ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
EXECUTIVE SUMMARY
This Management’s Discussion and Analysis of Financial Condition and Results of Operations relates to and should be read together with our Audited Consolidated Financial Statements as of and for each of the years in the three-year period ended December 31, 2025. Therefore, unless otherwise noted, the discussion below of our financial condition and results of operations is for Southern Copper Corporation and its subsidiaries (collectively, “SCC,” “Southern Copper,” “the Company,” “our,” and “we”) on a consolidated basis for all periods. Our financial results may not be indicative of our future results.
This discussion contains forward-looking statements that are based on management’s current expectations, estimates and projections about our business and operations. Our actual results may differ materially from those currently anticipated and expressed in the forward-looking statements as a result of a number of factors. See Item 1 “Business—Cautionary Statement.”
For details on the discussion on variations between 2024 and 2023, please see Management´s Discussion and Analysis of Financial Condition and Results of Operations, on the 2024 Form 10-K.
EXECUTIVE OVERVIEW
Business: Our business is primarily the production and sale of copper. In the process of producing copper, a number of valuable metallurgical by-products are recovered, which we also produce and sell. Market forces outside of our control largely determine the sale prices for our products. Our management, therefore, focuses on value creation through copper production, cost control, production enhancement and maintaining a prudent capital structure to remain profitable. We endeavor to achieve these goals through capital spending programs, exploration efforts and cost reduction programs. Our aim is to remain profitable during periods of low copper prices and to maximize financial performance in periods of high copper prices. We are one of the world’s largest copper mining companies in terms of production and sales and our principal operations are in Peru and Mexico. We also have an active ongoing exploration program in Chile and Argentina.
We believe we hold one of the world’s largest copper reserves and resources positions. As of December 31, 2025, our copper mineral reserves, estimated at a copper price of $3.30 per pound, totaled 108,955 million pounds of contained copper, distributed in the following locations:
Copper contained in ore reserves
Million pounds
Mexican open‑pit
Peruvian operations
Development projects
Total
Outlook: Various key factors affect our outcome. These include, but are not limited to, the following:
Sales structure: In the last three years, approximately 75.9% of our revenues came from the sale of copper; 10.9% from molybdenum; 5.7% from silver; 3.6% from zinc; and 3.9% from various other products, including gold, sulfuric acid and other materials.
Copper: In 2025, copper accounted for approximately 74.8% of our sales. The average LME copper price increased from $4.15 per pound in 2024 to $4.51 in 2025 (+8.7%), while COMEX prices rose from $4.22 to $4.82 per pound (+14.2%) in the same period.
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Based on current supply and demand dynamics, we are currently estimating a copper market deficit of 320,000 tonnes for 2026. Copper inventories worldwide were at the end of January 2026 at 1,054,000 tonnes. We estimate that this inventory currently covers approximately 14 days of global demand.
Molybdenum: Represented approximately 10.5% of our sales in 2025. Average molybdenum prices increased from $21.21 per pound in 2024 to $22.01 per pound in 2025 (+3.8%), reflecting favorable market conditions during the year.
Silver: Silver represented 7.3% of our sales in 2025. Average silver prices increased from $28.25 per ounce in 2024 to $39.99 per pound in 2025 (+41.6%). We believe that long-term silver prices will be supported by the intensive industrial use of this metal.
Zinc: Average zinc prices increased 3.2% in 2025 versus the figure recorded in 2024. This metal represented 3.9% of our sales in 2025.
Production: In 2026, we expect our copper production to stand at 911,400 tonnes, mainly due to lower ore grades. We are reviewing this forecast to improve it throughout the year.
Regarding by-products, we expect to produce 26,000 tonnes of molybdenum from our mines. We also expect to produce 23.7 million ounces of silver and 165,500 tonnes of zinc in 2026.
Capital investments: Capital investments were $1,325.3 million in 2025. This is 29.0% higher than in 2024 and represented 30.5% of net income. To achieve its full production potential, the Company is developing an organic growth plan to increase our copper volume production to 1.6 million tonnes by 2033.
For 2026, the Board of Directors approved a capital investment program of $1,925.5 million.
KEY MATTERS
Below, we discuss several matters that we believe are important to understand our results of operations and financial condition. These matters include (i) earnings, (ii) production, (iii) “operating cash costs” as a measure of our performance, (iv) metal prices, (v) business segments, (vi) the effect of inflation and other local currency issues and (vii) our capital investment and exploration program.
Earnings: The table below highlights key financial and operational data of our Company for the three years ended December 31, 2025 (in millions, except copper price and per share amounts):
Variance
Copper price LME
Copper price COMEX
Pounds of copper sold
Net sales
Cost of sales
Operating income
Income before income taxes
Net income attributable to SCC
Earnings per share
Cash dividend per share
Stock dividend per share
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Net sales in 2025 reached a record high of $13,420.0 million and represented an increase of $1,986.6 million (+17.4%) compared to 2024. This performance was supported by higher sales volumes of molybdenum (+7.4%), zinc (+19.3%), and silver (+15.3%), together with higher prices for copper (+8.7% LME; +14.2% COMEX), silver (+41.6%), molybdenum (+3.8%) and zinc (+3.2%). Additionally, net sales in 2025 were positively impacted by upward adjustments of $197.8 million related to provisionally priced sales, reflecting the increase in metal prices.
Costs of sales (exclusive of depreciation, amortization, and depletion) increased by 10.7% in 2025 compared to the figures recorded in 2024, mainly reflecting higher costs related to workers’ participation, purchased copper, repair materials, and energy. These increases were partially mitigated by lower expenses associated with inventory consumption, freight, and reagents.
In 2025, net income attributable to SCC reached a record high of $4,334.9 million and represented a 28.4% increase compared to 2024. This performance, which was mainly driven by higher sales volumes and increased interest income, was partially offset by higher cost of sales and income taxes. Net income attributable to SCC in 2024 was 15.5% above 2023’s net income; mainly reflecting higher sales volumes and improved metal prices for most of our products.
Production: The table below contains mine production data of our Company for the three years ended December 31, 2025:
Variance
Volume
Volume
Copper (in million pounds)
Molybdenum (in million pounds)
Zinc (in million pounds)
Silver (in million ounces)
The table below contains copper production data from each of our mines for the three years ended December 31, 2025:
Variance
Copper (in million pounds):
Volume
Volume
Toquepala
Cuajone
La Caridad
Buenavista
IMMSA
Total mined copper
2025 compared to 2024:
Copper mine production in 2025 decreased 1.8% to stand at 2,108.2 million pounds. This decline was mainly driven by lower production at Toquepala (-0.4%; due to lower ore grades and lower SX-EW output); Cuajone (-1.3%; due to lower ore grades); and Buenavista (-4.3%; due to lower ore grades and recoveries, and the full dedication of the new concentrator to zinc production, partially offset by higher SX-EW output). These decreases were partially offset by higher production at La Caridad (+2.9%; due to higher ore grades and recoveries) and IMMSA (+4.8%; due to higher ore grades and higher mineral volume processed).
Molybdenum production increased 7.4% to 68.7 million pounds in 2025, compared to 63.9 million pounds in 2024. This increase was mainly driven by higher production at Toquepala (+18.2%) and La Caridad (+7.4%). These gains were partially offset by lower production at Buenavista (-2.8%) and Cuajone (-0.7%).
Silver mine production increased 15.3% in 2025, primarily due to higher production at our Buenavista (+30.7%), La Caridad (+21.9%), IMMSA (+11.4%) and Cuajone (+4.2%) operations. This growth was slightly offset by a decline in production at our Toquepala mine (-3.1%).
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Zinc production increased by 36.1% in 2025, mainly reflecting higher output at our Buenavista Zinc concentrator (+81.6%). This increase was supported by full-capacity operations at this facility, which produced 257.4 million pounds in 2025.
Operating Cash Costs: An overall benchmark used by us and a common industry metric to measure performance is operating cash costs per pound of copper produced. Operating cash cost is a non-GAAP measure that does not have a standardized meaning and may not be comparable to similarly titled measures provided by other companies. This non-GAAP information should not be considered in isolation or as substitute for measures of performance determined in accordance with GAAP. A reconciliation of our operating cash cost per pound of copper produced to the cost of sales (exclusive of depreciation, amortization and depletion) as presented in the consolidated statement of earnings is presented under the subheading, “Non-GAAP Information Reconciliation” on page 125. We disclose operating cash cost per pound of copper produced, both before and net of by-product revenues.
We define operating cash cost per pound of copper produced before by-product revenues as cost of sales (exclusive of depreciation, amortization and depletion), plus selling, general and administrative charges, treatment and refining charges net of sales premiums; less the cost of purchased concentrates, workers’ participation and other miscellaneous charges, including royalty charges, and the change in inventory levels; divided by total pounds of copper produced by our own mines.
In our calculation of operating cash cost per pound of copper produced, we exclude depreciation, amortization and depletion, which are considered non-cash expenses. Exploration is considered a discretionary expenditure and is also excluded. Workers’ participation provisions are determined on the basis of pre-tax earnings and are also excluded. Additional exclusions from operating cash costs are items of a non-recurring nature and the mining royalty charge as it is based on various calculations of taxable income, depending on which jurisdiction, Peru or Mexico, is imposing the charge. We believe these adjustments will allow our management and stakeholders to see a presentation of our controllable cash cost, which we believe is one of the lowest of all copper-producing companies of similar size.
We define operating cash cost per pound of copper produced net of by-product revenues as operating cash cost per pound of copper produced, as defined in the previous paragraph, less by-product revenues and net revenue (loss) on sale of metal purchased from third parties.
In our calculation of operating cash cost per pound of copper produced, net of by-product revenues, we credit against our costs the revenues from the sale of all our by-products, including, molybdenum, zinc, silver, gold, etc. and the net revenue (loss) on sale of metals purchased from third parties. We disclose this measure including the by-product revenues in this way because we consider our principal business to be the production and sale of copper. As part of our copper production process, much of our by-products are recovered. These by-products, as well as the processing of copper purchased from third parties, are a supplemental part of our production process and their sales value contribute to covering part of our incurred fixed costs. We believe that our Company is viewed by the investment community as a copper company, and is valued, in large part, by the investment community’s view of the copper market and our ability to produce copper at a reasonable cost.
We believe that both of these measures are useful tools for our management and our stakeholders. Our cash costs before by-product revenues allow us to monitor our cost structure and address areas of concern within operating management. The measure operating cash cost per pound of copper produced net of by-product revenues is a common measure used in the copper industry and is a useful management tool that allows us to track our performance and better allocate our resources. This measure is also used in our investment project evaluation process to determine a project’s potential contribution to our operations, its competitiveness and its relative strength in different price scenarios. The expected contribution of by-products is generally a significant factor used by the copper industry to determine whether to move forward or not in the development of a new mining project. As the price of our by-product commodities can have significant fluctuations from period to period, the value of its contribution to our costs can be volatile.
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Our operating cash cost per pound of copper produced, as defined above, is presented in the table below for the three years ended December 31, 2025:
Operating cash cost per pound of copper produced(1)
(In millions, except cost per pound and percentages)
Value
Value
Total operating cash cost before by‑product revenues
Total by‑product revenues
Total operating cash cost net of by‑product revenues
Total pounds of copper produced(2)
Operating cash cost per pound before by ‑ product revenues
By ‑ products per pound revenues
Operating cash cost per pound net of by ‑ product revenues
These are non-GAAP measures, see page 125 for reconciliation to GAAP measure.
Net of metallurgical losses.
2025 compared to 2024:
For the year 2025, the operating cash cost per pound before by-product revenues increased from $2.13 to $2.17, mainly due to the unit cost effect of a slight decrease in copper production (-1.1%) and higher production costs (+3.2%); this was partially offset by lower treatment and refining charges due to market conditions. Additionally, a 27.2% increase in by-product revenues per pound helped reduce the operating cash cost per pound net of by-product revenues from $0.89 to $0.58. This 34.0% reduction was primarily supported by higher sales volumes of molybdenum, silver and zinc.
Metal Prices: The profitability of our operations is dependent on, and our financial performance is significantly affected by, the international market prices for the products we produce, especially for copper, molybdenum, zinc and silver.
We are subject to market risks arising from the volatility of copper and other metals prices. For instance, during the period from January 2016 through December 2025, the LME copper settlement price varied from a low of $1.96 per pound in 2016 to a record high of $5.68 per pound in 2025. The Metals Week Molybdenum Dealer Oxide weekly average price, in turn, ranged from a low of $5.10 per pound in 2016 to a high of $38.50 per pound in 2023. Metal prices historically have been subject to wide fluctuations and are affected by numerous factors beyond our control, as described further in Item 1A Risk Factors . These factors, which affect each commodity to varying degrees, include international economic and political conditions, levels of supply and demand, the availability and cost of substitutes, inventory levels maintained by producers and others and, to a lesser degree, inventory carrying costs and currency exchange rates. In addition, the market prices of certain metals have on occasion been subject to rapid short-term changes due to economic concerns and financial investments.
For 2026, assuming that expected metal production and sales are achieved; 2025 tax rates are unchanged and giving no effects relative to potential cost changes, metal price sensitivity factors indicate the following change in estimated annual net income attributable to SCC resulting from metal price changes:
Copper
Molybdenum
Zinc
Silver
Change in metal prices (per pound except silver—per ounce)
Change in net earnings (in millions)
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Business Segments: We view our Company as having three reportable segments and manage it on the basis of these segments. These segments are (1) our Peruvian operations, (2) our Mexican open-pit operations and (3) our Mexican underground operations, known as our IMMSA unit. Our Peruvian operations include the Toquepala and Cuajone mine complexes and the smelting and refining plants, industrial railroad and port facilities that service both mines. Our Mexican open-pit operations include La Caridad and Buenavista mine complexes, the smelting and refining plants and support facilities, which service both mines. Our IMMSA unit includes five underground mines and several industrial processing facilities.
Segment information is included in our review of “Results of Operations” in this item and also in Note 18 “Segment and Related Information” of the consolidated financial statements.
Inflation and Exchange Rate Effect of the Peruvian sol and the Mexican peso: Our functional currency is the U.S. dollar and our revenues are primarily denominated in U.S. dollars. Significant portions of our operating costs are denominated in Peruvian sol and Mexican pesos. Accordingly, when inflation and currency devaluation/appreciation of the Peruvian and Mexican currency occur, our operating results can be affected. In recent years, exchange rate volatility has been high but has had a limited effect on our results. Please see Item 7A “Quantitative and Qualitative Disclosures about Market Risk” for more detailed information.
Capital Investment Program: We made capital investments of $1,325.3 million in 2025 and $1,027.3 million in 2024. In general, the capital investments and projects described below are intended to increase production, decrease costs or address social and environmental commitments.
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The table below contains information on our capital investments for the three years ended December 31, 2025 (in millions):
Peruvian projects:
Tia Maria project
Los Chancas project
Relocation of leaching crusher at Toquepala
Sheet stripping machine and permanent cathodes refurbishment – Ilo Refinery
Modernization of the slab stripping machine at Toquepala
New maintenance workshop at the Cuajone concentrator
Replacement of cooling pump and piping – Ilo
Electric cogeneration – Ilo smelter
Tailings disposal—Quebrada Honda dam
HPGR optimization at Cuajone
Maintenance workshops at Cuajone
Quebrada Honda filter plant
Maintenance workshops at Toquepala concentrator
Toquepala expansion project
Other projects
Sub‑total projects
Maintenance and replacement
Net change in capital expenditures incurred but not yet paid
Total Peruvian expenditures
Mexican projects:
New Buenavista concentrator
Buenavista Zinc project
Pilares Mine
Expansion of mine pit at Buenavista
Lime plant - Sonora
MexCobre - Bella Union Mine
IMMSA - Mine development
Project MexArco
San Fernando mineshaft rehabilitation
New tailing disposal deposit at Buenavista mine
Over elevation of tailings deposit N° 7 at La Caridad mine
San Martin mine restoration
Other projects
Sub‑total projects
Maintenance and replacement
Net change in capital expenditures incurred but not yet paid
Total Mexican expenditures
Total capital investments
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In 2026, we plan to invest $1,925.5 million in capital projects. In addition to our ongoing capital maintenance and replacement spending, our principal capital programs include the following:
Projects in Peru :
Our investments in Peruvian projects that are being built or for which basic or detail engineering is being conducted could surpass $10.3 billion in the next decade.
The Company’s investment program is underpinned by openness of the Peruvian government and institutions to private investment; strong local community support; and respect for the rule of law. With the support and assistance of Peruvian authorities, the Company is moving forward to secure the administrative permits and licenses that are required prior to investment. We believe the projects’ construction and subsequent operating phases will generate new poles of development; create significant job opportunities; and drive growth in tax revenues at both national and regional levels.
Tia Maria - Arequipa: This greenfield project, located in Arequipa, Peru, will use state of the art SX-EW technology with the highest international environmental standards with a capacity of 120,000 tonnes of SX- EW copper cathodes per year.
Tia Maria will generate significant revenues for the Arequipa region from day one of its operations. At current copper prices, we expect to export $20.2 billion and contribute $4.6 billion in taxes and royalties during the first 20 years of operation. The project budget has been set at $1,805 million.
Project update: As of December 31, 2025, the Company had committed $790 million to different project activities. Large-scale earthmoving works have mobilized 1.7 million tonnes of material from the La Tapada deposit. Purchase orders to acquire metallic structures for secondary and tertiary crushing have been issued for the dry area. At the SX-EW process level, state-of-the-art technology has been selected for our main equipment. Access roads and platforms, as well as the temporary contractor camp have been completed.
Regarding energy supply, all earthworks for the electrical main substation have been completed; foundation works are currently underway, and the transmission line is being built. Next efforts will focus on developing the main and secondary components of the project’s dry and wet areas and setting up a temporary camp.
At the end of 2025, progress at Tia Maria stood at 24% and 3,589 new jobs had been generated; 978 of these positions were filled with local applicants. To the fullest extent possible, we intend to fill the 5,000 jobs estimated to be required during Tia Maria´s construction phase prioritizing workers from the Islay province. In 2027, when we start operations, the project will generate 764 direct jobs and 5,900 indirect jobs.
Projects in Mexico:
SCC has several projects in its Mexican pipeline that may boost organic growth if they are found to be of value for both stakeholders and the communities in which we operate. These projects are Angangueo, Chalchihuites and the Empalme Smelter, which could bolster our position as a fully integrated copper producer. We are having ongoing discussions with the current administration to continue rolling out SCC’s Mexican investments for $10.2 billion.
El Pilar - Sonora: This low-capital intensity copper greenfield project is strategically located in Sonora, Mexico, approximately 45 kilometers from our Buenavista mine. Its copper oxide mineralization contains estimated proven and probable reserves of 317 million tonnes of ore with an average copper grade of 0.249%. We anticipate that El Pilar will operate as a conventional open-pit mine with an annual production capacity of 36,000 tonnes of copper cathodes. This operation will use highly cost efficient and environmentally friendly SX-EW technology.
Potential projects:
We have a number of other projects that we may develop in the future. We continuously evaluate new projects on the basis of our long-term corporate objectives, strategic and operating fit, expected return on investment, required
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investment, estimated production, estimated cash-flow profile, social and environmental considerations, among other factors. All capital spending plans will continue to be reviewed and adjusted to respond to changes in the economy and market conditions.
Los Chancas - Apurimac : This greenfield project, located in Apurimac, Peru, is a copper and molybdenum porphyry deposit. Current estimates of indicated copper mineral resources are 98 million tonnes of oxides with a copper content of 0.45% and 52 million tonnes of sulfides with a copper content of 0.59%. The Los Chancas project envisions an open-pit mine with a combined operation of concentrator and SX-EW processes that are expected to produce 130,000 tonnes of copper and 7,500 tonnes of molybdenum annually. The estimated capital investment is $2,600 million and the project is expected to begin operating in 2031.
Project update: As of December 31, 2025, we had continued to implement environmental and social programs in the communities of Tapayrihua and Tiaparo, which are located within the direct area of influence of the Los Chancas Mining Project. Despite these efforts, the presence of illegal miners within the project area has prevented the project from advancing. In this context, the Company continues to take actions with the relevant authorities to regain control of the project area.
Michiquillay Project - Cajamarca : In June 2018, Southern Copper signed a contract for the acquisition of the Michiquillay project in Cajamarca, Peru. Michiquillay is a world class mining project with inferred mineral resources of 2,288 million tonnes and an estimated copper grade of 0.43%. When developed, we expect Michiquillay to produce 225,000 tonnes of copper per year (along with by-products of molybdenum, gold and silver) at a competitive cash-cost for an initial mine life of more than 25 years.
We estimate an investment of approximately $2.5 billion will be required and expect production start-up by 2032. Michiquillay will become one of Peru´s largest copper mines and will create significant business opportunities in the Cajamarca region; generate new jobs for the local communities; and contribute with taxes and royalties to the local, regional and national governments.
Project update: The comprehensive review of the geological information used to estimate the project’s mineral resources has been duly audited in accordance with the SEC’s mining disclosure standards under Regulation S-K 1300. Subsequently, the Company intends to use this information to estimate mineral reserves and develop the corresponding mine plan.
El Arco - Baja California : This is a world-class copper deposit located in the central part of the Baja California peninsula with sulfide ore reserves of over 1,230 million tonnes with an average ore grade of 0.40% and 141 million tonnes of leach material with an average ore grade of 0.27%. The project includes an open-pit mine with a combined 120 ktpd concentrator and 28 ktpy SX-EW operations.
Detailed engineering is still underway for the concentrator, SX-EW plant, water desalination, logistics infrastructure and power delivery.
The aforementioned information is based solely on estimates. We cannot make any assurances that we will undertake any of these projects or that the information noted is accurate.
ENVIRONMENTAL, SOCIAL AND GOVERNANCE (“ESG”) PRACTICES
Southern Copper Corporation is among the top three mining companies with the highest ratings for sustainability in 2025. In the Corporate Sustainability Assessment 2025 (“CSA”) of S&P Global, which publishes an annual performance review of the sustainability practices of 13,000 companies from across the globe, SCC’s sustainability rating rose four points in 2025, placing the Company among the leaders in the Mining and Metals sector’s performance rankings, with a rating that is more than twice the industry’s average. This is our sixth consecutive year in the MILA Pacific Alliance category of the Dow Jones’s Best-in-Class Index, and our first year included in its Emerging Markets category.
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Occupational safety and health of our workforce are priorities. Strong operating discipline and robust preventive safety culture drove a 14% reduction in employee lost-time injuries in 2025, outperforming comparable rates reported across the mining sector.
Tía María: Our commitment to the Islay province and the Arequipa region is embodied in a comprehensive social strategy through which we have successfully implemented initiatives in education, healthcare, digital inclusion, and productive development that empower communities and create shared value. These efforts are designed to strengthen local capacities and support sustainable regional growth.
A core pillar of this strategy is boosting productive development and competitiveness, particularly in agriculture and local businesses. In agriculture, the Technology for Agriculture program has integrated 35 of the Tambo Valley’s 40 organizations, covering 26% of its farmland. This human-centric innovation has directly benefited 53% of the valley’s families, cut production costs by 20% and strengthened the region’s economic resilience.
To complement these initiatives, SPCC Peru Branch launched a structured, replicable local supplier development model at Tía María in partnership with the Arequipa Chamber of Commerce and Industry (“CCIA”). This program assessed 168 local companies and strengthened 103, exceeding initial targets and enabling their integration into the project value chain. Contracts awarded to local suppliers rose from 99 to 159 and contracted value increased from $4.1 million to $13.3 million, demonstrating measurable gains in competitiveness and operational capacity of local businesses as the project advances toward construction.
Our social commitment includes large-scale regional development through the Works for Taxes mechanism, converting our social vision into tangible public assets such as modern healthcare facilities, high-performance schools, research centers, and road infrastructure that support sustainable growth. We also prioritize digital inclusion, currently providing internet access to 5,400 local students and residents. By anchoring our social programs in the Tía María project and our broader presence in Arequipa, we aim for our operations to catalyze systemic well-being and lasting regional progress.
Adopting best international practices for tailings management. With a preventive focus and an eye on minimizing risks, we are proactively implementing the International Council on Mining and Metals (“ICMM”) Global Industry Standard on Tailings Management across our main operations. Our four open-pit mines in Mexico and Peru have earned The Copper Mark accreditation for compliance with the Global Industry Standard on Tailings Management set forth by the ICMM. This accreditation confirms that best international practices are followed, giving authorities, neighboring communities and other stakeholders confidence in the safety of our operations.
HEALTH AND SAFETY
The safety, health and well-being of our employees are the bedrock of SCC’s values and remain our highest priorities. We are committed to providing a safe, healthy work environment for employees, contractors and suppliers at our facilities or in adjacent areas. Workplace safety is paramount and a shared responsibility; all personnel must follow established policies and procedures to protect themselves and our facilities. For detailed health and safety performance, see Grupo Mexico's Sustainability Report at https://www.gmexico.com/en/reports-and-brochures/. This reference is provided for informational purposes only and is not intended to create an active link or incorporate the website’s contents into this Report on Form 10-K.
Strong operating discipline and robust preventive safety culture drove a 14% reduction in employee lost-time injuries in 2025 compared to 2024, outperforming comparable rates reported across the mining sector. In 2025, the La Caridad Unit’s SX-EW Plant, was honored with the Mexican Mining Chamber’s (“Camimex”) “Silver Helmet” award for the
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“Metallurgical Plants with up to 500 workers” during the opening ceremony of the XXXVI International Mining Convention, recognizing it as one of Mexico’s safest operations.
We have reaffirmed our commitment to ISO-certified occupational health and safety management systems: all SCC units passed follow-up audits and retained ISO 45001 certification in 2025. This progress advances our pursuit of the “The Copper Mark” accreditation for responsible copper production.
We are rolling out a Behavioral Safety Program across all SCC’s units to promote safe practices, leverage human behavior for compliance and encourage proactive, mutually supportive vigilance among employees, with the goal of strengthening safe behaviors and reducing accident rates at our operations. We are also implementing a Critical Risk Registry to manage environmental and safety risks, enabling identification, prevention, mitigation, and remediation of accidents at our operations that could affect personnel safety and community relationships.
ENVIRONMENT
Southern Copper Corporation is committed to meeting the needs of future generations by promoting inclusive, sustainable development that benefits all and to continually improve our environmental performance. We promote best environmental practices across our operations to support the transition to a green economy. All our operations maintain ISO 14001 environmental management certifications and in 2025, all our units passed follow-up audits, retaining their ISO 14001 certifications.
We are committed to preserving the environment by implementing measures that generate positive biodiversity impacts. As set out in the Company’s Environmental Policy, we have developed biodiversity management plans aligned with the International Council on Mining and Metals Good Practice Guidance for Mining and Biodiversity. These plans strengthen our ability to implement effective mitigation measures and help preserve and improve the environment at our operations.
To strengthen environmental risk management, we created an Internal Committee for Review of Tailings Systems to improve oversight, safety management and communication between operations and executive leadership. These measures support alignment with the ICMM’s Global Industry Standard on Tailings Management. To maintain high water recovery levels at our tailings dams, we perform compartmentalization actions within our tailings impoundments and use amphibious equipment to prevent tailings stagnation. These actions reduce evaporation and the residence time of tailings, while raising water recovery to over 70% of total tailings/water inflow to the dams from concentrator plants.
We have also advanced our biodiversity protection efforts. Since 2023, the Buenavista del Cobre Environmental Management Unit has maintained a Wildlife Habitat Council certification, recognizing our contributions to prevent the extinction of the Mexican grey wolf. These initiatives have significantly increased populations of this critically endangered species their natural habitat in Mexico. Going forward, we will continue to collaborate with institutions and authorities to advance the common good in the regions in which we operate.
COMMUNITY OUTREACH
Southern Copper Corporation prioritizes being a good neighbor to the communities near our operations. By working together, we collaborate on shared social and economic development goals and support the United Nations’ Sustainable Development Goals. We base community engagement on transparency and trust, and aim to build lasting relationships.
Our Community Development model has three key components: 1) Responsible coexistence, which promotes positive and healthy relationships with neighboring communities through open ongoing communication channels for addressing complaints and concerns; 2) Economic development: which focuses on sharing economic value generated by our
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operations with the community, and 3) Human development, which enhances the skills of community members to empower them as the primary drivers of local progress.
Our primary tool for fostering responsible coexistence is the Support and Attention Center, a grievance mechanism for external stakeholders active at 100% of our sites and resolving complaints in an average of nine days.
In relation to economic development, we trained 1,219 people in mining communities in 2025, including 829 people in employment, 390 people in regional vocational and productive skills and 368 local businesses to support the development of small and medium mining suppliers. In addition, we invested $25.2 million in social infrastructure in Mexico and Peru. In Mexico, we finished the Urban Improvement and Safe Pedestrian Crossings in Esqueda, Sonora and began the construction of a sports center in Nacozari, Sonora. In Peru, we continue to prioritize collaboration with the government to close social infrastructure gaps through the Works for Taxes mechanism, with the awarding of four projects in the education and health sectors. This performance was recognized by the government with the “OXI Raymi 2025” Award, highlighting the Company’s contribution to the country’s sustainable development.
During the year, progress was made on the development of more than ten technical studies and the beginning of strategic infrastructure projects, including studies for the creation of a research center and specialized laboratories in Arequipa, as well as urban road improvement works in Mirave, Tacna. In addition, two infrastructure projects were completed in Tacna and Moquegua: the construction of the municipal slaughterhouse in Cairani and the improvement of the La Ronda irrigation canal (Stage II) in La Capilla, benefiting more than 1,200 residents in rural areas.
We consolidated the Youth Orchestras and Choirs program promoted by SCC, benefiting 2,042 students across 16 communities in Mexico and Peru and held 105 artistic performances in 2025. In collaboration with the San Luis Potosí Arts Center and the Potosino Institute of Arts, we presented photographic exhibitions, workshops and appreciation conferences as part of the “Fotovision” International Festival and the 433rd anniversary of the founding of the city of San Luis Potosí in Mexico.
CLIMATE CHANGE
We recognize the urgency of tackling climate change and are committed to supporting the objectives of the Paris Agreement, protecting the environment, reducing the environmental footprint of our operations, and effectively managing climate-related risks and opportunities. We understand that climate change will influence our strategy in multiple ways, and we aim to align it with global business trends demanding products with lower carbon footprints. Our focus is on continuously enhancing the responsible use of natural resources while adhering to legal standards for preventing, mitigating, controlling and remediating environmental impacts.
To improve our performance on climate-related issues, we have embarked on a multi-year effort to align our climate change disclosures with the recommendations of the Task Force on Climate-Related Financial Disclosures (TCFD). Since 2020, Grupo Mexico’s Sustainable Development Report has included a section about climate-related risks and opportunities, in which it is described that over the medium and long term, extreme climate events such as droughts or rainfalls might intensify. It also mentions the actions we have undertaken to mitigate any potential effects derived from these events, and how we plan to adapt our operations.
Additionally, detailed information is provided about new short, medium and long-term Scope 1 and 2 climate targets, strategy and governance mechanisms, and emissions and energy metrics based on Sustainability Accounting Standards Board (“SASB”) standards. Additionally, since 2023 the report includes Scope 3 targets and preliminary capital allocation data for decarbonization projects. For a more detailed overview of this progress, see https://www.gmexico.com/en/Pages/development.aspx. The reference is provided for informational purposes only and is not intended to create an active link or incorporate the website’s content into this Report on Form 10-K.
As part of our emission reduction initiatives, as of August 2024, we began receiving renewable energy from the Fenicias wind park, operated by Grupo Mexico Infraestructura . As of December 2025, the wind park is fully operational and we estimate that it is supplying its full capacity to our mining operations, and consequently SCC will avoid CO 2 emissions of approximately 250,000 tonnes per year, which is equivalent to 7% of our carbon footprint. Additionally, in the first
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quarter of 2025, for a second consecutive year, we received clean energy certificates from one of our electricity suppliers in Peru, indicating that all the electrical energy consumed in Peru in 2024 was derived from renewable sources, and we expect to receive the 2025 certificates in the first half of 2026. Consumption of renewable electrical energy at our operations increased from 23% to 36% in 2024, and we expect this indicator to be even higher in 2025, once we receive the certificates. Therefore, we have already met our 2027 target of deriving 25% of our electricity from renewable sources.
The execution of our climate strategy has markedly improved our performance in several external climate evaluations. In the S&P Global through the Corporate Sustainability Assessment (“CSA”), in which we have participated since 2020, we earned a climate governance score of 100 out of 100 in 2025, a 10 point increase from 2024, confirming the progress we have made in recent years. This excellent rating recognized the publication of our Climate Policy and the Board-level Sustainability Committee’s ongoing oversight of our climate change strategy, which evaluates management of the risks and opportunities associated with climate change. For a second consecutive year, we scored 100 in the Task Force on Climate-related Financial Disclosures (“TCFD”) category in 2025, which assesses management and disclosure of financial risks and opportunities related to climate change.
For a third consecutive year, the investor-led Climate Action 100+ initiative recognized our efforts to develop a roadmap for emissions reductions and rated us in full compliance with the TCFD category.
We have participated in the Carbon Disclosure Project (“CDP”) annual Climate Change assessment since 2016 and completed our first Water Security assessment in 2022. For the 2024 questionnaires, we received a “B” rating for both, the third highest score of eight levels, which is one level above the mining sector and the North American regional averages.
In 2026, we will explore implementing an internal carbon price and update our 2021 scenario analysis to identify emerging risks and assess future financial impacts from climate-related risks and opportunities.
HUMAN RIGHTS
We are committed to enforcing the United Nations Guiding Principles on Business and Human Rights. We maintain policies and procedures that serve as a guide to our employees, and a Code of Business Conduct for suppliers, contractors and relevant business partners, which contain several human rights provisions.
We maintain a human rights’ due diligence process to identify, prevent, mitigate, and remediate adverse impacts on community human rights. It has the following three main components:
1) Participatory Social Diagnosis to allow communities to raise human rights concerns,
2) Social Management Plans that define actions to address those concerns, and
3) Service and Attention Center (“SAC”), a mechanism developed with guidance from the United Nations Office of the High Commissioner for Human Rights in Mexico that allows communities to communicate their concerns to us immediately.
SCC also maintains a human rights due diligence process to protect the rights of employees and contractor staff. Work environment surveys, complaint hotlines, and the due diligence process support compliance with our General Human Rights Policy. We are implementing a Strategic Workplace Plan, focused on capacity building; communication campaigns; revising of human resources processes to increase inclusivity and equity; and making physical workplace adjustments to address women’s needs.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
Our significant accounting policies are discussed in Note 2 “Summary of Significant Accounting Policies” of the Notes to Consolidated Financial Statements, included in Item 8 “Financial Statements and Supplementary Data” of this Annual Report.
Our discussion and analysis of financial condition and results of operations, as well as quantitative and qualitative disclosures about market risks, are based upon our consolidated financial statements, which have been prepared in
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accordance with U.S. GAAP. Preparation of these consolidated financial statements requires our management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. We make our best estimate of the ultimate outcome for these items based on historical trends and other information available when the financial statements are prepared. Changes in estimates are recognized in accordance with the accounting rules for the estimate, which is typically in the period when new information becomes available to management. Areas where the nature of the estimate makes it reasonably possible that actual results could materially differ from amounts estimated include: mineral reserves, revenue recognition, ore stockpiles on leach pads and related amortization, estimated impairment of assets, asset retirement obligations, determination of discount rates related to the operating lease liabilities, valuation allowances for deferred tax assets and unrecognized tax benefits. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions.
Mineral Reserves : For mineral reserve estimation, we use metal price assumptions of $3.30 per pound for copper and $10.00 per pound for molybdenum. These prices are intended to conservatively approximate average prices over the long term and are based on internal estimates for the curves of long-term metal prices.
Certain financial information is based on reserve estimates calculated on the basis of current average prices. These include amortization of intangible assets and mine development. Variations in mineral reserve estimations from changes in metal price assumptions generally do not create material changes in our financial results. However, significant decreases in metal prices could adversely affect our earnings by causing, among other things, asset impairment charges, please see “Assets impairment” below.
Ore stockpiles on leach pads : The leaching process is an integral part of the mining operations carried out at our open-pit mines. We capitalize the production cost of leachable material at our Toquepala, La Caridad and Buenavista mines, recognizing it as inventory. The estimates of recoverable mineral content contained in the leaching dumps are supported by engineering studies. As the production cycle of the leaching process is significantly longer than the conventional process of concentrating, smelting and electrolytic refining, we include current leach inventory (as part of work-in-process inventories) and long-term leach inventory on our balance sheet. Amortization of leachable material is recorded by the units of production method.
The capitalization of long-term inventory-Ore stockpiles in leach pads is based on the allocation of copper content recoverable between ore and leach material. In addition, inventory consumption is valued at the average unit cost.
Asset Retirement Obligation : Our mining and exploration activities are subject to various laws and regulations governing the protection of the environment. Accounting for reclamation and remediation obligations requires management to make estimates unique to each mining operation of the future costs we will incur to complete the reclamation and remediation work required to comply with existing laws and regulations. These estimates are based in part on our inflation and credit rate assumptions. Actual costs incurred in future periods could differ from amounts estimated. Additionally, future changes to environmental laws and regulations could increase the extent of reclamation and remediation work required to be performed by us. Any such increases in future costs could materially impact the amounts charged to operations for reclamation and remediation.
Asset retirement obligations are further discussed in Note 10 “Asset Retirement Obligation” to the consolidated financial statements included herein.
Revenue Recognition : For certain of our sales of copper and molybdenum products, customer contracts allow for pricing based on a month subsequent to shipping, in most cases within the following three months and in a few cases, in a period that can exceed three months. In such cases, revenue is recorded at a provisional price at the time of shipment. The provisionally priced copper sales are adjusted to reflect forward LME or COMEX copper prices at the end of each month until a final adjustment is made to the price of the shipments upon settlement with customers pursuant to the terms of the contract. In the case of molybdenum sales, for which there are no published forward prices, the provisionally priced sales are adjusted to reflect the market prices at the end of each month until a final adjustment is made to the price of the
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shipments upon settlement with customers pursuant to the terms of the contract. (See details in “Provisionally Priced Sales” under this Item 7).
Income Taxes : In preparing our consolidated financial statements, we recognize income taxes in each of the jurisdictions in which we operate. For each jurisdiction, we calculate the actual amount currently payable or receivable, as well as deferred tax assets and liabilities attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred income tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which these temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in rate is recognized through the income tax provision in the period that the change is enacted.
A valuation allowance is provided for those deferred tax assets for which it is more likely than not that the related benefits will not be realized. In determining the amount of the valuation allowance, we consider estimated future taxable income, as well as feasible tax planning strategies in each jurisdiction. If we determine that we will not realize all or a portion of our deferred tax assets, we will increase our valuation allowance with a charge to income tax expense. Conversely, if we determine that we will ultimately be able to realize all or a portion of the related benefits for which a valuation allowance has been provided, all or a portion of the related valuation allowance will be reduced with a credit to income tax expense.
The Company’s operations are in multiple jurisdictions where uncertainties can arise in the application of complex tax regulations. The final taxes paid are dependent upon many factors, including audits and negotiations with tax authorities. The Company recognizes potential liabilities and records tax liabilities for anticipated tax audit issues based on its estimate of whether, and the extent to which, additional taxes will be due. The Company adjusts these estimates in light of changing facts and circumstances; however, due to the complexity of some of these uncertainties, final taxes paid may be materially different from the Company’s current estimate of the tax liabilities. If its estimate of tax liabilities proves to be less than the ultimate assessment, or payment of these amounts ultimately proves to be more than the recorded amounts, the difference would be recognized in the period when the Company determines the change.
Asset Impairments : We evaluate our long-term assets when events or changes in economic circumstances indicate that the carrying amount of such assets may not be recoverable. Our evaluations are based on business plans that are prepared using a time horizon that is reflective of our expectations of metal prices over our business cycle. We are currently using an average copper price of $3.50 per pound and an average molybdenum price of $10.00 per pound in our business plans, which reflect what we believe is the lower level of the current price environment. The results of our impairment sensitivity analysis, which included a stress test using a copper price assumption of $2.80 per pound and a molybdenum price assumption of $6.00 per pound, showed projected discounted cash flows in excess of the carrying amounts of long-lived assets by margins ranging from 2.8 to 7.5 times said amounts.
We use an estimate of the future undiscounted net cash flows of the related asset or asset group over the remaining life to measure whether the assets are recoverable and measure any impairment compared to fair value.
Leases : The Company has concluded that all of its existing lease contracts are operating lease contracts. Right-of-use assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent an obligation by the Company to make lease payments that arise from the lease. Lease right-of-use assets and liabilities are recognized at the inception date based on the present value of lease payments over the lease term. As the Company’s lease contracts do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at the inception date to determine the present value of lease payments.
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RESULTS OF OPERATIONS
The following table highlights key financial results for each of the years in the three-year period ended December 31, 2025 (in millions):
Variance
Statement of Earnings Data
Net sales
Operating costs and expenses
Operating income
Non‑operating income (expense)
Income before income taxes
Income taxes
Deferred income taxes
Equity earnings of affiliate
Net income attributable to non‑controlling interest
Net income attributable to SCC
Net sales in 2025 reached a record high of $13,420.0 million and represented an increase of $1,986.6 million (+17.4%) compared to 2024. This performance was supported by higher sales volumes of molybdenum (+7.4%), zinc (+19.3%), and silver (+15.3%) as well as better prices for copper (+8.7% LME; +14.2% COMEX), silver (+41.6%), molybdenum (+3.8%) and zinc (+3.2%). Additionally, net sales in 2025 were positively impacted by upward adjustments of $197.8 million related to provisionally priced sales, reflecting the increase in metal prices.
The table below outlines the average published market metals prices for our metals for each of the three years in the three-year period ended December 31, 2025:
% Variance
Copper price ($per pound—LME)
Copper price ($per pound—COMEX)
Molybdenum price ($per pound)(1)
Zinc price ($per pound—LME)
Silver price ($per ounce—COMEX)
Platt’s Metals Week Dealer Oxide.
The table below provides our metal sales as a percentage of our total net sales:
Year Ended
December 31,
Sales as a percentage of total net sales
Copper
Molybdenum
Silver
Zinc
Other by‑products
Total
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The table below provides our copper sales by type of product (in million pounds). The difference in value between products is the level of processing. At the market price, concentrates take a discount since they require smelting and refining processes, while refined and rod copper receive premiums due to their purity and presentation.
Variance
Copper Sales (million pounds)
Refined (including SX‑EW)
Rod
Concentrates and other
Total
The table below provides our copper sales volume by type of product as a percentage of our total copper sales volume:
Year ended December 31,
Copper Sales by product type
Refined (including SX‑EW)
Rod
Concentrates and other
Total
OPERATING COSTS AND EXPENSES
The table below summarizes the production cost structure by major components for the three years ended December 31 2025, 2024 and 2023 as a percentage of total production cost:
Year ended December 31,
Power
Labor
Fuel
Maintenance
Operating materials
Other
Total
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2025-2024: Operating costs and expenses were $6,418.3 million in 2025 compared to $5,878.7 million in 2024. The increase of $539.6 million was primarily due to:
Operating cost and expenses for 2024 ($ in millions)
Plus:
Increase in other cost of sales (exclusive of depreciation, amortization and depletion), which is mainly attributable to:
- Workers participation
- Repairing materials, principally heavy equipment spare parts
- Sales expenses
- Exchange rate variance
- Energy costs
- Inventory variance
- Operations contractors
- Explosives
- Other, net
Increase in volume and cost of metals purchased from third parties.
Increase in depreciation, amortization and depletion expense.
Increase in selling, general and administrative expenses.
Less:
Decrease in exploration expense.
Operating cost and expenses for 2025 ($ in millions)
Variance
NON ‑ OPERATING INCOME (EXPENSE)
Interest expense
Capitalized interest
Other income (expense)
Interest income
Total non‑operating income (expense)
2025-2024 : Non-operating income and expense were a net expense of $217.4 million in 2025, compared to a net expense of $197.3 million in 2024. The $20.1 million increase in net expense in 2025 was mainly due to:
$(53.2) million decrease in other income (expense). In 2024, this item included $31.2 million income due to insurance recovery in Peru, and the 2025 figures include a write-off of certain expenses related to the Tia Maria project.
$(35.2) million increase in interest expense net of capitalized interest due to the Minera Mexico debt issuance in February 2025; partially offset by,
$68.3 million increase in interest income due to higher cash and cash equivalents balances in 2025.
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Income taxes
Year Ended
December 31,
Provision for income taxes ($ in millions)
Effective income tax rate
The income tax provision includes Peruvian, Mexican and U.S. federal income taxes.
Components of income tax provision for 2025, 2024 and 2023 include the following ($ in millions):
Statutory income tax provision
Peruvian royalty
Mexican royalty
Peruvian special mining tax
Total income tax provision
The decrease in the effective income tax rate in 2025 compared to the same period in 2024 was primarily attributable to a variance in uncertain tax positions recorded in the U.S., Peruvian and Mexican jurisdictions.
Equity earnings of affiliate
In 2025, 2024 and 2023 we recognized $34.0 million, $6.4 million and $(2.2) million in equity earnings, respectively, which were associated with our 44.2% interest in the Tantahuatay mine.
Net Income attributable to the non-controlling interest
Net income attributable to the non-controlling interest in 2025 was $13.3 million, $11.8 million in 2024, and $9.5 million in 2023.
Net Income attributable to SCC
Net income attributable to SCC in 2025 amounted to $4,334.9 million, a 28.4% increase from the $3,376.8 million reported in 2024. The rise in net income for 2025 was largely driven by higher metal prices and increased sales volumes for our main by-products.
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SEGMENT RESULTS ANALYSIS
We have three segments: the Peruvian operations, the Mexican open-pit operations and the Mexican underground mining operations. Please see a detailed definition of these segments in Item 1 “Business—Business Reporting Segments.”
The following table presents the volume of sales by segment of copper and our significant by-products for each of the years in the three-year period ended December 31, 2025:
Variance
Copper Sales (million pounds)
Peruvian operations
Mexican open‑pit
Mexican IMMSA unit
Other and intersegment elimination
Total copper sales
Variance
By ‑ product Sales (million pounds, except silver—million ounces)
Peruvian operations:
Molybdenum contained in concentrate
Silver
Mexican open‑pit operations:
Molybdenum contained in concentrate
Silver
Zinc‑refined and in concentrate
IMMSA unit
Zinc‑refined and in concentrate
Silver
Other and intersegment elimination
Silver
Zinc‑refined and in concentrate
Total by‑product sales
Molybdenum contained in concentrate
Zinc‑refined and in concentrate
Silver
Peruvian Open-pit Operations:
Variance
Net sales
Operating costs and expenses
Operating income
Net sales in 2025 increased by $643.0 million compared to 2024. This improvement was mainly driven by higher sales volumes for copper (+0.4%), molybdenum (+12.2%) and silver (+16.6%) and by better prices for copper (LME, +8.7%), silver (+41.6%) and molybdenum (+3.8%).
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Operating costs and expenses:
2025-2024: Operating costs and expenses were $2,647.0 million in 2025 compared to $2,512.1 million in 2024. The increase of $134.8 million was primarily due to:
Operating costs and expenses for 2024 ($ in millions)
Plus:
Increase in other cost of sales (exclusive of depreciation, amortization and depletion), mainly attributable to:
- Inventory variance
- Repairing materials, principally heavy equipment spare parts
- Exchange rate variance
- Workers participation
- Other net, partially offset by
- Labor expenses
- Operations contractors
- Fuel
Increase in depreciation, amortization and depletion expense.
Increase in selling, general and administrative expenses.
Less:
Decrease in cost of metals purchased from third parties.
Decrease in exploration expenses.
Operating costs and expenses for 2025 ($ in millions)
Mexican Open-pit Operations:
Variance
Net sales
Operating costs and expenses
Operating income
Net sales in 2025 increased by $1,305.9 million compared to 2024. This growth primarily reflects improvements in sales volumes of zinc (+99.0%), molybdenum (+3.3%) and silver (+11.0%). Positive developments for metal prices, mainly copper (COMEX, +14.2%), silver (+41.6%), molybdenum (+3.8%) and zinc (+3.2%), bolstered this performance. Start-up at the Buenavista zinc concentrator played a pivotal role, as zinc sales volumes reached 205.8 million pounds for the period. However, this was slightly offset by a decline in the sales volume of copper (-2.0%).
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Operating costs and expenses:
2025-2024 : Operating costs and expenses were $3,347.8 million in 2025 compared to $2,932.9 million in the same period of 2024. The increase of $414.9 million was primarily due to:
Operating costs and expenses for 2024 ($ in millions)
Plus:
Increase in other cost of sales (exclusive of depreciation, amortization and depletion), which is mainly attributable to:
- Workers participation
- Energy costs
- Sales expenses
- Operations contractors
- Repairing materials, principally heavy equipment spare parts
- Other net, partially offset by
- Exchange rate variance
Increase in volume and cost of metals purchased from third parties.
Increase in selling, general and administrative expenses.
Less:
Decrease in depreciation, amortization and depletion expense.
Decrease in exploration expense.
Operating costs and expenses for 2025 ($ in millions)
Mexican Underground Operations (IMMSA):
Variance
Net sales
Operating costs and expenses
Operating income
Net sales in 2025 increased by $103.8 million compared to 2024. This improvement was mainly supported by higher sales volumes of silver (+8.0%) and lead (+18.2%), as well as better prices for copper (COMEX, +14.2%), zinc (+3.2%) and silver (+41.6%). These positive effects were partially offset by lower sales volumes of copper (-15.0%) and zinc (-10.0%).
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Operating costs and expenses:
2025-2024 : Operating costs and expenses were $645.4 million in 2025 compared to $574.9 million in the same period of 2024. The increase of $70.5 million was primarily due to:
Operating costs and expenses for 2024 ($ in millions)
Plus:
Increase in other cost of sales (exclusive of depreciation, amortization and depletion), which is mainly attributable to:
- Workers participation
- Exchange rate variance
- Operations contractors
- Repairing materials, principally heavy equipment spare parts
- Other net, partially offset by
- Inventory variance
Increase in volume and cost of metals purchased from third parties.
Increase in depreciation, amortization and depletion expense.
Increase in selling, general and administrative expenses.
Increase in exploration expense.
Operating costs and expenses for 2025 ($ in millions)
Intersegment Eliminations and Adjustments:
The net sales, operating costs and expenses and operating income discussed above will not be directly equal to amounts in our consolidated statement of earnings because the adjustments to intersegment operating revenues and expenses must be taken into account. Please see Note 18 “Segment and Related Information” of the consolidated financial statements.
LIQUIDITY AND CAPITAL RESOURCES
The following discussion relates to our liquidity and capital resources for each of the years in the three-year period ended December 31, 2025.
Cash Flow:
The following table shows the cash flow for the three year period ended December 31, 2025 (in millions):
Variance
Net cash provided by operating activities
Net cash used in investing activities
Net cash used in financing activities
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Net cash provided by operating activities:
The 2025, 2024 and 2023 change in net cash from operating activities include (in millions):
Variance
Net income
Depreciation, amortization and depletion
Benefit for deferred income taxes
Loss on foreign currency transaction effect
Other adjustments to net income
Operating assets and liabilities
Net cash provided by operating activities
Significant items added to (deducted from) net income to arrive at operating cash flow include depreciation, amortization and depletion, deferred tax amounts and changes in operating assets and liabilities.
2025: Net income was $4,348.2 million, which represented 91.5% of the net operating cash flow.
Changes in operating assets and liabilities reduced cash flow by $512.7 million and was driven by the following variances:
$(761.6) million increase in accounts receivable, principally at our Mexican operations.
$326.2 million increase in accounts payable and accrued liabilities, mainly reflecting higher accrued income taxes and workers’ participation at our Peruvian and Mexican operations, both attributable to an increase in income before taxes in 2025.
$22.1 million net decrease in inventories, mainly consumed at our Peruvian operations.
$ (99.4) million increase in other operating assets and liabilities, net.
Net cash used in investing activities:
2025: Net cash used for investing activities in 2025 included $1,325.3 million for capital investments. This included $836.6 million of investments at our Mexican operations and $488.7 million at our Peruvian operations. For further information, please see “Capital Investment Program” under this Item on page 104.
The 2025 investing activities also included net purchase of short-term investments of $359.3 million.
2024: Net cash used for investing activities in 2024 included $1,027.3 million for capital investments. This included $756.0 million of investments at our Mexican operations and $271.3 million at our Peruvian operations. For further information, please see “Capital Investment Program” under this Item on page 104.
The 2024 investing activities also included net proceeds of short-term investments of $354.0 million.
Net cash used in financing activities:
2025: Net cash used in financing activities in 2025 totaled $2,007.2 million and included an issuance by Minera Mexico of $1,000.0 million of fixed-rate senior notes; the repayment of $500.0 million of fixed-rate senior unsecured notes; and cash dividend distributions of $2,485.1 million.
2024: Net cash used in financing activities in 2024 was $1,645.2 million and included a cash dividend distribution of $1,637.2 million.
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Other Liquidity Considerations
We expect that we will meet our cash requirements for 2026 and beyond from cash on hand and internally generated funds. In addition, we believe that we will be able to access additional external financing on reasonable terms, if required.
As of December 31, 2025, $1.620.1 million of the Company´s total cash and cash equivalents, and short-term investments of $4,909.3 million were held in foreign subsidiaries. The cash and cash equivalents and short-term investments maintained in our foreign operations are generally used to cover local operating and investment expenses. Earnings of the Company’s Peruvian branch are not subject to transition taxes since they are taxed in the United States on a current basis.
Dividends: On January 22, 2026, the Board of Directors authorized a quarterly cash dividend of $1.00 per share of common stock and a stock dividend of 0.0085 shares of common stock per share of common stock, payable on February 27, 2026, for shareholders of record at the close of business on February 10, 2026.
In lieu of fractional shares, cash will be distributed to each shareholder who would otherwise have been entitled to receive a fractional share, based on a share price of $179.93, which is the average of the high and low share price on January 22, 2026.
FINANCING
Our total debt as of December 31, 2025 was $6,750.7 million, compared to $6,258.3 million at December 31, 2024, net of the unamortized discount and issuance costs of notes issued under par for $100.5 million and $92.8 million as of December 31, 2025 and 2024, respectively. This debt is all denominated in dollars at fixed interest rates at a weighted average rate of 5.93%.
On February 5, 2025, our subsidiary Minera Mexico S.A. de C.V. issued $1 billion of fixed-rate senior unsecured notes. This debt is due in 2032 and has an annual interest rate of 5.625%. The proceeds of the offering are intended to provide the Company with additional liquidity to finance our Mexican capital expenditures and Minera Mexico’s general corporate purposes.
Please see Note 11 “Financing” for a discussion about the covenants requirements related to our long-term debt.
Capital Investment Program
A discussion of our capital investment program is an important part of understanding our liquidity and capital resources. We expect to meet the cash requirements for these capital investments from cash on hand, internally generated funds and from additional external financing if required. For information regarding our capital expenditure programs, please see the discussion under the caption “Capital Investment Program” under this Item 7.
CONTRACTUAL AND OTHER OBLIGATIONS
As of December 31, 2025, our most significant contractual obligations include interest and principal on debt, workers’ participation, pension and post-retirement obligations, payments for operating leases, asset retirement obligations, and commitments for purchasing energy and for capital investment projects.
Interest on debt is calculated at rates in effect at December 31, 2025. As all our debt is at fixed rates, future expenditures will not change due to rate changes. Please refer to Note 11 “Financing” of the consolidated financial statements for a description of our long-term debt arrangements and credit facilities.
Workers’ participation is currently calculated based on Peruvian Branch and Mexican pre-tax earnings. In Peru, the provision for workers’ participation is calculated at 8% of pre-tax earnings. The current portion of this participation, which is accrued during the year, is based on the Peruvian Branch’s taxable income and is largely distributed to workers
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after final results are determined for the year. Amounts in excess of 18 times a worker’s salary are distributed to governmental bodies. In Mexico, workers’ participation is determined using the guidelines established in the Mexican income tax law at a rate of 10% of pre-tax earnings as adjusted by the tax law. In 2021, there was a change in the Ley Federal del Trabajo ("Federal Labor Law"), effective in 2022. Under this change, the amount payable to a worker cannot be higher than the maximum between the worker’s salary for a three-month period and the average of the participation received in the last three years.
Operating leases include lease payments for power generating facilities to MGE, vehicles and properties. Please refer to Note 9 “Leases” of the consolidated financial statements.
Pension and post-retirement obligations include the benefits expected to be paid under our pension and post-retirement benefit plans. Please refer to Note 12 “Benefit Plans” of the consolidated financial statements.
Asset retirement obligations include the aggregate amount of closure and remediation costs for our Peruvian mines and facilities to be paid under the mine closure plans approved by MINEM and the closure and remediation costs of our Mexican operations. See Note 10 “Asset Retirement Obligation” of the consolidated financial statements.
In June 2014, we entered into a power purchase agreement for 120 megawatt (“MW”) with the state company Electroperu S.A., which began supplying energy for our Peruvian operations for twenty years starting on April 17, 2017. In July 2014, we entered into a power purchase agreement for 120MW with a private power generator Kallpa Generacion S.A. (“Kallpa”), which began supplying energy for our Peruvian operations for ten years starting on April 17, 2017. In May 2016, we signed an additional power purchase agreement for a maximum of 80MW with Kallpa, under which Kallpa began supplying energy for the Peruvian operations related to the Toquepala Expansion and other minor projects starting on May 1, 2017 and ending on April 30, 2029. In the third quarter of 2024, Parque Eolico de Fenicias began supplying energy to the IMMSA unit. For further information, please see Note 17 “Related party transactions”.
Additionally, we have a commitment to purchase power for our Mexican operations from MGE, a subsidiary of Grupo Mexico through 2032. See Note 13 “Commitment and Contingencies—Other commitments”.
Our long-term estimated power costs are subject to change as energy generation costs change and our forecasted power requirements through the life of the agreements change. In addition, as of December 31, 2025, the Company has committed approximately $1,310.5 million for the development of its capital investment projects. These include committed purchase orders and executed contracts for our Mexican projects and for our Peruvian expansion projects.
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NON-GAAP INFORMATION RECONCILIATION
Operating cash cost: Following is a reconciliation of “Operating Cash Cost” (see page 102) to cost of sales (exclusive of depreciation, amortization and depletion) as reported in our consolidated statement of earnings, in millions of dollars and dollars per pound in the table below:
$ per
$ per
$ per
$ millions
pound
$ millions
pound
$ millions
pound
Cost of sales (exclusive of depreciation, amortization and depletion)
Add:
Selling, general and administrative
Sales premiums, net of treatment and refining charges
Less:
Workers’ participation
Cost of metals purchased from third parties
Royalty charge and other, net
Inventory change
Operating Cash Cost before by ‑ product revenues
Add:
By‑product revenues(1)
Net revenue on sale of metal purchased from third parties
Total by‑product revenues
Operating Cash Cost net of by ‑ product revenues
Total pounds of copper produced (in millions)
By-product revenues included in our presentation of operating cash cost contain the following:
$ per
$ per
$ per
$ millions
pound
$ millions
pound
$ millions
pound
Molybdenum
Silver
Zinc
Sulfuric Acid
Gold
Other
Total
The by-product revenue presented does not match with the sales value reported by segment on page 184 because the above table excludes purchases from third parties, which are reclassified to net revenue on sale of metal purchased from third parties.
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