The following discussion provides information that management believes is
relevant to an assessment and understanding of the condensed consolidated
financial condition and results of operations of Southern Copper Corporation and
its subsidiaries (collectively, "SCC", "the Company", "our", and "we"). This
item should be read in conjunction with our interim unaudited Condensed
Consolidated Financial Statements and the notes thereto included in this
quarterly report. Additionally, the following discussion and analysis should be
read in conjunction with the Management Discussion and Analysis of Financial
Condition and Results of Operations and the Consolidated Financial Statements
included in Part II of our annual report on Form 10-K for the year ended
December 31, 2020.



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
exploration programs in Chile, Argentina and Ecuador. In addition to copper, we
produce significant amounts of other metals, either as a by-product of the
copper process or through a number of dedicated mining facilities in Mexico.

Outlook: Various key factors will affect our outcome. These include, but are not limited to, the following:

Sales structure: In the third quarter of 2021, approximately 78.7% of our ? revenue came from the sale of copper; 11.0% from molybdenum; 3.9% from silver;

3.7% from zinc; and 2.7% from various other products, including gold, sulfuric


  acid and other materials.

Copper: In the third quarter of 2021, the LME copper price increased from an

average of $2.96 per pound in the third quarter of 2020 to $4.25 (+43.6%). ? Currently, we are seeing prices at about $4.50 per pound, and as such, the

outlook for the Company remains positive. We believe the following factors are


  influencing the market:

The strong demand that we are seeing in the U.S. and Europe, particularly in

? terms of cathode consumption. China, although affected by real estate troubles

and power shortages, is experiencing a notable reduction in scrap imports.

The combined inventories of the LME, Comex, Shanghai and Bonded warehouses

? remain at relatively low levels. The combined sum of these inventories fell

from 907,000 tons in June 2021 to 569,000 tons at the end of September 2021; a

37% reduction.

? The uncertainty regarding future production growth in Chile and Peru, which

together represent about 40% of the world supply.

The most important market intelligence houses for the copper market are

? expecting a market deficit of about 200,000 tons this year due to a recovery in

demand, which is estimated to grow about 5% in 2021, driven by a recovery in


   economic activity, mainly in developed economies.

Molybdenum: Represented 11.0% of our sales in the third quarter of 2021 and is ? currently our most important by-product. Molybdenum prices averaged $18.43 per

pound in the third quarter of 2021, compared to $7.57 in the same period of


  2020. This represented a 143.5% increase.




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Molybdenum is mainly used in the production of special alloys for stainless
steel that require significant hardness and corrosion and heat resistance. A new
use for this metal is in lubricants and sulfur filtering of heavy oils and

shale
gas production.

Silver: Represented 3.9% of our sales in the third quarter of 2021. We believe ? that the prices for silver will be supported by its intensive level of

industrial use and the fact that, like gold, it represents value shelter in


  times of economic turmoil.

Zinc: Represented 3.7% of our sales in the third quarter of 2021. We consider ? zinc has very good long term fundamentals due to high levels of industrial


  consumption and expected production.

Production: In 2021 and 2022, we expect to produce 958,000 and 922,000 tons of ? copper, respectively, given that production during these periods will be

affected by a temporary reduction in ore grade and recovery at our Peruvian


  operations.

We expect our copper production to recover by 2023 and reach 1,000,000 tons of production as we get Peruvian

production back on track and generate new production from our Pilares, El Pilar and Buenavista-Zinc Concentrator

projects.





We also expect to produce 19.3 million ounces of silver in 2021, which
represents a decrease of 10% with regard to our 2020 production level. In 2021,
we expect to produce 67,500 tons of zinc at our mines, which represents a 2.0%
decrease compared to 2020 levels. Additionally, we expect to produce 29,400 tons
of molybdenum, which represents a decrease of 3.2% compared to the levels
reported in 2020.

Capital Investments: In the first nine months of 2021, we spent $695.5 million ? on capital investments; this represented 27.1% of net income and an increase of


  99.4% compared to the amount registered for the same period in 2020.




CYBERSECURITY EVENT



As previously reported, on March 1, 2021, at approximately 02:00 hours Mexico
City time, we experienced a Ransomware cyber-attack, which was operated by
humans. This cyber-attack encrypted a total of 479 servers and 303 pieces of
personal equipment. However, due to the quick response of our IT team, our
Enterprise Resource Planning software was not affected by the aforementioned
attack.



After the attack, we immediately began a remediation and recovery process and
completely restored the affected servers. So far, the forensic investigation has
not identified any concrete evidence of information stolen during the attack.
However, we maintain active lines of work in cyberintelligence and forensic
investigation to continue monitoring the DarkWeb/DeepWeb and social networks to
identify any publication or activity related to the Company; ensure that our
systems infrastructure is safe and validate the technological controls affected
during the attack.



In March 2021, we appointed a new Head of Information Technology, who is
implementing a new information security strategy to ensure business continuity
based on processes (controls and corporate governance framework), technology and
human capital (organizational culture). The areas of compliance, internal
control, information technology and internal audit are working together to
integrate reference frameworks, risk management models and the necessary
controls to implement the information security strategy and corresponding
programs.



Our information security strategy is being executed on a continuous basis. In
July 2021, Grupo Mexico appointed a Chief Information Security Officer who has
been actively involved in the development and implementation of this strategy.
In addition, between July and September of 2021 we performed a cybernetic
forensic analysis with the assistance of a specialized provider with global
experience in this area. The recommendations received have already been
integrated in current information security programs. AMC has set up a task force
to oversee ongoing initiatives

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and to ensure that targets are met. We are actively following up on this matter
with this task force, our internal audit team and will involve specialized

third
parties as needed.

As of September 30, 2021, we recorded $0.3 million in costs for the aforementioned efforts but may incur additional costs relative to the strategy and the controls being implemented.





COVID-19



The full impact of the COVID-19 pandemic worldwide is not yet known and,
accordingly, the magnitude of the COVID-19 impact on the Company's financial
condition, liquidity and future operating results is still uncertain. However,
we believe we are beginning a new stage in the COVID-19 crisis, where outbreaks
will be better controlled worldwide, which, we hope, will bode well for a strong
recovery across the globe in the near future. Senior Management continues to
actively monitor the global situation´s effect on the Company´s financial
condition, liquidity, operations, suppliers, industry and workforce and is
focusing principally on the health, safety and well-being of our employees,
their families and the communities where we have operations. As of September 30,
2021, the strong global economic recovery has generated significant challenges
for the global shipping industry, which have led to congestion at ports,
shortage of containers and a lack of space on ships. This situation has caused
the Company to experience some delays in the reception of imported materials as
well as in the shipment of its products and receivable collections. This,
however, has had no material impact on the financial position of the Company.



As of September 30, 2021, copper prices maintain a positive trend, closing at
$4.10 per pound (LME) with regard to $3.00 per pound for the same period of
2020. Considering the market outlook previously described, we have a positive
view for the copper market in the near future.



The Company maintains a solid financial position and performance level. We
believe this has allowed and will continue to allow us to deal with the effects
of the pandemic in a way that prevents adverse material effects on our
operations and financial results. The table below compares some of our financial
information as follows:



                                        Sep-21   Dec-20   Sep-20
($ in millions, except ratios)
Cash and cash equivalents              2,583.7  2,183.6  2,145.4
Accounts receivable                    1,579.8  1,136.6  1,036.8
Total assets                          18,110.3 16,946.5 16,248.4
Long term debt                         6,546.7  6,544.2  6,543.4
Sales                                  8,110.4  7,984.9  5,634.2

RATIOS

Current assets to current liabilities 3.29 3.49 3.78 Accounts receivable turnover (1) 5.13 7.03 5.43 Total debt ratio (2)

                      0.36     0.39     0.40
Net income margin (3)                    31.6%    19.7%    17.4%

(1) Represents net sales divided by accounts receivable.

(2) Represents total debt divided by total assets.

(3) Represents net income divided by net sales, as a percentage.


At the present time, our operations are in compliance with all sanitary and
government regulations and maintain proper environmental safeguards. Our
COVID-19 emergency protocol has reinforced preventive measures such as
disinfecting, clinical monitoring before work, cleaning and sanitizing of work
areas and respect for social distancing. We have also restricted the access of
contractors, suppliers and personnel to our facilities if visits are not
indispensable and enforced multiple actions to limit workforce exposure to

COVID-19 by imposing travel

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restrictions, prohibiting face-to-face meetings and urging frequent hand washing, as well as adhering to all other health, safety and social distancing measures required by governmental authorities.


As of September 30, 2021, our production facilities in Mexico and Peru were
working at approximately 96% of their production capacity. As of September 30,
2021, approximately 96% of the workforce in Mexico and 71% of the workforce in
Peru was working on site or at home under strict safety measures; the remaining
labor force was not working, including all individuals at high risk due to age
and/or preexisting medical conditions.



We have fully restored exploration activities at all of our locations, except in
Argentina where we are developing social and environmental programs for local
communities.



KEY MATTERS



Below, we discuss several matters that we believe are important to understand
the results of our operations and financial condition. These matters include,
(i) our earnings, (ii) our production, (iii) our "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 and nine months ended September 30, 2021 and 2020 (in millions, except copper price, percentages and per share amounts):






                             Three months ended September 30,                     Nine months ended September 30,
                      2021         2020       Variance     % Change        2021         2020       Variance     % Change
Copper price LME         4.25         2.96         1.29        43.6 %         4.17         2.65         1.52        57.4 %
Pounds of copper
sold                    506.2        590.5       (84.3)      (14.3) %      1,550.6      1,740.8      (190.2)      (10.9) %

Net sales           $ 2,680.9    $ 2,129.1    $   551.8        25.9 %    $ 8,110.4    $ 5,634.2    $ 2,476.2        43.9 %
Operating income    $ 1,507.8    $   943.9    $   563.9        59.7 %    $ 4,534.6    $ 2,054.3    $ 2,480.3       120.7 %
Net income
attributable to
SCC                 $   867.6    $   506.0    $   361.6        71.5 %    $ 2,564.2    $   980.3    $ 1,583.9       161.6 %
Earnings per
share               $    1.12    $    0.65    $    0.47        72.3 %    $    3.32    $    1.27    $    2.05       161.4 %
Dividends per
share               $    0.90    $    0.40    $    0.50       125.0 %    $    2.20    $    1.00    $    1.20       120.0 %




Net sales in the third quarter of 2021 were 25.9% higher than in the same period
of 2020, which was primarily attributable to higher metal prices for copper
(+43.6%), molybdenum (+143.5%) and zinc (+28.3%), as well as to an increase in
the sales volume of molybdenum (+5.7%) and zinc (+25.1%). This was slightly
offset by a decrease in silver (-1.3%) prices as well as decreases in sales
volume of copper (-14.3%) and silver (-18.6%).

Net income attributable to SCC in the third quarter of 2021 was 71.5% higher than in the same period of 2020. This growth was mainly attributable to the increase in metal prices and sales volumes mentioned above.





Net sales in the first nine months of 2021 were 43.9% higher than in the same
period of 2020, which was primarily attributable to higher metal prices for
copper (+57.4%), molybdenum (+71.4%), silver (+35.1%) and zinc (+33.4%). This
was partially offset by decreases in sales volumes of copper (-10.9%),
molybdenum (-1.9%), silver (-15.8%) and zinc (-9.1%).

Net income attributable to SCC in the first nine months of 2021 was 161.6% higher than in the same period of 2020. This growth was mainly attributable to the increase in metal prices.





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Production: The table below highlights our mine production data for the three and nine months ended September 30, 2021 and 2020:






                          Three months ended September 30,

Nine months ended September 30,


                       2021       2020      Variance    % Change       2021       2020      Variance    % Change
Copper (in million
pounds)                 540.5      543.6       (3.1)       (0.6) %    1,588.8    1,635.0      (46.2)       (2.8) %
Molybdenum (in
million pounds)          17.9       16.9         1.0         5.4 %       49.1       50.0       (0.9)       (1.8) %
Silver (in million
ounces)                   4.8        5.3       (0.5)       (8.8) %       14.4       16.1       (1.7)      (10.5) %
Zinc (in million
pounds)                  37.2       37.9       (0.7)       (1.8) %      111.3      115.0       (3.7)       (3.3) %

The table below highlights our copper production data for the three and nine months ended September 30, 2021 and 2020:




                          Three Months Ended September 30,               Nine Months Ended September 30,
Copper (in million
pounds):                2021     2020     Variance    % Change       2021       2020      Variance    % Change
Toquepala               130.4    132.5       (2.1)       (1.5) %      389.0      415.2      (26.2)       (6.3) %
Cuajone                  98.8     89.8         9.0        10.0 %      279.5      273.8         5.7         2.1 %
La Caridad               68.5     75.6       (7.1)       (9.4) %      213.8      223.9      (10.1)       (4.5) %
Buenavista              237.8    239.7       (1.9)       (0.8) %      691.6      705.2      (13.6)       (1.9) %
IMMSA                     5.0      6.0       (1.0)      (16.7) %       14.9       16.9       (2.0)      (11.6) %
Total mined copper      540.5    543.6       (3.1)       (0.6) %    1,588.8    1,635.0      (46.2)       (2.8) %





Third quarter: Mined copper production in the third quarter of 2021 fell by 0.6%
to 540.5 million pounds compared to 543.6 million pounds in the third quarter of
2020. This was mainly attributable to a drop in production at our La Caridad
(-9.4%), Toquepala (-1.5%), Buenavista (-0.8%) and IMMSA (-16.7%) mines due to
lower grades. This effect was offset by higher production at our Cuajone
(+10.0%) mine due to higher ore grades.



Molybdenum production increased 5.4% in the third quarter of 2021 compared to
the levels registered in the third quarter of 2020. This was attributable to an
increase in production at our Toquepala (+18.4%) and Buenavista (+19.3%) mines
due to higher ore grades and recoveries. This effect was partially offset by a
decrease in production at the Cuajone (-9.7%) and La Caridad (-6.5%) mines

due
to lower ore grades.




Silver mine production decreased 8.8% in the third quarter of 2021 due to a drop
in production at the Toquepala (-16.2%), Buenavista (-20.8%), La Caridad (-9.9%)
and IMMSA (-7.0%) operations. This was offset by a higher production at the
Cuajone (+25.2%) mine.



Zinc production decreased 1.8% in the third quarter of 2021 compared to the same
period of 2020. This decrease was mainly attributable to lower production at the
Santa Barbara (-9.3%) and Charcas (-3.3%) mines, which was partially offset by a
higher production at the San Martin mine (+16.4%).



Nine months: Mined copper production in the first nine months of 2021 decreased
2.8% to 1,588.8 million pounds compared to 1,635.0 million pounds in the same
period of 2020. This decrease was mainly attributable to a drop in production at
our Toquepala (-6.3%), La Caridad (-4.5%), Buenavista (-1.9%) and IMMSA (-11.6%)
mines mainly due to lower grades. This effect was slightly offset by a higher
production at our Cuajone (+2.1%) mine.



Molybdenum production decreased 1.8% in the first nine months of 2021 compared
to the same period in 2020; this was mainly due to lower production at our
Buenavista (-13.1%) and La Caridad (-0.4%) mines, which was partially offset by
higher production at the Cuajone (+1.4%) and Toquepala (+2.0%) mines.



Silver mine production decreased 10.5% in the first nine months of 2021; this
was principally due to lower production at our Toquepala (-16.8%), Buenavista
(-16.6%), IMMSA (-14.1%) and La Caridad (-0.4%) operations, which was partially
offset by higher production at the Cuajone (+15.7%) mine.



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Zinc production decreased 3.3% in the first nine months of 2021, which was mainly attributable to a decrease in production at the Santa Barbara mine (-16.3%) due to lower grades and a decrease in milled mineral. This was partially offset by an increase in production at the San Martin mine (+16.6%), which was driven by higher grades and recoveries.





Operating Cash Costs: An overall benchmark that we use, which is 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
59. 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 allow our management and stakeholders to more fully visualize 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, before and net of by-product revenues, is presented in the table below for the three and nine months ended September 30, 2021 and 2020:





              Operating cash cost per pound of copper produced (1)

              (In millions, except cost per pound and percentages)


                                    Three Months Ended September 30,                       Nine Months Ended September 30,
                              2021         2020       Variance     % Change         2021           2020        Variance     % Change
Total operating cash
cost before by­product
revenues                    $   847.1    $   713.8    $   133.3        18.7 %    $   2,436.4    $   2,134.1    $   302.3        14.2 %
Total by­product
revenues                    $ (543.4)    $ (374.3)    $ (169.1)        45.2 %    $ (1,458.2)    $ (1,035.9)    $ (422.3)        40.8 %
Total operating cash
cost net of by­product
revenues                    $   303.7    $   339.5    $  (35.8)      (10.5)

% $ 978.2 $ 1,098.2 $ (120.0) (10.9) % Total pounds of copper produced(2)

                     522.5        526.4        (3.9)       (0.7) %        1,541.0        1,586.0       (45.0)       (2.8) %
Operating cash cost per
pound before by­product
revenues                    $    1.62    $    1.36    $    0.26        19.1 %    $      1.58    $      1.35    $    0.23        17.0 %
By­products per pound
revenues                    $  (1.04)    $  (0.71)    $  (0.33)        46.5 %    $    (0.94)    $    (0.66)    $  (0.28)        42.4 %
Operating cash cost per
pound net of by­product
revenues                    $    0.58    $    0.65    $  (0.07)      (10.8) %    $      0.64    $      0.69    $  (0.05)       (7.2) %

(1) These are non-GAAP measures. Please see page 59 for reconciliation to GAAP

measure.

(2) Net of metallurgical losses.






As seen in the table above, our per pound cash cost before by-product revenues
in the third quarter of 2021 was 19.1% higher than in the same period of 2020.
This increase was mainly attributable to an increase in production costs. Our
cash cost per pound net of by-product revenue for the third quarter of 2021
decreased 10.8% when compared to the same period of 2020. This was mainly
attributable to a significant increase in by-product revenues.



For the nine months ended September 30, 2021, our per pound cash cost before
by-product revenues was 17.0% higher than in the same period of 2020. This
increase was mainly driven by an increase in production costs and to the unit
cost effect of lower production. The operating cash cost per pound of copper net
of by-product revenues was $0.64 in the nine months ended September 30, 2021.
This represented an improvement of 7.2% compared to the $0.69 reported in the
same period of 2020 and was mainly due to a significant increase in by-product
revenues.




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, and for copper, molybdenum, zinc and silver
in particular.



We are subject to market risks arising from the volatility of copper and other
metal prices. For the remaining three months of 2021, assuming that expected
metal production and sales are achieved, tax rates remain unchanged and no
effects are generated by potential hedging programs, metal price sensitivity
factors would indicate the following change in estimated net income attributable
to SCC resulting from metal price changes:




                                             Copper      Molybdenum       Zinc         Silver
Change in metal prices (per pound
except silver-per ounce)                   $     0.10    $      1.00    $    0.10    $     1.00
Change in net earnings (in millions)       $     30.3    $       9.5    $  

  3.4    $      3.6
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. The Peruvian
operations produce copper, with significant by-product production of molybdenum,
silver and other material. Our Mexican open-pit operations include La Caridad
and Buenavista mine complexes, the smelting and refining plants and support
facilities, which service both mines. The Mexican open pit operations produce
copper, with significant by-

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product production of molybdenum, silver and other material. Our IMMSA unit includes five underground mines that produce zinc, lead, copper, silver and gold, and several industrial processing facilities for zinc, copper and silver.

Segment information is included in our review of "Results of Operations" in this item and also in Note 14 "Segment and Related Information" of our condensed 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 currency and Mexican currency
occur, our operating results can be affected. In recent years, we believe such
changes have not had a material effect on our results and financial position.
Please see Item 3. "Quantitative and Qualitative Disclosures about Market Risk"
for more detailed information.



Capital Investment Programs: We made capital investments of $695.5 million in
the nine months ended September 30, 2021, compared to $348.8 million in the same
period of 2020. In general, the capital investments and investment projects
described below are intended to increase production, decrease costs or address
social and environmental commitments.



Set forth below are descriptions of some of our current expected capital
investment programs. We expect to meet the cash requirements for these projects
by utilizing cash on hand; internally generated funds and additional external
financing, including funding received in September 2019. All capital spending
plans will continue to be reviewed and adjusted to respond to changes in the
economy, market conditions or the COVID-19 pandemic.



Projects in Mexico:



Buenavista Zinc - Sonora: This project is located within the Buenavista facility
and includes the development of a new concentrator to produce approximately
100,000 tons of zinc and 20,000 tons of copper per year. We have completed the
engineering study. In order to continue with the project, stronger preventive
measures to combat COVID-19 have been put in place. Procurement has progressed
93% and all the main equipment is on site. Additionally, construction site works
are in progress. The project has all the necessary permits. The project´s budget
is $413 million, and we expect to initiate operations in 2023. As of September
30, 2021, we had invested $196.8 million in this project. When completed, we
anticipate that this new facility will double the Company's zinc production
capacity and will provide 490 direct jobs and 1,470 indirect jobs.



Pilares - Sonora: This project, located six kilometers from La Caridad, will be
developed as an open-pit mine operation with an annual production capacity of
35,000 tons of copper in concentrate. A new 25-meter wide off-road facility for
mining trucks has been built and will be used to transport the ore from the pit
to the primary crushers at the La Caridad copper concentrator. This will
significantly improve the overall mineral ore grade (combining the 0.78%
expected from Pilares with 0.34% from La Caridad). The budget for Pilares is
$159 million and we expect the project to begin production in the first quarter
of 2022. As of September 30, 2021, we had invested $81.4 million in this
project.



El Pilar - Sonora: This is a low-capital intensity copper development project
strategically located in Sonora, Mexico, approximately 45 kilometers from our
Buenavista mine. Its copper oxide mineralization contains estimated proven and
probable reserves of 281 million tons of ore with an average copper grade of
0.301%. El Pilar will operate as a conventional open-pit mine with an annual
production capacity of 36,000 tons of copper cathodes. This operation will use
highly cost efficient and environmentally friendly SX-EW technology. We estimate
a development investment of approximately $310 million. The results from
experimental pads in leaching process have confirmed adequate levels of copper
recovery. We expect this project to start production in 2023 with an expected
mine life of 13 years. The basic engineering study is finished and the Company
continues developing project and site environmental activities.



The San Martin mine recovery program. After eleven years of illegal stoppage, we
resumed control of the San Martin mine in August 2018. The San Martin facilities
deteriorated during this period but we made a major renovation and restarted
operations during the second quarter of 2019. Currently, the mine has 200,000
tons of ore and the concentrator has initiated production. In 2020, we produced
14,361 tons of zinc, 2.8 million ounces of silver, 3,601 tons of copper,

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and 1,425 tons of lead. As of September 2021, the Company had completed most of
the rehabilitation plan to restore operations at the San Martin mine with a
total expense of approximately $90.1 million; the mine has since reached full
operating capacity.



Projects in Peru:




Quebrada Honda dam expansion - Tacna: This project aims to enlarge the main and
lateral dams in Quebrada Honda and includes the relocation of some facilities
due to dam growth and implementation of other facilities for water recovery,
among other factors. As of September 30, 2021, the engineering study was
complete. The majority of the main equipment and materials have been procured
and are arriving according to schedule. Construction is in progress with work on
three fronts. This project has a total budget of $140.0 million, of which we had
committed $37.6 million and invested $89.3 million as of September 30, 2021.



Tia Maria - Arequipa: On July 8, 2019, we were granted the construction permit
for this 120,000 ton annual SX-EW copper greenfield project with a total capital
budget of $1,400 million. The Government awarded the permit after completing an
exhaustive review process, complying with all established regulatory
requirements and addressing all observations raised. The challenges surrounding
the construction permit were overcome when on October 30, 2019, the Mining
Council of the Peruvian Ministry of Energy and Mines ratified the construction
permit for the Tia Maria project.



The Company has been consistently working to promote the welfare of the Islay
province population. As part of these efforts, we have implemented successful
social programs in education, healthcare and productive development to improve
the quality-of-life in the region. We also have promoted agricultural and
livestock activities in the Tambo Valley and supported growth in manufacturing,
fishing and tourism in Islay.



On January 7, 2021, the mayor of the Islay province (Arequipa, Peru) awarded a
City Diploma to SPCC in recognition of the Company's efforts to assist the
population of Islay during the COVID-19 pandemic. SPCC provided medical
assistance, tests, oxygen, personal protection equipment and food stuffs to the
population in the area of influence of the Tia Maria project.



We consider that the initiation of construction activities at Tia Maria will
generate significant economic opportunities for the Islay province and the
Arequipa region. During the construction and operation phase, we will make it a
priority to hire local labor to fill the 9,000 jobs (3,600 direct and 5,400
indirect) that we expect to generate during Tia Maria's construction phase. When
operating, we expect Tia Maria to directly employ 600 workers and indirectly
provide jobs for another 4,200. Additionally, from day one of our operations, we
will generate significant contributions to revenues in the Arequipa region

via
royalties and taxes.



We expect the Peruvian government to acknowledge the significant progress the
project has made on the social front and the important contributions that Tia
Maria will generate for Peru´s economy and, consequently, take the necessary
steps to provide SCC with adequate support to initiate construction.



This greenfield project, located in Arequipa, Peru, will use state of the art
SX-EW technology with the highest international environmental standards. SX-EW
facilities are the most environmentally friendly in the industry due to their
technical process with no emissions released into the atmosphere.



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, expected return on investment, environmental concerns, required
investment and estimated production, among other considerations. All capital
spending plans will continue to be reviewed and adjusted to respond to changes
in the economy, market conditions or the COVID-19 pandemic.



El Arco - Baja California: This is a world-class copper deposit located in the
central part of the Baja California peninsula, with ore reserves of over 2.4
billion tons with an ore grade of 0.422%, 0.3 billion tons of leach material
with an ore grade of 0.288% and 0.11 grams of gold per ton. This project
envisions an open-pit mine with a combined

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concentrator and SX-EW operations, with an estimated production capacity of
190,000 tons of copper and 105,000 ounces of gold annually. The project has an
estimated capital budget of $2.9 billion. The Company has started the baseline
study and it is reviewing the basic engineering analysis to request the
environmental impact permit. Several years back, we began to acquire the rights
to all relevant mining concessions in the area; this process was completed

in
2020.



Los Chancas - Apurimac: This greenfield project, located in Apurimac, Peru, is a
copper and molybdenum porphyry deposit. Current estimates indicate the presence
of 545 million tons of mineralized material with a copper content of 0.59%,
molybdenum content of 0.04% and 0.039 grams of gold per ton, as well as 181
million tons of mineralized leachable material with a total copper content of
0.357%. Los Chancas project envisions an open-pit mine with a combined operation
of concentrator and SX-EW processes to produce 130,000 tons of copper and 7,500
tons of molybdenum anually. The estimated capital investment is $2,600 million
and the project is expected to be in operation in 2027. In 2019, we continued to
engage in social and environmental improvements for the local communities. In
2020,

we continued to work on these activities and in 2021 we are developing the environmental impact assessment for the project.

Michiquillay Project - Cajamarca: On June 12, 2018, Southern Copper signed a
contract and made an initial payment of $12.5 million for the acquisition of the
Michiquillay project in Cajamarca, Peru. In June 2021, the Company paid an
additional $12.5 million to acquire the project. The Company has created a
multidisciplinary management team to plan the development of this project. As
part of this plan, the Company has established contact with the local and
regional authorities and communities in order to promote programs for the
sustainable development of the area. In 2020, we continued to develop social and
environmental programs for the local communities. On September 3, 2021 the
Company signed a Social Agreement with the Michiquillay Community. Additionally,
on October 1, 2021 the Peruvian Ministry of Energy and Mines approved the
semi-detailed Environmental Impact Study for the project.



The Social Agreement with the Michiquillay community represents an opportunity
to improve the quality of life of the residents of Michiquillay via our strong
social programs and backed by a solid framework for technical work at the
project level. Talks for signing a similar agreement are being conducted with
the La Encañada Community, where we expect positive results. These events are
important steps that will allow Southern Copper to initiate an in-depth
exploration program in the first quarter of 2022.



Michiquillay is a world class mining project with estimated mineralized material
of 1,150 million tons with an estimated copper grade of 0.63%. When developed,
we expect Michiquillay to produce 225,000 tons of copper per year (along with
by-products of molybdenum, gold and silver) for an initial mine life of more
than 25 years, at a competitive cash-cost. We estimate an investment of
approximately $2.5 billion will be required and expect production start-up by
2028 and that Michiquillay will become one of Peru´s largest copper mines. The
project 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.



The information above is based on estimates only. 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")


We are committed to improving our ESG record by adopting best practices. In this
regard, our sustainable development policies were recently updated. These
policies, applicable to SCC and its subsidiaries, formalize our vision,
commitments and objectives to promote sustainable development and generate
shared value for our stakeholders. For further information on our disclosure on
Human Capital Resources, see the section included in Part I, Item 1 of our
Annual report on Form 10-K for the year ended December 31, 2020. Also, see our
disclosure on our COVID-19 response, environmental disclosure and support of our
local communities elsewhere in this report.



The Company has launched several programs and initiatives in all of the regions
where we operate to help communities cope with the COVID-19 pandemic. In Peru, a
partnership was established with the government in July 2021 to help vaccinate
40% of the population in the five regions where our operations are located.

The
Company donated over $2.45

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million to help build, modernize, equip and operate vaccination centers. About 92% of the 850,000 vaccines contemplated in this initiative have been administered by government personnel. To date, 91.4% of Southern Copper Corporation's workforce has been vaccinated against COVID-19.





The Mining Chamber of Mexico recognized La Caridad's mine, refinery and
metallurgical plants for top safety performance in their respective categories
in 2020. La Caridad mine received the "Silver Helmet" ("Casco de Plata") in the
category for open-pit mining operations with more than 500 employees whereas the
refinery and metallurgical plants received the same distinction in the category
for metallurgical plants and smelters with up to 500 employees.



Southern Copper Corporation reaffirms its commitment to preserving and improving
the environment by implementing actions to generate a net positive impact on
biodiversity through our operations. To fulfil this commitment, which is
outlined in the Company's Environmental Policy, we have developed action plans
for biodiversity management that are aligned with the guide for Good Practice
Guidance for Mining and Biodiversity published by the International Council on
Mining and Metals (ICMM). These plans further improve the Company's capacity to
implement effective mitigation measures and contribute to the preservation and
improvement of the environment in which we operate.



The government of Sonora recognized Southern Copper Corporation for being a
"Culturally Responsible Company" for the voluntary initiatives implemented to
promote and safeguard the state's history, culture and traditions. Three of the
community programs launched by the Company were pinpointed as particularly
relevant: the Itinerant Documentary Cinema Workshop, which led to the creation
of over 200 videos; the support provided for organizing the "Festival Alfonso
Ortiz Tirado" ("FAOT") in Nacozari and Cananea; and the creation of Youth
Orchestras. These educational music programs, which are offered to more than
2,100 children in the communities surrounding our mining operations in Mexico
and Peru, have led to the creation of six orchestras and four choirs.



CLIMATE CHANGE



Southern Copper Corporation recognizes the importance and urgency of tackling
climate change. The Company's operational greenhouse gases emissions have
decreased significantly over the last three years despite an increase in
production volumes. In addition, we strive to continuously reduce the carbon
footprint of our operations and products.



Peruvian operations: On April 17, 2018, the Peruvian government enacted Law N.
30754, establishing a Climate Change Framework. Through this law, promoting
public and private investments in climate change management is declared to be of
national interest. The law proposes to create an institutional framework to
address climate change in Peru, outlining new measures, particularly with
respect to climate change mitigation. It includes, for example, provisions
regarding: increasing carbon capture and use of carbon sinks; afforestation and
reforestation practices; land use changes; and sustainable systems of
transportation, solid waste management, and energy systems. This is the first
climate change framework law in Latin America to incorporate obligations from
the Paris Agreement. Regulations to this law were enacted by Supreme Decree
013-2019, which was published on December 31, 2019 and are applicable to all
Peruvian institutions and agencies. It is expected that further Peruvian
regulations will be applicable to non-governmental entities. The Company has
initiated a multi-year process to align its reporting on climate change for its
Peruvian operations with the recommendations of the Task Force on
Climate-Related Financial Disclosures ("TCFD"). The Company is committed to the
environment and to managing climate-related impacts. The Company's focus is to
seek continuous improvement in the responsible use of natural resources while
complying with strict applicable legal standards for prevention, mitigation,
control and remediation of environmental impacts. Implementing continuous
improvement in the Company's processes improves efficiency in the use and
consumption of energy, water, and other natural resources.



Mexican operations: Grupo Mexico, the indirect parent of SCC, has issued
sustainability reports under the Global Reporting Initiative (GRI) for more than
10 years. Grupo Mexico also participates in different Mexican and international
reporting programs such as the Greenhouse Gases (GHG) Mexico Program and CDP
(formerly the Carbon Disclosure Project).

In 2020, we also began to align our disclosure of efforts to manage climate-related risks and opportunities with the recommendations of the TCFD. Grupo Mexico's Sustainable Development Report 2020 included a section with specific details on our progress in this regard. The report, which can be accessed at



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https://www.gmexico.com/en/Pages/development.aspx, includes for the first time an analysis of the climate-related risks and opportunities that are most important to the Company's stakeholders.


We are referring our investors to Grupo Mexico's internet site for details on
the aforementioned initiatives for informative purposes only. We do not intend
the address to be an active link or to otherwise incorporate the contents of the
website into this Report on Form 10-Q. Grupo Mexico strives to continuously
reduce the carbon footprint of its operations and products to satisfy growing
demand from its stakeholders (including authorities, clients and investors,

among others).



ACCOUNTING ESTIMATES



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
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: ore 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 financial lease
liabilities, classification of operating leases versus financial leases,
valuation allowances for deferred tax assets, unrecognized tax benefits and fair
value of financial instruments. We base our estimates on historical experience
and on various other assumptions that we believe reasonable under the
circumstances. Actual results may differ from these estimates under different
assumptions or conditions.

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