Company: SCCO
Filing Date: 2025-03-03
Form Type: 10-K
Source: 0001558370-25-002017
Chunk: 34

Company: SOUTHERN COPPER CORP/
Filing Date: 2025-03-03
Form: 10-K
Item: Item 7A
Chunk 34
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ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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Commodity price risk:

For additional information on metal price sensitivity, refer to “Metal Prices” in Part II, Item 7 of this annual report.

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Open sales risk:

Our provisional copper and molybdenum sales contain an embedded derivative that is required to be separate from the host contract for accounting purposes. The host contract is the receivable from the sale of copper or molybdenum concentrates at prevailing market prices at the time of the sale. The embedded derivative, which does not qualify for hedge accounting, is marked to market through earnings in each period prior to settlement. See Note 19 to the consolidated financial statements for further information about these provisional sales.

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Foreign currency exchange rate risk:

Our functional currency is the U.S. dollar. Portions of our operating costs are denominated in Peruvian soles and Mexican pesos. Given that our revenues are primarily denominated in U.S. dollars, when inflation or deflation in our Mexican or Peruvian operations is not offset by a change in the exchange rate of the sol or the peso to the dollar, our financial position, results of operations and cash flows could be affected by local cost conversion when expressed in U.S. dollars. In addition, the dollar value of our net monetary assets denominated in soles or pesos can be affected by an exchange rate variance of the sol or the peso, resulting in a re-measurement gain or loss in our financial statements. Recent inflation and exchange rate variances for the three years ended December 31, 2024 are provided in the table below:

​​​​​​​​​    Year Ended ​​​December 31, ​​    2024    2023    2022​Peru:         ​Peruvian inflation rate  2.0%   3.2%   8.5%​​​​​​​​Initial exchange rate  3.713  3.820  3.998​Closing exchange rate  3.770  3.713  3.820​Appreciation/(devaluation)  (1.5)%   2.8% 4.5%​​​​​​​​Mexico:         ​Mexican inflation rate  4.2%   4.7%   7.8%​​​​​​​​Initial exchange rate  16.894  19.362