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,
	2018		2017
Related parties receivable current:
Grupo Mexico and affiliates:
Asarco LLC	$	74.4		4.1
Americas Mining Corporation (“AMC”)		11.0		—
AMMINCO Apoyo Administrativo, S.A. de C.V. (“AMMINCO”)		0.2		—
Compania Perforadora Mexico S.A.P.I. de C.V. and affiliates		1.4		1.4
Ferrocarril Mexicano, S.A. de C.V.		0.1		—
Grupo Mexico		2.7		2.8
Mexico Generadora de Energia S. de R.L. ("MGE")		10.3	$	16.2
Mexico Proyectos y Desarrollos, S.A. de C.V. and affiliates		0.6		1.1
Related to the controlling group:
Boutique Bowling de Mexico S.A. de C.V.		0.3		0.2
Mexico Transportes Aereos, S.A. de C.V. ("Mextransport")		0.1		—
Operadora de Cinemas S.A. de C.V.		0.4		0.3
	$	101.5	$	26.1
Related parties payable:
Grupo Mexico and affiliates:
Asarco LLC	$	4.1	$	24.2
AMMINCO		8.0		—
Eolica El Retiro, S.A.P.I. de C.V.		1.0		0.8
Ferrocarril Mexicano S.A. de C.V.		6.4		2.6
Grupo Mexico		0.6		0.7
MGE		40.6		38.5
Mexico Proyectos y Desarrollos S.A. de C.V. and affiliates		14.4		21.7
Related to the controlling group:
Boutique Bowling de Mexico S.A. de C.V.		0.1		0.6
Mexico Transportes Aereos S.A. de C.V. (“Mextransport”)		—		0.3
Operadora de Cinemas S.A. de C.V.		0.1		0.7
	$	75.3	$	90.1

Purchase and sale activity:

Grupo Mexico and affiliates:

The following table summarizes the purchase and sale activities with Grupo Mexico and its affiliates in 2018, 2017 and 2016 (in millions):


	2018		2017		2016
Purchase activity
Asarco LLC	$	37.2	$	37.2	$	30.3
AMMINCO		8.0		—		—
Compania Perforadora Mexico S.A.P.I. de C.V. and affiliates		—		—		0.3
Eolica El Retiro, S.A.P.I. de C.V.		3.6		3.3		2.0
Ferrocarril Mexicano, S.A. de C.V.		41.7		43.5		42.7
Grupo Mexico		10.1		14.0		13.8
MGE		200.1		223.7		233.8
Mexico Proyectos y Desarrollos S.A. de C.V. and affiliates		79.8		152.9		76.0
Total purchases	$	380.5	$	474.6	$	398.9
Sales activity
Asarco LLC	$	81.8	$	96.2	$	37.1
AMMINCO		0.3		—		—
Compania Perforadora Mexico S.A.P.I. de C.V. and affiliates		—		0.2		0.6
Grupo Mexico		—		0.2		0.6
Mexico Proyectos y Desarrollos S.A. de C.V. and affiliates		—		—		0.4
Operadora de Generadoras de Energia Mexico S.A. de C.V		—		—		0.1
MGE		68.2		101.0		95.9
Total sales	$	150.3	$	197.6	$	134.7

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. In 2018, AMMINCO, a subsidiary of Grupo Mexico, began providing these services for the Company's Peruvian operations. The Company pays Grupo Mexico and AMMINCO for these services and expects to continue these services in the future. The Company sold vehicles to AMMINCO.

In 2018, the Company donated $6.2 million to Fundacion Grupo Mexico,A.C., an organization dedicated to promoting the social and economic development of the communities close to the Company’s Mexican operations.

In addition, in December 2018, the Company´s Peruvian operations advanced $11 million to AMC for the payment of the Company's GILTI tax which later was determined not to be due.

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, 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 repaid in the third quarter of 2016. Related to this loan, the Company recorded interest income of $4.2 million in 2016.

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 has two natural gas-fired combined cycle power generating units, with a net total capacity of 516.2 megawatts and has been supplying power to the Company since December 2013. Currently, MGE is supplying 17.1% of its power output to third-party energy users; compared to 14% at December 31, 2017.

In 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, a windfarm with 37 wind turbines. This company started operations in January 2014 and started to sell power to Industrial Minera Mexico, S.A. de C.V. and subsidiaries (IMMSA) and other subsidiaries of Grupo Mexico in the third quarter of 2014. Currently, Eolica el Retiro is supplying approximately 18% of its power output to IMMSA; compared to 27% at December 31, 2017.

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 2018, 2017 and 2016 (in millions):


	2018		2017		2016
Purchase activity
Boutique Bowling de Mexico S.A. de C.V.	$	0.3	$	0.3	$	0.4
Mextransport		12.4		1.3		2.0
Operadora de Cinemas S.A. de C.V.		0.2		0.1		0.5
Total purchases	$	12.9	$	1.7	$	2.9
Sales activity
Boutique Bowling de Mexico S.A. de C.V.	$	0.2	$	0.2	$	0.2
Mextransport		1.2		0.3		0.2
Operadora de Cinemas S.A. de C.V.		0.1		0.2		0.1
Total sales	$	1.5	$	0.7	$	0.5

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. and Operadora de Cinemas S.A. de C.V.

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:

In 2018, the Company did not have purchase activities with companies having relationships with SCC executive officers. In 2017 and 2016, the Company purchased industrial material from these companies amounting to $0.2 million and $2.0 million, respectively. It is anticipated that in the future the Company will not enter into similar transactions with these same parties.

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.