SOUTHERN COPPER CORP/ Leases Disclosure
NOTE 9—LEASES:
The Company has operating leases for power generating facilities, vehicles and properties. The Company recognizes lease expense for these leases on a straight-line basis over the lease term. Some of the Company’s leases include both lease and non-lease components which are accounted for separately. The Company’s leases have remaining lease terms of less than one year to seven years, and do not include options to extend the leases. The Company’s lease agreements do not contain options to purchase the leased assets or to terminate the leases before the expiration date. In addition, the Company’s lease contracts do not have any material residual value guarantees or material restrictive covenants. As none of the Company’s leases provides an implicit rate, the Company uses its incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments.
The weighted average remaining lease term for the Company’s leases is six years, and the weighted average discount rate for these leases is 5.08%.
The operating lease expense recognized in the years ended December 31, 2025, 2024 and 2023 was classified as follows (in millions):
Classification | | 2025 |
| 2024 | 2023 | ||||
Cost of sales (exclusive of depreciation, amortization and depletion) |
| $ | 112.6 | $ | 106.0 | $ | 115.4 | ||
Selling, general and administrative |
| 0.1 |
| 0.1 |
| 0.1 | |||
Exploration |
| 0.1 |
| 0.1 |
| 0.1 | |||
Total lease expense |
| $ | 112.8 | $ | 106.2 | $ | 115.6 | ||
Maturities of lease liabilities are as follows:
Lease liabilities | |||
Year | | (in millions) | |
2026 |
| $ | 116.4 |
2027 |
| 115.8 | |
2028 |
| 115.2 | |
2029 |
| 113.2 | |
2030 |
| 105.5 | |
After 2030 |
| 211.9 | |
Total lease payments |
| $ | 778.0 |
Less: interest on lease liabilities |
| (115.2) | |
Present value of lease payments |
| $ | 662.7 |
About Leases Disclosures
Lease disclosures under ASC 842 provide a comprehensive view of a company's leased asset portfolio, including the split between operating and finance leases, discount rates used to present-value future payments, and the maturity schedule of lease obligations. This section reveals a significant source of off-balance-sheet commitments that were largely hidden before the current standard.
Key signals: the weighted-average discount rate affects the size of recorded lease liabilities — a higher rate reduces the reported obligation, so compare the chosen rate against the company's incremental borrowing rate. The operating versus finance lease mix affects both EBITDA and operating income presentation. Watch the maturity table for concentration risk: large payment cliffs in specific years may create cash flow pressure. Variable lease payments excluded from the liability measurement represent real obligations that do not appear on the balance sheet. Compare total lease costs against prior-year operating lease expense to assess the true economic burden.