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Property, plant, equipment and development costs

12 Months Ended

Dec. 31, 2022

Property, plant, equipment and development costs

Property, plant, equipment and development costs

11.   Property, plant, equipment and development costs

(a) Below is presented the movement:

​

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​		Balance as of		​		​		​		​		​		Balance as of		​		​		​		​		​		Balance as of
​	​	January 1,	​	​	​	​	​	​	​	Changes in	​	Reclassifications	​	December 31,	​	​	​	​	​	​	​	Changes in	​	Reclassifications	​	December 31,
​	​	2021	​	Additions	​	Disposals	​	Sales	​	estimations	​	and transfers	​	2021	​	Additions	​	Disposals	​	Sales	​	estimations	​	and transfers	​	2022
​		US$(000)		US$(000)		US$(000)		US$(000)		US$(000)		US$(000)		US$(000)		US$(000)		US$(000)		US$(000)		US$(000)	​	US$(000)		US$(000)
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Cost:	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Lands		17,650		—		—		—		—		53		17,703		—		—		—		—	​	1,062		18,765
Mining concessions (f)		151,873		—		—		—		—		—		151,873		—		—		—		—	​	—		151,873
Development costs		813,232		31,749		—		—		—		—		844,981		59,702		—		—		—	​	—		904,683
Buildings, constructions and other		1,343,060		31		(11)		—		—		7,315		1,350,395		—		(123)		—		—	​	3,510		1,353,782
Machinery and equipment		883,192		5		(393)		(249)		—		19,842		902,397		10		(41,053)		(34)		—	​	12,695		874,015
Transportation units		8,409		70		(152)		(934)		—		269		7,662		15		(277)		(1,816)		—	​	73		5,657
Furniture and fixtures		11,737		33		(98)		—		—		98		11,770		—		(702)		(4)		—	​	7		11,071
Units in transit		3,381		—		(506)		—		—		—		2,875		12,811		—		—		—	​	—		15,686
Work in progress		34,934		40,768		(1,838)		—		—		(27,577)		46,287		65,577		(3,049)		—		—	​	(17,347)		91,468
Stripping activity asset (g)		152,597		17,653		(6,763)		—		—		—		163,487		26,669		—		—		—	​	—		190,156
Right-of-use asset (e)	​	16,259	​	—	​	—	​	—	​	2,973	​	—	​	19,232	​	—	​	—	​	—	​	11,712	​	—	​	30,944
Mine closure costs		335,654		—		—		—		(3,272)		—		332,382		—		—		—		(21,869)	​	—		310,513
​		3,771,978		90,309		(9,761)		(1,183)		(299)		—		3,851,044		164,784		(45,204)		(1,854)		(10,157)	​	—		3,958,613
Accumulated depreciation and amortization:	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Mining concessions (f)		40,270		7		-		-		—		—		40,277		6		—		—		—	​	—		40,283
Development costs		340,999		20,582		-		-		—		—		361,581		26,907		—		—		—	​	—		388,488
Buildings, construction and other		698,324		66,445		(3)		-		—		928		765,694		58,345		(121)		—		—	​	—		823,918
Machinery and equipment		686,466		56,384		(340)		(170)		—		—		742,340		42,698		(40,355)		(34)		—	​	—		744,649
Transportation units		7,083		604		(143)		(894)		—		—		6,650		478		(153)		(1,803)		—	​	—		5,172
Furniture and fixtures		9,824		601		(97)		-		—		—		10,328		548		(651)		(4)		—	​	—		10,221
Stripping activity asset		111,455		14,039		-		-		—		6,665		132,159		21,769		—		—		—	​	—		153,928
Right-of-use asset (e)	​	9,081	​	4,813	​	-	​	-	​	—	​	—	​	13,894	​	4,290	​	—	​	—	​	—	​	—	​	18,184
Mine closure costs		191,840		14,819		-		-		—		7,173		213,832		18,198		—		—		—	​	—		232,030
​		2,095,342		178,294		(583)		(1,064)		—		14,766		2,286,755		173,239		(41,280)		(1,841)		—	​	—		2,416,873
Provision for impairment of long-lived assets:	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Mine closure costs		13,207		—		(3,828)		—		(7,173)		(7,173)		2,206		—		—		—	​	—	​	—		2,206
Development costs		10,153		—		—		—		(6,665)		(6,665)		3,488		—		—		—	​	—	​	—		3,488
Property, plant and other		2,915		19,874		(1,136)		—		(928)		(928)		20,725		—		(19,874)		—	​	—	​	—		851
​		26,275		19,874		(4,964)		—		(14,766)		(14,766)		26,419		—		(19,874)		—	​	—	​	—		6,545
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Net cost		1,650,361	​	​	​	​	​	​	​	​	​	​		1,537,870	​	​	​	​	​	​	​	​	​	​		1,535,195

​

​

(b) Impairment of long-lived assets

In accordance with its accounting policies and processes, each asset or CGU is evaluated at each reporting date and annually at year-end, to determine whether there are any indications of impairment. If any such indications of impairment exist, a formal estimate of the recoverable amount is performed.

In assessing whether impairment is required, the carrying value of the asset or CGU is compared with its recoverable amount. The recoverable amount is the higher of (i) the CGU’s fair value less costs of disposal (FVLCD) and (ii) its value in use (VIU). Given the nature of the Group’s activities, information on the fair value of an asset is usually difficult to obtain unless negotiations with potential purchasers or similar transactions are taking place.

Consequently, the recoverable amount for each CGU is estimated based on discounted future estimated cash flows expected to be generated from the continued use of the CGUs using market-based commodity price and exchange assumptions, estimated quantities of recoverable minerals, production levels, operating costs and capital requirements, and its eventual disposal, based on the latest life of mine (LOM) plans. Capital and operating expenditure associated with the Group’s climate change initiatives are, to the extent necessary, taken into account when determining the recoverable amount of each CGU. The Group Buenaventura practice responsible mining that promotes economic growth and sustainable development, creating value in the regions where it operates. The Group’s environmental management has as an objective to innovate in water management and mine closure, looking forward to supporting the sustainability of operations. The use of clean technologies to reduce fresh water consumption and waste generation, together with the application of adequate environmental protection standards and procedures in the management of operations are essential for Buenaventura. The challenges that come from higher environmental and social expectations of the environment are being addressed appropriately, encouraging research to improve the prevention and control of the environmental impacts of the Group’s activities.

These cash flows were discounted using a real post-tax discount rate that reflected current market assessments of the time value of money and the risks specific to the CGU.

The estimates of quantities of recoverable minerals, production levels, operating costs and capital requirements are obtained from the planning process, including the LOM plans, one-year budgets and CGU-specific studies.

During 2022, the Group identified impairment indicators in Orcopampa, Uchucchacua, La Zanja and Río Seco. The Group evaluated and concluded that there is no impairment as a result of the analysis of the recoverable amount in Orcopampa, Uchucchacua and La Zanja mining units. The Group recognized a recovery of impairment of long-lived assets for US$19.9 million in Río Seco. The main factors considered in the impairment analysis were changes in estimates of proven and probable reserves, market forward prices and remaining mine useful lives.

During 2021, the Group identified impairment indicators in Orcopampa, Uchucchacua, La Zanja and Río Seco. The Group evaluated and concluded that there is no impairment as a result of the analysis of the recoverable amount of said units based on their value in use for Orcopampa, Uchucchacua, and La Zanja. As a result of the analysis of the recoverable amount as of December 31, 2021 in Río Seco, the Group recognized an impairment of assets for US$19.9 million. In addition, the La Zanja unit mining recognized a reversal of impairment of US$5.0 million, (net effect of US$14.9 million). The main factors considered in the impairment analysis were changes in estimates of reserves and resources, market forward prices and remaining mine useful lives.

During 2020, the Group identified impairment indicators in its Julcani, Orcopampa, Uchucchacua, El Brocal and La Zanja. The Group evaluated and concluded that there is no impairment as a result of the analysis of the recoverable amount of said units based on their value in use. The main factors considered in the impairment analysis were changes in estimates of reserves and resources, market forward prices and remaining mine useful lives. As a result of the analysis of the recoverable amount as of December 31, 2020, Buenaventura recognized a reversal for impairment of long-lived assets for US$2.1 million derived from the evaluation of its Julcani mining unit.The main factors considered in the impairment analysis were the increase in metal price projections and the life of mine plans. The recoverable amounts of the Julcani mining unit are based on management’s estimations of the value in use.

Below are the amounts of the recovery amounts as of December 2022, 2021 and 2020:

​

​	​	​	​	​	​	​
​		2022		2021		2020
​	​	US$	​	US$	​	US$
​	​	​	​	​	​	​
Uchucchacua		146,114		196,545		244,795
Río Seco		50,808		18,671		N/A
Orcopampa		51,911		43,128		57,650
La Zanja		35,011		51,044		20,736
Julcani		N/A		N/A		40,642
El Brocal		N/A		N/A		761,081

​

Key assumptions

The determination of value in use is most sensitive to the following key assumptions:

- Production volumes

- Commodity prices

- Discount rate

- Residual value

Production volumes: Estimated production volumes are based on detailed life-of-mine plans and take into account development plans for the mines agreed by management as part of planning process. Production volumes are dependent on a number of variables, such as: the recoverable quantities; the production profile; the cost of the development of the infrastructure necessary to extract the reserves; the production costs; the contractual duration of mining rights; and the selling price of the commodities extracted.

As each producing mining unit has specific reserve characteristics and economic circumstances, the cash flows of the mines are computed using appropriate individual economic models and key assumptions established by management. The production profiles used were consistent with the reserves and resource volumes approved as part of the Group’s process for the estimation of proven and probable reserves and resource estimates.

Commodity prices: Forecast commodity prices are based on management’s estimates and are derived from forward price curves and long-term views of global supply and demand, building on experience of the industry and consistent with external sources. These prices were adjusted to arrive at appropriate consistent price assumptions for the different qualities and type of commodities, or, where appropriate, contracted prices were applied. These prices are reviewed at least annually.

Estimated prices for the current and long-term periods that have been used to estimate future cash flows are as follows:

​

As of December 31, 2022 -

​

​	​	​	​	​
​	​	2023		2024-2026
​		US$		US$
​	​	​	​	​
Gold		1,750 / Oz		1,735 / Oz
Silver		21.00 / Oz		23.17 / Oz
Copper		7,900 / MT		9,625 / MT
Zinc	​	3,000 / MT	​	2,648 / MT
Lead		1,900 / MT		2,181 / MT

​

As of December 31, 2021 -

​

​	​	​	​	​
​		2022		2023-2025
​	​	US$	​	US$
​	​	​	​	​
Gold		1,700 / Oz		1,764 / Oz
Silver		24.00 / Oz		27.30 / Oz
Copper		8,500 / MT		8,705 / MT
Zinc		2,600 / MT		2,616 / MT
Lead	​	2,000 / MT	​	2,313 / MT

​

(*)OZ= Ounces, MT = Metric Tonne.

Discount rate:

In calculating the value in use, as of December 31, 2022 and 2021 the following discount rates were applied to the post-tax cash flows:

​	​	​	​	​	​	​	​	​
​	​	2022			​	2021
​	​	Post-Tax	​	Pre-Tax	​	Post-Tax	​	Pre-Tax
​	​	%	​	%	​	%	​	%
​	​	​	​	​	​	​	​	​
Uchucchacua		8.12		12.52		6.04		9.31
Orcopampa		8.12		12.52		6.04		9.31
Río Seco		10.60		16.34		7.86		12.12
La Zanja		9.13		14.08		7.01		10.81

​

These discount rates are derived from the Group’s post-tax weighted average cost of capital (WACC), with appropriate adjustments made to reflect the risks specific to the CGU. The WACC takes into account both debt and equity. The cost of equity is derived from the expected return on investment by the Group’s investors. The cost of debt is based on its interest-bearing borrowings the Group is obliged to service. The Beta factors are evaluated annually based on publicly available market data.

(c) The book value of assets held under finance leases, and assets under trustworthy equity, amounted to US$250.5 million as of December 31, 2022 (US$270.8 million as of December 31, 2021) and is presented in various items of the “Property, plant, equipment and development cost” caption. During 2022 and 2021, no acquisitions of assets under lease agreements were made. Leased assets are pledged as security for the related finance lease liabilities.

(d) During 2022, 2021 and 2020, no borrowing costs were capitalized.

(e) Right-of-use assets

The net assets for right-of-use assets maintained by the Group correspond to the following:

​

​	​	​	​	​
​	​	2022		2021
​	​	US$(000)	​	US$(000)
Buildings	​	10,484		2,088
Transportation units	​	1,380		2,501
Machinery and equipment	​	896		749
​	​	​	​	​
​	​	12,760		5,338

​

During 2022, the additions to the right-of-use assets were US$11.7 million and no disposals were made (additions of US$3.0 million and no disposals were made during 2021).

(f) Mining concessions includes goodwill of El Brocal for an amount to US$34.0 million as of December 31, 2022 and 2021.

(g) During June 2021, as a result of its reserves review, the subsidiary El Brocal wrote off the phase 6 for a total of 1,181,280 DMT at a value of US$6,763,000. The write-off corresponds to a new estimation of reserves of the open pit as a result of the topographical information. The balance as of December 31, 2021 of this phase is 5,730 DMT valued in US$118,000 which were comsumed during 2022.

In December 2020, as a result of the review of the mineral reserve balances, the subsidiary El Brocal wrote off the phase 9 for a total of 1,102,117 DMT at a value of US$11,633,000. The write-off corresponds to a loss of reserves due to variation in technical and economic parameters such as: decrease in estimated prices; increased cut-off; percentage decrease in payable items; and new block model.

(h) Below is the distribution of depreciation expenses of the year:

​

​	​	​	​	​	​	​
​		2022		2021		2020
​	​	US$(000)	​	US$(000)	​	US$(000)
​	​	​	​	​	​	​
Cost of sales of goods		147,032		159,652	​	174,103
Unabsorbed cost due to production stoppage		14,877		4,569	​	10,764
Cost of sales of services		8,153		8,109	​	8,461
Administrative expenses		1,886		4,741	​	3,142
Property, plant, equipment and development costs	​	1,039	​	963	​	833
Exploration in non-operating areas	​	101	​	114	​	111
Selling expenses	​	93	​	84	​	—
Other, net	​	49	​	48	​	46
Discontinued operations, note 1(e)		9		14	​	2,126
​	​	​	​	​	​	​
​		173,239		178,294	​	199,586

​

Sociedad Minera Cerro Verde S.A.A.

Property, plant, equipment and development costs

Property, plant, equipment and development costs

7.    Property, plant and equipment, net

Property, plant and equipment consist of owned and leased assets (right-of-use assets), and cost and accumulated depreciation accounts as of December 31, 2022 and 2021 are shown below:

​

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	December 31,	​	​	​	Adjustments	​	​	​	​	​	December 31,	​	​	​	Adjustments	​	​	​	​	​	December 31,
​		2020		Additions		and changes in		Disposals		Transfers		2021		Additions		and changes in		Disposals		Transfers		2022
​	​	​	​	​	​	estimates	​	​	​	​	​	​	​	​	​	estimates	​	​	​	​	​	​
​		US$(000)		US$(000)		US$(000)		US$(000)		US$(000)		US$(000)		US$(000)		US$(000)		US$(000)		US$(000)		US$(000)
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Cost	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Land		24,905		—		—		—		5,477		30,382		—		—		—		2,820		33,202
Buildings and other constructions		2,589,004		—		430		(913)		7,885		2,596,406		—		1,041		(61)		11,063		2,608,449
Machinery and equipment		4,985,749		—		(430)		(14,967)		128,007		5,098,359		—		(1,041)		(54,732)		155,044		5,197,630
Transportation units		30,098		—		—		(1,132)		4,416		33,382		—		—		—		2,995		36,377
Furniture and fixtures		949		—		—		(377)		—		572		—		—		—		—		572
Other equipment		30,965		—		—		(92)		4,522		35,395		—		—		(58)		885		36,222
Construction in progress and in-transit units		118,430		158,599	(a)	(195)		—		(150,307)		126,527		227,216	​	(19)		—		(169,459)		184,265
Stripping activity asset (see Note 2(i))		945,637		214,192		—		—		—		1,159,829		304,198		—		—		—		1,464,027
Asset retirement costs (see Note 11(b))		204,567		—		(18,271)		—		—		186,296		—		(17,812)		—		—		168,484
Right-of-use assets (b)	​	96,451	​	4,099	​	—	​	(1,650)	​	—	​	98,900	​	4,941	​	—	​	(3,137)	​	(3,348)	​	97,356
​		9,026,755		376,890		(18,466)		(19,131)		—		9,366,048		536,355		(17,831)		(57,988)		—		9,826,584
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Accumulated depreciation	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Buildings and other constructions		456,213		66,846		236		(914)		—		522,381		72,899		655		(14)		—		595,921
Machinery and equipment		2,305,568		279,531		(236)		(14,891)		—		2,569,972		272,528		(655)		(54,519)		141		2,787,467
Transportation units		17,698		1,969		—		(1,040)		—		18,627		2,160		—		—		—		20,787
Furniture and fixtures		904		23		—		(376)		—		551		21		—		—		—		572
Other equipment		21,240		2,942		—		(92)		—		24,090		3,136		—		(58)		—		27,168
Stripping activity asset		678,041		113,530		—		—		—		791,571		134,186		—		—		—		925,757
Asset retirement costs		31,526		5,388		—		—		—		36,914		4,770		—		—		—		41,684
Right-of-use assets (b)	​	19,589	​	12,459	​	—	​	(1,640)	​	—	​	30,408	​	12,708	​	—	​	(3,124)	​	(141)	​	39,851
​		3,530,779		482,688		—	​	(18,953)		—		3,994,514		502,408		—	​	(57,715)		—	​	4,439,207
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Net cost		5,495,976	​	​	​	​	​	​	​	​		5,371,534	​	​	​	​	​	​	​	​		5,387,377

(a) As of December 31, 2022 additions to construction in progress and in-transit units primarily relate to (i) tailings dam projects (US$ 55.5 million), (ii) projects associated with the capitalization of main components of the mine’s heavy equipment (US$36.1 million), (iii) mine support equipment (US$32.6 million), (iv) belt replacement projects (US$11.1 million), (v) a direct flotation reactor technology project (US$11.0 million), (vi) the purchase of stators for ball mills (US$10.7 million), and (vii) installation of flotation recovery technology (US$8.5 million).

As of December 31, 2021, additions to construction in progress and in-transit units primarily relate to (i) tailings dam projects (US$30.1 million), (ii) projects associated with the capitalization of main components of the mine’s heavy equipment (US$ 28.9 million), (iii) the purchase of stators for ball mills (US$ 18.7 million), (iv) the purchase of mine support equipment (US$ 17.3 million), (v) major maintenance on shovels (US$ 9.2 million), (vi) the purchase of rollers (US$ 9.0 million), (vii) belt replacement projects (US$ 7.9 million), (viii) major components of the primary crusher (US$ 4.3 million), (ix) haul trucks beds (US$ 3.2 million) and (x) projects for the optimization of the Company’s operating processes (US$ 2.5 million).

As of December 31, 2022, additions to construction in progress include capitalized interest with an average rate of 4.25% primarily related to (i) capital projects for the maintenance truck shop (US$1.5 million), (ii) tailings dam projects (US$1.2 million), (iii) the purchase of stators for ball mills (US$0.1 million) and (iv) other projects (US$0.3 million).

As of December 31, 2021, additions to construction in progress include capitalized interest with an average rate of 2.88% primarily related to (i) capital projects for the maintenance truck shop (US$ 1.0 million), (ii) tailings dam projects (US$ 0.4 million), (iii) the purchase of stators (US$ 0.2 million) and (iv) other projects US$ 0.3 million).

(b)  Set out below are the carrying amounts of right-of-use assets recognized and the movements as of December 31, 2022 and 2021:

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December

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December

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December

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31, 2020

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Additions

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Disposals

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31, 2021

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Additions

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Disposals

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Transfers

​

31, 2022

​

​

US$(000)

​

US$(000)

​

US$(000)

​

US$(000)

​

US$(000)

​

US$(000)

​

US$(000)

​

US$(000)

Cost

​

​

​

​

​

​

​

​

Land

9,851

789

—

​

10,640

​

216

​

(365)

—

​

10,491

Buildings and other constructions

56,594

2,195

(873)

​

57,916

​

1,273

​

(2,668)

—

​

56,521

Machinery and equipment

30,006

1,115

(777)

​

30,344

​

3,452

​

(104)

(3,348)

​

30,344

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

96,451

4,099

(1,650)

​

98,900

​

4,941

​

(3,137)

(3,348)

​

97,356

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Accumulated depreciation

​

​

​

​

​

​

​

​

​

​

​

​

Land

2,897

1,732

—

​

4,629

​

1,949

​

(365)

—

​

6,213

Buildings and other constructions

10,575

7,480

(865)

​

17,190

​

7,216

​

(2,656)

—

​

21,750

Machinery and equipment

6,117

3,247

(775)

​

8,589

​

3,543

​

(103)

(141)

​

11,888

​

19,589

12,459

(1,640)

​

30,408

​

12,708

​

(3,124)

​

(141)

​

39,851

​

​

​

​

​

​

​

​

​

​

​

​

​

Net cost

76,862

​

​

68,492

​

​

​

​

​

​

57,505

​

X

- Definition

The entire disclosure for property, plant and equipment.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Name IAS
-Number 16
-IssueDate 2022-03-24
-Section Disclosure
-URI https://taxonomy.ifrs.org/xifrs-link?type=IAS&num=16&code=ifrs-tx-2022-en-r&doctype=Standard&dita_xref=IAS16_g73-79__IAS16_g73-79_TI
-URIDate 2022-03-24

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- Definition

Line items represent concepts included in a table. These concepts are used to disclose reportable information associated with members defined in one or many axes of the table.

+ References

No definition available.

+ Details

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