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ASSET RETIREMENT OBLIGATION: | 6 Months Ended
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Jun. 30, 2015
ASSET RETIREMENT OBLIGATION: |
ASSET RETIREMENT OBLIGATION: | NOTE 8 - 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 a review of closing plans every five years. Currently and for the near-term future, the Company has pledged the value of its Lima office complex as support for this obligation. The accepted value of the Lima office building, for this purpose, is $27.8 million. Through June 2015, the Company has provided guarantees of $17.9 million. The closure cost recognized for this liability includes the cost, as outlined in its closure plans, of dismantling the Toquepala and Cuajone concentrators, the smelter and refinery in Ilo, and the shops and auxiliary facilities at the three units. In 2010, the Company announced to the Mexican federal environmental authorities its closure plans for the copper smelter plant at San Luis Potosi. The Company initiated a program for plant demolition and soil remediation with a budget of $62.4 million, of which the Company has spent $58.1 million through June 30, 2015. Plant demolition and construction of a confinement area at the south of the property were completed in 2012 and the Company expects to complete soil remediation and the construction of a second confinement area during the third quarter of 2015. The Company expects that once the site is remediated, a decision will be made on whether sell or develop the property. The overall cost recognized for mining closure in Mexico 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, 2015 and 2014 (in millions):
|  | 2015 |  | 2014 |
Balance as of January 1 |  | $ | 116.1 |  | $ | 124.8 |
Changes in estimates |  | — |  | 26.7 |
Payments |  | (11.2 | ) | (3.6 | )
Accretion expense |  | 8.2 |  | 3.6 |
Balance as of June 30, |  | $ | 113.1 |  | $ | 151.5 |

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- Definition The entire disclosure for an asset retirement obligation and the associated long-lived asset. An asset retirement obligation is a legal obligation associated with the disposal or retirement from service of a tangible long-lived asset that results from the acquisition, construction or development, or the normal operations of a long-lived asset, except for certain obligations of lessees. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 410 -SubTopic 20 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6392692&loc=d3e7535-110849 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 410 -SubTopic 20 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=6392692&loc=d3e7569-110849 + Details
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