Understanding Southern Copper’s Corporate Structure

As we’ve already seen, Southern Copper (SCCO) was created in 2005 with the merger of Southern Peru Copper Corporation and Minera Mexico. In this part, we’ll look at Southern Copper’s corporate structure.

The chart above shows Southern Copper’s corporate structure. As you can see, Southern Copper holds a 99.29% and 99.96% stake, respectively, in Southern Copper Corporation’s Peru Branch and Minera Mexico, respectively.

Southern Copper is majority owned by Grupo Mexico. As of March 31, 2015, Grupo Mexico, through its wholly owned subsidiaries, owned an 86% stake in Southern Copper. Grupo Mexico is owned by billionaire Mexican German Larrea and his family.

According to a November 2014 Bloomberg article, Larrea “bought more than 1.8 million shares in Southern Copper.” The article finds Larrea’s buying support as a possible reason for Southern Copper’s stock not falling much last year compared to other mining companies.

Some investors perceive high promoter ownership as a sign of accompany’s increased risk. Having said that, few mining companies today have the privilege of a billionaire buying its stock under troubled times.

Apparently, Southern Copper is among the better-performing companies in 2015 as well. It has managed to hold its ground while other copper producers, including Freeport-McMoRan (FCX) and Teck Resources (TCK), have fallen sharply this year. We’ll discuss the possible reasons for Southern Copper’s relative outperformance in the coming parts of this series.

Currently, Freeport-McMoRan forms 2.34% of the Materials Select Sector SPDR ETF (XLB) and 3.48% of the SPDR S&P Metals and Mining ETF (XME).

In the next part, we’ll look at Southern Copper’s product portfolio.