NOTE 16—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):

	At December 31,
	2017		2016
Related parties receivable current:
Grupo Mexico and affiliates:
Mexico Generadora de Energia S. de R.L. ("MGE")	$	16.2	$	10.2
Asarco LLC		4.1		5.5
Grupo Mexico		2.8		4.5
Compañia Perforadora Mexico S.A.P.I. de C.V. and affiliates		1.4		1.3
Mexico Proyectos y Desarrollos, S.A. de C.V. and affiliates		1.1		1.5
Operadora de Generadoras de Energia Mexico S.A. de C.V.		—		0.1
Related to the controlling group:
Operadora de Cinemas S.A. de C.V.		0.3		0.2
Boutique Bowling de Mexico S.A. de C.V.		0.2		0.1

	$	26.1	$	23.4


Related parties payable:
Grupo Mexico and affiliates:
MGE	$	38.5	$	13.9
Asarco LLC		24.2		36.3
Mexico Proyectos y Desarrollos S.A. de C.V. and affiliates		21.7		7.8
Ferrocarril Mexicano S.A. de C.V.		2.6		3.0
Eolica El Retiro, S.A.P.I. de C.V.		0.8		0.1
Grupo Mexico		0.7		0.1
Related to the controlling group:
Operadora de Cinemas S.A. de C.V.		0.7		0.4
Boutique Bowling de Mexico S.A. de C.V.		0.6		0.2
Mexico Transportes Aereos S.A. de C.V. ("Mextransport")		0.3		0.1
Related to SCC executive officers:
Breaker, S.A. de C.V. and affiliates ("Breaker")		—		0.3

	$	90.1	$	62.2

Purchase and sale activity:

Grupo Mexico and affiliates:

The following table summarize the purchase and sale activities with Grupo Mexico and its affiliates in 2017, 2016 and 2015 (in millions):

	2017		2016		2015
Purchase activity
Asarco LLC	$	37.2	$	30.3	$	32.0
Compañia Perforadora Mexico S.A.P.I. de C.V. and affiliates		—		0.3		0.3
Eolica El Retiro, S.A.P.I. de C.V.		3.3		2.0		6.6
Ferrocarril Mexicano, S.A. de C.V.		43.5		42.7		27.3
Grupo Mexico		14.0		13.8		13.8
Mexico Proyectos y Desarrollos S.A. de C.V. and affiliates		152.9		76.0		57.3
MGE		223.7		233.8		143.3

Total purchases	$	474.6	$	398.9	$	280.6


Sales activity
Asarco LLC	$	96.2	$	37.1	$	72.3
Compañia Perforadora Mexico S.A.P.I. de C.V. and affiliates		0.2		0.6		0.6
Grupo Mexico		0.2		0.6		0.5
Mexico Proyectos y Desarrollos S.A. de C.V. and affiliates		—		0.4		0.8
Operadora de Generadoras de Energia Mexico S.A. de C.V		—		0.1		—
MGE		101.0		95.9		81.7

Total sales	$	197.6	$	134.7	$	155.9

Grupo Mexico, the parent and the majority indirect stockholder of the Company, and its affiliates provide various services to the Company. These services are primarily related to accounting, legal, tax, financial, treasury, human resources, price risk assessment and hedging, purchasing, procurement and logistics, sales and administrative and other support services. The Company pays Grupo Mexico for these services and expects to continue these services in the future.

In 2017, the Company made donations of $1.9 million to Fundacion Grupo Mexico, an organization dedicated to promoting the social and economic development of the communities close to the Company's Mexican operations.

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 Compañia Perforadora Mexico S.A.P.I. de C.V. All of these companies are subsidiaries of Grupo Mexico.

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

In 2005, the Company organized MGE, as a subsidiary of Minera Mexico, for the construction of two power plants to supply power to the Company's Mexican operations. In May 2010, the Company's Mexican operations granted a $350 million line of credit to MGE for the construction of the power plants. That line of credit was due on December 31, 2012 and carried an interest rate of 4.4%. In the first quarter of 2012, Controladora de Infraestructura Energetica Mexico, S. A. de C. V., an indirect subsidiary of Grupo Mexico, acquired 99.999% of MGE through a capital subscription of 1,928.6 million 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. The remaining balance was restructured as subordinated debt of MGE. In the third quarter of 2016, MGE repaid the outstanding balance of the debt. Related to this loan, the Company recorded interest income of $4.2 million and $9.2 million in 2016 and 2015, respectively.

In 2012, the Company signed a power purchase agreement with MGE, whereby MGE will supply some of the Company's Mexican operations with power through 2032. MGE completed construction of its first power plant in June 2013 and the second plant, in the second quarter of 2014. These plants are natural gas-fired combined cycle power generating units, with a net total capacity of 516.2 megawatts. The first plant began supplying power to the Company in December 2013, and the second plant began to supply power in June 2015. MGE is supplying 13.5% of its power output to third-party energy users.

On August 4, 2014, Mexico Generadora de Energia Eolica S. de R.L. de C.V, an indirect subsidiary of Grupo Mexico, located in Oaxaca, Mexico, acquired Eolica el Retiro. Eolica el Retiro is a windfarm that has 37 wind turbines. This company started operations in January 2014 and started to sell power to IMMSA and other subsidiaries of Grupo Mexico in the third quarter of 2014. Eolica el Retiro is supplying approximately 27% of its power output to IMMSA.

The Company sold copper cathodes, rod and anodes, as well as sulfuric acid, silver, gold and lime to Asarco. 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 by MGE, all subsidiaries of Grupo Mexico.

Companies with relationships with the controlling group:

The following table summarizes the purchase and sales activities with other Larrea family companies in 2017, 2016 and 2015 (in millions):

	2017		2016		2015
Purchase activity
Boutique Bowling de Mexico S.A. de C.V.	$	0.3	$	0.4	$	0.4
Mextransport		1.3		2.0		2.0
Operadora de Cinemas S.A. de C.V.		0.1		0.5		0.5

Total purchases	$	1.7	$	2.9	$	2.9


Sales activity
Boutique Bowling de Mexico S.A. de C.V.	$	0.2	$	0.2	$	0.3
Mextransport		0.3		0.2		0.3
Operadora de Cinemas S.A. de C.V.		0.2		0.1		0.2

Total sales	$	0.7	$	0.5	$	0.8

The Larrea family controls a majority of the capital stock of Grupo Mexico, and has extensive interests in other businesses, including transportation, real estate and entertainment. The Company engages in certain transactions in the ordinary course of business with other entities controlled by the Larrea family relating to the lease of office space, air transportation and entertainment.

The Company's Mexican operations paid fees for entertainment services provided by Boutique Bowling de Mexico S.A de C.V. and Operadora de Cinemas S.A. de C.V. Both companies are controlled by the Larrea family.

MexTransport provides aviation services to the Company's Mexican operations. In addition, the Company received fees for building rental provided to Mextransport. This is a company controlled by the Larrea family.

In addition, the Company received fees for building rental and maintenance services provided to Boutique Bowling de Mexico S.A de C.V., Operadora de Cinemas S.A. de C.V. and MexTransport.

Equity Investment in Affiliate: The Company has a 44.2% participation in Compañia Minera Coimolache S.A. ("Coimolache"), which it accounts for on the equity method. Coimolache owns Tantahuatay, a gold mine located in northern Peru.

It is anticipated that in the future the Company will enter into similar transactions with these same parties.

Companies with relationships with SCC executive officers:

The following table summarizes the purchase activities with companies with relationships to SCC executive officers in 2017, 2016 and 2015 (in millions):

	2017		2016		2015
Breaker	$	—	$	0.5	$	5.5
Higher Technology S.A.C.		—		1.0		1.4
Servicios y Fabricaciones Mecanicas S.A.C.		0.2		0.5		0.7
Sempertrans		—		—		1.2

Total purchased	$	0.2	$	2.0	$	8.8

In 2016, the Company purchased industrial materials from Breaker S.A. de C.V., Breaker Peru S.A.C., and Pigoba S.A. de C.V. in which the SCC´s Chief Executive Officer´s sons, Carlos Gonzalez and Alejandro Gonzalez, and son-in-law, Jorge Gonzalez, have a proprietary interest. Also, the Company purchased industrial material from Higher Technology S.A.C. and paid fees for maintenance services provided by Servicios y Fabricaciones Mecanicas S.A.C., companies in which Carlos Gonzalez, the son of SCC´s Chief Executive Officer, had a proprietary interest through June 6, 2016.

Tax Agreement: On, February 28, 2017, AMC and the Company entered into a tax agreement, effective as of February 20, 2017, pursuant to which AMC, as the parent of the consolidated group of which the Company is a member and joins in the filing of a U.S. federal income tax return, (a) will be responsible for and discharge, any and all liabilities and payments due to the IRS on account of any incremental tax liabilities of the Company in connection with the potential adjustments being considered by the IRS in connection with the interest of the 2012 Judgment, (b) will not seek reimbursement, contribution or collection of any amounts of money or any other asset in connection therewith from the Company, and (c) will indemnify, defend and hold harmless the Company from any such liability, including the cost of such defense.