10-KPeriod: FY2021

SOUTHERN COPPER CORP/ Annual Report, Year Ended Dec 31, 2021

Filed March 7, 2022For Securities:SCCO

Summary

Southern Copper Corporation (SCCO) reported strong financial performance for the fiscal year ending December 31, 2021, driven by significantly higher commodity prices, particularly for copper. The company's net sales reached a historic high of $10.9 billion, an increase of 36.9% compared to 2020, primarily due to robust price increases across its key products: copper (+51.1%), molybdenum (+81.0%), zinc (+32.0%), and silver (+22.1%). Despite some volume decreases in copper and other metals, the favorable price environment translated into a substantial increase in profitability, with net income attributable to SCC soaring by 116.3% to $3.4 billion. SCCO's operational efficiency and cost management remain a key focus, as evidenced by the operating cash cost per pound of copper, net of by-product revenues, decreasing by 2.9% to $0.67. The company also demonstrated a strong commitment to growth and shareholder returns, with capital investments increasing by 50.7% to $892.3 million in 2021, supporting ongoing development projects and future production expansions. The company announced an ambitious capital investment program of $1.54 billion for 2022, signaling confidence in future growth and favorable market conditions.

Financial Statements
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Key Highlights

  • 1Record Net Sales: Achieved historical high net sales of $10.9 billion in 2021, a 36.9% increase year-over-year, driven by strong commodity prices.
  • 2Significant Profitability Growth: Net income attributable to SCC surged by 116.3% to $3.4 billion, reflecting higher metal prices and effective cost control.
  • 3Improved Cash Costs: Operating cash cost per pound of copper, net of by-product revenues, decreased by 2.9% to $0.67, demonstrating operational efficiency.
  • 4Increased Capital Investments: Capital expenditures rose by 50.7% to $892.3 million in 2021, with a planned investment of $1.54 billion for 2022, indicating a focus on growth and expansion.
  • 5Strong Balance Sheet: Maintained a solid financial position with a net debt to net capitalization ratio of 27.1% as of December 31, 2021.
  • 6Substantial Mineral Reserves: Holds significant mineral reserves, with approximately 93.5 billion pounds of copper contained in ore reserves, positioning the company for long-term production.
  • 7Strategic Growth Projects: Advancing several key development projects, including Buenavista Zinc, Pilares, and El Pilar in Mexico, and Tia Maria in Peru, to support future production increases.

Frequently Asked Questions

Southern Copper reported record net sales of $10.9 billion, a 36.9% increase from 2020, driven by a 51.1% rise in copper prices and significant increases in molybdenum, zinc, and silver prices. Net income attributable to SCC more than doubled, increasing by 116.3% to $3.4 billion. Operating cash cost per pound of copper, net of by-product revenues, decreased by 2.9% to $0.67.

Higher commodity prices were the primary driver of Southern Copper's strong financial performance in 2021. Copper prices, in particular, saw a significant increase, positively impacting revenue and profitability. The company's results are highly sensitive to these market prices, as copper accounted for approximately 81% of its revenues in 2021.

Southern Copper is focused on increasing production and managing costs effectively. The company invested heavily in capital projects in 2021 and plans further significant investments in 2022, including projects in Mexico like Buenavista Zinc, Pilares, and El Pilar, and in Peru with the Tia Maria project. These projects are aimed at expanding copper production capacity and enhancing operational efficiencies.

The company maintained a solid financial position, with a decrease in its net debt to net capitalization ratio to 27.1% as of December 31, 2021. Southern Copper also demonstrated its commitment to shareholder returns through consistent dividend payments and a share repurchase program. For 2021, dividends per share totaled $3.20.