Ended June 30, |
|  |  |  |  |  | Variance |  |  |  |  |  | Variance |
|  | 2014 |  | 2013 |  | Volume |  | % |  | 2014 |  | 2013 |  | Volume |  | % |
COPPER (in million pounds) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Toquepala |  | 76.0 |  | 70.8 |  | 5.2 |  | 7.3 | % | 151.0 |  | 140.4 |  | 10.6 |  | 7.6 | %
Cuajone |  | 98.7 |  | 90.6 |  | 8.1 |  | 8.9 | % | 198.1 |  | 178.8 |  | 19.3 |  | 10.8 | %
La Caridad |  | 70.7 |  | 66.7 |  | 4.0 |  | 6.0 | % | 139.6 |  | 132.9 |  | 6.7 |  | 5.0 | %
Buenavista |  | 116.5 |  | 93.1 |  | 23.4 |  | 25.2 | % | 230.0 |  | 195.2 |  | 34.8 |  | 17.8 | %
IMMSA |  | 2.6 |  | 3.9 |  | (1.3 | ) | (34.6 | )% | 5.6 |  | 7.4 |  | (1.8 | ) | (24.7 | )%
Total mined copper |  | 364.5 |  | 325.1 |  | 39.4 |  | 12.1 | % | 724.3 |  | 654.7 |  | 69.6 |  | 10.6 | %

Second quarter: Copper mine production in the second quarter of 2014 increased 12.1% to 364.5 million pounds compared with 325.1 million pounds in the second quarter of 2013. This increase was due to:

· Higher ore grades and recoveries at all our mines and higher production at the Buenavista mine due to the first commercial production of the new SX-EW III plant, which produced 1.7 million pounds,

· higher production at the Cuajone mine resulting from higher ore grades and the projects developed at this site,

· higher production at the Toquepala mine due to better ore grades and recoveries, and

· higher production at the La Caridad mine due to higher ore grades and recoveries, partially offset by

· lower production at IMMSA mines due to lower ore grades at each of their mines.

Molybdenum production increased 29.6% in the second quarter of 2014 compared to the second quarter of 2013 due to the contribution of 1.8 million pounds from the new Buenavista molybdenum plant and from higher production at our Peruvian mines, principally as a result of better grades.

Silver mine production decreased 4.7% in the second quarter of 2014 from the second quarter of 2013, principally as a result of lower production at our IMMSA mines, partially offset by an increase in production at the Buenavista mine and our Peruvian mines.

Zinc production decreased 39.0% in the second quarter of 2014 due to lower grades at all our IMMSA mines and lower production at the Charcas mine due to an accident that temporarily restricted production.

30

Table of Contents

Six months: Copper mine production in the first six months of 2014 increased 10.6% to 724.3 million pounds compared with 654.7 million pounds in the same period of 2013. This increase was due to:

· Higher production at the Buenavista mine due to higher throughput at the concentrator and better ore grades and recoveries, as well as the first production from the new SX-EW III plant,

· higher production at the Cuajone mine resulting from higher throughput and higher ore grades from the HPGR production,

· higher production at the Toquepala mine due to better ore grades and recoveries, and

· higher production at the La Caridad mine due to better ore grades and recoveries, partially offset by

· lower production at IMMSA mines due to lower ore grades at all of their mines.

Molybdenum production increased 22.4% in the first six months of 2014 compared to the same period of 2013 due to our new Buenavista molybdenum plant´s contribution of 3.1 million pounds of molybdenum and higher production at our Peruvian mines, principally as a result of better grades.

Silver mine production had a slight increase of 1.7% in the first six months of 2014 from the same period of 2013, principally as a result of higher production at all our Peruvian mines and at the Buenavista mine, partially offset by lower production at the Charcas mine due to an incident that temporarily restricted production.

Zinc production decreased 26.1% in the first six months of 2014 due to lower grades at all our IMMSA mines and lower production at the Charcas mine due to an accident that temporarily restricted production.

Operating Cash Costs: An overall benchmark used by us and a common industry metric to measure performance is operating cash cost per pound of copper produced. Operating cash cost is a non-GAAP measure that does not have a standardized meaning and may not be comparable to similarly titled measures provided by other companies. This non-GAAP information should not be considered in isolation or as substitute for measures of performance determined in accordance with GAAP. A reconciliation of our operating cash cost per pound of copper produced to the cost of sales (exclusive of depreciation, amortization and depletion) as presented in the condensed consolidated statement of earnings is presented under the subheading “Non-GAAP Information Reconciliation” on pages 44 - 45. We disclose operating cash cost per pound of copper produced, both without and with the inclusion of by-product revenues.

We define operating cash cost per pound of copper produced without by-product revenues as cost of sales (exclusive of depreciation, amortization and depletion), plus selling, general and administrative charges, treatment and refining charges net of sales premiums; less the cost of purchased concentrates, workers’ participation and other miscellaneous charges, including royalty charges and the change in inventory levels; divided by total pounds of copper produced by our own mines.

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

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

We believe that both of these measures are useful tools for our management and our stakeholders. Our cash costs, without by-product revenues allow us to monitor our cost structure and address operating management areas of concern. The measure operating cash cost per pound of copper produced with by-product revenues is a common measure used in the copper industry and it is a useful management tool that allows us to track our performance and better allocate our resources. This measure is also used in our investment project evaluation process to determine a project’s potential contribution to our operations, its competitiveness and its relative strength in different price scenarios. The expected contribution of by-products is generally a significant factor used by the copper industry in determining whether to move forward with the development of a new mining project. As the price of our by-product commodities can have significant fluctuations from period to period, the value of its contribution to our costs can be volatile.

For further discussion please see our section of Operating cash costs in Part II, Item 7 of our Annual report on Form 10-K for the year ended December 31, 2013.

31

Table of Contents

Our operating cash cost per pound of copper produced, with and without by-product revenues, is presented in the table below for the three and six months ended June 30, 2014 and 2013.

Operating cash cost per pound of copper produced (1)

(in millions, except cost per pound and percentages)

|  | Three Months Ended |  | Six Months Ended |
|  | June 30, |  | June 30, |
|  |  |  |  |  | Variance |  |  |  |  |  | Variance |
|  | 2014 |  | 2013 |  | Value |  | % |  | 2014 |  | 2013 |  | Value |  | % |
Total operating cash cost without by-product revenues |  | $ | 699.4 |  | $ | 633.5 |  | $ | 65.9 |  | 10.4 | % | $ | 1,354.3 |  | $ | 1,243.3 |  | $ | 111.0 |  | 8.9 | %
Total by-products revenues |  | (374.3 | ) | (303.9 | ) | (70.4 | ) | 23.2 | % | (671.6 | ) | (633.8 | ) | (37.8 | ) | 6.0 | %
Total operating cash cost with by-products revenues |  | $ | 325.1 |  | $ | 329.5 |  | $ | (4.4 | ) | (1.3 | )% | $ | 682.7 |  | $ | 609.5 |  | $ | 73.2 |  | 12.0 | %
Total pounds of copper produced |  | 352.9 |  | 316.9 |  | 36.0 |  | 11.4 | % | 702.7 |  | 638.9 |  | 63.8 |  | 10.0 | %
Operating cash cost per pound without by-product revenues |  | $ | 1.98 |  | $ | 2.00 |  | $ | (0.02 | ) | (1.0 | )% | $ | 1.93 |  | $ | 1.95 |  | $ | (0.02 | ) | (1.0 | )%
Operating cash cost per pound with by-products revenues |  | $ | 0.92 |  | $ | 1.04 |  | $ | (0.12 | ) | (11.5 | )% | $ | 0.97 |  | $ | 0.95 |  | $ | 0.02 |  | 2.1 | %

(1) This is a non-GAAP measure. Please see pages 44 - 45 for reconciliation to GAAP measure.

As seen on the table above, our cash cost without by-products revenues in the second quarter and the first six months of 2014 were two cents lower than in the same periods of 2013 mainly due to the diluting effect of higher production at all our open pit mines mainly from Buenavista. This increase production volume offset the cost inflation, which increased fuel, power, tires, reagents and other operating materials for our production process.

Our per pound cash cost for the three months ended June 30, 2014, when calculated with by-products revenues was 92 cents per pound compared with $1.04 per pound in the same period of 2013. The decrease was largely attributable to the increase in molybdenum sales due to the higher production from the new Buenavista molybdenum plant and higher market price which increased by 24.5% in the second quarter 2014 compared with the same period of 2013.

In addition, our per pound cash cost for the six months ended June 30, 2014 when calculated with by-products revenues was 97 cents per pound compared with 95 cents per pound in the same period of 2013. This increase of two cents per pound or 2.1% was result of lower by-products market prices except for molybdenum and zinc which partially offset the reduction together with an increase in molybdenum production.

Metal Prices: The profitability of our operations is dependent on, and our financial performance is significantly affected by, the international market prices for the products we produce, especially for copper, molybdenum, zinc and silver. Metal prices historically have been subject to wide fluctuations and are affected by numerous factors beyond our control. These factors, which affect each commodity to varying degrees, include international economic and political conditions, levels of supply and demand, the availability and cost of substitutes, inventory levels maintained by producers and others and, to a lesser degree, inventory carrying costs and currency exchange rates. In addition, the market prices of certain metals have on occasion been subject to rapid short-term changes due to economic concerns and financial investments.

We are subject to market risks arising from the volatility of copper and other metal prices. For the remaining six months of 2014, assuming that expected metal production and sales are achieved, that tax rates are unchanged, giving no effect to potential hedging programs, metal price sensitivity factors would indicate the following change in estimated net income attributable to SCC resulting from metal price changes:

|  | Copper |  | Molybdenum |  | Zinc |  | Silver |
Change in metal prices (per pound, except silver — per ounce) |  | $ | 0.01 |  | $ | 1.00 |  | $ | 0.01 |  | $ | 1.00 |
Annual change in net income attributable to SCC (in millions) |  | $ | 4.7 |  | $ | 14.7 |  | $ | 0.6 |  | $ | 5.1 |

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

32

Table of Contents

mines. The Mexican open-pit operations produce copper, with significant by-product production of molybdenum, silver and other material. Our IMMSA unit includes five underground mines that produce zinc, lead, copper, silver and gold, a coal mine which produces coal and coke, and several industrial processing facilities for zinc and silver.

Segment information is included in our review of “Results of Operations” and also in Note 10 - “Segment and Related Information” of our condensed consolidated financial statements.

Inflation and Exchange Rate Effect of the Peruvian Nuevo Sol and the Mexican Peso: Our functional currency is the U.S. dollar and our revenues are primarily denominated in U.S. dollars. Significant portions of our operating costs are denominated in Peruvian Nuevo sol and Mexican pesos. Accordingly, when inflation and currency devaluation/appreciation of the Peruvian currency and Mexican currency occur, our operating results can be affected. In recent years we believe such changes have not had a material effect on our results and financial position. Please see Item 3 “Quantitative and Qualitative Disclosures about Market Risk” for more detailed information.

Capital Investment Programs: We made capital investments of $375.6 million and $699.4 million for the three and six months ended June 30, 2014, compared with $385.5 million and $702.3 million in the comparable periods of 2013, respectively. In general, the capital investments and investment projects described below are intended to increase production, decrease costs or address social and environmental commitments.

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

Projects in Mexico:

Buenavista Projects: The new copper molybdenum concentrator has an annual production capacity of 188,000 tons of copper and 2,600 tons of molybdenum. In addition, the project will produce annually 2.3 million ounces of silver and 21,000 ounces of gold. The total capital budget of the project is $1,383.6 million and through June 30, 2014 has an 80.7% progress with an investment of $783.1 million. The project is expected to be completed in the first half of 2015. All major equipment is on site and 72.5% has been installed.

Regarding the mine equipment acquisition for the Buenavista expansion, through June 30, 2014 we have invested $510.8 million and have received 61 400-ton capacity trucks, seven shovels and eight drills required for the mine expansion.

The first copper cathode at our SX-EW III plant was produced in June. The first of three solvent extraction trains started operation, as well as 50% of our electro winning plant. Full capacity is expected to be reached by the end of the third quarter of 2014, with an annual production of 120,000 tons per year. The total capital budget for the project is $444 million of which we have invested 99% through June 30, 2014.

The crushing, conveying and spreading system for leachable ore project (Quebalix IV) will increase production by improving SX-EW copper recovery, reducing processing time and hauling costs. It has a crushing and conveying capacity of 80 million tons per year and is expected to be completed in the fourth quarter of 2015. The project has a 37.6% progress with an investment of $70.2 million out of the approved capital budget of $340 million. The mobile stacking conveyor and the overland conveyor contracts have been assigned.

The remaining projects to complete the $3.4 billion budgeted program include important investments in infrastructure (power lines and substations, water supply, tailings dam, mine equipment shops, internal roads and others).

Angangueo: The project is moving forward as scheduled to develop this underground polymetallic deposit in Michoacan, Mexico. With an estimated investment of $174.7 million, Angangueo includes a concentrator plant which will have an estimated average annual metal content production of 10,400 tons of copper and 7,000 tons of zinc in the first seven years. Over the life of the mine, average annual concentrate production is expected to contain 2.4 million ounces of silver and 1,500 ounces of gold. The project is scheduled to begin production in the first half of 2015. Through June 30, 2014 we have spent $22.7 million on the project. In the second quarter of 2014, we executed additional diamond drilling at the Descubridora vein in order to further define our ore reserves. In addition, we initiated the new environmental study for this project.

33

Table of Contents

Projects in Peru:

Toquepala Projects: Through June 30, 2014, we have invested a total $309.8 million on Toquepala projects. These projects include the construction of a new crusher and conveyor belt system to replace current mine rail haulage, which we expect will reduce annual operating cost.

Toquepala expansion project. On July 1, 2014, we received the comments from the authorities and stakeholders related to the EIA of the Toquepala concentrator expansion, which we expect to answer during the third quarter of 2014. We expect to receive the EIA approval by year end and continue developing this project. The Toquepala concentrator expansion will increase annual production capacity by 100,000 tons of copper and 3,100 tons of molybdenum.

Cuajone Projects: Through June 30, 2014, we have invested $38.3 million of a budget of $45 million on the HPGR project, which will produce a more finely crushed material. This project continues in the ramping up stage and we expect to reach full capacity during the third quarter 2014. The project will generate cost savings, improve copper recovery and reduce power consumption in the crushing process. Through June 2014, the implementation of the HPGR project and the variable cut-off ore grade project, implemented in 2013, has produced incremental production of approximately 13,000 tons of copper. When fully operational we expect an annual increment in copper production of 22,000 tons.

The project to improve slope stability at the south area of the Cuajone mine, will remove approximately 148 million tons of waste material, over a three-year period, in order to improve mine design without reducing current production level. The mine equipment acquired includes one shovel, five 400-ton capacity trucks, one drill and auxiliary equipment which will be reallocated to our mine operations once the project is finished. Besides preparing the mine for the future, this investment will avoid a reduction in average ore grade. At June 30, 2014, we have invested $62.0 million of a total budget of $65.1 million.

Tia Maria project: we have responded to the comments raised by the governmental authorities and stakeholders and are waiting for the final approval of our EIA which we expect during the third quarter of 2014. Once received, we will be able to move forward with this important project. For further developments please see Note 14.

This project will represent an investment of approximately $1.4 billion and will produce 120,000 tons of copper cathodes using state of the art technology which would be compliant with the highest international environmental and sustainable development standards. The project is currently expected to generate 3,500 jobs during the construction phase. When in operation, Tia Maria would directly employ 600 workers and indirectly another 2,000. Through its expected twenty-years of life, the project related services would create significant business opportunities in the Arequipa region.

In addition, the Company intends to implement social responsibility programs in the Arequipa region similar to those established in the communities near its other operations in Peru.

Tailings disposal at Quebrada Honda: This project increases the height of the existing Quebrada Honda dam to impound future tailings from the Toquepala and Cuajone mills and will extend the expected life of this tailings facility by 25 years. The first stage and construction of the drainage system for the lateral dam is finished. We are preparing bidding documents for the second stage that includes engineering and procurement to improve and increase the dam’s embankment. The project has a total budgeted cost of $66.0 million with $51.1 million invested through June 30, 2014.

Potential projects

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

El Arco: El Arco is a world class copper deposit in the central part of the Baja California peninsula, with ore reserves over 1.5 billion tons with an ore grade of 0.416% and 0.14 grams of gold per ton. In 2010, we concluded the feasibility study and an investment of $56.4 million was approved for land acquisition required for the project. This project, when developed, is expected to produce 190,000 tons of copper and 105,000 ounces of gold annually. Through June 30, 2014 we have invested $40.8 million on studies, exploration and land acquisition for the project. In 2014, we expect to continue investing in land acquisition and exploration. In addition, we will begin an engineering study to determine the best way to optimize the investment in the project.

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

34

Table of Contents

ACCOUNTING ESTIMATES

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

RESULTS OF OPERATIONS

The following highlights our financial results for the three and six month periods ended June 30, 2013 and 2012 (in millions):

|  | Three Months Ended June 30, |  |  |  | Six Months Ended June 30, |  |  |
|  | 2014 |  | 2013 |  | Variance |  | 2014 |  | 2013 |  | Variance |
Net sales |  | $ | 1,487.4 |  | $ | 1,410.2 |  | $ | 77.2 |  | $ | 2,841.8 |  | $ | 3,033.2 |  | $ | (191.4 | )
Operating costs and expenses |  | (890.2 | ) | (843.8 | ) | (46.4 | ) | (1,681.6 | ) | (1,692.9 | ) | 11.3 |
Operating income |  | 597.2 |  | 566.4 |  | 30.8 |  | 1,160.2 |  | 1,340.3 |  | (180.1 | )
Non-operating income (expense) |  | (38.9 | ) | (29.6 | ) | (9.3 | ) | (79.3 | ) | (75.7 | ) | (3.6 | )
Income before income taxes |  | 558.3 |  | 536.8 |  | 21.5 |  | 1,080.9 |  | 1,264.6 |  | (183.7 | )
Income taxes |  | (225.8 | ) | (167.8 | ) | (58.0 | ) | (429.9 | ) | (406.8 | ) | (23.1 | )
Equity earnings of affiliate |  | 5.9 |  | 5.1 |  | 0.8 |  | 11.9 |  | 13.3 |  | (1.4 | )
Net income attributable to non-controlling interest |  | (1.1 | ) | (1.4 | ) | 0.3 |  | (2.3 | ) | (3.0 | ) | 0.7 |
Net income attributable to SCC |  | $ | 337.3 |  | $ | 372.7 |  | $ | (35.4 | ) | $ | 660.6 |  | $ | 868.1 |  | $ | (207.5 | )

NET SALES

Net sales for the second quarter 2014 increased by $77.2 million, compared with the second quarter of 2013. The 5.5% increase in sales was principally due to the higher copper and molybdenum sales volume and higher molybdenum and zinc prices, partially offset by lower zinc and silver sales volume and lower copper and silver prices.

Net sales in the first six months of 2014 decreased by $191.4 million compared with the first six months of 2013. The 6.3% decrease was mainly the result of lower copper and silver prices and lower silver and zinc sales volume, partially offset by higher copper and molybdenum sales volume and higher molybdenum and zinc prices.

The table below outlines the average published market metals prices for our metals for the three and six month periods ended June 30, 2014 and 2013:

|  | Three Months Ended June 30, |  | Six Months Ended June 30, |
|  | 2014 |  | 2013 |  | % Change |  | 2014 |  | 2013 |  | % Change |
Copper ($ per pound — LME) |  | $ | 3.08 |  | $ | 3.24 |  | (4.9 | )% | $ | 3.14 |  | $ | 3.42 |  | (8.2 | )%
Copper ($ per pound — COMEX) |  | $ | 3.10 |  | $ | 3.25 |  | (4.6 | )% | $ | 3.17 |  | $ | 3.43 |  | (7.6 | )%
Molybdenum ($ per pound) (1) |  | $ | 13.45 |  | $ | 10.80 |  | 24.5 | % | $ | 11.69 |  | $ | 11.04 |  | 5.9 | %
Zinc ($ per pound — LME) |  | $ | 0.94 |  | $ | 0.83 |  | 13.3 | % | $ | 0.93 |  | $ | 0.88 |  | 5.7 | %
Silver ($ per ounce —COMEX) |  | $ | 19.62 |  | $ | 23.10 |  | (15.1 | )% | $ | 20.04 |  | $ | 26.56 |  | (24.5 | )%

(1) Platt´s Metals Week Dealer Oxide

35

Table of Contents

The table below provides our metal sales as a percentage of our total net sales:

|  | Three Months Ended |  | Six Months Ended |
|  | June 30, |  | June 30, |
|  | 2014 |  | 2013 |  | 2014 |  | 2013 |
Copper |  | 75.1 | % | 77.6 | % | 76.4 | % | 77.4 | %
Molybdenum |  | 11.9 | % | 6.5 | % | 10.4 | % | 6.4 | %
Silver |  | 4.8 | % | 7.0 | % | 4.7 | % | 7.6 | %
Zinc |  | 3.5 | % | 3.6 | % | 3.7 | % | 3.3 | %
Other by-products |  | 4.7 | % | 5.3 | % | 4.8 | % | 5.3 | %
Total |  | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | %

The table below provides our copper sales by type of product:

|  | Three Months Ended |  |  |  | Six Months Ended |  |  |
|  | June 30, |  |  |  | June 30, |  |  |
Copper Sales (million pounds) |  | 2014 |  | 2013 |  | Variance |  | 2014 |  | 2013 |  | Variance |
Refined |  | 213.5 |  | 198.9 |  | 14.6 |  | 395.9 |  | 394.8 |  | 1.1 |
SX-EW |  | 51.8 |  | 52.3 |  | (0.5 | ) | 97.3 |  | 100.2 |  | (2.9 | )
Rod |  | 73.8 |  | 72.3 |  | 1.5 |  | 142.6 |  | 143.6 |  | (1.0 | )
Concentrates and other |  | 14.5 |  | 7.1 |  | 7.4 |  | 47.8 |  | 36.6 |  | 11.2 |
Total |  | 353.6 |  | 330.6 |  | 23.0 |  | 683.6 |  | 675.2 |  | 8.4 |

OPERATING COSTS AND EXPENSES

The table below summarized the production cost structure by major components for the three and six months ended June 30, 2014 and 2013 as a percentage of total production cost:

|  | Three months ended June 30, |  | Six months ended June 30, |
|  | 2014 |  | 2013 |  | 2014 |  | 2013 |
Power |  | 18.0 | % | 19.9 | % | 19.0 | % | 20.2 | %
Labor |  | 14.1 | % | 16.5 | % | 14.2 | % | 16.1 | %
Fuel |  | 16.4 | % | 14.4 | % | 16.5 | % | 14.4 | %
Maintenance |  | 15.8 | % | 15.7 | % | 15.1 | % | 15.7 | %
Operating material |  | 18.6 | % | 17.9 | % | 18.7 | % | 18.2 | %
Other |  | 17.1 | % | 15.6 | % | 16.5 | % | 15.4 | %
Total |  | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | %

Second quarter: Operating costs and expenses were $890.2 million in the second quarter of 2014, compared with $843.8 million in the comparable period of 2013. The increase of $46.4 million was primarily due to:

Operating cost and expenses for the second quarter 2013 |  | $ | 843.8 |
Plus: |  |  |
· Higher cost of sales (exclusive of depreciation, amortization and depletion), mainly due to higher fuel and power cost, partially offset by lower costs of metals purchased from third parties and lower inventory consumption, |  | 15.4 |
· higher depreciation, amortization and depletion mainly at our Mexican operations as a result of the acquisition of mine equipment and the start-up of some projects, including the Quebalix III project and |  | 22.6 |
· higher exploration expenses mainly at Ecuador, Argentina and at our Peruvian operations. |  | 10.5 |
Less: |  |  |
· Lower administrative expenses. |  | (2.1 | )
Operating cost and expenses for the second quarter 2014 |  | $ | 890.2 |

Six months: Operating costs and expenses were $1,681.6 million in the six months ended June 30, 2014, compared with $1,692.9 million in the comparable period of 2013. The decrease of $11.3 million was primarily due to:

36

Table of Contents

Operating cost and expenses for the six months 2013 |  | $ | 1,692.9 |
Less: |  |  |
· Lower cost of sales (exclusive of depreciation, amortization and depletion) mainly due to lower inventory consumption and lower cost of metals purchased from third parties, partially offset by higher production cost and |  | (65.5 | )
· lower administrative expenses. |  | (2.9 | )
Plus: |  |  |
· Higher depreciation, amortization and depletion mainly at our Mexican operations as a result of the acquisition of mine equipment and the start-up of some projects, including the new molybdenum and SX-EW plants and the Quebalix III all at the Buenavista mine and |  | 42.4 |
· higher exploration expenses mainly at Ecuador, Argentina and at our Peruvian operations. |  | 14.7 |
Operating cost and expenses for the six months 2014 |  | $ | 1,681.6 |

NON-OPERATING INCOME (EXPENSES)

Non-operating income and expense were an expense of $38.9 million and $79.3 million in the three and six month periods ended June 30, 2014, respectively, compared to an expense of $29.6 million and $75.7 million in the comparable periods of 2013.

Second quarter: The $9.3 million increase in non-operating expense in the second quarter of 2014 is principally due to:

· $ 6.1 million of higher other expenses mainly at our Peruvian operations and

· $ 13.5 million of higher capitalized interest, partially offset by

· $(16.5) million from the return in 2013 of funds from Coimolache expensed during the exploration stage of the Tantahuatay mine.

Six months: The increase of $3.6 million in non-operating expense in the first six months of 2014 is principally due to:

· $11.3 million of higher other expenses mainly at our Peruvian operations and

· $25.8 million of higher capitalized interest mainly at our Mexican operations due to higher capital investment at the Buenavista mine, partially offset by

· $(16.5) million from the partially return of funds in 2013 from Coimolache spent during the exploration stage of the Tantahuatay mine.

INCOME TAXES

|  | Six months ended June 30, |
|  | 2014 |  | 2013 |
Provision for income taxes (in millions) |  | $ | 429.9 |  | $ | 406.8 |
Effective income tax rate |  | 39.8 | % | 32.2 | %

These provisions include income taxes for Peru, Mexico and the United States. The increase in the effective tax rate for the first half of 2014 from the same period in the prior year is primarily due to the new Mexican royalty tax instituted for 2014, which added 4.7% to the first six months effective tax rate. Other items that added to the increase in the effective tax rate are taxes allocable to dividends from Mexico which are taxed at a higher rate, the effect of capitalization of interest expense and the effect of the deduction for percentage depletion for U.S. tax purposes.

Royalty mining charge:

Peruvian operations: In 2011, the Peruvian congress approved an amendment to the mining royalty charge. The new mining royalty charge is based on operating income margins with graduated rates ranging from 1% to 12%, with a minimum royalty charge assessed at 1% of net sales. If the operating income margin is 10% or less, the royalty charge is 1% and for each 5% increment in the operating income margin, the royalty charge rate increases by 0.75%, up to a maximum of 12%. The minimum royalty charge assessed at 1% of net sales is recorded as cost of sales; those amounts assessed against operating income are included in the income tax provision. We have accrued $14.4 million and $17.7 million of royalty charge in the first six months of 2014 and 2013, respectively, of which $2.1 million and $5.0 million, respectively, were included in income taxes.

Mexican Operations: In December 2013, the Mexican government enacted a new law which, among other things, established a mining royalty charge of 7.5% on taxable EBITDA and an additional royalty charge of 0.5% on net sales value of gold, silver and platinum. These charges became effective January 2014 and we have accrued $46.6 million of royalty taxes as part of the income tax provision for the first half of 2014.

37

Table of Contents

SEGMENT RESULT ANALYSIS

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

The table below presents information regarding the volume of our copper sales by segment for the three and six month periods ended June 30, 2014 and 2013:

|  | Three Months Ended June 30, |  | Variance |  | Six Months Ended June 30, |  | Variance |
Copper Sales (million pounds): |  | 2014 |  | 2013 |  | Value |  | % |  | 2014 |  | 2013 |  | Value |  | % |
Peruvian operations |  | 167.4 |  | 157.5 |  | 9.9 |  | 6.3 | % | 334.5 |  | 319.7 |  | 14.8 |  | 4.6 | %
Mexican open-pit |  | 186.2 |  | 173.1 |  | 13.1 |  | 7.6 | % | 349.1 |  | 355.5 |  | (6.4 | ) | (1.8 | )%
Mexican IMMSA unit |  | 4.4 |  | 4.7 |  | (0.3 | ) | (6.4 | )% | 8.5 |  | 9.4 |  | (0.9 | ) | (9.6 | )%
Other and intersegment elimination |  | (4.4 | ) | (4.7 | ) | 0.3 |  | (6.4 | )% | (8.5 | ) | (9.4 | ) | 0.9 |  | (9.6 | )%
Total |  | 353.6 |  | 330.6 |  | 23.0 |  | 6.9 | % | 683.6 |  | 675.2 |  | 8.4 |  | 1.2 | %

The table below presents information regarding the volume of sales by segment of our significant by-products for the three and six month periods ended June 30, 2014 and 2013:

By-product Sales (in million pounds |  | Three Months Ended June 30, |  | Variance |  | Six Months Ended June 30, |  | Variance |
except silver – in million ounces) |  | 2014 |  | 2013 |  | Value |  | % |  | 2014 |  | 2013 |  | Value |  | % |
Peruvian operations |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Molybdenum contained in concentrates |  | 4.7 |  | 3.8 |  | 0.9 |  | 24.8 | % | 9.5 |  | 7.2 |  | 2.3 |  | 31.9 | %
Silver |  | 0.9 |  | 0.9 |  | — |  | — |  | 1.6 |  | 1.7 |  | (0.1 | ) | (4.2 | )%
Mexican open-pit |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Molybdenum contained in concentrates |  | 8.1 |  | 6.1 |  | 2.0 |  | 32.4 | % | 15.5 |  | 13.4 |  | 2.1 |  | 15.7 | %
Silver |  | 2.0 |  | 2.7 |  | (0.7 | ) | (25.9 | )% | 3.6 |  | 5.6 |  | (2.0 | ) | (36.3 | )%
Mexican IMMSA unit |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Zinc — refined and in concentrate |  | 51.9 |  | 55.9 |  | (4.0 | ) | (7.9 | )% | 105.6 |  | 107.6 |  | (2.0 | ) | (1.9 | )%
Silver |  | 1.2 |  | 1.3 |  | (0.1 | ) | (2.6 | )% | 2.6 |  | 2.4 |  | 0.2 |  | 9.5 | %
Other and intersegment elimination |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Silver |  | (0.5 | ) | (0.5 | ) | — |  | — |  | (1.0 | ) | (1.0 | ) | — |  | — |
Total by-product sales |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Molybdenum contained in concentrates |  | 12.8 |  | 9.9 |  | 2.9 |  | 29.5 | % | 25.0 |  | 20.6 |  | 4.4 |  | 21.0 | %
Zinc — refined and in concentrate |  | 51.9 |  | 55.9 |  | (4.0 | ) | (7.9 | )% | 105.6 |  | 107.6 |  | (2.0 | ) | (1.9 | )%
Silver |  | 3.6 |  | 4.4 |  | (0.8 | ) | (16.2 | )% | 6.8 |  | 8.7 |  | (1.9 | ) | (21.6 | )%

Sales Value per Segment:

|  | Three Months Ended June 30, 2014 |
|  | (in millions) |
|  | Mexican Open-pit |  | Mexican IMMSA Unit |  | Peruvian Operations |  | Corporate & Elimination |  | Consolidated |
Copper |  | $ | 588.7 |  | $ | 10.6 |  | $ | 529.2 |  | $ | (10.9 | ) | $ | 1,117.6 |
Molybdenum |  | 114.6 |  | — |  | 62.9 |  | — |  | 177.5 |
Zinc |  | — |  | 51.6 |  | — |  | — |  | 51.6 |
Silver |  | 39.7 |  | 23.1 |  | 17.9 |  | (9.1 | ) | 71.6 |
Other |  | 29.3 |  | 24.6 |  | 17.6 |  | (2.4 | ) | 69.1 |
Total |  | $ | 772.3 |  | $ | 109.9 |  | $ | 627.6 |  | $ | (22.4 | ) | $ | 1,487.4 |

38

Table of Contents

|  | Three Months Ended June 30, 2013 |
|  | (in millions) |
|  | Mexican Open-pit |  | Mexican IMMSA Unit |  | Peruvian Operations |  | Corporate & Elimination |  | Consolidated |
Copper |  | $ | 573.0 |  | $ | 13.7 |  | $ | 520.9 |  | $ | (13.7 | ) | $ | 1,093.9 |
Molybdenum |  | 57.0 |  | — |  | 34.2 |  | — |  | 91.2 |
Zinc |  | — |  | 50.2 |  | — |  | — |  | 50.2 |
Silver |  | 60.4 |  | 27.3 |  | 21.1 |  | (9.7 | ) | 99.1 |
Other |  | 33.7 |  | 24.2 |  | 19.9 |  | (2.0 | ) | 75.8 |
Total |  | $ | 724.1 |  | $ | 115.4 |  | $ | 596.1 |  | $ | (25.4 | ) | $ | 1,410.2 |

|  | Six Months Ended June 30, 2014 |
|  | (in millions) |
|  | Mexican Open-pit |  | Mexican IMMSA Unit |  | Peruvian Operations |  | Corporate & Elimination |  | Consolidated |
Copper |  | $ | 1,106.8 |  | $ | 22.4 |  | $ | 1,063.6 |  | $ | (22.7 | ) | $ | 2,170.1 |
Molybdenum |  | 187.4 |  | — |  | 108.1 |  | — |  | 295.5 |
Zinc |  | — |  | 104.7 |  | — |  | — |  | 104.7 |
Silver |  | 70.7 |  | 49.9 |  | 32.1 |  | (18.0 | ) | 134.7 |
Other |  | 55.4 |  | 53.4 |  | 34.1 |  | (6.1 | ) | 136.8 |
Total |  | $ | 1,420.3 |  | $ | 230.4 |  | $ | 1,237.9 |  | $ | (46.8 | ) | $ | 2,841.8 |

|  | Six Months Ended June 30, 2013 |
|  | (in millions) |
|  | Mexican Open-pit |  | Mexican IMMSA Unit |  | Peruvian Operations |  | Corporate & Elimination |  | Consolidated |
Copper |  | $ | 1,236.6 |  | $ | 28.7 |  | $ | 1,111.7 |  | $ | (28.7 | ) | $ | 2,348.3 |
Molybdenum |  | 129.2 |  | — |  | 66.1 |  | — |  | 195.3 |
Zinc |  | — |  | 100.8 |  | — |  | — |  | 100.8 |
Silver |  | 148.8 |  | 60.4 |  | 44.4 |  | (24.0 | ) | 229.6 |
Other |  | 72.1 |  | 47.4 |  | 44.4 |  | (4.7 | ) | 159.2 |
Total |  | $ | 1,586.7 |  | $ | 237.3 |  | $ | 1,266.6 |  | $ | (57.4 | ) | $ | 3,033.2 |

The geographic breakdown of the Company’s sales is as follows (in millions):

|  | Three Months Ended June 30, |  | Six Months Ended June 30, |
|  | 2014 |  | 2013 |  | 2014 |  | 2013 |
Mexico |  | $ | 379.1 |  | $ | 400.3 |  | $ | 718.0 |  | $ | 847.2 |
United States |  | 304.1 |  | 297.4 |  | 580.9 |  | 643.8 |
Asia |  | 233.8 |  | 156.0 |  | 494.4 |  | 431.8 |
Europe |  | 215.3 |  | 252.5 |  | 401.6 |  | 470.0 |
Chile |  | 136.4 |  | 86.2 |  | 228.8 |  | 183.1 |
Brazil |  | 100.9 |  | 116.9 |  | 200.7 |  | 236.5 |
Peru |  | 75.8 |  | 68.9 |  | 146.8 |  | 167.8 |
Other countries |  | 42.0 |  | 32.0 |  | 70.6 |  | 53.0 |
Total |  | $ | 1,487.4 |  | $ | 1,410.2 |  | $ | 2,841.8 |  | $ | 3,033.2 |

Peruvian Operations:

The following table sets forth net sales, operating cost and expenses and operating income for our Peruvian operations segment, for the three and six months ended June 30, 2014 and 2013 (in millions):

|  | Second Quarter |  | Variance |  | Six Months |  | Variance |
(in millions) |  | 2014 |  | 2013 |  | Value |  | % |  | 2014 |  | 2013 |  | Value |  | % |
Net sales |  | $ | 627.6 |  | $ | 596.1 |  | $ | 31.5 |  | 5.3 | % | $ | 1,237.9 |  | $ | 1,266.6 |  | $ | (28.7 | ) | (2.3 | )%
Operating costs and expenses |  | (412.5 | ) | (375.5 | ) | (37.0 | ) | 9.9 | % | (795.9 | ) | (744.5 | ) | (51.4 | ) | 6.9 | %
Operating income |  | $ | 215.1 |  | $ | 220.6 |  | $ | (5.5 | ) | (2.5 | )% | $ | 442.0 |  | $ | 522.1 |  | $ | (80.1 | ) | (15.3 | )%

39

Table of Contents

Second quarter: Net sales in the second quarter of 2014 were $627.6 million, compared with $596.1 million in the second quarter of 2013. The increase of $31.5 million was primarily the result of higher copper, molybdenum and silver sales volume, partially offset by lower prices.

Operating costs and expenses in the second quarter of 2014 increased by $37.0 million to $412.5 million from $375.5 million in the second quarter of 2013, primarily due to:

Operating cost and expenses for the second quarter 2013 |  | $ | 375.5 |
Plus: |  |  |
· Higher cost of sales (exclusive of depreciation, amortization and depletion) mainly due to higher production cost and higher inventory consumption, partially offset by lower worker´s participation, |  | 29.5 |
· higher depreciation, amortization and depletion mainly due to the acquisition of mine equipment and |  | 6.2 |
· higher exploration expenses. |  | 3.3 |
Less: |  |  |
· Lower selling, general and administrative expenses. |  | (2.0 | )
Operating cost and expenses for the second quarter 2014 |  | $ | 412.5 |

Six months: Net sales in the first six months of 2014 were $1,237.9 million, compared with $1,266.6 million in the first six months of 2013. The decrease of $28.7 million was mainly the result of lower prices for copper and silver, partially offset by higher sales volume of copper and molybdenum. Copper sales volume increased by 14.8 million pounds and molybdenum by 2.3 million pounds.

Operating costs and expenses in the first six months of 2014 increased by $51.4 million to $795.9 million from $744.5 million in the first six months of 2013, primarily due to:

Operating cost and expenses for the six months 2013 |  | $ | 744.5 |
Plus: |  |  |
· Higher cost of sales (exclusive of depreciation, amortization and depletion) mainly due to higher production cost and higher inventory consumption partially offset by lower workers participation, |  | 39.5 |
· higher depreciation, amortization and depletion due to the acquisition of mine equipment and other assets, and |  | 12.0 |
· higher exploration expenses |  | 2.8 |
Less: |  |  |
· Lower selling, general and administrative expenses. |  | (2.9 | )
Operating cost and expenses for the six months 2014 |  | $ | 795.9 |

Mexican Open-pit Operations:

The following table sets forth net sales, operating cost and expenses and operating income for our Mexican open-pit operations segment for the three and six months ended June 30, 2014 and 2013 (in millions):

|  | Second quarter |  | Variance |  | Six Months |  | Variance |
(in millions) |  | 2014 |  | 2013 |  | Value |  | % |  | 2014 |  | 2013 |  | Value |  | % |
Net sales |  | $ | 772.3 |  | $ | 724.1 |  | $ | 48.2 |  | 6.7 | % | $ | 1,420.3 |  | $ | 1,586.7 |  | $ | (166.4 | ) | (10.5 | )%
Operating costs and expenses |  | (376.8 | ) | (390.0 | ) | 13.2 |  | (3.4 | )% | (670.4 | ) | (820.6 | ) | 150.2 |  | (18.3 | )%
Operating income |  | $ | 395.5 |  | $ | 334.1 |  | $ | 61.4 |  | 18.4 | % | $ | 749.9 |  | $ | 766.1 |  | $ | (16.2 | ) | (2.1 | )%

Second quarter: Net sales in the second quarter of 2014 were $772.3 million, compared to $724.1 million in the second quarter of 2013. The increase of $48.2 million was due to higher copper and molybdenum sales volume and higher molybdenum and zinc prices, partially offset by lower copper and silver sales prices and lower silver sales volume. Copper and molybdenum sales volume increased by 13.1 million pounds and 2.0 million pounds, respectively, while silver sales volume decreased by 0.7 million ounces.

Operating costs and expenses in the second quarter of 2014 decreased by $13.2 million from the comparable 2013 period, primarily due to:

40

Table of Contents

Operating cost and expenses for the second quarter 2013 |  | $ | 390.0 |
Less: |  |  |
· Lower cost of sales (exclusive of depreciation, amortization and depletion) mainly due to lower cost of material purchased from third parties and lower inventory consumption, partially offset by, higher production cost. |  | (24.9 | )
Plus: |  |  |
· Higher depreciation, amortization and depletion mainly due to the start-up of the molybdenum and SX-EW plants at the Buenavista mine and other equipment placed in service. |  | 11.7 |
Operating cost and expenses for the second quarter 2014 |  | $ | 376.8 |

Six months: Net sales in the first six months of 2014 were $1,420.3 million, compared to $1,586.7 million in the first six months of 2013. The decrease of $166.4 million was due to lower copper and silver prices and sales volume, partially offset by higher molybdenum sales volumes and prices. Copper sales volume decreased 6.4 million pounds and silver decreased 2.0 million ounces while molybdenum sales volume increased by 2.1 million pounds.

Operating costs and expenses in the first six months of 2014 decreased by $150.2 million from the comparable 2013 period, primarily due to:

Operating cost and expenses for the six months 2013 |  | $ | 820.6 |
Less: |  |  |
· Lower cost of sales (exclusive of depreciation, amortization and depletion) due to lower metal purchased from third parties and lower inventory consumption partially offset by higher production cost and higher workers participation and |  | (176.1 | )
· lower selling, general, administrative and exploration expenses. |  | (0.2 | )
Plus: |  |  |
· Higher depreciation, amortization and depletion due to the start-up of the molybdenum and SX-EW plant at Buenavista and other equipment placed in service. |  | 26.1 |
Operating cost and expenses for the six months 2014 |  | $ | 670.4 |

Mexican Underground Operations (IMMSA):

The following table sets forth net sales, operating cost and expenses and operating income for our IMMSA segment, for the three and six months ended June 30, 2014 and 2013 (in millions):

|  | Second Quarter |  | Variance |  | Six Months |  | Variance |
(in millions) |  | 2014 |  | 2013 |  | Value |  | % |  | 2014 |  | 2013 |  | Value |  | % |
Net sales |  | $ | 109.9 |  | $ | 115.4 |  | $ | (5.5 | ) | (4.8 | )% | $ | 230.4 |  | $ | 237.3 |  | $ | (6.9 | ) | (2.9 | )%
Operating costs and expenses |  | (102.2 | ) | (106.0 | ) | 3.8 |  | (3.6 | )% | (203.2 | ) | (195.7 | ) | (7.5 | ) | 3.8 | %
Operating income |  | $ | 7.7 |  | $ | 9.4 |  | $ | (1.7 | ) | (18.1 | )% | $ | 27.2 |  | $ | 41.6 |  | $ | (14.4 | ) | (34.6 | )%

Second quarter: Net sales decreased by $5.5 million to $109.9 million in the second quarter of 2014 from $115.4 million in the second quarter of 2013. The decrease of 4.8% was primarily due to lower copper, zinc and silver sales volume and lower metal prices for copper and silver, partially offset by higher zinc prices.

Operating costs and expenses in the second quarter of 2014 decreased by $3.8 million from the comparable 2013 period. This decrease was primarily due to:

Operating cost and expenses for the second quarter 2013 |  | $ | 106.0 |
Less: |  |  |
· Lower cost of sales (exclusive of depreciation, amortization and depletion). |  | (5.3 | )
Plus: |  |  |
· Higher depreciation, amortization and depletion mainly due to the acquisition of equipment and |  | 0.7 |
· higher exploration expenses. |  | 0.8 |
Operating cost and expenses for the second quarter 2014 |  | $ | 102.2 |

41

Table of Contents

Six months: Net sales in the first six months of 2014 were $230.4 million, compared to $237.3 million in the same period of 2013. This decrease of $6.9 million in net sales was primarily due to lower zinc and copper sales volume partially offset by higher zinc price. Zinc and copper sales volume decreased by 2.0 million and 0.9 million pounds, respectively.

Operating costs and expenses in the first six months of 2014 increased by $7.5 million from the comparable 2013 period. This increase was primarily due to:

Operating cost and expenses for the six months 2013 |  | $ | 195.7 |
Plus: |  |  |
· Higher cost of sales (exclusive of depreciation, amortization and depletion) mainly due to higher cost of metal purchased from third parties and inventory consumption partially offset by, lower production cost and lower workers participation and |  | 6.1 |
· higher depreciation, amortization and depletion due to the acquisition of mine equipment and other assets. |  | 1.8 |
Less: |  |  |
· Lower exploration expenses and |  | (0.3 | )
· lower selling, general and administrative expenses. |  | (0.1 | )
Operating cost and expenses for the six months 2014 |  | $ | 203.2 |

Intersegment Eliminations and Adjustments:

The addition of the segments net sales, operating costs and expenses and operating income discussed above will not be directly equal to amounts in our condensed consolidated statement of earnings because the adjustments of intersegment operating revenues and expenses must be taken into account. Please see Note 10 — “Segments and related information” of the condensed consolidated financial statements.

CASH FLOW

The following table shows the cash flow for the six months ended June 30, 2014 and 2013 (in millions):

|  | 2014 |  | 2013 |  | Variance |
Net cash provided from operating activities |  | $ | 683.5 |  | $ | 896.9 |  | $ | (213.4 | )
Net cash used in investing activities |  | $ | (776.1 | ) | $ | (946.6 | ) | $ | 170.5 |
Net cash used in financing activities |  | $ | (248.6 | ) | $ | (441.7 | ) | $ | 193.1 |

Net cash provided from operating activities:

The six months ended June 30, 2014 and 2013 change in operating activities include (in millions):

|  | 2014 |  | 2013 |  | Variance |
Net income |  | $ | 663.0 |  | $ | 871.1 |  | $ | (208.1 | )
Depreciation, amortization and depletion |  | 226.5 |  | 184.1 |  | 42.4 |
Provision (benefit) for deferred income taxes |  | (56.8 | ) | 10.7 |  | (67.5 | )
Other adjustments to net income |  | (12.8 | ) | 5.6 |  | (18.4 | )
Operating assets and liabilities |  | (136.4 | ) | (174.6 | ) | 38.2 |
Net cash provided from operating activities |  | $ | 683.5 |  | $ | 896.9 |  | $ | (213.4 | )

Six months ended June 30, 2014: In the first six months of 2014 net income was $663.0 million, approximately 97.0% of the net operating cash flow. Significant items (deducted from), or added to net income, to arrive at operating cash flow included:

· $226.5 million of depreciation, amortization and depletion and

· $(56.8) million for deferred income tax benefit.

In addition, in the first six months of 2014 an increase in operating assets and liabilities reduced operating cash flow by $136.4 million and included:

· A decrease in cash of $49.9 million for an increase in accounts receivable value principally due to higher copper and molybdenum sales volume and higher molybdenum and zinc prices,

42

Table of Contents

· A decrease in cash of $160.7 million from an increase in inventory primarily due to an increase of $100 million in long-term leachable material inventory, mainly at our Buenavista mine,

· An increase in cash due to higher accounts payable and accrued liabilities of $42.1 million was primarily due to higher income tax provision and

· The increase in other assets and liabilities of $32.2 million was primarily due to $26.6 million of increase in asset retirement obligations.

Six months ended June 30, 2013: In the first six months of 2013 net income was $871.1 million, approximately 97.1% of the net operating cash flow. Significant items (deducted from), or added to net income, to arrive at operating cash flow included:

· $184.1 million of depreciation, amortization and depletion,

· $10.7 million for deferred tax provision and

· $11.1 million of currency translation loss.

In addition, in the first six months of 2013 an increase in operating assets and liabilities reduced operating cash flow by $174.6 million and included:

· An increase in cash of $181.0 million from a reduction in accounts receivable, principally due to lower prices.

· A decrease in cash of $63.6 million for an increase in inventory which was primarily due to an increase in long-term leachable material inventory, mainly at our Buenavista mine,

· A decrease in cash of $187.9 million resulting from a decrease in accounts payable and accrued liabilities, primarily due to the income tax and workers’ participation payments as well as lower accrual due to the decrease in earnings and

· A decrease in cash of $104.0 million resulting from an increase in other assets and liabilities, primarily due to $53.9 million of prepaid labor costs related to the new Peruvian collective bargain agreements and $42.8 million of other prepaid expenses.

Net cash used in investing activities:

Six months ended June 30, 2014: Net cash used for investing activities in the first six months of 2014 included $699.4 million for capital expenditures. The capital expenditures included:

· $544.0 million of investments at our Mexican operations:

· $227.3 million for the new Buenavista concentrator,

· $69.1 million for the SX-EW III project,

· $30.7 million for new projects infrastructure,

· $16.3 million for the Quebalix IV project,

· $18.3 million at our IMMSA unit, and

· $182.3 million for various other replacement expenditures.

· $155.4 million of investments at our Peruvian operations:

· $21.3 million for the Toquepala projects,

· $6.7 million for the Cuajone projects, and

· $127.4 million for various other replacement expenditures.

The first six months of 2014 investment activities included a net purchase of short-term investments of $81.6 million.

Six months ended June 30, 2013: Net cash used for investing activities in the first six months of 2013 included $702.3 million for capital expenditures. The capital expenditures included:

· $599.1 million of investments at our Mexican operations:

· $135.5 million for the Buenavista mine equipment,

· $145.3 million for the new Buenavista concentrator,

· $71.4 million for the SX-EW III project,

· $13.1 million for the new molybdenum plant at Buenavista,

· $31.4 million at our IMMSA unit, and

· $202.4 million for various other replacement expenditures

· $103.2 million of investments at our Peruvian operations:

· $25.9 million for the Toquepala projects,

· $ 6.1 million for the Cuajone projects and

· $71.2 million for various other replacement expenditures.

43

Table of Contents

The first six months of 2013 investment activities also included a net purchase of short-term investments of $258.6 million and $13.3 million received from a loan to MGE.

Net cash used in financing activities:

Net cash used for financing activities in the first six months of 2014 was $248.6 million, compared with $441.7 million in the first six months of 2013. The first six months of 2014 included a dividend distribution of $183.4 million, compared with a distribution of $372.0 million in the 2013 period. Also, the first six months of 2014 included the purchase of 2.3 million of our common shares at a cost of $65.5 million, compared with a repurchase in the 2013 period of 2.2 million shares of our common shares at a cost of $64.5 million.

LIQUIDITY AND CAPITAL RESOURCES

Dividends:

On May 8, 2014, we paid a quarterly dividend of 10 cents per share, totaling $83.3 million. On July 24, 2014, our Board of Directors authorized a quarterly dividend of 12 cents per share, expected to total $100 million, to be paid on August 28, 2014 to SCC shareholders of record at the close of business on August 15, 2014.

Capital Investment and Exploration Programs:

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

Contractual Obligations:

The following information updates our significant contractual obligations disclosed in Part II, Item 7 of our Annual report on Form 10-K for the year ended December 31, 2013 as filed with the SEC on February 27, 2014:

We have a commitment to purchase power for our Peruvian operations from Enersur through April 2017. In June 2014, we signed a power purchase agreement for 120MWh with the state company Electroperu S.A., under which Electroperu S.A. will supply energy for our Peruvian operations for twenty years starting on April 17, 2017 and ending on April 30, 2037. Also in July 2014, we signed a power purchase agreement for 120MWh with a private power generator Kallpa, under which Kallpa will supply energy for our Peruvian operations for ten years starting on April 17, 2017 and ending on April 30, 2027.

Also, we have a commitment to purchase power for our Mexican operations from MGE, a subsidiary of Grupo Mexico through 2032. See Note 13 “Commitment and Contingencies.”

As a result of the new Peruvian agreements, our contractual obligations to purchase energy increases as follows: 2017 - $511.7 million, 2018 - $454.7 million, 2019 and thereafter — $7,741.2 million. Amounts are based on our long-term estimated power costs, which are subject to change as energy generation costs change and our forecasted power requirements through the life of the agreements change.

Capital expenditure projects include committed purchase orders and executed contracts principally for our Mexican projects at the Buenavista mine.

NON-GAAP INFORMATION RECONCILIATION

Operating cash cost:

Following is a reconciliation of “Operating Cash Cost” (see page 31-32) to cost of sales (exclusive of depreciation, amortization and depletion) as reported in our condensed consolidated statement of earnings, in millions of dollars and dollars per pound in the table below.

44

Table of Contents

|  | Three Months Ended |  | Three Months Ended |  | Six Months Ended |  | Six Months Ended |
|  | June 30, 2014 |  | June 30, 2013 |  | June 30, 2014 |  | June 30, 2013 |
|  | $ million |  | $ per pound |  | $ million |  | $ per pound |  | $ million |  | $ per pound |  | $ million |  | $ per pound |
Cost of sales (exclusive of depreciation, amortization and depletion) |  | $ | 726.6 |  | $ | 2.06 |  | $ | 711.2 |  | $ | 2.24 |  | $ | 1,368.5 |  | $ | 1.95 |  | $ | 1,434.0 |  | $ | 2.25 |
Add: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Selling, general and administrative |  | 25.4 |  | 0.07 |  | 27.5 |  | 0.09 |  | 49.9 |  | 0.07 |  | 52.8 |  | 0.08 |
Sales premiums, net of treatment and refining charges |  | (5.2 | ) | (0.02 | ) | (8.9 | ) | (0.03 | ) | (9.4 | ) | (0.01 | ) | (14.6 | ) | (0.02 | )
Less: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Workers’ participation |  | (50.7 | ) | (0.14 | ) | (55.0 | ) | (0.17 | ) | (103.8 | ) | (0.15 | ) | (109.9 | ) | (0.17 | )
Cost of metal purchased from third parties |  | (28.5 | ) | (0.08 | ) | (52.6 | ) | (0.17 | ) | (70.4 | ) | (0.10 | ) | (119.5 | ) | (0.19 | )
Royalty charge and other, net |  | (19.2 | ) | (0.05 | ) | (12.8 | ) | (0.04 | ) | (30.7 | ) | (0.04 | ) | (43.5 | ) | (0.07 | )
Inventory change |  | 51.0 |  | 0.14 |  | 24.1 |  | 0.08 |  | 150.2 |  | 0.21 |  | 44.0 |  | 0.07 |
Operating Cash Cost Without by-products revenues |  | $ | 699.4 |  | $ | 1.98 |  | $ | 633.5 |  | $ | 2.00 |  | $ | 1,354.3 |  | $ | 1.93 |  | $ | 1,243.3 |  | $ | 1.95 |
Add: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
By-product revenues (1) |  | (371.0 | ) | (1.05 | ) | (298.7 | ) | (0.94 | ) | (666.0 | ) | (0.95 | ) | (624.2 | ) | (0.98 | )
Net revenue on sale of metal purchased from third parties |  | (3.3 | ) | (0.01 | ) | (5.2 | ) | (0.02 | ) | (5.6 | ) | (0.01 | ) | (9.6 | ) | (0.02 | )
Total by-product revenues |  | (374.3 | ) | (1.06 | ) | (303.9 | ) | (0.96 | ) | (671.6 | ) | (0.96 | ) | (633.8 | ) | (1.00 | )
Operating cash cost, with by-product revenues |  | $ | 325.1 |  | $ | 0.92 |  | $ | 329.5 |  | $ | 1.04 |  | $ | 682.7 |  | $ | 0.97 |  | $ | 609.5 |  | $ | 0.95 |
Total pounds of copper produced (in millions) |  | 352.9 |  |  |  | 316.9 |  |  |  | 702.7 |  |  |  | 638.9 |  |  |

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

|  | Three Months Ended |  | Three Months Ended |  | Six Months Ended |  | Six Months Ended |
|  | June 30, 2014 |  | June 30, 2013 |  | June 30, 2014 |  | June 30, 2013 |
|  | $ million |  | $ per pound |  | $ million |  | $ per pound |  | $ million |  | $ per pound |  | $ million |  | $ per pound |
Molydenum |  | $ | (187.8 | ) | $ | (0.53 | ) | $ | (96.6 | ) | $ | (0.31 | ) | $ | (312.5 | ) | $ | (0.44 | ) | $ | (207.8 | ) | $ | (0.33 | )
Silver |  | (65.2 | ) | (0.19 | ) | (79.0 | ) | (0.25 | ) | (117.3 | ) | (0.17 | ) | (168.2 | ) | (0.26 | )
Zinc |  | (51.9 | ) | (0.15 | ) | (50.5 | ) | (0.16 | ) | (104.7 | ) | (0.15 | ) | (101.1 | ) | (0.16 | )
Sulfuric Acid |  | (32.6 | ) | (0.09 | ) | (36.7 | ) | (0.12 | ) | (64.0 | ) | (0.09 | ) | (76.4 | ) | (0.12 | )
Gold and others |  | (33.5 | ) | (0.09 | ) | (35.9 | ) | (0.10 | ) | (67.5 | ) | (0.10 | ) | (70.7 | ) | (0.11 | )
Total |  | $ | (371.0 | ) | $ | (1.05 | ) | $ | (298.7 | ) | $ | (0.94 | ) | $ | (666.0 | ) | $ | (0.95 | ) | $ | (624.2 | ) | $ | (0.98 | )

IMPACT OF NEW ACCOUNTING STANDARDS

On May 28, 2014, the FASB released the 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 should apply the amendments in this Update using either one of these two methods: retrospectively to each prior reporting period presented or retrospectively with the cumulative effect of initially applying this Update recognized at the date of initial application.

45

Table of Contents

Item 3. Quantitative and Qualitative Disclosure about Market Risk

Commodity price risk:

We are subject to market risks arising from the volatility of copper and other metal prices. For the remaining six months of 2014, assuming that expected metal production and sales are achieved, that tax rates are unchanged, and giving no effects to potential hedging programs, metal price sensitivity factors would indicate the following change in estimated net income attributable to SCC resulting from metal price changes:

|  | Copper |  | Molybdenum |  | Zinc |  | Silver |
Change in metal prices (per pound except silver — per ounce) |  | $ | 0.01 |  | $ | 1.00 |  | $ | 0.01 |  | $ | 1.00 |
Change in net earnings (in millions) |  | $ | 4.7 |  | $ | 14.7 |  | $ | 0.6 |  | $ | 5.1 |

Foreign currency exchange rate risk:

Our functional currency is the U.S. dollar. Portions of our operating costs are denominated in Peruvian nuevos soles and Mexican pesos. Since our revenues are primarily denominated in U.S. dollars, when inflation or deflation in our Mexican or Peruvian operations is not offset by a change in the exchange rate of the nuevo sol or the peso to the dollar, our financial position, results of operations and cash flows could be affected by local cost conversion when expressed in U.S. dollars. In addition, the dollar value of our net monetary assets denominated in nuevos soles or pesos can be affected by exchange rate variances of the nuevo sol or the peso, resulting in a re-measurement loss or gain in our financial statements. Recent inflation and exchange rate variances are provided in the table below for the three and six month periods ended June 30, 2014 and 2013:

|  | Three Months Ended |  | Six Months Ended |
|  | June 30, |  | June 30, |
|  | 2014 |  | 2013 |  | 2014 |  | 2013 |
Peru: |  |  |  |  |  |  |  |  |
Peruvian inflation rate |  | 0.8 | % | 0.7 | % | 2.2 | % | 1.7 | %
Initial exchange rate |  | 2.809 |  | 2.589 |  | 2.796 |  | 2.551 |
Closing exchange rate |  | 2.796 |  | 2.783 |  | 2.796 |  | 2.783 |
Appreciation/(devaluation) |  | 0.5 | % | (7.5 | )% | — |  | (9.1 | )%
Mexico: |  |  |  |  |  |  |  |  |
Mexican inflation rate |  | (0.3 | )% | (0.3 | )% | 1.1 | % | 1.3 | %
Initial exchange rate |  | 13.084 |  | 12.355 |  | 13.077 |  | 13.010 |
Closing exchange rate |  | 13.032 |  | 13.024 |  | 13.032 |  | 13.024 |
Appreciation/(devaluation) |  | 0.4 | % | (5.4 | )% | 0.3 | % | (0.1 | )%

Change in monetary position:

Assuming an exchange rate variance of 10% at June 30, 2014 we estimate our net monetary position in Peruvian nuevo sol and Mexican peso would increase (decrease) our net earnings as follows:

|  | Effect on net earnings |
|  | ($ in millions) |
Appreciation of 10% in U.S. dollar vs. nuevo sol |  | $ | (12.2 | )
Devaluation of 10% in U.S. dollar vs. nuevo sol |  | 14.9 |
Appreciation of 10% in U.S. dollar vs. Mexican peso |  | (36.0 | )
Devaluation of 10% in U.S. dollar vs. Mexican peso |  | $ | 44.0 |

Open sales risk:

Our provisional copper and molybdenum sales contain an embedded derivative that is required to be separate from the host contract for accounting purposes. The host contract is the receivable from the sale of copper and molybdenum concentrates at prevailing market prices at the time of the sale. The embedded derivative, which does not qualify for hedge accounting, is marked to market through earnings each period prior to settlement.

At June 30, 2014, we have recorded provisionally priced sales of 31.3 million pounds of copper, at an average forward price of

46

Table of Contents

$3.19 per pound. Also we have recorded provisionally priced sales of 8.5 million pounds of molybdenum at the June 30, 2014 market price of $13.30 per pound. These sales are subject to final pricing based on the average monthly LME or COMEX copper prices and Dealer Oxide molybdenum prices in the future month of settlement. See Note 5 to our condensed consolidated financial statements.

Provisional sales price adjustments included in accounts receivable and net sales at June 30, 2014 represented positive effects of $3.5 million for copper and $3.1 for molybdenum.

Short-term Investment:

Short-term investments were as follows ($ in millions):

|  | At June 30, 2014 |  | At December 31, 2013 |
Trading securities |  | $ | 284.4 |  | $ | 202.6 |
Weighted average interest rate |  | 1.80 | % | 3.78 | %
Available for sale |  | $ | 5.5 |  | $ | 5.7 |
Weighted average interest rate |  | 0.41 | % | 0.42 | %
Total |  | $ | 289.9 |  | $ | 208.3 |

Trading securities: consist of bonds issued by public companies and are publicly traded. Each financial instrument is independent of the others. We have the intention to sell these bonds in the short-term.

Available for sale investments consist of securities issued by public companies. Each security is independent of the others and at June 30, 2014 and December 31, 2013, included corporate bonds and asset and mortgage backed obligations. As of June 30, 2014 and December 31, 2013, gross unrealized gains and losses on available for sale securities were not material.

Related to these investments we earned interest, which was recorded as interest income in the condensed consolidated statement of earnings. Also we redeemed some of these securities and recognized gains (losses) due to changes in fair value, which were recorded as other income (expense) in the condensed consolidated statement of earnings.

The following table summarizes the activity of these investments (in millions):

|  | Three months ended |  | Six months ended |
|  | June 30, |  | June 30, |
|  | 2014 |  | 2012 |  | 2014 |  | 2012 |
Trading securities: |  |  |  |  |  |  |  |  |
Interest earned |  | $ | 1.1 |  | $ | 1.4 |  | $ | 2.5 |  | $ | 2.0 |
Unrealized gain (loss) at the end of the period |  | $ | 1.7 |  | $ | 3.4 |  | $ | 1.7 |  | $ | 3.4 |
Available for sale: |  |  |  |  |  |  |  |  |
Interest earned |  | (* | ) | (* | ) | (* | ) | (* | )
Investment redeemed |  | $ | 0.2 |  | $ | 0.4 |  | $ | 0.2 |  | $ | 0.4 |

(*) Less than $0.1 million

Cautionary Statement:

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

47

Table of Contents

Item 4. Controls and Procedures

EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES

As of June 30, 2014, the Company conducted an evaluation under the supervision and with the participation of the Company’s Disclosure Committee and the Company’s management, including the Chief Executive Officer and Chief Financial Officer, of the effectiveness and the design and operation of the Company’s disclosure controls and procedures. Based on that evaluation, the Chief Executive Officer and the Chief Financial Officer have concluded that the Company’s disclosure controls and procedures are effective as of June 30, 2014, to ensure that information required to be disclosed in reports filed or submitted under the Exchange Act is:

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

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

CHANGES IN INTERNAL CONTROLS OVER FINANCIAL REPORTING

There was no change in the Company’s internal controls over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934, as amended) that occurred during the quarter ended June 30, 2014 that has materially affected, or is reasonably likely to materially affect, the Company’s internal controls over financial reporting.

48

Table of Contents

Report of Independent Registered Public Accounting Firm

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

We have reviewed the accompanying condensed consolidated balance sheet of Southern Copper Corporation and subsidiaries (the “Company”) as of June 30, 2014, and the related condensed consolidated statements of earnings and comprehensive income for the three-month and six-month periods ended June 30, 2014 and 2013 and cash flows for the six-month periods ended June 30, 2014 and 2013. These interim financial statements are the responsibility of the Company’s management.

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

Based on our reviews, we are not aware of any material modifications that should be made to the accompanying condensed consolidated interim financial statements for them to be in conformity with accounting principles generally accepted in the United States of America.

We have previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheet of Southern Copper Corporation and subsidiaries as of December 31, 2013, and the related consolidated statements of earnings, comprehensive income, equity, and cash flows for the year then ended (not presented herein); and in our report dated February 26, 2014, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying condensed consolidated balance sheet as of December 31, 2013 is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived.

Galaz, Yamazaki, Ruiz Urquiza S.C.

Member of Deloitte Touche Tohmatsu Limited

C.P.C. Miguel Angel Andrade Leven

Mexico City, Mexico

August 5, 2014

49

Table of Contents

PART II — OTHER INFORMATION

Item 1. — Legal Proceedings

The information provided in Note 9 “Commitments and Contingencies” to the condensed consolidated financial statements contained in Part I of this Form 10-Q, is incorporated herein by reference.

Item 1A. Risk Factors

There have been no material changes to the risk factors disclosed in Part I, Item 1A of our Annual report on Form 10-K for the year ended December 31, 2013 as filed with the SEC on February 27, 2014.

Item 2. Unregistered Sale of Equity Securities and Use of Proceeds

SCC share repurchase program:

In 2008, the Company´s Board of Directors authorized a $500 million share repurchase program. On July 28, 2011 our Board of Directors authorized an increase of the share repurchase program to $1.0 billion and on October 17, 2013, our Board of Directors authorized an additional increase to $2 billion. Pursuant to this program, the Company purchased common stock as shown in the table below. These shares will be 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.

Period |  | Total Number of |  | Average Price Paid |  | Total Number of Shares Purchased as Part of Publicly |  | Maximum Number of Shares that May Yet Be Purchased Under |  | Total Cost |
From |  | To |  | Shares Purchased |  | per Share |  | Announced Plan |  | the Plan @ $30.37 (*) |  | ($ in millions) |
2008: |  |  |  | 28,510,150 |  | $ | 13.49 |  | 28,510,150 |  |  |  | $ | 384.7 |
2009: |  |  |  | 4,912,000 |  | 14.64 |  | 33,422,150 |  |  |  | 71.9 |
2010: |  |  |  | 15,600 |  | 29.69 |  | 33,437,750 |  |  |  | 0.5 |
2011: |  |  |  | 9,034,400 |  | 30.29 |  | 42,472,150 |  |  |  | 273.7 |
2012: |  |  |  | 4,442,336 |  | 33.17 |  | 46,914,486 |  |  |  | 147.3 |
2013: |  |  |  | 10,245,000 |  | 27.47 |  | 57,159,486 |  |  |  | 281.4 |
2014: |  |  |  |  |  |  |  |  |  |  |  |  |
01/01/14 |  | 01/31/14 |  | 1,768,000 |  | 28.06 |  | 58,927,486 |  |  |  | 49.6 |
03/01/14 |  | 03/21/14 |  | 106,079 |  | 27.04 |  | 59,033,565 |  |  |  | 2.9 |
Total first quarter |  |  |  | 1,874,079 |  | 28.00 |  |  |  |  |  | 52.5 |
06/01/14 |  | 06/30/14 |  | 450,532 |  | 28.92 |  | 59,484,097 |  |  |  | 13.0 |
Total second quarter |  |  |  | 450,532 |  | 28.92 |  |  |  |  |  | 13.0 |
Total purchased |  |  |  | 59,484,097 |  | $ | 20.59 |  |  |  | 25,518,495 |  | $ | 1,225.0 |

(*) NYSE closing price of SCC common shares at June 30, 2014.

As a result of the repurchase of shares of SCC’s common stock, Grupo Mexico’s direct and indirect ownership was 82.5% as of June 30, 2014.

Item 4.- Mine Safety Disclosures

Not applicable.

50

Table of Contents

Item 6. — Exhibits

Exhibit No. |  | Description of Exhibit
3.1 |  | (a) Amended and Restated Certificate of Incorporation, filed on October 11, 2005. (Filed as Exhibit 3.1 to the Company’s Quarterly Report on Form 10-Q for the third quarter of 2005 and incorporated herein by reference). (b) Certificate of Amendment of Amended and Restated Certificate of Incorporation dated May 2, 2006. (Filed as Exhibit 3.1 to Registration Statement on Form S-4, File No. 333-135170) filed on June 20, 2006 and incorporated herein by reference). (c) Certificate of Amendment of Amended and Restated Certificate of Incorporation dated May 28, 2008. (Filed as Exhibit 3.1 to the Company’s Quarterly Report on Form 10-Q for the second quarter of 2008 and incorporated herein by reference).
3.2 |  | By-Laws, as amended on January 27, 2011. (Filed as Exhibit 3.2 to the Company’s 2010 Annual Report on Form 10-K and incorporated herein by reference).
4.1 |  | Indenture governing $200 million 6.375% Notes due 2015, by and among Southern Copper Corporation, The Bank of New York and the Bank of New York (Luxembourg) S.A. (Filed as Exhibit 4.1 to the Company’s Current Report on Form 8-K, filed on August 1, 2005 and incorporated herein by reference.
4.2 |  | (a) Indenture governing $600 million 7.500% Notes due 2035, by and among Southern Copper Corporation, the Bank of New York and The Bank of New York (Luxembourg) S.A. (Filed as Exhibit 4.2 to the Company’s Current Report on Form 8-K, filed on August 1, 2005 and incorporated herein by reference). (b) Indenture governing $400 million 7.500% Notes due 2035, by and among Southern Copper Corporation, The Bank of New York, The Bank of New York (Luxembourg) S.A. (Filed as Exhibit 4.2 to the Company’s Current Report on Form 8-K, filed on August 1, 2005 and incorporated herein by reference).
4.3 |  | Form of 6.375% Note (included in Exhibit 4.1).
4.4 |  | Form of New 7.500% Note (included in Exhibit 4.2(a)).
4.5 |  | Form of New 7.500% Note (included in Exhibit 4.2(b)).
4.6 |  | Indenture, dated as of April 16, 2010, between Southern Copper Corporation and Wells Fargo Bank, National Association, as trustee, pursuant to which $400 million of 5.375% Notes due 2020 and $1.1 billion of 6.750% Notes due 2040 were issued (Filed as Exhibit 4.1 to the Company’s Current Report on Form 8-K, filed on April 19, 2010 and incorporated herein by reference).
4.7 |  | First Supplemental Indenture dated as of April 16, 2010, between Southern Copper Corporation and Wells Fargo Bank, National Association, as trustee, pursuant to which the 5.375% Notes due 2020 were issued (Filed as an Exhibit to the Company’s Current Report on Form 8-K, filed on April 19, 2010 and incorporated herein by reference).
4.8 |  | Second Supplemental Indenture, dated as of April 16, 2010, between Southern Copper Corporation and Wells Fargo Bank, National Association, as trustee, pursuant to which the 6.750% Notes due 2040 were issued. (Filed as an Exhibit to the Company’s Current Report on Form 8-K, filed on April 19, 2010 and incorporated herein by reference).
4.9 |  | Form of 5.375% Notes due 2020 (Filed as an Exhibit to the Company’s Current Report on Form 8-K, filed on April 19, 2010 and incorporated herein by reference).
4.10 |  | Form of 6.750% Notes due 2040 (Filed as an Exhibit to the Company’s Current Report on Form 8-K, filed on April 19, 2010 and incorporated herein by reference).
4.11 |  | Third Supplemental Indenture, dated as of November 8, 2012, between Southern Copper Corporation and Wells Fargo Bank, National Association, as trustee, pursuant to which the 3.500% Notes due 2022 were issued.
4.12 |  | Fourth Supplemental Indenture, dated as of November 8, 2012, between Southern Copper Corporation and Wells Fargo Bank, National Association, as trustee, pursuant to which the 5.250% Notes due 2042 were issued.

51

Table of Contents

4.13 |  | Form of 3.500% Notes due 2022.
4.14 |  | Form of 5.250% Notes due 2042.
10.1 |  | Form of Directors’ Stock Award Plan of the Company (Filed as Exhibit 10.4 to the Company’s 2005 Annual Report on Form 10-K/A and incorporated herein by reference).
10.2 |  | Service Agreement entered into by the Company with a subsidiary of Grupo Mexico S.A.B. de C. V., assigned upon the same terms and conditions to Grupo Mexico S.A.B. de C.V. in February 2004 (Filed as Exhibit 10.10 to the Company’s 2002 Annual Report on Form 10-K and incorporated herein by reference).
10.3 |  | Agreement and Plan of Merger, dated as of October 21, 2004, by and among Southern Copper Corporation, SCC Merger Sub., Inc, Americas Sales Company, Inc., Americas Mining Corporation and Minera Mexico S.A. de C.V., (Filed as an Exhibit to Current Report on Form 8-K, filed on October 22, 2004 and incorporated herein by reference).
14.0 |  | Code of Business Conduct and Ethics adopted by the Board of Directors on May 8, 2003 and amended on October 21, 2004. (Filed as Exhibit 14 to the Company’s Current Report on Form 8-K, filed October 22, 2004 and incorporated herein by reference).
15.0 |  | Consent of Registered Public Accounting Firm (Galaz, Yamazaki, Ruiz Urquiza, S.C. - Member of Deloitte Touche Tohmatsu, Limited) (filed herewith).
31.1 |  | Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith).
31.2 |  | Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith).
32.1 |  | Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C., Section 1350. This document is being furnished in accordance with SEC Release No. 33-8238.
32.2 |  | Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C., Section 1350. This document is being furnished in accordance with SEC Release No. 33-8238.
101.INS |  | XBRL Instance Document (submitted electronically with this report).
101.SCH |  | XBRL Taxonomy Extension Schema Document (submitted electronically with this report).
101.CAL |  | XBRL Taxonomy Calculation Linkbase Document (submitted electronically with this report).
101.DEF |  | XBRL Taxonomy Extension Definition Linkbase Document (submitted electronically with this report).
101.LAB |  | XBRL Taxonomy Label Linkbase Document (submitted electronically with this report).
101.PRE |  | XBRL Taxonomy Presentation Linkbase Document (submitted electronically with this report).

Attached as Exhibit 101 to this report are the following documents formatted in XBRL (Extensible Business Reporting Language): (i) the Condensed Consolidated Statement of Earnings for the three and six months ended June 30, 2014 and 2013; (ii) the Condensed Consolidated Statement of Comprehensive Income for the three and six months ended June 30, 2014 and 2013; (iii) the Condensed Consolidated Balance Sheet at June 30, 2014 and December 31, 2013; (iv) the Condensed Consolidated Statement of Cash Flows for the three and six months ended June 30, 2014 and 2013; and (v) the Notes to Condensed Consolidated Financial Statements tagged in detail. Users of this data are advised pursuant to Rule 406T of Regulation S-T that this interactive data file is deemed not filed or part of a registration statement or prospectus for purposes of sections 11 or 12 of the Securities Act of 1933, is deemed not filed for purposes of section 18 of the Securities Exchange Act of 1934, and otherwise is not subject to liability under these sections.

52

Table of Contents

PART II — OTHER INFORMATION

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

| SOUTHERN COPPER CORPORATION (Registrant)
| /s/ Oscar Gonzalez Rocha
| Oscar Gonzalez Rocha
| President and Chief Executive Officer
August 5, 2014 |
| /s/ Raul Jacob
| Raul Jacob
| Vice President, Finance and Chief Financial Officer
August 5, 2014 |

53

Table of Contents

SOUTHERN COPPER CORPORATION

List of Exhibits

Exhibit No. |  | Description of Exhibit
3.1 |  | (a) Amended and Restated Certificate of Incorporation, filed on October 11, 2005. (Filed as Exhibit 3.1 to the Company’s Quarterly Report on Form 10-Q for the third quarter of 2005 and incorporated herein by reference). (b) Certificate of Amendment of Amended and Restated Certificate of Incorporation dated May 2, 2006. (Filed as Exhibit 3.1 to Registration Statement on Form S-4, File No. 333-135170), filed on June 20, 2006 and incorporated herein by reference). (c) Certificate of Amendment of Amended and Restated Certificate of Incorporation dated May 28, 2008. (Filed as Exhibit 3.1 to the Company’s Quarterly Report on Form 10-Q for the second quarter of 2008 and incorporated herein by reference).
3.2 |  | By-Laws, as amended on January 27, 2011. (Filed as Exhibit 3.2 to the Company’s 2010 Annual Report on Form 10-K and incorporated herein by reference).
4.1 |  | Indenture governing $200 million 6.375% Notes due 2015, by and among Southern Copper Corporation, The Bank of New York and the Bank of New York (Luxembourg) S.A. (Filed as Exhibit 4.1 to the Company’s Current Report on Form 8-K, filed on August 1, 2005 and incorporated by reference.
4.2 |  | (a) Indenture governing $600 million 7.500% Notes due 2035, by and among Southern Copper Corporation, the Bank of New York and The Bank of New York (Luxembourg) S.A. (Filed as Exhibit 4.2 to the Company’s Current Report on Form 8-K, filed on August 1, 2005 and incorporated herein by reference). (b) Indenture governing $400 million 7.500% Notes due 2035, by and among Southern Copper Corporation, The Bank of New York, The Bank of New York (Luxembourg) S.A. (Filed as Exhibit 4.2 to the Company’s Current Report on Form 8-K, filed on August 1, 2005 and incorporated herein by reference).
4.3 |  | Form of 6.375% Note (included in Exhibit 4.1).
4.4 |  | Form of New 7.500% Note (included in Exhibit 4.2(a)).
4.5 |  | Form of New 7.500% Note (included in Exhibit 4.2(b)).
4.6 |  | Indenture, dated as of April 16, 2010, between Southern Copper Corporation and Wells Fargo Bank, National Association, as trustee, pursuant to which $400 million of 5.375% Notes due 2020 and $1.1 billion of 6.750% Notes due 2040 were issued (Filed as Exhibit 4.1 to the Company’s Current Report on Form 8-K, filed on April 19, 2010 and incorporated herein by reference).
4.7 |  | First Supplemental Indenture dated as of April 16, 2010, between Southern Copper Corporation and Wells Fargo Bank, National Association, as trustee, pursuant to which the 5.375% Notes due 2020 were issued (Filed as an Exhibit to the Company’s Current Report on Form 8-K, filed on April 19, 2010 and incorporated herein by reference).
4.8 |  | Second Supplemental Indenture, dated as of April 16, 2010, between Southern Copper Corporation and Wells Fargo Bank, National Association, as trustee, pursuant to which the 6.750% Notes due 2040 were issued. (Filed as an Exhibit to the Company’s Current Report on Form 8-K, filed on April 19, 2010 and incorporated herein by reference).
4.9 |  | Form of 5.375% Notes due 2020 (Filed as an Exhibit to the Company’s Current Report on Form 8-K, filed on April 19, 2010 and incorporated herein by reference).
4.10 |  | Form of 6.750% Notes due 2040 (Filed as an Exhibit to the Company’s Current Report on Form 8-K, filed on April 19, 2010 and incorporated herein by reference).
4.11 |  | Third Supplemental Indenture dated as of November 8, 2012, between Southern Copper Corporation and Wells Fargo Bank, National Association, as trustee, pursuant to which the 3.500% Notes due 2022 were issued (Filed as an Exhibit to the Company’s Current Report on Form 8-K filed on November 9, 2012 and

54

Table of Contents

|  | incorporated herein by reference).
4.12 |  | Fourth Supplemental Indenture, dated as of November 8, 2012, between Southern Copper Corporation and Wells Fargo Bank, National Association, as trustee, pursuant to which the 5.250% Notes due 2042 were issued. (Filed as an Exhibit to the Company’s Current Report on Form 8-K filed on November 9, 2012 and incorporated herein by reference).
4.13 |  | Form of 3.500% Notes due 2022. (Filed as an Exhibit to the Company’s Current Report on Form 8-K filed on November 9, 2012 and incorporated herein by reference).
4.14 |  | Form of 5.250% Notes due 2042. (Filed as an Exhibit to the Company’s Current Report on Form 8-K filed on November 9, 2012 and incorporated herein by reference).
10.1 |  | Form of Directors’ Stock Award Plan of the Company (Filed as Exhibit 10.4 to the Company’s 2005 Annual Report on Form 10-K/A incorporated herein by reference).
10.2 |  | Service Agreement entered into by the Company with a subsidiary of Grupo Mexico S.A.B. de C. V., assigned upon the same terms and conditions to Grupo Mexico S.A.B. de C.V. in February 2004 (Filed as Exhibit 10.10 to the Company’s 2002 Annual Report on Form 10-K and incorporated herein by reference).
10.3 |  | Agreement and Plan of Merger, dated as of October 21, 2004, by and among Southern Copper Corporation, SCC Merger Sub., Inc, Americas Sales Company, Inc., Americas Mining Corporation and Minera Mexico S.A. de C.V., (Filed as an Exhibit to Current Report on Form 8-K, filed on October 22, 2004 and incorporated herein by reference).
14.0 |  | Code of Business Conduct and Ethics adopted by the Board of Directors on May 8, 2003 and amended on October 21, 2004. (Filed as Exhibit 14 to the Company’s Current Report on Form 8-K, filed October 22, 2004 and incorporated herein by reference).
15.0 |  | Consent of Registered Public Accounting Firm (Galaz, Yamazaki, Ruiz Urquiza, S.C. - Member of Deloitte Touche Tohmatsu, Limited) (filed herewith).
31.1 |  | Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith).
31.2 |  | Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith).
32.1 |  | Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C., Section 1350. This document is being furnished in accordance with SEC Release No. 33-8238.
32.2 |  | Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C., Section 1350. This document is being furnished in accordance with SEC Release No. 33-8238.
101.INS |  | XBRL Instance Document (submitted electronically with this report).
101.SCH |  | XBRL Taxonomy Extension Schema Document (submitted electronically with this report).
101.CAL |  | XBRL Taxonomy Calculation Linkbase Document (submitted electronically with this report).
101.DEF |  | XBRL Taxonomy Extension Definition Linkbase Document (submitted electronically with this report).
101.LAB |  | XBRL Taxonomy Label Linkbase Document (submitted electronically with this report).
101.PRE |  | XBRL Taxonomy Presentation Linkbase Document (submitted electronically with this report).

Attached as Exhibit 101 to this report are the following documents formatted in XBRL (Extensible Business Reporting Language): (i) the Condensed Consolidated Statement of Earnings for the three and six months ended June 30, 2014 and 2013; (ii) the Condensed Consolidated Statement of Comprehensive Income for the three and six months ended June 30, 2014 and 2013; (iii) the Condensed Consolidated Balance Sheet at June 30, 2014 and December 31, 2013; (iv) the Condensed Consolidated Statement of Cash Flows for the three and six months ended June 30, 2014 and 2013; and (v) the Notes to Condensed Consolidated Financial Statements tagged in detail. Users of this data are advised pursuant to Rule 406T of Regulation S-T that this interactive data file is deemed not filed or part of a registration statement or prospectus for purposes of sections 11 or 12 of the Securities Act of 1933, is deemed not filed for purposes of section 18 of the Securities Exchange Act of 1934, and otherwise is not subject to liability under these sections.

55