Southern Copper (SCCO) risk factors, FY2024 10-K

Financial risks

1. 01Our financial performance is highly dependent on the price of copper and the other metals we produce
2. 02the largest consumer of refined copper and concentrate in the world
3. 03See also the historical average price of our products on Item 1 Business caption “Metals prices”
4. 04Volatility in metals prices may also impact the price of our outstanding securities
5. 05Our business requires levels of capital investments that we may not be able to maintain
6. 06Restrictive covenants in the agreements governing our indebtedness and the indebtedness of our Minera Mexico subsidiary may restrict our ability to pursue our business strategies
7. 07We may not pay a significant amount of our net income as cash dividends on our common stock in the future
8. 08Our ability to recognize the benefits of deferred tax assets is dependent on future cash flows and taxable income

Operational risks

1. 09Our actual reserves and resources may not conform to our current estimates of our ore deposits and our long-term viability depends on our ability to replenish mineral reserves and resources
2. 10Our operations are subject to risks, some of which are not insurable
3. 11Such occurrences could result in damage to, or destruction of, mining operations resulting in monetary losses and possible legal liability. In particular, surface and underground mining and related processing activities present inherent risks of injury to personnel, loss of life and damage to equipment
4. 12During recent years, social and political demands has caused violence which could result in damage to, or destruction of, mining operations resulting in monetary losses and possible legal liability
5. 13Changes in the demand level for our products and copper sales agreements could adversely affect our revenues
6. 14Interruptions of energy supply or increases in energy, fuel and gas costs, shortages of water supply, critical parts, equipment, skilled labor and other production costs may adversely affect our results of operations
7. 15Our Company is subject to health and safety laws that may restrict our operations, result in operational delays or increase our operating costs and adversely affect our financial results of operations
8. 16Our metals exploration efforts are highly speculative in nature and may be unsuccessful
9. 17We may be adversely affected by challenges relating to slope stability
10. 18We may be adversely affected by labor disputes
11. 19Our mining operations or metal production projects may be subject to stoppage and additional costs due to community actions and other factors
12. 20In 2022, violent protests by some of communities adjoining the Cuajone mine negatively affected the mine’s operations. In February 2022, the railway between Cuajone and Ilo was blocked and Viña Blanca water reservoir facilities were seized, cutting off the water supply to some residents of the Cuajone mining camp
13. 21However, we cannot guarantee that any additional incidents will not arise or assert that any future incidents that occur will imply no adverse impacts for our facilities, the results of our operations or our financial position
14. 22Environmental regulation, climate change and other regulations may increase our costs of doing business, restrict our operations or result in operational delays
15. 23Please refer to Note 13 “Commitments and Contingencies—Environmental matters” of our financial statements for further information on this subject
16. 24Our mining and metal production projects may expose us to new risks
17. 25Our business depends upon information technology systems that may be adversely affected by disruptions, damage, cyber-attacks, failure and risks associated with implementation and integration
18. 26Our business is exposed to certain risks associated with artificial intelligence (“AI”) and other new technologies

Other risks

1. 27Applicable law restricts the payment of dividends from our Minera Mexico subsidiary to us
2. 28Global and local market conditions, including the high competitiveness in the copper mining industry, may adversely affect our profitability
3. 29We are controlled by Grupo Mexico, which exercises control over our affairs and policies and whose interests may be different from yours
4. 30We cannot assure you that an increase in the financial obligations of Grupo Mexico or AMC, which may be attributable to financing or to other reasons, will not result in a scenario in which our parent corporations obtain loans, increase dividends or receive other funding from us
5. 31Unanticipated litigation or negative developments in pending litigation or with respect to other contingencies may adversely affect our financial condition and results of operations
6. 32Developments in the United States, Europe and emerging market countries may adversely affect the Company business, the market value and trading price of our common stock and our debt securities
7. 33Potential developments in the United States, regulatory uncertainty, tariff threats and trade tensions may affect the Company’s business and results of operations

Other international risks

1. 34There is uncertainty as to the termination and renewal of our mining concessions
2. 35Peruvian economic and political conditions, as well as illegal mining activities may have an adverse impact on our business
3. 36Between 2019 and 2023, Peru experienced heightened political instability in a context marked by ongoing investigations into allegations of corruption and confrontation on the political front. Significant political turmoil in Peru led to a shutdown of the Peruvian Congress and the removal of three Peruvian presidents
4. 37Mexican economic and political conditions, as well as drug-related violence, may have an adverse impact on our business
5. 38Although the Company believes that there will be no material impact on the Company's current operations or financial situation as a result of these changes, we cannot assure you that future developments in these laws will not affect our business
6. 39Peruvian inflation and fluctuations in the sol exchange rate may adversely affect our financial condition and results of operations
7. 40Mexican inflation, restrictive exchange control policies and fluctuations in the peso exchange rate may adversely affect our financial condition and results of operations