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v3.23.1

Provisions | 12 Months Ended
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Dec. 31, 2022
Provisions |
Provisions | 15. Provisions
| (a) | This caption is made up as follows:
​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | As of | ​ | ​ | ​ | ​ | ​ | ​ | ​ | As of | ​ | ​ | ​ | ​ | ​ | Reclassifications | ​ | ​ | ​ | As of
​ | ​ | January 1, | ​ | ​ | ​ | Accretion | ​ | ​ | ​ | December | ​ | ​ | ​ | Accretion | ​ | and | ​ | ​ | ​ | December 31,
​ |  | 2021 |  | Changes |  | expense |  | Disbursements |  | 31, 2021 |  | Changes |  | expense |  | others |  | Disbursements |  | 2022
​ | ​ | US$(000) | ​ | US$(000) |  | US$(000) | ​ | US$(000) | ​ | US$(000) | ​ | US$(000) |  | US$(000) | ​ | US$(000) | ​ | US$(000) | ​ | US$(000)
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Closure of mining units and exploration projects (b) |  | 277,689 | ​ | 1,779 | ​ | 5,623 | ​ | (13,104) | ​ | 271,987 |  | (8,872) | ​ | 5,129 | ​ | 992 | ​ | (14,989) | ​ | 254,247
Environmental liabilities |  | 5,038 | ​ | 16,557 | ​ | 363 | ​ | (2,002) | ​ | 19,956 |  | (228) | ​ | 59 | ​ | (992) | ​ | (2,534) | ​ | 16,261
Environmental contingencies |  | 2,874 | ​ | 3,425 | ​ | — | ​ | (1,135) | ​ | 5,164 |  | 3,459 | ​ | — | ​ | 246 | ​ | (453) | ​ | 8,416
Safety contingencies |  | 4,536 | ​ | 1,323 | ​ | — | ​ | (227) | ​ | 5,632 |  | 870 | ​ | — | ​ | 258 | ​ | (44) | ​ | 6,716
Labor contingencies |  | 4,080 | ​ | 381 | ​ | — | ​ | (40) | ​ | 4,421 |  | 489 | ​ | — | ​ | 233 | ​ | (12) | ​ | 5,131
Tax contingencies |  | 3,110 | ​ | 299 | ​ | — | ​ | — | ​ | 3,409 |  | 1,596 | ​ | — | ​ | — | ​ | — | ​ | 5,005
Obligations with communities | ​ | 3,605 | ​ | (1,010) | ​ | — | ​ | — | ​ | 2,595 | ​ | (637) | ​ | — | ​ | 147 | ​ | — | ​ | 2,105
Other provisions |  | 480 | ​ | (317) | ​ | — | ​ | — | ​ | 163 |  | 377 | ​ | — | ​ | 97 | ​ | — | ​ | 637
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ |  | 301,412 | ​ | 22,437 | ​ | 5,986 | ​ | (16,508) | ​ | 313,327 |  | (2,946) | ​ | 5,188 | ​ | 981 | ​ | (18,032) | ​ | 298,518
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Classification by maturity: |  | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ |  |  |  | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Current portion |  | 51,816 | ​ | ​ | ​ | ​ | ​ | ​ | ​ | 81,039 |  | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | 94,171
Non-current portion |  | 249,596 | ​ | ​ | ​ | ​ | ​ | ​ | ​ | 232,288 |  | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | 204,347
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ |  | 301,412 | ​ | ​ | ​ | ​ | ​ | ​ | ​ | 313,327 |  | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | 298,518
​
| (b) | Provision for closure of mining units and exploration projects -
The table below presents the movement of the provision for closure of mining units and exploration projects: ​
​ | ​ | ​ | ​ | ​
​ |  | 2022 |  | 2021
​ | ​ | US$(000) | ​ | US$(000)
​ | ​ | ​ | ​ | ​
Beginning balance |  | 271,987 |  | 277,689
​ | ​ | ​ | ​ | ​
Additions (reversals) in estimates and reclassifications: | ​ | ​ | ​ | ​
Continuing mining units, note 11(a) |  | (21,869) |  | (3,272)
Continuing mining units, note 28(a) | ​ | (302) | ​ | —
Discontinued mining units, note 1(e) |  | 660 |  | 3,021
Exploration projects, note 28(a) |  | 13,631 |  | 2,030
​ | ​ | (7,880) | ​ | 1,779
Accretion expense: | ​ | ​ | ​ | ​
Continuing mining units, note 29(a) |  | 4,932 |  | 5,522
Exploration projects, note 29(a) |  | 138 |  | 76
Discontinued mining units, note 1(e) |  | 59 |  | 25
​ | ​ | ​ | ​ | ​
Disbursements |  | (14,989) |  | (13,104)
​ | ​ | ​ | ​ | ​
Ending balance |  | 254,247 |  | 271,987
​ | ​ | ​ | ​ | ​
Classification by maturity: | ​ | ​ | ​ | ​
Current portion |  | 60,644 |  | 54,013
Non-current portion |  | 193,603 |  | 217,974
​ | ​ | ​ | ​ | ​
​ |  | 254,247 |  | 271,987
​ The provision for closure of mining units and exploration projects represents the present value of the closure costs that are expected to be incurred between the years 2023 and 2041. The Group recognizes the provision for closure of mining units and explorations projects based on estimates of studies and activities that meet the environmental regulations in effect and that will be approved by the Ministry of Energy and Mines. The Group recognizes the provision of continued operations based on its analysis and estimates prepared by independent advisors and reviewed by the Group’s management. Provisions related to discontinued operations are based on estimates prepared by internal advisors. The provision for closure of mining units and exploration projects corresponds mostly to activities that must be carried out for restoring the mining units and areas affected by operation and production activities. The principal works to be performed correspond to earthworks, re-vegetation efforts and dismantling of the plants. Closure budgets are reviewed regularly to take into account any significant change in the studies conducted. Nevertheless, the closure costs of mining units will depend on the market prices for the closure works required, which would reflect future economic conditions. Also, the time when the disbursements will be made depends on the useful life of the mine, which will be based on future metals prices. As of December 31, 2022, the future value of the provision for closure of mining units and exploration projects was US$319.59 million, which has been discounted using annual risk-free rates from minimums of 4.77 percent and at a maximum range of 6.55 percent, in a period of 1 to 19 years, obtaining as a result an updated liability amounting to US$254.2 million (as of December 31, 2021, the provision was US$272.0 million). The Group believes that this liability is sufficient to meet the current environmental protection laws approved by the Ministry of Energy and Mines. As of December 31, 2022, the Group has constituted letters of credit in favor of the Ministry of Energy and Mines for US$171.8 million (US$155.9 million as of December 31, 2021) to secure current mine closure plans of its mining units, exploration projects and environmental liabilities to date.
Sociedad Minera Cerro Verde S.A.A. |
Provisions |
Provisions | 11. Provisions This item is made up as follows: ​
​ | ​ | ​ | ​ | ​
​ |  | December 31, |  | December 31,
​ | ​ | 2022 | ​ | 2021
​ | ​ | US$(000) | ​ | US$(000)
​ | ​ | ​ | ​ | ​
Current: |  |  |  |
Provision for social commitments (a) |  | 3,096 |  | 9,399
Provision for legal contingencies (b) |  | 465 |  | 350
Provision for remediation and mine closure (c) |  | 423 |  | 2,968
Total current |  | 3,984 |  | 12,717
​ | ​ | ​ | ​ | ​
Non–current: |  |  |  |
Provision for remediation and mine closure (c) |  | 209,237 |  | 219,942
Provision for social commitments (a) |  | 7,303 |  | 1,226
Provision for legal contingencies (b) | ​ | 2,211 | ​ | 2,004
Provision for uncertainty over income tax treatments (d) |  | 615 |  | 7,878
Other long-term liabilities |  | — |  | 401
​ | ​ | ​ | ​ | ​
Total non-current |  | 219,366 |  | 231,451
(a) The provision for social commitments is associated with repaving Alata-Congata Road (US$6.1 million as of December 31, 2022 and US$6.3 million as of December 31, 2021) and an irrigation project in La Joya (US$4.3 million as of December 30, 2022 and 2021). (b) The provision for legal contingencies is associated with OSINERGMIN (Organismo Supervisor de la Inversión en Energía y Minería) and SUNAFIL (Superintendencia Nacional de Fiscalización Laboral) fines, which have been appealed by the Company. (c) The Company’s mineral exploitation activities are subject to environmental protection standards. In order to comply with these standards, the Company has obtained the approval for the Environment Adequacy Program (PAMA) and for the Environmental Impact Studies (EIA), required for the operation of Cerro Verde’s production unit. On October 14, 2003, Law 28090 was enacted, which regulates the commitments and procedures that entities involved in mining activities must follow in order to prepare, file and implement a mine site closure plan, as well as the respective environmental guarantees that assure compliance with the plan in accordance with protection, conservation and restoration of the environment. On August 15, 2005, the regulations regarding this law were approved. During 2006, in compliance with the mentioned law, the Company completed the closure plans for its mine site and presented it to the Ministry of Energy and Mines. The closure plans for its mine site were approved by Resolution No 302-2009 MEM-AAM and its modifications were approved by Resolution No 207-2012 MEM-AAM, Resolution No 186-2014 MEM-DGAAM and its last modification, Resolution No 032-2018 MEM-DGAAM. As of December 31, 2022, pursuant to legal requirements, the Company has issued a letter of credit to the Ministry of Energy and Mines totaling US$86.5 million to secure mine closure plans. The estimate of remediation and mine closure costs is based on studies prepared by independent consultants and based on current environmental regulations. This provision corresponds mainly to the activities to be performed in order to restore the areas affected by mining activities. The main tasks to be performed include ground removal, soil recovery, and dismantling of plant and equipment. Under the closure regulations, the Company must submit a closure plan that includes the reclamation methods, closure cost estimates, methods of control and verification, closure and post-closure plans, and financial assurance. In compliance with the requirement for five-year updates, the Company submited the last updated closure plan and cost estimate to the Ministry of Energy and Mines in February 2023. The table below presents the changes in the provision for remediation and mine closure: ​
​ | ​ | ​ | ​ | ​
​ |  | 2022 |  | 2021
​ | ​ | US$(000) | ​ | US$(000)
​ | ​ | ​ | ​ | ​
Beginning balance |  | 222,910 |  | 237,543
Accretion expense |  | 4,566 |  | 3,715
Changes in estimates (see Note 7) |  | (17,812) |  | (18,271)
Progressive mine closure payments in hydrometallurgy process |  | — |  | (87)
Exchange rate effect | ​ | (4) | ​ | 10
Final balance |  | 209,660 |  | 222,910
​ As of December 31, 2022, the Company’s provision for remediation and mine closure was US$209.7 million (reflecting the future value of the provision for remediation and mine closure of US$477.6 million, discounted using an annual risk-free rate of 4.06%). As of December 31, 2021, the Company’s provision for remediation and mine closure was US$222.9 million (reflecting the future value of the provision for remediation and mine closure of US$374.3 million, discounted using an annual risk-free rate of 1.93%). The Company considers this liability sufficient to meet the current environmental protection laws approved by the Ministry of Energy and Mines. As of December 31, 2022 changes in estimate (decrease of US$17.8 million) primarily related to changes in the discount rate, partially offset by higher future nominal flows coupled with change in the escalation rate. As of December 31, 2021, changes in estimates (decrease of US$18.3 million) primarily relate to changes in the discount rate.
| (d) | As of December 31, 2022, represents interest and penalties related to income tax for the years 2018 and 2021 and related taxes. As of December 31, 2021, represents interest and penalties related to income tax for the years 2017 and 2018 and related taxes. All amounts were determined in accordance with the IFRIC 23, “Uncertainty over Income Tax Treatments.”

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