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RELATED PARTY TRANSACTIONS: | 3 Months Ended
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Mar. 31, 2019
RELATED PARTY TRANSACTIONS: |
RELATED PARTY TRANSACTIONS: | 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 and 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 March 31, |  | At December 31,
|  | 2019 |  | 2018
Related parties receivable current: |  |  |  |  |  |
Grupo Mexico and affiliates: |  |  |  |  |  |
Asarco LLC |  | $ | 74.6 |  | $ | 74.4
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 |  |  | 1.0 |  |  | 1.4
Ferrocarril Mexicano, S.A. de C.V. |  |  | 0.1 |  |  | 0.1
Grupo Mexico |  |  | 2.7 |  |  | 2.7
Mexico Generadora de Energia, S. de R.L. (“MGE”) |  |  | 18.0 |  |  | 10.3
Mexico Proyectos y Desarrollos, S.A. de C.V. and affiliates (“MPD”) |  |  | 0.5 |  |  | 0.6
Related to the controlling group: |  |  |  |  |  |
Boutique Bowling de Mexico, S.A. de C.V. |  |  | 0.3 |  |  | 0.3
Empresarios Industriales de Mexico, S.A. de C.V. |  |  | 0.1 |  |  | —
Mexico Transportes Aereos, S.A. de C.V. ("Mextransport") |  |  | 0.5 |  |  | 0.1
Operadora de Cinemas, S.A. de C.V. |  |  | 0.4 |  |  | 0.4
|  | $ | 98.2 |  | $ | 101.5
Related parties payable: |  |  |  |  |  |
Grupo Mexico and affiliates: |  |  |  |  |  |
Asarco LLC |  | $ | 6.6 |  | $ | 4.1
AMMINCO |  |  | 2.4 |  |  | 8.0
Eolica El Retiro, S.A.P.I. de C.V. |  |  | 1.0 |  |  | 1.0
Ferrocarril Mexicano, S.A. de C.V. |  |  | 7.6 |  |  | 6.4
Grupo Mexico |  |  | 0.8 |  |  | 0.6
MGE |  |  | 36.7 |  |  | 40.6
MPD |  |  | 11.2 |  |  | 14.4
Related to the controlling group: |  |  |  |  |  |
Boutique Bowling de Mexico, S.A. de C.V. |  |  | 0.1 |  |  | 0.1
Operadora de Cinemas, S.A. de C.V. |  |  | (*) |  |  | 0.1
|  | $ | 66.4 |  | $ | 75.3
(*) amount is lower than $0.1 million Purchase and sale activity: Grupo Mexico and affiliates: The following table summarizes the purchase and sale activities with Grupo Mexico and its affiliates in the three months ended March 31, 2019 and 2018 (in millions):
|  | 2019 |  | 2018
Purchase activity |  |  |  |  |  |
Asarco LLC |  | $ | 10.0 |  | $ | 6.8
AMMINCO |  |  | 2.4 |  |  | —
Eolica El Retiro |  |  | 0.8 |  |  | 0.6
Ferrocarril Mexicano, S.A de C.V. |  |  | 10.6 |  |  | 10.0
Grupo Mexico |  |  | 2.5 |  |  | 4.5
MGE |  |  | 55.2 |  |  | 61.9
MPD |  |  | 10.8 |  |  | 15.9
Total purchases |  | $ | 92.3 |  | $ | 99.7
Sales activity |  |  |  |  |  |
Asarco LLC |  | $ | 2.0 |  | $ | 36.5
MGE |  |  | 15.1 |  |  | 23.2
Total sales |  | $ | 17.1 |  | $ | 59.7
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. The Company´s Mexican operations pay Grupo Mexico and the Company´s Peruvian operations pay AMMINCO for these services and expect to continue requiring these services in the future. In the first quarter of 2019, the Company made donations of $3.4 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, in accordance with the Company´s tax sharing agreement with its parent, the Company´s Peruvian operations advanced $11 million to AMC for the payment of the Company’s portion of the GILTI tax that later was determined not to be necessary. In the first quarter of 2019, this amount was reimbursed to the Company. The Company’s Mexican operations paid fees for freight services provided by Ferrocarril Mexicano, S.A de C.V. and for construction services provided by Mexico Proyectos y Desarrollos, S.A. de C.V. and its affiliates. All of these companies are subsidiaries of Grupo Mexico. The Company’s Mexican operations purchased scrap and other residual copper mineral from Asarco LLC, 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. 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 2.1% of its power output to third-party energy users; compared to 14% at March 31, 2018. 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. Eolica el Retiro is a windfarm with 37 wind turbines. This company started operations in January 2014 and started to sell power to Industrial Minera Mexico and subsidiaries (IMMSA) and other subsidiaries of Grupo Mexico in the third quarter of 2014. Currently, Eolica el Retiro is supplying approximately 20.9% 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 LLC. In addition, the Company received fees for building rental and maintenance services provided to Mexico Proyectos y Desarrollos, S.A. de C.V. and its affiliates and to Perforadora Mexico, S.A.P.I. de C.V., and for natural gas and services provided to MGE; all subsidiaries of Grupo Mexico. Companies with relationships to the controlling group: The following table summarizes the purchase and sales activities with other Larrea family companies in the three months ended March 31, 2019 and 2018 (in millions):
|  | 2019 |  | 2018
Purchase activity |  |  |  |  |  |
Boutique Bowling de Mexico, S.A. de C.V. |  | $ | 0.1 |  | $ | 0.1
Operadora de Cinemas, S.A. de C.V. |  |  | (*) |  |  | (*)
Mextransport |  |  | — |  |  | 0.2
Total purchases |  | $ | 0.1 |  | $ | 0.3
Sales activity |  |  |  |  |  |
Boutique Bowling de Mexico, S.A. de C.V. |  | $ | (*) |  | $ | 0.1
Empresarios Industriales de Mexico, S.A. de C.V. |  |  | 0.1 |  |  | —
Operadora de Cinemas, S.A. de C.V. |  |  | (*) |  |  | (*)
Mextransport |  |  | 0.5 |  |  | 0.1
Total sales |  | $ | 0.6 |  | $ | 0.2
(*) amount is lower than $0.1 million 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. In addition, the Company received fees for building rental and maintenance provided to Boutique Bowling de Mexico S.A. de C.V., Operadora de Cinemas S.A. de C.V and Mextransport. The Company´s Mexican operations also received fees for surveillance services provided to Empresarios Industriales de Mexico, S.A. de C.V. This is a company controlled by the Larrea family. Equity Investment in Affiliate: The Company has a 44.2% participation in Compania Minera Coimolache S.A. (“Coimolache”), which it accounts for on the equity method. Coimolache owns Tantahuatay, a gold mine located in the northern part of Peru. It is anticipated that in the future the Company will enter into similar transactions with these same parties. In the first quarter of 2019, the Company did not have purchase or sales activities with companies having relationships with SCC executive officers.

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- Definition The entire disclosure for related party transactions. Examples of related party transactions include transactions between (a) a parent company and its subsidiary; (b) subsidiaries of a common parent; (c) and entity and its principal owners; and (d) affiliates. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 850 -URI http://asc.fasb.org/topic&trid=2122745 + Details
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